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The fastest-growing mobile money provider in the Somali Region, Rays Microfinance, the creator of Sahay, has partnered with Awash Bank to expand its operations in Addis Abeba and pastoralist areas of the eastern part of Ethiopia. Works to integrate the two financial institutions have been underway after the two signed an agreement on December 16, 2020.

The move enables Rays to make its mobile money platform, which allows its customers to deposit, withdraw and borrow, interoperable with the core banking solution of Ethiopia's biggest private commercial bank, which netted a profit of 2.6 billion Birr during the last fiscal year, mobilising deposits of 74.3 billion Br.

Once the integration is completed, customers of Sahay will be able to deposit, withdraw and transfer cash at any branch of Awash Bank, whose clients would also be able to do the same at the agents of the mobile money service provider and enjoy similar offerings using USSD and Android and iOS mobile applications. Customers of Awash would be also able to send money, buy goods, purchase airtime, pay bills, and access digital microloans.


Founded seven years ago by six investors with a paid-up capital of 10 million Br, Rays has been providing microfinance services before it launched its brainchild, Sahay, last year. It has quickly become one of the most preferred mobile money services in the country with more than half a million subscribers, 2,410 agents and 10,429 merchants.

"In just a year, we were able to achieve beyond our target, even reaching the unbanked population in the peripheries of Somali Region. We want to expand our presence in Addis Abeba and the pastoralist areas of Oromia, Afar, and Somali," says Abdiaziz Hassan, chief executive officer and one of the founders of Rays.


Having 466 branches across the country, Awash expects to increase its outreach in rural parts of the country, where it has almost no presence with over a fourth of its branches located in Addis Abeba.


"We have planned to move further into Eastern Hararghe, Oromia, and north. Opening branches in these areas is difficult since they are very far from urban towns where people access banking services," says Kefayalew Shiferaw, deputy chief of digital banking operations at Awash. Two-thirds of the Ethiopian population is unbanked, according to a study conducted by the World Bank in 2019.

According to Rays Microfinance, Sahay has an engine that can manage 400 requests per second, possesses a server handling one gigabyte of orders a second, and offers an app that uses a protocol compatible with 2G and 3G networks. Sahay's customers can request a non-secured loan depending on their transaction history. The loan is repaid after two weeks or one month at the most. The loan is assessed using a highly tuned machine learning tool, which allocates an accurate score.

"Besides enjoying such services, the agreement enables customers of Sahay to pay for goods at any merchant with an Awash Bank POS machine and receive remittance directly to their wallet from abroad. The money will automatically be exchanged using the current exchange rate at that time," Abdiaziz told Fortune.


Addisu Haba, a banking expert with over three decades of experience, welcomed the partnership.

"Massive branch expansion cannot be a solution for financial inclusion. To reach the unbanked population, banks have to partner with microfinance institutions and reduce the overhead costs they incur by digitising banking activities and giving equal emphasis to non-branch-based banking services," says Addisu.

Embracing mobile money is also key for a secure cash management system and increases the liquidity of banks, according to Addisu.

"Cash management is not easy, starting from printing to transporting the money. A cashless transaction using platforms like mobile money apps would not only help avoid such circumstances but would also improve their liquidity position," remarked Addisu.



PUBLISHED ON Apr 30,2021 [ VOL 22 , NO 1096]


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