Digital Platform Aims to Bridge Financing Gap for MSMEs


Digital Platform Aims to Bridge Financing Gap for MSMEs

To bridge the financing gap in micro, small, and medium enterprises (MSMEs), Ahadu Bank has launched an uncollateralised digital lending platform. Dubbed 'Mahder,' the new system enables credit registers, financial record keeping and reporting, and account opening. It was developed in partnership with K.M. Dastur & Company KMD), APSIS and SNV. The absence of digital and credit infrastructure, limited data, an imbalance of risks and costs, insecure transactions and collateral registries, and a lack of insolvency procedures are cited as primary reasons for financial institutions' reluctance to support MSMEs. In its press briefing at its headquarters last week, Ahadu Bank revealed a 25pc allocation from its credit portfolio to MSMEs, recognising their contribution to the economy. The strategy also includes an arrangement with insurance companies for risk management during defaults. A World Bank study estimates the global financing gap for MSMEs to be one trillion dollars, increasing to 2.6 trillion dollars when including informal businesses. MSMEs make up over 90pc of all firms and account for 70pc of total employment and 50pc of GDP worldwide. The SME finance gap now stands at 5.7 trillion dollars. There are an estimated two million MSMEs in Ethiopia alone and according to a 2021 UNDP report, only 1.9pc of small enterprises have access to loans or lines of credit, compared to six percent for micro-enterprises and over 20pc for medium-sized enterprises. The Cooperative Bank of Oromia (CBO) ushered in the first digital non-collateral lending platform two years ago dubbed 'Michu', in partnership with Kifiya Financial Technology. The Bank was able to disperse 946 million Br in loans to farmers through cooperative unions and MSMEs, reaching more than 100,000 customers. Several further initiatives have been taken to improve the financial gaps of MSMEs. Last year, the Central Bank partnered with financial technology firms to design and execute a regulatory framework for moveable collateral and non-collateral loans that address Micro, Small and Medium Enterprises.


Radar

Central Bank's Auction Sends Dollar Soaring to 135 Br

A dollar value against the Birr exceeds 135 during an auction the Central Bank held last week, offering 60 million dollars. Close to 27 banks made their bid where the weighted average was 135.61 Br for a dollar. The National Bank of Ethiopia (NBE) announced the results of the special foreign exchange auction, the second since monetary authorities floated the forex regime in early August last year. Last week's result reflects a weaker Birr than in the first when the average rate was 107.9 Br....


Radar

Ethio Telecom Bids to Dominate Ethiopia's Digital Future

An array of services from digital livestock tracking, push-to-talk/video communications to cloud-based banking, an education management system (EMS), and enterprise resource Planning (ERP) are available from the state-owned Ethio telecom. Ethio telecom has introduced seven new cloud-based digital services last week at the Skylight Hotel, on Africa Avenue (Bole Road), pledging to transform business operations, financial services, and education management. The company said that these solutions...


Radar

Addis International Convention Centre Inaugurates

The much-anticipated Addis International Convention Centre, spanning 40 hectares, was officially inaugurated last week. It is set to become the country's largest conference venue, designed to host both national and international events. The centre features two large halls, each accommodating 3,000 to 4,000 people. It also includes eight smaller meeting rooms, bringing its total capacity to 10,000 attendees. Two hotels, with a combined 1,000-bed capacity, will serve both local and internationa...