Fortune News | Mar 07,2020
Nov 27 , 2021
By YARED SEYOUM ( FORTUNE STAFF WRITER )
The rank of microfinance institutions (MFI) joining a national payment system is swelling following three MFIs showing strong interest in acquiring shares with EthSwitch S.C.
The three MFIs joining EthSwitch as shareholders serve close to 1.5 million customers; EthSwitch allows their clients to complete transactions with member banks. EthSwitch was incorporated in 2011 with an equity of 12 million Br raised from all the banks. Recently established banks – ZamZam, Hijra and Goh – have also become shareholders.
Rays Microfinance, Addis Credit & Saving Institution, and Oromia Credit & Savings have finalised the requirements to join EthSwitch, such as having a settlement account with the National Bank of Ethiopia (NBE) or partnering with a bank that does. However, buying shares remains optional.
Somali Microfinance was the first MFI to get accepted by EthSwitch in May this year after acquiring 1,035 shares at a par value of 1,000 Br. Not all financial institutions have joined EthSwitch, a reason for the directors of EthSwitch to decide how to accept new members moving forward, says Fikru Woldetensie, director of marketing and innovation of EthSwitch.
Last September, the three MFIs began the process, reaching the integration phase recently, where their core systems are linked with EthSwitch.
These are part of the 41 MFIs operating in the country with 52.4 billion Br in aggregate deposits, a 17.2pc increase from the previous year. Eleven of these are public-owned, including Addis Credit and Oromia Credit & Savings.
The microfinance institutions will also benefit from the interbank transfer system EthSwitch launched last month. They can issue debit cards to their customers using the operator's system, which it avails to any member without a switch system of its own. Six commercial banks have a switch system, while six others use a shared platform operated by Premier Switch Solutions, a company incorporated by banks including Awash, Hibret, and Nib.
There were close to 5,000 ATMs, 10,000 PoS terminals and 15 million card users in Ethiopia as of June 2020, a report from EthSwitch reveals.
MFIs have the advantage of using an extensive network of ATM and point of sale (POS) machines that they do not have to invest in, say experts in the industry. Kinfemicheal Yibkaw, a digital financial services expert, is one of these experts who believe EthSwitch's infrastructure offers the clients of these MFIs a range of additional transactions.
"The most important benefit we get from joining EthSwitch is for our customers to withdraw money from any ATM easily," said Damtew Alemayehu, CEO of Addis Credit, established in 2001.
Addis Credit & Saving, serving 250,000 customers, has met all the requirements to join EthSwitch, Damtew told Fortune.
Addis Credit is growing to a commercial bank with a paid-up capital of nearly four billion Birr, rebranding itself as the 'Bank of Addis'. Oromia Credit, serving 700,000 customers, is also preparing to join the industry as 'Siinqee Bank' with a paid-up capital of seven billion Birr.
Rays Microfinance has progressed farthest in its bid to integrate with EthSwitch. Established in June 2014 by six investors with a paid-up capital of 10 million Br, Rays is also expanding on its success in the digital finance space through its mobile money service, Sahay. It is a platform launched in February last year, enabling customers to deposit, transfer and withdraw cash. Sahay has onboarded close to 12,000 merchants and 2,400 agents during its first year of service. The majority of its 600,000 users reside in the eastern parts of the country.
PUBLISHED ON
Nov 27,2021 [ VOL
22 , NO
1126]
Fortune News | Mar 07,2020
Fortune News | Jul 25,2020
Radar | May 21,2022
Editorial | May 15,2021
Radar | Mar 26,2022
Commentaries | Dec 17,2022
Commentaries | Jun 17,2023
Fortune News | Feb 19,2022
Radar | Oct 05,2019
Editorial | Oct 21,2023
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
Apr 20 , 2024
In a departure from its traditionally opaque practices, the National Bank of Ethiopia...
Apr 13 , 2024
In the hushed corridors of the legislative house on Lorenzo Te'azaz Road (Arat Kilo)...
Apr 6 , 2024
In a rather unsettling turn of events, the state-owned Commercial Bank of Ethiopia (C...
Mar 30 , 2024
Ethiopian authorities find themselves at a crossroads in the shadow of a global econo...