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Ethiopia's Central Bank, FinTech Firms Join Forces to Boost Financial Inclusion through MSMEs

May 3 , 2023

Ethiopia's central bank has announced a partnership with financial technology firms to develop and implement a regulatory framework for movable collateral and non-collateral loans to support micro, small, and medium enterprises (MSMEs). According to Vice Governor of the National Bank of Ethiopia (NBE), Solomon Desta, the Bank is actively working on the infrastructure to facilitate this initiative.

A panel discussion focused on digital lending was held at the Hyatt Regency Hotel on Africa Avenue (Bole Road). The event is expected to address strategies for overcoming barriers to financial inclusion in Ethiopia and beyond.

Last year, the central bank facilitated 3.6 billion Br in non-collateral loans to MSMEs, which marked a fourfold increase from the previous year. The authorities aim to extend financial access to 70pc of the population by 2025, said Solomon.

Experts are urging banks to broaden their financial services to traditionally underserved sectors, such as farmers. The primary reasons for banks' reluctance to support these groups include the lack of digital infrastructure, limited data, and an imbalance of risks and costs.

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