State-owned Bank Partners with Private Financial Tech for Digital Lending

Jul 8 , 2023

In a bid to address Micro, Small and Medium Enterprises (MSMEs), a pioneering firm in financial technologies, Chapa Financial Technologies is vying to partner with the Commercial Bank of Ethiopia (CBE) to provide non-collateral loans through a digital lending platform. The company also partnered with Telegram a couple of months ago to facilitate digital payments for online marketers. It comes a month after the central bank joined hands with financial technologies to design and execute a regulatory framework for moveable collateral and non-collateral loans. Nael Hailemariam, CEO of Chapa, indicated the absence of digital and credit infrastructure and limited data as the primary reason for financial institutions' reluctance to finance enterprises. "The company hopes to bridge the gap through the partnership," he said. More than 60pc of Enterprises did not have access to finance in the past few decades through stiffer credit terms in the form of higher interest rates, according to Nael. Last week, the Addis Chamber of Commerce & Sectoral Association (ACCSA), prepared a discussion forum, at Interluxury Hotel, for business owners and financial technologies to discuss the trends and impacts of digital solutions for businesses in Ethiopia. Zerkarias Assefa, director general of ACCSA, who moderated the discussion, said that businesses have fallen short of being data-driven entities, indicating that persistence, execution, and the drive to employ digital business models moving at a slow pace. Nael, on the other hand, highlighted the importance of digital literacy, and making technologies user interface to reach out to businesses. Some participants cited the necessity of strong IT infrastructure, regulatory measures, and adequate end-to-end encryption in platforms. Digitally transacted economic activities in the country accounted for 10 billion Br in 2022, compassing 10pc of the country's GDP. In 2025, the number is estimated to grow by 39pc accounting for 60 billion transactions.