Unleashing Millions for Micro-Entrepreneurs with Digital Loans

May 12 , 2024

  A 100 million-dollar program to scale up six financial institutions to facilitate digital non-collateral loans to micro, small and medium enterprises (MSMEs) was launched last week. Drawing experience from the first digital non-collateral lending platform dubbed Michu powered by Cooperative Bank of Oromia (COOP), the program coupled with Amhara, Bunna, Enat, Wegagen and ZamZam banks. Last year, Coop dispersed 946 million Br loans to farmers through cooperative unions and MSMEs, reaching more than 100,000 users. In partnership with Kifiya Financial Technology Plc and the Mastercard Foundation, the program is expected to put forth 300 million dollars and impact close to half a million businesses. The financing gap in the country is estimated to be close to 4.3 billion dollars, while access to finance has left MSMEs with slim access to non-collateralised financing. The absence of digital and credit infrastructure, limited data, an imbalance of risks and costs, and insecure transactions are cited as primary reasons for financial institutions' reluctance. By providing data-driven AI credit scoring, which ensures that appropriate and relevant products are tailored to and serve the needs and demands, Munir Duri, CEO of Kifiya, plans to "make uncollateralised digital credit the new normal.”