The cooperation aims to provide digital financial services tailored to the financing needs of small enterprises. Through a variety of new products and an emphasis on women-owned businesses, Accion is helping Dashen Bank establish an innovation hub with the goal of offering digital banking services to MSMEs.
The agreement states that Accion will work with Dashen to develop new products for MSMEs by forming strategic partnerships with those supply chains. Artificial intelligence (AI) will be used in these products to analyse new types of data and develop new credit scoring models that are better suited to the requirements of MSMEs, including women-owned enterprises. Through embedded finance products, the innovation hub will create non-financial tools like business management support and solutions like credit from their current suppliers with the aid of this new data and extensive research.
Asfaw Alemu, the CEO of Dashen Bank, stated that “small businesses, especially those run by women, face significant financing challenges despite their critical contribution to the nation’s economic growth.” The primary reasons for this are women’s strong reliance on cash-based transactions, which leads to insufficient formal financial records of their business operations, and their lack of asset ownership to meet collateral requirements. Through this partnership, we hope to address these challenges, enhance our operational capacities, enhance our credit offerings to meet the needs of small business owners, and develop a range of digital products and value propositions to help them access the resources they need to successfully grow their companies.”
Dashen Bank’s Chief Digital and Information Officer, Yohannes Million, said: “Our innovation hub aims to serve as a catalyst for MSMEs’ empowerment by providing them with tailored digital banking solutions. Located in a special facility, it will act as a hub where technology and financial services meet to advance development and improve our clients’ operational efficiency.”
According to Dashen Bank, a tender was recently released to begin building this cutting-edge facility.The establishment of the bank’s innovation hub is another audacious move to revolutionise Ethiopia’s banking sector and shows its steadfast dedication to using technology to promote economic empowerment and development. Dashen Bank also revealed that, as part of its future roadmap, it will collaborate with a globally recognised technology partner to host an innovation workshop for its leadership and employees. The workshop will cover opportunities in emerging technologies, such as artificial intelligence.
Vice President, Middle East and Africa at Accion Advisory, Raliat Sunmonu, stated: “Ethiopia is one of Africa’s fastest-growing economies, and small businesses play a vital role in propelling its growth.We are contributing to the development of a more inclusive ecosystem for MSMEs in Ethiopia through our partnership with DashenBank, a pioneer in financial innovation, and other significant partners. By using AI and other technological tools, we can collaborate to lessen discrimination and other obstacles that micro, small, and medium-sized businesses—especially those run by women—face.”
“Ethiopia is at a pivotal point in its journey to drive economic growth through inclusive and relevant services for micro and small businesses,” stated Subhashini Chandran, Senior Vice President of Social Impact for Asia Pacific, Europe, Middle East, and Africa at the Mastercard Centre for Inclusive Growth. “An essential part of that journey is digital financial services. The Mastercard Centre for Inclusive Growth has been promoting financial inclusion globally for the past ten years. We are thrilled to collaborate with Accion and Dashen Bank to create inclusive financial services that can help Ethiopian small business owners become more resilient and successful.” He added. This program is a component of Accion’s eight-year collaboration with the Mastercard Centre for Inclusive Growth, which supports the transformation of fintechs, digital platforms, and financial service providers with the goal of assisting 23 million people in 25 countries in reaping the benefits of the digital economy.
According to recent studies, Ethiopia’s nearly two million MSMEs play a significant role in the country’s economy, but only 1.9% of small businesses and 6%2 of microenterprises have access to official credit. An estimated $4.2 billion3 is needed to close the financing gap in the nation’s MSME sector. Lack of access to formal financial services is still primarily caused by low incomes, unemployment, and a lack of financial literacy. Furthermore, only 39%4 of women, compared to 55%5 of men, have an account at a formal financial institution. This means that women are unable to participate in the nation’s economic growth and access the rapidly changing digital financial ecosystem.
Dashen Bank was among the first banks in the country to launch a digital wallet that makes transactions simple for small business owners. Thanks to the new innovation hub being built with Accion, the bank now hopes to develop new solutions that are integrated into existing supply chains for MSMEs in Ethiopia that still primarily conduct business in cash, have few assets, and are thus largely invisible to large banks. The innovation hub is one of the strategic pillars of the Bank’s sixth strategy plan, which aims to improve its capacity to support MSMEs.