Dashen Bank, with nearly 900 branches across Ethiopia, is teaming up with global nonprofit Accion and the Mastercard Center for Inclusive Growth to create a digital innovation hub. The facility will develop financial products targeted for micro- to medium-sized and women-led businesses. Ethiopia passed a law last year to allow foreign banks to operate and establish subsidiaries in the country in an effort to make its financial services sector more efficient, attract more foreign direct investment and spur innovation.
Enabling innovation
Small businesses in Ethiopia tend to rely on cash based-transactions, which hampers their ability to establish credit, says Dashen’s Asfaw Alemu. In addition, women’s lack of asset ownership makes it difficult for them to meet collateral requirements.
The bank was among the first to launch a digital wallet. The hub will integrate solutions within small business supply chains to provide visibility into transactions and enable suppliers to develop AI-based credit scoring.
The initiative is part of an eight year partnership between Accion and Mastercard Center for Inclusive Growth. The two extended their initiative in 2023 with a $15.8 million grant from the Mastercard Impact Fund, to connect five million small businesses to digital financial services.
Global backers
The African Development Bank approved a $40 million trade financing transaction guarantee facility for Dashen last year, to support Ethiopia’s small businesses’ export and import dealings.
Dutch development bank FMO and UK’s British International Investment invested $20 million each into Dashen in 2023 to provide farmers and agribusinesses with dollar-denominated loans for machinery importation to boost their productivity and Ethiopia’s agricultural exports.
