Dashen Bank, Accion & Mastercard drive digital innovation to bridge Ethiopia’s MSME financing gap

Ethiopia's Dashen Bank, Accion, and the Mastercard Center for Inclusive Growth have come together to launch an innovation hub aimed at expanding digital financial services for small businesses in Ethiopia. The primary goal of this initiative is to bridge the $4.2 billion financing gap that currently exists for Micro, Small, and Medium Enterprises (MSMEs) in the country. With only a meager 6 per cent of microenterprises and 1.9 per cent of small businesses having access to formal credit, the focus of this partnership is specifically on women-owned businesses. The innovative approach taken by Dashen Bank, Accion, and Mastercard aims to leverage artificial intelligence (AI) and other digital technologies to provide tailored financial solutions to women entrepreneurs in Ethiopia. In a recent interview with CNBC Africa, Accion's Vice President, Raliat Sunmonu, shed light on this groundbreaking collaboration and the potential impact it could have on the country's financial landscape. Sunmonu emphasized the importance of this partnership in driving digital innovation without disrupting ongoing business operations. Dashen Bank's established position in the financial services sector allows for the creation of a parallel track dedicated to innovation and digital transformation. By utilizing AI to reimagine credit risk assessment for women entrepreneurs and enhancing customer engagement through various digital channels, the initiative seeks to empower women-owned businesses and spur economic growth in Ethiopia. One of the key focus areas of the collaboration is the use of large language models powered by AI to analyze alternative data and overcome language barriers, particularly in a region where the predominant language is Amharic. By harnessing the power of AI for credit risk assessment and customer engagement, the partnership aims to improve access to financial services for microentrepreneurs in Ethiopia. Sunmonu highlighted the importance of identifying priority use cases that align with the needs of the target customers and implementing AI solutions that drive meaningful impact. Furthermore, the collaboration between Accion, Dashen Bank, and the Mastercard Center for Inclusive Growth is set to enhance financial inclusion and support entrepreneurial growth in Ethiopia. By leveraging Accion's technical expertise and global networks, Dashen Bank is poised to develop new capabilities, tools, and products to better serve micro and small businesses in the country. The four-year program will focus on providing technical assistance to Dashen Bank, enabling them to accelerate their journey towards catering to a wider range of customers and offering tailored financial solutions. In terms of measuring the long-term impact of this initiative, Sunmonu emphasized the importance of rigorous impact measurements to demonstrate the business case for serving women, micro entrepreneurs, and small businesses. By defining internal and external metrics to gauge the progress and impact of the program, Accion aims to assess the effectiveness of the solutions rolled out by Dashen Bank and the benefits experienced by the end customers. Through qualitative and quantitative analysis, the partnership seeks to showcase the positive impact of digital financial services on the financial health and business growth of small enterprises. As the collaboration progresses, Accion remains committed to sharing the lessons learned, highlighting the successes, and addressing any challenges encountered along the way. The ultimate goal is to catalyze movement in the financial services landscape, drive economic empowerment for women entrepreneurs, and foster inclusive growth in Ethiopia's MSME sector. With a focus on leveraging digital innovation and AI-powered solutions, the partnership between Accion, Dashen Bank, and MasterCard holds promising potential for transforming the financial future of small businesses in Ethiopia.