Dashen Bank in Partnership with Accion and Mastercard to Support Ethiopian MSMEs
Dashen Bank, one of Ethiopia’s leading private financial institutions, has recently joined forces with global nonprofit organization Accion and the Mastercard Center for Inclusive Growth to launch a strategic partnership. The primary objective of this collaboration is to develop innovative digital financial services tailored specifically for micro, small, and medium enterprises (MSMEs) in Ethiopia.
The cornerstone of this partnership is the establishment of an innovation hub that will focus on expanding digital banking services to small businesses through customized products. A key focus of this initiative is to provide support for women-owned businesses, addressing the significant gender gap in financial inclusion within the country.
Ethiopia’s economy heavily relies on its nearly two million MSMEs; however, these businesses encounter significant challenges in accessing formal financial services. Current statistics indicate that only 6 percent of microenterprises and 1.9 percent of small enterprises have access to formal credit, resulting in a substantial $4.2 billion financing gap in Ethiopia’s MSME sector.
The gender disparity in financial inclusion is equally concerning, with only 39 percent of women holding accounts at formal financial institutions compared to 55 percent of men. This imbalance hinders many women entrepreneurs from fully participating in the digital financial ecosystem and contributing to the nation’s economic growth.
Asfaw Alemu, CEO of Dashen Bank, emphasized that small businesses, especially those led by women, face challenges due to cash-based operations that result in inadequate financial records and lack of collateral assets. Through this partnership, the aim is to address these obstacles, enhance operational capacity, and improve credit offerings to meet the needs of small business owners.
The innovation hub will utilize artificial intelligence to analyze alternative data sources and develop new credit scoring models that better align with the realities of MSMEs. Solutions in development include embedded finance products that offer credit through existing suppliers and non-financial tools such as business management support.
Raliat Sunmonu, Vice President for Middle East and Africa at Accion Advisory, highlighted Ethiopia’s status as one of Africa’s fastest-growing economies, with small businesses playing a pivotal role in this growth. The collaboration aims to create a more inclusive ecosystem for MSMEs by leveraging AI and other technologies to eliminate bias and other barriers.
Subhashini Chandran from the Mastercard Center for Inclusive Growth emphasized the importance of digital financial services in Ethiopia’s economic development journey. This initiative is part of Accion’s 8-year partnership with Mastercard, which aims to help 23 million people across 25 countries benefit from the digital economy.
Dashen Bank has already taken tangible steps towards establishing the innovation hub by issuing a construction tender for the facility. The bank also plans to conduct an innovation workshop for its leadership and staff, exploring opportunities in cutting-edge technologies, including artificial intelligence.
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