Dashen Bank has partnered with Accion and the Mastercard Center for Inclusive Growth to better serve small businesses with digital financial services customized to meet their financing needs. Accion is supporting Dashen Bank to build an innovation hub that aims to expand digital banking services to micro, small, and medium enterprises (MSMEs) through a range of new products and a focus on women-owned businesses.
Ethiopia’s nearly two million1 MSMEs are important drivers of its economy, yet only 6%2 of microenterprises and 1.9% of small enterprises have access to formal credit. The financing gap in the MSME sector of the country is estimated to be $4.2 billion3. Unemployment, low incomes, and a lack of financial education remain key reasons for a lack of access to formal financial services. Moreover, only 39%4 of women — compared to 55%5 of men — have an account at a formal financial institution, preventing them from accessing the evolving digital financial ecosystem and contributing to the country’s economic growth.
Dashen Bank aims to develop new solutions, embedded in existing supply chains for MSMEs in Ethiopia that still largely transact in cash, have few assets. The innovation hub is one of the strategic pillars of the Bank’s sixth strategy plan designed to enhance its capacity supporting MSMEs. This move is aimed at driving financial inclusion and fostering economic development through innovative digital solutions.
Asfaw Alemu, Chief Executive Officer at Dashen Bank shared, “Despite their critical contribution to the country’s economic growth, small businesses, particularly those led by women, face significant financing challenges. This is largely due to high reliance on cash-based transactions leading to insufficient formal financial records of their business operations and women’s lack of ownership over assets to meet collateral requirements. Through this partnership, we seek to address these challenges, build our operational capacity, 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 grow their businesses successfully. This landmark project underscores our commitment to staying always one step ahead, further cementing our reputation as an industry leader in Ethiopia’s financial sector.”
Accion will help Dashen develop new products designed for MSMEs, using AI to crunch new types of data and develop new credit scoring models that are better suited to the realities of MSMEs. The innovation hub will build solutions such as credit from their existing suppliers via embedded finance products, and non-financial tools, such as business management support.
This initiative is part of Accion’s 8-year partnership with the Mastercard Center for Inclusive Growth that supports the transformation of financial service providers, digital platforms, and fintechs. It aims to help 23 million people across 25 countries benefit from the digital economy.