Dashen Bank, Accion, & Mastercard to Launch Innovation Hub for Ethiopian MSMEs

Ethiopia’s second-biggest private bank Dashen, has partnered with global nonprofit Accion and the Mastercard Center for Inclusive Growth to build an innovation hub that focuses on women-owned micro, small, and medium enterprises (MSME). The Hub locks in on bridging the financing gap for MSMEs by expanding access to digital financial services. 

An artificial intelligence-powered interface will be integrated into the Hub that provides an alternative credit scoring model to determine the creditworthiness of the MSMEs. The Hub will also pilot embedded finance products, allowing MSMEs to secure credit directly through supply-chain partnerships.

The initiative seeks to address Ethiopia’s $4.2 billion MSME financing gap and improve financial inclusion in a country where only 6% of microenterprises and 1.9% of small businesses currently access formal credit. 

Asfaw Alemu, CEO of Dashen Bank, pointed to the possibilities of leveraging technology to address challenges in attaining financial inclusivity across Ethiopia. 

“Women-led businesses often lack formal financial records or assets for collateral. By leveraging technology, we aim to create inclusive systems that empower these entrepreneurs to grow sustainably,” he said.

Accion’s involvement builds on its work in Ethiopia since 2022, initially supporting refugees in regions like Gambella and Addis Ababa. Its formal partnership with Dashen Bank began in March 2024, with a focus on designing financial products tailored to women-owned businesses.

“Our goal is to position Dashen as the bank for SMEs where any business, especially women-led ones, can access accounts and credit. This means developing services that directly address their needs, from unsecured loans to financial literacy tools” Martin Tirigo, Accion’s Director for Digital Transformation, told Shega

The initiative is part of an eight-year partnership between Accion and the Mastercard Center for Inclusive Growth that aims to support 23 million people across 25 countries. Transforming financial service providers, fintechs and digital platforms is the primary objective of the project. Dashen Bank has already initiated a tender for the construction of the Hub in Ethiopia.

The Hub aims to address key challenges faced by women entrepreneurs, including limited financial literacy, collateral requirements, and restrictive social norms that exacerbate gender disparities. Only 39% of women as opposed to 55% of men in Ethiopia have an account at a formal financial institution with the numbers not faring any better in the digital financial space. Only 14% of the 90 million mobile money accounts in Ethiopia belonged to women as of December 2023. Furthermore, women accounted for only 22% of the user base across all forms of digital financial services rendering access to credit even less likely. Traditional bank loans in Ethiopia often require collateral, which many women-owned small businesses lack, effectively excluding them from accessing finance. 

To further support women-led businesses, Accion looks to pursue partnerships with e-commerce companies and other supply chain actors in the country. The global nonprofit has helped around 267 financial service providers in 75 countries over the past 64 years.