Hijra Bank Unveils Full-Fledged Sharia-Compliant Digital Lending Platform

Hijra Bank, one of four fully Sharia-compliant banks in Ethiopia, launched an interest-free digital lending platform over the weekend. While the mobile money service, branded as HalalPay, was officially unveiled at a ceremony held at the Hyatt Regency Hotel last Saturday, it has already onboarded 120,000 users and over 700 agents.

Developed by Tech Horizons over three months, the app currently offers loans of up to 150,000 birr with future limits set to be modified according to users' credit scores. Hassan Mohammed, vice president at Hijra Bank, states that users must first submit the necessary documents before pairing up with an account holder that serves as collateral to access the credit service.

“Instant transfers are immediately made after the account holder confirms,” he told Shega.

Besides Islamic financing options, HalalPay also includes cash in-cash out, money transfers, airtime purchases, as well as payments for goods and services. The platform is also integrated with Hijra’s core banking services like Murabha.

Dawit Keno, President of the two-year-old bank, highlighted the comprehensive set of tools available in the app offer financing options to a traditionally excluded population segment. He recalled experiencing constant demand from local communities for an interest-free alternative in the digital lending space.

“This is a historic milestone,” Dawit added.

Officials from the National Bank of Ethiopia echoed the sentiment, with Vice Governor Solomon Desta aligning Hijra’s new service with the government’s financial inclusion targets. He reflected on how it has been a mere 16 years since interest-free services were first explored by Ethiopia’s banks. Solomon noted that just four banks and microfinance institutions of the same amount currently offer fully-fledged Sharia-compliant services.

There are a little over 22 million interest-free accounts in Ethiopia with deposits of nearly 205 billion birr, according to the latest central bank figures.

HalalPay, which offers its services in five languages, is the realization of a year-long project by the bank’s management. Hijra netted 27.8 million birr profits in the 2022/23 financial year as it rebounded from losses in its inaugural challenges. The Bank’s annual report highlights comprehensive growth across all income streams along with surging expenses arising from a rapid expansion strategy.

Two months ago, Dashen Bank introduced a modified version of Dube Ale called Dube Ale-IFB, which offers interest-free services and short-term financing in partnership with merchants and traders.