Regulatory Hurdles Propel Ethiopian Fintech Startup to Neighboring Markets

Elite Fintech Solution, a local startup, has found a home in neighboring African countries after facing regulatory roadblocks in its base of operations.

The three-year-old firm, founded by Alazar Solomon, is now bidding to transform SME credit facilitation in Kenyan, Mauritian, and Ugandan markets through the combination of AI tools and data analytics.

The startup’s flagship product, E-bidir, a centralized platform that provides automated digital credit, presented a novel service outside the regulatory scope of the National Bank of Ethiopia.

“The current credit reference directive does not allow for a company like ours to operate,” Alazar told Shega.

While the central bank appreciated their innovative service, it could not give them the final green light. The emerging digital credit scene does not have a regulation governing the landscape, and current fintech players like Kifiya and even the likes of telebirr have to partner with banks to provide the service.

Alazar recalls having almost no intention of creating just another micro-lending service and ignoring the central platform that makes E-bidir different. Nonetheless, the platform would find suitors elsewhere.

The startup had an easy time establishing a subsidiary in Mauritius while the Kenyan market exhibited significant demand for its product offerings. Access to finance remains a challenge for most Sub-Saharan SMEs, with just half managing to access some form of credit.

Alazar identifies two major hurdles in providing financial access to SMEs across the continent: lack of adaptive real-time financing and fragmented software as a service (SaaS) solutions. 

He points out how unintegrated enterprise and resource planning (ERP), customer relationship management (CRM), human resource management, and overall growth fail to align.

“Businesses are forced to juggle multiple platforms that do communicate with each other,” Alazar notes.

He expects E-bidir to have the capacity to address deep systemic issues that contribute to the lack of financing. The founder foresees sizeable uncollateralized loans being given out to SMEs that can contribute to accelerating economic growth.