SNV Onboards Awash, Ahadu, CBE For Digital Lending Platform Targeting MSMEs

Dutch-rooted global development organization SNV is collaborating with KMD London, a consultancy firm, to launch a mobile app-based comprehensive financial solution for medium, small, and micro enterprises (MSME) through three Ethiopian banks. The platform provides non-collateral cash flow-based loans and inventory management tools to alleviate financial service hurdles faced by local MSMEs while minimizing risks through an insurance facility. It is part of the Livelihoods Improvement for Women and Youth (LIWAY) program, which looks to improve the lives of over a quarter million Ethiopians until 2026.

Tatek Tesfaye, market system development adviser at SNV, says a two-year planning period preceded the development of the platform that relies on cash flow for its services. He expects the project, one of 21 others undertaken by the NGO, to address financial management and access hurdles faced by MSMEs.

“It will empower them (MSMEs) significantly,” Tatek told Shega.

Prospective users can register at the nearest branches of the state-owned Commercial Bank of Ethiopia (CBE), Awash Bank, and Ahadu when the platform launches, while more banks might join in the future. After relevant documentation is provided, the system already integrated into the banks’ core banking system can analyze risk to determine the size of loans. Bank agents equipped with a different app will conduct sight visits to the MSME’s to authenticate details and evaluate their status.

The platform is also currently integrated with the National Insurance Corporation, Awash Insurance, and Abay Insurance’s systems for integrated insurance bundles. While poised for a debut in Addis Ababa, there are plans to expand nationally.

Tatek indicated that the ultimate determinations on size of borrowing and interest rates will be set by the banks themselves. He foresees the inventory management system integrated into the digital lending platforms to help MSME’s with management while also giving the banks data to determine credit scores.

“It will help both sides streamline their operations,” Tatek says.

While SNV Ethiopia started off with emergency operations in the 1970’s, it has championed several development projects in the country over the past few decades.

Wondwesen Worku, operations head of KMD London, also anticipates the unique financial packages offered by the platform will become highly valued services by Ethiopian MSMEs.

“Insurance for the lenders will significantly decrease risks,” he told Shega.

K.M.D has been providing consultancy, risk analysis, and advisory services for creditors operating in the agricultural sector. It has collaborated with banks to facilitate agricultural produce-based financial solutions for Ethiopian farmers for about ten years before the new venture.

Awash Bank, Ethiopia’s biggest private bank, unveiled a soft launch of the project last week, attended by President Tsehay Shiferaw and representatives from key stakeholders.