Wegagen Bank Launches Digital Lending Platform in Partnership with Kifiya

Wegagen Bank, in partnership with Kifiya Financial Technology, has launched a new digital loan service, ‘Efoyta.’ Powered by Kifiya’s Qena, an intelligent financial services platform, ‘Efoyta’ aims to address the working capital needs of MSMEs.

The announcement was made on July 22, 2024, during a formal launch event held at the Planet Hotel in Mekelle, Tigray region, where Wegagen has a strong presence and plans to deploy the majority of its allocated digital lending capital.

The Efoyta digital loan service will offer loans ranging from 5,000 to 50,000 birr. Currently, two types of loans are active on the app. Efoyta Wase offers loan amounts from 500 to 15,000 birr, with a repayment period of up to one month. A 2% access fee and a daily interest fee of 0.95% are attached to the terms. These loans are open to every Wegagen customer.

Meanwhile, Efoyta Melegna targets women informal sector workers and offers amounts up to 5,000 birr. It has a duration of one month with no access fee. This loan type has an interest rate of 3.75%.

While Shega was unable to receive a formal response, it has learned that the high interest rates for Efoyta Wase, which could reach up to 28% per month are due to the bank just entering the digital lending scene and that these rates could change over time.

As Efoyta Melegna, is aimed at MSMEs that undergo an onboarding process, the bank has higher confidence in their repayment, thus the lower interest fee. In contrast, Telebirr Mela Daily has an interest rate of 2%, while Telebirr Mela Monthly has a daily interest rate of 0.75%.

The Bank’s board chairperson, Abdishu Hussien, stated that Efoyta is designed to alleviate cash shortage challenges and meet the working capital needs of MSMEs, as well as enable salaried employees to access emergency loan facilities.

Kifiya previously partnered with the Cooperative Bank of Oromia to launch the nation’s first digital lending platform, Michu, in 2022. Since then, other players have entered the scene, including the biggest player, Telebirr, and Bank of Abyssinia’s Apollo App.

“The launch of ‘Efoyta’ represents a paradigm shift in how we serve communities that have been previously overlooked. About 3.2 million formal and 7.8 million informal MSMEs in Ethiopia lack access to working capital,” said Hayat Abdulmalik, Chief Growth Officer at Kifiya Financial Technology.

In May 2024, Kifiya, in partnership with the Mastercard Foundation, launched a $100 million program designed to unlock resources from banks, innovate new models and products, and solve challenges that have traditionally constrained MSMEs’ access to financial services.

Dubbed the Sustainable Access to Finance to Enable Entrepreneurship (SAFEE) Program, the project will run for five years and will see the development and launch of several digital financial products, including digital working capital, invoice financing, inventory credit, and buy-now-pay-later options. SAFEE has initially partnered with six banks, including Wegagen.