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Sylvia Duruson
Dashen Bank, a leading Ethiopian private financial institution, has formed a strategic partnership with global nonprofit Accion and the Mastercard Center for Inclusive Growth. The collaboration aims to develop innovative digital financial services specifically designed for micro, small, and medium enterprises (MSMEs) in Ethiopia.
The centerpiece of this partnership is a new innovation hub that will focus on expanding digital banking services to small businesses through customized products. The initiative places special emphasis on supporting women-owned businesses, addressing the significant gender gap in financial inclusion within the country.
Ethiopia’s economy relies heavily on its nearly two million MSMEs, yet these businesses face substantial barriers to accessing formal financial services. Statistics reveal that only 6 percent of microenterprises and a mere 1.9 percent of small enterprises currently have access to formal credit. This has created an estimated $4.2 billion financing gap in Ethiopia’s MSME sector.
The gender disparity in financial inclusion is equally concerning, with only 39 percent of women having accounts at formal financial institutions compared to 55 percent of men. This imbalance prevents many women entrepreneurs from participating fully in the digital financial ecosystem and contributing to national economic growth.
Dashen Bank CEO Asfaw Alemu highlighted that small businesses, particularly those led by women, struggle due to cash-based operations that leave insufficient financial records and lack of collateral assets. “Through this partnership, we seek to address these challenges, build our operational capacity, and enhance our credit offerings to meet the needs of small business owners,” Alemu stated.
The innovation hub will leverage artificial intelligence to analyze alternative data sources and develop new credit scoring models better aligned with MSME realities. Solutions being developed include embedded finance products that provide credit through existing suppliers and non-financial tools like business management support.
Raliat Sunmonu, Vice President for Middle East and Africa at Accion Advisory, noted that Ethiopia is among Africa’s fastest-growing economies, with small businesses playing a crucial role in this growth. The collaboration aims to create a more inclusive ecosystem for MSMEs by deploying AI and other technologies to remove bias and other obstacles.
Subhashini Chandran from the Mastercard Center for Inclusive Growth emphasized that Ethiopia is at a critical juncture in its economic development, with digital financial services being essential to that journey. This initiative forms part of Accion’s 8-year partnership with Mastercard, which aims to help 23 million people across 25 countries benefit from the digital economy.
Dashen Bank has already begun taking concrete steps toward establishing the innovation hub, recently issuing a construction tender for the facility. The bank also plans to organize an innovation workshop for its leadership and staff, exploring opportunities in cutting-edge technologies including artificial intelligence.
