On September 17, 2024, at the Global SME Finance Forum in São Paulo, Brazil, Kifiya Financial Technologies won the Global SME Finance Awards 2024's Product Innovation of the Year, marking a significant milestone for Ethiopian innovation. This award honours Kifiya's contributions to financial inclusion and SME growth in Africa. Organized by the World Bank's International Finance Corporation (IFC) SME Finance Forum, the award recognizes institutions that have delivered innovative products and services with far-reaching impacts on financial inclusion for SMEs.
Micro, Small, and Medium Enterprises (MSMEs) are pivotal in driving Africa's economy, accounting for up to 90% of all businesses and providing 60% of the continent's jobs. Despite their importance, many MSMEs need help accessing financial resources, particularly credit, which limits their potential for growth and sustainability.
Through its innovative alternative credit scoring and digital lending platform, Kifiya is revolutionizing access to finance for MSMEs in Ethiopia. AI-based credit scoring allows businesses to bypass traditional barriers to credit, such as collateral requirements or limited credit histories. By leveraging alternative data and advanced algorithms, Kifiya provides more accurate and inclusive credit assessments, enabling SMEs to obtain uncollateralized loans and digital financial services for the first time.
Through their platform, MSMEs now have access to essential funding from banks that can help them scale operations, invest in new opportunities, and contribute more effectively to the broader economy.
The partnership with the Mastercard Foundation played a significant role as it was instrumental in providing technical assistance to the first bank (Cooperative Bank of Oromia-COOP) to provide uncollateralized credit in Ethiopia, enabling the system-level change required on one side and the financial literacy and Business Development Services (BDS) training provided to MSMEs to access financial services.
Glimmers of Hope for Ethiopia's Youth
For the first time in Ethiopia, young entrepreneurs and MSMEs are gaining access to unsecured digital credit. This milestone is nothing short of transformative, as it opens the door to financial opportunities that were previously inaccessible to many. In a country where traditional banking systems often exclude young people and smaller businesses due to collateral requirements and limited financial histories, Kifiya's platform revolutionizes how credit is accessed. Moreover, the focus on underserved groups, including women and marginalized communities, ensures that the benefits of financial inclusion are shared more equitably.
As of August 2024, over 241,000 MSMEs have been assessed through Kifiya's platform, with loans totalling 122.8 million USD disbursed. Young female entrepreneurs are benefiting from this shift. Still, with Kifiya's digital infrastructure and AI-powered credit assessments, they have started receiving the financial support needed to run and grow their businesses.
The impact of this development goes far beyond financial access. It represents hope for Ethiopia's youth, who face high unemployment rates and limited economic opportunities. The Foundation's partnership with Kifiya and other implementing partners is playing a critical role in advancing inclusive economic growth. Providing access to capital helps individual businesses thrive, fosters job creation, stimulates local economies and promotes a culture of self-reliance.
The story of Yemariamwork
Yemariamwork is 29 years old and a mother of four. She lives in Addis Ababa and is one of the program participants under the Mastercard Foundation and Kifiya partnership. Her story represents millions of young people struggling to access finance to start and expand their businesses. She runs a spices business and was doing it from home.
Over the last nearly two years, she has been able to borrow 31 times, a total amount of ETB 1.4 million. This has enabled her to buy raw materials, rent a shop, and expand her business. She has also created jobs for other young women and men. Her credit score improved because of her timely repayment.
Leadership and Vision for the Future
"This award is a testament to our collective vision, commitment, and the extraordinary work we have undertaken with our partners. It recognizes our dedication to empowering African MSMEs and low-to-middle-income individuals through innovative technology. However, we recognize that this achievement implies a much bigger milestone for Ethiopia, placing our nation on the global stage as a beacon of innovation and progress ," states Munir Duri, Founder & CEO of Kifiya.
"At the Mastercard Foundation, we work with partners like Kifiya to enable more MSMEs and young people, particularly women like Yemariamwork, to access finance, a productive asset that helps them to start and expand their business. The Foundation's access to finance program unlocks resources from banks, innovates new models/products, and catalyzes the financial sector transitions to offer uncollateralized financial credit to MSMEs in Ethiopia. Through such initiatives, the Foundation aims to create an ecosystem where MSMEs can harness the power of digital lending to realize their full potential and ensure sustainable livelihoods for fellow young people. The award and recognition that Kifiya received is a testament that we are on the right track and motivation to do more," said Samuel Yalew Adela, Mastercard Foundation Country Director, Ethiopia
Additional Resource
Mastercard Foundation and Kifiya Financial Technology PLC to Enable More Than 477,800 MSMEs to Access Uncollateralized Digital Credit Products
Sustainable Access to Finance for Enabling Entrepreneurship (SAFEE) https://kifiya.com/safee/
