Mastercard Foundation in $100 million partnership with Kifiya to offer credi to 477,800 MSMEs in Ethiopia

Through this collaboration, over 148,000 MSMEs in Ethiopia gained access to uncollateralized working capital credit within a mere 14-month period. Program is poised to unlock $300 million from six banks

The Mastercard Foundation, in collaboration with Ethiopia’s Kifiya Financial Technology PLC (Kifiya), has unveiled a scale-up program aimed at unleashing resources from banks, pioneering new financial models and products, and transitioning the financial sector to facilitate access to uncollateralized financial credit products for a larger number of Micro, Small, and Medium Enterprises (MSMEs). A substantial budget of  $100 million has been allocated to this initiative.

Known as the Sustainable Access to Finance to Enable Entrepreneurship (SAFEE) program, it draws insights from Michu, a highly successful large-scale pilot project conducted by the Cooperative Bank of Oromia, Kifiya, and the Mastercard Foundation. Through this collaboration, over 148,000 MSMEs in Ethiopia gained access to uncollateralized working capital credit within a mere 14-month period.

“Through collaborative efforts and innovative and tailored programs like SAFEE, 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,” said Samuel Yalew Adela, Mastercard Foundation Country Director, Ethiopia. “These MSMEs will not access financial services through traditional lending approaches otherwise. Including SAFEE, the Foundation to date has committed a total of $672 million in Ethiopia, of which $222 million is dedicated to increasing affordable access to finance through various partnerships.”

SAFEE is poised to unlock US $300 million from six banks, facilitating access to relevant and suitable uncollateralized digital credit products for over 477,800 micro, small, and medium enterprises (MSMEs). Additionally, the program will enable 425,000 young women to access financing for mobile devices.

Over the course of five years, SAFEE aims to directly facilitate the creation of employment opportunities for 2.18 million young people, with a focus on empowering women, who make up 80 percent of the target demographic. Furthermore, the program will extend support to an additional 3.65 million young people, enabling them to access credit. Special attention will be given to vulnerable groups traditionally excluded from financial services, including women, persons with disabilities, refugees, and Internally Displaced People (IDPs).

SAFEE addresses both supply-side and demand-side challenges that have historically impeded MSMEs’ access to uncollateralized financial services. By leveraging alternative data-driven Artificial Intelligence (AI) credit scoring, the program eliminates the need for collateral, ensuring that tailored financial products meet the unique needs of MSMEs. Moreover, through the adoption of data-driven technology solutions, the costs associated with finance and management of small-value loans are significantly reduced for banks.

“Our partnership with the Mastercard Foundation will enable the unlocking of uncollateralized productive credit products ranging from digital working capital, invoice financing, inventory credit, buy-now-pay-later, and interest-free banking that address the needs and demands of MSMEs. The program is catalytic by design to enable the financial sector transition through system-level change support where uncollateralized digital credit for MSMEs become the new normal,” said Munir Duri, Founder and Chief Executive Officer, Kifiya Financial Technology PLC.

The announcement of the SAFEE program took place during the “Startup Ethiopia” event in April 2024, where a series of reforms aimed at enhancing access to finance opportunities for startups were also unveiled. As MSMEs are crucial drivers of employment in Africa, addressing access to finance constraints is deemed essential for fostering job creation and sustainability on the continent.

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