THE AFRICA BAZAAR STAFF
March 10, 2021
The funding, a $2.33 million grant to EthSwitch Share Company—an initiative led by National Bank of Ethiopia, will help upgrade the payments systems as well as enhance financial inclusion across the nation, a major goal of AfDB to accelerate digital financial inclusion across Africa.
The Bank “believes that provision of interoperable payment systems that are aligned to Level One Principles of reach, safety and affordability, provide the needed grounding to accelerate financial inclusion on the continent and enable opportunities for people in low-income groups, especially women,” the AfDB said in a statement.
The funding, which comes from AfDB’s, Africa Digital Financial Inclusion Facility, a pan African special initiative fund that aims to accelerate digital financial inclusion for an estimated 332 million unbanked population across the African continent, 60 percent of whom are women.
The ADFI was established in June 2019 during the AfDB ’s annual meetings and is administered by AfDB. Current partners includes French Development Agency, the French Treasury, French Ministry of Economy and Finance, Luxembourg Ministry of Finance and the Bill and Melinda Gates Foundation.
Speaking about the award and the role that FinTech such as digital payment plays in improving people’s incomes, ADFI Fund coordinator Sheila Okiro said “digital payments infrastructure is a pre-requisite to effective financial inclusion. By linking the rails and the rules, the EthSwitch project is braced to change the digital payments landscape in Ethiopia and ADFI is happy to invest towards that impact.”
The project, which will be executed by EthSwitch over a three year period working jointly with the ADFI and other strategic industry partners and experts, includes the buying and applying of necessary payments system that can speed up design and use of different digital financial services including, digital distribution of payments such as social benefits, pensions and other government payments, e-commerce, transport systems, and utility bills.
As part of its effort to jump start and simplifies the nation’s financial systems, the National Bank of Ethiopia, the nation’s central bank established EthSwitch in 2011 to provide simple, secure, effective and affordable digital payments infrastructure to the Ethiopian market.
It owns 46 percent stake in the company with the remaining shares going to financial service providers in the country.
The country’s regulatory framework favors the modernization of the switch and through a shareholding structure open to Banks and MFIs, the company is held accountable by key stakeholders. Non-banks will be allowed to participate on a case-by-case basis as approved by the National Bank of Ethiopia.