African Development Bank seeks to finance Ethiopia’s Digital Modernisation

The African Development Bank has approved a 2.33 million USD grant to the EthSwitch initiative as part of its Africa Digital Financial Inclusion (ADFI) program that aims to bring in more than 32 million people across the continent into the digital banking system. 

Ethiopia’s initiative operates under the premise that well integrated financial systems are the backbone of economic growth through the provision of more opportunity and sustainable opportunity for economic participation to a greater number of people. 

Given the deficiency of digital infrastructure and related practices in Africa that the COVID-19 pandemic and the acceleration of technological growth shed light on, there is an almost unanimous view that African countries need to do more by way of digital transformation. As such the EthSwitch initiative, which is led by the National Bank of Ethiopia, is tasked with the procurement and implementation of the necessary resources for more integrated digital banking, especially payment systems.

EthSwitch was established by the National Bank of Ethiopia in 2011 to provide simple, secure, effective, and affordable digital payment infrastructure in the country. The National Bank has a 46% stake in the company with the remaining shares going to financial service providers in the country.

Banks and Microfinance Institutions retain a stranglehold on the privilege of transacting without many, if any, restrictions, even in EthSwitch where these organisations operate fully but others are allowed participation on a case by case basis.

Regardless, the ADFI’s auspices are expected to be implemented in Ethiopia within three years. The ADFI in general is a partnership with the Bill and Melinda Gates Foundation, and various institutions within the governmental structures of France and Luxembourg. 

New Business Ethiopia

Leave a Reply

Your email address will not be published. Required fields are marked *