CBE drives financial inclusion through digital transformation

The Commercial Bank of Ethiopia (CBE) is spearheading a nationwide push to expand financial inclusion by harnessing digital technology to reach millions of underserved citizens across the country. This was highlighted by CBE President Abie Sano during a panel discussion at the recent two-day Ethiopia Finance Forum.Abie acknowledged the bank’s historical focus on financing government projects, which limited its role in broadening access to finance for the general public. “For many years, we thought opening a branch or setting up a bank account was enough,” he said. “But it was never about financing public projects and not to finance them.”Now, with digital technology rapidly advancing, CBE is adopting a new mindset aimed at reaching everyone interested in financial services. This includes rethinking lending practices by easing collateral requirements and empowering local branches to approve small loans, thus facilitating access for individuals and micro, small, and medium enterprises (MSMEs).CBE’s pilot digital finance program has already financed over 24,000 borrowers with 2.3 billion birr. A major project in partnership with fintech firms has provided 14 billion birr in fertilizer financing, benefiting nearly half a million farmers in the Oromia region. “This gives me great hope that we can scale up to finance millions, not just thousands,” Abie stated.Currently, MSMEs remain under-served, with only about 9,000 borrowers. However, the bank sees substantial growth potential in this sector. Non-interest banking products have also expanded significantly, with 7.1 million savings accounts and deposits totaling 180 billion birr, alongside 71 billion birr in loans issued.Abie stressed the importance of financial literacy to overcome misconceptions that banks are not for the poor or small businesses. “Even small businesses don’t dare to come to the bank,” he noted. “We need to teach them how to manage their businesses and access banks.”To address these challenges, CBE plans to broaden its digital finance offerings through partnerships with fintech companies and telecom operators, while leveraging its mobile banking platform to serve salaried workers and eventually provide personal loans for housing, vehicles, and other needs.Specialized products are also being developed for farmers, including financing for irrigation equipment, solar energy installations, and biofuels.While optimizing resources by reducing branches in larger cities, CBE is expanding its presence in underserved rural areas, targeting over 270 districts currently lacking banking services.The World Bank’s $700 million Financial Sector Consolidation Project (FSSP) will support these reforms by strengthening state financial institutions like CBE and the Ethiopian Development Bank, modernizing regulations, and providing capital injections and technical assistance.