New mobile money service provider, Kacha Digital Financial Services S.C has been licensed to be a private mobile money platform and now joins the financial industry despite it not being owned by a financial institution.
Earlier this week Kacha received its license from the National Bank of Ethiopia to join the market.
Founded by 13 Ethiopian techies and entrepreneurs, Kacha was registered with a subscribed capital of 200,000 million birr based on the payment service proclamation 718/2011 and the NBE directive ONPS/01/2020.
“The issuance of this license distinctly marks the beginning of a new era for broader participation of the private sector in the national digital financial services landscape as much as it does as a defining milestone to the team of founding shareholders and professionals involved in its establishment for the past three and half years,” Kacha underlined.
According to the company, Kacha has already brought on board more than 30,000 agents across the country which is said to reach over 85,000 within six months.
Aimed to provide cashless transaction, the firm intends to unlock possibilities for users by providing access to affordable, convenient, and secure digital financial services that drive sustainable growth, enhance access to finance, and improve citizens’ livelihood.
The services Kacha provides is said to include; the opening of wallet accounts, cash-in, cash-out, micro saving, uncollateralized micro credits, micro insurance, direct payments, bill payments, international remittance, fund transfer, airtime top-up, card payments, and other innovative services, which will ultimately boost financial inclusion and help the country to attain its aspirations of meeting national development goals including the SDGs.
“Kacha’s vision is closing the existing gaps to change the face of digital financial services in Ethiopia through availing innovative, affordable, seamless, and value-adding business propositions including bringing financial inclusion, Empowering citizens” said Yigermal Meshesha, marketing and business development manager at Kacha.
Kacha Digital Financial Services S.C is composed to play a key role in driving the journey towards the empowerment of citizens by bringing meaningful financial inclusion through innovative product and market approach designs after dedicating years of development and institutional preparation led by Ethiopian developers along with international experts.
The National Bank of Ethiopia has also approved the appointment of 7 Board of Directors and the appointment of Abreham Tilahun Abera, as the founding Chief Executive Officer of Kacha Digital Financial Service. Abreham had been serving Lion International Bank for more than 2 years as the acting vice president and has an ocean of experience in vast banking operations which spans 16 years.
The development of the mobile money ecosystem in Ethiopia can generally be defined as early stage. The mobile money ecosystem in Ethiopia follows a bank-led model whereby banks and microfinance institutions (MFIs) partner with a technology provider to offer the service as the sector has been closed for both local and foreign fintech firms. Until recently, fintechs were barred from providing digital financial services (DFS) on their own and had to partner with financial institutions as system suppliers, constraining their growth.
This ban ended in 2020 with the introduction of two laws that opened up the sector. This meant fintechs could now operate independently and many startups were quick to try and take up the opportunity.
Over a year ago, EthioTelecom’s mobile money platform telebirr became the first fintech platform in Ethiopia that’s was not owned by a financial institution. Telebirr has now over 21 million subscribers.
Kacha steps foot independently in the digital finance space
Trade ministry targets ‘$5.4 billion’ from export
The Ministry of Trade and Regional Integration (MoTRI) plans to generate 5.4 billion dollars from export for the 2022/23 trading year.
MoTRI emphasizes that structural economic transaction requires time as the agriculture sector takes lead, whilst the industry sector lags behind.
In a press conference held on Wednesday, MoTRI disclosed the country had earned 4.12 billion dollars in export revenues during the just concluded Ethiopian 2021/2022 fiscal year, which ended on July 7.
The Ministry pointed out that the agriculture sector had generated 72 per cent of the projected plan.
“The agriculture sector still has the economic lead, generating the highest incomes, and it will take a lot of work to achieve the structural economic transition,” said Kassahun Gofe, State Minister of MoTRI.
As the minister indicated, though efforts to improve the diversification of Ethiopia’s export products are taking shape for the structural transaction, it is not easily achievable in a short period of time, thus the agricultural sector will continue to take lead in export earnings.
The agriculture sector marked 105 percent of its overall plan, while the industrial sector generated 12 percent of revenues for its 80 per cent wholesale plan, whilst the 53 percent overall cost-of-business plan for the sector generated revenues of 14 percent.
“The Industry sector is not taking the grip on shares as expected and the country out to double its efforts to transition from Agri led to Industry led,” said Kassahun, adding, “This is atop of our plans to improve for the coming year.”
“This revenue generated showed a growth of 13.81 percent from the last budget year and gave much meaning to the country when it jumped out of revenue,” the State Minister explained highlighting that the growth in interest-trading revenues would improve the country’s ability to embrace, fly and restore credit.
The figure has shown 500 million dollars revenue jump from 2020/21 which was only 3.62 billion dollars. However, MoTRI disclosed the 2021/22 fiscal year export revenue fell slightly short of the government export revenue target which was 4.63 billion USD. In terms of the commodity composition of exports, although coffee continues to dominate the top spot, also other five major non-coffee exports, oilseeds, gold, chat, flower, and pulses each reeled in more than 100 million dollars per year.
According to the Ministry of Industry (MoI), the industry sector had generated about 500 million U.S. dollars in export revenue from the manufacturing industry sector in the 2021/2022 fiscal year. The revenue marked a 100 million U.S. dollars increase as compared with the previous Ethiopian 2020/21 fiscal year.
The lack of side-links, illegal smuggling trade and the slow pace of structural economic transition are some of the problems that are indicated by the state minister as hurdles facing the export business.
“Export is the cornerstone to realize the 2025 plan of the country to join middle income countries. To this end agriculture, manufacturing and mining sector pays significant role for the overall export progress of the country. Even though the export performance of the country showed increments from time to time the result doesn’t meet the desired goals,” the trade ministry underlined.
Ethiopia gives due emphasis to the agriculture, mining and manufacturing sectors such as textile and garment, leather and pharmaceuticals exports as sources of substantial foreign currency. The country’s export performance shows improvement but still much effort remains to boost the export performance of the country in all sectors.
Oromia bank forges partnerships to better digital banking services
Oromia Bank has signed an agreement with two technology providers to invest Omni Channel digital banking technology so as to deliver an integrated service.
On an event held on Thursday July 19, 2022 the bank has signed agreements with CR2 Digital Banking Technology and Moneta Technologies S.C.
“Previously, our bank has done a lot in equipping itself with the latest technology so as to provide reliable and modern banking services to our customers. By realizing the future era is based on banking technology, our Bank has put it into practice by installing the first and most massive data centre infrastructure in the private banking sector,” said Teferi Mekonnen, president of the bank, adding that the Technology adoption will make the bank a superior customer service experience centre and contribute significantly to the development of the country’s digital transformation and help to bring the unbanked society into the banking industry.
“Omni Channel Digital Banking Technology will also greatly update the bank’s internal processes and enables its customers to get services digitally,” said Fintan Byrne, CEO of CR2.
“Once built and readied for service, this huge investment Omni Channel digital banking technology will significantly update the entire payment system of the bank as Omni Channel digital banking technology enables payment of any bill from any bank through digital means,” indicated the bank’s president.
“Omni Channel’s Digital Banking Technology brings the payment options that were previously provided in a fragmented manner by multi-channel technology into one platform and making the service fast, modern and very convenient to users,” he further elaborated.
The adoption of this technology makes Oromia Bank the 3rd bank in the country to do so.
“What makes Oromia Bank unique with this technology is that, the rural farmers are our centre in terms of accessibility. In nutshell, our adoption of this technology will make our bank a superior customer service experience centre and will significantly contribute to the development of our country’s digital transformation,” said Teferi.
Oromia bank is said to be accessible through its 405 branches, by providing efficient and modern banking services. It is said that Oromia bank has financial technology security by installing an information system security centre that can monitor 24/7 and has the highest capacity in the industry.
Geray Real Estate sets emulative pace for construction turnkey
Geray Real Estate, a developer relatively new to the Ethiopian construction scene, has managed to pull through and transfer houses prior to the set turnkey deadline, which is rarely observed in the real estate market.
The developer which joined the sector about two years ago was successfully able to transfer houses to its buyers, about six months prior to the contract deadline.
The facility which was built up close to the Ethiopian Youth Sports Academy around Imperial Hotel will be officially inaugurated today.
At the event, houses that had already been sold to buyers will officially be transferred.
“We have fully accomplished the houses as per the agreement,” said Alemayehu Birhanie, founder and CEO of Geray Real Estate.
Alemayehu said that he was engaged in the export import business for the last about two decades, with a business culture that stems from his family.
“I have been engaged in the trade for the local and export market and the business is still up and running,” he added.
“I decided to join the real estate business about two years ago since there was a gap I observed,” he said, whilst adding, “if you are prudent enough, the sector is profitable and that is what drew me to become a developer.”
According to the real estate developer, the challenge on the sector is that developers are not committed to their contracts in terms of transfer of houses in a timely manner; to which he said it damaged their reputation and eroded the trust of potential customers.
“The project delay also contributes to a lot of money being incurred which may have a ripple effect and cause bankruptcy to developers,” he explained.
Meanwhile he admitted that there are several force majeure like sudden price hikes on raw materials and hard currency shortage to import some key input on projects like on finishing parts.
“Even though we faced several challenges we have committed to accomplish our projects as per the agreement we gave to our home buyers,” he said, adding, “and our commitment helped us to finalize the project in two years time ahead of the period.” The original agreement was to transfer houses in two and half years.
The facility is an 11 storey and has 27 luxury houses with different sized two bedroom properties.
“The ground and first floor has already been leased by businesses, while the residential flats started from second floor to ten and the last upper floor is an office for the real estate,” he explained.
The residential floors have three houses each in every flat, while the size range 154, 146, 141 in square meters of space. In total the facility rests on a 460 square meter plot of land. The facility has parking lots at the basement and open air area behind the building with a capacity to handle 50 cars.
“Initially we had sold the luxury house at 40,000 birr per square meter, but later the price spike in construction materials pushed the rate to climb up to 70, 000 birr for some houses that were not sold,” the developer said.
“As a beginner we sold houses at fair price, which is great for our customers,” he added.
Alemayehu said that their upcoming project is a 17 storey apartment that will be erected around Gerji Mebrat Hayel on a 610 square meter plot of land, “as per our principle we will continue constructing apartments at the heart of the city with relatively vast lands.”
The Gerji Mebrat Hayel project has already commenced construction will have three basements and 68 houses with two and three bedrooms.
He disclosed that the company will continue on its commitment to finalize houses as per the agreement. “We are working to finalize the upcoming project within two and half years time meanwhile the agreement is to transfer it in three years time.”
He said that besides sudden and nonstop price hike on the construction materials like cement and rebar, lack of plots in the capital is a major challenge for the sector, “one of the major reason that make the houses expensive is the way we access to land.”
“We are constructing house on the plots of land that we bought at extra ordinary rates from individual landowners, due to that the house will be sold at high rates,” he explained “if the city administration facilitate plots we may provide houses at lesser price points.”
Geray Real Estate is named after an irrigation dam called Geray that was constructed early 1980s in the Derg era.
