The Need to Join Forces in Promoting the DFS Agenda 

So far, the Association of Ethiopian Digital Finance Practitioners has been formally established. The association is formed by alumni of Digital Frontiers Institute which has trained over 500 people in Ethiopia in various disciplines. Another lobby group, the Ethiopian Fintech Association was conceived over two years ago and is expected to undergo formal registration soon. Thus far, it has been running an information sharing platform on Telegram.

In the rather short history of the burgeoning digital financial services sector, there have been attempts to bring industry players together to form associations.

So far, the Association of Ethiopian Digital Finance Practitioners has been formally established. The association is formed by alumni of Digital Frontiers Institute which has trained over 500 people in Ethiopia in various disciplines. Another lobby group, the Ethiopian Fintech Association was conceived over two years ago and is expected to undergo formal registration soon. Thus far, it has been running an information sharing platform on Telegram.

The financial sector as a whole has a lot more experience organizing itself into groups. Years ago, stronger associations representing payers of the financial industry were founded. The Ethiopian Bankers’ Association was established in 2002 and presently represents all Ethiopian banks. Similarly, the Association of Ethiopian Insurers came about 20 years ago.  The Association of Ethiopian Microfinance Institutions has a slightly longer experience having been formed in 1999. Assuming their lobbying and collaborative duties, all three have played a huge role over the years.

The government has also paid due attention to these organizations often including them in the drafting of laws and policies.

For instance, the Ethiopian Bankers’ Association and the Ethiopian Insurers’ Association have just been given a seat to consult on the drafting of the financial services commercial code, which is spearheaded by the Ministry of Justice. Although the code is supposed to cover digital financial services (DFS), no representatives from any industry associations were present at the kick-off meeting.

Given the newness of the DFS industry and the fact that few non-financial businesses have persisted for lengthy periods of time, the lack of an association is perhaps unsurprising. However, As the government strives to reform and expand the availability of digital financial services, the need for an association is apparent.

To tackle the issue, the UN Capital Development Fund (UNCDF) took a stab at forming a working group it’s calling DFS Working Group.

The initiative is part of UNCDF’s work to increase financial inclusion in Ethiopia. In 2021, the organization in collaboration with the European Union and the Organization of African, Caribbean and Pacific States (OACPS) launched a resilience program.

Conception 

UNCDF has two key agendas in its operation in Ethiopia. The first one has to do with policy development where it provides assistance to the government in designing policy instruments that will create an enabling environment for industry players. The second and vast one deals with the delivery of DFS with the main aim of boosting access to finance.

The core working areas include agent network expansion, enhancing digital and financial literacy, expanding digital financial services beyond payments, and lateral learning exchange.

The establishment of the working group is part of the lateral learning exchange initiative.

Objectives | The need

The working group has three major objectives

Collaboration and networking

Under this pillar the working group aim to create a platform where  players in DFS come together to find ways to collaborate, discuss on sector wide challenges. One of the areas mentioned as an area of collaboration was agent interoperability.

Learning and capacity building

The goal of this pillar is to solve the scarcity of qualified practitioners in the sector. Because DFS are just growing, it is run by a small group of knowledgeable individuals who move from one institution to another.  

Policy advocacy and lobbying

By engaging in research and policy-level discussion, the group plans to influence and advocate for suitable policy development that will help the sector flourish.

Way forward 

During the launching ceremony, stakeholders appointed leaders of the group’s steering committee. Yoseph Kibret, CEO of Premier Switch Solutions and vice-chairperson of the Association of Ethiopian Digital Finance Practitioners was elected as chairperson of the steering committee. Nael Hailemariam, cofounder and manager of Chapa has taken the role of vice-chairperson. The UNCDF will play a coordination and secretarial role for a year until the steering committee fully takes over.

Since its official formation in May 2022, the working group has commenced its work, conducting frequent meetings to decide on its mode of operation.

According to the initial plan, the group will have direct, indirect, honorary, and individual members. Shortly after operation, it plans to form itself as a formal association.

The group will be representing all services providers, including banks, MFIs, Payment instrument issuers, telcos, payment systems operators, Payment aggregators, remittance service providers, data analytics companies… etc.

Challenges, Learnings from others

During the launch, several potential challenges were discussed. One of the issues was the role of the regulator, the National Bank of Ethiopia. Its willingness to listen to the group was mentioned as a critical issue.

The role of the regulator is important because policy changes, and regulatory gaps are seen as common hurdles among all players in the sector.

The UNCDF has previously implemented similar initiatives in other African countries.

In Liberia, it launched a similar working group in 2016. It was seen as a step toward a better service as the working group brought together two of the largest service providers in the country Cellcom (Orange) and Lonestar.

For the successful implementation of the group, it’s important to look within and outside to understand challenges that arise when stakeholders come together and implement these learnings.

Alliance for Digital Financial Association, which brings together various associations worldwide, provides tips for developing digital finance associations.

  • Have a diverse team running the association
  • Make sure to have a good value proposition to members
  • Partners with diverse institutions (Regulators, development partners…)
  • Present the group/associations at events, maintain an active online presence
  • Get a sit in policy or decision-making rooms
  • Develop advisory papers and send them to relevant organizations