What Has the DFS Working Group Been Up to?

It has been six months since the Digital Financial Services (DFS) Working Group -Ethiopia was convened by the United Nations Capital Development Fund (UNCDF). The Group was formed to bring together players in the DFS ecosystem to work towards common goals that will help to scale digital finance in Ethiopia.

According to a term of reference developed by the UNCDF, the objective of the Working Group is to create a framework for dialogue and exchange between the various stakeholders in the DFS sector to promote and remove barriers to digital financial inclusion in Ethiopia. To that end, it has identified three thematic areas to operate in: collaboration and networking; lobbying and advocacy; and learning and capacity building.

As elected during a launching ceremony held in May 2022, the Working Group is being led by chairperson Yoseph Kibret the CEO of Premier Switch Solutions (PSS), a veteran in the financial sector along with Vice-chair Nael Hailemariam, CEO of Chapa.

Developing a governance structure was on the agenda during the first assembly of the Group’s steering committee in early June. Other points included setting a regular meeting schedule, understanding primary objectives, reviewing member recommendations, and determining roles within the committee. 

The committee has held a dozen meetings in the months since. Yoseph says the meetings have solidified the Group’s goals and strategies.

 The extensive scope of the activities and projects at various planning stages has pushed the committee to involve volunteers from among its members to provide support. These member volunteers will work under multiple sub-committees. Over thirty-five institutions have already nominated employees to represent them in the working group. 

Membership structure was another discussion point. The Group has thus far instituted five membership categories. Direct members include licensed financial institutions and fintechs that hold voting power. Technology providers are included as indirect members, while interested individuals can become non-voting members, too. Government institutions such as the National Bank of Ethiopia (NBE) and the Ministry of Innovation & Technology are to join as honorary members. Associate memberships are reserved for associations and innovation hubs. Nonetheless, the categorizations are subject to further discussions.

One of the activities the steering committee has invested time in is its formal introduction to the central bank, whose involvement is crucial to fulfilling its advocacy mission. It has also been working to develop its governance structure, understand its primary objectives, review member recommendations, and determine roles within the committee.

Meanwhile, the Group has identified its “quick wins” that it has been working on in the months since its establishment.

One of the “quick wins” the Group has identified since its establishment, as Yoseph points out is building its members’ capacities by rolling out a scholarship scheme for members with the support of UNCDF and the Digital Frontiers Institute. Members who applied for the scholarship are currently undergoing application processes to be enrolled in short and long-term courses offered by the Digital Frontiers Institute. 

In line with its objective of fostering collaboration and networking, the working group has hit the ground running by organizing a two-day showcase event. The showcase, dubbed ‘Digital Finance Ethiopia Showcase’ 22′, is supported by the UNCDF and its partners, the European Union (EU) and the Organization of African, Caribbean and Pacific States (OACPS). 

The showcase aims to bring various stakeholders together to share best practices and facilitate networking with other ecosystem players and high-level decision-makers from the government and industry. Additionally, it plans to initiate discussions on varied issues, including the policy and regulatory environment.

Over 40 exhibitors have registered to take part in the two-day showcase. It will have three sessions including an opening session followed by a webinar titled “inclusive innovation framework to drive formal remittances to Ethiopia”. On the second day, a panel discussion will be held to discuss how to “Ensure full participation in Ethiopia’s digital economy through innovative, accessible and inclusive digital financial services.”

The showcase will take place on October 19 and 20, 2022 at the Interluxury Hotel in Addis Ababa.  

To further understand the Group’s work K-flip asked Yoseph Kibret and Endashaw Tesfaye, lead of DFS at UNCDF in Ethiopia a few questions. Endashaw Tesfaye has extensive experience in the DFS space. He started his journey with M-birr, a pioneer in mobile money services. He served the company in various capacities for eight years before joining the UNCDF as head of digital financial services.

Yoseph Kibret on how he came to lead the Group.

“I participated in one of the initial meetings to kick off the Group. The importance of it hit me when a physical meeting was called. Experienced individuals in the sector often shy away from taking on such roles, and I feared this lack of involvement would deter such initiatives. Still, I accepted a request for nomination and decided to take on the role.”

On the Group’s lobbying role:

“Advocacy and lobbying require extensive study or the analysis of existing information. Lobbying can be done based on constraints and opportunities identifies in the DFS space.”

On the changing landscape of DFS:

“Even though it’s still on an individual capacity basis, we’re not foregoing the chance to get involved in policy discussions. But we have to hurry. I hope to see the Group become an entity that can exert influence.”

Endashaw On the need to form a strong lobby group in light of the rapidly changing DFS scene:

“Bringing together DFS sector players to create a collaborative environment at which point they would identify their common hurdles is a big part of the puzzle. That way they wouldn’t be challenged to lobby for their common causes. “  

On how the group would work towards promoting financial inclusion:

“The basic concept of DFS delivery is seen as one of the tools for enhancing financial inclusion. Participants could collaborate through data sharing for instance where financial services are prevalent or lacking. Even through its lobbying role collaborating with the regulatory body, creating awareness on financial inclusion and initiating joint projects that increase access to finance can be an area of operation for the working group.”

On the Working Group’s future:

“The end goal is to create a platform where DFS sector players can collaborate. Every player is going through the hurdles alone as opposed to collaborating. As the group is not expected to remain as an informal group forever. It is expected to grow into an association after two years at which point the UNCDF would withdraw after ensuring its sustainability, be it through members’ contribution or institutional support.”