Addis Ababa April 15/2016 Financial institutions are eyeing to invest in digital finance to make the sector more competitive, efficient and sustainable, according to Dr. Wolday Amha, Executive Director of Association of Ethiopian Microfinance Institutions (AEMFI).
Dr. Wolday said the digital finance is directly related with strengthening the financial infrastructure which is one of the pillars of the inclusive finance strategy.
Digital finance is measured as a strategic tool that provides huge potential for expanding inclusive finance; the director said adding financially excluded people are increasingly gaining financial service through innovative digital solution.
According to the executive director, financial institutions have started offering financial service through various digital channels to reach out new clients.
Significant number of customers is now moving from exclusive cash-based transaction to digital financial transaction service following improvements in the accessibility and affordability.
The benefits of shifting from cash-based economy to digital payments can improve efficiency of service, lower costs and reduce travel distance for clients, the director indicated.
He said the advantages of digital finance is extended from delivering financial access to other sectors such as agriculture, transportation, water , health , education and clean energy.
Policymakers, regulators and financial institutions have recognized digital finance as the potential “game changer” to expand financial inclusion.
Accordingly, with the support of digital finance, financial service providers can provide their service with transparency and fairness and reduce fraud as well as improve the internal control system, he further stated.
The national bank of Ethiopia has finalized national inclusive finance strategy which stipulates the core elements, strategic interventions, coordination needed to promote financial inclusiveness in the country, he said.
Microfinance institutions (MFI) are expected to reach out at least 50 percent of the rural kebeles by the end of GTP –II while 80 percent of rural household heads will have an account in MFI, the director said.
Dr. Wolday revealed that the branch expansion of banks is projected to increase from 2,868 in 2015/16 to 5,736 by the end of 2020.
Ignacio Mas, Enterprise Partners with Renowned Global Expert for consultant in Mobile Money and Financial Inclusion on his part said digital finance service is providing a shortcut solution to reach out to a huge number of unbanked Ethiopians, particularly the rural population that could not be accessed by the formal financial institutions.
Digital finance services have significant potential to provide a range of affordable, convenient and secure banking service to ordinary people in Ethiopia, he added.