The Mastercard Foundation has partnered with Kifiya Financial Technology to launch SAFEE, a $100 million programme in Ethiopia.

This programme focuses on increasing access to loans for small businesses (MSMEs) by eliminating the requirement for collateral.

The programme hopes to unlock an additional $300 million from Ethiopian banks, benefiting over 477,800 businesses. There’s a particular focus on empowering women, with mobile device financing planned for 425,000 young women.

Over five years, SAFEE aims to create over 2 million jobs, mostly for young women, and help 3.65 million young people access credit.

Expanding Financial Inclusion for Underserved Groups

Financial inclusion is a key component of economic development, and SAFEE places a strong emphasis on empowering underserved communities.

The programme prioritises expanding access to credit for women, persons with disabilities, refugees, and internally displaced persons (IDPs).

This focus on vulnerable groups recognises their entrepreneurial potential and promotes a more inclusive financial landscape.

Furthermore, SAFEE highlights the importance of financial independence for young women by including mobile device financing for 425,000 young women.

Owning a mobile phone and having access to financial services can be transformative, allowing them to participate more actively in the economy and build a brighter future.

Transforming Lending Practices through AI

Traditionally, securing a loan has often involved substantial collateral, a major obstacle for many MSMEs. SAFEE is changing lending practices by introducing AI-driven credit scoring .

This innovative approach uses artificial intelligence to assess creditworthiness based on a borrower’s financial history and business viability.

Replacing traditional collateral requirements with AI scoring offers significant benefits. Loan costs are reduced as the need for extensive physical verification is eliminated.

More importantly, accessibility increases, opening doors for a wider range of MSMEs to access the capital they need to grow their businesses.

This shift towards AI-driven credit scoring not only benefits borrowers but also encourages Ethiopian banks to transition to a more inclusive lending model.

By demonstrating the effectiveness of alternative credit assessment methods, SAFEE can pave the way for a more innovative and accessible financial system in Ethiopia.

A Brighter Future for Ethiopian MSMEs

The SAFEE programme has the potential to be a game-changer for Ethiopian MSMEs. Increased access to credit, together with a focus on empowering underserved groups, can unlock a wave of entrepreneurial activity.

This can lead to significant job creation, particularly for young people with a target of 2.18 million jobs, with a focus on women, and contribute to Ethiopia’s overall economic growth.

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The $100 million SAFEE programme builds upon the Mastercard Foundation’s broader commitment of $672 million to enhance financial access in Ethiopia. This long-term investment demonstrates a strong belief in the potential of Ethiopia’s entrepreneurial spirit.

With its focus on financial inclusion, innovative lending practices, and empowering underserved communities, the SAFEE programme is set to transform the Ethiopian financial landscape and empower a new generation of entrepreneurs.

For more information on the Mastercard Foundation and its initiatives, please visit their website at https://mastercardfdn.org/.