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Country assessment to facilitate digital financial inclusion in Ethiopia

SDGs Impacted

Digital technology provides an opportunity to reach the approximately 1.7 billion adults worldwide who remain unbanked. Digital financial services (DFS) can make a valuable contribution to the economic growth of a country. Digital financial inclusion (DFI) is key to the attainment of most of the Sustainable Development Goals (SDGs). Notably, DFI is pivotal for the achievement of SDG 5, on the economic empowerment of women and Gender Equality, as it promises to extend financial access to the 35 per cent of women globally – nearly 980 million – who remain excluded from the formal financial system. Digital financial services have also provided a viable strategy in the context of the coronavirus disease pandemic given the challenges created by the pandemic and the associated risks that threaten to expand existing digital and gender gaps. This report presents findings from a country assessment undertaken to facilitate digital financial inclusion in Ethiopia and gives an overview of the current DFS landscape in the country and how it was included and implemented into its National Financial Inclusion Strategy (NFIS). It also identifies some of the barriers to DFI and suggests how they might be removed.

Impact / Outcome
In 2020 about 12 million people, or 19 per cent of all adults, were active users of the DFS service, i.e. made at least one digital transaction. The annual volume of DFS transactions is ETB 241 billion, a significant increase from ETB 42 billion in 2016. In terms of GDP, that is an increase from 2.7 per cent in 2016 to 7.1 per cent in 2020. The total transaction volume including mobile and agency banking in 2020 came to ETB 9.41 billion, compared to 1.34 billion in 2016. The transaction volume for all DFS channels in 2020 was ETB 71 billion, making up about 3 per cent of GDP. This is a great contrast to the situation five years earlier, when the economic contribution of DFS transactions was close to zero (0.35 per cent).
Funding sources
Public
Key Metrics
Driving financial inclusion and economic development; Facilitate the economic empowerment of women and Gender Equality
Locations
Africa, Ethiopia
Sector
Financial services
Intervention lever
Policy
Operating model
Fully public
Target populations
Women & girls, Youth
Year published
01 January 2022

The EDISON Alliance

A World Economic Forum Initiative