Micro and small enterprises played a critical role in rejuvenating and sustaining the modern economy, generating substantial employment and serving as important innovation engines for the global economy. In an attempt to find a way that CBE contributes its role for alleviating the extensive poverty of the nations, this feasibility study identifies the following issues.
• Financial access to micro and small enterprises is the critical challenge despite their contribution towards economic development is quite immense. Ethiopia’s context has no any difference, micro and small enterprises encountered financial shortages and the financial inclusion level is quite minimal which testified shortage of financial access to micro and small enterprises.
• Digital financial service channels allow to bridge financial access challenges through reaching out financially excluded segments and thereby enhance financial inclusion.
• Micro and small enterprises are purely taken as strategic segment to the government of Ethiopia to enhance the industrial development journey of the country and considered as the heart of government strategy.
• The assessment clearly divulged that there is excess financing demand that CBE should leverage and played its role towards the financial inclusion strategy of the government.
• Digital saving and loan is the preferred mechanism to properly address the financing gap with minimal transaction cost and proper risk management tools.
• Global and domestic experiences clearly divulged that financial constraints of financial excluded segments can be bridged through innovative products with appropriate risk management tools.
• Kenyan experience is taken as a best experience to the context of CBE as it has appropriate platforms to provide digital micro saving and loan.
• CBE has adequate digital channels and maintained adequate financial transactions that could be leveraged for digital lending.
• The proposed products are financially viable and allow CBE to enhance its profitability.
• The products help CBE to expand its customer base; enhance deposit mobilization; expand its product portfolio; diversify its credit portfolio; improve its business efficiency; and consistent and quick credit decisions.
• Mobile money/banking platforms of the bank are the tools helpful to launch both digital saving and loan products. Ordinary saving, target saving and fixed saving are the saving products identified to mobilize deposit from the target group. Further, micro loan and overdraft are loan products designed to address the financial constraints of the target group.
Recommendation
As per the assessment made, the products found feasible and it is recommended to commence digital micro saving and loan. The following recommendations are drawn to implement digital micro saving and CBE should leverage its digital channels, mobile money/banking, as customer interface tools to avail digital saving and loan products to the identified target should.