First Consult Africa has made history by signing Ethiopia's inaugural blended finance partnership agreement, dedicated to supporting conflict-affected areas. This groundbreaking initiative is set to revolutionize the financial landscape for micro, small, and medium enterprises (MSMEs) in post-conflict regions, marking a significant milestone in their journey towards financial inclusion.
The agreement, facilitated by Lion International Bank through its digital finance platform, Alegnta, introduces a pilot uncollateralized digital lending service. This service is specifically tailored to MSMEs operating in Mekelle and Abala, addressing the critical challenge of limited access to credit due to conflict, insufficient collateral, and weak or non-existent credit histories.
The pilot is part of the ER-CAP Programme, a five-year initiative funded by the Swedish government and led by Mercy Corps, in collaboration with the Danish Refugee Council / Dansk Flygtningehjælp (DRC/DHF) and First Consult Africa. This program is designed to empower businesses owned by returnees, internally displaced persons (IDPs), and host community members, with the ultimate goal of restoring livelihoods and fostering local economic recovery.
The blended finance structure is a key innovation, combining private sector lending with de-risking mechanisms and technical assistance. This approach enables Lion International Bank to extend credit without the traditional collateral requirements, thereby reducing lending risk while simultaneously enhancing enterprise readiness and bolstering financial sector confidence in underserved, high-risk markets.
The success of the pilot is not solely measured by loan volumes but by its ability to responsibly expand access to finance, establish sustainable lending systems, and contribute to long-term post-conflict economic recovery. If successful, this model could serve as a scalable blueprint for inclusive finance in other conflict-affected and fragile regions across Ethiopia.
Stay tuned for further updates on this transformative initiative, as it has the potential to redefine financial inclusion in post-conflict settings.
