Kacha plans to launch Sharia-compliant financial services

Kacha Digital Financial Services Share Company (S.C.) said that it is finalizing preparatory activities to launch Sharia-compliant financial services.

Yigermal Mesesha, Marketing and Business Development Manager at Kacha Digital Financial Services S.C. told Origins Business that the services are mainly intended to ensure financial inclusion of the Muslim community.

Kacha is Payment-Instrument Insurer Company and it’s the first licensed private mobile money service provider by the National Bank of Ethiopia (NBE).

The interest-free financial services have so been delivered through Sharia-compliant Takaful (Islamic Insurance) services providers.

Interest-free banking activities have also been delivered in a window services across 11 commercial banks. But, since 2019 full-fledged interest-free financial banks have come into existence.

“Kacha will work in unison with different banks to provide digital financial services to the unbanked society,” Yigermal said.

Interst-free banking services provider banks have been collecting finances though Amanah and Wadiah Islamic banking platforms.

However, there’s a mismatch between the collected and financed resource. Close to 117.2 billion Birr has been collected from interest free banking (IFB) as of June 2020, according to NBE. However, only 35.5 billion Birr loan has been disbursed through IFB services across the country.

“We aim to digitalize the disbursement of loans and other interest free financial services at a micro-level,” he said, adding, “We’re in a discussion with banks to launch the services and expecting its realization soon.”

“Our Sharia-financial advisers have given a green light after inspecting the services we provided,” Yigermal says. “We’re going to inspect these services along with the banks—which we are in discussion with.”

NBE has also to grant a final license to Kacha.

“Kacha is in a pre-pilot stage. Provision of interest-free financial services is among the services we’re poised to launch after a pre-pilot stage,” he confirmed.

Reaching out the unbanked people across the country is Kacha’s main vision. It has an aim of enabling digital first Ethiopia through providing a seamless digital financial service.

Kacha will also provide a bundle of services, which are not common in the financial sector.

Opening wallet accounts, cashing in and out, micro-saving, uncollateralized microcredits, micro-insurance, direct payments, bill payments, international remittance, fund transfers, airtime top-up, card payments, and other cutting-edge services are among the services, which will be offered.

Kacha will work with agents across Ethiopia and partners up with governmental, Non-Governmental Organizations (NGOs) and other stakeholders across the country.

More than 30,000 agent networks across the country will be able to offer cashless transactions through the Kacha mobile money platform. Kacha, which has a registered capital of 200 million Birr, heralds the start of a new era for expanded private sector involvement in the framework of the country’s digital financial services.