‘CheGebeya’: An Innovative Digital Supply Chain Financing Initiative for Micro, Small, and medium enterprises (MSMEs) in Ethiopia

 

In the ever-evolving economic landscape of Ethiopia, cultivating entrepreneurship is a key driving force in accelerating sustainable development and securing long-lasting growth . A collaborative effort between the UN Capital Development Fund (UNCDF) and Kifiya Technologies, a digital finance and payment services provider) serves as a source of optimism for emerging entrepreneurs in Ethiopia.

’Chegebeya’ translated as ’Che Market’ aims to revolutionize the financial ecosystem for Micro, Small, and medium enterprises (MSMEs) in Ethiopia by modernizing the supply chain of Fast-Moving Consumer Goods (FMCG). The goal of this initiative which is supported under Digital Finance for Resilience (DFS4Resilience) Programme, funded by the European Union (EU) and the Organisation of African, Carribean and Pacific States (OACPS) is to transform the financial ecosystem for micro, small, and medium enterprises (MSMEs) in Ethiopia by modernising the FMCG supply chain.

Addressing Key Challenges

MSMEs in Ethiopia face multifaceted challenges, including credit constraints and inefficient manual distribution systems. Formal financial institutions often struggle to meet the credit needs of these enterprises due to the lack of creditworthiness assessment models and collateral. Additionally, manual distribution methods hinder sales projections and increase operational costs. The ‘CheGebeya’ initiative aims to address these challenges by providing digital solutions for credit access, inventory management, and digital payments, thus streamlining operations and optimizing supply chains.

Utilizing a comprehensive platform-based supply chain finance (SCF) solution, the project is designed to optimize liquidity management in supply chain processes. The innovative solution is facilitated through access to Kifiya’s digital platform, offering capabilities in lending, inventory, order, delivery, and logistics management. This initiative helps to address barriers to financial inclusion and harnesses the potential of MSMEs.

Empowering MSMEs

Tinsae Ayele, a local merchant who runs a small retail shop in the bustling area of Semit Fiyel Bet, Addis Ababa, shares his positive experience with the CheGebeya platform. He highlights the ease and efficiency of using the app to manage his inventory and the swift delivery of orders saying, “I like how seamless the app is and how swiftly my orders get delivered. My inventory restock has been effortless ever since.” Approved for a supply chain credit of around US$260, Tinsae notes, “It’s possible to restock without hustle so I can focus on my sales without distraction. The loan has also been a great start into getting a larger scale of credit.” Looking to the future, Tinsae has high hopes for the continued expansion of the platform. He is particularly excited about “the prospect of having a broader variety of products to choose from”, which will further enhance his ability to meet customer demands efficiently. His story underscores how CheGebeya provides the tools and financial support needed for local merchants to thrive.

The project has successfully integrated MSMEs like Tinsae into Kifiya’s digital platform, with a plan of facilitating over roughly more than US$50,000 in transactions, and 30 percent attributed to inventory credit.

The partnership is expected to support the move into a fully digitized loan application integration and partnership with financial institutions, moving away from a manual management of credits for MSMEs. The business model is designed in a way to fits its purpose of serving last mile beneficiaries.

Major Achievements

The project initially trained and integrated 2 suppliers onto the CheGebeya platform, at the pilot stage which now boasts a vibrant marketplace with 13 suppliers out of which 8 are active suppliers. Starting from September 2023, CheGebeya has onboarded 11,258 MSMEs, including 2,469 women-owned and 4,053 youth-owned enterprises. Among these, 5,120 MSMEs actively engage with the platform’s services, showcasing its relevance and accessibility. The project has facilitated the distribution of 31 loans to MSMEs, amounting to over ETB 400,000 (roughly more than US$7,000), with sizable amount of the loan going to women and youth enterprises . This is expected to grow in the coming months when the project scales to meet its expected project deliverables and the market demand. Furthermore, to facilitate ease of inventory request and loan application approvals, Kifiya has already partnered with multiple financial institutions that will provide direct loans using Che-Gebeya platform.

Sustainability and Scalability

Looking ahead, CheGebeya aims for long-term sustainability and scalability. By leveraging Kifiya’s market insights and extensive experience, the project seeks to expand beyond Addis Ababa, reaching MSMEs in regional urban and peri-urban centers. Through innovative solutions, strategic partnerships, and a commitment to gender equality, CheGebeya is poised to unlock new opportunities and drive positive change in Ethiopia’s economic landscape. As MSMEs embrace digital solutions and grow their businesses, the ripple effects of CheGebeya will be felt far and wide, shaping a brighter future for Ethiopia’s entrepreneurs and communities.

Distributed by APO Group on behalf of United Nations Capital Development Fund (UNCDF).