The National Bank of Ethiopia (NBE) is leading the reform to enable millions of farmers and small business owners to obtain essential bank loans without requiring conventional collateral like real estate or land.
NBE Governor Mamo Mihretu made this known at the Ethiopia Finance Forum, which was held on Thursday.
For years, many people found it difficult to obtain a loan because they lacked physical assets to pledge as collateral. NBE Governor Mamo Mihretu acknowledged the flaws in the current system.
“The Ethiopian financial sector is not adequately reaching those who need finance, especially agriculture, manufacturing, and small businesses,” he said, acknowledging the urgent need for reform.
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Leading this reform is the National Bank of Ethiopia (NBE), which seeks to include a sizable portion of the populace that was previously shut out of the official financial system.
Main idea behind collateral-free loans
The main idea behind this new directive is simple: physical collateral should not be required if a bank has enough financial information to determine a borrower’s ability to repay.
The goal of this strategic change is to direct critical funds toward the small business and agricultural sectors, which are essential to Ethiopia’s economy.
Role of digitalisation
The drive for digitalisation is already causing this policy change. Leading financial platforms like Telebirr and Michu by Cooperative Bank of Oromia are already using transaction histories and mobile data to provide billions of Birrs in microloans without collateral.
The Governor declared that a formal system will be put in place to guarantee that all banks follow this cutting-edge lending philosophy.
About the Ethiopia Finance Forum 2025
The Ethiopia Finance Forum 2025—Investors Series was a component of Ethiopia’s continuous pursuit of a more robust financial environment.
The one-day forum, which was hosted at the Commercial Bank of Ethiopia Headquarters in Addis Ababa, brought together more than 1,800 leaders from the public, private, academic, banking, and government sectors.
Through five targeted panels covering topics such as investment, ease of doing business, macroeconomic and structural reforms, and more, participants thoughtfully discussed the opportunities and challenges influencing Ethiopia’s private sector environment.
Ethiopia’s dedication to fortifying alliances and fostering the expansion of the private sector was emphasised in the opening remarks given by H.E. Ahmed Shide, Minister of Finance, and H.E. Mamo Mihretu, Governor of the National Bank of Ethiopia.
The Ministry of Finance (MoF), the Ministry of Planning and Development (MoPD), and the National Bank of Ethiopia (NBE) collaborated to host the forum.