Ethiopian Financial Trio Launches Agar: A Digital Credit and Insurance Service

Agar, an integrated digital credit and insurance service, has been launched by Kacha, Lucy Insurance, and Global Bank in Ethiopia. This service facilitates paperless access to third-party motor insurance and offers digital loans for taxi drivers and salaried employees. The initiative aims to increase insurance uptake in Ethiopia’s low-penetration market, with a focus on securing customer data and cybersecurity.

A collaborative effort involving a fintech, a commercial bank, and an insurance company has resulted in the launch of an integrated digital credit and insurance service in Ethiopia. Kacha, Lucy Insurance, and Global Bank presented their partnership for this initiative named Agar, meaning ‘supporter’ in Amharic, at the Skylight Hotel. Notably, Agar enables customers to access insurance without any physical documentation.

In addition to insurance, the partnership has introduced a digital loan service specifically for taxi-hailing drivers, as well as a microloan feature for salary advances accessible through the Kacha mobile application. Adeferes Wesene, CEO of Lucy Insurance, stated that these new initiatives align with the company’s expanding suite of services, which increasingly encompasses various non-life and general insurance products.

The insurance offering within Agar consists of a mandatory third-party motor insurance policy, complementing Ethiopia’s rapidly increasing vehicle ownership, which exceeds 1.4 million. Following a governmental decree last August, third-party insurance premiums have surged, reaching rates as high as 4,360 birr for private vehicles. Agar’s insurance premiums start at 5,000 birr and can be managed entirely through an online system.

To obtain coverage, users must upload essential details like their vehicle’s registration number, ownership certificate, chassis number, and relevant images using the app. Agar’s loan services target two primary demographics: Agar for Drivers, which affords meter taxi operators swift loans for urgent expenses, and Agar for Salaried Employees, enabling employees to access their wages prior to payday without collateral.

Furthermore, customers may utilize digital loans to manage insurance premium payments, with repayment durations spanning one to nine months. Currently, Ethiopia’s insurance penetration remains critically low, with less than one percent of the population utilizing such services. The recent growth in technology adoption has paved the way for tailored services focused on distinct sectors.

Mikias Fekadu, Partnership and Business Development Manager at Kacha, highlighted that the development of the platform was a year and a half in the making. He clarified that accessing digital loans depends on transaction history with Global Bank, necessitating a one-time branch visit to activate the service. Available loan amounts through Kacha Wallet can reach up to 50,000 birr, determined by an automated credit scoring system based on user history, with penalties for delayed payment.

Martha Hailemariam, advisor to the Vice Governor of the National Bank of Ethiopia, assured that the central bank would continue to guide the implementation of these services. She emphasized the critical importance of safeguarding customer data and ensuring robust cybersecurity measures.

In summary, the collaboration between Kacha, Lucy Insurance, and Global Bank to launch Agar simplifies access to digital financial services, merging insurance and loans for customers in Ethiopia. This initiative reflects an adaptive response to the country’s growing vehicle ownership and a significant shift towards the digitalization of financial services, addressing the low insurance penetration rate in the nation. The project underscores the necessity of maintaining customer privacy and robust cybersecurity protocols as it moves forward.

Original Source: shega.co