Financial Sector Strives to Serve Communities with Special NeedsIt has been one hundred years since Ethiopia witnessed the first bank that served as a whistle to the launching of the Ethiopian financial sector. Now, with 19 banks and USD20 Billion in assets, the banking sector still falls short in serving special needs communities including the visually impaired. Private financial service providers need to go the extra mile and effort in tandem with the regulatory body which needs to create an environment that encourages innovation for a wider scope of inclusiveness in the financial sector, writes Bamlak Fekadu.
Abebe Fite, Attorney and a 45-year-old father of five, has been working at the Ministry of Justice for over a decade. When EBR approached him—midday on November 13—he was crossing the commonly-known-as Bambis bridge, near Jomo Kenyatta Street in Addis Ababa. Walking up the hill towards Kazanchis, a popular business district in the metropolis, he was scanning and orientating himself using his white cane and searching for a nearby Commercial Bank of Ethiopia (CBE) branch. He looked tired walking the hill, but he needed to withdraw some pocket money.
“The service for blind people like myself used to be very inconvenient a few years back, but the thing has recently been easing up,” Abebe said. “Visually impaired persons were requested to bring at least two people to witness transactions at banks.” Abebe remembers how people would often help him filling out withdrawal or deposit forms and how this creates insecurity amongst blind people.
Over a century old, Ethiopia’s banking industry tracks its origins with the establishment of the Bank of Abyssinia in 1905. It was established based on the agreement signed between the Imperial Government of Ethiopia and the National Bank of Egypt, which was owned by the British at the time. Emperor Menelik II, in his pursuit of accelerating the modernization of the Ethiopian state, signed an agreement with MacGillivray, representative of National Bank of Egypt. This moment is seen as the introduction of modern banking in Ethiopia. Following that agreement, the first modern bank, known as the Bank of Abyssinia, commenced operations on February 16, 1906 and was totally managed by the Egyptians.
Ethiopia currently has 19 operating commercial banks, including the giant state-owned CBE with its account holders in excess of 22 million and an estimated asset value of over USD20 Billion. Despite its age and growing private investment in the area, the Ethiopian banking sector is still short of appropriate innovations to ensure access and quality of banking services for the blind and other similar communities. As much as attempts made by financial institutions to address these challenges are present, financial secrecy or banking discretion is not fully protected for the blind.
Alemu Gari, Teacher at a government high school, is among those who feel that banking services lack fairness towards serving minorities like the visually impaired—including him—who represent 1.6Pct of Ethiopia’s population, according to the World Health Organization (WHO). Another 3.7Pct of Ethiopians have low vision according to the same report.
“I was once robbed by people who were behind me and saw me withdrawing cash from the bank,“ Alemu told EBR.
Deficiencies in access to banking services is also evident in the more modern services including mobile, internet, and ATM banking, amongst others.
The importance of developing a constraint-free and inclusive banking service has already been recognized by the financial services providers. However, in Ethiopia, numerous banking services are still plagued by the exclusion or restriction of visually impaired persons. This can frequently be traced to an extreme lack of knowledge of assistive technologies on the part of the banks. Ill-treatment of visually impaired customers, absence of sufficient legal frameworks, and improper application of existing laws remain bottlenecks yet to be addressed.
Financial inclusion is, of course, a global challenge. It is estimated that about 1 in 3 adults still do not have access to financial services, making up a total of 1.7 billion unbanked people, according to reports from the World Bank. However, the global experience also shows evidence of better sensitivity towards customers with special needs. After the 1970s, many visually impaired bank customers were lucky enough to be part of an inclusive era, rather than depending on trusted friends and family, or even strangers. A bank in Los Angeles, USA, pioneered a “Braille account” on which customers received an aluminum plate with holes and pens. Within the first year, more than 50 people had signed up for the program.
Financial institutions, mainly banks, should consider the inclusiveness of disabled people and other communities with special needs, according to Bersufekad Getachew, Founder and CEO of EagleLion, a financial technologies developer. Bersufekad doubts that the central bank, which has the lion’s share in regulating financial institutions, has paid enough attention to the issue, adding that “I believe it is not even beginning to crawl to give equal opportunities for the disabled”.
Prioritizing knowledge and awareness at the central bank level, and easing some of the discouraging directives will add to efforts of filling the gap of financial inclusiveness, argues Bersufekad, whose team has been preparing to launch an inclusive e-commerce platform with hopes of easing some of the frustration experienced by unbanked communities.
“Even when experiences are brought from other neighboring countries, some local policies stand in the way,” Bersufekad shares his experience in tackling the challenge.
The frustration of Abebe, Alemu, and their community seems to have garnered the attention of some private banks. Bank of Abyssinia (BoA), amongst the top three most profitable banks in the country, has recently broke a leg by installing automated teller machines (ATM) accessible to visually impaired customers. The pioneering move was officially launched in early November and features voice-assisted ATMs that offer a variety of banking services to any bank’s customers.
“Inspiration of inclusiveness came up following the digitization strategy which our bank put in place two years ago,” said Abay Sime, Director of Online Banking at BoA. The average price of a single ATM machine is around USD2,500 to 3,000, even reaching USD8,000 in some cases. The project took six months to implement.
According to Abay, the facilities were launched in 20 sites between Arat Kilo and Shiro Meda, where thousands of visually impaired citizens live. The software, fully developed by the bank’s digital team, posed a challenge in regards to compatibility with already installed machines, according to the director.
“As much as the new system bridges the gap in terms of financial secrecy, it might not fully fill the gap, but can minimize their frustration,” Abay told EBR.
Bersufekad welcomed the move by BoA and recommends enabling the system to include features like card-less services. Other banks should take a similar path, he said.
As of late, the visually impaired community is being accommodated through screen reading software, special talking, and Braille devices which are similar to elevator buttons. The software allows those unable to see the capability to independently use computers, cell phones, and other electronic devices including ATMs.
The inaccessibility of financial services is not only limited to the visually impaired community. Others, such as pastoralists and rural dwellers, also do not have easy and quality access to financial services in large parts of the country.
“Most pastoralists prefer not to visit banks as most transactions require ID cards.” Abdiaziz Hassan, CEO of Rays Microfinance, told EBR. Quite a large number of pastoralists in Ethiopia do not possess national identity cards because of their mobile lifestyle. Moreover, as most interest-free or Sharia compliant banking services are recent developments in Ethiopia, a significant proportion of pastoralists haven’t been beneficiaries of financial services in the country. This has exacerbated the poverty situation in these areas as most agricultural inputs are provided through the conventional interest-based financial services by microfinance institutions.
The recent steps by the government to allow the formation of interest-free banking services in tandem with conventional services will solve part of the problem of financial inclusion.
Women, in general, are another demographic category with far less reduced access to financial services, despite their significant share of the general population. Only 26Pct of women save their money at banks, whilst 38Pct use informal saving schemes, according to a recent World Bank study. Examples of informal schemes are Edir, local community-based social welfare associations, and Equib, communal saving and credit associations.
In the age of technology, it is not easy, feasible, and cost-effective for banks to pursue the brick-and-mortar model of banking to reach the vast majority of the unbanked population. Thus, convenient and suitable digital money services at affordable rates are required. These services can be rendered by equipping well-organized agent bankers.
According to the World Bank’s report of 2018, 38Pct of adults worldwide now have access to financial access. In Kenya, for example, 82Pct of adults have an account, whilst in Rwanda, account ownership is 50Pct. In the East African region, 43Pct of adults have an account. Yet, Ethiopia lags far behind its African peers with 70Pct of its population still unbanked. EBR