Ethiopian Financial Trio Launches Agar: An Integrated Digital Credit and Insurance Service

A fintech, a bank, and an insurance company in Ethiopia have launched Agar, a digital service offering integrated credit and insurance solutions. Agar, which means “supporter” in Amharic, enables users to access third-party motor insurance and microloans via a mobile app, thus enhancing financial access while removing the need for physical paperwork, particularly benefiting taxi drivers and salaried employees.

In a recent collaboration, a fintech firm, a commercial bank, and an insurance company unveiled Agar, an integrated digital credit and insurance service in Addis Ababa, Ethiopia. This partnership includes Kacha, Lucy Insurance, and Global Bank, and represents a significant advancement in providing financial services that eliminate the need for physical documentation. Agar, translated to mean “supporter” in Amharic, aims to enhance accessibility to insurance and loans for users.

The service introduces a digital credit solution specifically designed for taxi-hailing drivers, and facilitates microloans through Kacha’s mobile application. According to Adeferes Wesene, CEO of Lucy Insurance, these offerings reflect the company’s commitment to expanding its portfolio to include a variety of non-life and general insurance products, which now include mandatory third-party motor insurance.

With car ownership in Ethiopia exceeding 1.4 million vehicles, the demand for third-party motor insurance has surged following a proclamation last year that significantly raised premium rates. Agar collects premiums beginning at 5,000 birr, presenting customers with standard insurance services coordinated through an online portal. Users can activate their insurance by providing detailed vehicle information and documentation via the app.

Agar’s digital loan services target two distinct groups: meter taxi operators requiring immediate funds for vehicle repairs, and salaried employees seeking access to portions of their wages before the scheduled payday, without collateral. Additionally, customers can obtain digital loans to facilitate premium payments, with repayment terms ranging from one to nine months.

Despite Ethiopia’s low insurance penetration rate, which is under one percent, the recent technological advancements present opportunities for specialized financial services. Recently, Little Ethiopia and Lion Insurance also launched insurance products for ride-hailing services. Mikias Fekadu, Kacha’s Partnership and Business Development Manager, noted that the development of Agar spanned a year and a half, with loan eligibility contingent upon a transaction history with Global Bank.

Customers can borrow up to 50,000 birr via the Kacha Wallet, with amounts derived from an automated credit scoring system based on transaction history. Delays on loan repayments may incur daily penalties, and loans may be classified as non-performing after 90 days. Martha Hailemariam, advisor to the Vice Governor of the National Bank of Ethiopia, affirmed the central bank’s ongoing support while emphasizing the importance of customer data protection and cybersecurity protocols for the new platform.

The launch of Agar marks a significant step forward in Ethiopia’s financial landscape, providing integrated digital insurance and credit services. This initiative promises greater accessibility to essential financial products, particularly for taxi-hailing drivers and salaried employees. As Ethiopia continues to embrace technology in finance, the potential to enhance insurance penetration and improve customer service remains substantial. The collaboration of Kacha, Lucy Insurance, and Global Bank stands as a promising model for future financial innovations in the region.

Original Source: shega.co