Hijra Bank has introduced a new lending model that utilizes digital transaction records as collateral, aiming to bridge the financing gap for small and medium-sized enterprises (MSMEs) in Ethiopia. The proposal was presented by Hassen Mohammed Ali, Senior Chief for Retail Banking and Digitalisation at Hijra Bank, during the 29th Edition Connected Banking Summit held in Addis Ababa on August 13, 2026.
The model focuses on shifting credit assessment from traditional reliance on physical property and land titles to the evaluation of digital data trails generated through the bank's HalalPay payment platform. By analyzing cash flow, sales consistency, and repayment capacity, the bank intends to provide financing to businesses that currently struggle to meet standard collateral requirements.
Why it matters for Ethiopia
MSMEs account for more than 95% of businesses in Ethiopia, yet they remain the most underserved segment by formal financial institutions. The lack of registered property titles frequently disqualifies these businesses from obtaining credit. According to data cited by the bank, while formal account ownership in Ethiopia increased from 23% in 2016 to 46% in 2022, over half of the adult population remains outside the formal financial system.
Hijra Bank argues that digital transaction records provide a more accurate picture of a business's productivity and seasonal sales patterns than physical assets. The bank is positioning this approach within its Shariah-compliant financing framework, suggesting that Islamic finance models are well-suited for inclusive digital lending.
The proposal highlights a broader trend in the Ethiopian bank sector as institutions look to leverage digital footprints to expand credit penetration. As banks continue to digitize, the ability to translate transactional data into creditworthiness remains a critical factor for increasing financial inclusion across the country. For those looking to compare the performance and offerings of various banks, staying informed through updated business intelligence is essential.
