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

Agar, a collaborative initiative by Kacha, Lucy Insurance, and Global Bank, has introduced integrated digital insurance and credit services in Ethiopia. The platform enables users to access mandatory third-party motor insurance and digital loans for drivers and salaried employees, streamlining financial services. Emphasizing cybersecurity and customer privacy, the project aims to enhance financial inclusion in a nation with notably low insurance uptake.

In a significant development for Ethiopia’s fintech landscape, a coalition comprising Kacha, Lucy Insurance, and Global Bank launched an integrated service named Agar. This service merges digital credit and insurance solutions, enabling users to access insurance without physical documentation. The unveiling occurred at Skylight Hotel, marking a pivotal moment in enhancing financial accessibility for citizens.

Agar includes a unique digital credit service tailored for taxi drivers, alongside a salary advance microloan feature available via Kacha’s mobile application. Adeferes Wesene, CEO of Lucy Insurance, noted that these services are part of a broader expansion into non-life and general insurance products, responding to rising insurance needs as car ownership increases in Ethiopia.

The insurance aspect of Agar comprises a mandatory third-party motor insurance policy due to a substantial rise in vehicles on the road, amounting to over 1.4 million. Premiums, which start at 5,000 birr, are managed through an online platform, crucial since recent regulations have substantially raised insurance costs for car owners.

Users must submit various details, including their vehicle’s plate number and ownership certificate, to activate their insurance digitally. Agar’s loan offerings aim to assist two distinct groups: taxi operators requiring immediate repairs and salaried employees seeking early wage access without collateral requirements. Additionally, digital loans for managing premium payments are available with repayment terms spanning one to nine months.

Despite low insurance penetration in Ethiopia, standing below one percent, the trend towards technology adoption presents opportunities for tailored financial services. As demonstrated, partnerships, like those between ride-hailing services and insurance providers, are forming to address specific market needs.

Mikias Fekadu from Kacha highlighted that the development of the platform took over 18 months. Access to Agar’s services relies on transaction history verified through Global Bank, necessitating an initial branch visit for activation. Kacha Wallet can offer loans up to 50,000 birr, determined by an automated credit-scoring system.

Martha Hailemariam, advisor to the Vice Governor of the National Bank of Ethiopia, assured that the central bank will support the oversight of these new services with an emphasis on robust customer data protection and cybersecurity protocols. This development signifies the advancement of financial services in Ethiopia, enhancing accessibility and customer convenience.

The introduction of Agar symbolizes a substantial leap forward in Ethiopia’s financial sector, merging digital insurance and credit services to meet the needs of citizens. By addressing vehicle insurance requirements and providing financial solutions for specific demographics, this initiative seeks to improve financial inclusion, especially in a country with low insurance penetration. The cautious approach regarding customer data protection also illustrates a commitment to safeguarding user information amidst the rapid evolution of digital financial services.

Original Source: shega.co