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

Ethiopian fintech Kacha, Lucy Insurance, and Global Bank have launched Agar, an integrated digital credit and insurance service. This innovative platform provides paperless access to insurance and digital loans for taxi drivers and salaried employees. The services target growing vehicle ownership and aim to enhance financial inclusion in a country with low insurance penetration.

A new partnership between a fintech, a commercial bank, and an insurance provider has resulted in the launch of Agar, a digital credit and insurance service in Ethiopia. The collaboration includes Kacha, the first private mobile money service, Lucy Insurance, and Global Bank, and was officially announced at the Skylight Hotel. Agar, which means “supporter” in Amharic, offers customers paperless access to insurance and additional services for taxi drivers and salaried employees through Kacha’s mobile application.

Agar incorporates third-party motor insurance policy, in response to the rising number of vehicles in Ethiopia, which now exceeds 1.4 million. This insurance is a requirement debido to heightened regulations enforcing premium increases to as much as 4,360 birr for private vehicles. Agar’s premiums begin at 5,000 birr, and users can activate their insurance through an online portal by submitting their vehicle’s details.

The digital loan aspect of Agar is designed for two distinct groups. One service is aimed at taxi operators needing urgent repairs, while another assists salaried employees in accessing a portion of their pay before payday, both without the need for collateral. Furthermore, Agar also facilitates digital loans that help customers manage their insurance premium payments, with repayment periods extending from one to nine months.

Despite Ethiopia’s insurance penetration being below one percent, the technological advancements present new prospects for tailored services in the sector. Recently, the ride-hailing company Little Ethiopia and Lion Insurance introduced insurance coverage for both drivers and passengers. Mikias Fekadu from Kacha disclosed that the platform’s development spanned one and a half years, and access to loans is tied to the customer’s transaction history with Global Bank, requiring a preliminary visit to a bank branch.

Kacha Wallet offers loans up to 50,000 birr, with amounts determined via an automated credit scoring system. Borrowers may incur penalties of 0.6% per day for late payments, and loans are deemed nonperforming after 90 days of delinquency. Martha Hailemariam from the National Bank of Ethiopia has affirmed that the central bank will oversee the project to safeguard sensitive customer information and emphasized the importance of cybersecurity measures by the service providers involved.

The introduction of Agar represents a significant advancement in Ethiopia’s financial landscape, integrating digital credit and insurance services for users without the need for conventional paperwork. This collaboration aims to enhance financial inclusivity amid rising vehicle ownership and a growing demand for insurance services. As the nation grapples with low insurance penetration, initiatives like Agar may pave the way for innovative financial solutions, emphasizing the need for customer privacy and robust security measures.

Original Source: shega.co