Ethiopian Financial Trio Launches Agar: A New Digital Insurance and Credit Solution
Ethiopian fintech companies Kacha, Lucy Insurance, and Global Bank have launched Agar, an integrated digital service providing credit and insurance. Agar includes a third-party motor insurance policy, a digital loan service for taxi drivers, and a salary advance microloan option for employees. The initiative aims to improve insurance access in a market with low penetration rates, while also emphasizing the need for robust data security.
A new integrated digital credit and insurance service named Agar has been launched by a partnership between Kacha, Lucy Insurance, and Global Bank. This initiative was announced at the Skylight Hotel in Addis Ababa, and the service allows customers to obtain insurance without physical paperwork. Agar, which translates to “supporter” in Amharic, also provides digital loan options for taxi-hailing drivers and a microloan function for salary advances accessible via Kacha’s mobile application.
The Agar initiative features a third-party motor insurance policy, essential as Ethiopia’s vehicle ownership continues to rise, now exceeding 1.4 million cars. Following a recent policy change, third-party motor insurance premiums increased significantly, with Agar collecting premiums starting from 5,000 birr online. To activate coverage, customers must submit their vehicle details through the app, streamlining what has traditionally been a cumbersome process.
The Agar platform serves two distinct groups: taxi drivers needing quick loans for vehicle maintenance and salaried employees seeking advance access to their wages with no collateral necessary. Additionally, it includes options for securing digital loans to manage premium payments, with repayment terms ranging from one to nine months, promoting greater financial flexibility.
Despite Ethiopia’s insurance penetration rate being below one percent, technology has opened new avenues for tailored financial services. Recent initiatives, such as ride-hailing company Little Ethiopia and Lion Insurance, reflect this trend by introducing passenger and driver insurance coverage.
According to Mikias Fekadu from Kacha, the development of Agar spanned one and a half years. Users must have a transaction history with Global Bank, and there is a requirement for an initial branch visit to activate the service. Loans up to 50,000 birr can be obtained through the Kacha Wallet, with an assessment based on an automated credit scoring system. Loan repayment delays incur daily penalties, and unfulfilled obligations within 90 days categorize the loan as nonperforming.
Martha Hailemariam from the National Bank of Ethiopia emphasized ongoing regulatory support to ensure the responsible implementation of these services, particularly concerning customer privacy and cybersecurity measures. This focus underscores the responsibilities that accompany innovations within the financial sector, as they must safeguard sensitive data while fostering growth.
The launch of the Agar service by Kacha, Lucy Insurance, and Global Bank signifies a pivotal moment in Ethiopia’s financial landscape, combining digital insurance and credit solutions. With minimal insurance market penetration, the service aims to enhance access and streamline processes for customers, particularly in the transportation sector. Ongoing oversight by the National Bank emphasizes the importance of data security as this new digital landscape unfolds, highlighting a critical balance between innovation and consumer protection.
Original Source: shega.co
