Steward Bank, a subsidiary of Ecocash Holdings, disbursed $2.8 billion to 903,000 individuals and Micro, Small and Medium Enterprises (MSMEs) under its digital micro-credit loan facility, Kashagi, in its 2023 financial year.
This represents a 180% increase from the previous year figure of $1 billion.
Steward Bank, the country’s largest bank by depositors, said Kashagi loans are helping to promote financial inclusion by providing access to credit to individuals and businesses that would otherwise be excluded from the formal financial system.
“The business is scheduled to introduce more variants of the Kashagi product in FY24 to respond to emerging digital credit customer needs. The digital micro-credit product remains a key initiative contributing to inclusive economic growth for poverty eradication,” said Steward Bank in the EcoCash Holdings 2023 Annual Report released recently.
The financial institution added that it reviewed, together with EcoCash, the Kashagi algorithm and collection mechanisms to improve the micro loans portfolio quality.
Steward Bank noted that the financial inclusion impact of Kashagi micro loans has been particularly pronounced among rural women and youth, who are traditionally underserved by the formal financial sector. Kashagi has enabled women and youth to start their own businesses, the bank said, expanding existing businesses and allowing investment in education and training.
Statistics from the Annual Report show that the number of rural nano loans increased to 153 489 in the 2023 financial year up from 54 897 and 25 510 in 2022 and 2021 respectively.
Kashagi loans may be accessed by customers who have an EcoCash wallet or a Steward Bank account. The loan application and disbursement process takes place in under 60 seconds by simply dialling *236# for Steward bank account holders or *151# for Ecocash users.
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The instant access to digital loans with lower transaction costs and significantly lower administrative costs has assisted a number of Micro, Small to Medium Enterprises to remain afloat in times when the inflationary environment has made it difficult to merely break even.
Market watchers said the success of Kashagi is a testament to the importance of digital financial services in promoting financial inclusion.