Launch of Agar: Ethiopia’s Integrated Digital Insurance and Credit Service
Agar, a new integrated digital credit and insurance service, was launched by Kacha, Lucy Insurance, and Global Bank in Ethiopia. The service offers third-party motor insurance and digital loans for taxi drivers and salaried employees, addressing the rise in vehicle ownership and insurance needs. This initiative aims to improve financial inclusion in Ethiopia’s low-insurance environment, with emphasis on customer data protection and cybersecurity.
In a significant development, a fintech company, a commercial bank, and an insurance provider have united to unveil Agar, an integrated digital credit and insurance service. The consortium includes Kacha, Ethiopia’s first private mobile money service provider, Lucy Insurance, and Global Bank, and the announcement took place at the Skylight Hotel in Addis Ababa. Agar, meaning “supporter” in Amharic, streamlines the insurance process by eliminating the need for physical paperwork.
Agar features a digital credit service aimed primarily at taxi-hailing drivers, alongside a digital salary advance microloan available through Kacha’s mobile application. Adeferes Wesene, CEO of Lucy Insurance, noted that these services enhance the company’s diverse offerings, with a focus on expanding non-life and general insurance products.
The Agar platform includes a third-party motor insurance policy designed to address the growing number of vehicles in Ethiopia, which has exceeded 1.4 million. Given the recent enactment of regulations that significantly increased mandatory third-party insurance premiums, Agar provides more accessible premium options starting from 5,000 birr. Customers can activate their insurance by uploading essential vehicle details via the mobile application.
Agar’s loan facilities are tailored for two groups: taxi operators needing immediate financial support for vehicle repairs and salaried employees seeking advance payments on their wages. The service also assists users in managing insurance premium payments with flexible repayment terms ranging from one to nine months. Ethiopia currently faces low insurance penetration rates, with less than one percent of the population engaged in insurance services.
The application of innovative technology in financial services is increasingly relevant, as demonstrated by the recent partnership between Little Ethiopia and Lion Insurance, which established insurance coverage for ride-hailing drivers and passengers. Mikias Fekadu, Partnership and Business Development Manager at Kacha, emphasized that the service’s development took a year and a half and that access to digital loans is determined by a customer’s transaction history with Global Bank.
Loan amounts may reach up to 50,000 birr through Kacha Wallet, governed by an automated credit scoring system. Borrowers may face penalties of up to 0.6% daily for delayed repayments, and loans become nonperforming after 90 days. Martha Hailemariam, advisor to the Vice Governor of the National Bank of Ethiopia, indicated that the central bank would monitor the implementation of these new financial services, highlighting the importance of safeguarding customer data.
The launch of Agar represents a strategic effort to enhance financial inclusion in Ethiopia by integrating digital services in insurance and credit sectors. With the combined expertise of Kacha, Lucy Insurance, and Global Bank, this initiative promises to address the rising demand for insurance and financial solutions. Furthermore, ongoing oversight by regulatory authorities underscores the significance of protecting consumer privacy and implementing robust cybersecurity measures as the financial landscape evolves.
Original Source: shega.co
