Interview With Asfaw Alemu – Chief Executive Officer Dashen Bank
INTEREST-FREE BANKING IS NEW IN ETHIOPIA. HOWEVER, IT HAS A POTENTIAL TO BECOME A HUB FOR INTEREST-FREE BANKING IN THE REGION ONCE THE FINANCIAL SECTOR REFORMS IN THE COUNTRY START BEARING FRUITS. THE NEW FINANCIAL CODE, SOON TO BE RELEASED, IS EXPECTED TO BRING FOREIGN BANKS INTO ETHIOPIA, INCLUDING SOME INTEREST-FREE BANKS AS WELL. HOW WELL IS DASHEN BANK PREPARED IN THE WAKE OF THE NEW DEVELOPMENTS IN THE FINANCIAL SECTOR?
Dashen Bank welcomes the initiation of the domestic banking industry for foreign competition. As per our strategy for 2023, we have been building technological infrastructure to the extent that can comfortably accommodate innovations in business processes and digital financial services.
We have operationalized a Tier III Ready Huawei Modular Data Center with accompanying network and security operation centers. We have also introduced an IBM powered Enterprise Service Bus and API Gateway. These are just some of the advances we are making on the technological front.
We are also working extensively in areas of human capital development; accessibility of our products and services through physical and digital channels; introduction of digital financial services through partnerships and collaborations; and refurbishment of our touch points for better customer experience. These strides are primarily dictated by our vision to be the “best-in-class bank in Africa”, and hence be in a position to compete internationally. As we work towards our vision, we are keen on exploring new opportunities that come with the opening up of the market for international investment.
ACCORDING TO THE WORLD BANK, ONLY 35 PERCENT OF ETHIOPIAN ADULTS CURRENTLY ENJOY ACCESS TO A BANK ACCOUNT, MEANING 43.7 MILLION CITIZENS LACK THE ABILITY TO SAVE, BORROW OR MAKE PAYMENTS. HOW IS DASHEN BANK PLAYING ITS ROLE FOR FINANCIAL INCLUSION?
We are leveraging our digital capabilities, Shari’a- complaint banking products and services, and extensive outreach to pay our fair share towards the national agenda for financial inclusion. We are reaching out to new markets through conventional and dedicated interest-free branches. Building on our digital capabilities, we are developing extensive agent network through partnerships to reach the unbanked and underbanked segments of the society. Partnerships established with local and international organisations are also helping us reach marginalised communities and providing them affordable financial services.
HOW CAN DASHEN BANK’S INTEREST-FREE BANKING WINDOW PLAY A ROLE IN PROMOTING FINANCIAL INCLUSION?
The industry has been offering interest-free banking (IFB) services through the window-based model until the deregulation that came in 2019. However, our windows remain instrumental in pursuing the financial inclusion agenda. Much of our half a million customers who subscribed to our interest-free banking services are attended in interest-free banking (IFB) windows found in 600 plus conventional branches across the country.
We endeavour to advance the cause for financial inclusion by investing in our people, enhancing their understanding of interest-free banking, improving our customers’ in-branch experience through targeted marketing collaterals, and building their confidence that the products and services being offered through the windows are Shari’a compliant.
THERE ARE QUITE A FEW FINTECH COMPANIES IN ETHIOPIA, BUT ADMITTEDLY THE FINTECH SECTOR HAS YET TO TAKE OFF IN THE COUNTRY. DO YOU THINK INTEREST-FREE BANKING HAS A BETTER SCOPE IF IT IS OFFERED BY A FINTECH PLAYER RATHER THAN A HIGH-STREET BANK LIKE DASHEN BANK?
FinTechs would undoubtedly have a huge role to play in making banking accessible to the masses. Yet, high-street banks like Dashen Bank have a huge resource base and an extensive physical network, which can easily be leveraged for better accessibility of interest-free banking products and services to the wider public.
Partnerships help us achieve these goals, and Dashen Bank is a pioneer in harboring FinTechs for the delivery of digital financial services as exemplified in our Amole Omni-channel platform, and the recent introduction of micro saving and lending products in collaboration with Ethio Telecom, the Country’s sole telecom provider until recently.
WHAT WAS THE REACTION OF DASHEN BANK TO THE RECENT WINNING OF PRIME MINISTER ABIY AHMED ALI OF THE GLOBAL ISLAMIC FINANCE LEADERSHIP AWARD 2022 AT THE 12TH GLOBAL ISLAMIC FINANCE AWARDS CEREMONY HELD IN DJIBOUTI ON SEPTEMBER 14, 2022?
Our Prime Minister HE Dr Abiy Ahmed has taken historic steps in allowing the formation of full-fledged interest-free banks and adoption of robust financial inclusion strategy. The bold measures have widened the space for players in the interest-free banking market. The financial inclusion agenda is embraced by banks and other new players in the financial market as seen in the growing outreach of physical branches, and self-serving channels; increasing the adoption of digital financial services partly spurred by non-bank operators. From this perspective, we consider the recognition of our Prime Minister HE Dr Abiy Ahmed with the Global Islamic Finance Leadership Award 2022 befitting.
WHAT ARE THE ADVANTAGES OF A CONVENTIONAL BANK OFFERING INTEREST-FREE BANKING VIS-À-VIS A FULLY-FLEDGED INTEREST-FREE BANK?
In regard to Dashen, the reputation we have built as a banking brand, as well as the financial, physical, technological, and human resources we have assembled over a quarter of a century gives us a huge advantage. We have been able to render interest-free banking services at a scale by making use of the available infrastructure and resources.
Our conventional branches with interest-free banking windows make it economical to avail services in places that would not otherwise be viable for a full-fledged interest-free banking operation. Interest-free banking windows in conventional branches are also convenient for existing customers to make use of our Shari’a-compliant products and services without the need to switch to a full-fledged interest-free branch.
DASHEN BANK IS ALSO PROVIDING INTEREST-FREE FINANCIAL SERVICES. CAN YOU PLEASE ELABORATE ON THE FINANCIAL SERVICES PROVIDED BY THE BANK’S INTEREST-FREE BANKING WINDOW?
We provide full-fledged interest-free banking services under our Sharik brand. We have depository products such as wadia’h and qard. These are the prominent products widely used by our customers. We also provide murabaha financing. We are strong in the financing aspect and more than two-third of the resources mobilised are deployed through Shari’a-compliant contracts. We also provide hawala, kafala and trade finance services. Depository accounts are linked to IFB cards and the Amole Omni-channel platform.
WHAT WOULD YOU ADVISE THE GOVERNMENT WITH REGARD TO DEVELOPMENT OF INTEREST-FREE BANKING IN THE COUNTRY? WHICH COUNTRY IN AFRICA, IN YOUR OPINION, HAS DONE WELL IN THIS RESPECT?
The interest-free banking market has ample opportunities for growth. Sustainable growth of the industry, however, would hinge on a robust legal and regulatory framework. I have advised the government to put that in place as early as possible. I have also advised the Central Bank to have a separate Directorate to deal with IFB business of banks. Among our neighbours, I think there would be a lot to learn from the experience of countries such as Sudan and Djibouti. North African countries and South Africa also provide interesting cases to draw lessons from.
ETHIOPIA IS NOW AFRICA’S FASTEST-GROWING ECONOMY, WITH THE COUNTRY’S BANKING SECTOR DEVELOPING AND EXPANDING QUICKLY. DASHEN BANK IS AT THE FOREFRONT OF THIS GROWTH, LEADING THE WAY BOTH IN PROVIDING ACCESS TO SERVICES FOR UNBANKED PEOPLE ACROSS ETHIOPIA, AS WELL AS OFFERING SOPHISTICATED INTERNATIONAL BANKING PRODUCTS. HOW HAS DASHEN BANK MANAGED TO MAINTAIN ITS LEADERSHIP POSITION?
Our sustained growth is a result of multiple factors. We have forward-looking investors to whom we credit our sound financial position. We also have a vast yet growing valuable customer base, giving us the liquidity needed to drive the economy. Moreover, we have local and international partners on whom we rely to meet the needs of our customers. The proper guidance and oversight of Board Directors, the consistent and farsighted investment on building technological backbone, human resource development and well-thought succession planning, and meaningful and exemplary CSR engagements and professional strategic partnership with external stakeholders have all put us on the path to sustainable growth. Value creation and prudence are at the center of all our interactions with stakeholders. Our relentless efforts to add value to our stakeholders has earned us invaluable goodwill in Ethiopia and beyond.
LET’S END THIS INTERVIEW WITH A LIGHT QUESTION. CAN YOU SHARE WITH OUR READERS THE STORY BEHIND THE BANK’S NAME?
Dashen Bank coined its name from Ethiopia’s highest peak, Mount Dashen. Apart from being the highest peak, Mount Dashen is also home to endemic animals and diverse flora. Inspired by the height of the mountain, the Bank aspires to be unparalleled in the provision of banking services. The Bank also cherishes and thrives on diversity, an attribute borrowed from the flora and fauna of Mount Dashen and diverse beauty our Country, Ethiopia.
