The National Bank of Ethiopia, which manages and controls the country’s financial sector, announced a new directive when the Covid epidemic broke out in the world and fundamentally changed many events.
This guideline is where non-bank organizations can provide digital finance services.
According to this, digital banking services, which were only allowed to banks, were allowed to be issued to non-banks for local payment processing documents and payment system operators.
Nael Hailemariam and Israel Goytom, who understood that non-bank operators can also engage in the digital banking service, which was only allowed for banks, began to take advantage of this opportunity.
Chapa Financial Technologies Co., Ltd., Chapa, is one of the non-banking institutions that have been licensed to streamline the financial system in the country.
Chapa belongs to the rapidly growing financial sector called Fintech.
In short, fintech is the use of financial technologies, artificial intelligence, blockchain, cloud computing and data to modernize the financial system.
Nael Hailemariam and Israel Goytom, the founders of Chapa, met while studying at a Chinese university.
Nael was working on his master’s degree in data science and information technology, while Israel was studying physics, microelectrical science and engineering and conducting research on artificial intelligence.
Nael said about the purpose of his organization, “It is to encourage entrepreneurs and businesses in Ethiopia and to connect them with the global economy.”
Chapa is a system that makes online payments easy for businesses.
According to the founders, Chapa is designed to enable users to receive payments online from any bank.
It allows receiving online payments not only from local banks but also from any international money transmitters and banks.
Although digital finance is in its infancy in Ethiopia, the National Bank once said that it is planned to bring the financial sector into international competition by providing payment services to all sections of the society easily, at low cost and time and in a reliable manner, increasing the demand of financial service users.
Regarding the payment system of the country, by issuing and implementing the National System Proclamation in 2011, the National Bank is developing and managing a system that enables the payment orders to be made from one bank to another bank immediately through the customers of all banks.
How was Chapa founded?
Nael and Israel have traveled to various European countries for education and work.
“Every time we come to Ethiopia, we notice that the digital sector is weak. This is not because people lack creativity or lack of digital platforms. But the problem was that they didn’t set up a system to make payments online. He says.
In European countries, people prefer to use their phones or bank cards to make payments, but in Ethiopia, people still carry paper money or coins.
Before issuing this directive, the National Bank of Israel was thinking about how to make payments online.
Digital payment services in general, from individuals to governments, especially in the financial sector, have a significant impact.
“We were both in Ethiopia when the National Bank announced the policy. Therefore, we used this opportunity to achieve our long-term plan.
How does the system work?
In Ethiopia, it is not easy to imagine that both governmental and non-governmental institutions sell their products and services to domestic or overseas customers and receive payment.
More importantly, it is difficult to find the service online. This system developed by Chapa Financial Technologies is designed to simplify this.
Nael, on the other hand, says that withdrawing money from one party online in the country is complicated.
“If a business in Ethiopia wants to accept online payments, it has to step in many places, including Insa.”
“We put this system together,” he added.
Online payments include not only payments made outside the country but also domestic payments.
“We have been able to help small businesses reach their local and international customers online,” says Nael.
“Our company is not Mobile Money or PayPal or Tele Birr. We have linked existing payment systems together,’” adds Israel.
Merchants also avail their services from their own website as well as online. But to get their payment online, they need to register with Chapa.
The challenges they faced
They have knocked on the doors of many government institutions to explain the importance and importance of digital payment before the announcement of this directive.
Although they submitted an 80-page explanation to the National Bank, they remember that their efforts were unsuccessful.
But in the past, it was not possible with all the government institutions that they had trampled on.
Just as the arrival of the Corona epidemic changed the world from its roots, the situation of the digital finance sector in the country also changed rapidly.
“A lot has changed. Government officials are becoming tech-savvy. But before that, there was a problem, especially in terms of policy.”
The two young men overcame the challenges they faced and have now hired and hired 18 employees.
They also dream of expanding their services to East Africa and then to the whole of Africa.
“Our plan is to connect Ethiopia with the world economy by 2025 and help 100 thousand entrepreneurs and businesses,” Nael concluded.
