Tuesday 26th May 2020
The Financial Alliance for Women recently welcomed Enat Bank Ethiopia as a new member. Founded in July 2011, Enat Bank was initiated by a diverse group of 11 powerful Ethiopian women who had a vision of creating a bank that was open to everyone, with a special focus on women and ensuring their access to credit. The bank stands out among African banks with women owning 64 percent of its shares and holding leadership positions from senior bank management to the Board of Directors.
Enat provides consumer and commercial banking services coupled with non-financial services such as capacity building workshops and financial literacy programs for women. It’s ranked second in Ethiopia in the private banking industry in terms of branch effectiveness.
In this interview, Mr. Wondwosen Teshome, President, spoke with us about the financial inclusion of women, the bank’s strategy for supporting women and its leadership’s decision to join the Alliance.
Alliance: For the benefit of our global readership, can you share Enat Bank’s position in the market and the overall strategic vision for the organization?
Wondwosen Teshome: Founded in 2011 and operational in 2013, Enat Bank is the youngest bank in the Ethiopian banking industry and was incorporated to create a difference in the market by maximizing women’s economic capabilities. The bank has a 2 percent share of the private commercial banking deposit market and a vision to become a bank of choice in Ethiopia by 2030. Our mission is to provide an array of inclusive banking services focusing on women’s economic needs with the objective of reducing the credit gap for women entrepreneurs, fostering their future growth and contributing to their success. State-of-the-art technology, innovation, and people are our strategic pillars to meet our goals and objectives.
Alliance: With more than 16 banks in Ethiopia, how does Enat Bank differentiate itself in the market? Is the women’s segment a part of this differentiation strategy?
WT: Amharic for “mother,” Enat signifies utmost care and reliable services. Our motto, “Man Ende Enat,” translates to “No one like a mother.” The women’s segment is the essence of our differentiation strategy with two main focuses:
Alliance: According to Findex, more than half of the population of Ethiopia are unbanked. And just 29.1 percent of accounts are owned by women, lower than the Sub-Saharan Africa average of 36.9 percent. What do you think are the main reasons for this low inclusion among women, and how is the bank addressing this issue?
WT: The low uptake of women in financial services is not only because of women’s behavior toward banking but also because of banks’ approach to women.
Women traditionally perceive banks as targeting only the wealthy segment of society. The biggest majority of Ethiopian women are housewives, hence they’re not economically independent. As for employed women, they are not well paid, and therefore unable to open saving accounts. Women also lack financial literacy, and similar to other economies, collateral remains a main obstacle in addition to the low mobile phone and internet penetration rates.
Banks, on the other hand, are not supporting women to change their perception. Proximity is a major inhibitor. One branch serves around 17,000 people in Ethiopia currently, with a high concentration of bank branches in the major cities—despite the fact that only 20 percent of the population is living in urban areas (As of June 2019, 34.6% of commercial bank branches are located in Addis Ababa alone.)
At Enat Bank, we addressed these issues by providing free financial literacy services for unbanked and underbanked women and girls. We are providing loans to microfinance institutions (MFIs) which have a greater outreach to serve female individuals and micro business owners. We are designing customized products and services to meet the women’s market needs. We are also working on developing partnerships with the public sector and government agencies for female economic empowerment. That includes technical skill-building programs to help improve their knowledge. We are also hosting networking and experience-sharing workshops for women in business to help them learn from each other’s experiences. And we’re providing leadership and personal effectiveness training to women in SMEs to help them gain skills to grow their businesses.
Alliance: Do you have any special plan to reach women in rural areas?
WT: We are planning to expand our presence in rural areas through mobile banking and through our partnerships with MFIs operating in rural areas.
Alliance: How are you segmenting the women’s market? What are your financial and non-financial services value propositions for each segment—current or planned?
WT: Enat bank is committed to serving all female individuals and business owners. However, we identified three sub-segments promising future high growth and profitability potential based on their life stage, income and age. For each identified sub-segment, we are in the process of implementing the following customer value propositions:
For Young Professionals (YPs)—well-educated, ambitious, career-focused women at a pre-family or career-building stage of their lives—we are providing a salary advance loan with an employer guarantee; credit cards; a “save then borrow” program which includes special-purpose deposit accounts; loans that can be used as a personal loan (with car and mortgage loan); vacation loans; student or career development loan (with a family/friend guarantee); education savings accounts (with an attractive rate); and startup/seed financing against guarantor.
For Mass Affluent–women from the middle and upper market who are married with children including non-working housewives and moms, professionally employed women, and those planning to establish their own enterprise—we have products and services such as a family vacation loan, a children’s summer camp saving account, business loans to start a new business, and discounts in supermarkets, beauty salons, gymnasiums through a special scheme.
For Women Business Owners—running their own MSME—we have a special current account with interest; medium-term loans with low lending rates; equipment financing; a female merchant cash-advance loan (against accounts receivable of merchants), and a personalized approach to repayment terms. We’ve also included capacity-building programs and advisory services, and have invited successful women entrepreneurs to share their experiences to Enat bank customers.
Alliance: Very small enterprises tend to fall in between the SMEs that commercial banks normally serve and micro-enterprises that MFIs address. How is Enat Bank Ethiopia innovating to provide solutions to this segment—and specifically to women?
WT: We have a risk fund scheme designed for women in the missing middle segment whereby our shareholders and volunteers deposit funds in a segregated account in order to make credit accessible to women without collateral. These women’s financing needs are above the limits of MFIs and below the limits of commercial banks, with a loan size ranging between ETB$10,000 (US$294) and ETB$300,000 (US$8,830) and an average approved loan amount of ETB$203,000 (US$5,975).
We collaborate with MFIs to connect with female entrepreneurs whose financing needs grow beyond the MFIs’ capacity.
Alliance: We all know how crucial it is to capture sex-disaggregated data to establish a baseline for a women-centered strategy, as well as monitor its performance. Have you already started sex-disaggregating the data internally? Did you face any challenges?
WT: We started by capturing and reporting data segregated by gender for individuals. However, we don’t yet have gender statistics for enterprises. We are planning to implement the IFC’s definition of a ‘woman-owned business’ as a basis to disaggregate our data by gender for businesses.
The main challenge is that our system is not developed in a way to label business customers by sex. We are planning to set up a system that is able to incorporate such data, although it is a lengthy project, requiring data collection from existing customers and MIS software functionality improvements to include subsegments.
Alliance: Can you tell us about your overall internal diversity and inclusion strategy? What’s your vision on that front going forward? Do you have initiatives to get more women into leadership positions?
WT: Our internal diversity and inclusion strategy stems from our vision to ensure women’s equitable ownership, financial inclusion and employment opportunities. To reach our objectives we ensure that:
We have proudly met most of these objectives, and we are working on bringing more female staff to leadership positions through an integrated system of recruitment, retention and development. This includes training our female workforce on leadership and emotional intelligence regularly and implementing a retention and development strategy. In addition, we initiated a Supplier Diversity Scheme to encourage more women-owned businesses to do business with Enat bank.
Alliance: How did you first hear about the Financial Alliance for Women, and why did you decide to join?
WT: We first heard of the Alliance in the framework of our partnership agreement with the IFC in developing Enat bank’s women’s market strategy. Following our successful launch, we joined the Financial Alliance for Women because we trust it will provide us with great exposure to best practices and success stories in banking on women and grant us the opportunity to share our story in the future.
ENAT Bank ETHIOPIA at a Glance (as of June 2019)
Number of clients: 97,730
Percentage of female clients: 60%
Number of employees: 540
Percentage of female employees: 60.2%
Value of assets (in USD): 277.5 million
Value of Profit Before Tax (in USD): ~ 7 million
Value of Profit After Tax (in USD): ~6.08 million
Loan portfolio (in USD): 165.3 million
Loan portfolio to women (in USD): 28.2 million
Deposits (in USD): 211.3 million
Deposit held by women (in USD): 53.1 million
NPL ratio (in %): 1.86%