New App Dire MFI Brings Non-Collateral Loans to Eastern Ethiopia

Mobile money service provider Kacha Digital Financial Services and Dire Microfinance Institution have partnered to launch a digital savings and lending platform. Launched last week, the app, dubbed Dire MFI, enables residents of the eastern region to access two types of non-collateral loans.

According to the partnership, Kacha, the first private mobile money service in Ethiopia, provides the platform’s technology, while Dire Microfinance, established in 2003, provides the capital. In a written statement shared with Shega, Kacha stated  users can access the service by downloading the app from the Play Store or by using the USSD number *914#.

Kacha explained that once users complete the registration process, their information will be stored in Kacha’s Customer Registration and Profiling System (CRPS). After approval, the loan will be credited to their Kacha wallet, and they can then transfer the money to their preferred bank.

Mulugeta Abebe, Business Development and Marketing Director at Dire Microfinance said that the partnership with Kacha aims to provide users with loan and savings services without requiring them to visit an office. “We have prepared two options for the loan purpose,” says Mulugeta. “We offer a loan service for employees and another for three-wheeled vehicles (Bajaj) operating in Dire Dawa city.”

For the salary loan, access is granted once an agreement between corporates and Dire Microfinance is signed. Mulugeta explained that corporations must agree to pay their employees’ salaries through Dire Microfinance to access the service. Loans can range up to fifty thousand birrs, depending on the salary, and can be taken for a week or up to six months. Corporates assume the risk if users fail to repay the money, he added.

The second loan option for three-wheeled vehicles requires users to present verification of motor ownership. Mulugeta told Shega that their institution has already helped many three-wheel motor owners purchase their vehicles with a loan from Dire Microfinance.

Owners can upload official documentation showing vehicle ownership on the platform. “We require the plate number and Libre to minimize the risk of losing the money,” he said, adding that they will work with the city’s traffic management system.

Mulugeta noted that a digital ID is not mandatory for the loan service. “We accept regular kebele ID, driving licenses, or passports,” he added. The goal is to provide loans for service and repair costs for the drivers, which can reach up to thirty thousand birr and be repaid within six months. Shega was unable to learn the interest rates of the loans.

Dire Microfinance by the Dire Dewa City Administration, following a feasibility study identifying gaps in financial inclusion, has over 10,000 borrowers and more than 65,000 savers.