Michu Crosses ETB 60 Billion, Expanding Collateral-Free Lending in Ethiopia

Michu, Ethiopia’s pioneering collateral-free digital lending platform, has disbursed more than ETB 60 billion through over 3.2 million loan accounts since its launch in 2022, underscoring the growing role of artificial intelligence and digital banking in widening access to finance for micro, small and medium-sized enterprises (MSMEs).

Recent figures from the Cooperative Bank of Oromia highlight the rapid growth of digital lending for entrepreneurs and MSMEs. The platform provides working capital through a fully digital process, replacing traditional collateral with alternative credit evaluation.

 

“The milestone validates our long-term vision of harnessing digital innovation to deliver inclusive and accessible financial services,” said Deribie Asfaw, Chief Executive Officer of Cooperative Bank of Oromia, noting its role in driving sustainable economic growth.

Launched in January 2022 by the bank and Kifiya Financial Technology, Michu is one of Ethiopia’s first large-scale digital lending platforms. It utilizes Kifiya’s AI-powered Qena engine to assess borrowers using digital financial data instead of physical collateral.

The platform now offers multiple financing products tailored to different customer segments. While Michu Wabi targets established businesses seeking larger working capital loans, Michu Guya and Michu Kiyya focus on smaller enterprises and informal businesses that have traditionally been underserved by commercial banks. The bank added that women account for more than 35 percent of Michu borrowers, reflecting growing participation by women-owned businesses.

The latest milestone continues a period of rapid expansion. Michu had processed ETB 40 billion through 2.44 million loan accounts by December 2025 before surpassing ETB 50 billion and approximately 2.86 million accounts in April 2026. The newest figures indicate that another ETB 10 billion in financing and more than 300,000 additional loan accounts were added within roughly three months.

The expansion comes as Ethiopia seeks to improve financial inclusion and narrow the sizeable financing gap facing MSMEs. Industry estimates presented this year suggest formally registered small businesses face a financing gap of around ETB 1 trillion, rising to approximately ETB 2.6 trillion when informal enterprises are included.

As digital lending platforms bypass traditional collateral-based banking to offer faster approvals and broader credit access, their rapid growth has intensified discussions around responsible lending, consumer protection, pricing transparency, and portfolio quality.

Additionally, Cooperative Bank of Oromia clarified that the ETB 60 billion represents cumulative disbursements rather than outstanding loans, leaving Michu’s active portfolio, repayment performance, non-performing loan ratio, and borrower count undisclosed.

Beyond digital lending, the bank said its mobile payment platform, Coopay E-birr, has processed transactions exceeding ETB 6 trillion and now serves more than 22 million customers, reflecting broader growth in Ethiopia’s digital financial services ecosystem.

Source: Birrmetrics