Press release

ILO and Shabelle Bank pilot innovative product for financial inclusion of hosts and forcibly displaced in Ethiopia

Press release | Addis Ababa | 06 February 2024
ILO and Shabelle Bank representatives at the launch ceremony in Jigjiga, Ethiopia. ©ILO/Zelalem Alemenew Desta
Jigjiga, Ethiopia – The International Labour Organization (ILO) and Shabelle Bank teamed up to pilot test a new financial products targeting forcibly displaced persons (FDPs) and their host communities in the Somali region. With these financial products and services including access to loans, Shabelle Bank will be able to enter a new market segment and FDPs and host communities will have better access to finance to meet their needs.

Ethiopia is home to over 916,000 refugees primarily from Eritrea, Somalia and South Sudan. These significant parts of the society have no or limited access to financial services; especially credit products.

The ILO has been working in the area of financial inclusion for more than three decades. The ILO’s Social Finance Programme works with the financial sector enabling it to contribute to the ILO Decent Work agenda. Through collaborative efforts with diverse financial sector players, the programme drives the creation, testing and launching of innovative and inclusive financial solutions.

An assessment by the ILO, ’Integrated enterprise, cooperative and financial services assessment on refugees and host communities around Jigjiga, Somali Region and Shire, Tigray Region, Ethiopia’, revealed that microfinance institutions (MFI) and commercial banks primarily serve the host community, leaving refugees with limited options for securing loans. The assessment was conducted as a part of Government of the Netherlands supported Partnership for improving prospects for forcibly displaced persons and host communities (PROSPECTS) programme.

As per the assessment, the government of Ethiopia has developed several legal proclamations and policies with the intention of enhancing access to financial services. However, the Customer Due Diligence of Banks Directive, because of its Know Your Customer (KYC) requirements, has had the effect of excluding some potential clients, particularly refugees, as they do not have a national identity card, which is part of the KYC requirements. Moreover, the stringent lending procedures, policies and requirements exclude small businesses from gaining access to financial services from commercial banks. The banks have limited knowledge and therefore little interest in serving low-income earners with credit products, both in the refugee and host communities.

In January 2021, the ILO took a decisive step towards bridging the financial inclusion gap for refugees and host communities. Recognizing the crucial role of accessible financial services in empowering vulnerable populations and fostering economic development, the organization delivered the ILO’s ‘Making Finance Work for refugees and host communities’ training programme for financial service providers and other stakeholders.

Following the training programme, Shabelle Bank (formerly Somali Microfinance - SMFI) recognized the potential for expanding financial inclusion in the Somali region and expressed its interest in developing appropriate financial products targeting FDPs and host communities. This shared vision led to the signing of a Memorandum of Understanding in October 2022 among the two parties.

Since then, the ILO has been providing technical and financial support to Shabelle Bank in developing new financial products specifically designed to meet the needs of this underserved population.

In this pilot phase, a product is made ready for the potential target customers. The product is a working capital loan designed for financing existing micro and small businesses owned by refugee and host communities. With a planned duration of one year, the new product will be tested in one branch of Shabelle Bank (Kebrebeyah), targeting at least 200 host and refugee community entrepreneurs, small and medium-sized enterprises and cooperatives before wide-scale implementation of the service in different areas.


This initiative will not benefit only refugee community entrepreneurs and MSE operators, but it will also assist Shabelle Bank in diversifying its product portfolio and foster cooperation between Shabelle Bank and ILO to improve the financial inclusion of forcibly displaced people and host communities in Somali region through access to suitable microfinance products."

Alexio Musindo, Director, ILO Country Office for Ethiopia, Djibouti, Somalia, Sudan and South Sudan and Special Representative to the AU and ECA

Shabelle Bank is committed to serving all communities in the Somali Region, and we are proud to partner with the ILO in this important initiative. With our strategic partnership, we were able to leverage the bank's expertise and the ILO's technical knowledge to develop tailored financial products that meet the specific needs of both FDPs and host communities. This pilot project will provide crucial insights for scaling up the financial product and expanding its reach throughout the Somali Region and beyond. "

Mr Khadar Ahmed Abdi, CEO of Shabelle Bank.

Offering tailored financial products and services has the potential to bridge the financial gap, unlock economic opportunities, boost local businesses and improve the overall well-being of forcibly displaced persons and their host communities. By providing access to finance and essential financial services, we can empower FDPs and their hosts to become self-reliant, contribute to their communities, and build a brighter future for themselves and their families. "

Henk Jan Bakker, Ambassador of the Kingdom of the Netherlands to Ethiopia.
Since 2019, the ILO has been implementing the PROSPECTS programme, spearheaded and funded by the Government of the Netherlands to improve the prospects of refugees and host communities.”

About the International Labour Organization (ILO):
The ILO is the United Nations agency responsible for setting international labour standards. Founded in 1919, the ILO brings together government, employer and worker representatives of 187 member states to set labour standards, develop policies and deliver knowledge and training in order to promote rights at work.

About Shabelle Bank:
Shabelle Bank, formerly Somali Microfinance, is a leading financial institution in Ethiopia's Somali Region, providing financial services to micro and small businesses, traders and entrepreneurs.

For more information, please contact:
  • Eirmyas Kaase, National Programme Officer at ILO - or +251 911 16 76 047
  • Ahmed Abas, Microfinance Operations Director at SB or +251 915 70 91 27