Yasin Sharif, a refugee living in the Somali Region, is one of the first users of the Aisha product

Financial inclusion

How inclusive banking is creating opportunities for refugees and host communities in Ethiopia

Through their partnership, the ILO and Shabelle Bank are expanding access to affordable, inclusive finance, helping refugees and host communities in Ethiopia’s Somali Region grow businesses and build more resilient livelihoods.

5 August 2026

Kebribeyah, ETHIOPIA (ILO News) – For 28-year-old Dib Mohamed, a mother of six living in the Kebribeyah refugee camp, accessing formal financial services once seemed out of reach. Born in Ethiopia to Somali refugee parents, she grew up facing many of the challenges common to displaced communities, including limited access to economic opportunities and financial services.

Although she and her husband operated a small tailoring shop, requirement such as physical collateral and formal customer identification documents (KYCs requirements) prevented them from securing the finance needed to expand their business. That changed when Dib accessed Aisha, a tailored Shabelle Bank financial product designed and implemented with technical and financial support from the ILO under the PROSPECTS programme.

Dib Mohamed, a refugee living in the Somali Region, is one of the first users of the Aisha product

Dib received a loan of ETB 75,000, approximately US$ 480, which she used to purchase additional garments and increase the shop's working capital. She repaid the entire loan five months ahead of schedule.

"I made the repayment early because I want to take another round of financing to expand our business even further," she said.

Building institutional capacity for inclusive finance

The Aisha product is a result of partnership between the ILO and Shabelle Bank that began in 2021.

As part of the collaboration, the ILO provided specialized training on Making Microfinance Work for Refugees (MMFRW) to financial service providers in Ethiopia. The training aimed to help institutions diversify their products and serve refugees and host communities in a strategic, sustainable and cost-effective manner.

Following the training, Shabelle Bank designed an action plan to implement the MM FRW and working with the ILO to design a financial product tailored to the needs of refugee and host community entrepreneurs. The ILO assigned national and international consultants and supported the bank in designing the product and coaching staff to apply the knowledge gained in the classroom training.

The ILO also trained and certified four Shabelle Bank staff members as National Financial Education Trainers. One of them, Ahmed Siyad, now Marketing and Business Development Director at Shabelle Bank, went on to qualify as a Regional Financial Education Trainer.

"By investing in the institutional capacity of local financial institutions like Shabelle Bank, we are helping create sustainable financial ecosystems that are inclusive by design," said Stephen Opio, Chief Technical Advisor of ILO PROSPECTS in Ethiopia and Sudan.

Ahmed Siyad, Marketing and Business Development Director at Shabelle Bank

"With humanitarian funding declining, our goal is to support financial institutions in the transition from short-term assistance towards sustainable systems that foster decent work, self-reliance and economic resilience for both refugees and the host communities that welcome them."

Removing barriers to finance

Traditional lending models often exclude refugees and people with low incomes because they cannot provide conventional collateral. Aisha addresses this barrier through a group-guarantee mechanism, under which borrowers from solidarity groups whose member support one another in meeting their repayment commitments.

Dib belongs to a four-person group. Another client, 32-year-old tailor and a father of three from host community, Yasin Sharif is a member of five-person solidarity group. Yasin received a loan of ETB 75,000 (approximately US$ 480).

“I used the money to buy more garments and expand my shop,” said Yasin.

After completing repayment, I hope to take another loan to continue growing the business.
Yasin Sharif , Shabelle Bank client

To ensure repayment more manageable, Shabelle Bank introduced an innovative daily savings mechanism. Customers save one-thirtieth of their monthly instalment each day, allowing them to make a smaller and more regular contributions.

Payments can be made through the HelloCash Mobile Money platform, at bank branches or directly at clients’ workplaces through Shabelle Bank credit officers. Mobile banking agents deployed in refugee camps also provide cash-in and cash-out services, including the collection of daily loan repayments.

The product was first piloted in Kebribeyah, a city from Somali region in Ethiopia and has already shown encouraging results.

So far, 214 customers, including 100 refugees, have accessed the service. Women account for 56 per cent of borrowers. More than ETB 12 million, approximately US$ 77,500, has been disbursed through loans ranging from ETB 25,000 to ETB 75,000.

“The repayment rate is very encouraging,” Ahmed said. “More than 95 per cent of our customers repay on time. Much of the risks we expected did not happen. We provided the loans without collateral, but customers are making repayments responsibly.”

Scaling up for sustainable financial services

Following the results of the pilot, Shabelle Bank is reviewing 150 new applications for Aisha financing. Of these 82 are renewal requests from clients who fully repaid their loans.

To meet the increasing demand, the bank plans to increase its maximum loan amount from ETB 75,000 to ETB 150,000. It is also preparing to expand the product to other refugee-hosting areas in the Somali region, including Awberre and Sheder in 2026 and Dolo-Ado in 2027. The bank is investing in modern financial technologies to make its services more accessible and strengthen its ability to serve clients in remote communities.

"Looking ahead, the Bank envisions leveraging customers’ credit history as a form of collateral to further expand access to finance,” Ahmed said. “While this approach requires strong data security, reliable digital infrastructure and integrated systems, the Bank has already laid the foundation through its ongoing investments in secure and modern financial technology."

According to Stephen, the results demonstrate that refugees and other displaced people can be reliable clients when financial products are designed around their circumstances.

The 95 per cent repayment rate achieved by Shabelle Bank challenges prevailing myths about the financial risk of investing in displaced populations,
Stephen Opio, Chief Technical Adviser, ILO PROSPECTS Ethiopia and Sudan

"The ILO remains committed to strengthening this partnership, scaling these models with other financial service providers and proving that inclusive finance is a powerful vehicle for local economic development."

Supporting livelihoods through partnership

Aisha is supported through PROSPECTS, a global partnership implemented by the ILO, the International Finance Corporation, UNHCR, UNICEF and the World Bank, with support from the Government of the Netherlands.

The partnership seeks to improve access to education, social protection and decent work for refugees, forcibly displaced people and members of the communities that host them.

In Ethiopia, the ILO works with government institutions, financial service providers and other partners to develop inclusive market systems, strengthen livelihoods and create sustainable economic opportunities for refugees and host communities.