The Quest for Regulation of Uncollateralized Digital Lending in Ethiopia

Abstract

The availability and accessibility of credit is instrumental to startups that are in need
of ‘seed money’ to raise investment capital. The availability of a credit system that is
easy to secure is very critical. The current digital revolution has changed the
traditional hurdles for accessing loan. Nowadays, technology has changed the
modality and conditionality of accessing loan. Ethiopian banks and non-bank
economic sectors, like Ethio-Telecom have started offering uncollateralized digital
lending. The Ethio-Telecom, took the first initiative in offering easy and
uncollateralized digital credit system in Ethiopia. However, the regulatory landscape
is not ready to effectively to govern the increasing uncollateralized digital lending.
This short article attempts to highlight the need for setting a regulatory framework
that specifically suits to uncollateralized digital lending in Ethiopia by applying
doctrinal research methodology.