FC Africa has signed the country’s first blended finance partnership agreement focused on conflict-affected areas, marking a major step toward expanding access to finance for micro, small, and medium enterprises (MSMEs in post-conflict settings.
Under the agreement, Lion International Bank, through its digital finance platform Alegnta, has formally launched a pilot uncollateralized digital lending service aimed at MSMEs operating in Mekelle and Abala. The initiative targets enterprises whose access to credit has been severely constrained by conflict, limited collateral, and weak or non-existent credit histories.
The pilot is being implemented under the ER-CAP Programme, a five-year initiative funded by the Government of Sweden and led by Mercy Corps, in partnership with the Danish Refugee Council / Dansk Flygtningehjælp (DRC/DHF) and FC Africa. The programme focuses on supporting businesses run by returnees, internally displaced persons (IDPs), and host community members, with the aim of restoring livelihoods and stimulating local economic recovery.
Through a blended finance structure, the initiative combines private sector lending with de-risking mechanisms and technical assistance, enabling Lion International Bank to extend credit without traditional collateral requirements. The approach is designed to reduce lending risk while improving enterprise readiness and strengthening financial sector confidence in underserved, high-risk markets.
Stakeholders emphasized that the success of the pilot will not be measured solely by loan volumes, but by its ability to responsibly expand access to finance, build sustainable lending systems, and contribute to long-term post-conflict economic recovery.
If successful, the model could provide a scalable blueprint for inclusive finance in other conflict-affected and fragile regions across Ethiopia.
