Resilience and Incomes for Smallholders in Ethiopia through Digital Financial Services (RAISE-DFS)
Lead partner: Mercy Corps Europe
2022-2025
Location: Somali, Afar and Oromia Regions, Ethiopia
Project partners: Somali MicroFinance Institute, Rays MFI, Awash Bank, Siinqee Bank
Project aims
Through partnerships with select financial institutions, this project aimed to increase incomes and enhance resilience for rural households by supporting financial institutions to develop stronger systems and capacities that enable 75,000 households to access new products and services, facilitating increased savings, investment in off-farm businesses, diversified income streams, and investment in livelihoods.
Photo: Outdoor Literacy Awareness Campaign March 2023
Exceeding expectations - Key facts and figures
Through RAISE-DFS, a total of 354,682 people accessed digital financial products and services in Somali, Afar, and Oromia Regions. This empowered them to set up savings accounts and invest in businesses, bring greater financial security and stability into their lives.
- 281,355 mobile money users are now connected to digital finance.
- 62,946 people opened Sharia-compliant finance-based savings accounts.
- 23,764 people accessed digital microcredit to start or grow their businesses.
- 48 financial literary events were conducted to build local capacity and confidence.
Why Sharia-compliant financial services matter
Many people in Ethiopia’s Somali, Afar, and Oromia regions follow Islamic principles that guide their approach to finance, prohibiting interest and speculative investments. Sharia-compliant financial services offer products that avoid interest (Riba) and promote risk-sharing and ethical investment. Culturally appropriate services such as these are essential for promoting financial inclusion in these communities.
If you would like to learn more about Sharia-Compliant Financial Services, take a look at another blog published here: Sharia Compliant Financial Services for Smallholders in Ethiopia | Jersey Overseas Aid Commission.
Photo: Raise DFS Financial Forum April 2023
What was the problem?
The regions of Somali, Afar and Oromia are situated in the arid lowlands of Ethiopia. Hard to reach and vulnerable to climate shocks such as flooding, these lowlands, historically, have been comparatively underdeveloped with communities benefitting from fewer commercial and government services.
These regions also suffer from the highest rates of childhood malnutrition in the country. Most of the traditional livelihoods, based around mobility and livestock have become more challenging and less profitable due to climate stressors including drought, population growth and resource depletion. This has led to repeated cycles of animal loss, displacement and hunger.
Additionally, there is very little in the way of savings culture or availability of financial products for the people of the lowlands. Therefore, investment in improved livestock or equipment is low, meaning herds aren’t as profitable as they could be. When income is low and without a savings buffer or alternative options, people’s lives are greatly impacted when their livelihoods are disrupted.
Before the project, thousands of small entrepreneurs – especially women – faced major barriers:
- A lack of affordable, Sharia-compliant financing
- Businesses that were informal and vulnerable to shocks like drought
- A lack of digital tools and financial literacy, hindering growth and long-term planning.
Without capital or formal business support, small business owners and pastoralists could only dream of stable, community serving businesses, turning their ideas into lasting income-generating ventures.
What did the project do?
Over the course of three years, invaluable partnerships between Mercy Corps and institutions like Rays Microfinance Institutions (Rays MFI), gave local entrepreneurs the opportunity to receive Sharia-compliant digital micro-loans such as their ‘E-Murabaha’ loans, financial literacy and business training, and digital tools to track income, control expenses and save. These opportunities allowed small business owners and local entrepreneurs to develop their ambitions into successful business prospects, benefitting themselves and the wider community.
Photo: Rays MFI and Shabelle DFS training participants.
Stories of change
"Luqman Physiotherapy" - How one entrepreneur transformed access to medicine and therapy
In the Somali Region of Ethiopia, Abdiaziz Sheekh Arab saw families struggle to find affordable, reliable medicine. Many travelled long distances for basic drugs, and others went without treatment due to cost of availability. Driven by this need, Abdiaziz dreamed of opening a local pharmacy, to bring life-saving medicines closer to his community and reduce health risks caused by delays or lack of access.
But like many aspiring entrepreneurs in undeserved regions, he faced a major barrier: lack of startup capital. “I had the passion to serve my community, but I didn’t have the resources to begin.” Abdiaziz recalls.
That changed when he came across the RAISE-DFS project. Through the project, Abdiaziz received a loan, financial literacy training, digital tools, and business development support.
After receiving the initial loan, Abdiaziz was able to open a small drug shop. Following his education on loans and business development, Abdiaziz was able to pay off and take out new loans transforming his small shop into a fully registered pharmacy with trained staff and modern equipment.
Yet, Abdiaziz didn’t stop there. He identified another need, physiotherapy services, and he reinvested into the community, launching a physiotherapy centre, called Luqman Physiotherapy, with modern tools and qualified therapists.
Photo: Abdiaziz Sheekh Arab in his registered pharmacy alongside a trained member of staff.
Photo: Abdiaziz’s physiotherapy centre, Luqman Physiotherapy, equipped with modern tools.
Today, his two businesses provide essential health services to hundreds of people in his community. Abdiaziz’s ambition, enabled by the RAISE-DFS project, created jobs and strengthened his community’s healthcare system, demonstrating how the RAISE-DFS project does not just strengthen businesses but also facilitates the improvement of communities.
From street sales to a thriving clothing shop: how Adar Abdulahi Nur transformed her business and inspired a community
Every morning, Adar Abdulahi Nur set out on foot, carrying her stock of clothes and visiting shop after shop to make a sale. Her customers valued her products, but selling this way meant unpredictable income, long hours, and no space to showcase her goods properly.
“I wanted a place where customers could come, see what I had, and feel comfortable. But I didn’t have the capital or tools to make it happen,” Adar explains.
Like many women entrepreneurs in Ethiopia’s Somali Region, Adar faced systemic barriers: limited access to finance, lack of business training, and no digital tools to track income or growth.
However, Adar’s journey changed when she the Digital Financial Services (DFS) Project. Through the DFS project, Adar received; business and financial literacy training, access to digital tools for managing income and expenses, and her first loan of 120,000 birr to rent a permanent shop and expand inventory.
“The training taught me to plan better and save,” she shares. “The loan gave me a real chance to grow,” she says.
By having a permanent shop Adar’s business transformed, her customers were able to browse comfortably and return regularly, her sales become more stable and predictable, and Adar could stock more products, attracting diverse customers and an opportunity to build trust. Thanks to her education in business and financial literacy, Adar was able to reinvest in her shop supported by further loans from the DFS project. With each step, Adar improved her shop’s design, expanded product variety and managed her finances digitally. Thanks to help of the DFS project, Adar is no longer an informal street trader but the proud owner of a respected clothing shop that maintains its loyal customer base.
Adar’s story shows that investing in financial inclusion doesn’t only fund businesses, yet also, empowers women, creates jobs, markets and reduces poverty.
Photo: Entrepreneur Adar Abdulahi Nur in her shop in the Somali Region.
Conclusion
RAISE-DFS is already making a remarkable impact by helping small business owners and entrepreneurs turn their ambitions into successful business ventures. Its comprehensive training in financial literacy and business development, combined with improved access to loans, Sharia-compliant financial services, and digital tools, is playing a crucial role in this success.
At the same time, the project continues to strengthen local communities by boosting self-reliance, enhancing education and resilience to economic shocks, and fostering job opportunities and sustainable incomes. These efforts have contributed significantly to poverty reduction and the empowerment of marginalised groups.
As the project approaches its completion in September, it is serving as a powerful example of how sustained investment in financial inclusion benefits not only local businesses and entrepreneurs but also promotes widespread development within communities.