By Biruk Alemu @Birukalemu21
Addis Abeba – Equb is Ethiopia’s age-old tradition widely known as social-based, indigenous saving and credit scheme with a distinct purpose of helping one another through a rotating mechanism whereby members of a given Equb association save equal amount of money at a given time (such as monthly or weekly), and provide the sum of the saving to one lucky person amongst them based on a lottery drawing.
In 2020, four tech-savvy stakeholders came together and created an app called “Digital Equb” with an intention of modernizing this ancient indigenous saving and credit scheme with the help of modern technology.
Bisrat Fikru, the CEO of Digital Equb, says the app is developed to avoid space and time limitations and enable people become a part of Equb without being necessarily physically together and collect the money in cash.
In the traditional Equb, a person who wants to enter to Equb has to know all the other members, Bisrat said; Digital Equb members don’t need know one another. However, they need to present copies of verifiable credentials such as identification card, income statements, business licenses, among others, upon registration. They use mobile banking or telebirr to pay their contributions from wherever they are, for which, “we have recently made an agreement with Commercial Bank of Ethiopia to work together,” Bisrat told Addis Standard.
Participants are only required to be physically present at the company’s office on the day of the lottery drawing, and they are expected to be charged a service fee of two to five per cent, depending on the amount of money they collect after the drawing.
The CEO also stated that people can join the Digital Equb by selecting the amount of money they want to contribute. He says that government and private company employees could contribute between 1,000 and 10,000 Birr per month, drivers from 300 to 1,000 Birr per day, and those engaged in different business sectors from 500 to 5,000 Birr per day.
According to Bisrat, the app has been downloaded by more than 7,000 people so far, but only 400 of them have become members having completed the necessary registration.
Mahlet Zewdu, one of the members of the digital Equb app, told Addis Standard that she was part of two rounds of Equb, where she won 50,000 and 20,000 birr one after the other.
She said she paid 2000 and 800 service fees for the two rounds respectively, adding that she found it easier to take part than the traditional Equb and is also reliable.
Nardos Girma, whose livelihood rely on spice processing, is also a member of the Digital Equb. “I became lucky in the third week just after I joined the Digital Equb having verified its legitimacy”, she said. She added that the Digital Equb app takes away the cumbersome job of mobilizing people to become part of a Equb and having collecting the money in cash every week, or every month based on the interval of the Equb.
According to Bisrat, the platform is suitable for those who have traditional Equb and want to switch to the digital one, while having their members intact to use the technology to collect money and cast the lottery draw with the app.
Besides, the Digital Equb application includes a system that allows the lottery winner to sell their wins. Among other functionalities, the company will also make deposits for members who couldn’t make their payments on time with up to two-percent penalty fee.
In addition, Bisrat said, preparations are underway to start in-kind Equb for items such as laptops, phones, TVs, sofas, cars and other equipment. As most of its members are individuals living abroad, Bisrat said, the Digital Equb will be helpful in bringing foreign currency into the country.
Addisu Abebaw, an economist, says that as part of efforts to digitizing the country’s economy, Digital Equb app could be monumental in bringing the large amount of cash circulating through the traditional Equb into digital financial systems. AS