Kenyan telecommunication titan, Safaricom, has become the first foreign entity to be awarded a mobile money license in Ethiopia, marking a momentous step in the evolution of Africa’s digital finance landscape. This significant move by Ethiopia’s central bank arrived seven months after Safaricom’s debut as the inaugural private telecommunication provider in the nation, disrupting the longstanding monopoly of state-controlled Ethiopia Telecom.
“This is a pioneering moment as we grant the first-ever mobile money license to a foreign investor in our country,” declared the National Bank of Ethiopia in a press release. The central bank further emphasized its commitment to fostering the growth of digital finance in Ethiopia, advocating for a transition from cash-centric transactions to a robust digital payment infrastructure.
Ethio Telecom already operates Telebirr, a mobile money transfer service named after the country’s currency. However, Safaricom brings its globally acclaimed M-Pesa service to the Ethiopian market, a platform that has transformed financial transactions since its inception in Kenya in 2007. M-Pesa is now an essential tool for 51 million users across seven African nations, contributing an estimated 40% to Safaricom’s profit.
Safaricom, recognized as one of East Africa’s largest corporations, confirmed a payment of $150 million for the Ethiopian license. It intends to initiate M-Pesa operations in Ethiopia during the latter half of this year. Despite reporting a 10 percent decline in net profit for the year concluding March 2023, amounting to 62.3 billion Kenyan shillings ($455.6 million), Safaricom remains optimistic about its Ethiopian venture, currently running at a deficit.
Having activated its telecommunication network in Ethiopia in October of the preceding year, Safaricom has already amassed a customer base of 2.1 million, with an ambitious target of reaching 10 million by the following year. This comes amidst the Ethiopian government’s declaration in February of its plans to sell up to 45 percent of Ethio Telecom, aligning with their larger goal of liberalizing the country’s stringently regulated economy.
The dissolution of the state monopoly in the telecom sector is a critical element of the economic reform agenda launched by Prime Minister Abiy Ahmed in 2018. However, with the nation’s economy grappling with recent downturns, the resolve to sustain these reforms seems increasingly tenuous.