The interest in Ethiopia’s first mobile money platform reflects “the huge pent-up demand for mobile money services in Ethiopia,” a spokesperson for the World Bank said. Combined with the government’s process to open up the telecom sector to foreign players, it expects soon “to see a wider range of digital financial services, such as online savings accounts, loans, [and] insurance services,” the World Bank added in an emailed statement. “This will open up opportunities for partnership with banks and other financial services companies.”
With its new but already popular mobile wallet, Ethiopia joins a growing number of African countries that have mobile money platforms, although the most successful and notable ones are privately run. Zimbabwe, with its EcoCash, and Kenya with Safaricom-owned M-Pesa, are among the African countries where mobile money has taken root.
The launch of the wallet preceded the recent news that Safaricom, working with a consortium of international investors, including Vodacom and the UK’s CDC Group, has just been announced as winner of a bid to build, operate, and run a private mobile network in Ethiopia, making it the country’s first private network provider. Ethio Telecom itself is on the path to privatization, with the government keen to parcel out a 45% stake in the company to international investors.
Ethiopia’s key mobile market
Ethiopia ranks among the lowest countries in the world in terms of the use of digital financial services, according to a recent survey by the World Bank. This is in part why GSMA, an organization representing mobile network operators which collects data on the sector, describes the country of 112 million “as one of Africa’s sleeping mobile money giants.”
“Sub-Saharan Africa will have more than 130 million new subscribers by 2025, half of which will come from just five markets, including Ethiopia,” GSMA’s acting head for sub-Saharan Africa Angela Wamola says. That makes the country “a key market for mobile” on the continent.
Ethio Telecom currently has around 50 million subscribers on its cellphone network. It said Telebirr would help meet “the growing demand for digital financial services, and ensure financial inclusion” in the country. CEO Frehiwot Tamiry says the company’s goal is to get 21 million registered users on the platform in the next 12 months.
Last year, Ethiopia launched Ethswitch, a platform that allows the country’s 19 finance institutions to share payment platforms such as point-of-sale machines and ATMs. The total number of finance institutions is however still considered inadequate given the country’s population. According to a paper in the International Journal of Economics and Finance, 66% of Ethiopia’s adult population, or 36 million people, do not have access to the country’s financial system.
Plans to link Telebirr with banks, as well as plans to allow additional privately run mobile wallets one year from now, will enhance the cross-bank switch already operational under Ethswitch, thus bumping up ease of finance transactions for the country’s citizenry.
Although the liberalization of the telecom sector by Ethiopia’s president Abiy Ahmed has won him good standing with global investors, his poor handling of the Tigray crisis and accusations that he has bungled the telecom privatization process appear to be spooking the international community.
The World Bank was concerned that the pace to finalize bidding for the two telecom permits could have been slowed down as a protectionist measure in favor of Ethio Telecom, which has now been given a head-start in mobile money (Safaricom will not be allowed to operate any mobile money services in at least the first year of its launch in the country). The government of Ethiopia is also encouraging new mobile operators to share infrastructure with the state owned telco.
“As soon as it is practically possible, we have the expertise and the capability to be able to roll [mobile money] out,” says Safaricom CEO, Peter Ndegwa. “We’re very keen to replicate the success that we have seen both in Kenya, but also across a number of other markets.” He added that Safaricom and other bidders “made it very clear from the beginning…that for the country to fully benefit from the mobile telecommunication, mobile money is a critical component.”
Complicating matters is the fact that Netblocks, which monitors state blockades of the internet and social media, confirmed this week that Facebook, WhatsApp and Instagram had been “restricted in Ethiopia,” most likely by the government, which has a history of blocking online platforms in the country. The latest incident came amid “renewed international condemnation over the Tigray conflict and the postponement of elections,” the watchdog organization said.
These are challenges any newcomer to Ethiopia’s telecoms sector will have to face. But Ayobami Omole, an analyst at Tellimer Research, believes that privatization will have a positive impact. “High-quality new entrants could help improve infrastructure and prompt tech innovation” within the country,” Omole says.
