The short: Kenya’s mobile money M-Pesa is coming to Ethiopia!
What this means: Ethiopia’s state-owned Ethio telecom has maintained a monopoly over Ethiopia’s telecommunications services since its launch in 2010. That changed last year when a consortium led by Kenya’s Safaricom won a $850 million bid over telcos like MTN and Orange to acquire a national telecom license and retain a market share of Ethiopia’s 115 million population.
The license gives Safaricom powers to roll out 4G services across Ethiopia. Still, it was exempt from offering mobile money services like M-Pesa – which accounted for 48.5% of Safaricom’s revenue in its 2021’s earnings report.
Fast forward to present day, Ethiopia’s National Bank is drafting a bill that will allow mobile money services like M-Pesa to operate in the country – not a bad compromise for an $850 million check.
It’s not all peaches and roses: Ethio telecoms launched its mobile money service Telebirr last year, acquiring over 4 million customers in its first few weeks. However, with the M-Pesa rollout, Telebirr faces a formidable competitor in Africa’s largest fintech operator – which services over 51 million users across 7 African countries.
This might be the disruption Ethiopia’s PM is gunning for. The play is to take Ethiopia fully digital over the next decade, beginning with an unbundling of its telecoms sector. With new competition in this industry, Ethiopians now have access to diverse payment options outside outdated banking systems.
Money moves: Ethiopia’s PM Abiy Ahmed overturned decades of privatised telecom services by opening the country to its largest foreign direct investment. This deal is expected to inject over $8 billion into Ethiopia’s economy over the next ten years and create 1.1 million jobs in the short term. The PM also announced plans to sell off a 45% stake in Ethio telecom, attracting more global players in Ethiopia’s economy.
Safaricom’s historic expansion into Ethiopia’s insulated economy is a big win for Safaricom’s head honcho Peter Ndegwa
, who took over the reins two years ago and a more significant victory for Ethiopians who have been anticipating innovation in its financial technology.