Ethiopia has okayed Safaricom to introduce its popular mobile money service, M-Pesa, in the market of over 110 million people.
The announcement was made during the national launch of Safaricom Telecommunications Ethiopia (STE) in the capital Addis Ababa, at a ceremony attended by President William Ruto and his host Prime Minister Abiy Ahmed, on Thursday.
The approval, announced by Ethiopia’s Finance minister Ahmed Shide, means Safaricom will be allowed to acquire a licence for M-Pesa services.
In April, Ethiopia’s central bank said it had drafted a Bill to pave the way for foreign investors like Safaricom to offer mobile money services. Existing laws only allowed locally owned non-financial institutions to offer the services.
Safaricom’s M-Pesa will compete with state-owned Ethio Telecom service dubbed Telebirr, which it launched last May, attracting four million users in weeks, a clear testament to the rich potential in the market.
Ethio Telecom has enjoyed a monopoly, but Ethiopia has since moved to liberalise the telecoms sector to pivot to a modern, digital economy in line with reforms unveiled by Dr Abiy in 2018.
STE is the first private company to be awarded a telco licence to operate in the country. It has already signed 200,000 subscribers since rolling out in three regions – Dire Dawa City on August 29, eastern Harari Region on September 1, and Oromia Region, starting in Haramaya City on September 7.
Safaricom is the major shareholder in the Ethiopian consortium, which includes UK’s Vodafone, South Africa’s Vodacom, Sumitomo Corporation and British International Investment.
Safaricom began head-hunting the chief executive for its planned rollout of M-Pesa services in Ethiopia in April despite pending of regulatory approvals.
The expansion of digital banking services access is poised to be a game-changer for Ethiopians whose banking sector has no way of transferring funds across banks.