Ethiopia grants mobile money licence to Kenya’s Safaricom

AFP | Ethiopia’s central bank said on Thursday it had issued a mobile money licence to Kenyan telecoms giant Safaricom, the first granted to a foreign company in Africa’s second most populous country.

The announcement came 7 months after Safaricom became the first private telecommunications operator in Ethiopia, ending a monopoly under state-owned Ethio Telecom.

“This is the first mobile money licence granted to a foreign investor in Ethiopia,” the National Bank of Ethiopia (NBE) said in a statement.

“The NBE will continue to take measures to deepen Ethiopia’s digital finance ecosystem. To this end we will strongly support the spread of digital payment systems as a substitute for cash-based transactions within the economy.”

Ethio Telecom already offers a mobile money transfer service called Telebirr, named after the national currency, the birr.

Safaricom first launched its mobile money service known as M-Pesa in Kenya in 2007 and it has become an indispensable tool for paying bills and transferring money.

The system is now used by 51 million people in 7 African countries, according to Safaricom, which estimates that M-Pesa generates about 40 percent of its profit.

The company said it paid US$150 million for the licence in Ethiopia and aims to launch the M-Pesa service there in the second half of this year.

Safaricom, one of the biggest companies in East Africa, reported a 10 percent slide in net profit for the year ended March 2023 to 62.3 billion Kenyan shillings (US$455.6 million), with its Ethiopian business operating at a loss.

Safaricom switched on its telecommunications network in Ethiopia in October last year and said it now has 2.1 million customers, with a goal of reaching 10 million next year.

In February, the Ethiopian government said it planned to sell up to 45 percent of Ethio Telecom, part of a push to open up the tightly controlled economy in the country of about 120 million people.

Ending the state monopoly in the telecoms sector is a key component of an economic reform package that Prime Minister Abiy Ahmed announced after coming to power in 2018.