By the end of September 2023, Safaricom intends to introduce M-Pesa in Ethiopia and have it integrated with more banks.

 Due to Ethiopia’s history of having state-controlled industries like banking and telecoms, private telecom company Safaricom has had difficulties entering the Ethiopian market. However, opportunities have been generated as a result of Prime Minister Abiy Ahmed’s initiatives to liberalize the economy.

In order to conduct business in Ethiopia, a consortium led by Safaricom—which is partially controlled by Vodafone—paid USD 850 million in 2021 for a telecoms license and another USD 150 million in May 2023. Due to the nation’s preference for cash transactions, low credit card usage, and undeveloped rural areas, Safaricom believes that mobile money services have a lot of potential for growth.

Ethiopia’s foreign currency system, which is regulated by the National Bank of Ethiopia, presents a barrier to the country’s progress toward financial liberalization. Its liberalization is supported by the IMF and World Bank. Foreign businesses, notably Safaricom, are having trouble remitting income due to the country’s high inflation and lack of foreign exchange.

Safaricom is nevertheless upbeat about the government’s continued attempts to liberalize the financial system and open the economy. The banking and mobile money industries should gain from this transformation. The delay in dividend distributions gives these developments a favorable window of time in which to take place.

Safaricom holds 52% of the Ethiopian business on its own, while Sumitomo owns 25% and Vodafone’s South African affiliate, Vodacom, along with the BII, the UK’s international development investment arm, and the IFC, a unit of the World Bank, each have the remaining shares.

In addition to allowing foreign banks to operate in Ethiopia in the future months, Ethiopia’s central bank governor stated that the government was “committed to deepening economic reforms” and referred to M-Pesa as the first international investor in the mobile money sector.

Due to central bank restrictions on foreign banks, Ethiopia had first informed bidders that foreign companies could not perform cashless transactions, leaving Ethio Telecom as the lone provider. However, the government finally permitted fresh providers to provide mobile money services.

 Officials from Safaricom stressed that 40% of Safaricom’s revenue in Kenya comes from services related to M-Pesa, which can be used from any type of mobile phone device, and that they have always been clear with the government that they were building on the assumption that telecom operators will be allowed to operate mobile financial services.