Ethiopia clears hurdle for M-Pesa expansion

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Friday August 06 2021

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A cellular phone shopper makes an M-Pesa transaction. FILE PHOTO | NMG

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By BRIAN NGUGI

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Summary

  • Ethiopian authorities told Enterprise Day-to-day Thursday that the Safaricom licence will be upgraded to consist of cellular financial provider.
  • The bidding will be opened this month.

  • A consortium led by Safaricom secured the predominant licence, which does now now not own a permit for cellular financial products and services love M-Pesa, in Could perhaps simply.

Ethiopia has cleared the plot in which for Safaricom to introduce its in vogue M-Pesa in the market of 110 million other folks after deciding to consist of the cellular phone-primarily primarily based completely financial products and services in the telco’s licence equipped in Could perhaps simply.

Ethiopian authorities told Enterprise Day-to-day Thursday that the Safaricom licence will be upgraded to consist of cellular financial provider when it completes bidding for its second telecoms operator permit.

The bidding will be opened this month.

A consortium led by Safaricom secured the predominant licence, which does now now not own a permit for cellular financial products and services love M-Pesa, in Could perhaps simply.

The consortium will delivery operations subsequent year when Ethiopian authorities dispute the telco can own the lawful to characteristic cellular financial products and services.

This marks a departure from last year’s directive that only allowed in the neighborhood owned non-financial establishments to provide cellular money provider, dimming the hopes of foreign firms love Safaricom that are in the hunt for a presence in Kenya’s neighbouring nation.

“The second licence assignment which contains cellular money products and services will now now not downside the earlier winner (Safaricom),” the director-total of Ethiopian Communications Authority (ECA) told the Enterprise Day-to-day in interview the day prior to this.

“What will be permitted for the second licensee will be permitted for the predominant licensee. One component we could well assemble sure is that the predominant and second licensee can own the likelihood to begin providing cellular financial products and services at the identical time.”

The Horn of Africa nation sold only regarded as one of two full-provider licences on provide in Could perhaps simply, citing a lower-than-anticipated label for the second, which it now desires to provide again.

The authorities expects skill bidders to consist of firms which had expressed curiosity in the earlier strive to promote the licence but whose bids were deemed insufficient.

Ethiopia had regarded as one of the area’s closed telecoms markets.

Cell financial products and services own change into a critical section of African telecoms operators’ firms since Safaricom pioneered them with M-Pesa in 2007, giving other folks an alternative to banks.

Speak monopoly Ethio Telecom, which launched a peculiar cellular financial provider known as Telebirr in Could perhaps simply, snapped four million users within weeks, showing the ability of the market.

The barring of foreign firms intended that for operators love Safaricom to provide the provider in Ethiopia, they’d want a partnership with Ethio Telecom, which is in line to be privatised during the sale of a minority stake.

Biggest prize

The Ethiopian authorities is furthermore making ready to promote a 45 p.c stake in Ethio Telecom, section of a broader liberalisation that consist of the auctioning of two unusual full provider telecoms licences.

A monopoly, Ethio Telecom is seen because the finest prize attributable to its gigantic precise market.

Its subscriber unfriendly of 50.7 million makes it the finest single-nation buyer unfriendly of any operator in Africa.

Avid gamers love Safaricom are attracted by the growth skill in that market whose 110 million other folks skill the nation affords a penetration rate of 46 p.c.

Against this, Kenya’s 52.2 million cellular phone subscribers affords it a penetration of 118 p.c.

Cell money products and services love M-Pesa own the ability to transform Ethiopia’s financial system, because it has done in Kenya, by allowing other folks to sidestep a rickety and inefficient banking plot and send money or assemble payments at the touch of a phone button.

The flexibility to entry digital banking products and services is more likely to be a game-changer for Ethiopians whose banking sector has no plot of transferring funds from one financial institution to yet any other.

Safaricom is thought of as one of several Kenyan firms that were eyeing the Ethiopian market for years attributable to the nation’s gigantic inhabitants. Ethiopia has saved foreign involvement in the financial system at a naked minimal.

On the other hand, the nation has constantly registered sturdy financial growth, averaging 10 p.c previously 5 years, and its ongoing financial reforms search for space to provide a enhance to investor sentiment.

Its inhabitants, the second-finest in Africa after Nigeria, furthermore affords big opportunities for industrial.

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