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Ethiopia changing law to allow introduction of M-Pesa

Kenyan Business Feed by Kenyan Business Feed
Ethiopia changing law to allow introduction of M-Pesa
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Ethiopia has began making changes to its national payment laws to pave way for Safaricom to introduce its popular M-Pesa services in the market that boasts of over 100 million people.

The country’s central bank has drafted a Bill that will allow foreign investors to offer mobile money transfer services that will benefit companies like Safaricom that is set to begin operations in Ethiopia this year.

Safaricom secured the first private mobile telephony licence which does not have a permit for mobile financial services such as M-Pesa last year.

The National Bank of Ethiopia (NBE) last week drafted the new Bill to remove any legal hurdles for firms like Safaricom which is poised to enter their telecommunication market.

“There is no law that enables foreign operators like M-Pesa to acquire a licence in Ethiopia. If the new amendment is approved, it will allow M-Pesa to get a licence in Ethiopia,” Marta Hailemariam of NBE said.

The move aims to pivot Ethiopian telecommunication industry to a modern, digital economy in line with reforms unveiled by Prime Minister Abiy Ahmed in 2018.

State owned Ethio Telecom launched Telebirr, a new mobile financial service in May last year and attracted four million users within weeks, showing the potential of the market.

The new law which enjoys the backing of the government states that “Foreign nationals may be allowed to invest in a payment instrument issuer or a payment system operator business; or establish a subsidiary which shall be licensed as a payment instrument issuer or payment system operator.”

Kenya’s Safaricom is part of a consortium that includes Vodacom, Vodafone, the United Kingdom’s CDC Group and Japan’s Sumitomo Corp, which secured the licence with a h$850 million (Sh97.9 billion) bid.

Ethiopia’s telecom’s market remains one of the closed in the world despite mobile financial services being very significant in Africa since Safaricom pioneered with M-Pesa in 2007.

But once the proposed law is passed Safaricom will launch M-Pesa on the back of the new license. Initially the law required foreign firms to offer such services in partnership with Ethio Telecom.

Safaricom is attracted by the potential of growth potential in the Ethiopian market whose 114.1 million people means the country offers a penetration rate of 51.4%.

Kenya on the other hand has 65.08 million mobile phone subscribers which gives it penetration of 133.6%.

Mobile money services have the potential to spur economic growth in Ethiopia like it does in Kenya where M-Pesa has allowed people to overcome inefficient banking system and send money or make payments at the touch of a phone button.

The ability to access digital banking services will also be a game-changer for Ethiopia where banking sector has no way of transferring funds from one bank to another.


Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]
Tags: EthiopiaM-PESASafaricom
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