Safaricom has received a a payment instrument issuer licence from the National Bank of Ethiopia to expand its mobile money offering, M-Pesa into the country—after paying a fee of $150 million.
With this licence, the leading East African telco will be competing with the state-owned mobile money provider, telebirr.
"M-Pesa comes with a tested and proven track record of enabling financial inclusion in Africa, provides services to more than 51 million customers across seven countries in Africa with a safe, secure and affordable ways to send and receive money, top-up airtime, make bill payments, get short-term loans and much more," Anwar Soussa, CEO of Safaricom Ethiopia said.
Ahead of the launch of the Kenya-headquartered telco last year, the Ethiopian government amended its national payment systems proclamation to provide the necessary regulatory framework for foreign owned telecom operators to provide Mobile Financial services in Ethiopia.
"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," the amendment reads.
During the launch, Kenyan President, William Ruto and Prime Minister of Ethiopia Abiy Ahmed Ali reached a deal on behalf of Safaricom and the Ethiopian government to issue a mobile money licence to the telco. Today's announcement is a fulfilment of that agreement.
"M-Pesa is going to be massive. In a country with 120 million people, the opportunity is unparalleled. So, marry a fantastic network with M-PESA, and there’s almost no limit," says Anwar. The telco believes that the replication of the success of M-Pesa in Kenya is a fundamental pillar of its growth in Ethiopia.
Seven months of Safaricom in Ethiopia
In October 2022, over a year after it was granted a nationwide full-service unified telecommunications service licence, Safaricom switched on its network and services in Addis Ababa, Ethiopia's capital city, becoming the first non-state owned and private telco to operate in the country.
As of March 2023, Safaricom crossed three million subscribers in the country. The telco is currently operating in 25 Ethiopian cities covering 10% of the about 110 million population. According to the company, it has about 847 network sites, 754 permanent employees and there are 5,000 places where one can buy a SIM card, and 28,000 places where one can buy airtime.
However, the telco's core earnings reportedly fell by a fifth in the year to March 31, hit by the cost of starting operations in Ethiopia, it said on Thursday. Regardless, Peter Ndegwa, Safaricom CEO says the company plans to invest $300 million a year into Ethiopia over the next ten years, having already invested $1.2 billion in the country.
Safaricom Ethiopia is owned by an international consortium including Vodafone Group; Safaricom PLC; Vodacom Group; Sumitomo Corporation – one of the largest international trading and business investment companies; and British International Investment (BII) – the UK’s development finance institution and impact investor.