A US government agency has delayed the disbursement of a US$500Million (KSh53.97 billion) loan to finance the entry of a Safaricom-led consortium into the Ethiopian telecoms market, citing uncertainty over the ongoing unrest in Ethiopia’s Tigray region.
The US International Development Finance Corporation (DFC) said it was still weighing the escalation of armed conflict in the horn of Africa nation before it could release the loan.
The deepening conflict in Ethiopia could force DFC to pause the investment and push the telecoms companies to source the cash elsewhere and at a higher cost.
The Safaricom consortium had agreed to take the KSh53.9 billion loan from DFC to help with acquisition and development costs.
Global Partnership for Ethiopia- a consortium made up of Safaricom, Vodafone Group Plc and Vodacom Group Limited, has signed an agreement to borrow US$ 500 Million(KSh 55.7 Billion) from sovereign wealth fund US International Development Finance Corporation(DFC) to fund expansion into Ethiopia’s telecommunications market.
DFC loan is part of the funds that the consortium seeks to raise
This Capital Injection into Ethiopia’s nascent telecoms industry is expected to top the US$1Billion (KSh111 Billion) mark, with the DFC loan deal seen as part of the project’s fundraising efforts.
“The loan to the Safaricom-led Global Partnership for Ethiopia will finance the design, development, and operation of a new private mobile network provider and the acquisition of a mobile network provider licence,” DFC said in a statement.
The project is expected to have a highly developmental impact through the creation of a new private telecommunications network that will increase connectivity in Ethiopia while utilising trusted technology.
Safaricom had earlier said it was ready to take more debt in its role as the majority shareholder of the consortium with a 51 per cent stake.
Vodacom has a five per cent interest in the joint venture, with the rest of the ownership spread among unnamed strategic financial investors.
The DFC loan offers the consortium long-term financing on relatively favourable terms.
The US development finance agency says its loans typically mature between five and 25 years, with repayment schedules set on a quarterly or semi-annual basis.
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