On Saturday, a Safaricom-led consortium dubbed “Global Partnership for Ethiopia” which comprises of its parent firms Vodafone and Vodacom, British development finance agency CDC Group and Japan’s Sumitomo Corporation won one of the two telecom licenses that were on offer.
In a briefing with the media on Tuesday, Safaricom CEO Peter Ndegwa shared more details about the expansion details into Ethiopia. The CEO mentioned that Safaricom has a stake of 55.7% in the consortium. He added that United States Government-owned International Development Finance Corporation (DFC) has committed to support Safaricom in form debt.
The holding company for the consortium will be held in the Netherlands mainly because the Netherlands has bilateral investment treaty with Ethiopia.
“There is a real commitment from the Ethiopian Communications Authority and also from the government from Ethiopia, that they will facilitate an environment in which the new licensees will be allowed to operate in the right way and the right regulations will be put in place.” Said Safaricom CEO Peter Ndegwa.
Ethiopia – Foreign Exchange Controls
Speaking on Ethiopia’s stringent foreign currency regulations on foreign currency repatriation, Peter Ndegwa said that this was an area that they were aware of during their deliberations with the Ethiopian Authorities.
“The government has made commitments about some of the measures they will take to ensure that the market allows shareholders to repatriate their profits, but also to access currency to operate a business in the normal way. So we’ve been given assurances that that would be the case, but over time, as the business evolves remember we wouldn’t be paying dividends from day one. By the time we need to repatriate dividends there will be sufficient reforms that will have allowed for us to be able to repatriate dividends from the country.” Safaricom CEO Peter Ndegwa.
Ethiopia Forex Regulations
There are various forex-related regulatory requirements for foreign investors in Ethiopia, which are the preconditions for the repatriation of forex from the country. There are exchange controls on injections and withdrawal of capital to and from Ethiopia.
Requests for repatriation of profits and dividends and other payments depend in large part on compliance with the requirements of the country’s Central Bank.
However, the government of PM Abiy Ahmed in 2019 introduced more economic reforms, part of this includes changes to foreign exchange policy which began in 2020.
The National Bank of Ethiopia in 2020 issued a directive allowing Ethiopian residents and non-residents to open and operate foreign currency accounts in the country. The directive was one of many reforms in the country’s financial sector aimed at liberalizing the sector.
Ethiopia Mobile Money
“We are happy and delighted that the government has actually committed that the new licensees will be allowed to operate mobile money within a relatively short period of time which is one year,” added Mr. Peter Ndegwa on taking M-Pesa into Ethiopia.