Ethiopia has started changing its national payments law to clear the way for Safaricom to introduce its popular mobile payment platform M-Pesa in the market of 110 million users.
Ethiopia’s central bank has drafted a Bill that will allow foreign investors to offer mobile money services, boosting firms such as Safaricom that are seeking to start operations in the country this year.
“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 State-backed Bill states.
Safaricom is part of a consortium that includes Vodafone, Vodacom, the United Kingdom’s CDC Group and Japan’s Sumitomo Corp, which secured the licence with an $850 million bid in May last year, that saw them attract four million users within weeks, showing the potential of the market.
The National Bank of Ethiopia (NBE) now seeks to remove the remaining legal hurdle for Safaricom through the Bill that was made public last week.
“So far, 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, the head of payment settlement at NBE, told the Ethiopian press.
Mobile financial services have become a significant part of African telecoms operators’ businesses since Safaricom pioneered them with M-Pesa in 2007, giving people an alternative to banks.
If the proposed law is approved, the Safaricom consortium looks set to launch M-Pesa on the back of the new licence.
Safaricom is set to soon access the giant network of Ethio Telecom, allowing the telco to roll out its services across the vast Horn of Africa nation.
This follows an Ethiopian government-backed deal that paves the way for Safaricom to start commercial operations in the market, Safaricom officials said recently.
“The deal is very important and critical for our commercial viability and launch. Hopefully (we will launch) soon but we don’t have a date yet,” Safaricom chairman Michael Joseph told the Business Daily.