Safaricom, the leading mobile phone operator in the Eastern Africa region, has posted 3.1 million M-PESA customers since its launch in Ethiopia.
- The opportunity for M-PESA in the over 119million populous nation of Ethiopia remains untapped given the low levels of financial inclusion.
- According to Safaricom Q3 2023 update on Ethiopia, for the period ended 31st December 2023, Ethiopia now has 26.4 thousand M-PESA agents and 43.1 thousand merchants.
- These numbers are expected to grow as the Safaricom network expands and as M-PESA penetrates the market.
“We are now interoperable with 9 banks including Commercial Bank of Ethiopia, Dashen Bank, Bank of Abyssinia, Awash International Bank, Co-operative Bank of Oromia, Abay Bank, Hibret Bank, Berhan Bank and Bunna Bank for M-PESA to Bank,” said Safaricom Plc Chief Executive Officer, Peter Ndegwa –
For Bank to M-PESA services, the operator is interoperable with 7 banks including Commercial Bank of Ethiopia, Dashen Bank, Bank of Abyssinia, Awash International Bank, Co-operative Bank of Oromia, Abay Bank, and Bunna Bank.
According to the International Trade Administration Market Intelligence on Ethiopia’s Banking Sector Opportunities, 30 banks are operating in the country consisting of 8,250 branches, serving the country’s population.
- Safaricom Plc says that 63 million people in Ethiopia are over 18 years with 13.5 million being between the age of 13-18 years.
- This presents the opportunity for M-PESA to drive financial inclusion to levels seen in Kenya after over 20 years of operations in the country, to over 84% in 2021 from 27% in 2006, according to The Financial Inclusion Statistics Conference.
- Funding of the Safaricom Ethiopia subsidiary is through shareholder equity, deferred vendor payments, and third-party borrowings.
Shareholders of had contributed US$ 1,614 million by Dec 2023, including International Finance Corporation (IFC), in proportion to their shareholding.
This funding includes the license fee of US$ 850 million and the US$ 150 million MPESA Investment Protection Fee.
Ethiopia’s Usage Levels Surpass Kenya’s
Safaricom Plc’s contribution amounts to US$ 834Mn, which was partly funded through a US$ 400 million loan borrowed from a consortium of local and international banks during the 2022 financial year. The network paid a total license fee of US$ 1 billion which was paid directly to the Government of Ethiopia. The operating entity has also borrowed from the local market and is leveraged as below at varying interest rates.
“As of 31 Dec 2023, we had launched 2,242 base stations (1,252 own built & 990 collocated) covering 33 cities including large and medium towns. This represents 33% of population coverage. Our focus now is to densify connectivity to continue enhancing the quality of connectivity as we create a contiguous network,” said Safaricom Chief Ndegwa.
- He adds that Safaricom has made significant progress in expanding its network rollout and M-PESA which is gaining more ground since switching on M-PESA services in Ethiopia on 15 Aug 2023.
- It is now over one year since Safaricom launched commercial operations in Ethiopia in October 2022. C
- ommercial momentum remained positive having recorded 9.0 million gross customer additions since launch and attained 4.3 million 90-day active customers as of December 2023.
“We have covered 33% of the population and are on track to meet all license coverage obligations. Mobile data is a key proposition in Ethiopia with usage per chargeable Mobile data subscriber now at 4.76GB as at the end of Q3. We are encouraged by this momentum in usage levels which has now surpassed Kenya,” said Safaricom CEO Ndegwa.
Apart from the depreciation of the Ethiopian Birr, the Kenyan mobile firm has also been hit by a high inflation rate, which rose to 28.7% in December 2023, from 28.3% in November 2023.
On 10th May 2023, the National Bank of Ethiopia (NBE) granted the payment instrument issuer license to the Safaricom M-PESA Mobile Financial Services PLC (Safaricom M-PESA ET) upon fulfilling the set conditions i.e., incorporation of the subsidiary, proof of payment of US$ 150million for the investment protection fee and the paid-up capital of ETB 50Million.
- The license allows the Safaricom M-PESA ET to issue payment instruments and use agents in its mobile money business.
- Safaricom M-PESA ET is a wholly owned subsidiary of Safaricom Telecommunications Ethiopia PLC, apart from a nominal share held by the Consortium holding company, Global Partnership of Ethiopia BV.
- Safaricom runs the Mpesa platform that enables the making of deposits, withdrawals, transfers (P2P), airtime and data package purchases, M-PESA to Bank (C2B) and Bank to M-PESA (B2C), merchant payments (with transacting tills) and international money remittances services (inbound transfers only).