Safaricom, the biggest phone company in East Africa, has paid $150 million to the National Bank of Ethiopia for a payment instrument provider license. This will let it bring its M-Pesa mobile money service into the country.
With this permission, Safaricom will compete directly with Telebirr, Ethiopia’s state-owned mobile money service.
M-Pesa has a track record of making it easier for African people to use money, serving over 51 million customers in seven countries. Anwar Soussa, CEO of Safaricom Ethiopia, was optimistic about the possibility of M-Pesa in Ethiopia. He pointed to the country’s 120 million people as a unique chance.
The Ethiopian government revised its proclamation on national payment systems last year to let foreign telecommunications companies provide mobile banking services within the country.
Since its launch in October 2022 in Addis Ababa, the capital of Ethiopia, Safaricom has gained more than three million customers and spread its network to 25 towns, which cover 10% of the population. The company wants to invest $300 million annually in Ethiopia. This is on top of the $1.2 billion it has already put into the country.
The Vodafone Group, Safaricom PLC, Vodacom Group, Sumitomo Corporation, and British International Investment are all part of an international group that backs Safaricom Ethiopia.
Even though the costs of entering the Ethiopian market are said to have caused challenges and a 20% drop in core earnings, Safaricom is still optimistic that it will be able to repeat the success of M-Pesa in Kenya with its growth into Ethiopia.