Safaricom ‘to license mobile money technology’ to Ethiopia

18 July 2018 | Alan Burkitt-Gray

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Ethiopia’s Ethio Telecom is set to offer mobile money services, ahead of an expected split into two competing operators.

An unconfirmed report says that Kenya’s Safaricom is talking to the new government of Ethiopia about licensing its M-Pesa mobile banking system. Prime minister Abiy Ahmed wants to use the project to liberalise and boost Ethiopia’s economy.

According to the Reuters news agency, Safaricom will host the M-Pesa servers in Nairobi, across the border in Kenya. An Ethiopian bank will offer the M-Pesa service in association with Ethio Telecom, still the monopoly provider of telecoms in Ethiopia.

The move could be highly lucrative for Safaricom, which already has a 66.5% mobile market share in Kenya, and has 22 million M-Pesa users in a population of 48 million. Ethiopia has more than twice as many people as Kenya.

Last month Ahmed, who has led a reformation programme since he became prime minister on 2 April, announced plans to split Ethio Telecom into two units – but warned it would take two years to formulate proposals. He would also sell stakes in the company or companies to outside investors.

Vodacom, partly owned by Vodafone, has already expressed interest in investing in Ethiopian telecoms – as has rival operator MTN. Vodafone owns the M-Pesa technology that is used by Safaricom, in which Vodacom is a main shareholder.

In Kenya, Safaricom offers a range of financial services through M-Pesa, including savings, loans and insurance, as well as payments. M-Pesa was founded by Michael Joseph when he was CEO of Safaricom. Joseph is now mobile money advisor to the whole Vodafone group. The M-Pesa technology and brand is also used in Afghanistan, India and South Africa and well as in the European countries Albania and Romania.