Ethiopia: How ECA decision delays M-Pesa launch

Safaricom set solid footing by initiating this service in 2007, with the introduction of M-Pesa, which intended to expand operations in Ethiopia this year

Inclusion Times Gabriel Enyinwa

Ethiopian Communication Authority (ECA) has announced suspending its plan to offer a new telecommunication license and reignite the proceedings shortly. A move primarily influenced by the requests from prospective applicants and Safaricom's request for mobile money inclusion in its license. Ethiopia had opened bidding in August 2021 for its second telecoms operator license; however, the suspension comes from low turnout in bids. The ECA hopes to reopen the process more conveniently as requested by prospective operators. In May of 2021, Safaricom had secured the first license with a win in the bidding procedure. A winning bid valued at $850 million. Unfortunately, the company's license did not include operating mobile financial services.

For the past decade, mobile financial service has been a significant business for Telecom operators in the African continent. Mobile money provides users with alternatives to banks. Safaricom set solid footing by initiating this service in 2007, with the introduction of M-Pesa, which intended to expand operations in Ethiopia this year. Safaricom wants to remain at the forefront of the mobile money business and has sought clarity on the requirement to operate mobile money. Last year, the company Chief Executive Peter Ndegwa stated that Safaricom was awaiting a response from the ECA and if it would be required to add some fees to get a mobile money license. The suspension in license proceedings by the ECA automatically delays the launch for M-Pesa, scheduled for this year.

Ethio Telecom remains the only telecommunication company to launch and operate mobile money. This monopoly will only be short-lived as Safaricom intends to break into the Ethiopian market, which boasts about 50 million mobile subscribers.

Ethiopia in focus

Population: 115 million in 2020 as compared to 112 million in 2019

GDP: $107.6 billion compared to $95.9 billion in 2019

GDP per capita: $936 in 2020 compared to $855 in 2019

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Gabriel Enyinwa

Writer | Columnist