Safaricom Ethiopia plan receives a boost following US sanction waiver

Safaricom plans to launch in Ethiopia still intact as the US financier (DFC) receive approval to invest in Ethiopia.

Inclusion Times
Inclusion Times

Last month, Safaricom led consortium got the better of MTN in a race to secure Ethiopia's telecommunications license. The Safaricom led consortium agreed to pay $850 million for a nationwide full-service telecommunications service operator license.

However, the success of the deal was in doubt following the U.S. sanctions on Ethiopia - the major financier of the deal is based in the U.S. "The Ethiopia expansion had been complicated by the U.S. International Development Finance Corporation (DFC) pausing of investments in the country despite agreeing to offer the consortium a $500 million loan (Sh53.9 billion)." Business daily Africa.

However, the deal seems to be back on track, following the approval of the U.S. financier to fund the telcos' entry into Ethiopia despite America's economic sanctions against Ethiopia. Safaricom revealed that the U.S. State development financier had been given the go-ahead to make specific investments in Ethiopia, including funding the consortium.

“The DFC announced that they had sought and had gotten approval for funding specific investments across Africa to support Africa. In particular, for Ethiopia, they had indicated that they would be interested in funding consortium lead through the Vodafone Group, which is our consortium.” Peter Ndegwa, Safaricom chief executive

A portion of the license fee will be paid using debt, which will constitute a significant share of the more than $8 billion (Sh862 billion) the consortium will invest in Ethiopia over the next decade.

Safaricom has eyes on the mobile money license, and the potential of mobile money is a critical factor in the decision to invest in Ethiopia. According to Peter Ndegwa, “We hope that that can be converted into law so that foreign operators, like ourselves, can operate mobile money. Mobile money was an important part of our business case in thinking about the opportunity in Ethiopia.

Ethiopia in focus

GDP: $95.913 billion compared to Kenya's $95.503 billion in 2019

Population: 112,078,730 compared to Kenya's 52,573,973 in 2019

GDP per capita: $855 compared to Kenya's $1,816 in 2019

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