Safaricom will offer mobile money services in Ethiopia

Ethiopia will allow the Safaricom-led consortium to offer mobile money services throughout the country, signaling the end of Ethio Telecom’s monopoly over the service, local media reported late last week.  

This step follows the government’s announcement earlier last week of re-opening bidding on second operator license including the right to operate mobile financial services. 

Previously, any new entrant was barred from offering any mobile money based FinTech services, a tactic that wasn’t aligned with calls from the World Bank of maintaining fairness within Ethiopia’s telecom liberalization. 

Fortunately, the government formally updated the rules last week to allow new bidders to integrate mobile financial services in the scope of the license, according to an announcement by Ethiopia’s communication watchdog.  

The Safaricom-led provider — currently the first private operator in Ethiopia — will add mobile money services to its offering when authorities complete the process of finding a second bidder. 

As it stands, only state-run Ethio Telecom offers FinTech services, under the name of TeleBirr, with around six million customers. 

Notably, the African country received earlier this year two offers from South Africa’s MTN Group and a consortium of Kenya’s Safaricom, Vodafone, Vodacom, CDC Group (a U.K. development finance institution) and Japanese global trading and business investment company Sumitomo Corporation. 

However, earlier in May, Ethiopia had only sold one of two full-service licenses citing a lower-than-expected price for the second tender, which it now wants to offer again.  

Experts considered that the country’s first trial did not attract satisfactory bids, due to harsh restrictions that lowered the value of the second license.  

These laxer terms might guarantee different results in the second round of bidding, as mobile financial services are considered a substantial portion of Africa’s telecom ecosystem. 

These efforts are part of the country’s plan to liberalize its telecommunications sector, as state-owned Ethio Telecom is looking to auction off 40 percent of its stake to private investors.