Ethiopia has given Kenya’s Safaricom a nod to introduce mobile phone operations in the country. The move is precedent-setting as it sets the stage for the introduction of M-Pesa services in a market of 110 million people.
Safaricom Ltd. Vodafone, Vodacom Group Ltd. Formed a consortium in which the British carrier has a majority stake, they will invest $8.5 billion in their network during the coming 10 years, including the license fee. Others include CDC Group Plc and Sumitomo Corp.
Ethiopia has up to 21 million mobile phone users and will peak to 33 million in five years. M-Pesa had 19.3 million users in Kenya by December 2020 and generated Ksh35.89 billion ($335.3 million) in sales, six months leading to September 2020
“With over $8 billion total investment, this will be the single largest foreign direct investment into Ethiopia to date,” Prime Minister Abiy Ahmed said on Twitter. The consortium led by Safaricom submitted a bid of $850 million, according to the prime minister. The other from MTN Group Ltd., Vodacom’s Johannesburg rival, and partners including the Silk Road Fund, a Chinese state investment group, was for $600 million.
This marks a departure from last year’s directive that had only allowed locally-owned non-financial institutions. Safaricom now expects to roll out its popular M-Pesa services by June 2021.
Ethiopia has up to 21 million mobile phone users and will peak to 33 million in five years. M-Pesa had 19.3 million users in Kenya by December 2020 and generated Ksh35.89 billion ($335.3 million) in sales, six months leading to September 2020. Kenya’s Safaricom pioneered M-Pesa in 2007, giving many people alternative to banking services from the mainstream banks.
Safaricom aims to tap into Ethiopia’s robust economic growth, averaging 10 per cent in the past five years, and its ongoing economic reforms look set to strengthen investor confidence. Its population, the second-largest in Africa after Nigeria, also offers immense opportunities for business.
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