Currently, only banks and micro-finance companies are allowed to offer mobile-money services in Ethiopia, and this new development will open up mobile money services to the state-owned telco monopoly Ethio Telecom.
Ethiopia’s has 41 million mobile connections, with more than 96 percent on prepay according to GSMA Intelligence (2019). With plans to liberalize the telecoms market by selling new licenses, the mobile money opportunity has huge potential for MTN Group Ltd., Vodacom Group Ltd. and Orange SA have expressed an interest in entering the nation with a population of more than 105 million people.
License requirements include minimum capital of 50 million birr ($1.5 million), ownership by Ethiopian nationals or people of Ethiopian origin and a minimum of 10 shareholders, the National Bank of Ethiopia said.
The directive, effective April 1, allows maximum account balances of 30,000 birr and transaction limits of 8,000 birr daily and 60,000 birr monthly.
Companies that receive the mobile-money permits can also provide savings, credit, insurance and pension products. State-owned enterprises can also apply for permits according to the NBE.
Upgrading the Horn of Africa nation’s financial system is part of a raft of economic reforms by Prime Minister Abiy Ahmed’s government aimed at opening the economy to more foreign investment.
To succeed, mobile money services require continuous mobile communications, and the trust of users, that their money can be accessed at all times.
Over the last number of years, the Ethiopian Government has shut down phone services on a number of occasions, most recently hindering the COVID-19 fight. This needs to be addressed to ensure consumers can trust mobile money and drive adoption across the country.