Safaricom, the leading Kenyan telecoms operator, has made a significant move by launching its M-PESA mobile money service in Ethiopia.
This development is expected to contribute to the company’s growth in one of Africa’s largest economies.
Safaricom, which is partially owned by South Africa’s Vodacom and Britain’s Vodafone, successfully introduced its voice and data network in Ethiopia last year and has managed to attract over 2 million active users thus far.
The launch of M-PESA in Ethiopia follows its successful implementation in Kenya, where it was first introduced in 2007. Since then, M-Pesa has become Safaricom’s most profitable service and has expanded to other African countries such as the Democratic Republic of Congo, Egypt, Ghana, Lesotho, Mozambique, and Tanzania.
One of the key reasons for introducing M-Pesa in Ethiopia is its reputation as a game-changer for financial inclusion. Stanley Njoroge, the interim CEO of Safaricom Ethiopia, highlighted the company’s commitment to enhancing the services offered through the M-PESA platform.
The Ethiopian market presents significant opportunities for Safaricom, given the country’s population of approximately 120 million people and its young demographic.
Safaricom’s entry into Ethiopia was made possible after the government decided to liberalise the telecoms sector in 2019, ending the state-controlled monopoly of Ethio Telecom.
However, while the Ethiopian market offers immense potential, it also demands substantial investments that will require Safaricom to deliver prompt and impactful results.
Safaricom experienced a significant decline in core earnings during the fiscal year ending on March 31. This can be attributed to the expenses associated with launching their operations in Ethiopia.
Additionally, they are grappling with fierce competition from Ethio Telecom, which recorded a profit increase of over 100% in its most recent financial year.
In July, Ethio Telecom boasted a subscriber base of more than 34 million for its mobile money service, Telebirr. Mobile money services are widely utilised throughout East Africa, enabling customers to conveniently conduct financial transactions such as sending and receiving money, as well as making payments for goods and services.