Ethio Telecom enjoys a mobile money monopoly

Ethio Telecom enjoys a mobile money monopoly

As expected, Ethiopia's state telecoms monopoly, Ethio Telecom, has launched a mobile money service with the aim of boosting growth by offering cashless transactions.

Called telebirr, it is, for now at least, the only mobile financial service permitted in the country. Foreign operators, when they arrive, will be barred by law from offering such services.

Users will be able to send and receive money, deposit or take out cash at appointed agents, pay bills to various merchants and receive cash sent from abroad.

This is quite a change for Ethiopia, where the failings of the banking system are likely to give alternative financial services a real boost. Certainly, expectations are high for the new service, with figures like 33 million users in five years being bandied about by Ethio.

According to Reuters, the company’s chief executive Frehiwot Tamiru even suggested that some 40 to 50 percent of Ethiopia’s annual economic output could be transacted on the platform in five years.

Meanwhile the government is readying itself to sell a 45 percent stake in Ethio and to auction two new full-service telecoms licences, neither of which will allow the winners to roll out mobile financial services.

According to Bloomberg, the government has admitted that it will take a financial hit from this stance. In fact the prime minister has been quoted as saying that forbidding new entrants to offer mobile money could have cost the government some $500 million due to lower bidding. 

Presumably the expectation is that Ethio’s service will be highly profitable. There’s certainly a strong incentive to bring mobile money to Ethiopia, given the success of such offerings in so many other African countries. However, Ethio will now have to prove that it doesn’t need competition to perform well in this market.

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