Safaricom’s Ethiopian mobile finance licence confirmed despite holdups

Safaricom’s Ethiopian mobile finance licence confirmed despite holdups

The suspension of bidding for a second new Ethiopian mobile licence will not affect earlier licence winner Safaricom’s permission to offer mobile financial services, according to Dr Eyob Tekalgn Tolina, the State Minister of the country’s Ministry of Finance.

It does seem there had been some confusion about the legality of the award, given that the licence for the consortium led by Safaricom, which was awarded last year, was all set to be upgraded to include mobile financial services – but only after bidding had finished for the country’s second new mobile operator licence (whose remit also included mobile finance).

There is likely to be little interest in bidding for a new licence while the ongoing conflict in the country’s north continues. The Business Daily news service has suggested that almost 3,500 base stations belonging to incumbent Ethio Telecom have been damaged during the fighting.

Thus, the authorities have now delinked Safaricom's mobile finance permit from the second operator’s license and are finalising legal changes to allow the central bank to issue Safaricom with a licence for mobile financial services. That means M-Pesa, or something like it, should roll out in Ethiopia later this year.

Business Daily says, quoting Dr Tolina, that the bidding process for the second licence has now been pushed back a few months.

It's also worth mentioning that the Ethiopian government had originally planned to hold back on any mobile financial services awards for a lot longer. This would have given incumbent Ethio Telecom and its recently introduced Telebirr service an even more extended free run than it has so far enjoyed.

However, lack of interest in the second licence without a finance component seems to have brought about a change of heart. Indeed, Telebirr’s success to date underlines the need for mobile financial services in a country that reputedly has an inefficient banking system.

However, until the new entrants become part of a competitive landscape, and the planned sale of a 45 percent stake in Ethio Telecom goes ahead, Ethiopia will remain one of the world’s most closed telecoms markets. Given the ongoing conflict it’s hard to see that changing soon.

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