Ethiopia has started changing its national payments law to clear the way for Safaricom to introduce its popular M-Pesa in the market of 110 million people.
A consortium led by Safaricom last year secured the first private mobile telephony licence, which does not have a permit for mobile financial services such as M-Pesa.
Ethiopia’s central bank has drafted a Bill that will allow foreign investors to offer mobile money services, boosting firms such as Safaricom that are seeking to start operations in the country this year.
The National Bank of Ethiopia (NBE) now seeks to remove the remaining legal hurdle for Safaricom through the Bill that was made public last week.
“So far, there is no law that enables foreign operators like M-Pesa to acquire a licence in Ethiopia. If the new amendment is approved, it will allow M-Pesa to get a licence in Ethiopia,” Marta Hailemariam, the head of payment settlement at NBE, told the Ethiopian press.
State monopoly Ethio Telecom, which launched a new mobile financial service called Telebirr in May last year, attracted four million users within weeks, showing the potential of the market.
The State-backed Bill states: “Foreign nationals may be allowed to invest in a payment instrument issuer or a payment system operator business; or establish a subsidiary which shall be licensed as a payment instrument issuer or payment system operator.”
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Ethiopia is liberalising its telecoms sector in a bid to pivot to a modern, digital economy in line with reforms unveiled by Prime Minister Abiy Ahmed in 2018.
Its population, which is the second-largest in Africa after Nigeria, also offers immense opportunities for business.
Safaricom is part of a consortium that includes Vodafone, Vodacom, the United Kingdom’s CDC Group and Japan’s Sumitomo Corp, which secured the licence with a h$850 million (Sh97.9 billion) bid.