The telecommunications landscape in Ethiopia has largely lagged behind its neighbors, owing to strict observance of monopolistic regulations.
Until Safaricom entered the market last year, Ethiopia was served by Ethio Telecom, the government-owned telecommunications company.
From the moment it entered the Ethiopian market, Safaricom had indicated it was looking to introduce its mobile money services. This was never the case as the license issued to Safaricom only allowed the company to compete against state monopoly Ethio Telecom, it couldn’t offer its revolutionary money-remittance services due to legal limitations.
In April of that same year, however, Ethiopia’s Central Bank drafted a Bill that opened the door for foreign investors such as Safaricom to offer mobile money services. The government-backed bill stated, “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.”
It is now emerging that the National Bank of Ethiopia, the industry regulator is proposing a $150 million license fee from M-Pesa and other mobile operators who want to set up shop in the country.
In a draft proposal signed by Solomon Damtew, the Payment and Settlement System Director at the National Bank of Ethiopia, the regulator is referring to the $150 million fee as an investment protection fee. This fee is described as the amount paid by foreign nationals who invest in businesses exclusively reserved for domestic investors or the government.
This draft law opens the way for discussion on the progress of Safaricom’s application to launch mobile money services in Ethiopia.
The new directive also increases the amount that can be held in digital wallets Level 1 accounts are subject to a maximum daily electronic account balance of 10,000 Birr, and an aggregate daily transaction limit of 20,000 birr. Level 2 accounts are capped at a maximum electronic balance of 100,000 Birr and an aggregate daily transaction limit of 300,000 birr.
With a population of more than 100 million people, Ethiopia is a highly promising market for companies such as Safaricom. Ethio Telecom, the country’s largest operator has over 50 million subscribers.