Safaricom eyes Ethiopian mobile money market after securing teleco licence  – KBC

Safaricom Chief Executive Officer Peter Ndegwa says Global Partnership for Ethiopia, the consortium that was on Saturday awarded a telecommunication license to operate in Ethiopia has held talks with authorities who have promised to review law on repatriation of cash.

This concern emerged from anticipated challenges the firm was to face in payment of dividends to shareholders, some of who are foreign investors outside Ethiopia, Africa’s second most populous country.

“The government has made commitment about some of the measures they will take to ensure the market allows shareholders to repatriate their profits but to also access their currency. But we believe by the time we need to repatriate dividends there will be sufficient reforms,” said Ndegwa.

Global Partnership for Ethiopia, the consortium in which Safaricom is the major shareholder with 55.7% stake plans to roll out data,voice and SMS  in Ethiopia next year after the Ethiopian government  promised to review its laws on mobile money transfers.

“This licence is for communication not for mobile money at this stage because foreign entities are not allowed to operate mobile money although the Ethiopian authorities recently confirmed that a new licensee will be allowed to operate mobile money within the next 12 months. Of course that needs to be confirmed in writing, but that is good progress,” said Ndegwa.

The telco says it seeks to leverage on its M-pesa success in Kenya to gain a foothold in the Ethiopian market.

The consortium has however ruled out buying any stake from government owned Ethio Telecom noting that it will partner with the dominant telco to improve communication infrastructure in the country.

“We are excited for the opportunity to work with the people of Ethiopia to set up telecom networks to deliver a digital lifestyle. In past years, we have seen the power of digital transformation and its impact on our customers. We believe by working with all stakeholders in Ethiopia, we can deliver a similar transformation while achieving a sustainable return to our shareholders,” said Peter Ndegwa, Safaricom CEO.

Reforms in Ethiopia’s financial sector are also expected to ease repatriation of dividends to foreign investors once the venture starts to make profits.

The consortium in the short-term plans to invest in cloud services to provide e-commerce services to over 4 million SMEs in Ethiopia.