Will Ethiopia’s telecom liberalization improve financial inclusion?

Original Story Published by: Natalie Donback, www.devex.com
Photo Source: Reuters

(Above) An M-Pesa stall in Nyang’oma Kogelo, Siaya county, Kenya

Last October, Ethiopia, Africa’s second-most populous country, ended its longstanding state monopoly on telecommunication when the Global Partnership for Ethiopia — led by Safaricom — launched its services in the country of 120 million people.

State-owned Ethio Telecom is now facing competition from the international consortium, which also includes Vodafone, Vodacom, Sumitomo Corporation, and British International Investment. The group paid a hefty licensing fee of $850 million to enter the large market.

“For us, Ethiopia is what we call a powerhouse country. It's a big important country in Africa and we think it needs to meet its potential,” said Abhinav Sinha, managing director and head of technology and telecoms at British International Investment. He added that Safaricom has managed to gather 5.5 million customers across 25 cities.

Liberalization has already driven down prices on services such as airtime and data, and the incumbent Ethio Telecom has had to improve its services to prepare for competition. The government also plans to privatize 45% of Ethio Telecom and a tender for a third mobile operator was just issued at the end of June.

Development stakeholders are now looking for ways to leverage the ripple effects of liberalization — which include better connectivity, cheaper services, and a more competitive market — to improve financial inclusion.