Safaricom’s Bold Move with M-Pesa Amidst Challenges in Ethiopia

Safaricom is known to venture into new areas outpacing competitors at least here in Kenya, and it seems this is the same trend it’s trying to replicate in its newest market – Our neighbor Ethiopia. In a bold and ambitious move, Safaricom, the leading telecommunications giant of Kenya, has taken a leap of faith and ventured into the complex and diverse landscape of Ethiopia with its M-Pesa operations. This significant stride comes after a three-month period of anticipation following the acquisition of a mobile money license for the Horn of Africa nation.

Safaricom Ethiopia’s Mobile Financial Services which is tasked with spearheading the M-Pesa venture, was unveiled recently, marking a crucial step towards replicating the remarkable success M-Pesa has achieved in Kenya. Stanley Njoroge, the interim CEO of Safaricom Ethiopia, expressed his excitement about this venture, stating, “We are excited to go live with M-Pesa in Ethiopia and start providing mobile financial services to our customers.” He further emphasized their commitment to expanding the platform’s services to enhance the quality of life for Ethiopian customers.

The road leading to this launch was not without its challenges. Safaricom had to navigate through ethnic tensions that have marked Ethiopia’s landscape, particularly amidst recent civil unrest. Despite this turmoil, Safaricom was granted the mobile money license on May 11, following an investment of $150 million (approximately Sh21.6 billion). This financial commitment was driven by the vision to not only establish M-Pesa in Ethiopia but also to amalgamate its operations with the burgeoning telecommunications service initiated in October the previous year.

The launch of M-Pesa in Ethiopia comes on the heels of an exhaustive three-month pilot and testing phase. This meticulous process involved technical preparation, forming pivotal partnerships with local banks, recruiting, training, and onboarding M-Pesa agents. These efforts underscore Safaricom’s determination to seamlessly introduce a service that’s proven its worth in Kenya to a new and diverse Ethiopian market.

The impact of M-Pesa in Ethiopia promises to be transformative. Ethiopians will now be empowered to transfer funds within the nation, receive money both domestically and from abroad, and conduct merchant payments, all through the M-Pesa platform. This convenience extends to purchasing airtime and facilitating money transfers between bank accounts and mobile money wallets. Safaricom is not merely launching a service; it’s introducing a catalyst for financial empowerment and inclusion.

However, Safaricom’s venture into Ethiopia has not been devoid of geopolitical complexities. The launch coincides with a new wave of conflict in the Amhara region. This region had previously played a pivotal role in supporting Ethiopian Prime Minister Abiy Ahmed during a time of rival Tigrayan forces’ attempted coup. Ethiopia itself had only recently emerged from a two-year civil war that had profound repercussions on businesses and institutions. Safaricom, too, had its share of challenges, including staff withdrawal due to the uncertain situation.

Nevertheless, Safaricom remains undeterred. It has charted a path of substantial capital expenditure ranging from Sh40 billion to Sh45 billion for its Ethiopian operations in the current financial year. This ambitious commitment is a testament to Safaricom’s belief in the potential of the Ethiopian market. Notably, the Ethiopian unit managed to amass an impressive three million customers and establish a wide-ranging distributor network comprising over 114 outlets in a relatively short span from October to March. This endeavor was supported by the deployment of approximately 1,300 network sites across 22 regions.

However, the journey was not without financial challenges. Despite generating a revenue of Sh1.83 billion, the Ethiopian unit was met with operating costs of Sh19.95 billion, resulting in a substantial after-tax loss of Sh12 billion. These financial hurdles underscore the complexities Safaricom faces in this nascent market.


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