Ethio Telecom customer using Telebirr mobile money service
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Mobile Money Could Add $5.3bkn to Ethiopia’s GDP

ADDIS ABABA – Mobile money services could add $5.3 billion to Ethiopia’s GDP and lift 700,000 people out of poverty, provided “certain enablers are in place.”

This is according to a GSMA Intelligence study that projects, under a high-case scenario, as many as almost 60% of Ethiopian adults to adopt mobile money by 2030.

Whether Ethiopia will see high adoption of mobile money, however, depends on a number of factors.

“Enabling policy and regulations, better payments interoperability, sufficient and widespread access points and high-quality agent networks are key factors that will determine whether Ethiopia sees high levels of adoption of mobile money services,” the report says.

GSMA Intelligence launched its report ‘Mobile Money in Ethiopia: Advancing financial inclusion and driving growth’ on Monday.

The report states that “the much-anticipated liberalization of the telecoms market is presenting an opportunity” to advance economic development in the country, including the financial inclusion of underserved populations via mobile money.  

Currently, Ethiopia has notably lower financial inclusion rates than its East African neighbors. Data from Global Findex shows that less than half of Ethiopian adults had a bank or mobile money account in 2022 compared to almost 80% of adults in Kenya, 77% in Rwanda, and 66% in Uganda.  

Recent regulatory changes made as part of a broader liberalization of the economy have allowed non-banks to provide mobile money services, providing competition in the financial sector historically dominated by banks and micro-finance institutions.

The state-owned Ethio Telecom has onboarded more than 34 million subscribers to Telebirr since the launch of the mobile money service in May 2021. Safaricom has already obtained a mobile money license to launch its own under the name of M-Pessa as authorities push to bring a third operator into the market.

“A competitive market could be a game-changer for financial inclusion,” the GSMA says. In Kenya, Ghana, and Uganda, mobile operators have been able to leverage wide subscriber bases, large distribution networks, and trust in their brands to reach a significant proportion of financially underserved populations via mobile money.

Its adoption in Ethiopia could have positive impacts on poverty reduction, GDP growth, tax collection and resilience to economic shocks in the country, the report says.

GSMA Intelligence estimates that should Ethiopia see high adoption of mobile money, i.e., approximately 60% of Ethiopian adults are mobile money users by 2030, mobile money could: 

  • Lift 700,000 people out of extreme poverty.
  • Add $5.3 billion to Ethiopia’s GDP.
  • Increase tax revenue by $300 million.
  • Provide a cushion for the economic shocks experienced by almost 40% of Ethiopian households. 

To harness these, the country is expected to create an enabling environment that ensures better connectivity, affordability, policy/regulations, literacy, and digital skills, payments interoperability as well as awareness, trust, safety and security.

The high adoption of mobile money also depends on access points and agent networks; relevant use cases, and affordability of handsets and mobile services.

Relevant use cases  

Besides the “usual” entry points to mobile money such as cash in-cash out, and person-to-person transfers, the report says the digitalization of government-to-person and person-to-government payments is a key opportunity to drive adoption and usage in the short run.  

“As the ecosystem matures, mobile money will also become a viable option for international remittances, merchant, agricultural and humanitarian payments. 

“With most Ethiopians saving at informal institutions, low accessibility and uptake of credit, and almost no instances of insurance products for agricultural communities or microentrepreneurs, tailored micro-credit, microinsurance and micro-savings products are another prominent opportunity.”

These opportunities can further be maximized by building consumers’ confidence, trust, and security, linked to low financial and digital literacy, poor network quality, and concern over the smooth functioning of technology, the analysis highlighted in the report shows.

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