Ethiopia eyes Sh19bn fee for M-Pesa entry


The Safaricom-led consortium in Ethiopia will pay $150 million (Sh18.9 billion) as license fees to roll out M-Pesa in the populous nation if the proposed regulations by the Horn of Africa country are passed.

The amount referred to as an investment protection fee is contained in the proposed rules that will guide the licensing and launching of mobile money operations such as M-Pesa.

“A foreign national applicant shall present evidence for the payment of $150 million or equivalent in another foreign currency for investment protection fee,” reads the draft published by the National Bank of Ethiopia, the country’s banking sector regulator.

An investment protection fee is the amount paid by foreigners to invest in businesses exclusively reserved for domestic investors or the government.

The amount will be in addition to 50 million birrs (Sh117.81 million) that Safaricom will have to pay in cash as paid-up capital and the amount deposited in a bank account with restricted access.

The National Bank of Ethiopia is on Tuesday expected to hold a consultative meeting with officials from Safaricom Ethiopia, Ethiopia Telecommunication Authority and those from banks, microfinance banks and payment system operators to discuss the draft.

Mobile money in Ethiopia is set to lift the profile of M-Pesa, which has been raising its stake in Safaricom’s revenue mix since its launch in 2007.

M-Pesa accounted for Sh107.69 billion, 39.9 percent, of the telco’s Sh269.86 billion total mobile service revenue for the year ended March 2022.

Ethiopia is home to more than 112 million people, making it the second-largest country in Africa by population, and M-Pesa is expected to thrive given the large population that is unbanked.

A Safaricom-led consortium —which also includes Vodacom and Vodafone — was in May granted a telecom license in Ethiopia following a Sh107 billion ($850 million) bid but has been unsure of what it would take to get an M-Pesa license.

The draft directive on licensing and authorization of payment instrument issuers now makes it clear that Safaricom will have to pay additional money to get a mobile money license.

If the proposal is passed in its current form, Safaricom will be required to launch M-Pesa within six months of getting the license.

Published on: Business Daily

Publication date: 21.02.2023

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