Ethio Telecom, on Tuesday May 11, launched a mobile phone-based financial service, seeking to boost growth by offering cashless transactions. Customers can deposit, receive and transfer money using their mobile phones in areas where network service is available.
The new service, telebirr, aims to extend mobile services to financially excluded sections of society.
Prime Minister Abiy Ahmed during the launching ceremony said that the decision to exclude mobile money from the terms of the two new telecom licenses has cost the government about USD 500 million from bid levels. The block was imposed to allow the country to build its own expertise in phone-based financial technology. This will be lifted after about a year according to PM Abiy Ahmed.
He said that the government will protect the country’s national interest at any cost. “We have to protect our national interest and have to give way for Ethio telecom to be better prepared to compete with other operators before we give them the license. Next year I hope Ethio telecom will be able to compete with others,” PM Abiy added.
Mobile financial services have become a significant part of African telecom operators’ businesses after Kenya’s Safaricom pioneered them with M-Pesa in 2007, giving people an alternative to banks.
Ethio telecom plans to recruit 21 million users for the service in the first year of operation, rising to 33 million in five years, said Frehiwot Tamiru, CEO of Ethio telecom. About 40 to 50 percent of Ethiopia’s annual economic output will be transacted on the platform by the end of the five years, she said.
“So far, more than 1,600 agents are onboard and the number of agents will increase to more than 15,000 within a year to ensure accessibility and convenience to our customers,” Frehiwot added.
“We are working with international remittance companies to launch a service that allows our customers to receive remittances easily and at a low cost, on which we are working on integration and due diligence to make it available in a few weeks. The service is of additional national benefit in rerouting 15 to 20% of the grey market remittances into the formal economy,” the CEO added
“Telebirr service will play a major role in narrowing the financial inclusion gap, we are currently working to increase financial inclusion at least by 25 to 30 percent and improve the overall national financial inclusion to 60 percent,” she added.
Telebirr will help provide formal financial services to those who do not have access to bank accounts. It will also enhance security by discouraging criminals who target cash.
Mobile money services will narrow the financial inclusion gap in our country; enable people to get better, faster and easier financial services at a lower transaction cost. Financial Inclusion is an economic concept that makes all financial services accessible to all sections of the society, and mobile money services are an important solution to ensure financial inclusion. In addition to creating a healthy money flow, telebirr service will increase the overall development of the nation and wellbeing of our people by increasing savings, reducing poverty, encouraging entrepreneurship and investment, reducing printing costs and eventually boosting the economy.
Huawei technologies has powered the first telecom mobile money platform for Ethio Telecom. Huawei Mobile Money platform deployed currently have the capacity of processing up to 100 transactions per second (TPS) and can be easily scaled up to 1000 TPS in the future.
The service is accessible with SMS, USSD and smartphone applications and it can scale up to more functions in the future.
Ethio Telecom, which had revenue of 25.57 billion Ethiopian birr in the six months to the end of December 2020, has 52.7 million total subscribers.