How Safaricom will Transform the Ethiopian Economy – Kenyan President

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NAIROBI, Kenya, Jun 9 – East and Central Africa’s most profitable company Safaricom will help transform Ethiopia by positively impacting most sectors of the 112 million population economy.

This is according to Kenya’s President Uhuru Kenyatta who says the Kenyan telco’s entry into Ethiopia will help the economy make even greater strides in its areas of strength.

These include digital presence, mobile money, telephony, data and fibre connectivity, and business solutions among others.

Kenyatta spoke on Tuesday in Addis Ababa during the issuance of an operation license to the Safaricom led Global Partnership for Ethiopia consortium which won a Sh91.8 billion bid to operate in the country.

The licences are expected to bring an infusion of cash, jobs and infrastructure investment.

The consortium won a 15-year license in a competitive bidding process making it the first private telecoms player in the country.

It brings together Kenya’s Safaricom, South Africa’s Vodacom, UK’s Vodafone, British finance agency CDC Group, and Japan’s Sumitomo Corporation.

“Kenya has seen the great gains and opportunities unleashed by Safaricom across the entirety of our socio-economic landscape. Ethiopia now stands at the cusp of making even greater strides in Safaricom’s areas of strength,” Kenyatta said.

Kickstart Operations

The Global Partnership for Ethiopia consortium will officially start its operations next year and is expected to expend over Sh864 billion in ten years, making it the largest FDI in Ethiopia’s history.

It is also expected to help Ethiopia create over 1.5 million new job opportunities for its citizens.

The Kenyan President also urged the Ethiopian Government to consider opening up opportunities for mobile money services as part of the telecommunications liberalization process.

He said that In Kenya, the success of M-PESA, Africa’s, if not global, first mobile money platform, is a classic example of what possibilities lie in mobile financial services, if fully exploited.

“Studies have shown that enhanced access to mobile financial services, have a great potential to reduce poverty as more people are enabled, easier and safer savings and in effect, greatly influencing the kind of choices they make in life,” he said.

Commenting on the development, Ethiopian Prime Minister Dr Abiy Ahmed said the award of the telecommunications license will catalyse inclusive prosperity.

He added that the competition that will be introduced by the consortium, will create a vibrant telecommunications sector that will significantly contribute to the growth of the economy through creation of jobs and the rise of new MSMEs.

Last month, Ethiopia’s senior finance ministry adviser Brook Taye revealed that  the deal is also expected to provide 4G and 5G internet services, and by 2023 a low-orbit satellite will be put in place to provide nationwide 4G coverage.

“This is a great day for us and we’re very much excited,” he said at the time.

Safaricom’s entry into the Horn of Africa country is part of the country’s telecoms reforms that also include a plan to sell a stake in Ethio Telecom, a move officials hope will make the firm more efficient.

The deal comes weeks after the telco announced the first drop in full-year profit in nine years.

Safaricom recorded a 6.8 percent drop in profit to Sh68.67 billion for the year ended March 2021 from Sh73.65 billion posted a year earlier.

The drop was attributed to a reduction in voice and messaging. M-Pesa revenues also impacted the telco’s profitability, following a directive by the Kenyan government to have mobile money transfers of Sh1, 000 and below free, to encourage the use of cashless payments to combat the spread of the coronavirus disease.

During the review period, voice revenue fell by 4.6 percent to Sh82.55 billion while messaging revenue retreated by 11.7 percent to Sh13.6 billion.

M-Pesa revenue, which accounted for about a third of the total revenue, declined by 2.1 percent or Sh1.79 billion on the back of zero-rating transfers of Sh1,000 and below from mid-March to December last year.

Commenting on the financial results, the firm’s CEO Peter Ndegwa said the Covid-19 pandemic had strained consumers’ wallets and businesses across the country.

“We were not spared either,” Ndegwa told shareholders.

By Wanjiku Mbugua

 

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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