Ethiopia’s Telecoms Privatization and Payments Digitalization
November 23, 2020
To the World Bank Group:
As a representative of the Ethiopia’s Communications Authority (ECA)[1], we humbly seek your support to launch a digital payments service. Our telecoms network is currently run by a single provider Ethio Telecom. Last year, we announced major plans for privatization, but progress has stalled due to COVID-19. Our post-pandemic plans for spurring our slumping economy includes the strengthening the telecoms sector. We hope you can assist us on this journey.
Today only 19% of the population has internet and 41% of the population equivalence has mobile connections. We have a long way to go. Working with the World Bank IDA gives us a chance to create proper policy and invest in infrastructure to strengthen our privatization of the telecoms networks. Ethio Telecom is the single player and we need to create a blueprint to allow others to enter the market — your support would be greatly appreciated on this front.
“I am afraid of COVID-19… the counting of money with the hands causes disease, so instead I use HelloCash.”[2] The circumstances of COVID-19 indicate that our citizens are ready to adopt digital payments. Mobile money technology has also improved here making it easy and simple to use. Restaurant owners like it because they are getting their money faster too. Incumbent technologies, like card payments, are still expensive and not widely adopted. Moreover there is an added layer of safety because customers do not need to carry large sums of cash.
We have also made recent policy shift allowing non-financial institutions to act as mobile-money providers. Our aim was to make mobile money more accessible. “The previous regulation was more or less focused on the financial sector. The new proclamation enables technology services providers to have an electronic payment issuer license”[3]. Existing regulation keeps the incumbent, Ethio telecom, from participating in this process, so smaller players have plenty of room for innovative thinking. Also our colleagues in the Ministry of Finance have pioneered how to use digital payments for poverty programs, so we can see across stakeholders an interest to further develop this technology.
Finally, the telecoms sector is a better suited for this change compared to banks. Those with bank accounts in Ethiopia only make up about 31% of the population. Most do not go to banks at all, but instead MFIs and local savings clubs. While Commercial Bank of Ethiopia is attempting to launch, its use case seems to be on remittances more than P2P or business transactions.
We humbly seek your help to perform a comprehensive study of our telecoms sector. Our aim is to follow through with our privatization while supporting our budding digital payments offerings. Please feel free to reach out to my office if you have any questions or would like to discuss further.
Sincerely,
Representative of Ethiopia’s Communications Authority (ECA)[4]
[1] I am not really a part of ECA. This is for a fictional class assignment.
[2] https://www.dw.com/en/ethiopians-are-dipping-into-digital-wallets/a-54917399
[3] https://www.dw.com/en/ethiopians-are-dipping-into-digital-wallets/a-54917399
[4] I am not really a part of ECA. This is for a fictional class assignment.
