In 2007, when the mobile payment and money transfer system M-PESA was launched in Kenya, few could have predicted its revolutionary global influence.
Currently, the product has reached over 170 countries worldwide, effectively catering to more than 70 million customers.
The mobile financial service provider has expanded to serve over one million businesses and agents across Kenya, Ethiopia, Tanzania, Mozambique, the Democratic Republic of Congo, Lesotho, Ghana, and Egypt.
The service boasts over 55,000 integrations through its Daraja platform, where more than 100,000 developers are active.
Boasting a present capability of handling 4,000 transactions per second, this platform manages approximately 100 million transactions daily, establishing itself as the biggest fintech solution across Africa.
This mobile money transfer and payment system thrives due to its ease of access and the global reach of the service, enabling countless individuals to execute immediate, safe, and dependable financial operations through their cellphones.
On October 6, 2022, Safaricom activated its mobile telecommunications network and services in Addis Ababa, Ethiopia's capital city.
Following the acquisition of a national full-service Unified Telecommunications Service License, this became the first company in the nation to introduce a competing mobile service against the state-run Ethio Telecom.
As part of the Digital Ethiopia 2025 initiative, this plan seeks to assist the nation in achieving its full digital capabilities and utilizing technology to foster a more affluent societal framework.
Although the telecommunications company took nearly 25 years to capture 65 percent of the nation's mobile subscribers, according to recent Q2, 2024 data from the Communications Authority, it reached 46 percent of Ethiopia’s total population only two years following its entry into the market.
This indicates that the network has been accessed by at least 52 million out of the nation's 112 million people.
HUGE POTENTIAL
Vim Vanhelleputte, the CEO of Safaricom Ethiopia, expresses optimism regarding the company’s recently implemented network infrastructure in the nation and sees promising opportunities for growth by capitalizing on the successes in the Kenyan market.
He states that the quick expansion into the market and increase in total subscribers can be attributed to Ethiopia's substantial population, coupled with its significant number of individuals without bank accounts. This presents a major chance for expanding mobile financial services.
Given its population of over 120.3 million people spanning a vast area of 1.1 million square kilometers, Ethiopia is considerably larger than Kenya. This presents significant potential for generating revenue that could surpass the impressive figures accumulated by Safaricom in Kenya throughout the years, possibly even doubling them.
Every year, three million people in Ethiopia become 18 years old, effectively increasing the potential consumer base within the country by a number equal to one and a half times the total population of Lesotho," Vanhelleputte stated. "This indicates that we must be present.
Safaricom Ethiopia also benefits from avoiding some of the challenges that M-PESA faced in Kenya.
Although it took the telecommunications company seven years to set up mobile money transfers in Nairobi, the process was completed in just seven months in Addis Ababa.
"What we're addressing in Ethiopia with M-PESA is transitioning from cash payments to digital ones. To succeed with a new offering, relevance is key. It must address genuine issues and customer needs; only then can it achieve significant success," stated Wim Vanhelleputte, CEO of Safaricom Ethiopia.
Based on the financial disclosures made public in February, the customer base for M-Pesa within Safaricom’s operation in Ethiopia surged over threefold from 3.1 million to 10.8 million during the year ending December 2024.
This represents nearly one-third of the nation's mobile phone subscribers. During a recent media discussion, Vanhelleputte mentioned that attempting to recreate M-PESA's Kenyan triumph in Ethiopia involves dealing with entirely distinct user behaviors.
Initially introduced to address the financial transaction issues in Kenya, it has become a complete digital game-changer in Ethiopia.
Prior to M-Pesa, Kenyans predominantly used Public Service Vehicles for transferring funds, particularly to remote regions, because of the insufficient banking network.
BANKING DISRUPTION
In Ethiopia, M-Pesa is addressing the issue of reliance on cash. "To make this work, you require a network, participants, distribution channels, and the M-Pesa platform," according to Vanhelleputte.
All these components, which form the basis of our achievement, have finally been established. We're currently focusing on expanding them to ensure ongoing success. From this point forward, we will begin constructing the structure and demonstrate just how successful we can become.
Fintech aficionado James Maore suggests that similar to what happened in Kenya with M-Pesa, this mobile money service will likely have a substantial effect on Ethiopia’s banking industry by providing an easy-to-use and readily available financial solution, especially benefiting individuals who lack access to conventional banks.
This will result in enhanced access to finance and greater competitiveness within the financial sector.
"Mobile money has significantly transformed Kenya's financial services sector without undermining the conventional banking industry," Maore stated.
It provides clients with a significantly distinct value offering, and even though banks initially strongly opposed it, it has allowed them to expand their customer base.
He mentioned that in Ethiopia, this shift is anticipated to assist banks in reducing expenses and boosting efficiency as they move from physical structures to digital platforms.
He notes that M-Pesa is anticipated to transform how financial transactions are conducted and managed in Ethiopia, providing customers greater autonomy over their everyday routines and conserving precious time through the digitalization of crucial tasks.
He mentioned that for customers, M-Pesa provides the ease of online shopping, along with benefits like discounts and incentives, recommendations for new services, opportunities to save and borrow money, and the capability to manage everyday activities directly from their smartphones.
Companies get exposure to a broader marketplace for their offerings along with the streamlined benefits of digital procedures featuring intuitive control panels and analytics.
In October, Safaricom expanded its M-PESA Global service into Ethiopia, enabling clients to perform mobile money transfers between Kenya and Ethiopia.
These firms intend to boost the adoption and spread of mobile money throughout Ethiopia, enhancing local economies and opening up fresh possibilities for people, enterprises, and organizations nationwide.
This expansion zeroes in on addressing the evolving needs, preferences, and requests of both clients and end-users within a rapidly changing marketplace. Simultaneously, it emphasizes maintaining compliance with the pertinent regulatory standards and legal obligations specific to the local sector.
Safaricom Customer Registration in Ethiopia / HANDOUTFINANCIAL INCLUSION
It is also collaborating with fintech companies as part of its strategy to revolutionize the banking industry in the landlocked nation.
Earlier this week, Safaricom’s M-Pesa joined forces with LakiPay Financial Technologies SC (LakiPay) to improve digital payment services in Ethiopia. This collaboration aims to provide merchants and consumers with easy-to-use, safe, and effective digital financial options.
This collaboration enables M-Pesa to integrate with LakiPay’s payment platform, permitting merchants enrolled via LakiPay to receive payments.
This integration streamlines transactions, broadens financial inclusion, and supports Ethiopia’s expanding digital economy. Safaricom M-Pesa Mobile Financial Services CEO Elsa Muzzolini has welcomed this advancement.
"As a provider of mobile financial services, we are dedicated to equipping both businesses and individuals with safe and user-friendly digital payment options," she stated.
This collaboration with LakiPay bolsters our commitment to promoting financial inclusiveness and digital progress in Ethiopia through the offering of additional choices for smooth transactions.
The success of M-Pesa goes beyond just technological advancement; it also stems from how well it fits into the cultural norm of assisting extended families, underscoring the significance of cultural suitability in adopting fintech solutions.
The tale of M-Pesa exemplifies how technologies have rapidly bypassed traditional stages of development in theGlobal South, marking a notable achievement in fintech uptake that offers us an extensive case study for evaluation.
In the M-PESA Africa offices located in Nairobi, Sitoyo Lopokoiyit leads the group responsible for overseeing the platform within markets outside of Kenya. M-PESA Africa is a collaborative effort between Safaricom and Vodacom Group which came into existence in 2020.
Sitoyo was part of the testing team for M-PESA before its launch in Kenya in March 2007. He became involved because his then-employer, Chevron, operated the Caltex service stations that served as some of the initial agents.
"The positive aspect is that at M-PESA Africa, we developed a unified platform ensuring that every platform offers identical capabilities across different markets. This way, each region can introduce these products and services based on their specific requirements," explained Sitoyo.
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