Ethiopian banks and microfinance firms are embarking on a country-wide initiative to draw millions of people into the financial system using mobile money services.
The Ethiopian central bank approved the roll out for M-Birr, owned by primarily Irish-owned MOSS ICT, in December. The mobile money service will be offered by five microfinance firms. M-Birr already has 5,000 to 6,000 users and expects to add 13,000 in February alone, with the potential to reach millions in Ethiopia.
Netherlands-based BelCash is also offering a solution called helloCash. BelCash’s chief executive Vince Diop told Reuters that the service could have 2-3 million users this year and 10 million by 2017 or 2018.
So far, two of Ethiopia’s 16 private banks, Lion International Bank and Cooperative Bank of Oromia, as well as a microfinance firm, have signed up for helloCash, which is currently undergoing a pilot project. The firm expects to be able to offer commercial services in two months, Diop said.
BelCash will receive a fee for each transaction made using helloCash.
In both these cases, Ethiopian banks will offer the mobile money services to their customers and hold the deposited cash on their behalf because of a government policy forbidding foreign firms from investing in the financial sector or telecoms industry.
Only one in ten Ethiopians has a bank account, with only one bank branch per 40,000 people in a nation of 96 million people, and 1,500 ATMs. Banks are planning to authorise thousands of agents, such as shops and merchants, to take deposits and hand out cash via the mobile system.
The initiative mirrors Kenya’s mobile money model, which now has 27 million users in a nation of 45 million.
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