The new service, TeleBirr, will allow customers to send and receive money, as well as deposit or withdraw cash from appointed agents
Ethio Telecom has now announced its first foray into the realm of mobile financial services, a sector booming across the entire African continent.
The service, named TeleBirr, will allow customers to make cashless transactions, including sending and receiving money, depositing and withdrawing cash from selected locations, paying bills, and receiving cash sent from abroad.
Part of the motivation here is to allow the country’s low-income citizens access to the digital financial market, many of whom do not have conventional bank accounts.
Building financial identities for the so-called ‘unbanked’ is a growing concern in an increasing digital world. Back in 2019, the World Bank found 67% of the world’s adult population were excluded from the formal economy because of a lack of credit history; if financial identities could be built for this population, global GDP would receive a boost of around $250 billion, according to research.
The TeleBirr is nothing if not ambitious. The service is set to be available in five languages and hopes to attract around 21 million users in its first year, rising to 33 million in five years. By 2026, Ethio Telecom’s Chief Executive Frehiwot Tamiru said that she hopes 40–50% of the country’s economic output would be carried via the platform.
If such projections were to come true, this would represent an enormous achievement, representing around a quarter of Ethiopia’s 115 million people using the platform. However, such feats are not unprecedented, with Kenya’s mobile money platform M-Pesa currently processing around half of the country’s GDP every year.
The service has reportedly been in development for the past two years, with Ethiopian Prime Minister Abiy Ahmed, noting that such a service was first proposed a decade ago, though it did not succeed.
It is worth noting here that TeleBirr’s launch coincides with the liberalisation of the Ethiopian telecoms market, which will see two new operators granted licences later this year. As part of this process, foreign telcos have been excluded from launching their own mobile money services, meaning TeleBirr will face little immediate competition.
According to Prime Minister Abiy, this decision to deny the new entrants the rights to launch their own financial services had reportedly seen bids cut by $500 million, with the possibility of launching a mobile money service one of the major drivers for potential foreign operators.
However, it seems that TeleBirr will not enjoy this competition-free environment for long, with Abiy suggesting that competition would be allowed after a year.
Back in April, two bidders for the new Ethiopian telecoms licences were announced: South Africa’s MTN, a consortium, including Safaricom, Vodafone, and Vodacom.
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