Telecommunication giants, MTN and Vodafine, have been restricted from providing mobile money service in Ethiopia.
This follows the exclusion of mobile money service provision from the terms of new telecommunications licenses yet to be given to MTN and Vodafone by the Ethiopian government.
The Ethiopian government is set to lose around $500 million on the back of the decision taken.
Ethiopian Prime Minister Abiy Ahmed, who announced the decision said, the block was imposed to allow the country build its own expertise in phone-based financial technology.
“It will be lifted after about a year,” the Prime Minister said at the launch of Telebirr, a mobile payments service to be run by the state-owned operator, Ethio Telecom.
“This decision has cost us a high price,” the prime minister said.
The government has long been in the process of selling two new telecoms licenses — a policy that’s at the heart of Abiy’s economic reform plan.
The move will open up one of the last major markets yet to welcome international investors, and is intended to trigger a wider privatization program to raise foreign exchange and boost productivity.
The issue of mobile money has been vital to the progress of the auction. Fintech is a major revenue and profit driver for African telecoms operators, who are filling a gap left by traditional banks and taking advantage of soaring smartphone use.
“Though Ethiopian mobile penetration lags behind peers, investment and lowered prices should lead to strong growth in take-up of mobile services,” Bloomberg Intelligence analyst John Davies said in a note.
“The value to international investors depends on agreements with the government and how it chooses to regulate the market,” he added.
Ethiopia has received a license bid from a consortium including Vodafone Group, Vodacom Group and Kenya’s Safaricom. Another offer was made by MTN Group and China’s Silk Road Fund.
The country is yet to announce the result.
