Mobile-Money Comes of Age with Banks

Forty-year-old Dawit Assefa, a sociology graduate, worked at a non-governmental organisation for five years before establishing his own business about nine years ago.

He runs a mid-sized coffeehouse in Kokeb Building, Bole District, kebele 24, close to the campus of the School of Tomorrow.

About a year ago he added a new service, an agency for M-Birr, the first mobile-money service provider in the country. To become a registered agent for M-Birr, Dawit had to fulfil requirements set up by the Central Bank of Ethiopia, including obtaining a new business license and identification card.

M-Birr, established in 2013 by six microfinance institutions – Amhara, Dedebit, Oromia, Addis Credit & Saving Institution, Omo and Peace Microfinance – began operations in 2015.

The service enables users to handle financial transactions remotely using their mobile devices. The services include making cash deposits and withdrawals, money transfers and buying products and services including mobile airtime. Users can also check their balance statements on their phones.

Beyond mobile phone users, the service reaches out to clients who do not use mobile phones or who are illiterate. These users will receive account numbers which they can use to transact money at their convenience by going into the offices of M-Birr authorized agents.

Since launching his new business about a year ago, Dawit has acquired 400 clients and transacts up to 7,000 Br a month.

He registers clients with valid ID cards who make an initial deposit of 20 Br. After registration, clients will be able to use the M-Birr services by dialling a three digit number, *818#, on their phones.

M-Birr has aggressively promoted its service and has reached a large population.

Dawit’s clients can deposit a maximum of 6,000 Br, and withdraw up to 25,000 Br with each transaction. Clients in Addis Abeba have to visit one of the branch offices of Addis Credit and Saving Institution if the amount of a transaction exceeds these values. Addis Credit & Saving Institution has 300 agents in operation throughout the capital.

Since launching the agent and mobile banking service three years ago, Addis Credit, which is one of 38 government and private microfinance institutions in the country, has transacted roughly 111 million Br with 160,000 users.

Agents like Dawit receive 10 Br commission from every client who opens a new account. They also receive commissions from each transaction, which is automatically deposited into their accounts.

M-Birr has aggressively promoted its service and has reached a large population. Meanwhile, some commercial banks have taken out licenses and are advertising their mobile-money service following the launch of the Central Bank’s 2012 directive for mobile and agent banking.

Private banks, including Dashen, Abay, Cooperative Bank of Oromia, Lion, United, Nib, Wegagen and Oromia, and the state-owned Commercial Bank of Ethiopia have already launched similar services. There are two other banks in the pipeline that are preparing to enter the mobile-money service business.

Apart from the banks, the Central Bank’s directive has led to the opening of other business opportunities for companies that develop platforms for the mobile transactions. Among the players are MOSS ICT, Belcash and e-Genzeb.

MOSS ICT, a company founded in 2009 in Dublin, Ireland, is the developer of the transaction platform and provider of technical support for M-Birr.

Belcash Technology Solutions Plc, a Dutch company established in Ethiopia in 2011, designs automated solutions for mobile and agent banking services for HelloCash and others in Ethiopia.

Low awareness level, system inconvenience, limitation of technology know-how and a limited number of service providers has constrained the service from expanding in Ethiopia, according to industry operators.

HelloCash was formed in 2015 by a consortium of Lion, Wegagen and Oromia Cooperative banks and the Somali Microfinance Institution. HelloCash is used by companies like employment agencies, law offices and business brokers to transact payments. It has additional applications like HelloDoctor and HelloGebeya.

HelloCash has a total of 7,530 agents across the country with 1,400 offices operating in the capital. The agents conduct 45,000 to 50,000 transactions daily with a total value of 60 million Br.

“But this figure is small compared with the country’s huge population,” Zewidu Assefa, deputy CEO of Belcash, told Fortune. “That is because we do not have enough services to give to the users.”

HelloCash can be used to purchase air and bus tickets using only a mobile phone or through an agent.

Another platform, e-Genzeb, has developed the platform for Commercial Bank of Ethiopia’s CBE-Birr; Oromia International Bank’s ORO-agent, United’s Hibir-Wekil and Abay’s Abay Bedeje.

Hagere Teseyem is an agent for banks that use the e-Genzeb platform. Her shop, located inside the premises of Addis Abeba University’s main campus, has over 700 clients using CBE Birr, representing a significant share of her client base.

“Many people prefer CBE-Birr, as it enables them to buy mobile airtime,” she said.

Tesfaye Berecha, a first-year student in a master’s degree programme for leadership at the university, is one of her customers.

“I mostly use CBE-Birr to buy mobile airtime and transfer money to my family,” he told Fortune.

Along with Hagere, Commercial Bank has 2,260 agents spread across the country and 227,000 customers, as of March 2018.

Though the industry has been expanding in Ethiopia for the past year, mobile banking adoption still stands far behind neighbouring Kenya, which has made advancement in digital and electronic banking a priority.

M-PESA, launched jointly by Safaricom and Vodacom, has 30 million users in Kenya, contributes 1.5pc of the country’s GDP and has annual revenues of 624 million dollars.

Low awareness level, system inconvenience, limitation of technology know-how and a limited number of service providers has constrained the service from expanding in Ethiopia, according to industry operators.

Accessibility and convenience will be elevated if all service providers use inter-operable systems, software that enables exchange across networks and makes use of the available information, according to Zewidu of Belcash.

Dawit believes that expanding the service under these platforms can potentially attract many users. Customers can pay utility bills and conduct tax settlements, among other things, and the system can attract many users, he said.

“As the system can save time and deliver quality service, people would definitely subscribe to digital banking if these systems are included,” he said.

However, Abebaw Kassie (PhD), a university lecturer and department head of the School of Accounting & Finance at Addis Abeba University, believes that the system is not expanding due to low adoption of new technologies by the general public.

“Beyond that, improving the ICT infrastructure of the country is essential,” stressed Abebaw. “The e-banking system will not quench the users’ thirst without additional services.”

In the meantime, service providers such as Addis Credit & Saving are expanding their shareholder base.

Six government and one private microfinance institution and Debub Global Bank are in the process of acquiring shares in Addis Credit & Saving, according to Habtamu Shiferaw, mobile agent banking department head at the addis credit savings.

“They are waiting for approval from the National Bank of Ethiopia,” said Habtamu.



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