Ethiopia’s closed economy is not stopping ambitious African fintech companies from taking strategic stands. After Ghana’s e-pharmacy startup, mPharma, opened the expansion door through a strategic partnership with the country’s Belayab Group in March this year, and Moneta Technologies — the fully-owned subsidiary of Fettan Holdings, Limited of Kenya, that is based in Addis Ababa — launched the country’s first payment gateway to accept Visa, Mastercard, and American Express cards for ecommerce transactions, a quick succession of African fintechs are rushing in.
The latest to join the East African country’s fintech race are Africa’s latest unicorn, Flutterwave and Africa-focused fintech company, Mukuru.
Both Mukuru And Flutterwave’s Presence Into Ethiopia Will Be Strengthened Through Partnerships
Mukuru’s Partnership
Mukuru has partnered with global payments network Thunes. The partnership, although will begin in Nigeria, will see rapid expansion to other countries such as the Democratic Republic of the Congo, Ethiopia, Senegal, and India, as well as link Mukuru users to Thunes’ global interoperable network, which operates in over 100 countries.
“Our partnerships continue to be a source of both innovation and growth across our network, with our homegrown technology solutions continually evolving to meet the day-to-day needs of our customers. We meet customers wherever they are, which today includes a variety of both physical and digital touchpoints across Africa, Europe and Asia,” Andy Jury, CEO, Mukuru, said.
Mukuru’s business in South Africa began in 2010 as a joint venture with Inter-Africa, a Bureau de Change. It then developed into a free consumer USSD platform two years later. Customers received a reference number via text after placing an order, which they presented at a retail partner to pay for the order in cash. Mukuru’s first South African retail partner was PEP.
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Other collaborations followed, including payin/payout points with retail giant Shoprite/Checkers, and Mukuru became a payout partner for WorldRemit customers in regions where Mukuru has its own booth and branch network in the last 12 months.
Mukuru has also collaborated with companies such as Ozow, which allows consumers to make simple payments via the Mukuru App, and Flash, which allows South Africans to send money to loved ones by paying for their orders at any of Flash’s 175,000 vendors.
“Thunes is leading the way in building a global cross-border payments network with real-time transaction processing. Our coverage across Africa, Europe, the Americas and Asia-Pacific (APAC) gives our customers the most accessible, fast and reliable interoperable local payment solutions around the world,” Obey Itai Domingo, Business Development Director, Thunes SADC, said.
Mukuru already has collection points in Ethiopia. Partnership with Thunes will increase the volumes of transactions the company conducts in the East African country.
Flutterwave’s Partnership
For Flutterwave, the partnership is with Ethiopia’s digital money and e-commerce platform Amole. Amole is a creation of a partnership, in 2018, between Ethiopia’s Dashen Bank and payments platform Moneta Technologies.
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Flutterwave-Amole partnership will make remittances from the country’s huge diaspora faster and cheaper, the companies said in a statement.
With the partnership, Flutterwave users around the world will be able to transfer money directly to an Amole digital wallet, a bank account, or a cash collection site, according to the companies. They added that Ethiopia has 8 million people employed abroad who send home more than $5 billion each year.
Flutterwave’s announcement comes just days after Ethio Telecom, Ethiopia’s lone mobile provider, unveiled a mobile-based financial service.
| S/N | AFRICAN STARTUP | SECTOR | BASE COUNTRY OF OPERATIONS | COUNTRY EXPANDED INTO IN 2021 (AS AT MAY 7TH) |
|---|---|---|---|---|
| 1 | mPharma | Healthtech | Ghana | Ethiopia |
| 2 | Aza Finance | Fintech | Kenya | South Africa |
| 3 | Gozem | Ride-hailing | Togo | Gabon |
| 4 | Andela | Edtech | New York, USA | Latin, South America |
| 5 | SWVL | Ride-hailing | Egypt | Saudi Arabia |
| 6 | GOMYCODE | Edtech | Tunisia | Morocco; Senegal |
| 7 | FairMoney | Fintech | Nigeria | India |
| 8 | Autochek | Car listing | Nigeria | Ghana |
| 9 | Daystar Power | Solar energy | Nigeria | Togo |
| 10 | ZeePay | Fintech | Ghana | Zambia |
| 11 | Catch | Ride-hailing | Ethiopia | Kenya |
| 12 | AURA | Security | South Africa | Kenya |
| 13 | Paystack | Fintech | Nigeria | South Africa |
| 14 | Flutterwave | Fintech | Nigeria | Ethiopia |
Foreign (Non-Ethiopian) Investors Are Barred From Participating In Ethiopia’s Fintechs
Despite the latest move to allow foreign participation in the provision of mobile money services, Ethiopia (which is Africa’s second most populated country after Nigeria) continues to place a bar on foreigners owning stakes in banking, insurance, brokerage services, and legal consultancy businesses.
In October 2020, after series of negotiations and deliberations, the National Bank of Ethiopia (NBE), granted a license to state-owned telecoms company, Ethio Telecom, to start mobile money service in the country. This followed the issuance, in April 2020 by the bank, of a regulation called Licensing & Authorization of Payment Instrument Issuers. For the first time in Ethiopia’s history, the regulation allowed mobile money transactions.
“As part of the application process,” the directive read, in parts, “the National Bank, may request for a preliminary meeting and demonstration of the intended payment instrument to be issued, its related services, products as well as operation. Based on requests made and written approval of the National Bank, a payment instrument issuer may be allowed to provide cash-in and cash-out; local money transfers including domestic remittances, load to card or bank account, transfer to card or bank account; domestic payments including purchase from physical merchants, bill payments; over-the-counter transactions; and inward international remittances services.”
The regulation has also opened up the country’s financial services sector to include that a licensed payment instrument issuer may, with the relevant agreement with regulated financial institutions and pension funds, be allowed to provide micro-saving products; micro-credit products; micro-insurance products; or pension products in the country.
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The National Bank of Ethiopia also issued, that same year, a “Licensing and Authorisation of Payment System Operators Directive (ONPS/02/2020), allowing financial technology companies (fintechs) to start off payment processing and related services in Ethiopia.
Five licenses under the payment system operator directive include National Switch, Switch Operator, ATM Operator, POS Operator, and payment gateway license.
Although not yet there, it does seem that the days of bar against foreign participation in the country’s financial services sector are numbered.
Ethiopia fintechs Ethiopia fintechs Ethiopia fintechs Ethiopia fintechs
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer