IFC and MIGA, members of the World Bank Group, have announced a comprehensive investment package to support Safaricom Ethiopia’s greenfield telecommunications network in Ethiopia. The investment aims to provide affordable internet access, reliable mobile connectivity, and technology access to people and businesses across the country.
The partnership involves several entities, including IFC, MIGA, Vodafone, Vodacom, Safaricom, Sumitomo Corporation, and British International Investment. The investment aligns with the World Bank Group’s mission to alleviate poverty and meet the growing demand for digital connectivity services.
IFC’s contribution to the project includes a $157.4 million equity investment in Global Partnership for Ethiopia BV (GPE) and a $100 million A-loan to Safaricom Telecommunications Ethiopia Private Limited Company (Safaricom Ethiopia). This equity investment positions IFC as a minority shareholder in Safaricom Ethiopia.
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To safeguard the investment, the Multilateral Investment Guarantee Agency (MIGA) will provide 10-year guarantees totaling $1 billion. These guarantees cover the equity investments of Safaricom Ethiopia’s shareholders, which include Vodafone Group, Vodacom, Safaricom, and British International Investment. MIGA will allocate $76 million from the MIGA Guarantee Facility, a part of the International Development Association’s Private Sector Window, as a first loss layer.
The investment and guarantees will enable Safaricom Ethiopia to deploy and operate 4G and 5G mobile networks throughout the country, including rural and urban areas. Furthermore, Safaricom Ethiopia plans to launch financial services in 2023, under the brand name M-PESA, after obtaining a license from the Central Bank of Ethiopia in May 2023.
Reasons for the Investment
The investors have several compelling reasons for their significant investment in Safaricom Ethiopia’s telecommunications network. In the first place, the investment aligns with IFC’s strategy to enhance global competition in the digital sector, resulting in reduced costs for consumers. The improved access to digital services, particularly mobile financial services, will benefit young people, small businesses, and entrepreneurs.
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Again, the investment supports the Ethiopian government’s Digital Ethiopia 2025 plan, which aims to leverage technology for societal and economic development. By partnering with Vodafone, a renowned global telecommunications provider, the World Bank Group and other investors can contribute to Ethiopia’s digital transformation and help the country achieve its United Nations Sustainable Development Goal commitments.
Lastly, the project has substantial potential for job creation, with estimates suggesting that up to 1.5 million direct and indirect jobs can be generated in Ethiopia. Additionally, by increasing financial and social inclusion through improved digital access, the project can contribute to Ethiopia’s sustainable future growth.
Safaricom’s Project in Ethiopia
Safaricom Ethiopia, the first private telecom operator in Ethiopia, launched its services in October 2022. The company was established as part of the Ethiopian government’s efforts to liberalize the telecommunications market, ending the monopoly previously held in the sector.
The founders of Safaricom Ethiopia include Vodafone Group, Vodacom, Safaricom, Sumitomo Corporation, and British International Investment. The primary markets for these entities are located worldwide, with extensive experience and expertise in the telecommunications industry.
Ethiopia, Africa’s second most populous country with approximately 120 million people, presents significant growth opportunities for Safaricom Ethiopia. The company aims to provide widespread access to high-quality internet services and expand its mobile network coverage across both urban and rural areas.
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Through this project, Safaricom Ethiopia plans to enhance financial inclusion by offering mobile financial services under the brand name M-PESA. This initiative, scheduled to launch in 2023, will enable individuals to access a wide range of financial services conveniently and securely using their mobile devices. With the launch of M-PESA in Ethiopia, Safaricom aims to revolutionize the way people manage their finances and conduct transactions.
M-PESA has been widely successful in Safaricom’s home market of Kenya, where it has transformed the financial landscape by providing accessible and affordable mobile banking services to millions of people. Building on this success, Safaricom Ethiopia aims to replicate the positive impact of M-PESA by extending financial services to the unbanked and underserved populations in Ethiopia.
Through M-PESA, individuals will be able to perform various financial activities such as depositing, withdrawing, and transferring money, paying bills, purchasing goods and services, and accessing credit and insurance products. These services will be available through Safaricom Ethiopia’s mobile network, leveraging the widespread adoption of mobile phones in the country.
Safaricom Ethiopia IFC Safaricom Ethiopia IFC
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard