Ethiopia launches mobile money schemes to extend banking reach

by Zelalem

* Millions have little access to branches or services

* Schemes will allow payments via mobile phones

* Mirrors model pioneered in neighbouring Kenya

By Edmund Blair

ADDIS ABABA, Feb 4 (Reuters) – Ethiopian banks and
microfinance firms are launching mobile money services, helping
reach swathes of the population that now have little access to
branches or services, the mobile technology providers and banks

The launch of the services, which allow customers to make
payments or receive money via a mobile that is linked to a bank
account, mirrors technology used in other African nations that
has drawn millions of people into the financial system.

Netherlands-based BelCash is offering a technology called
helloCash, while MOSS ICT, mainly owned by an Ireland-based
firm, is rolling out M-Birr in the nation of 96 million people.

In both cases, Ethiopian banks and institutions will offer
the service to customers and hold the cash deposited, in line
with government policy that bars foreign firms or banks from
investing in the financial sector or the telecoms industry.

“One of the things that the government wants to do is ensure
there is financial inclusion,” said MOSS ICT deputy general
manager Kidist Negeye, adding M-Birr would help reach rural
areas. “Another aspect is the mobilization of domestic savings.
The government wants to increase the number of deposits.”

The central bank approved the roll out for M-Birr, which
will be offered by five micro finance firms, in December. It
already has 5,000 to 6,000 users and expects to add 13,000 in
February. Kidist said the potential was “in the millions.”

BelCash’s helloCash service could have 2-3 million users
this year and 10 million by 2017 or 2018, the firm’s chief
executive Vince Diop said, adding that BelCash would receive a
fee for each transaction made.

Two of Ethiopia’s 16 private banks, Lion International Bank
and Cooperative Bank of Oromia, as well as a microfinance firm,
have signed up for helloCash. Two more banks have yet to submit
applications to the central bank, he said.

The pilot project was under way and commercial services
should start in about two months, Diop said.

Bankers say Ethiopia has no more than 1,500 ATM cash
machines, while there was just over 2,200 bank branches as of
June, or one for every 40,000 people, the central bank says.
Only one in 10 people have a bank account.

In addition to branches, which are expensive to set up,
banks plan to authorise thousands of agents, such as shops or
merchants, in line with new regulations. Such agents will be
able to take deposits and hand out cash via the mobile system.

Ethiopia’s initiative mirrors the model pioneered in Kenya,
where there are now 27 million users in the nation of 45
million. Safaricom, a unit of Britain’s Vodafone
, was first with such a service, launched in 2007.

(Additional reporting by Aaron Maasho; Editing by Andrew

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