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By Maggie Fick and Duncan Miriri
ADDIS ABABA / NAIROBI, July 17 – Safaricom Kenya is in advanced negotiations with the Ethiopian government to introduce its popular mobile money service M-Pesa, an important step towards setting up a catch On the market of 100 million people, two sources said Tuesday that
M-Pesa could transform the Ethiopian economy, as it did in Kenya, by allowing people to bypbad a decrepit and inefficient banking system and send money. Payments at the push of a button
As such, it could support the bold political and economic reform of the new Prime Minister Abiy Ahmed against the opposition of supporters of the government coalition EPRDF
Started in 2007, M-Pesa has about 20 million active users in Kenya and has become the main driver of earnings growth for the dominant telecommunications provider in East Africa, revenues from traditional voice and text services being flattened
. It has evolved from a basic money transfer service to a financial platform offering savings, loan and insurance products in collaboration with local lenders
. "This is an important step for Safaricom," said Eric Musau, head of research at Standard Investment Bank Nairobi.
Vodafone will allow the use of the M-Pesa brand at an Ethiopian bank, while Safaricom will host the servers in Nairobi, a Kenyan source of the telecommunications industry told Reuters, Ethio Telecom. the service has been added, added the source.
Vodafone did not make any immediate comment.
Safaricom would likely receive 10 to 25 percent of the annual business turnover of the new M-Pesa company. According to badysts, in Ethiopia, Safaricom had to pay another company that hosted its M-Pesa servers in Germany before 2015, when they were transferred internally to Kenya.
The rate would start at 25% when the number of users is low and will drop to a minimum of 10% when the number of users will increase and the incomes will increase, according to Musau.
Income of Safaricom's 20 Million Active M-Pesa Users Kenya, which accounts for less than half of the Ethiopian population, harvested 63 billion shillings ($ 630 million) last year , an increase of 14% over the previous year
. change the game for Ethiopians whose banking sector is blocked in the 1900s, without means to transfer funds from one bank to the other.
"New products, new services like digital banking and investment banking is arching According to Eyob Tesfaye, economist based in Addis Ababa, financial sector reform is essential to the pursuit of economic growth. [19659002] M-Pesa could also improve the flow of remittances, helping to alleviate chronic foreign exchange shortages that have emerged as a threat to Ethiopian pacy economic growth.
M-Pesa's approach also suggests that Kenyan firms, from telecoms to banks, are well placed to take advantage of a wave of political and economic liberalization unleashed in the last three months by Abiy.
eye to Ethiopia for years because of its huge population and lack of economic development.However, until the arrival of Abiy this year, Addis has maintained foreign participation in the economy.
The head of Kenya's largest bank, KCB Group, told Reuters last week that the lender could seek a partner in Addis announced plans to liberalize key sectors of the economy.
The Ethiopian banking sector is currently dominated by the Commercial Bank of Ethiopia, which holds about 70% of the sector's badets, according to badysts' estimates.
Safaricom declined to comment. Its chief executive, Bob Collymore, who is on leave because of a long illness, told Reuters that the company wanted to use M-Pesa to expand on other African markets. (Reportage by Maggie Fick and Duncan Miriri, Additional Report by Paul Sandle in London Edited by Ed Cropley and Adrian Croft)
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