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In various parts of Africa, paying for food, clothing or public transport with a phone is commonplace. Mobile money is also taking off in Ethiopia, with COVID-19 as a catalyst.
It is early afternoon, but small groups of men have already begun to gather around the khat stalls in Jijiga city. Hundreds of these stands are part of the urban landscape of the Somali region of Ethiopia, where amphetamine leaf is widely consumed. The practice of chewing khat has a long tradition, but the business is modernizing.
Mohammed Abdehashi, a regular user, does not pay for the first of his two daily doses of the bright green plant in cash, but with mobile money. The digital form of payment is becoming increasingly common in Jijiga, and the COVID-19 pandemic has accelerated what was already a trend.
“I am afraid of COVID-19,” admits the middle-aged man. “Counting money with your hands causes illness, so I use HelloCash instead.”
Mobile money leader
The dramatic increase in the number of mobile money providers and subscribers in recent months has made Jijiga a leader among Ethiopian cities. In the Somali region, the main providers are HelloCash, which has been around for years, E-Birr and Sahay.
Ethiopia has lagged behind its neighbors like Somalia or Kenya in this business. Protectionist government policies in the cash-oriented society have gotten in the way.
In the Somali region, the change was partly influenced by the mobile money market in Somalia. The Ethiopian federal government is also beginning to promote the technology.
Abdulaziz Hassan is the CEO of Sahay, a new microfinance institution known for its mobile money arm. The company has been operating in the Somali region since the end of February and now has more than 200,000 clients.
“It is easy to penetrate this region and that is due to [it’s easy for] Customers in this area adapt to new technologies, and they like simplicity and all that stuff, “he says.
Easy and safe
Everywhere you look in Jijiga, posters and stickers promoting mobile money providers entice consumers to pay with their phones. Cafes, small shops and even some transport providers now accept mobile payments. The technology aims to make transactions more secure and allows users to outperform credit card technology.
Card payments are still very expensive and facilities to make them are almost non-existent in Ethiopia. With mobile money, you use a phone to send and receive payments.
Abdukani Mohammed, who works as a cashier at one of Jijiga’s many cafes, says mobile money has brought many benefits. “We are getting our money faster,” he says. About half of its customers use mobile banking to pay for coffee.
One of his regular customers, Mohammed Abdulrahman, says he likes to pay for drinks, food and clothes without carrying large sums of cash. “The mobile money service is very good because it makes it easy to access your money. It’s safe money because even if you lose your phone, you can still easily get your money back.”
New users targeted
In Ethiopia’s capital Addis Ababa, using a phone to pay checks is not yet common, but companies like Amole have found ways to target new users. Soccer fans pay for tickets through the company’s mobile money service, which is associated with the government-owned Dashen Bank.
Customers of Addis Ababa’s high-end supermarket chains, such as Shoa, who are already familiar with mobile technology, also have the option of using the payment method.
It is still difficult to reach the general population in a country where approximately 80% of the population lives in rural areas. A recent policy change allowing non-financial institutions to act as providers of mobile money could make mobile money more accessible.
“The previous regulation was more or less focused on the financial sector. The new proclamation allows technology service providers like us to have an electronic payment issuer license, giving us more flexibility to acquire customers, merchants, agents and execute transactions, “says Samson Getu. Amole’s vice president of operations. “It really gave us a lot of room to grow and expand.”
Ethiopians are still “more comfortable carrying cash,” says Samson Getu. “So we need a lot of behavioral and educational changes, not just from a mobile money perspective, but also from a financial inclusion aspect.”
A pandemic opportunity
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Despite its many negative consequences, COVID-19 has given the mobile money market a boost. The government introduced incentives for citizens to increase the use of digital payment methods. But it is too early to say whether and how the pandemic has benefited the mobile money market.
Transferring money from one bank to another, or from one digital wallet to another, has recently become possible. Not all banks have completed the process, but mobile money professionals like Samson Getu are optimistic. “We are 100% confident that this will increase the use of mobile devices,” says Getu.
One challenge still remains intact, and that is the issue of connectivity, as Ethiopia’s mobile networks and internet are very unreliable. Sometimes the government even enforces internet outages in times of political turmoil.
Tuk-tuk driver Hussein Ali asks his passengers to pay cash. “Sometimes the network is saturated or absent for several days in a row. For me it is better to receive cash and leave than to wait for the money to be sent slowly through the phone and thus waste time,” he says before mounting his blue three -wheeler back to Jijiga traffic.
