Ethio Telecom, the state-owned telecom operator, launched integrated digital financial services in collaboration with Dashen Bank.
Three new services will be offered by the partnership of the operator and the bank through the mobile money platform Telebirr, which was launched 14 months ago.
Dashen Bank supports the financial services with funding while Ethio Telecom develops technological solutions.
The digital financial services include microloan, overdraft, and micro-saving schemes. The services were authorized by the National Bank of Ethiopia (NBE) on August 1, 2022, and went operational after four days.
The launching ceremony of Ethio Telecom’s digital financial service was held on Aug 5 at the Skylight Hotel in Addis Ababa.
The new digital financial services include Telebirr Endekise (Telebirr pocket), an overdraft service; Telebirr Mela (Telebirr Solution), a microcredit service; and Telebirr Sanduq (Telebirr box) is a saving scheme.
At the launching event, Frehiwot Tamiru, CEO of Ethio Telecom, stated that Telebirr is broadening its scope through new services focusing on fostering its financial services using e-money to reach those who are not currently eligible for formal financial services.
According to NBE, there are more than 43 million mobile money users in the country.
“Ethiopia’s financial services are cash currency based due to multiple factors. This cash currency based economy is challenged by contraband and other illegal acts, which consequently is making the country spend millions of dollars annually for printing new cash currency and disposing of the old,” said Yinager Dessie, Governor of NBE.
Among the new services, Telebirr Mela will provide micro-credit service without any collateral for individuals and businesses with a 1% facilitation fee. The amount of loan provided depends on the customer’s credit score meaning the usage rate history of Ethio Telecom’s regular services such as voice, SMS and data plus transactions on Telebirr which will be determined by artificial intelligence.
“We planned to lend 10,000 ETB for individuals, while 100 thousand ETB will be the limit for businesses and small enterprises,” said Frehiwot.
“The partnership with Ethio Telecom is a step forward to reach a diverse customer base, especially the agricultural society in rural areas and the youth with dreams facing financial constraints,” said Asfaw Alemu, President of Dashen Bank.
The other service Telebirr Endekise is an overdraft service that is limited to 2 thousand ETB and the facilitation fee starts from 5%. This service is an overdraft scheme aimed at borrowing the customer a certain amount of money when there is a deficiency of balance in his account to make a transaction or withdrawal.
Telebirr Sanduq, on the other hand, is a scheme for saving e-money to a Telebirr account. The savings service will be provided as an interest-bearing account in which the initial amount to get an interest will be 26 ETB with a 7% interest fee added per year, and also in a non-interest-bearing way.
To subscribe to these new services customers are expected to be 18 years old and above, have Ethio Telecom active Sim Card, and be active users of Telebirr.
“As the mobile money market would be open to foreign investors, Ethio Telecom should be ready and committed for the upcoming market competition,” remarked Yinager Dessie.
As the mobile banking proclamation of the country doesn’t allow foreign investors to engage in mobile money services, interested companies had to wait for the revision of the proclamation. Safaricom Ethiopia recently said it is anticipating the amendment of the National Bank of Ethiopia’s Regulation of Mobile and Agent Banking Services Directives to launch its mobile money service M-Pesa in Ethiopia.
According to Ethio Telecom’s annual report, Telebirr has shown “tremendous growth” surpassing the industry’s trend by acquiring more than 21.8 Million subscribers within a short period of time. The data from the operator shows that among 67 million of Ethio Telecom’s regular service users, only 44% are smartphone users, and 22.2 million subscribed to Telebirr.