Exclusive / Safaricom targets seven-fold subscriber rise in Ethiopia by 2030

Ethiopia’s telecoms industry was widely seen as a major prize when Prime Minister Abiy Ahmed’s government announced the privatization of Ethio Telecom after he took office in 2018. The move was part of Abiy’s broader liberalization of the economy.

But Safaricom initially grappled with currency volatility and insecurity. A shortage of the foreign currency required to bring in equipment was among the initial obstacles that made it difficult to set up in Ethiopia, said the CTO.

However, in May it said its overall earnings could increase by up to 50% this financial year because losses in Ethiopia were projected to fall steeply.

“The initial problem was technology set-up. This is behind us,” said Maitai. “Now we know how to build infrastructure fast.” He said much of the expansion plan in Ethiopia hinged on broadening its network coverage by more than doubling its base stations from less than 4,000 to more than 10,000 within the next 10 years.

Safaricom, which is partly owned by South Africa’s Vodacom and the UK’s Vodafone, is by some distance the biggest telecoms company in Kenya, East Africa’s biggest economy. It has around 65% market share of SIM card subscriptions, although its main competitor Airtel has been closing the gap in recent months.

The company’s strength in Kenya is most pronounced in M-Pesa. The service, launched in 2007, is used by 90% of the country’s mobile money account holders.

Establishing the infrastructure needed to scale up the business in Ethiopia was always going to be tough. The multiple crises of the Birr’s devaluation, surging inflation, a foreign exchange scarcity, and the 2020-2022 war in the northern Tigray region, only added to the underlying challenge of setting up in a relatively closed economy.

But the seven-fold growth predicted seems optimistic because it underplays the potential impact of key challenges around policy uncertainty, insecurity, and Ethio Telecom. The liberalization of Ethiopia’s economy has been swift and it still remains to be seen how it’ll play out. The currency was floated only a year ago and the IMF warned last month that the economic policy overhaul faces challenges from declining donor support. Meanwhile, an insurgency in the central Oromia region is emblematic of the febrile security situation in part of the country that could undermine Safaricom’s push to extend the network of masts needed to broaden coverage.

The other crucial factor is the role of Ethio Telecom, which has 83 million subscribers. Safaricom could find it hard to scale up rapidly when faced with strong brand recognition and the former monopoly’s close ties to the national telecoms regulator.

Nigeria for many years lagged behind other African countries in the uptake of digital financial services, largely because the central bank did not allow the largest telecoms companies, MTN and Airtel, to have mobile money licenses until 2022.

Michael Wiegand, director of inclusive financial systems at the Gates Foundation, told Semafor that Nigeria was “fairly late in opening up to mobile network operators.” Some 45% of Nigerian adults had an account in 2021, said Wiegand, adding that this remained largely unchanged since 2014. But he said that figure rose to 63% in 2024. “Just allowing mobile network operators to offer accounts enabled a huge growth in participation,” he said.