Safaricom Ethiopia to Launch Device Financing Service

In a bid to bridge challenges of affordable phone access, Safaricom Ethiopia is set to roll out a device financing program within the next few months. The telecom operator looks to employ a financing scheme that allows customers to buy phones through installment payments made over several months.

Wim Vanhellepute, CEO of Safaricom Ethiopia, recalled the success of its device financing strategy in Kenya, which allowed its sister company to sell over 3 million smartphones.

“We are going to apply a similar strategy in Ethiopia,” he told Shega.

The CEO further noted the possibility of reducing costs by working with three local companies that assemble low-cost smartphones in the country. He expects the reliance on foreign exchange to be reduced by working with manufacturers who make smartphones in Ethiopia.

Affordability has become the most significant barrier to mobile internet adoption in the country, according to a new report by the Global System for Mobile Communications (GSMA). 

Safaricom entered the Ethiopian market two years ago and has managed to onboard close to 6 million users on its way to a 5.5% market share in the country’s duopolistic telecommunications sector. It has built a massive network infrastructure of over 3,500 towers in less than three years with over a billion dollars in investments.

Safaricom ventured into the mobile money business in Ethiopia through its flagship M-Pesa service last year, which managed to onboard 4.5 million subscribers in seven months. However, this figure is significantly less than the nearly 47 million users on ethio tel’s Telebirr, which offers a varied portfolio of services.

Nonetheless, Safaricom Ethiopia is preparing to launch a buy now pay later overdraft credit facility as it looks to solidify its footing in the mobile money sector. Wim expects the microcredit service to equip customers with a convenient loan facility if they run out of money during transactions.

The CEO foreshadowed the increasing adoption of innovative products already tested out in Kenya by modifying them for the Ethiopian market. Safaricom is also exploring a project that is dubbed ‘Wealth’, which aims to periodically collect savings linked to interest-bearing financial products such as bonds or stocks. In Kenya, Safaricom operates the M-Pesa-based Mali money market fund, offering investors annual returns that are calculated and compounded daily.