How Ethio Telecom Spearheads Ethopia's Financial Inclusion Programs

-- A GSMA report had branded Ethiopia one of Africa's "sleeping giants". Ethio Telecom spearheads Ethopia's financial inclusion programs and enhances the financial inclusion development and digitalisation of the country. Here we will invite Ethio Telecom to share how to launch the TeleBirr service, and evolve into a payment lifestyle brand that gives customers a 'one-stop shop' for all their financial service needs.

In terms of total subscribers, Ethio Telecom is the second largest operator in Africa after MTN, and the 23rd largest operator in the world. Currently we are integrated telecom operator having 69.5 million mobile customers, over 560k Fixed broadband and 860k Fixed voice customers covering 99.1% regions of the country. Driven by a mission to provide reliable communication and digital financial services to simplify life and accelerate digital transformation of Ethiopia. We launched the mobile money solution called TeleBirr in May 2021. Starting in July 01, 2022, Ethio Telecom also implemented a three-year LEAD Growth Strategy with a vision to provide service beyond connectivity and enable inclusive growth by providing digital and financial services that simplify the daily activities of organizations and individuals. The strategy also focuses on delivering problems solving and cloud-based value-adding, content-driven services and solutions to our mass and enterprises customers and thus opening new revenue streams, apart from the traditional voice and data offerings. TeleBirr has emerged as the pillar of the LEAD strategy because it perfectly aligns with these objectives enhancing the financial inclusion and digitalisation of our country.

TeleBirr – the backbone of the country's financial inclusion program

TeleBirr, developed in collaboration with Huawei Technologies, is the first operator-led mobile money platform in Ethiopia. The potential of mobile money solutions in Ethiopia was already known. A GSMA report on global mobile money adoption released in 2018 had branded Ethiopia one of Africa's "sleeping giants." Thus we positioned TeleBirr as the pillar of the country's financial inclusion program. Since its launch, the penetration of mobile money business in Ethiopia has grown significantly.

TeleBirr offers differentiated services including savings, remittances, mobile wallets, credit pay, micro credit & saving and more. With just a mobile phone, people can carry out transactions like deposits, cash in & out, paying utility bills, sending money to families & friends and receiving payments from them, get instant micro credit, overdraft and saving services. We are also offering foreign remittance, in collaboration with international remittance companies. As a further innovation, we have also integrated the country's start-ups, e-government and enterprise services with TeleBirr, enabling hassle-free cashless transaction for their customers.

Major milestones for TeleBirr

TeleBirr surpassed 1 million customers in barely two weeks after its launch. As of December 2022, TeleBirr subscriber base stands at 26.5 million with customer transactions value touching ETB 128 billion (2.3B USD) becoming the first such achievement by any African mobile money operator. We have also achieved USD 1.5 million in international remittance. Supporting this growing ecosystem, we have 101 master agents, 97,000 agents of whom 30% are women, 24,000 merchants and 17 banks working in tandem. With over 52 public and private institutions integrated on to TeleBirr, we have emerged as the most interoperable mobile money platform in Ethiopia. Back in August, we partnered with Dashen Bank to provide Micro-Credit & Saving services with a local flavor. The services, named TeleBirr Mela (micro-credit service), TeleBirr Sanduk (micro-credit service), and TeleBirr Endekise (credit pay service), fetched half billion ETB transactions reaching over 500K customers within ninety days of the launch. The launch of digital lottery via TeleBirr is another major milestone in TeleBirr's journey.

TeleBirr was also selected as a payment channel to support e-governance and facilitate various G2C payments for Federal Documents Authentication and Registration Agency (DARA), Traffic fine agency, immigration & citizenship service, Hybrid Designs (Ride), Ministry of Foreign Affairs (MoFA), the Accounting Auditing Board of Ethiopia (AABE), and Ministry of Trade and Regional Integration (MoTRI). TeleBirr also acts as the exclusive payment channel for implementation of fuel subsidy scheme of the Ethiopian government. We have created a solution that can help identify customers who are eligible for subsidy and bill them accordingly. Thus TeleBirr helps reduce the complexity associated with such procedures.

Challenges in implementation

While implementing TeleBirr, we faced a diverse set of challenges, of which are mainly attributed to demographic factors. For example, the lower literacy rate among the agents, customers and merchants emerged as a barrier in educating about TeleBirr's benefits and implementing its use cases effectively in some parts of the country. Merchants who were registered with TeleBirr were also not using it to the expected level. Lack of awareness of the platform in low-income markets and rural areas prevented widespread adoption of the platform among merchants in those areas. The lack of mobile skill also contributed to these challenges in some communities.

Establishing mobile money agent structure was another challenge. After multiple considerations, we built an agent structure by developing our existing airtime distribution channel. Ethio Telecom owns more than 300,000 retail outlets and more than 500 shops across the country. Realizing their potential, we made our major airtime distributors as master agents. However, getting them onboard for our business became challenging in the initial stages. Thus, it became important for us to develop more flexible use cases and offerings which are attractive to the agents as well as the customers.

We had to also deal with a number of regulatory hurdles as well. Over the past few years, the regulatory environment in Ethiopia has improved a lot. However, due to low banking penetration and lack of mature infrastructure for banking, we confronted several complexities while procuring the mobile money service provider license. We achieved it though, thanks to our leadership who got constantly engaged with the authorities to achieve the goal. We are further working towards simplifying the regulatory procedures for not just Ethio Telecom, but the entire telecom operators in Ethiopia.

We are engaging with the National Bank of Ethiopia to address the regulatory challenges associated with mobile payments. For example, we believe the transaction limit should be increased so that customers get the flexibility to do more transactions at the convenience of a mobile connection. Integrating very small business providers like shoe-shiners and street vendors is another challenge because they don't fall under the purview of the country's taxing or licensing codes. Also, we think the tax imposed on incentives, bonus or rewards is likely to backfire. We hope for a timely intervention of the regulatory and revenue authorities in these matters.

TeleBirr's winning strategy

Since the launch of TeleBirr, we met with several challenges but managed to overcome some of them completely and bring down the impact of others by adopting appropriate strategies. For example, the localized names assigned to the services and the commission-based structure for customers and agents, innovative products and services and partnerships with the ecosystem players have helped wide acceptance of TeleBirr. In addition, we launched aggressive social media campaigns and referral marketing programs such as cash back, cash for recharge and other future transactions. We have also integrated TeleBirr to our loyalty program called Asham Tele and launched an annuity cash reward program for our agents and merchants.

We are also engaging in technology partnerships to integrate merchant platforms on TeleBirr. In a major breakthrough, we partnered with CNET software technologies to integrate TeleBirr across a wide network of retail and business partners. The CNET integrated payment system allows customers in supermarkets, companies in entertainment and hospitality service, hospitals, pharmacies, and cafes which are partners of CNET to pay service charges using TeleBirr. As of December 2022, 99 merchants have already integrated CNET with TeleBirr and transacted a total of ETB 988.43 million (18.37M USD).

TeleBirr aspires to become a digital marketplace and largest Fintech platform that supports cashless and digital economies in Ethiopia and in the entire Africa. With TeleBirr acting as a gateway for digitization of Ethiopia, we also aim to emerge as a cross-sectoral player by facilitating industries like education, agriculture, gaming, health, lifestyle, and more on TeleBirr platform. Simultaneously, we are also evolving into a payment lifestyle brand that gives customers a 'one-stop shop' for all their financial service needs.