Ethiopia has a developing mobile sector that, while an early adopter of telecommunication technologies, lags behind many African nations in mobile ecosystem development and digital economy growth. The majority of mobile services are provided by the state-owned Ethio Telecom, which has achieved significant coverage but maintains a monopoly that limits competition and innovation. The mobile banking sector shows promise, with initiatives like m-birr and hellocash, but challenges remain in fostering a robust digital culture and collaboration among ecosystem participants.

1. Mobile in Ethiopia
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December 2016
Digital Resource
MSED
GSMA Capacity Building
Aynalem Aregawi (Mr./Eng.)
Senior Standards & Regulation Expert
Ministry of Communication and IT, Ethiopia

2. Mobile is transforming Africa’s economy and
society. This is an attempt to briefly assess the
case of Ethiopia in line with the course format of
MSED.
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3. Telecommunication Sector in Ethiopia
Surprisingly, Ethiopia is an early adopter of the telephone and telegraph.
Telephone was introduced in 1894 which is only 17 years after Alexander Graham Bell’s famous trial of
the phone.
Telegraph was introduced along the Ethio-Djibouti rail in 1897.
In adopting Mobile, Ethiopia trails some African countries, but is among early adopters.
Mobile was first rolled out in 1999 in the capital Addis Ababa with a subscriber capacity of 40,000.
Its growth has been slow compared to Other African countries. However, recently, with massive
investment and reorganization, it has scored impressive improvements in coverage, subscriber
number, generation of technology, offered services, customer care, etc.
However, the mobile sector performance is still lower than many African countries in the
development level of its ecosystem, and in its ability to drive growth of the digital economy of the
nation.
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4. Mobile Sector
The market structure of Ethiopian communication sector is monopoly. ethio telecom is the
monopoly network operator(MNO).
It describes itself as an ‘Integrated Telecommunication Solutions Provider’. It provides mobile,
fixed, internet services.
ethio telecom launched
⁻ 2G (GSM900) in April 1999,
⁻ 3G (WCDMA & HSPA 2100) in January 2009, and
⁻ 4G (LTE 1800) in March 2015
Its aggregate mobile network area coverage has now reached 92% of the country. The population
coverage is even higher than this and is close to 100%.
The subscriber number has been growing at a rate of 49% CAGR for the last decade. It reached
38.8m in 2015 [National Bank of Ethiopia]
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5. Mobile Sector-Continued
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6. The Mobile Ecosystem
There is no strong collaboration and coordinated (symbiotic)
evolution among the mobile ecosystem components. However, the
following businesses could be considered constituting the
ecosystem.
Following the MNO, The second most visible component of the
mobile ecosystem are handset manufacturers or more precisely
assemblers.
There are now 8 mobile assembly plants in the country, out of
which three-Tecno [TV Report of Expansion] , Tana and Smadl- are
the dominant ones.
Companies that specialize in Software development are less than
500. Further, those that have proven mobile native or hybrid
development capabilities are even less.
An emerging trend of collaboration between handset manufacturers
and developers is the mobile App challenge like the one sponsored
by Tecno.
mobile retailers: according to the operator there are 75,000 device
and accessory retailors all over the country.
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7. Contribution of Mobile to the Economy
The government is the sole owner of the MNO. As a result
the total revenue of the company is appropriated by the
government and used to finance development projects.
Direct contribution of the MNO hovers around 1.6% of
GDP. This is not far from the aggregate contribution of
MNO for Sub-Sharan Africa which was 1.7% in 2016.
Official account for the contribution of other components
of the mobile ecosystem is not available.
Similarly, official account for the indirect contribution of
the mobile industry through productivity enhancement
and innovation is not available. A look at the aggregate for
SSA from the GSMA Mobile Economy Report 2016 (p32)
indicates that it is significant and by far higher than the
direct contribution. (See also side fig.)
Qualitatively, it can be assumed that the indirect
contribution of the mobile industry in Ethiopia would be
higher than the direct contribution
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8. Contribution of Mobile to the Economy –
Cont’d
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9. Mobile Access and Regulation
Due to the monopoly market structure, the MNO in
Ethiopia faces little regulatory hurdles. The policy
objective is also supportive of telecom infrastructure
development.
However, the MNO is dependent on foreign aid to
finance its investments. It also depends on turnkey
arrangements by foreign firms as it lacks the technical
and managerial capacity to run its projects.
The MNO lacks the incentive for efficiency and
innovation that comes from competition.
Mobile voice tariff in Ethiopia is among the lowest in
Africa. On the contrary, internet tariff is substantially
higher. Especially on PPP basis.
As mobile broadband (MBB) is becoming mainstream
with growing utility, the MNO and other components
of the mobile ecosystem need to address the
affordability of mobile internet and smartphones.
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10. Mobile Services
•There are several initiatives in almost every sector of the economy and social services. But
except for mobile financial services and mFarm, none has emerged with definite success and
visibility.
•A partial list of Mobile services and applications may include
⁻ Financial Sector - M-Birr, HelloCash, Bank Owned Mobile Banking
⁻ Agriculture Sector - ECX mFarm, EATA various initiatives
⁻ Education Sector - National Exam Result , High school mobile education management
system, etc.
⁻ Health Sector - maternal information delivery, Health Agents Education, etc.
⁻ Labor Market– mEmployment (mJobs)
⁻ Etc.
• Substantial number of mobile services (or other ICT solutions) are initiated mainly by foreign
NGO’s.
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11. Mobile Financial Services
Financial services of any kind are restricted to financial
institutions only (meaning banks and microfinance
institutions)
However, according Directive No. FIS /01/2012[NBE] which
regulates ‘Mobile and Agent Banking Services’, financial
institutions can procure the technological services from a
third party and provide mobile banking
As a result some banks have their own mobile banking
service while others use a service provider to provide
mobile banking service.
There are now two successful mobile banking technology
service providers: M-Birr and HelloCash.
M-Birr plans to reach #### agents and 1.5 million active
accounts by 2016
HelloCash estimates to build a customer base with active
accounts of 2-3 million by 2016 and 10 million by 2018.
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12. Mobile Financial Services
OPPORTUNITIES AND STRENGTHS
Interoperability between different financial institutions
enables smooth transaction between the unbanked
and the banked.
No major intrinsic problem has been reported. This will
enhance the confidence of financial sector
stakeholders on the technology.
Existence of competition in MFS is good for efficiency
and innovation.
The financial regulator, NBE, has built on best practices
in MFS in its directive including (KYC, Tx Limit, etc.)
Mobile subscriber number is growing at high double
digit figures. Similarly, Mobile geographical cover
which is practically 100% would create huge potential
market for the service providers.
CHALLENGES
Weak digital culture promotion in the country may not
drive rapid adoption of mobile financial services.
Lack of continuous and proactive collaboration within
the mobile ecosystem is also reflected in mobile
financial services.
Mobile financial service has huge potential as the
country goes forward in digitalization. The financial
regulator, NBE, does not however publish separate
data and report on MFS. That makes it difficult for
industry researchers and other players.
It is not clear whether the regulator is ready and has a
working mechanism for the review and update of
regulatory issues in the MFS
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13. mAgriculture
Various technologies are implemented in the agriculture
sector that are based on mobile. To enhance productivity,
and benefit smallholder farmers.
One developed by the exchange market called ECX has
been lauded as successful by several experts.
This application uses mobile IVR, SMS and website to
provide live market information to farmers.
About 60,000 farmers use the App daily [GSMA mFarm].
Overall, 1.365 million farmers have subscribed to the
service.
The App is initiated and developed by ECX in cooperation
with USAID & Melinda Gates Foundation.
It aims to benefit farmers set their price right and avoid
middlemen. Earning good price is also expected to be an
effective incentive in enhancing farm productivity.
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14. Other Mobile Services
MGOV
Mobile Apps for 20 government offices were specified
by the Ministry of Communication and Information
Technology and a contract awarded to a private
company called Avado.
This is a decisive move by the government to employ
the advantage of mobile prevalence for the benefit of
citizens.
Some of the existing eGov services also function on
mobile. But dedicated mobile Apps have the advantage
of better performance both on mobile and desktop.
Developments of mobile governance or mGov is bound
to expand in the future.
To produce impact on the socioeconomic progress of
the country, the government needs to ensure reliable
operation of the platforms & avoid frequent
unavailability.
MLEARNING / MEDUCATION
The governments main thrust has been to ensure 100%
basic education enrollment through traditional school
expansion. To date the nation has achieved basic
education net enrollment of 80%+.[Ministry of Education]
Thus there is no big scale mLearning development.
However, many private schools and the government use
several mobile based education management services. In
addition, evaluation of the education sector lists some
major challenges such as teacher quality, teaching material
shortage, etc. Mobile can help overcome this problems.
Thus the government should give due attention to
mLearning services development.
The national examination agency has for example
deployed an SMS App for result notification. That has been
particularly useful to people in remote areas to easily and
instantly know their results and get ready to the next level.
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15. Other Mobile Services
MHEALTH
A number of services are initiated in the health sector
which are either public sponsored or market oriented
One good example is the maternal advise provided
through mobile. This pilot project was initiated by
Dutch Health[e]Foundation and TTC Mobile in
cooperation with Ministry of Health and Medical
Professional Associations. Initially, it planned to reach
4,000 expectant mothers.
Maternal health is one of the priority policy areas
because of international commitments and national
goals.
Market oriented health advisory services provide
medical advise for a certain charge by calling with a
short code 8896 on the mobile. One example is
HelloDoctor.
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16. Conclusion and Recommendation
As the foregoing discussion point out, Ethiopia is slowly but surely moving towards digitalization. To
meet its own development goals and to be a respectable part of the future, for digital is the future, it
needs to accelerate its digitalization.
Facts on the ground clearly show that Mobile is the indispensable and in some cases irreplaceable
platform for digitalization in Africa including Ethiopia. Therefore, the government should pivot on
mobile.
In line with this, the government should promote digital culture of the public proactively to accelerate
mobile services uptake.
On the supply side, the government has to promote collaboration and linkage among the various
components of the mobile ecosystem.
To match at least the SSA aggregate contribution of MNO to GDP, ethio telecom should strengthen its
infrastructure upgrade and expansion with clear goals of broadband coverage.
The ICT industry structure, mobile based or otherwise, favors capability more than number. However,
it is important to foster local entrepreneurship in all components of the mobile ecosystem.
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17. Thank You
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ACKNOWLEDGEMENT
I would like to thank my course leader Julia Burchell, Senior Insights Manager, Mobile for Development Program at the GSMA; and my course moderator Andrea
Guajardo, Engagement Manager for the Capacity Building program at the GSMA. Their assistance and direction has been valuable in the preparation of this
material and during the course.
I would also like to thank my course mates from the regulators and related industries of Tanzania, Kenya, Côte d’Ivoire, Turkey, India, Pakistan, and Philippines. I
have benefitted from their questions and opinions in the live sessions of the course.