Ideas & Updates

Ethiopia: “Mobile money doubled my number of customers in just three years”

© © Dayan Berhe / Better Than Cash Alliance

By Oswell Kahonde and Angela Corbalan

In Addis Ababa, the vibrant Ethiopian capital, lies a busy Somali community market where Bisharo runs a small shop. She sells rice, pasta and manufactured products like canned pineapple and olive oil to residents of the Bole Mikael neighborhood.

She talks passionately about how she’d like to turn this small shop into a big supermarket that would be open 24 hours a day. She thinks mobile money could help her achieve her dream, particularly if she could have access to digital financial services such as loans that will enable her to source directly from farmers and other suppliers.

Just outside, there’s a sign that says customers can pay for goods at this shop using their mobile phones. That sign has been a game-changer for Bisharo.

Thanks to the sign, many more customers come to my shop. Since I started using mobile money three years ago, the number of customers has more than doubled. My income has increased significantly. From the very first day.

Also, I no longer need to store all the cash in the shop and take it to the bank in the evening when it’s dark. I keep my earnings safe on my phone. I wish all my customers paid with their phone.”

© © Dayan Berhe / Better Than Cash Alliance

I keep my earnings safe on my phone. I wish all my customers paid with their phone,” Bisharo, the shop owner. [Photo Credit: Dayan Berhe / Better Than Cash Alliance]

She also sees the other benefits of not using cash.

For women, mobile money helps manage our finances. Husbands can’t see. When I get extra profit, I give money to an orphanage.

She leads by example by paying the salary of her employee and rent digitally, and she hopes one day to be able to pay her suppliers, government tax and utility bills like water and electricity with mobile money, as well.

It’s not yet possible and takes a lot of my time from the business, as I have to queue sometimes for hours to pay our bills.”

From the farm to the shop-shelf, mapping the supply chain for urban merchants

Bisharo’s story is one of the many urban merchants who have discovered the power of digital payments for their businesses. Over the past few years, technology providers such as BelCash with their HelloCash mobile money, product working closely with the Somali Microfinance Institution, have made significant progress in helping merchants like Bisharo realize the benefits of digitizing payments. Such partnerships have also unlocked the potential of digitizing payments for rural and smallholder farmers, who feed the supply chain that Bisharo taps into for her stocks. With a clear appreciation of urban merchants’ supply chain, financial service providers should be able to develop value-added services that benefits players along the value chain, including those in the agricultural sector. This was reflected during the recent Ethiopia ICT Expo, where some of the actors who made it possible for Bisharo to increase her profits and feel safer through making and receiving digital payments, met for a four-day event.

As part of the expo, The Better Than Cash Alliance, together with the Ministry of Communications and Information Technology (MCIT) and the Ethiopian Agricultural Transformation Agency (ATA), hosted a workshop on how digital payments can help transform agriculture value chains in the country.

Participants from across government, banks, fintech firms, agro-processing companies and international organizations shared approaches and opportunities to further accelerate digital payments along the agriculture value-chain. Across sectors, three top recommendations emerged:

  • Key government and private sector actors, (such as technology and financial service providers) should continue to develop private public partnerships to create an inclusive digital payment ecosystem in the country.
  • The Government should continue enhancing the regulatory framework to drive innovation in digitizing payments. A key area identified was reviewing the know-your-customer (KYC) requirements. A tiered KYC system that allows those currently financially excluded to open accounts digitally would make a big difference. In addition, relaxing the current rigid requirements for agent recruitment would go a long way to building a progressive agent network in the rural markets.
  • Use digital payments history to collect the critical data necessary for FSPs to assess clients’ financial status. This will increase access to other digital finance products particularly for small-holder farmers and micro, small and medium merchants like Bisharo who are financially excluded.

People from across government, banks, fintech firms, agro-processing companies and international organizations took part in the workshop. [Photo Credit: Better Than Cash Alliance]

Walking the talk

In his remarks during the workshop, Dr. Abiyot , MCIT’s Director of E-Government Services, reiterated the importance of the group’s discussions:

Today’s discussions at the ICT Expo Ethiopia are aligned with the Ethiopian government’s strategy to digitize payments in the agriculture sector, which is a priority given the majority of our population depend on agriculture for a living.

© © Better Than Cash Alliance

Dr. Abiyot photo speaking at the workshop. [Photo Credit: Better Than Cash Alliance]

Additionally, the Ethiopian ATA will incorporate the outcomes of the workshop into their Digital for Rural Development Strategy. As part of the strategy, ATA will collaborate with our Alliance to design a new Agriculture Payment Strategy for the country, drawing on the Alliance’s insights working around the world to accelerate digital payments.

As we’ve seen in other countries, Ethiopia’s commitment has the potential to create a ripple effect of economic and social benefits. From steadier work for small-holder farmers and agro-processors to increased business for micro, small and medium sized merchants like Bisharo, digitizing the country’s agriculture value chain can bring a new level of prosperity to Ethiopia — along with increased safety, transparency and efficiency.

Back at the little shop, Bisharo says the Somali community is particularly keen on trying out new technologies, noting “We like instant.” Her dream of getting financing for her 24-hour supermarket could be realized as alternate funding platforms made possible by digital payments become a reality there. Belcash and Somali Microfinance are already developing a digital-based loan product that would harness available transaction data for more than 1 million clients on their platform. Once such a platform is live, she will be able to showcase her creditworthiness through data generated from her digital transactions.

Coupled with a growing commitment from the government and other key players, the benefits of payments digitization will spread to other parts of the country and, crucially, in rural areas where 85% of the Ethiopians live.

Ethiopia’s commitment comes at a particularly important time for the country. According to the latest World Bank’s Global Findex report, the country has seen double-digit growth in bank account ownership over the last few years, underscoring the appetite for digital payments discussed at our recent workshop. While Ethiopia still faces significant barriers when it comes to reaching full financial inclusion, the commitment in the agriculture sector has the potential to set a positive path forward for the rest of the country.