MK254
JF-Expert Member
- May 11, 2013
- 32,408
- 50,809
Population of 100 million, opportunities are limitless.....
Two of Kenya’s largest blue chip companies, regional lender KCB Group and giant telco Safaricom, are on course to establishing operations in neighbouring Ethiopia where reformist Prime Minister Abiy Ahmed is opening up the economy, creating opportunity for daring foreign investors.
KCB on Wednesday said it is preparing to enter the market of 100 million people through a partnership with an Ethiopian bank or opening a fully fledged subsidiary in the country, which currently has no foreign bank.
“Ethiopia has just begun the reform process, which we believe will lead to a more open market. We are looking at either partnering with an existing institution or setting up afresh as has been our regional expansion experience. It is the market we are looking at as a key growth area in the next level of our regional expansion,” KCB said.
Ethiopia has consistently registered robust economic growth, averaging 10 per cent in the past five years and the new premier’s reforms look set to strengthen investor sentiment.
Its population, which is the second largest in Africa after Nigeria, offers immense opportunities for business.
Closed to foreigners
The country’s financial services industry is, however, one of the least developed in the region. Ethiopia has been closed to foreigners and available statistics show that less than 15 per cent of its 100 million people has access to a bank account.
Most of the country’s 18 banks are State-owned and Addis Ababa has maintained a tight lid on its financial services sector, keeping out foreigners.
Pan-African financial services provider Ecobank in 2013 estimated that Ethiopia’s unbanked population stood at 80 million, making it attractive to Kenyan banks.
The Ethiopian PM on Wednesday tweeted about a prospective deal that will see Safaricom take its mobile money M-Pesa services to the country.
“Ethiopians could soon enjoy the services of Kenya’s Safaricom,” said Mr Ahmed.
Earlier Reuters had quoted sources saying Safaricom was considering a partnership with Ethio Telecom, Ethiopia’s state-owned telecom giant, to roll out M-Pesa services.
Ethio Telecom in May this year agreed to allow some local firms to provide Internet services through its infrastructure, a move that allowed competition as well as expanded the data market. Analysts say Safaricom’s entry into Ethiopia would significantly boost its revenues.
“If confirmed, this is an important positive for Safaricom, and would offer an important upside on M-Pesa revenue growth numbers based on the number of subscribers it registers in the 100 million market,” Standard Investment Bank said in a research note.
“The upside could be higher depending on the negotiated revenue share – but unlikely to be substantially more than 15 per cent of revenue (unless the uptake is low).”
Safaricom, KCB look north as Ethiopia opens market
Two of Kenya’s largest blue chip companies, regional lender KCB Group and giant telco Safaricom, are on course to establishing operations in neighbouring Ethiopia where reformist Prime Minister Abiy Ahmed is opening up the economy, creating opportunity for daring foreign investors.
KCB on Wednesday said it is preparing to enter the market of 100 million people through a partnership with an Ethiopian bank or opening a fully fledged subsidiary in the country, which currently has no foreign bank.
“Ethiopia has just begun the reform process, which we believe will lead to a more open market. We are looking at either partnering with an existing institution or setting up afresh as has been our regional expansion experience. It is the market we are looking at as a key growth area in the next level of our regional expansion,” KCB said.
Ethiopia has consistently registered robust economic growth, averaging 10 per cent in the past five years and the new premier’s reforms look set to strengthen investor sentiment.
Its population, which is the second largest in Africa after Nigeria, offers immense opportunities for business.
Closed to foreigners
The country’s financial services industry is, however, one of the least developed in the region. Ethiopia has been closed to foreigners and available statistics show that less than 15 per cent of its 100 million people has access to a bank account.
Most of the country’s 18 banks are State-owned and Addis Ababa has maintained a tight lid on its financial services sector, keeping out foreigners.
Pan-African financial services provider Ecobank in 2013 estimated that Ethiopia’s unbanked population stood at 80 million, making it attractive to Kenyan banks.
The Ethiopian PM on Wednesday tweeted about a prospective deal that will see Safaricom take its mobile money M-Pesa services to the country.
“Ethiopians could soon enjoy the services of Kenya’s Safaricom,” said Mr Ahmed.
Earlier Reuters had quoted sources saying Safaricom was considering a partnership with Ethio Telecom, Ethiopia’s state-owned telecom giant, to roll out M-Pesa services.
Ethio Telecom in May this year agreed to allow some local firms to provide Internet services through its infrastructure, a move that allowed competition as well as expanded the data market. Analysts say Safaricom’s entry into Ethiopia would significantly boost its revenues.
“If confirmed, this is an important positive for Safaricom, and would offer an important upside on M-Pesa revenue growth numbers based on the number of subscribers it registers in the 100 million market,” Standard Investment Bank said in a research note.
“The upside could be higher depending on the negotiated revenue share – but unlikely to be substantially more than 15 per cent of revenue (unless the uptake is low).”
Safaricom, KCB look north as Ethiopia opens market
