Looking to make financial services more accessible, M-PESA Safaricom has signed an International Money Transfer Agreement with Onafriq, the African digital payments network, to enable Ethiopian users to receive remittances from different parts of the world through M-PESA.
Individuals do not need a bank account, something which has historically been challenging for some to acquire in Ethiopia, to send remittances. All they need is a Safaricom SIM card. With Onafriq operating in 40 African countries, seamless cross-border transactions will be enabled for Ethiopians starting July 2024, following National Bank of Ethiopia authorisation.
Paul Kavavu, general manager at Safaricom Ethiopia, states: “Our goal is to make payments easier, and the incorporation of international money transfer services into M-PESA serves that purpose perfectly. Ethiopia generates more than $5billion in remittances annually and this partnership will provide the Ethiopian Diaspora with an easy and fast formal channel to send money to their loved ones in Ethiopia.”
Ensuring greater reach and simplicity for remittances
Last year, the World Bank stated that the remittances flow to countries in sub-Saharan Africa reached $54billion in 2023 – an increase from the previous year’s gain. This increase was driven by strong remittance growth in countries like Mozambique, Rwanda and Ethiopia.
The receipt of remittances plays a crucial role in reducing poverty as well as the GDP of a country. Ethiopia’s director general of Ethiopian Diaspora, Mohammed Endris, previously noted this, stating that in some countries remittances take up to 40-50 per cent of the GDP. Meanwhile, the remittance sent by the diaspora to Ethiopia is five per cent.
A partnership such as the one between M-PESA Safaricom and Onafriq will only serve to contribute to this figure.
The incorporation of international money transfer capability into its offering allows M-PESA to tap into and leverage Onafriq’s extensive network. In turn, this will connect 500 million mobile money wallets and 200 million bank accounts. This vast reach enables domestic and cross-border disbursements and collections, card issuing and processing, agency banking, and treasury services.
Digital Ethiopia 2025
Nika Naghavi, group head of growth at Onafriq, states that the partnership will directly stimulate the realisation of Ethiopia’s digital transformation strategy. The strategy termed ‘Digital Ethiopia 2025’, emphasises enabling systems through digital transformation, of which digital payments form a crucial part. Consequently, the country’s solution to this includes ensuring financial inclusion, innovation in the banking system and the adoption of innovative solutions.
“We have always believed that payments should be a simple process, as simple as a phone call – connecting individuals through increased access. The agreement with M-PESA Safaricom extends our reach in Africa even further and strengthens our position as the largest payment network on the continent. We are confident that this partnership will positively impact economic growth and the achievement of greater sustainable development goals,” says Naghavi.
The service complements Ethiopia’s efforts to generate foreign currency inflow through formal channels, offering a safe, inclusive and reliable service to customers through M-PESA.
