Visa Inc., which is piloting Ethiopia's first international debit card, is seeking to convince the government to loosen strickt restrictions on banks in an effort to boost the use of electronic payments, Reuters reported.

Although Ethiopia has one of the fastest growing economies in Africa with a population of 90 Million, there are only a few people with bank accounts and the range of the banking service is also limited.

Foreign banks are not allowed to operate in Ethiopia, and the government claims it needs to protect domestic lenders as its reason for the bar.

Jabu Basopo, Visa's manager for Southern and East Africa, said his company is focusing on persuading leaders of Ethiopia the advantages of electronic payments. "They are willing to try some things,” he added. "They have agreed to a pilot for international cards. It is a very controlled environment".

Users of Visa's international card, which is being piloted by government officials, will be restricted to spending an amount that has been pre-loaded on the card. Visa said the government was pleased with the trial so far.

Basopo said local banks lacked muscle to push the central bank to drive change in an industry where the largest commercial lender is run by the state and holds two-thirds of all deposits.

He pointed to Rwanda as an example of where business-friendly reforms to liberalise banking regulations in the past four years had led to a swift deepening of the market.

Retail transactions in Ethiopia are primarily made in cash. Retailers say a scarcity of debit cards hinders growth in the retail sector, which is also off-limits to foreign chains.

Visa, the world's largest credit and debit card company which counts 10 Ethiopian banks as members, first entered the country in 2004.

Source: Reuters