Banks and microfinance firms in Ethiopia are rendering mobile money services which they say is enabling them reach a huge population that has very little access to banking service.

The services allow customers to make payments as well as receive money with their mobile phones that is linked to their bank account. The technology is copied from other African nations which drew millions of people to the financial system.

Netherlands-based and Ireland-based firms called BelCash and MOSS ICT respectively, are rolling out their technological solutions to the market. The earlier has a product dubbed helloCash while the latter is using M-Birr.

The system works in a way the financial institutions will offer the service while still holding onto the cash deposit.

MOSS ICT deputy general manager Kidist Negeye, explained the mobile banking service will reach rural areas. "One of the things that the government wants to do is ensure there is financial inclusion," she added. "Another aspect is the mobilization of domestic savings. The government wants to increase the number of deposits."

Back in December the National Bank of Ethiopia (NBE) gave the green light for five micro finance institutions to launch mobile banking service using M-Birr. MOSS has already got 5000 to 6000 users and this figure is expected to grow to 13,000 this month. Kidist noted the potential was “in the millions”.

BelCash on the other, is expecting to have from 2 to 3 million users in 2016 and expects this number to grow to 10 million in 2017 or 2018, Vince Diop, the firm’s chief executive explained. He added BelCash will charge its customers for every transaction.

Currently two private banks, Lion International Bank and Cooperative Bank of Oromia, and microfinance firms have signed up for helloCash. According to Diop two more banks have submitted their application to NBE.

He added the trial project was underway and the commercial service will commence in two months time.

According to NBE, Ethiopia has 1,500 ATM cash machines and just over 2,200 bank branches, one for every 40,000 people. Only 10 percent of the 96 million people have bank accounts.

Banks are currently to planning to authorize thousands of agents in line to the new regulation the central bank passed. The agents will take deposits and hand out cash via the mobile system.

Source: Reuters