An Irish company called M-Birr has been setting up shop in Ethiopia in recent months. It was launched in 2009 by James Noctor, the company’s Chief Executive and his business partner, Thierry Artaud.
They noticed that Ethiopia didn’t have a Mobile Money banking service, even though at the time it was the fastest-growing economy in the world. Today, it’s still in the top five.
"It’s a low banked market, but at the same time, you have a fast growing mobile subscriber base – now over 40 million,” says Mr Noctor.
M-Birr wanted to take advantage of this opportunity, but there was a challenge. Ethiopia is a highly regulated market, in which both the financial sector and mobile telecomms industry aren’t open to foreign operators.
M-Birr confronted the problem. They partnered with local microfinance companies, each covering a different region, and focused on offering the technical part of the service.
Like Safaricom’s programme with KCB Bank Kenya (though unlike M-Shwari) M-Birr has worked out an arrangement with local corner shops, petrol garages, and kiosks.
“These agents - about 3,000 of them”, says Mr Noctor “promote the service, answer questions, and sign up customers on behalf of the micro-finance institutions”.
He hopes to increase this to between 4,000 and 5,000 by the end of the year, and says that the five micro-finance institutions cover more than 90% of Ethiopia’s population.
They each cover a separate geographical area, so that’s given M-Birr a real presence in Ethiopia.
The company has also been trying to build ecosystems around M-Birr, so customers could use the service to buy milk, cheese, butter, or petrol.
Ethiopia also has a Productive Safety Net Programme, launched in 2005 to assist low-income rural dwellers to overcome food insecurity and create assets.
Government agencies have been exploring using M-Birr’s service to make those benefit payments and so bypass the bureaucracy.
Africa’s brighter banking future
Right across Africa, access to small loans and banking will be a game-changer for small businesses: “little traders, guys who need working capital for one day,” says Mr Clark.
In Sub Saharan Africa, rural communities, women, and those on lower incomes are the most likely to be ‘unbanked’. And poorer rural women, the most likely of all.
“If you can improve women’s access to finance in rural areas, you can improve agricultural productivity— that’s important in the developing world,” says Mr Clark.
Also, of the nearly 500 million mobile phone subscribers in Africa, 170 million already have smartphones. So there will be more and more financial inclusion, as better mobile phones with more capabilities become more widespread.
In the meantime, the humble Nokia, in rural Africa, is helping otherwise ‘unbanked’ people pay school fees and become entrepreneurs.
*FSD Kenya’s FinAccess study.