Ethiopia is embarking on the development of Mobile Financial Service (MFS), stated Debretsion Gebremichael; Minister of Communication Information Technology and Finance and Economy Cluster Head with the rank of Deputy Prime Minister.
A conference was organized on Mobile Financial Services on Thursday February 13th entitled “Catalyzing Transformation through Technology: How Mobile Financial Services Contribute to the Growth of Ethiopia.”
The conference explored the potential of Mobile Financial Services to drive transformation in the country’s financial sector. It was stated that the MFS can enable the rural population to improve their lives while supporting the Growth and Transformation Plan (GTP) through increased savings, agricultural investment and productivity as well as stronger rural institutions and markets.
“MFS has the power to enable the millions of rural citizens to enter the formal economy. These people need to save and borrow resources to build assets, buy and sell to engage in productive activities and send and receive money to reduce vulnerability. All of this requires they have access to the financial sector,” Debretsion stated.
There are currently over 90 million Ethiopians dispersed across 1.2 million square kilometers of land, 80 percent of which are living in the rural areas. Financial institutions have not been able to reach a majority of those people with the back branch to population ration still at 1 to 82,000.
“Clearly the need to find alternative ways of reaching and serving the population is required. While the penetration of mobile phones among the population continues to grow in significant numbers year on year, the government believes that it is possible to take advantage of that technological infrastructure and technology which now lies in the hands of citizens, to deliver financial services,” Debretsion said.
Parallel to the conference was a closed meeting held where decision makers from the office of the Prime Minister, Ministry of Communication Information Technology, National Bank of Ethiopia, Ministry of Finance and Economic Development and Ministry of Agriculture were present.
The main discussion at the closed meeting was said to be what Mobile Financial Service means in a policy context and what concrete steps and actions should be taken by the government to achieve the full economic potential of MFS.
“Achieving this goal, however, is still complex. It requires that we study the vast body of knowledge and evidence from the global community’ successes and challenges in similar endeavors. It requires that we understand our own strengths and remaining challenges,” Debretsion said.
He also stated that the meetings were not just about determining best practices but also what best fit in an Ethiopian context.