Ethiopia’s Digital Playbook Built Telebirr And Boxed In M-Pesa | The Kenyan Wallstreet

A deep dive into why Africa’s most successful mobile money export is generating modest per-user revenue in its biggest new market. By Yesuf Hadji, a writer covering Ethiopia’s economy, capital markets, and business landscape.

In August 2023, Safaricom launched M-Pesa in Ethiopia. The Kenyan telco had paid US$ 150 million for the mobile money license alone, on top of an US$ 850 million telecom license and its consortium, including Vodacom and the IFC, had pumped over US$ 2.27 billion into the venture. The thesis was straightforward: take the platform that turned Kenya into the most successful mobile money market in the world, and replant it in Africa’s second-most-populous country.

Two and a half years later, M-Pesa Ethiopia had 5.2 million active users following the EthSwitch integration, and pulled in roughly US$ 77,000 in revenue (KSh 14.4 million) over the full FY26 audited year. M-Pesa contributed just 0.071% of Safaricom Ethiopia’s service revenue.

Meanwhile, Telebirr, the state-owned platform that launched two years earlier in May 2021, had crossed 52.56 million customers, processed 4.93 trillion birr (~US$ 30.7bn) in cumulative transactions, and was moving 7.6 billion birr daily.

This is not just a story about two mobile money platforms. It’s a story about two diametrically opposed theories of how to build a digital economy in Africa and what happens when one country exports a strategy that worked into another country with different ground conditions.

Ethiopia’s state is not reactive. It writes the brief.

Two countries, two playbooks

Kenya’s mobile money revolution was, fundamentally, a bottom-up accident the state declined to interrupt. When Vodafone and Safaricom approached the Central Bank of Kenya (CBK) in 2006, mobile money had no regulatory category. The CBK issued what is now a famous “letter of no objection,” a deliberately permissive note that allowed M-Pesa to launch in March 2007 while the regulatory question was being debated. Customer funds had to sit in trust accounts; beyond that, Safaricom was free to design the product as it saw fit.

Banks lobbied hard against it. In late 2008 they pushed the finance ministry to audit the service, and the subsequent audit cleared M-Pesa. By 2011, the platform had 17 million users; by Q1 2025, M-Pesa controlled 90.8% of Kenya’s mobile money market. Kenya’s regulatory framework, what later became known internationally as the “test-and-learn” approach was reactive, codifying what the market had already proven.

Ethiopia chose the opposite model.

In 2020, two months into the COVID-19 pandemic, Prime Minister Abiy Ahmed’s cabinet approved Digital Ethiopia 2025, a comprehensive top-down strategy organized around four pillars: infrastructure, enabling systems, applications, and ecosystem. The roadmap explicitly tied digitalization to four priority sectors (agriculture, manufacturing, IT-enabled services, and tourism) and set hard targets for digital ID enrollment, telecom liberalization, and government service digitization.

World Bank data shows 99% of Ethiopians pay utility bills in cash, compared to just 12% in Kenya.

Five years on, the government’s own scorecard is striking: roughly 900 public services have been digitized; over 30 million Fayda digital IDs have been issued against a 90 million target by 2028; more than 3,000 digital firms have been licensed by the Ethiopian Communications Authority; 4G coverage has expanded eightfold, with population coverage jumping from 37.5% to 70.8% in a single fiscal year; and mobile money users, near zero in 2020, now stand close to 60 million. The state didn’t wait for market signals. It manufactured them.

Telebirr is not a fintech. It is an extension of Ethio Telecom, which is itself an extension of the Ethiopian state. That distinction explains almost everything about its trajectory.

The numbers from Ethio Telecom’s 2024/25 fiscal year report tell the story of an ecosystem assembled, not grown:

The platform was layered onto an existing distribution machine. Ethio Telecom had over 300,000 retail outlets and 1,000 service centers before Telebirr was a product. It was integrated into government services from launch, tax payments, utility bills, university fees and the Fayda digital ID, now embedded across 18 banks and counting, gives the state a single rail to pull every citizen into the formal financial system.

Crucially, Telebirr launched with two full years of monopoly in mobile money, a head start that wasn’t accidental. Safaricom’s mobile money license was held back until August 2023; by the time M-Pesa entered, Telebirr already had roughly 36 million users. This is industrial policy applied to fintech. The product was not designed to win a market. It was designed to be the market.

The State vs the Telco

The instinct is to blame protectionism, and there is some of that. In December 2025, just two days after Safaricom launched the M-Pesa Lehulum app, a telco-agnostic version meant to let any Ethiopian use M-Pesa regardless of their SIM provider, Ethio Telecom blocked access from its network, locking out roughly 90% of Ethiopia’s mobile users. The World Bank’s October 2025 Ethiopia Telecom Market Assessment flagged Ethio Telecom for holding “significant market power” in six segments and pricing services below cost in ways that squeeze competitors.

But the protectionism story explains only part of the gap. The deeper issue is behavioral. In Kenya in 2007, M-Pesa solved a single, screaming problem: urban workers needed to send money to rural relatives, and the alternative was handing envelopes of cash to bus drivers. Only about 20% of Kenyan adults had bank accounts. The product fit the pain point exactly.

In Ethiopia, that pain point doesn’t exist at the same intensity. The country has roughly 30 active banks operating over 8,250 branches and ATMs across a population of 125 million, and banking penetration in urban areas is relatively high. Cash, frankly, is working: World Bank data shows 99% of Ethiopians pay utility bills in cash, compared to just 12% in Kenya, and Safaricom Ethiopia itself acknowledges that 99% of small-value transactions in the country happen in physical currency.

Safaricom Ethiopia CEO Wim Vanhelleputte has been blunt about this: “We are not solving the money transfer problem. What we are solving in Ethiopia with M-PESA is the digital payment, the cash payment to be replaced by digital payments.” That’s a much harder sell, replacing a working habit is harder than filling a vacuum.

The data shows what M-Pesa users in Ethiopia are actually doing. About 20% of airtime and bundle sales now move through the M-Pesa channel, mostly self-top-ups, a transaction that generates no fee. Subscribers are using the wallet, but as a top-up tool rather than as a financial system. Even with the EthSwitch integration driving the active customer base to 5.2 million in FY26, a 120% increase, M-Pesa revenue in Ethiopia for the full audited year came in at just KSh 14.4 million (about $77,000), against transaction volumes that grew 168.7%. The merchant base doubled to 70,045. The infrastructure is still being laid, but monetization remains a fraction of what comparable user bases generate in Kenya.

For Safaricom, the math is uncomfortable. Annual license costs alone total US$ 66.7 million. The Ethiopia unit posted a full group loss of KSh 47,148.6 million (US$364 million) in PAT terms for FY26, and is now targeting EBITDA break-even by FY27. Safaricom has pivoted to introducing savings and credit products, hoping to follow the same arc that carried M-Pesa Kenya into BankTech, but in Kenya that took five to ten years. In Ethiopia, Safaricom is trying to compress 18 years of learning into 18 months.

Ground Conditions Differ

Three structural differences explain the divergence between Kenya 2007 and Ethiopia 2025, and they’re worth making explicit because most analysis collapses them into “Ethiopia is just behind.”

The first is that the incumbent is the state, not a private operator. Safaricom is partly government-owned (35%) but operates as a commercial entity. Ethio Telecom is the state. When state policy and state telco strategy are the same thing, regulatory neutrality is not a default the system can drift toward, it has to be actively constructed, and there is no internal constituency demanding that.

The second is that sequencing was reversed. Kenya let the product run, then wrote regulation around it. Ethiopia wrote the strategy first, sequenced the licenses, built the digital public infrastructure (Fayda, EthSwitch, the digital payments framework), and then opened the door to competition, selectively. Telebirr wasn’t competing for a market; it was occupying one the state had pre-fenced.

The third is the cash habit is stickier. Less than half of Ethiopian adults were banked or had mobile money in 2022, compared to nearly 80% in Kenya, 77% in Rwanda, and 66% in Uganda. But that “unbanked” figure masks a population that uses informal finance, equb (rotating savings groups), and cash with high efficiency. Mobile money in Ethiopia has to displace a working informal system, not fill an empty one.

Ethiopia’s Market has a Co-Author

The Ethiopian model is doing exactly what it was designed to do. Telebirr is on track to be the rails for digital ID-linked welfare disbursement, tax collection, utility payments, and SME credit, and it feeds revenue and forex earnings, US$ 14.79 million in remittances mobilized through Telebirr by April 2025, directly back into a state telco that is itself being prepped for partial privatization.

The state captures the value, controls the data, and dictates the pace. By the metrics Addis Ababa cares about, financial inclusion, formalization, fiscal capacity, sovereignty over digital infrastructure, Digital Ethiopia 2025 has largely delivered. What it has not delivered is a competitive market, and that’s the part private investors should read carefully.

The lesson for anyone building or investing in Ethiopia’s digital economy is not that the market is closed; it’s that the market has a co-author. Strategies that succeeded elsewhere by exploiting regulatory gaps (M-Pesa Kenya), undercutting incumbents on price (Jio in India), or scaling first and monetizing later (most of African fintech) all assume a state that is reactive. Ethiopia’s state is not reactive. It writes the brief.

That doesn’t make M-Pesa’s bet wrong. Ethiopia’s 125 million people, median age of 19, expanding 4G coverage, and newly-licensed securities exchange remain one of the largest greenfield opportunities in African fintech. But the path to capturing it runs through alignment with state priorities, Fayda integration, EthSwitch interoperability, support for the National Digital Payment Strategy 2026–2030, not around them.

The Kenyan model produced M-Pesa. The Ethiopian model produced Telebirr. Both worked. They’re just answering different questions.