Addis Ababa, July 18, 2023 (FBC) – Mobile phone technology could expand access to financial services in Ethiopia, World Bank Blogs indicated via a study published on Africa Can End Poverty.
Citing the data from the Global Findex Database, the study mentioned that the percentage of adults with bank accounts in Ethiopia has more than doubled since 2014 to reach 46%.
Reviewing the performance of the 2022/23 fiscal year government plan, Prime Minister Abiy Ahmed (PhD) indicated on July 6, 2023, that currently 34 million Ethiopians are currently accessing mobile banking owing to the government’s reforms to financial sector. Within the last two years along, more than 3 million Ethiopians have managed to get access to loans employing the digital banking system.
Meanwhile, Ethio telecom, in its 2022/23 fiscal year performance review, confirmed that it has acquired a total of 72 Million subscribers, achieving 98% of the subscriber base target and an increase of 8% from the previous budget year.
In this regard, the World Bank Blogs’ note stated that there’s also evidence that digital payments can increase an entrepreneur’s profitability by making financial transactions with customers, suppliers, and the government more convenient, safer, and cheaper. Even informal micro, small, and medium enterprises (MSMEs) can build a sales and credit history to improve their access to credit.
The study advises that addressing technological and infrastructural barriers to financial inclusion presents a crucial opportunity. Implementing programs that improve technological access and promote mobile money agent networks as a viable alternative to brick-and-mortar financial institutions, as seen in neighboring economies, could effectively reduce the barriers of distance, cost, and technological access, thereby increasing mobile money account ownership rates in Ethiopia to levels comparable to its neighbors.
Furthermore, digitalizing payments has been associated with improved account access and use.
Encouraging the adoption of digital payment methods can contribute to increased account ownership among unbanked adults.
The study further stated that embracing digitalization in a manner that allows payments to be sent directly to accounts, including to mobile money accounts, offers advantages for both payers and recipients.
It was also reminded that governments and private sector payers have reported reduced costs, enhanced transparency, and fewer losses. Recipients, particularly the unbanked, benefit from a safer, more convenient way to receive their money and manage it.