M-PESA partners with Onafriq to rev up remittances to Ethiopia
Cash transfer service M-PESA has struck a deal with Onafriq, a digital payments network operating in 40 African countries to streamline remittance flows to Ethiopia, providing individuals with quick and easy access to financial services through their mobile phones.
With the authorization received from the National Bank of Ethiopia to start the remittance service in July 2023, individuals within Ethiopia can now receive remittances from various parts of the world through M-PESA.
This development comes at a crucial time as last year, the World Bank reported a substantial increase in remittances flowing into countries in sub-Saharan Africa, reaching $54 billion in 2023.
The partnership between M-PESA and Onafriq is expected to contribute significantly to Ethiopia’s economy, as stated by Ethiopia’s Director General of Ethiopian Diaspora, Mohammed Endris.
He noted that remittances play a crucial role in reducing poverty and can account for up to 40-50 percent of a country’s GDP in some cases, whereas Ethiopia currently receives 5 percent of its GDP from remittances.
Paul Kavavu, General Manager at Safaricom Ethiopia, lauded the partnership, stating, “Our goal is to make payments easier, and the incorporation of International Money Transfer services into M-PESA serves that purpose perfectly. Ethiopia generates more than five billion USD in remittances annually, and this partnership will provide the Ethiopian Diaspora with an easy and fast formal channel to send money to their loved ones in Ethiopia.”
Nika Naghavi, Group Head of Growth at Onafriq, explained that the partnership will directly contribute to Ethiopia’s digital transformation strategy, known as ‘Digital Ethiopia 2025’.
Read also: M-PESA transaction value hits Sh18.5bn in Ethiopia
Digital transformation
This strategy focuses on enabling systems through digital transformation, with digital payments playing a crucial role. The M-PESA-Onafriq alliance aligns with this vision, providing a safe, inclusive, and reliable service to customers.
Naghavi added, “We have always believed that payments should be a simple process, as simple as a phone call – connecting individuals through increased access. The agreement with M-PESA Safaricom extends our reach in Africa even further and strengthens our position as the largest payment network on the continent. We are confident that this partnership will positively impact economic growth and the achievement of greater sustainable development goals.”
Incorporating International Money Transfer capability into its offering will allow M-PESA to tap into and leverage Onafriq’s extensive network, connecting 500 million mobile money wallets and 200 million bank accounts.
This vast reach enables domestic and cross-border disbursements and collections, card issuing and processing, agency banking, and treasury services, ultimately contributing to Ethiopia’s efforts to generate foreign currency inflow through formal channels.
The value of transactions through M-PESA in Ethiopia surged to Kes18.5 billion by December 31, propelled by the company’s expansion efforts in the new market. By the end of last year, Safaricom Ethiopia had registered over 26,200 M-PESA agents and 43,100 merchants, covering an estimated 33 percent of the market.
Additionally, the M-PESA Ethiopia reported interoperability with nine banks for M-PESA to Bank (C2B) and seven banks for Bank to M-PESA (B2C) services, further enhancing the accessibility of the mobile money platform.
“We are now interoperable with 9 banks including Commercial Bank of Ethiopia, Dashen Bank, Bank of Abyssinia, Awash International Bank, Co-operative Bank of Oromia, Abay Bank, Hibret Bank, Berhan Bank and Bunna Bank for M-PESA to Bank,” Safaricom Ethiopia said in an update early this year.
