BY Eyerusalem Hadgu – Digital payments are revolutionizing business opportunities, especially in regions lacking the traditional infrastructure needed for seamless transactions. According to a GSMA report, in developing countries, the digitization of financial sectors contributes to a 47% increase in economic activity.
Back in July 2020, the Ethiopian government set out on a transformative journey with the launch of the Digital Ethiopia 2025 Strategy. This ambitious initiative aims to weave digital technology into the very fabric of Ethiopian life and economy by 2025. It’s not just about laying down digital infrastructure; it’s about empowering citizens and businesses alike with the tools and knowledge to thrive in the digital age. Fast forward to today, and the strategy is nearing its completion. The government is already in the process of reviewing and consulting on the next phase, Digital Ethiopia 2030, which promises to build on the current successes.
For many Ethiopian business owners and entrepreneurs, this strategy has been nothing short of revolutionary. It has enabled them to operate online through various applications, opening up new avenues for growth and innovation. Significant milestones have already been achieved, such as the expansion of digital services, commerce, digital finance, and digital literacy. The government’s unwavering commitment has laid down the necessary legal and operational frameworks to foster a thriving digital economy. Additionally, it has ensured that citizens have access to basic digital knowledge and skills, setting the stage for a more inclusive and digitally-savvy society.
For instance, e-commerce platforms like Shega have recently joined global giants Alibaba and AliExpress to support retail businesses, particularly small and medium enterprises (SMEs). Additionally, four years ago, Ashewa Technology Solutions S.C. launched Ashewa, Ethiopia’s most organized and up-to-date e-commerce platform.
Moreover, informal trading channels like Facebook and Telegram have become trendy for transactions. A significant number of small and medium businesses, as well as individuals, are leveraging these platforms to conduct business, demonstrating the growing influence of digital commerce in the region.
The journey towards digital transaction
The technology boom has played a pivotal role in this transformation. With the advent of mobile apps, like the pioneer MBIRR established to enable micro financial institution with agent banking service in 2010 followed by #Kifya, known for Lehulu governmental utility bill aggregator P2G HelloCash, and #Amole but the most ground breaking changes game changer in the banking digital payment service come up with premium Ethswitch solution owned by all banks called EthiSwitch established in 2011.
This has created interoperability between banks, the digital financial supportive regulation document initiated and approved digital financial services (DFS) are regulated by a number of directives and laws, including Payments instrument issuers directive of 2020. Proclamation No. 1282/2023 National Payment System result all financial institutions to join the journey and create more public awareness and create simplicity to end users.
Game changers
The number of payment aggregators increased from time to time from government side #Derash, the rise of game changer Telebirr expands not only the base line of end users but also upgrade the network to 5g dramatically transformed the USSD system to shift in to internet banking for unbans and sub
Urbana’s but still mobile money platforms has been big users in remote and rural Ethiopia where there are no smart phone around.
For unbanked community the options of utilizations of this financial service where has limitation was Know Your Customers (KYC) because of most rural Ethiopia and this issues have a greater potential to be solved with the emergence of digital ID (National ID) and Payment system operators PSO like #Arifpay, #Chappa, and payment issuers #Kacha #Santimpay and more not listed here.
Hence, the growth of digital financial service create fertile grounds for SMES of formal and non-formal online business transactions the task of ordering food or groceries has become as simple as a few taps to order and pay. This digital revolution not only empowers consumers but also provides small businesses with the tools to reach a broader audience, turning local suppliers spatially retailing shops are key players in the e-commerce arena. The innovation extended beyond just buying things.
Startups like Deliver Addis, Beyuedelivery revolutionized food delivery. Picture this: you’re craving your favorite dish from a local restaurant, and with a few taps, it’s on its way to your door, piping hot and ready to eat.
Payment aggregators
Following those Digital payments make running a business online possible individuals use their social media accounts to digital marketplace propose retailed consumer items like closing for the and followed by. The majority of the platforms are Business to Consumer E-commerce sites while a few of them also serve Businesses along the side. Also, a couple of the marketplaces included here can be put as Consumer to Consumer (C2C) sites.
In Addis Ababa, despite the growing digital economy, a significant portion of the population still relies on cash transactions to purchase consumable goods. This is largely due to low awareness about digital payment options, system disruptions, incompatibility issues, and delivery delays. Additionally, concerns about the quality and quantity of ordered items often hinder the adoption of e-commerce.
A recent study highlighted that only 25% of the population in Addis Ababa uses digital payment methods, while the rest continue to depend on cash transactions. The lack of infrastructure and logistics support further complicates the situation, making it challenging for e-commerce platforms to meet consumer demands efficiently