Mobile money growth in Ethiopia not translating into credit access for merchants, FSD report finds
via The Reporter Ethiopia8 min read
A new report from FSD Ethiopia indicates that while Ethiopia's merchant economy is rapidly expanding and digital payment adoption has surged, this growth has not led to increased access to formal credit systems. Over 99 percent of digital payments still flow through personal accounts, not business accounts, making transaction data "invisible to credit underwriters." One mobile banking system serves 83.2 percent of digital merchants, holding years of data, but this data cannot support credit underwriting until merchants transition to business-designated accounts. The report highlights a supply-side failure in the financial sector, noting that 67 percent of micro-enterprises already have formal business licenses, suggesting product design and onboarding models are the primary constraints, not documentation. Additionally, a significant digital divide exists, with 69.2 percent adoption in urban areas compared to 26.4 percent in rural regions, largely due to connectivity issues. Despite a dramatic increase in mobile money accounts from 12.2 million in 2020 to 139.5 million by 2025, only 15 percent are active, with merchant payments accounting for less than 0.2 percent of total digital transactions in 2023/24. The report warns that emerging regulatory requirements, such as mandatory national digital identification Fayda or formal business registration, could deepen exclusion, as only 39 percent of merchants possess a Fayda ID and rural enterprise registration stands at 44.3 percent
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This summary was AI-generated from a story originally published by The Reporter Ethiopia.
The National Bank of Ethiopia NBE has reconfirmed its prohibition on the use, trading, and transfer of virtual assets, including cryptocurrencies, unless explicitly authorized by the NBE. The central bank issued a public notice defining virtual assets as digital representations of value that can be electronically traded, transferred, exchanged, or used for payments, investment, or similar purposes. The ban covers the purchase, sale, exchange, transfer, trading, settlement, and facilitation of transactions involving these assets without specific approval under Ethiopia's legal framework. The NBE clarified that the prohibition extends beyond just cryptocurrencies to all virtual assets. Prohibited activities include exchanging virtual assets for fiat currencies or other virtual assets, transferring them, providing custody or administrative services, and offering financial services related to their issuance or sale. The NBE warned the public against engaging in such transactions due to legal and financial risks, including fraud, scams, cyberattacks, market manipulation, and significant financial losses. This statement reiterates existing legal restrictions and does not announce new regulations or enforcement measures.
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