IFC Allocates $360 Billion to Safaricom Ethiopia Investment


The International Finance Corporation (IFC) has revealed a substantial financial injection of $257.4 million (equivalent to Sh35.88 billion) in Safaricom Ethiopia.

This investment comprises a combination of debt and equity, with $157.4 million (Sh21.9 billion) allocated as an equity investment, while the remaining $100 million (Sh13.9 billion) takes the form of a loan.

The announcement, made by IFC on Friday, highlights their intention to support Safaricom Ethiopia in constructing a robust communications network. Mohamed Gouled, IFC’s vice-president of industries, emphasized that this investment aims to foster a competitive mobile connectivity market, aligning with its global strategy to enhance competition in the digital sector and reduce costs for consumers.

The completion of this deal comes approximately nine months after the World Bank arm first unveiled its plans to acquire a stake in Safaricom Ethiopia.

The precise percentage of equity allocation for IFC’s investment remains undisclosed; however, the institution clarified that it would hold a “minority position” within Safaricom Ethiopia. Safaricom, headquartered in Kenya and presently possessing a controlling stake of 55.7 percent, stated in May that IFC’s stake would be below 10 percent.

cense for mobile money services in Ethiopia on May 11, after paying $150 million (Sh20.9 billion) as investment fees. The introduction of mobile money in Ethiopia will boost the prominence of M-Pesa, which has been a significant contributor to Safaricom’s revenue since its launch in 2007.

Safaricom faces competition from Ethio Telecom, the state-owned mobile operator that has enjoyed a monopoly for decades. In May 2022, Ethio Telecom launched its mobile phone-based financial service, Telebirr.

From October of the previous year until the end of March, Safaricom Ethiopia gained approximately three million customers, established a network of over 114 outlets, and provided coverage across 22 regions through around 1,300 network sites. During this period, the Ethiopia unit generated $131 million in revenue, but operating costs amounted to $143 million, resulting in a post-tax loss of $87 million.

The shareholders have collectively invested $1.24 billion (Sh172.86 billion) in the Ethiopia unit, with Safaricom contributing $690 million (Sh96.2 billion). The estimated capital investment over the next five years is expected to reach up to $2 billion (Sh279 billion). Safaricom’s net profit for the fiscal year ending in March 2023 decreased by 22.2 percent to Sh52.48 billion compared to Sh67.49 billion in the previous year. This decline is primarily attributed to increased operating expenses in Ethiopia. The profit decline marks the third consecutive year of decrease since the peak of Sh73.66 billion in the fiscal year ending in March 2020, and it is the lowest net earnings