The World Bank Group has announced an equity investment, a loan and guarantees to support the ongoing construction and operation of Safaricom Ethiopia’s greenfield telecommunications network across Ethiopia to offer more affordable internet, reliable mobile connectivity and technology access for people and businesses in the country.
This first partnership between IFC, MIGA, Vodafone, Vodacom, Safaricom, Sumitomo Corporation, and British International Investment in Ethiopia addresses the World Bank Group’s core mandate to help countries end poverty and meet their citizens’ demands for services including digital connectivity.
“Ethiopia has a large, young and entrepreneurial population that can unlock the country’s economic potential as we advance digitalisation. It is great to have the World Bank units with us as part of the international funding coalition behind Safaricom Ethiopia,” said Michael Joseph, Chairman of the Board of Safaricom Ethiopia.
As part of the deal,IFC will make a $157.4 million equity investment in Global Partnership for Ethiopia BV (GPE) and a $100 million A-loan to its wholly owned subsidiary, Safaricom Telecommunications Ethiopia Private Limited Company (Safaricom Ethiopia). Following the transaction, IFC will hold a minority position in Safaricom Ethiopia.
The Multilateral Investment Guarantee Agency (MIGA) will provide 10-year guarantees of $1 billion to cover the equity investments of Safaricom Ethiopia’s shareholders: Vodafone Group, Vodacom, Safaricom, and British International Investment. A portion of the MIGA guarantees, $76 million, will come from the MIGA Guarantee Facility, part of the International Development Association’s Private Sector Window, in the form of a first loss layer.
Ethiopia is Africa’s second most populous country, with a population of approximately 120 million. The investment and guarantees will help Safaricom Ethiopia roll out and operate 4G and 5G mobile networks across the country – including in rural and urban areas. Furthermore, under a license granted in May 2023 by the Central Bank of Ethiopia, Safaricom Ethiopia also plans to launch financial services in 2023 under the brand name M-PESA.
“IFC is delighted to announce its support to Safaricom Ethiopia, the first private sector-led telecoms operator in the country, and its parent company the Global Partnership for Ethiopia. Through this investment, we hope to help the company create a competitive market for mobile connectivity, reflecting our strategy to increase competition in the digital sector globally, and reduce costs for consumers. Young people, small businesses, and entrepreneurs will particularly benefit from improved access to high quality digital services such as mobile financial services,” said Mohamed Gouled, IFC Vice President of Industries.
When it launched services in October 2022, Safaricom Ethiopia became the first private telecom operator in Ethiopia, one of the world’s last telecom monopoly markets.
Telecoms market liberalisation is a key part of the Ethiopian government’s Digital Ethiopia 2025 plan to help the country realise its digital potential, leverage technology to build a more prosperous society and help meet the country’s United Nations Sustainable Development Goal commitments.
By increasing access to digital services, the project has the potential to help create up to 1.5 million direct and indirect jobs in Ethiopia, contribute to the country’s sustainable future growth, and increase both financial and social inclusion for Ethiopians.
The project follows more than four years of World Bank Group engagements in Ethiopia aimed at opening the telecommunications sector to private sector investment and supporting market liberalization.
In 2020, IFC advised Ethiopia’s Ministry of Finance and the Ethiopian Communications Authority in designing and tendering the nation’s first full-service telecom licenses and associated spectrum. The license was awarded in May 2021.
The successful IFC advisory mandate resulted in a $850 million license fee payment and will generate as much as $8 billion in new investments over the next decade, making it one of the largest foreign direct investments in the country.