M-PESA Safaricom has signed an International Money Transfer Agreement with Onafriq, Africa’s largest digital payments network, operating in 40 African countries, to help streamline remittance flows to Ethiopia.
The deal means Ethiopians will now receive remittances from different parts of the world through M-PESA.
It will be based on the authorisation received from the National Bank of Ethiopia to start the remittance service in July 2023.
Last year, the World Bank stated that the remittances flow to countries in sub-Saharan Africa reached $54 billion in 2023.
This was an increase from the previous year’s gain.
This increase was driven by strong remittance growth in countries like Mozambique, Rwanda and Ethiopia.
While this increase is a move in the right direction, there is work to be done.
The receipt of remittances plays a crucial role in reducing poverty as well as the GDP of a country.
Ethiopia’s Director General of Ethiopian Diaspora, Mohammed Endris, previously noted this, stating that in some countries remittances take up to 40-50% of the GDP, while the remittance sent by the diaspora to Ethiopia is 5%.
A partnership such as the one between M-PESA Safaricom and Onafriq will only serve to contribute to this figure.
M-PESA will tap into Onafriq’s 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.
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“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,” says Paul Kavavu, General Manager at Safaricom Ethiopia.
Nika Naghavi, Group Head of Growth at Onafriq, says the partnership will directly stimulate the realisation of Ethiopia’s digital transformation strategy.
The strategy termed ‘Digital Ethiopia 2025’, places emphasis on enabling systems through digital transformation, of which digital payments form a crucial part.
The country’s solution to this includes ensuring financial inclusion, innovation in the banking system and the adoption of innovative solutions.
“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,” says Naghavi.
The service complements Ethiopia’s efforts to generate foreign currency inflow through formal channels, offering a safe, inclusive and reliable service to customers through M-PESA.
