Ethiopost stamps priority to mobile money
Ethiopia Postal Service Enterprise shifts its plan to open its own postal bank to mobile money as its financial status is not enough to dive into the banking sector. For the last two years, the only postal service provider in the country, Ethiopian Postal Service Enterprise (Ethiopost), has been in a process to establish its own bank with expectations to have all kinds of banking services. The Ethiopost was gearing to provide customers with access to banking service, including direct deposit, cards, and online bill payments.
Despite the enterprise starting its process to engage in the sector, in accordance with the National Bank of Ethiopia’s regulation and guidelines, as Asmare Yigezu, deputy CEO of the enterprise explained, there is no promising situation with regards to the opening of a postal bank. This was attributed to the National Bank’s changing requirements which have proved to be elusive for the enterprise.
“It is now difficult to establish a bank based on our potential and financial status since the service has been in a series of fall downs in the past. For the last two years, it has been approaching to a good condition and even breaking even,” the deputy CEO explains. As sources indicate, Ethiopost has been through a series of losses over the past years as a result of low staff motive and capability, poor customer service, weak marketing and traditional and outdated processes and services. This has rendered the enterprise to become uncompetitive in service provision as well as hindered its financial standing.
Starting from May 2020, Ethiopost has been under reform, that aims to modernize its work as well as optimize its operation and quality of service which is the right step in terms of moving the enterprise forward to secure a firm financial standing in order to engage in new services including E-commerce and logistical financial services that offer competitive services as well as enhance the image of the service provider. Currently, the enterprise is focusing on updating itself by providing a wide range of E-commerce and various financial services.
“We are looking at certain options to expand our service including our plans to engage in the mobile money sector,” said Asmare, indicating that the enterprise is conducting its assessment on getting into the mobile money sector. “International partners are also showing their interest to work with us on the mobile money sector. We are also viewing the options of doing it independently,” he added.
In 2020, in order to blossom digital finance and to boost non-cash payments in the country, Ethiopia’s Central Bank regulations allow non-banks to offer basic financial services, potentially opening the door for companies mulling a play in the wireless market by adding mobile money to their portfolios. Following this, the state-owned telecom operator, Ethio Telecom launched Telebirr, the country’s first telecom mobile money service and if it is to push through, the postal service would have been the second governmental mobile money provider.
Given the rich history of the service provider that spans 128 years with close to 900 branches throughout the country, the foundation was and is still said to be ripe for business.
Ethiopia’s financial services sector is currently dominated by bank-led financial services. According to the National Bank directive No SBB/78/2021 the minimum paid up capital required to obtain a banking business license is 5 billion birr which shall be fully paid in cash and deposited in a bank in the name. Owning a business in Ethiopia as a non-citizen is hard, and until recently, even foreigners of Ethiopian descent were not allowed to invest in the country’s banking system.
The Association of Ethiopian Insurers hold interactive discussions with the Addis Ababa Police Commission on ways to curb traffic accidents, in addition to strengthening integration between the two parties on information sharing after accidents occur.
With motor vehicle accidents becoming one of the ever increasing public health problem in Ethiopia, discussions on the matter with all actors concerned is proving to be vital. Insurers often have a motor insurance which is a contract between the insured and the insurance company that protects against financial loss, but as the discussions show, such contracts play a bigger role. Since insurance and road safety are natural, motor insurance is a necessity but it is often a difficult class of business to manage. Thus the appropriate strategies and options must be emplaced.
The motor insurance industry plays an important role in road safety. Not only do most motor insurance companies assist in the creation of awareness through advertisements and circulars to clients, but they also provide the platform and solution to repair damaged vehicles. “Insurance is about more than just compensating for loss as it is a highly effective mechanism for assessing, managing and reducing risk. By helping customers face up to and manage risk effectively, insurance is an invaluable part of modern society and the motoring experience,” as indicated on the meeting. Different participants from both the insurance and police commission attended the fruitful discussion, and agreed to work in partnership.