Ethiopia Opens Door for Mobile Money Platforms to be Used in Securities Investment

The National Bank of Ethiopia (NBE) has revised its Payment Instrument Issuer Directive, paving the way for mobile money platforms to offer services related to investing in securities. The directive, made public yesterday, aims to establish a more accommodating regulatory framework that fosters competition and innovation in the financial sector.

According to the new directive, mobile money platforms, with written approval from the National Bank and agreements with licensed financial market participants, can now facilitate their user’s investment in government and private securities electronically. These platforms are also authorized to handle payments of principal, interest (coupon), dividends, or any other returns arising from the users’ investment activities.

Experts interviewed by Shega highlighted the directive’s significance, as it liberates the sector for diverse use cases of mobile money platforms in Ethiopia’s upcoming secondary market.

“Just like you can transfer money using your mobile money platforms, the move sees the future of enabling such platforms to be used to buy securities like bonds or stocks,” said Merid Fikireyohannes, Founder & CEO at Pragma Investment Advisory, to Shega.

Efforts are underway to launch Ethiopia’s first-ever securities exchange in 2024–25. Over the past years, the Ethiopian goverment has been working to prepare the groundwork for its stock market.

Last week, the Ethiopian Securities Exchange (ESX) took another step forward in its establishment by revealing its inaugural board of directors. Furthermore, four state-owned enterprises—Ethio Telecom, Ethiopian Shipping & Logistics, Ethiopian Insurance Corporation, and Birhana Selam Printing Enterprise—have been designated as founding members of the ESX.

Currently, mobile money platforms in Ethiopia can engage in digital savings, credit, insurance, and international remittances through partnerships with financial institutions.

“Similar to these, in the future we might be able to see investing features listed in their service,” said Merid.

According to a statement released by NBE, the bank will continue to build a modern, secure, inclusive, and competitive digital payment ecosystem, and the ultimate aim is to create a stable financial system that provides every citizen with access to a diverse array of financial services that, in turn, help propel economic growth and standards of living.

“The latest move empowers the public and will make it easier for the public to get involved in the secondary market,” added Merid.

In a commentary piece published in Fortune Newspaper, Lea Mehari, a consultant on international law and policy, argued that the introduction of the capital market in Ethiopia has the potential to transform its economy and set it on a path of sustainable growth. However, she adds that this potential can only be realized if retail investors are empowered and encouraged to participate in the market.

In 2017, the Government of Kenya, in partnership with M-Pesa, launched the M-Akiba Bond, a bond traded exclusively on mobile phones.

Through their mobile phones, retail investors could open securities accounts, purchase, pay, receive periodic interest or coupons, and trade their securities in the secondary market.

Among the other major revisions, the law introduces is the detailed requirements for foreign mobile money service providers to enter the Ethiopian market and the raising of the daily electronic account balance limit from 30,000 to 75,000 birr.

In addition, it introduces a new daily aggregate transaction limit of 150,000 birr to keep up with market developments while exempting certain transactions—such as utility, tax, airline tickets, fuel, and bulk payments—from these limits.