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There are many unknowns when it comes to the Novel Coronavirus (COVID-19) pandemic. We do not know yet how long it will last, what its long-term impact will be, or even how it will affect low-income countries where healthcare systems are underdeveloped. Although it has only been four months since the virus was first identified, it has now become a global pandemic unprecedented in our living memory. The ramifications go beyond public health and encompass the economic, social and political spheres. The full effect of COVID-19 is yet to hit African countries, according to the World Health Organization (WHO). Understandably, the organisation is extremely worried that the effect of the virus on African economies and societies will be far more severe than it has been in developed countries.

Thus far, the spread of the virus in African countries has been less extreme than in other parts of the world. To date, in Ethiopia, for example, the number of reported infections is less than 40, and there have not been any confirmed deaths as a result of COVID-19.

However, we cannot afford to be complacent or expect that the current status quo will persist. The late arrival of the virus in Ethiopia served as an early warning and an opportunity to be better informed. In light of this, the swift and decisive actions taken by the government to prepare the country for the damage that COVID-19 may cause are commendable and exemplary for many other African countries.

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With the main aim of boosting telecom penetration and smartphone usage, Ethio telecom is set to introduce a device financing model, where customers can get phones on a credit basis. The state telecom monopoly designed the scheme for those who cannot afford a smartphone with two types of credit options. The scheme also aims at upgrading customers from using feature phones to smartphones. With the new scheme, the company hopes the number of smartphone users will grow to 60pc from 33pc.

To carry out the scheme, the company has approached phone suppliers, manufacturers, importers, assemblers, and financial institutions such as microfinance firms and banks to agree on credit arrangements, according to Ephrem Arefaine, chief marketing officer of Ethio telecom, which plans to distribute smartphones that can access 3G and 4G.

”The research we conducted showed us that many people don't have the financial capability to afford smartphones,” said Ephrem. "We're in negotiation with suppliers and financial institutions to get and supply the devices to customers on credit."

Currently, the company is offering mobile devices only in exchange for full payment. However, with the new offer, anyone can access the devices through credit under one of two plans. Under the first plan, a buyer takes the phone and pays for it in monthly installments. Under the second, payments will be done in the form of deductions, while the buyer uses internet, data and SMS services.

In both cases, the credit will be completed after one or two years as per the interests of the customer, who will also sign contractual agreements. The scheme is expected to be launched in a month's time.

The company aims to provide access to smartphones to people with low incomes that cannot afford to buy the devices otherwise, according to Frehiwot Tamiru, CEO of Ethio telecom, which reports that there are 56.1 million functional mobile phone devices in the country and only 33pc of them are smartphones.

“The new model will replace the previous device supply model that requires buyers to pay the value upfront,” Frehiwot said.

Last year, the company, which has 15,000 permanent and 19,000 temporary employees, invested 50.4 million Br to distribute 70,000 mobile handsets to rural women.

It has announced service improvement and major tariff reductions on its fixed broadband services on February 27, 2020. The 123-year-old telecom service provider has already started supplying fixed broadband modems on credit with instalment offer and expects to start providing mobile devices on credit within a month.

Ethio telecom, which provides more than 20 different services, has launched an LTE Advanced Fourth-Generation (4G) network upgrade that delivers higher data speeds, at a cost of 173 million Br. The network upgrade was undertaken by Huawei, a Chinese telecommunications and ICT provider.

The introduction of telecommunications in Ethiopia dates back to the late 19th century. The Telephone & Postal Services Agency was established in 1941 and was reformed as the Imperial Board of Telecommunication Corporation in 1996.

The management of the company believes that when telecom services penetration grows by 10pc, it has a 1.4pc corresponding boost to the country's GDP.

Getie Andualem (PhD), an associate professor at Addis Abeba University, believes that starting the device financing model itself is one type of e-commerce, saying that the financing scheme will improve transaction speeds of money and marketing information.

"The mobile device supply should be in a quota, and financial organisations should control the payment method," he recommends.

In the first half of this fiscal year, the company has grossed more than 22 billion Br in revenues, achieving 104pc of its target. It also generated 73 million dollars in foreign currency from international business.

In a related news , the three leading e-payment and e-commerce platforms availed alternative transaction schemes to assist the country as it grapples with the spread of the Novel Coronavirus (COVID-19). M-Birr, Hello Cash and Amole, which have five million users in total, cut transaction costs and introduced alternative transaction mechanisms to their users.

"The best thing we can give to support the community as our economy starts to slow down is to save our customers money and keep social distancing using electronic transactions to protect [against] the spread of Coronavirus," reads a statement from the three platforms. With the new scheme, Amole's 2.1 million users will get five percent instant cash back when they transact with over 8,000 businesses that use the system. The new scheme will be effective as of April 30, 2020. M-Birr will also refund all fees for bill payment, money transfer and electronic purchase of goods and services in the month of April. Users can also transfer as high as 14,000 Br to recipients via M-Birr. Hello Cash also offers free sanitary masks for all Hello Market online orders from March 28, 2020, until the end of April.

 

Source: addisfortune You may also find the article here>>>

eepBp's take on:

In addition to the role of these payment plafroms and the smart phone access to the wider public will play in the current effort of COVID-19 reponse,  they will definately have a far longer impact on digitalization , financial inclusion and energy access domain in Ethiopia.

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The World Bank’s Board of Executive Directors today approved $500 million ($250 million grant and $250 million credit) from the International Development Association (IDA) in continued support of the Government of Ethiopia’s Homegrown Reform Agenda. The Second Ethiopia Growth and Competitiveness Development Policy Operation (DPO) is intended to accelerate Ethiopia’s economic growth and achieve its vision of becoming a lower-middle-income country.

This operation is the second of a series of DPOs and provides both financial and technical support to Ethiopia’s economic reforms. The operation is designed to help Ethiopia revitalize the economy by broadening the role of the private sector and attaining a more sustainable development path. Ethiopia, with support from the operation has:

  • Continued the implementation of reforms in the energy sector to improve efficiency and cost recovery, while protecting the poor. Established the new telecom regulator, Ethiopian Communication Authority, and launched the process of consultation and issuance of two licenses to new firms.

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Since Ethiopian Prime Minister Abiy Ahmed took power in April 2018, his government has sent an unambiguous message: It needs more private sector investment to drive growth and create jobs.

The government's growth strategy calls for structural reforms designed to strengthen the private sector, boost competition, and increase investment—an approach that is accelerating the end of Ethiopia’s long reliance on state-led economic development.

The ratification of a new investment law at the end of last month by the House of Peoples' Representatives is expected to add momentum to Ethiopia’s reform efforts. The new law, which updates the 2012 Investment Proclamation, consolidates reforms and confirms that few sectors will be restricted for foreign direct investment—the specifics will be defined in an investment regulation in the following months—allowing all other economic sectors to be open to foreign investors. These developments are in line with recommendations from the Country Private Sector Diagnostic (CPSD) for Ethiopia, published by IFC and the World Bank in March 2019.

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