It has also issued 100 million USD loan facility to the consortium to support the ongoing construction.
Addis Ababa (Ethiopia Today) June 11,2023: The International Finance Corporation (IFC), a member of the World Bank Group has pumped 157.4 million USD for a minority stake in Safaricom Ethiopia.
It has also issued a 100 million USD loan facility to the consortium to support the ongoing construction and operation of the firm’s greenfield telecommunications network across Ethiopiain a bid to make internet more affordable , 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,” the lender said on Friday.
Kenya’s biggest telco is the major shareholder in the Ethiopia venture with a stake of 55.7 per cent and the entry of IFC as a shareholder could see its ownership drop to below the 50 per cent mark, reducing its exposure in the populous nation.
Vodacom Group holds a 6.19 per cent share of the business. Sumitomo Corporation and British International Investment (formerly CDC Group) control stakes of 27.2 per cent and 10.9 per cent, respectively in Safaricom Telecommunication Ethiopia Plc (STE) which is the operating arm of the venture.
Although details about the stake bought are scanty, market players have estimated it to 15.5 per cent stake.
“Following the transaction, IFC will hold a minority position in Safaricom Ethiopia,” the lending arm of World Bank said.
The initial partners together paid 850 million USD towards the licence fee in 2022 after the Ethiopian government tendered to allow a private player in its telecommunications space.
The Multilateral Investment Guarantee Agency (MIGA) will provide 10-year guarantees of 1 billion USD 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 USD , 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.
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,” IFC said.
It added that through this investment, it hopes to help the company create a competitive market for mobile connectivity, reflecting on IFC’s 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 said.
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.
“It is great to have the World Bank units with us, as part of the international funding coalition behind Safaricom Ethiopia,” Joseph said.
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 liberalisation.
