Safaricom Ethiopia closes $257M IFC deal

Safaricom Ethiopia has closed a deal with the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) – members of the World Bank Group – with the deal completed at a funding ceremony in Addis Ababa, Ethiopia, on Monday.

In June 2023, Safaricom announced that the IFC would become an investor in the Global Partnership for Ethiopia (GPE) consortium.

The IFC promised a $157.4 million equity investment as well as a $100 million loan and guarantees to support the ongoing construction and operation of Safaricom's greenfield telecoms network to drive digital connectivity across Ethiopia.

MIGA will provide ten-year guarantees of $1 billion to cover the equity investments of Safaricom Ethiopia's shareholders.

"The progress Safaricom Ethiopia has achieved in such a short period is nothing short of remarkable. With the highly anticipated launch of M-Pesa, we are excited to witness the profound impact it will have not only on the telecommunications landscape but also on improving financial inclusion for all people across Ethiopia," said Mohamed Gouled, vice president of industries at IFC.

Following the closure of this transaction, IFC will hold a minority equity stake in the consortium, while Safaricom PLC remains the majority shareholder. The other members of the consortium include Vodafone, Vodacom, Sumitomo Corporation and British International Investment (BII).

The consortium was created to bid for a telecoms license to operate in Ethiopia, and it was awarded that license in May 2021 as part of the Horn of Africa nation's strategy to liberalize its telecoms sector.

Safaricom said the significant investment will expedite the company's ambitious plans to provide affordable Internet and reliable connectivity across Ethiopia.

"With IFC coming on board as an equity partner, their experience in global operations and the stature of their investment brings a lot of praise and respect to the board. We look forward to their input in helping us make strides in the Ethiopian market," added Safaricom Ethiopia Chairman Michael Joseph.

Safaricom's expansion in Ethiopia

Safaricom Ethiopia began rolling out its network in August 2022, in the city of Dire Dawa in the eastern part of the country. In October 2022, it officially launched its national network in the nation's capital Addis Ababa and ten other cities.

The telco was granted a mobile money license in May 2023 and plans to launch mobile financial services by the end of the year under its profitable M-Pesa fintech platform.

Safaricom believes the IFC investment will expedite the company's plans to provide affordable Internet and reliable connectivity across Ethiopia (Source: Allexxandar on Freepik)

Safaricom Ethiopia was the first private telecom operator in Ethiopia, ending one of the world's last telecoms monopolies.

In July 2023, Ethiopia launched a tender process for a second independent telecoms license.

Former MTN executive Wim Vanhelleputte will take over as CEO of Safaricom Ethiopia in September 2023, following the departure of Anwar Soussa at the end of July.

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*Top image is of (seated L to R) Katsuya Kashiki, corporate officer at Sumitomo Corporation; Stanley Njoroge, interim CEO and CFO at Safaricom Ethiopia; Mohamed Gouled, vice president of industries at IFC; and Michael Joseph, Safaricom Ethiopia chairman, at the funding ceremony in Addis Ababa on August 7, 2023. (Source: Safaricom Ethiopia)

— Paula Gilbert, Editor, Connecting Africa