Non-financial institutions, including Ethio telecom, will soon be able to engage in mobile money services if the central bank approves an amended directive.

The 20-page bill, which has been in the making over the past year, proposes allowing non-financial institutions to engage with electronic payment and money transfer services, which were prviously only reserved for banks and micro-financial institutions. The directive also opens doors of investment for private commercial companies and government institutions to operate as Payment Instrument Issuers.

In drafting the directive, the National Bank of Ethiopia, which has been rolling out a couple of reforms in the financial industry over the past year and a half, aims at improving financial inclusion for a more significant proportion of society, which is currently outside the reach of financial services.

Partnering with banks, insurance companies, micro-finance institutions and social security agencies, Payment Instrument Issuers would be allowed to give savings and credit services, sell insurance products and pay out pensions, according to the new directive.

"Innovative payment instruments are important to increase the use of financial services," reads the draft directive, "thus the inclusion of Payment Instrument Issuers is key to mitigate associated risks and maintain the reliability of payment instruments."

In Ethiopia, a country with a population above 100 million, only 20pc of the population is banked. The population living in rural areas are largely unbanked.

While mobile money is at the infant stage in the country, neighbouring Kenya has gone far in the service. M-PESA, the well-known mobile banking brand with over 17 million Kenyans as customers, allows Kenyans to even pay for taxis using the system.

"Since Ethio telecom already has a large number of subscribers," said Cherer Aklilu, executive director at Ethio telecom, "it will play a significant role in improving financial inclusion by allowing our clients to use the service."

As of the end of the last fiscal year, Ethio telecom has 41.9 million mobile voice subscribers and 22.3 million data and internet users.

The company, which is going to be partially privatised in the next few years, plans to provide the service through a dedicated unit that will be a subsidiary of the parent company, according to Cherer.