Digital Space, the Place to Be

May 15 , 2021
By Christian Tesfaye

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It is nothing less than surprising that the digital space is becoming the most exciting space to be in right now in Ethiopia. I would have barely believed it a few years ago.

After taking the national exams, I remember us debating as high school seniors which field offered the best investment on our years of education. This was nearly a decade ago, so I elected the engineering field. Construction was booming. The streets were being turned into asphalt road everywhere and buildings seemed to snake up from every nook and cranny in the city. Money was obviously pouring into the industry. For a person with tolerable math skills such as me, a profession in engineering in a roaring construction industry seemed to be the clear choice.

It was only later that I found out that, with the government’s encouragement, nearly most high school graduates across the country were making the same calculation. By the time I graduated five years later in 2017, the sector had become saturated while foreign currency shortages and gross corruption had sucked the air out of it.

Meanwhile, a bunch of my friends had chosen computer science as an undergraduate degree. They grew up playing video games and obsessing about apps and tech gadgets. They also thought it was a lot less backbreaking than engineering – it takes one less year to get a degree in computer science in public universities.

To their surprise and mine, the momentum is with the digital space. Sure, it will be quite a while before it becomes the driver of the economy, as the construction industry has been, or before it goes on to employ anywhere as many people. But the two areas of growth that show unprecedented potential and excitement in Ethiopia are innovations and competitions in the digital and garments industry.

Look no further for this than e-payment platforms. Anyone who sits in a café somewhere in Addis Abeba has a good chance that some E-Birr or CBE Birr representative would try to get them to open an account. And no wonder - the competition is fierce.

Last week, Ethio telecom launched Telebirr, a mobile payment platform that would pose a formidable challenge to the non-interoperable e-payment services provided by financial institutions. Some 44 million users of the telecom giant would pay, withdraw and deposit money using the platform.

Banks have yet to seriously consider how unattractive it is to use a mobile money outlet by one of them where the customer does not have an account. I will not go to the trouble of depositing money at a payment agent every time my mobile money account runs out just to use a service that is, in any case, severely underdeveloped.

Fortunately, EthSwitch plans to come to the rescue, currently piloting an interoperability service between the different commercial banks' mobile payment services. If it becomes as smooth as the seamless interbank service of ATMs – from anecdotal evidence, I cannot say the same about point-of-sale (PoS) terminals – it could mean that the various mobile outlets the banks have been coming up with have a fighting chance.

It does not stop there, though. Fin-tech will also be shining bright with the entry into the market of non-financial institutions other than Ethio telecom. There is Sunpay Solutions, which has come with 100 million Br in capital last March to enter the market. In the same month, ArifPay raised 140 million Br to become a digital payment platform.

The growth in e-payment services will have an advantage much greater than the immediate benefits of mobile banking, such as creating employment opportunities in fin-tech and increasing deposits for banks. It will also mean that digital content could be monetised. But in an environment where it could not, where the legal and infrastructural tools are lacking, there would be no incentives for investments in the digital space.

We already see how developments in the wider digital space, from taxi-hailing apps and delivery services to content streaming sites and ad services, are impacting the economy. The potential to become one of the essential drivers of the economy, especially the service sector, is high. It is not the construction industry yet, but bar disruptions strong enough to put the brakes on such impressive momentum – legal or political – it is only a matter of time.

Christian Tesfaye (christian.tesfaye@addisfortune.net) is a researcher and Fortune's Op-Ed Editor whose interests run amok in the directions of both print and audiovisual storytelling.

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PUBLISHED ON May 15,2021 [ VOL 22 , NO 1098]

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