Ethiopia Has the Digital Tools, But Can It Shift the Mindset?

Jun 22 , 2024
By Shewangezaw Seyoum

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Over the last two decades, Ethiopia has witnessed a remarkable transformation in its technology ecosystem, especially in telecom infrastructure and services. Since the mid-2000s, the telecommunications sector has undergone large-scale modernisation, laying down a national fibre backbone and deploying successive generations of networks. These efforts have increased coverage to broader geographical areas. A symbolic milestone came in May 2022 when Ethio Telecom launched 5G services in Addis Abeba.

The country has also matched progress in infrastructure with policy and institutional frameworks. The "Digital Strategy for Inclusive Prosperity 2025," a key initiative introduced in May 2020, envisions realising a digital economy and society and provides a roadmap for the country’s tech-led growth. Major government-led projects, such as the Ethio-ICT Park, WoredaNet & SchoolNet, the electronic World Trade Platform, and a digital identification project, have been steps towards enhancing ICT adoption.

These technological changes have opened new possibilities, particularly in the financial sector.

In 2011, the National Bank of Ethiopia (NBE) launched the Ethiopian Automated Transfer System (EATS), modernising the country's payment systems. EATS includes the Real-Time Gross Settlement system (RTGS) for the final settlement of payments between financial institutions and the Automated Clearing House (ACH) for clearing and netting services for bulk payments. Before this system, all payments, including interbank transfers, were made through the exchange of letters, resulting in lengthy settlement times.

The introduction of ATMs and mobile money agents has expanded access to financial services. Point of Sale (POS) terminals and debit card users have also risen. Mobile banking is now the most convenient and accessible digital payment channel, significantly increasing mobile money and wallet users. Traditional lenders, telecoms, and fintech firms are cooperating to introduce new digital financial services and credit access. As a result, digital payments have proliferated, with official sources indicating that payments worth more than 4.7 trillion Br were processed digitally by the end of June 2023, almost three times the previous year's value.

Despite this progress, inadequacies abound. In recent years, electronic government services have been rolled out, but their implementation has been troubled, and their impact remains uncertain due to deficient design and inadequate preparation. Public service employees have not undergone the required mindset shift, and the wider public has been left to cope with these changes on their own.

While service requests are available online, swift responses from institutions are still hard to come by. Delays are common, and the queues have merely shifted from government offices to internet cafes. The public's digital skill deficit means additional costs as people recruit third parties to process requests, raising privacy concerns.

Another weakness lies in data use. Public institutions possess vast amounts of data collected through citizen interactions, such as tax payments, exams, and health visits. This data could be used to understand user needs better and improve public services. Data-driven decisions can lead to more effective public service operations. However, old-fashioned approaches to data have limited the potential for these insights to be fully realised.

Data analytics is essential for drawing actionable insights and informing decisions. These decisions can help reduce crime, lower traffic congestion, improve the environment, and provide more efficient public services. Yet, government agencies shy away from utilising data and deploying processing tools to reap these benefits. The recent unveiling of the government's startup innovation scheme, a nine-point initiative designed to set the startup innovation ecosystem on the right path, has garnered support from notable innovators and many circles.

Political and institutional environments are key constraints holding the country back. Continuous improvements in policy, state capacity, and public service delivery at all levels are needed to create an innovative state capable of meeting the needs and requirements of 21st-century society. Without these improvements, isolated initiatives will only create enclaves of progress.

Agencies need to use data and associated technologies to create a government that solves problems more effectively and legitimately. Data-analytical approaches can help agencies understand the problems they are addressing more empirically and devise responsive policies and services. Data-processing tools can also make citizen engagement more efficient, assisting agencies to handle large quantities of information and invite meaningful participation from diverse audiences who have never engaged in governance.

However, to harness the power of new technologies for governing, the government must invest in training public service employees to work differently and prepare the general public for a new technological age.

The path to an innovative state is a rough road, but the potential rewards are substantial. Ethiopia's technological advancements and policy initiatives have laid the groundwork for a digital economy and society. The financial sector's transformation has demonstrated the benefits of embracing digital solutions. However, the public service and governance realms require a concerted effort to align mindsets and skills with the new technological landscape.

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PUBLISHED ON Jun 22,2024 [ VOL 25 , NO 1260]

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