Central bank regulators are set to introduce a bill that will allow foreign investors and overseas companies unrestricted opportunities in digital financial services. The draft proclamation comes following a pledge by federal officials last year to open up the market to foreign capital.

Companies applying for licenses are required to establish a subsidiary for digital financial services and pay licensing fees in foreign currency. Says the draft proclamation: "Foreign nationals and Ethiopian entities fully owned by foreign nationals can invest in a payment instrument issuer or payment system operator business only through foreign direct investment and in an acceptable foreign currency."

The bill designates subsidiaries as share companies wholly controlled or significantly owned by a local or foreign parent company, registered in Ethiopia and operating from a head office in the country. Experts say the requirement to form a subsidiary company will allow the central bank to enforce stringent regulatory measures better and avoid the duplication of supervision by other federal agencies.

Safaricom Ethiopia Plc is likely to be one of the frontrunner beneficiaries of the changes, which will allow it to introduce its powerful and popular platform, M-Pesa mobile money, to the Ethiopian market. M-Pesa began operations in Kenya in 2007, with acclaimed success in transforming the payment system in the neighbouring country. It facilitates transactions valued at over 780 million dollars a day.

If the bill is approved by the Council of Ministers and ratified by Parliament, the telecom operator will be required to establish a domestic subsidiary company and pay a license fee in foreign currency. Safaricom Ethiopia was granted a 15-year full telecom operator license last year after bidding 850 million dollars.

Last month, a team of officials and experts from the National Bank of Ethiopia (NBE) paid visits to Kenya and Tanzania, the latter where Safaricom expanded its presence.

For years, regulatory roadblocks have limited fintech companies to technology suppliers working with commercial banks. The proposed regulatory changes are also good news for foreign-owned fintech companies already operating in Ethiopia or considering an expansion into an untapped market. Mobile money pioneers Hellocash and M-Birr - both owned by foreign companies - have partnered with commercial banks and microfinance institutions to provide their services. The new rules would allow these firms to begin the business independently.

Another fintech company eyeing the Ethiopian market is the Nigeria-based Paga, established in 2006 by Tayo Oviosu. Paga-Ethiopia, part of the Paga Group, recently inked a deal with the Bank of Abyssinia to develop payment solutions. The Group operates payment facilities serving around 19 million customers.

"We've got the interest and the ability to enter," Adam Abate, chief executive officer (CEO) of Paga-Ethiopia, told Fortune. "The only setback was the regulatory restrictions.”

Adam confirmed that the company would apply for a digital financial services provider license after the bill is signed into law.

The bill surfaces two years after the central bank issued directives to govern the operation of payment system operators and instrument issuers. Three firms – the state-owned Ethio telecom, ArifPay, and SunPay – have been issued licenses since. The former's Telebirr mobile money platform has registered over 15 million users and facilitated transactions valued at more than five billion Birr since its launch last year. ArifPay surpassed one million Birr in transactions last week.

Digital financial services are thriving in Sub-Saharan Africa. It is home to over half of the 300 mobile money services globally. No less than five sub-Saharan African countries have five or more mobile money services operating in their respective markets. Kenya has five and a staggering 17 in Nigeria. MTN (MoMo), Airtel, Safaricom (M-Pesa), and Orange (Orange Money) are a few of the biggest brands in the payments system sector. Last week, MTN, a South African telecom operator in the business for nearly three decades, received a nod from the Nigerian central bank to introduce its MoMo mobile money platform to the largest market in Africa.

Industry players say Ethiopia has an even larger appetite for digital financial services. Operators can run their network of agents and devices, including automated teller (ATMs) and Point of Sales (POS) machines that can be used for multiple purposes and switches or payment gateways.

"It's about channelling money, selling extra services and entering the space of micro and mezzo loans," said Vincent Diop, CEO of BelCash.