Ethiopia's Open Finance Future Closer Than It Looks

Ethiopia's Open Finance Future Closer Than It Looks

Jun 27 , 2026. By Abel Taddele ( Abel Taddele (abel@fsdethiopia.org) is a digital finance expert currently serving as director of Financial Inclusion at FSD Ethiopia. )

The shift toward mobile money has fundamentally altered the country's financial demographics. Adult account ownership grew from 35pc in 2017 to 49pc in 2025, pulling millions of previously unbanked individuals into the formal economy through everyday transactions. However, every digital payment, microloan, and savings deposit generates a permanent data trace that currently remains locked inside the institution that recorded it, raising essential questions about who generates and controls financial data, writes Abel Taddele (abel@fsdethiopia.org), a digital finance expert serving as director of Financial Inclusion at FSD Ethiopia.

Ethiopia's digital finance story is no longer only about access to mobile money. It is becoming a story about data, who generates and controls it, and whether it can widen financial services for the people and businesses still shut out of formal credit, savings, insurance and investment.

In four years, the country has gone from one where most people had never made a digital payment to one where nearly 50 million carry a mobile money account. By June 2025, digital payments had surpassed 18.6 trillion Br, around 137 billion dollars, almost twice what they were a year earlier. Telebirr, the mobile money arm of state-owned Ethio telecom, drove much of that growth after its 2021 launch, amassing 58.61 million subscribers and transacting 1.94 trillion Br in the first two quarters of the fiscal year alone.

That transformation is still only half the story. The more interesting question is what happens to all the data generated by those transactions. Every payment, microloan, and savings deposit leaves a trace that, in most financial systems, remains locked within the institution that recorded it. Open finance is the idea that this need not be the case.

In November 2024, Agustín Carstens, the general manager of the Bank for International Settlements (BIS), made the case plainly. He stated that "open finance holds great promise for fostering innovation and competition, empowering customers and improving financial inclusion."

At its simplest, open finance lets people share their own data, their transaction histories, savings records and loan repayments, with whichever provider they choose, securely and with explicit consent. A farmer who has saved through Telebirr for three years could share that record to unlock a loan she would otherwise be denied for want of a credit history. A small trader could pool data across accounts to clarify his cash flow or find a cheaper payment option. A mid-career professional could unlock personalised investment advice by consenting to share his data.

But it is not only about convenience. At its core, open finance is a regulatory architecture, a policy choice about who owns financial data and who may use it. When done well, it loosens the grip incumbents hold on customers, lets smaller fintechs and cooperatives compete, and pushes the system toward serving people it has long ignored.

The same month, a coalition of the Consultative Group to Assist the Poor (CGAP), the BIS, the International Monetary Fund (IMF), the UN Secretary-General's Special Advocate for Inclusive Finance for Development and the World Bank published joint guidelines dubbed "Key Considerations for Open Finance," with design principles for countries heading this way. The document is candid about the risks. More data flowing across more institutions means greater opportunities for fraud, misuse, and consumer harm if safeguards are inadequate. The promise and the peril travel together.

The most instructive examples come from Brazil and India, which are large and diverse economies that built their frameworks with inclusion in mind.

Brazil's approach was sweeping. It mandated near-universal participation, tied the system to an inclusion objective, and built it on top of Pix, the country's instant payments infrastructure. Pix volumes topped 63.4 billion in 2024, up more than 50pc in a single year. Venture capital investment in fintechs doubled after open banking arrived. The benefits spread beyond payments into credit, advice and compliance tools, confirming that once data sharing is standardised, the applications multiply unpredictably.

India reached equally compelling results differently. Rather than a single mandate, it built its Account Aggregator (AA) ecosystem, a consent layer between institutions and data users that lets customers share specific data for specific purposes. By March 2024, 64 million accountswas  were linked. The share of people willing to share data to get better loan offers rose from 33pc to 71pc in a single year as trust built. For small businesses that had never demonstrated creditworthiness on paper, data-backed lending opened doors that had been shut for decades.

The Bank of England found that small businesses eligible to share data were more likely to form new lending relationships with non-bank lenders and to pay lower interest rates when they did so. Competition works. When data moves, money follows it to better uses.

Undoubtedly, Ethiopia's journey over the past five years has been remarkable and underappreciated abroad. The Telebirr launch in 2021 was not only a commercial milestone. It came alongside the first-ever licensing of non-bank payment service providers by the National Bank of Ethiopia (NBE), cracking open a sector long reserved for licensed banks and their fintech partners. Today, more than 11 non-bank providers operate, including Safaricom's M-Pesa, which entered in 2023, and home-grown fintechs such as Kacha, Arifpay and Chapa.

Mobile money account openings surged from 15 million in 2021 to over 139.50 million by June 2025, and adult account ownership rose from 35pc to 49pc between 2017 and 2025.

The infrastructure has kept pace as EthSwitch, the national interoperability switch, connects ATMs, point-of-sale terminals, as well as mobile and internet banking. A National Payment Gateway (NPG) that finished its pilot in late 2023 has moved toward commercial operation, while Et QR and the instant payment system have been operationalised. Fuel, utility and government payments are being progressively digitised, each pulling more people into the formal system.

The most consequential development for open finance is legislative. In July 2024, Ethiopia enacted its first comprehensive personal data protection law, establishing rights to access, correct and restrict the processing of personal information, and creating the Ethiopian Communications Authority (ECA) as the oversight body. The law allows individuals to receive their data in a transferable format, which will, one hopes, be followed by guidance on formats, standards, and technology. The NBE followed with a directive issued last year, requiring banks to localise data and maintain auditable IT systems. They signal that policymakers grasp that the data economy needs rules, and are writing them.

Despite all this, Ethiopia is not ready for open finance, at least not the full version.

I used a tool, the CGAP Open Finance Self-Assessment, which evaluates markets across three dimensions, to gauge readiness. These dimensions are the regulatory ecosystem, the provider ecosystem, and the data footprints of individuals and micro, small and medium enterprises. The result places Ethiopia in the 'Expand Footprints' quadrant. The logic is clear. Before open finance can work, enough people should generate sufficient digital data to make sharing worthwhile.

On the first two, Ethiopia sits above the intermediate mark. The 2024 data protection law, the NBE's evolving directives, the interoperable environment and the growing fintech market all count in its favour. The gaps are real but bridgeable. There is no dedicated open finance legal framework yet, no standardised specifications for financial data exchange, and the commercial banks, while increasingly digital internally, have not moved toward proactive data sharing.

The weakest dimension is data footprints, and that is the crux. Much of the population still transacts mainly in cash or through informal savings groups. The existing digital data is fragmented, siloed across institutions, not structured for consent-based sharing, and concentrated in urban areas and among men. Telebirr has generated impressive volumes, but volume alone does not create the rich and longitudinal trail across multiple services and life events that make open finance useful for credit scoring, insurance or tailored savings.

The CGAP assessment is clear on sequencing. Enhance data footprints first, and check the penetration, both access and usage, of digital accounts and payments among underserved segments.

The priority, then, should not be designing open finance architecture now. It should be getting more people, especially women, rural households and micro-enterprises, onto digital rails and using them regularly. When those populations have 12 or 24 months of transaction history, the case becomes far more compelling.

None of this means sitting on one's hands. Getting ready for open finance and expanding digital access are largely the same work.

The clearest opportunity lies in government payment programmes. The Productive Safety Net Programme, which supports between eight and nine million food-insecure households, should explore other interoperable channels to expand its footprint. That is exactly the high-volume and recurring payment that anchors people in the formal system and generates the data trails that open finance needs. Accelerating it across social transfers, salary payments, and utility collections is open finance groundwork, not merely a payments-efficiency exercise.

Agent networks matter too. A collaboration between the UN Capital Development Fund and Highlight Trading showed what is possible. By investing in digital tools and recruiting women and youth as mobile money agents, a single partner onboarded over 300,000 customers in less than two years, most of them in rural and peri-urban areas where the footprint is marginal. Replicating that at scale could lift inclusion faster than almost any regulatory intervention.

The NBE need not build a complete framework overnight, but it should start designing one, setting the scope of data sharing, defining consent in the local context, clarifying liability when shared data is misused, and working out how it and the Communications Authority would coordinate oversight. The 2024 law provides a foundation for the process, and the CGAP, BIS, IMF, and World Bank guidelines provide a template. The missing ingredient is a decision to begin.

Standardised application programming interfaces will eventually be the system's plumbing, and EthSwitch's infrastructure is the obvious place to start. Rather than letting each institution build its own interface, policymakers should move toward a common standard aligned with regional and international norms that lowers participation costs and makes it harder for dominant players to block entry.

Finally, none of it works without trust. CGAP's research in Brazil found women and lower-income groups consistently less aware of, and less confident in, open finance, the people most likely to benefit and to be left behind. Ethiopia's financial literacy programmes, consumer protection directorate and the media all have a role in ensuring that when open finance arrives, it arrives for everyone.

'Expand Footprints' is not a polite way of saying the country is unprepared. It recognises that the regulatory and market infrastructure is developing, and that the remaining gap, data depth among underserved populations, is one that Ethiopia is already working to close.

The countries that did open finance well did not leap ahead of their markets. Brazil spent years building Pix before the data-sharing layer could deliver. India spent years on the Account Aggregator framework before volumes made it compelling. Ethiopia has the advantage of learning from both. It also has something neither had at the equivalent stage. It has a single dominant mobile money platform connecting tens of millions of people, and a government with a real appetite for using digital infrastructure to reach the excluded.

Open finance in Ethiopia is not imminent. But it is a realistic medium-term ambition that the country can approach deliberately rather than scramble to catch up. The data that will make it work is already accumulating. The question is whether the institutions that hold it, and the regulators that oversee them, will be ready when it is time to let it flow.

PUBLISHED ON Jun 27,2026 [ VOL 27 , NO 1365]