
Jul 6 , 2025. By NAHOM AYELE ( FORTUNE STAFF WRITER )
A landmark directive from the Ministry of Finance signals a paradigm shift in the country’s digital payments architecture. Federal agencies are now required to accept a full spectrum of electronic payment methods, including debit cards, mobile wallets, prepaid instruments, and digital banking transfers, irrespective of the provider, as long as it is licensed by the National Bank of Ethiopia (NBE).
In a decisive break from precedent, the directive prohibits preferential treatment for state-affiliated platforms such as the Commercial Bank of Ethiopia (CBE) and telebirr, which have long dominated the government’s revenue collection ecosystem. Public institutions have 90 days to integrate their systems with approved payment gateways and should submit monthly compliance reports to the Ministry’s Inspection Department, tasked with monitoring implementation.
For commercial banks and fintech firms, which have historically been sidelined in public payments, the announcement marks a long-awaited opening.
“This is what we’ve been waiting for,” said Kefyalew Shiferaw, chief digital banking officer at Awash Bank.
He noted that banks have often been forced to lobby individual agencies to accept alternative payment options, leaving customers to open redundant accounts with state-backed providers to pay taxes or utility bills —a practice that dilutes customer relationships and fragments deposits.
According to the Ministry's officials, the directive is designed to dismantle these barriers and establish a level playing field by expanding financial inclusion, diversifying transaction channels, and encouraging competitive neutrality in the digital payments ecosystem. A senior Ministry official, who requested anonymity because he is not authorised to speak publicly, stated that minimising cash use and monopolistic bottlenecks would enhance transparency, reduce costs, and encourage more citizens to enter the formal financial sector.
Licensed players will compete for processing public service payments, including traffic fines, municipal parking, and tax collections, based on platform quality and user experience.
“If we can deliver better digital services, even starting late could work to our advantage,” Kefyalew told Fortune. "Banks now have a chance to win back digital engagement lost to incumbents."
The fintech sector is no less energised. Safaricom Ethiopia CEO, Wim Vanhelleputte, called the policy “a catalyst for financial progress and ecosystem expansion.” While acknowledging that reform was overdue, he insisted that the timing still allows for meaningful impact, particularly through expanded collaborations between banks and mobile-money providers to deepen agent networks in underserved areas.
In the 2023/24 fiscal year, 9.7 trillion Br in digital transactions were recorded, eclipsing cash payments for the first time. Of this, telebirr accounted for 1.81 trillion Br, representing 18.7pc, and processed 103 million fuel-related transactions worth 61.8 billion Br, a sign of its reach and the latent potential for its rivals.
However, unlocking that potential will not be a seamless process. A 2024 review by the Policy Studies Institute (PSI) revealed a range of structural impediments, including an unreliable power supply, patchy internet coverage, and a limited point-of-sale (PoS) infrastructure. Regulatory ambiguity further clouded the ecosystem, with fintechs operating disjointed licensing regimes and overlapping mandates. Digital and financial literacy remain low, particularly among women and low-income groups, which slows adoption in critical segments.
Nonetheless, optimism prevails among stakeholders who see the directive as both overdue and opportune. Commercial banks are rushing to upgrade their digital platforms. Fintechs are seeking new alliances and exploring untapped markets. Government officials tout the policy as a step toward a more transparent and competitive financial ecosystem. For consumers, the change offers more than convenience. It signals the gradual dismantling of institutional barriers that have long restricted payment freedom.
Yet, operational bottlenecks at the grassroots level exacerbate the problem. Frontline agents, the lynchpins of last-mile service delivery, struggle with liquidity constraints, irregular commission structures, and minimal institutional support. Cybersecurity lapses and an underdeveloped consumer-protection framework add further fragility to the system.
“Without addressing these systemic issues, this directive could fall short of its transformative promise,” warned Ameha Tefera (PhD), a financial analyst.
He urged providers to build more inclusive interfaces, prioritise offline functionality, and invest in resilient infrastructure to sustain growth across urban and rural contexts.
As service fees and revenues increasingly flow into digital accounts, delays in fund settlement between institutions could create working capital bottlenecks. Amaha called for tighter coordination among payment providers and regulators to manage settlement lags, suggesting that well-calibrated cash-flow strategies are essential to avoid destabilising effects.
PUBLISHED ON
Jul 06,2025 [ VOL
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