ETHIOPIA FAST FACTS KEY INSIGHTS DATA DEEP DIVE INDEXES PRICING OPERATORS CONCLUSION

FAST FACTS


VOLUME OF REMITTANCES
USD 3820 million
National Bank of Ethiopia, 2020
AVERAGE PRICE OF REMITTANCES TO SEND 200 USD
6.3%
RemitSCOPE Research, 2020
TOP 5 COUNTRIES

VOLUME OF REMITTANCES
USD 3820 million

National Bank of Ethiopia, 2020


AVERAGE PRICE OF REMITTANCES TO SEND 200 USD
6.3%

Remitscope Research, 2020


TOP 5 COUNTRIES


FINANCIAL INCLUSION
35% of adults have an account at a financial institution, incl. mobile money
FINDEX, 2017
NUMBER OF OPERATORS
sending to:
11
NOT COMPETITIVE MARKET

Remitscope Research, 2021
paying out:
18

Remitscope Research, 2021

FINANCIAL INCLUSION
<
35% of adults have an account at a financial institution, incl. mobile money

FINDEX, 2017


NUMBER OF OPERATORS
sending to: 11
*NOT COMPETITIVE MARKET

Remitscope Research, 2021

paying out: 18

Remitscope Research, 2021


KEY INSIGHTS

ACCOUNTS AND DIGITAL PAYMENTS

Slow adoption of digital tools, but infrastructure is developing

Ethiopia’s payment systems are undergoing modernization as interoperability between banks was recently achieved and more work is being done to further innovate the sector. Recent directives will allow more companies to provide financial products such as mobile money without going through a bank. The country’s national switch has also been given more purview to provide interoperability across the market.


Mobile banking and use of USSD with the two mobile money actors is on the rise but generally digital uptake is slow and the country remains predominantly cash based.

01

02
DOMESTIC PAYMENT INFRASTRUCTURE

A work in progress, but accessibility remains difficult

Ethiopia’s domestic payment infrastructure is a work in progress but its development is of key interest to the government and other stakeholders. Recent regulation expanded duties of EthSwitch, the national switch, to include interoperability across banks, MFIs and eventually mobile money.


Already all banks are mandated to be connected to the switch which ensures that 1,500+ ATMs, 13,000 POS and 2.5 million cardholders are connected. Ethiopia is predominantly rural, and branch and agent networks of banks, the only actors that can payout remittances, remain difficult to access.


03
LICENSING & REGULATORY ENVIRONMENT

New regulations have redefined the market but remains bank led

Ethiopia’s regulations are clear, well defined and mostly available online but can be limiting and slow to react to the market. A recent regulation has expanded the types of organizations that can offer mobile money services but the remittances sector remains bank led.


Outbound remittances from Ethiopia are restricted which makes the informal sector a significant part of this market. Many regulations were introduced in 2020 and 2021 that aim to clamp down on informal operators, but formal stakeholders remain uncertain of what regulations will come next.

DATA DEEP DIVE



LINK TO KEY REMITTANCE REGULATION

Ethiopia has clear guidelines for money transfer businesses in which they must partner with a bank. Mobile money was only offered through banks and MFIs, but that has been expanded. International remittances must still be received via a bank.

INDEXES





IMPORTANCE OF
REMITTANCES

01
score
1 Senegal 88
16 Uganda 50.5
17 Ethiopia 50.5
18 Algeria 48.5
43 Botswana 13

DIGITAL
READINESS

02
score
1 Kenya 100
38 Algeria 28
39 Ethiopia 20
40 Benin 12
41 Mauritania 12

OPENNESS
TO OPERATE

03
score
1 Kenya 100
23 Burundi 54.5
24 Ethiopia 52
25 Tanzania 51.5
30 Zimbabwe 30.5



What do these numbers mean?



IMPORTANCE OF REMITTANCES


This is a composite score that reflects the size of formal remittance flows to the receive country, how important these are to the country's economy and, (at household level) the proportion that receive money from overseas (including informal). Weights are applied by experts. Scores out of 100.


DIGITAL READINESS


This is a composite score that reflects how ready a country is for international remittances to be terminated directly into digital accounts (including bank account and/or MM). The Index includes whether the regulation permits money to be received into mobile wallets, account ownership, and whether there is domestic MM interoperability. Weights are applied by experts. Scores out of 100.


OPENNESS TO OPERATE


A composite score that reflects where barriers to entry/operate are low for different types of market players. Factors include: lack of specific guidance for RSPs; existence of exclusivity practices; if there is a significant parallel FX market; the numbers of operators sending to a country and international remittance payment aggregators present. Weights are applied by experts. Scores out of 100.



For more information on how the indexes were calculated please download our methodology.


PRICING

AVERAGE COST TO SEND TO ETHIOPIA IS AROUND GLOBAL AVERAGE

The average cost of sending to Ethiopia is 6.3% of the send amount, slightly below the global average of 6.5%. Prices to Ethiopia are also competitive compared to the East Africa average of 9.4%. Progress is still needed to reach the SDG 10.c goal of 3% average costs.

AVERAGE COST TO SEND EQUIVALENT OF USD200 BY TOP 5 CORRIDORS

Of the 5 corridors surveyed, Saudi Arabia was the cheapest at 3.9%. However, one operator was offering rates as low as 2.3% - including fee and foreign exchange (FX) costs – across three corridors: Italy, United States and UK. The EU corridors surveyed were the most expensive send countries to Ethiopia, namely Germany with 9.0% and Italy with 7.5%.

AVERAGE COST BY METHOD TO SEND EQUIVALENT OF USD200 TO ETHIOPIA

At 5%, end-to-end digital remittance services are much cheaper than their cash-to-cash counter parts at 7.4%, although many operators offer a mix of options. However, the vast majority of people still terminate in cash. Work is needed to encourage and enable digital termination.

LIST OF OPERATORS

Operators sending to Ethiopia (11)

Amal Express
Azimo
Dahabshiil
MoneyGram
Remitly
Ria
Small World
Walmart2World
Western Union
WorldRemit
Xoom
Operators Paying Out (18)

Abay Bank
Addis International Bank
Awash Bank
Bank of Abyssinia
Berhan International Bank
Bunna International Bank
Commercial Bank of Ethiopia
Cooperative Bank of Oromia
Dashen Bank
Debud Bank
Development Bank of Ethiopia
Enat Bank
Oromia International Bank
Lion Bank
NIB International Bank
United Bank
Wegagen Bank
Zemen Bank

FINAL THOUGHTS

REMITTANCE MARKET UNDERGOING MOSTLY POSITIVE CHANGES

The cost of sending to Ethiopia is around the global average, but high informality threatens the attractiveness of formal remittances. Regulations are being passed to try and improve the market but these leave some stakeholders unsure of what to expect next. Generally, the regulations have been useful in opening up a market most have considered closed. For now though, remittances must be paid through the banking sector meaning the incoming mobile money players and the already strong network of MFIs can’t participate unless partnered with a bank. Much more work is needed to help improve financial inclusion and digital payments which are still in their nascent stages in the country.


Ethiopia is one of the pilot countries chosen for PRIME Africa. As such, a full diagnostic report has been developed and presented to key stakeholders in the country. The diagnostic details all aspects of the remittance market, including key players, stakeholders, and recommendations.