IFC announces investment in Safaricom Ethiopia

LONDON, United Kingdom, June 8, 2023 – IFC and MIGA — members of the World Bank Group — today announced an equity investment, a loan and guarantees to support the ongoing construction and operation of Safaricom Ethiopia's greenfield telecommunications network across Ethiopia, leading to more affordable internet, reliable mobile connectivity and technology access for people and businesses in the country.

This first partnership between IFC, MIGA, Vodafone, Vodacom, Safaricom, Sumitomo Corporation, and British International Investment in Ethiopia addresses the World Bank Group's core mandate to help countries end poverty and meet their citizens' demands for services including digital connectivity.

IFC will make a $157.4 million equity investment in Global Partnership for Ethiopia BV (GPE) and a $100 million A-loan to its wholly owned subsidiary, Safaricom Telecommunications Ethiopia Private Limited Company (Safaricom Ethiopia). Following the transaction, IFC will hold a minority position in Safaricom Ethiopia.

The Multilateral Investment Guarantee Agency (MIGA) will provide 10-year guarantees of $1 billion to cover the equity investments of Safaricom Ethiopia's shareholders: Vodafone Group, Vodacom, Safaricom, and British International Investment. A portion of the MIGA guarantees, $76 million, will come from the MIGA Guarantee Facility, part of the International Development Association's Private Sector Window, in the form of a first loss layer.

Ethiopia is Africa's second most populous country, with a population of approximately 120 million. The investment and guarantees will help Safaricom Ethiopia roll out and operate 4G and 5G mobile networks across the country – including in rural and urban areas. Furthermore, under a license granted in May 2023 by the Central Bank of Ethiopia, Safaricom Ethiopia also plans to launch financial services in 2023 under the brand name M-PESA.

"IFC is delighted to announce its support to Safaricom Ethiopia, the first private sector-led telecoms operator in the country, and its parent company the Global Partnership for Ethiopia. Through this investment, we hope to help the company create a competitive market for mobile connectivity, reflecting our strategy to increase competition in the digital sector globally, and reduce costs for consumers. Young people, small businesses, and entrepreneurs will particularly benefit from improved access to high quality digital services such as mobile financial services," said Mohamed Gouled, IFC Vice President of Industries. "The Ethiopian telecommunications market — as well as the country's economy and society — will benefit substantially from equitable, high quality internet access and improved financial inclusion, advancing the country on a path to a more prosperous future."

When it launched services in October 2022, Safaricom Ethiopia became the first private telecom operator in Ethiopia, one of the world's last telecom monopoly markets. Telecoms market liberalisation is a key part of the Ethiopian government's Digital Ethiopia 2025 plan to help the country realise its digital potential, leverage technology to build a more prosperous society and help meet the country's United Nations Sustainable Development Goal commitments.

"Vodafone is pleased to partner with the World Bank Group in Ethiopia to help the country digitalise for the benefit of their citizens, their society, and their economy. By working together, we can deliver the connectivity, products and services relied upon by our customers," said Joakim Reiter, Vodafone Group External Affairs Director.

By increasing access to digital services, the project has the potential to help create up to 1.5 million direct and indirect jobs in Ethiopia, contribute to the country's sustainable future growth, and increase both financial and social inclusion for Ethiopians.

"MIGA is pleased to help people in all regions of Ethiopia, as the country increases access to high-quality digital services," said Hiroshi Matano, Executive Vice President, MIGA. "The creation of Safaricom Ethiopia is one of the largest foreign direct investments into Ethiopia, and with this guarantee, MIGA hopes to stimulate more foreign direct investment in other sectors of the Ethiopian economy." 

"Ethiopia has a large, young and entrepreneurial population that can unlock the country's economic potential as we advance digitalisation. It is great to have the World Bank units with us as part of the international funding coalition behind Safaricom Ethiopia," said Michael Joseph, Chairman of the Board of Safaricom Ethiopia.

The project follows more than four years of World Bank Group engagements in Ethiopia aimed at opening the telecommunications sector to private sector investment and supporting market liberalization. In 2020, IFC advised Ethiopia's Ministry of Finance and the Ethiopian Communications Authority in designing and tendering the nation's first full-service telecom licenses and associated spectrum. The license was awarded in May 2021. The successful IFC advisory mandate resulted in a $850 million license fee payment and will generate as much as $8 billion in new investments over the next decade, making it one of the largest foreign direct investments in the country.

IFC's investments and MIGA's guarantees in the digital infrastructure sector are helping to connect the unconnected and to create opportunities, particularly in Africa and in fragile and conflict-affected countries. Over the last decade, IFC committed and mobilized more than $7 billion in digital infrastructure and services, with more than $2.5 billion committed between July 2020 and June 2022. With this project, MIGA's contribution to the enhancement of the digital infrastructure reached $1.87 billion over the last decade, mainly in fragile and conflict affected countries.

About IFC  

IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. IFC works in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.


Source: IFC