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Safaricom suspends operations in Ethiopia's Amhara

Conflicts in Amhara, Ethiopia has forced the region's telecom giants Safaricom to suspend its operations

Safaricom Ethiopia has shut down its sites in Amhara, the country's second-largest region, following the federal government declaring a six-month state of emergency on August 4, 2023, due to a crisis between the Ethiopian National Defence Forces (ENDF) and the Fano militia (a part-time militia with no formal command structure) on August 1, 2023. This decision means Millions of people in the Amhara region can no longer access Safaricom's services.

Source: Africa Business Communities

Although fewer than 40% of its 120 million population uses mobile phones, the Ethiopian market remains highly valuable to Safricom as it generates substantial returns for the company. Since the company entered the Ethiopian market in October 2022, it has enjoyed operational efficiency on the winds of the country's stability and had plans to invest about $300m a year into Ethiopia until 2032, having already invested over $1.2bn.

Source: Safaricom

Unfortunately, the conflict in Amhara could dent Safaricom's vision to lay a strong foothold in the Ethiopian market and the company's push to digitalise the country's economy, as the conflict might affect a significant number of Safaricom's 1,272 sites in Ethiopia and hopes of meeting its 3000 sites target by 2024. Also, since its launch in Ethiopia, Safaricom has added over 600 jobs and has a workforce of about 909, with 81% comprising locals who could now be on the verge of being unemployed if conflicts persist.

Source: Reuters

Notably, Ethiopia has been heavily dependent on cash, and the only mobile operator in the market is the state-owned Ethio Telecom, which launched its mobile money service Telebirr in May 2021. Safaricom has plans to launch its mobile money service in the country. However, if the conflict in the country escalates, it could become a barrier to the company's expansion and Ethopia's financial inclusion and development.

Focus Box

Company Name:  Safaricom

Industry: Telecommunication

Founded: 1997

CEO: Peter Ndegwa

Funding raised: $2,600,000,000 (2017)

Revenue: N/A

Customer base: 29,600,000

Key countries: Kenya and Ethiopia