Telebirr Has 52 Million Users. M-Pesa Ethiopia Made USD 77,000 in a Year. Here Is Why the Gap Exists.

In August 2023, Safaricom launched M-Pesa in Ethiopia. The Kenyan telco had paid USD 150 million for the mobile money licence alone, on top of an USD 850 million telecom licence, and its consortium including Vodacom and the IFC had pumped over USD 2.27 billion into the venture. The thesis was straightforward: take the platform that turned Kenya into the most successful mobile money market in the world and replant it in Africa's second most populous country of 125 million people with a median age of 19 and expanding 4G coverage. Two and a half years later, the numbers make for uncomfortable reading at Safaricom's Nairobi headquarters. M-Pesa Ethiopia had 5.2 million active users following the EthSwitch integration, and generated approximately USD 77,000, KSh 14.4 million, in revenue over the full FY26 audited year. M-Pesa contributed 0.071 percent of Safaricom Ethiopia's service revenue. The Ethiopia unit posted a group loss of KSh 47,148.6 million, approximately USD 364 million, in profit after tax terms for FY26. Annual licence costs alone total USD 66.7 million. Safaricom is now targeting EBITDA break-even by FY27 and has pivoted to introducing savings and credit products, hoping to follow the same arc that carried M-Pesa Kenya into full banking services, but in Kenya that took five to ten years. In Ethiopia, Safaricom is trying to compress 18 years of learning into 18 months. Meanwhile, Telebirr, the state-owned platform that launched two years before M-Pesa received its Ethiopian licence, had crossed 52.56 million customers, processed 4.93 trillion birr in cumulative transactions equivalent to approximately USD 30.7 billion, and was moving 7.6 billion birr daily. It had 310,000 merchants, 320,000 agents, 13.22 billion birr in micro-loans disbursed to 6.88 million users, and 11.24 billion birr in digital savings mobilised. This is not a story about two mobile money platforms. It is a story about two diametrically opposed theories of how to build a digital economy in Africa, and what happens when one country exports a strategy that worked into another country with fundamentally different ground conditions, a different state posture, and a different relationship between government and market. Two countries, two playbooks Kenya's mobile money revolution was, at its core, a bottom-up development the state chose not to interrupt. When Vodafone and Safaricom approached the Central Bank of Kenya in 2006, mobile money had no regulatory category. The CBK issued what became a famous letter of no objection, a deliberately permissive note that allowed M-Pesa to launch in March 2007 while the regulatory question remained open. Customer funds had to sit in trust accounts. Beyond that, Safaricom was free to design the product as it saw fit. Banks lobbied hard against it. A 2008 audit cleared M-Pesa. By 2011, the platform had 17 million users. By Q1 2025, M-Pesa controlled 90.8 percent of Kenya's mobile money market. Kenya's approach was reactive: codifying what the market had already proven rather than pre-determining what the market should become. Ethiopia chose the opposite. In 2020, two months into the COVID-19 pandemic, Prime Minister Abiy Ahmed's cabinet approved Digital Ethiopia 2025, a comprehensive top-down strategy organised around four pillars: infrastructure, enabling systems, applications, and ecosystem. The roadmap explicitly tied digitalisation to four priority sectors and set hard targets for digital ID enrolment, telecom liberalisation, and government service digitisation. The state did not wait for market signals. It manufactured them. Five years on, the government's scorecard is striking by any measure. Approximately 900 public services have been digitised. Over 30 million Fayda digital IDs have been issued against a 90 million target by 2028. More than 3,000 digital firms have been licensed by the Ethiopian Communications Authority. 4G population coverage jumped from 37.5 percent to 70.8 percent in a single fiscal year. Mobile money users, near zero in 2020, now stand close to 60 million. Telebirr is not a fintech. It is the state. That distinction explains almost everything about the gap between the two platforms' performance. Telebirr is not an application built by a technology company that secured a licence from a regulator. It is an extension of Ethio Telecom, which is itself an extension of the Ethiopian state. The platform was layered onto an existing distribution machine: Ethio Telecom had over 300,000 retail outlets and 1,000 service centres before Telebirr existed as a product. It was integrated into government services from launch, covering tax payments, utility bills, and university fees. The Fayda digital ID, now embedded across 18 banks and counting, gives the state a single rail to pull every citizen into the formal financial system simultaneously rather than sequentially. Crucially, Telebirr launched with two full years of monopoly. Safaricom's mobile money licence was held back until August 2023. By the time M-Pesa entered the market, Telebirr already had approximately 36 million users. This was not an accident of regulatory process. It was industrial policy applied to financial technology. The product was not designed to win a market. It was designed to be the market. In December 2025, just two days after Safaricom launched the M-Pesa Lehulum app, a telco-agnostic version intended to let any Ethiopian use M-Pesa regardless of their SIM provider, Ethio Telecom blocked access from its network, locking out roughly 90 percent of Ethiopia's mobile users. The World Bank's October 2025 Ethiopia Telecom Market Assessment flagged Ethio Telecom for holding significant market power in six segments and pricing services below cost in ways that squeeze competitors. The protectionism element is real. But it is not the complete explanation for the gap. Protectionism explains why M-Pesa cannot grow as fast as it otherwise might. It does not explain why the revenue per user is this low even among the users M-Pesa does have. The cash habit is stickier than anyone expected In Kenya in 2007, M-Pesa solved a single urgent problem: urban workers needed to send money to rural relatives and the alternative was handing envelopes of cash to bus drivers. Approximately 20 percent of Kenyan adults had bank accounts at the time. The product fit the pain point precisely and adoption followed the fit. In Ethiopia, that specific pain point does not exist at the same intensity. The country has roughly 30 active banks operating over 8,250 branches and ATMs across a population of 125 million. Banking penetration in urban areas is relatively high by sub-Saharan African standards. Cash is functioning: World Bank data shows 99 percent of Ethiopians pay utility bills in cash, compared to 12 percent in Kenya. Safaricom Ethiopia CEO Wim Vanhelleputte has been direct about the reframing this requires: M-Pesa Ethiopia is not solving the money transfer problem. It is trying to replace cash payments with digital payments. That is a materially harder proposition. Replacing a working habit is harder than filling a vacuum. The M-Pesa Ethiopia data confirms the behavioural reality. Approximately 20 percent of airtime and bundle sales now move through the M-Pesa channel, mostly self top-ups, a transaction type that generates no fee. The merchant base doubled to 70,045. Transaction volumes grew 168.7 percent. But the revenue these activities generate at FY26 came to USD 77,000 across the full year because the transaction types dominating user behaviour are the free or near-free ones rather than the fee-generating financial services that drive M-Pesa's Kenyan economics. Ethiopia's unbanked population figure, less than half of adults in 2022 compared to nearly 80 percent financially included in Kenya, 77 percent in Rwanda, and 66 percent in Uganda, also masks something important. The population that has not been formally banked is not financially unsophisticated or unserved. It uses equb, the rotating savings groups that function across Ethiopian communities with high efficiency, and manages cash flows through informal systems whose reliability is proven. Mobile money in Ethiopia has to displace a working informal system rather than fill an empty space. That is a fundamentally different adoption challenge. Three structural differences that explain the gap The analysis that reduces the Telebirr versus M-Pesa Ethiopia gap to protectionism misses three structural differences whose combined weight is more explanatory. The first is that the incumbent is the state itself rather than a commercial entity that happens to have state ownership. Safaricom is 35 percent government-owned but operates as a commercial entity with profit obligations to shareholders. Ethio Telecom is the state. When state policy and state telco strategy are identical, regulatory neutrality is not a default position the system can drift toward without active political construction, and there is no internal constituency with incentives to demand it. The second is that the sequencing was deliberately reversed from Kenya's approach. Kenya let the product run and wrote regulation around what the market proved. Ethiopia wrote the strategy first, sequenced the licences to give the state platform a two-year monopoly head start, built the digital public infrastructure including Fayda and EthSwitch, and then opened the door to competition selectively and on terms the state chose. Telebirr was not competing for a market. It was occupying one the state had pre-built. The third is the cash habit. The intensity of the mobile money adoption problem in Ethiopia is lower than it was in Kenya in 2007 because the problem mobile money solves is less acute. When the problem is less acute, adoption is slower, and when adoption is slower in a market where the state platform already has 52 million users and preferential integration with government services, the path to competitive user economics is longer and more uncertain. What the Ethiopian model has actually delivered Ethiopia's Digital Ethiopia 2025 framework is doing exactly what it was designed to do, and it is important to be precise about what that is before concluding it has failed because M-Pesa is not profitable. Telebirr is on track to become the rails for digital ID-linked welfare disbursement, tax collection, utility payments, and SME credit. It has mobilised USD 14.79 million in remittances by April 2025. It feeds revenue and foreign exchange earnings directly back into a state telco that is being prepared for partial privatisation. The state captures the value, controls the data, and dictates the pace of the digital economy's development. By the metrics Addis Ababa has defined for itself, financial inclusion, formalisation, fiscal capacity, and sovereignty over digital infrastructure, Digital Ethiopia 2025 has largely delivered. What it has not delivered is a competitive market. That omission is not an accidental outcome. It is a design feature. What this means for investors in Ethiopia's digital economy For anyone building or investing in Ethiopia's digital economy, the lesson is not that the market is closed. Ethiopia's 125 million people, its median age of 19, its expanding 4G coverage, its newly licensed securities exchange, and its growing middle class remain one of the largest greenfield opportunities in African technology and financial services. The opportunity is real. The lesson is that the market has a co-author. Strategies that succeeded elsewhere by exploiting regulatory gaps, as M-Pesa did in Kenya's 2007 environment, by undercutting incumbents on price, as Jio did in India, or by scaling first and monetising later, as most of African fintech has attempted, all assume a state that is reactive. Ethiopia's state is not reactive. It writes the brief before the market participants arrive. The path to Ethiopia's digital economy runs through alignment with state priorities: Fayda integration, EthSwitch interoperability, support for the National Digital Payment Strategy 2026 to 2030, and commercial models that position the private investor as a complementary force rather than a competitive threat to the state's digital infrastructure ambitions. Strategies that route around those priorities rather than through them will encounter the same friction M-Pesa has been navigating since its 2023 entry. Two models, two answers The Kenyan model produced M-Pesa. The Ethiopian model produced Telebirr. Both have delivered mobile money at scale: Kenya through a permissive regulatory environment that let private innovation define the product, and Ethiopia through a directive state strategy that defined the product and built the market to receive it. Both approaches worked by their own terms. The mistake that the M-Pesa Ethiopia experience reveals is not that Safaricom made a bad bet. A market of 125 million people with near-zero mobile money penetration in 2021 was a rational investment thesis. The mistake was importing a playbook built for a reactive state into a country whose state is the most active co-author of its own digital economy on the continent. In Kenya, the state stepped aside and let M-Pesa become the market. In Ethiopia, the state was already the market before M-Pesa arrived. USD 77,000 in annual revenue from 5.2 million users against a USD 2.27 billion investment is the cost of that misread. The question Safaricom's board is now answering is whether the ground conditions will shift enough, through regulatory normalisation, growing consumer demand for digital services beyond free top-ups, and the credit and savings products being introduced, to make the Ethiopia investment recover on a timeline the consortium can sustain. The answer is not obvious. But the analysis of why the situation looks the way it does is. FAQ Why is M-Pesa struggling in Ethiopia despite 5.2 million users? M-Pesa Ethiopia generated only USD 77,000 in revenue in FY26 despite 5.2 million active users because the dominant user behaviour is free or near-free transactions, primarily mobile airtime top-ups, rather than the fee-generating financial services that drive M-Pesa's Kenyan economics. 99 percent of small-value transactions in Ethiopia happen in physical cash, and users are adopting M-Pesa as a convenience tool for airtime rather than as a core financial system. How does Telebirr compare to M-Pesa in Ethiopia? Telebirr crossed 52.56 million users and processed 4.93 trillion birr in cumulative transactions by April 2025, moving 7.6 billion birr daily. M-Pesa had 5.2 million active users and generated USD 77,000 in annual revenue in FY26. The gap reflects Telebirr's two-year monopoly head start, its integration into government services from launch, and its position as an extension of the state rather than a commercial competitor within it. Why did Ethiopia give Telebirr a two-year head start before licensing M-Pesa? This was deliberate industrial policy applied to financial technology. Digital Ethiopia 2025, approved in 2020, sequenced the mobile money licence deliberately to allow the state platform to establish market dominance before private competition was permitted. Telebirr had approximately 36 million users before M-Pesa entered in August 2023. The product was designed to be the market rather than to compete within it. What is the lesson for investors in Ethiopia's digital economy? The market has a co-author. Strategies that assume a reactive state, exploiting regulatory gaps, undercutting incumbents on price, or scaling before monetising, will encounter the friction that M-Pesa has been navigating. The path to Ethiopia's 125 million people runs through alignment with state priorities including Fayda digital ID integration, EthSwitch interoperability, and the National Digital Payment Strategy 2026 to 2030, rather than around them. Is the Ethiopian model better than the Kenyan model? They are answering different questions. Kenya's reactive approach produced M-Pesa, the world's most successful mobile money platform, by letting private innovation define the product and trusting the market to validate it. Ethiopia's directive approach produced Telebirr and digital infrastructure at scale by building the market before the competition arrived. Both delivered mobile money to tens of millions of people. The Kenyan model produced a more competitive market. The Ethiopian model produced faster state control of digital infrastructure rails. The mistake is importing one playbook into the other country's context and expecting equivalent results.