Enhancing Digital Transformation: Innovations and Obstacles in East Africa

By Robert van Breukelen, CEO at Itemate Solutions

The telco sector is poised to play a central role in Ethiopia’s economic and digital transformation, but should learn from other countries to avoid common pitfalls and accelerate development.

In recent years, countries in the eastern and north-eastern African region have launched several exciting initiatives aimed at accelerating the adoption of digital technologies.

Digital transformation in East Africa

Powered by the immense success of the telco sector, countries like Kenya, Rwanda, Uganda and the DRC are making strides toward becoming active, leading players in the continent’s digital economy through national digital and ecommerce strategies, and the roaring success of MPESA, for example.

And to the north, an incredible transformation is unfolding at the horn of Africa.

Ethiopia rising

Ethiopia, with economic growth of 7.2% last year and a goal to reach middle-income status by 2025, launched its Digital Transformation Strategy in 2020 with the aim of harnessing technology to drive greater citizen engagement and improve the quality of life for its 128 million inhabitants.

While the country’s internet penetration is only at 35% – accounting for 36 million people – its telco sector is poised for rapid growth. Thanks to the success of incumbent Ethiotel and the entry of Safaricom into the Ethiopian market, the telco sector may help drive greater digital inclusion throughout the country and accelerate the country’s transformation.

Overcoming common telco growth challenges

However, several challenges remain. According to the World Economic Forum, to unlock the true potential of digital transformation, Ethiopia needs to prioritise several critical elements, including improving internet access in rural areas and expanding mobile use cases that cater to the needs of a diverse population.

The country’s diversity – ranging from 5G-enabled metros such as Addis Ababa to sparsely populated rural areas – requires an adaptable telco strategy that ensures the needs of all citizens are catered for. Here, telcos need to be able to personalise services by collecting and drawing on rich customer data.

Take the example of Tanzania. The country is arguably home to a more mature telco market than Ethiopia, but many citizens still insist on using physical scratch cards for airtime top-ups, instead of the far more convenient digital tokens so prevalent in other markets. There, the telco sector works closely with its dealer network to track scratch card sales and distribution to ensure citizen needs are catered for.

By implementing the latest point-of-sale solutions at service centres and throughout a telco’s dealer network, Ethiopia can readily adopt new services such as Mobile Money, remittances, mobile payments and more.

Itemate, for example, has worked closely with telcos throughout Africa to better understand the unique customer and regulatory requirements of each market. These nuances are then adapted into the point of sale that telcos use to ensure the entire sector aligns with government policy and direction.

This can take the form of number management – ensuring mobile numbers are correctly provisioned and recycled – as well as SIM registration that integrates with government systems. Citizens applying for a mobile contract typically need to submit personal information to satisfy the country’s Know Your Customer (KYC) requirements. By drawing on the expertise of partners such as Itemate, Ethiopia’s telco sector can more quickly establish the capabilities that would allow it to comply to government KYC regulations, all the while delivering a positive customer experience.

By taking the learnings from other countries to avoid common pitfalls, Ethiopia can accelerate its digital transformation to the benefit of its large and diverse population.