M-Pesa Struggles in Ethiopia as Users Spend Just 50 Cents a Month
Safaricom’s flagship mobile money platform, M-Pesa, is struggling to gain commercial traction in Ethiopia, raising fresh doubts about the telecom giant’s most ambitious international expansion.
Despite billions of shillings invested, Ethiopians are spending an average of just 50 cents (about Sh65) per month on M-Pesa transactions—a stark contrast to Kenya, where users generate more than Sh374 per month, over 700 times higher.
Financial disclosures show that M-Pesa Ethiopia generated only Sh12.2 million ($94,000) in revenue over the nine months to December 2025 from 2.36 million active users. The weak performance has intensified investor concerns over Safaricom’s long-term strategy in Africa’s second-most populous country.
Safaricom paid $150 million for the M-Pesa licence and $850 million for a telecoms licence, with total infrastructure investments now exceeding $2.27 billion.
“M-Pesa users in Ethiopia are mainly buying airtime and data,” said Wim Vanhelleputte, acknowledging the platform’s limited monetisation. “About 20 per cent of sales go through M-Pesa via self top-ups.”
Cash Culture Undermines Digital Payments
The core challenge is behavioural. Unlike Kenya—where person-to-person transfers fuelled M-Pesa’s growth—Ethiopian users primarily rely on cash, using M-Pesa mainly for fee-free services like airtime purchases.
According to World Bank data, 99 per cent of small-value transactions in Ethiopia are conducted in cash, and a similar proportion of utility bills are paid physically. By comparison, only 12 per cent of Kenyans pay utilities in cash.
Safaricom has conceded that while banking penetration in urban Ethiopia is relatively high, digital payments have yet to replace entrenched cash habits.
Minimal Contribution to Revenue
M-Pesa accounted for just 0.13 per cent of Safaricom Ethiopia’s total service revenue of Sh9.7 billion during the review period. Data services dominated at 66.97 per cent, reinforcing the view that the Ethiopian operation remains a traditional telecoms business rather than the fintech engine investors expected.
The contrast with Kenya is striking. For the year ending March 2025, M-Pesa Kenya generated Sh161.1 billion from 35.82 million active users, contributing 44.2 per cent of Safaricom’s total service revenue.
Even in 2010—three years after launch—Kenyan M-Pesa users generated an average of Sh79 per month, far exceeding Ethiopia’s current performance.
Falling Revenue Despite Network Expansion
Worryingly, M-Pesa revenue in Ethiopia has declined sharply. Earnings fell 64.3 per cent, from Sh24.4 million in September 2024 to Sh8.7 million by November 2025, despite a 358 per cent increase in merchant outlets to 30,700 locations.
Safaricom has framed the slow uptake as a long-term infrastructure play aligned with Ethiopia’s financial reforms. In October 2025, M-Pesa integrated with EthSwitch, enabling interoperability with over 30 banks and QR payments across 50,000 merchants.
However, analysts caution that interoperability alone may not drive adoption where consumers see little incentive to pay transaction fees.
High Stakes, Uncertain Payoff
Ethiopia’s population of 120 million makes it one of Africa’s most attractive long-term growth markets. Safaricom aims to break even by 2027, banking on subscriber growth and improved monetisation.
Yet the financial pressure is mounting. Annual licence costs of $66.7 million exceed Safaricom Ethiopia’s FY2024 revenue of $53.6 million, while the unit posted losses of $325 million in 2024, according to World Bank data.
Although losses narrowed by 53 per cent year-on-year, Kenya remains Safaricom’s profit engine. During the six months to September 2025, reduced Ethiopian losses helped lift group profit 52.1 per cent to Sh42.7 billion, driven largely by M-Pesa Kenya’s 14 per cent revenue growth.
For now, Ethiopia represents more promise than profit. The reality that users spend just 50 cents a month raises a difficult question for investors: is M-Pesa’s struggle temporary, or has Safaricom fundamentally misjudged Ethiopia’s readiness for its mobile money model?