Millions benefit from Ethiopia mobile money service M-Birr, which is more advanced than the mobile banking technology most Europeans use

Amadi leans back against the mud wall of her home and recalls the days she used to spend queueing in the burning Ethiopian sun to receive her social security payments. Often the money simply wouldn’t be there in the end and Amadi, an old woman, would trek hours back to her remote village with no money, only to go through the same ordeal another day. “There were a lot of troubles. It was very hard,” she says. “But now we’re in a much better condition.”

Amadi is one of two million Ethiopians who benefit M-Birr, a mobile banking service that takes its name from the birr, the country’s currency. Now her government social payments are paid directly each month into her mobile M-Birr account at the regional Microfinance Institution (MFI). Instead of the long hike to collect her cash, she visits a nearby agent to make a withdrawal. “I am respected and I get my money,” she says.

Amadi outside her house ©M-Birr

M-Birr aims to be the Ethiopian spearhead for the mobile phenomenon that’s transforming finances for ordinary Africans. In Kenya, over 40 percent of national GDP moves through M-PESA’s mobile payments system. Apart from a few countries where mobile banking has taken hold, the continent still relies heavily on cash payments. Logistics are not easy in Africa, so a mobile network allows money to move around safely and simply. “Mobile has already proved to be an effective way to increase financial inclusion,” says Hannah Siedek, a microfinance expert at the European Investment Bank.

Impact Financing Envelope backing

The EIB is backing the next stage of M-Birr’s expansion with a EUR 3 million equity investment—to which a further EUR 1 million may be added—made under the Impact Financing Envelope, a EUR 800 million financing tool that allows the Bank to take on more risk in Africa, the Caribbean and the Pacific than it does in regular projects. It’s the first time the EIB has invested in mobile financial technology in Africa and is a co-investment with DEG, a subsidiary of Germany’s KfW.

Before its full roll-out in 2015, M-Birr ran a one-year programme that enabled five local microfinance institutions to offer mobile money services. The microfinance institutions offer M-Birr services in more than 7,000 locations—M-Birr MFI branches and agents in shops, pharmacies or petrol stations around Ethiopia. The company, founded by a Frenchman and an Irishman, today processes social payments for over 750,000 households with around three million beneficiaries, as well as serving 280,000 mobile-money core clients. That’s a transformation for a country where only one in five people have a bank account, while half of all adults own a mobile phone. “We play a big role in social inclusion,” says M-Birr Executive Chairman Thierry Artaud. “The EIB investment will allow us to develop the business and allow the country to grow.”

An M-Birr branch in an Ethiopian village ©M-Birr

Communities served

Bakala, a shop owner, is an M-BIRR agent for the local MFI. Of 125 households in his village, all but three receive government social payments. The regularity of the M-Birr system allows recipients to plan their finances in a way that wasn’t possible with the previous system. It’s also good for Bakala’s business. He plans to take a loan to buy a machine for grinding corn meal and to open a restaurant where he’ll employ several workers, because so many people now visit his shop.

But that’s not the only reason he likes M-Birr. “M-Birr improves my community,” he says. “I am serving my community. This mobile service has made a big impact on my community.”

Bakala in his shop ©M-Birr

“I like it better this way”

Outside the shop, an old woman named Mareh pulls a cellphone from a pouch round her neck. Most M-Birr users buy a phone for only a few dollars, but those who can’t afford even that can get a scratch card with a PIN code that they enter during their visit to the M-Birr agent to recover their social payments. Mareh gestures emphatically with her phone as she lists the improvements to her life brought by M-Birr.

Like Amadi, she used to be exhausted by long walks to distribution points for government money that often turned out not to be available. “It’s not easy for me to use a phone, but the agent helps me and I get my money through M-Birr,” she says. “I like it better this way.”

With the EIB investment, M-Birr plans to expand into other sectors of the Ethiopian economy, serving small businesses for which it can be costly or dangerous just to move daily revenues from one place to another in cash, as well as supporting the microfinance institutions delivering the M-Birr Service in setting up more agents and branches.

In a country the size of France and Spain combined, a broader network is vital. “M-Birr and its partners are opening up Ethiopia to a whole world of mobile money that will have a tremendous impact on the daily life of users,” says Benoit Denis, an economist in the EIB’s digital economy division. “The company’s really meeting a need. Their aim is to spread access to the benefits of mobile money across all sectors of the economy. That’s what we want to help them do.”

M-Birr brings mobile banking to remote villages like this one ©M-Birr