BY MENGSTEAB TESHOME & HIZKEL HAILU
In several parts of the world and even in Africa, paying for food, schooling, clothes, public transport and other social services using electronic payment system (E-Payment System) is becoming common. Mobile money is also being carried out in Ethiopia too, with COVID-19 prevention mechanism as a catalyst.
Despite Ethiopia has started implementing different digital technologies which are significant for marketing years ago, the current government of Ethiopia has recently launched National Digital Payment Strategy (NDPS).
National Bank of Ethiopia (NBE) also has launched National Digital Payment Strategy (NDPS) recently which will be implemented in the coming three years aiming at digitalizing the financial sector and encouraging the economic growth of the country.
Speaking on the occasion, NBE Payments and Settlement System Directorate Director, Martha Hailemariam, highlighted the importance of the technology in facilitating the modern financial system at individual and public level transactions.
She said that the system enables every individual to make payments with speedy, dependable and more affordable manner. It further increases customers in the finance service and boosts sector’s competence. Through digital payment system, both payers and receivers use digital modes to send and receive money without any physical contact thereby saving money and energy, she noted.
Vice Governor of NBE, Solomon Desta on his part said within the context of Ethiopia’s commitment to achieve a digital Ethiopia by 2025, the NDPS, which was recently approved by council of ministers, has been launched aiming at achieving the goal of the nation to become a middle income country by 2025.
He indicated that the National Digital Payment Strategy can help Ethiopia to achieve sustainable development goal, drive greater efficiency to payments service, transparency, women’s economic participation and financial inclusion thereby advancing Prime Minister Abiy Ahmed’s Digital Ethiopia 2025 vision as well as attaining the countries SDGs.
The NDPS is spearheaded by the NBE in coordination with the Ministry of Finance, Ministry of Innovation and Technology and other key stakeholders of the Ethiopian digitization ecosystem, so as to digitalize the financial system. As to him, the new strategy will bring payment efficiency across all sectors and improve efficiency of service delivery. It will also stimulate digital financial inclusion; create dignified jobs, and narrow financial gaps.
“Digital payment” is a vast, complex and multifaceted topic. As a result, advancing digital payments requires the combined efforts of stakeholders across many sectors and segments of the economy. For this reason, the NDPS has been developed in a highly collaborative manner, with wide and deep consultation with stakeholders across the payment ecosystem.
Approached by The Ethiopian Herald Metages Getachew, Ethiopian born and London resident, said in today’s digital world, everything is available online including; information, products, and services. As a result, developing countries such as Ethiopia could be benefited from the digitized economy by developing a secured method of payments, to support the economy.
As to Digital Commerce 360, Amazon’s revenue from U.S. consumers’ web purchases amounted to 30.7 percent of U.S. online retail sales in the first quarter of 2021. In 2020, e-commerce spiked to account for approximately 21.3 percent of U.S. retail sales, meaning Amazon accounted for about 6.5 percent of all retail spending.
Metages further stated that some developing countries, such as Ethiopia could not take advantage of the growth of the economy due to various reasons. Lack of awareness about the benefit of digital technologies and lack of infrastructures are among others. Ethiopia was one of the ancient countries in the world that started civilization in the trading economy.
History tells us before 600 B.C. people used to exchange goods for trade which is called the barter system then in 700 B.C. gold started to be used as a currency for the country’s economy. In the 18th and 19th centuries, Maria Theresa thalers and blocks of salt called “amole chew” (አሞሌ) served as currency in Ethiopia.
The thaler was known locally as the Birr (literally meaning “silver” in Ge’ez and Amharic) or talari (ታላሪ). Then the talari (thaler, Dollar, Birr) became the standard unit on 9 February 1893 and 200,000 dollars were produced at the Paris Mint in 1894 for Menelik II).
The above histories also bear witness that the methods of exchange and types of currencies have been changed through time as people become civilized. Now, the world economy has been changing more swiftly by the interference of the booming digital technologies.
According to him, paper money is so bulky to transfer from place to place and it is undoubtedly risk to travel with it. In addition, people might choose digital money transaction than having paper money on hand. “If our finance cannot be supported by such technologies, it is also difficult to save our money,” he added.
Moreover, paper money is more likely exposed to be stolen, robbed and waste. Therefore, he said that digital economy is the best solution to avoid such threats. One of the main advantages of the crypto currency is its safeness as everyone would have his/her unique code in the block chain.
While mentioning that developing countries such as Ethiopia can be benefited from the digitized economy, he explained that this could save time to make effective trading as well as tax collection. Therefore, the government has to encourage the youth to join the ICT sector and should provide the pieces of training to create digital applications and ideas.
Having a secured digitized payment method undeniably will encourage entrepreneurs to participate in the digitized economy which realizes the society’s desire to immerse in digital technology. As to him the current Ethiopian government has understood the effectiveness of digital technologies on a given country’s economic growth.
The recently launched digital transformation strategy by the government of Ethiopia is of paramount importance to leverage digital technologies in fostering development and growth for every citizen. But the government should work hard to create awareness among its citizens.
While utilizing digital technologies, Ethiopians have to adopt a new way of trading which is investing in stocks, commodities, directories and others to sustain a better future life, he asserted.
Chairperson of the Board for United Bank and Economist, Zafu Eyesuswork, for his part said international companies that use e-commerce systems are effective. He noted that the e-commerce system plays a key role in making the trading system more equitable. In the current context of the country, it will greatly help to ensure the smooth running of trade in the country by preventing intrusion and fraud
Noting that e-commerce is a system that can control and benefit both national and international trading system, he asserted that it helps to reduce illegal brokers’ interferences among the merchant and the consumer. In addition to benefiting the trader and the seller, its role in domestic and foreign transactions will be significant coupled with bringing significant impact on the economy.
He further pointed out the system, which is being implemented in various parts of the world as well as in Ethiopia will eliminate the illegal trade chains in the trading system.
“Therefore, we need to share experiences from the successful countries across the world in order to be more effective through solving problems and some threats that would likely to be appeared in the sector. Better experiences should be gained from successful countries in the sector,” he said.
As the vision for the NDPS is to build a secure, competitive, efficient, innovative, and responsible payment ecosystem to support a cash-lite and financially inclusive economy, scholars suggested that the people at large should work in unison with the government for further implementation and economic growth afterward.
Apart from the national digital payment strategy launched by NBE, it was learnt that currently Ethiopia and Ethiopians are implementing different electronics market mechanisms. M-birr, Tele-Birr, Cash-Go, Hello cash, Derash, Mobile banking, E-Birr are among others.
The Ethiopian Herald October 17/2021
