Standard Bank partners with Safaricom to invest R2.4bn in Ethiopia's digital infrastructure

Standard Bank, Africa’s biggest bank by assets, has partnered with Safaricom Telecommunications, Kenya’s largest telecommunications provider, to provide funding of $138 million (R2.4 billion) as part of investment towards Safaricom Telecommunications Ethiopia (STEP).

The bank said in a statement on Wednesday that it acted as the sole arranger, lender, and facility agent on the term facility to STEP and played an advisory role.

Standard Bank’s financing facilitates Safaricom’s ongoing rollout of digital infrastructure and services in Ethiopia.

The move comes hot on the heels of Vodacom Group announcing last week it  will spend about R35.77 billion  to acquire a further 20% stake in Safaricom, bringing its stake to 55%, as the Kenya government moves to raise additional capital instead of raising taxes or debt.

Business Report reported that the South African telecoms group said it will acquire 15% of the shareholding from the government of Kenya and 5% from Vodacom's parent, the UK-based Vodafone group. The deal gives Vodacom control over its biggest African market - Safaricom holds about 62 million customers, more than the 46.1 million customers Vodacom holds in South Africa, and roughly the same size of the group's 51 million customers in Egypt.

“We are honoured to have partnered with Safaricom again in enabling and supporting their on-going vision to driving digital transformation and inclusion in Ethiopia” said Anthony Ndegwa, executive vice president for Telecoms, Media & Technology at Stanbic Kenya’s Corporate and Investment Banking.

The two-businesses worked side by side in the development of the financial solutions that were bespoke to the business while responsive to the market’s needs.

Peter Ndegwa, Safaricom CEO said, “As a business, we are guided by innovation and strategic partnerships we aim to transform lives at scale - empowering youth, entrepreneurs, and underserved communities to fully participate in Ethiopia’s digital economy and realise the promise of shared prosperity by 2030." 

“Through this partnership we are given the opportunity to pursue this goal and grow further to digitally enable Africa,” added Ndegwa.

The telecommunication company acquired licence to operate in Ethiopia in 2021, and Standard Bank was one of the advisors and financiers who worked with them as they deployed services and built the network in the country.

The government of Ethiopia has also been deliberate in growing their economy through adaptation of regulations, which has resulted in a significant growth in the uptake of internet. According to the World Bank report, Empowering Ethiopians by Laying the Digital Foundations for Economic Growth, between 2020 and 2024, at least 4 million more people gained internet access, increasing coverage from 15 to 19 percent of the population. Although each of the new mobile users has access to broadband internet, not all use data, so 4 million is a minimum estimate for new internet users.

Safaricom recently announced 10.1 million three-month active customers, after only being in the Ethiopian market for four years.

Taitu Wondwosen, the head of Standard Bank in Ethiopia, said, “As a bank we are dedicated in partnering with relevant parties to drive infrastructure development that will help accelerate the growth of the continent’s economy. Digital and financial inclusion in the African market has been one of the key objectives to break barriers and enabling individuals, communities and businesses to access affordable financial products and services that meet their needs."

BUSINESS REPORT