Ethiopian Digital Economy.

July 6, 2021

The fundamental conditions needed for a vibrant digital economy—good network connectivity, affordable access costs, and favorable policies.

Until recently, Ethiopia lacked the necessary circumstances for the development of a digital economy. Due to a lack of telecom infrastructure, high network access prices, and a lack of resources, they are virtually missing. The overall population has low levels of digital connectivity. Reforms made in recent years have significantly changed the digital infrastructure and in terms of population, telecom coverage has already surpassed 95 percent of the country.

In terms of telecommunications prices, the significant cost decrease achieved in recent years has increased accessibility much beyond what would have been achievable with merely infrastructure upgrades.

Cepheus estimates Birr 350bn in gross transaction value (equivalent to 11.75% of Ethiopia’s 2021 GDP) and Birr 5bn in net revenue for Ethiopia’s main set of digital economy companies as of 2020.

It is estimated that the size of digitally transacted economic activities in Ethiopia will show a seven-fold increase by 2025, reaching just above Birr 3 trillion or 39% of GDP. The largest revenue pools will likely remain within digital finance and telecom services, followed by marketplace platforms, transportation, and digital media.

Several companies in the digital finance, ride-hailing, and digital media space could see Birr 1bn valuations in a few years’ time. If seen as a stand-alone company and using current valuation metrics of comparable cases, telebirr is likely to be Ethiopia’s first ‘digital disruptor’ to reach dollar unicorn status (with a $1bn-plus valuation) well before 2025.

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