The Role of Mobile Technology in Driving Digital Transformation of Ethiopia's Economy

This article was originally published on GT Perspectives.

"Digitalization of the economy is a key driver of economic growth and government revenue" in Ethiopia, according to a report published by GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change. The report adds that digitalization "also supports socio-economic development and offers a path towards shared prosperity. By leveraging digitalization opportunities, the Government of Ethiopia can achieve sustainable economic growth and structural changes."

The report's additional key messages include:

• "Adoption of digital technologies across both public and private sectors can impact on economic growth. It can increase agricultural productivity, improve access to global value chains (GVCs) and increase efficiency of government and public services. Access to emerging technologies such as artificial intelligence (AI) and cloud computing are desirable as drivers of digital and financial inclusion which in turn supports human development."
• "Digitalization, including the telecommunications sector reform program and the introduction of mobile money, is a key part of the Ethiopian government's Homegrown Economic Reform Agenda (HGER) since 2019 and implemented under the 2021-2030 Development Plan, the Digital Ethiopia 2025 strategy, the Communications Service Proclamation No. 1148/2019 and the National Bank of Ethiopia's (NBE) strategic plans.

As explained by the report's authors, "In the five years since the launch of Digital Ethiopia 2025 and the start of the telecommunications reforms, the number of people covered by 3G networks has increased by 50%, while coverage of 4G networks has increased by 8 times. This study identifies further opportunities and quantifies the economic value of adopting digital technologies across Ethiopia's economy. It determines how these opportunities can be unlocked through policy reforms, particularly focusing on the key role that the mobile telecommunications sector and mobile money services plays in supporting the process of digitalization."

Regarding policy recommendations, I concur that "Policy reforms must balance short-term objectives with long-term investment and development to realize the full potential of digital transformation in Ethiopia. Reaping the wide-ranging benefits of digitalization will require bold actions to support demand, reduce the cost of supply and promote a policy environment that supports investment."

What is more, "The economic and social value of digital and emerging technologies relies on mobile networks as the backbone of digitalization of the economy and the mobile sector is best positioned to partner with the government to develop a mission-oriented public policy that can catalyze innovation across multiple sectors in the economy."

The report concludes with the identification of  five areas of policy recommendations that the government, the Ethiopian Communications Authority, NBE, and other relevant authorities could undertake to support the development of the mobile telecommunications sector, mobile money services, and the wider process of digital transformation in Ethiopia:

1. Telecommunications reform implementation: Fair and timely implementation of the telecom reforms agenda to enable Digital Ethiopia transformation and inclusion objectives.
2. Industry sustainability and investment: Support industry sustainability and development through investment and tax incentives, including reduce or remove customs duty and other costs on mobile devices to improve affordability and reduce the usage gap.
3. Licensing, spectrum, and regulatory fees: Ensure affordable and predictable licensing, spectrum, and regulatory fees to encourage investment and densification of existing networks, rollout of new generation networks and improve affordability of services.
4. Mobile money and payments: Discourage distortive taxation on emerging mobile money services, and continue implementing regulatory reforms to enable digital financial strategy and inclusion objectives.
5. Demand-side policies: Support demand by continuing implementing digital government and digital ID programs, and incentivizing adoption of digital technologies by consumers and firms.

What are your recommendations for how mobile technology can drive the digital transformation of Ethiopia's economy?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.