| ADDIS ABABA
ADDIS ABABA May 26 Visa Inc., which is
piloting Ethiopia's first international debit card, is seeking
to persuade the government to ease tight restrictions on banks
in an effort to boost the use of electronic payments.
Ethiopia has one of Africa's fastest-growing economies but
few people in the Horn of Africa nation of 90 million have bank
accounts and the range of services is limited.
The government bars foreign banks, saying it needs to
protect domestic lenders, and local debit cards have until now
not worked abroad.
Jabu Basopo, Visa's manager for southern and east Africa,
said the focus was on persuading leaders of the $43 billion
economy that is dominated by state enterprise about the benefits
of electronic payments.
"They are willing to try some things," said Basopo. "They
have agreed to a pilot for international cards. It is a very
Users of Visa's international card, which is being trialled
by government officials, will be restricted to spending an
amount that has been pre-loaded on the card. Visa said the
government was pleased with the trial so far.
Basopo said local banks lacked muscle to push the central
bank to drive change in an industry where the largest commercial
lender is run by the state and holds two-thirds of all deposits.
He pointed to Rwanda as an example of where
business-friendly reforms to liberalise banking regulations in
the past four years had led to a swift deepening of the market.
"Rwanda was in a similar situation. (Now) every bank is
listed to Visa. All the ATMs in the country are linked to Visa
... and we've seen a lot of growth in terms of retailers
actually accepting Visa cards now," Basopo said.
Retail transactions in Ethiopia are primarily made in cash.
Retailers say a scarcity of debit cards hinders growth in the
retail sector, which is also off-limits to foreign chains.
"If you look at the main efficiencies brought by electronic
payments ... more money stays in the banks and the banks are
able to lend that money back to retailers to do more business,"
Visa, the world's largest credit and debit card company
which counts 10 Ethiopian banks as members, first entered the
country in 2004.
The International Monetary Fund has warned that Ethiopia's
huge public spending on roads, railways and power is suffocating
private lending. It says Ethiopia should row back on public
spending to allow the private sector greater access to credit.
(Editing by Edmund Blair and Erica Billingham)