A draft digital payment strategy unveiled by the National Bank of Ethiopia (NBE) this week highlights the inactivity, fraud, fragmentation, and widening rural-rurban divide bubbling beneath the surface of the country’s rapid shift towards digital transactions and mobile money platforms.
The second National Digital Payments Strategy that regulators envision guiding the financial sector for the coming five years was presented at the Skylight Hotel this week during an event that saw the attendance of new NBE Governor Eyob Tekalign (PhD) and Wamkele Mene, secretary general of the African Continental Free Trade Area (AfCFTA).
The document indicates that although Ethiopia boasts a total of nearly 140 million mobile money accounts, only 15 percent of them are active. It confirms that the rapid increase in digital account registrations has not translated into active usage, and argues that this points to “a need for the deployment of catalytic use cases at scale and more compelling value propositions to transition users from registration to sustained activity.”
The gap remains “one of the core ecosystem challenges” alongside a widespread lack of digital and financial literacy, according to the draft.
It details that two-thirds of women and 60 percent of men report not using mobile money because they do not know how—a significantly higher barrier than in peer countries like Nigeria and Kenya.
”This skills gap not only limits uptake but also increases vulnerability to scams and erodes confidence in the digital ecosystem,” reads the draft.
The document states that Ethiopia’s digital financial system absorbed fraud losses in 2024 that amounted to 1.3 billion Birr, making it one of the largest recorded losses since the expansion of mobile money and electronic payment platforms began in earnest a few years ago.
Alongside these losses, the strategy documents a significant rise in cyber threats. NBE reported 4,623 cyberattack attempts in the first half of 2024, a 115 percent increase compared to the same period in 2023.
This escalation demonstrates the increasing cyber-security challenges facing financial institutions and digital platforms but despite the scale of the losses and rising threats, the document confirmed that Ethiopia still lacks a formal system to protect victims of fraud.
“These security challenges are compounded by the absence of a specific regulatory framework that defines liability and establishes clear compensation mechanisms for fraud victims, leaving consumers with slow and often ineffective recourse,” it reads.
The strategy highlights the absence of a national liability system as a critical gap and identifies improving consumer protection as an immediate policy priority under the 2026–2030 plan. It recommends developing a harmonized compensation and liability framework to ensure “clear, consistent, and enforceable protections for consumers” across all digital payment channels.
On the other hand, the NBE’s proposed strategy described government digital payments as fragmented and closed, identifying this disharmony as a major structural issue.
It states that for instance, many government payment flows, both collections such as taxes, fees and disbursements like social transfers, and salaries, remain fragmented on account of bilateral agreements with financial service providers (FSPs) and cash-based distribution.
“The existing digital government payment platforms are closed-loop systems which restrict interoperability and constrain competition and consumer choice in government digital payments and collections,” reads the document.
Regulators urge for a unified e-government service platform to centralize payment flows, proposing the creation of a digital platform to facilitate the efficient and transparent delivery of government-to-person (G2P) payment.
The platform would allow recipients to choose their preferred payment service provider, eliminating the current practice of assigning beneficiaries to specific providers, according to the draft.
The document also sets an ambitious target to increase the value of annual digital payments from 82 percent of GDP in 2024 to 750 percent by the end of the decade.
While Ethiopia’s digital transaction volume has grown exponentially in recent years, the draft concedes that much of the growth is owed to compulsory use cases such as the mandatory digitization of fuel payments, which processed over 176 billion Birr between August 2024 and May 2025.
The document lists fuel digitization as a key catalyst but acknowledges that widespread voluntary adoption still remains limited.
It highlights “underdeveloped” merchant acceptance infrastructure as another obstacle, noting that as of June 2024, Ethiopia had just over 14,000 point-of-sale (POS) terminals or less than 18 per 100,000 adults. The figure pales in comparison to Kenya’s 136 or Nigeria’s 2,139.
Only a quarter of registered mobile money merchants are active, and merchant payments accounted for less than 0.2 percent of total digital transactions in 2023/24, according to the document.
Regulators also addressed the growing divide between digital payment adoption in rural and urban areas. They cited a study from 2024 which reported that 40 percent of urban adults had made a digital transaction within the past year, compared to just 16 percent of rural adults.
The document concludes that “digital payments are becoming mainstream in cities, but cash remains dominant in rural regions,” driven by limited connectivity, fewer agents, and weaker merchant acceptance outside major towns.
Another major structural challenge highlighted in the strategy is the lack of a national data-exchange layer, leaving financial data siloed within institutions and preventing providers from offering digital credit, insurance, savings, and other data-driven services at a scale needed in the economy.
Regulators say they want to establish a centralized data exchange infrastructure by 2030 in a bid to improve interoperability, data-driven innovation, and public-service delivery efficiency.
The draft strategy states that the NBE will require all licensed financial institutions to adopt the ISO20022 messaging standard, noting that it will be mandated within six months, with a one-year window for market implementation .
According to the document, this will enable “enriched data exchange” and align the national payment system with global standards. It also proposes establishing a national shared-agent platform to improve viability in rural and low-density areas stating that a new independent entity will “deploy, maintain, and govern the network’s technical infrastructure, and day-to-day operations”.
It calls for revising the existing agent regulation by creating two separate regulations for banking agents and mobile-money agents, both of which will formally enable shared agent networks to reduce costs and expand reach.
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