Safaricom PLC, which is the lead partner in an international consortium named the Global Partnership for Ethiopia was recently awarded the licence to operate telecom services in Ethiopia, however, it appears the telcos plan to conquer Ethiopia may have hit yet another wall after a US State financier threatened to recall its loans to the consortium following an escalation of armed conflict in the horn of Africa.
This is even as the safaricom-led consortium this week received a telecommunication operator licence in Ethiopia after incorporating a local company, setting the stage for Kenya’s largest telco to start operations in the market of over 100 million people.
“The ECA has granted a nationwide full-service Unified Telecommunications Service License to the Safaricom Telecommunications Ethiopia PLC effective from 9 July 2021, valid for a term of fifteen years from the effective date, and renewable for additional terms of fifteen years subject to fulfilment of all license obligations,” ECA said.
According to reports, the acts of violence against civilians in Ethiopia’s Tigray region could affect the release of $500-million in loans to the consortium. Should the conflict deepen, the US International Development Finance Corporation (DFC) says it will forgo the investments altogether and pressure the telecoms in the consortium to seek finances from elsewhere.
“DFC is working closely with its partner agencies in the US government to monitor the situation in Tigray and will carefully consider its impact on any potential financing of the Vodafone consortium.”
Business Daily reports that Safaricom had earlier disclosed that the US development financier was granted approval to make select investments in the country, including funding the consortium and its plans in the country. Led by Safaricom, the group also includes UK’s Vodafone and South Africa’s Vodacom Group, among others.
“The board approval signified initial DFC willingness to consider a loan to the consortium in the event it wins a licence but does not obligate DFC to move forward with the transaction,” the US State development agency said, quoted by Business Daily.
DFC’s financing of the consortium has now been thrown into doubt over the US economic sanctions against Ethiopia related to the ongoing conflict in Tigray, which has killed thousands of people and displaced even more.
The current conflict is between the Ethiopian military, its allies from Amhara and neighbouring Eritrea against armed forces from Tigray.