Written by: Sleepy.txt, Beating
In China, mobile payment is a revolution about "convenience." Whether in bustling cities or remote villages, blue and green QR codes have turned our mobile phones into digital wallets. In our understanding, mobile operators (China Mobile, China Telecom, and China Unicom) are defined as mere "data pipelines," while the real financial and payment battle takes place between the two giants, Ant Group and Tencent.
But if you cross the Indian Ocean and set foot on the red soil of East Africa, this business logic will be instantly crushed.
Here, operators are not just pipes; they are banks themselves. SIM cards are not just communication credentials; they are bank cards. Whoever controls the communication network controls a nation's financial lifeline. It is this allure of "lifeline" control that has fueled an extremely brutal hunt.
In December 2025, M-Pesa, an African mobile payment giant, was banned in Ethiopia by the "national team" itself.
To break down data silos between operators, M-Pesa launched the ambitious all-network compatible product, "M-PESA LeHulum." In the local language, "LeHulum" means "for everyone." This was originally an experiment with strong financial inclusion goals; M-Pesa hoped to enable every Ethiopian with a mobile phone number to freely transfer and make payments.
However, this product only lasted a few days.
Less than a week after its launch, Ethiopia's telecommunications giant, state-owned Ethio Telecom, intervened directly, blocking M-PESA's mobile data access. Faced with absolute administrative will, even the most sophisticated business logic is no match for a network cable being simply pulled out.
Why is the "national team" willing to bear the stigma of stifling innovation and still take such drastic measures against foreign giants?
The answer lies in those dominant statistics: Ethio Telecom, the "crown prince" of Ethiopia, and its payment platform Telebirr, are an unshakeable behemoth. It boasts 54.8 million users, controls nearly 90% of the country's market share, and generates an annual transaction volume of $43 billion.
For a company like this, when M-Pesa tries to bypass the barriers to connect all users, it no longer sees a competitor, but a predator trying to infiltrate the national treasury and seize control of the financial lifeline.
In the business world, data can sometimes lie, but contrasts that deviate from common sense often point to the truth.
Looking at user numbers, Safaricom's entry into the Ethiopian market appears to be a resounding success. In just one year, its user base surged by 83.7%, surpassing the 11.1 million mark. However, on the other side of the financial statements, M-Pesa's payment revenue plummeted by 45.6% year-on-year.
This contrast reveals the cruel truth behind the Iron Curtain: users can only treat foreign operators as cheap data cards to take advantage of, while the "national team" will still firmly hold onto the business involving custody and clearing.
Ethiopia under the Iron Curtain
In July 2025, a World Bank report titled "Ethiopian Telecom Market Assessment" tore away the last fig leaf from the local market.
According to the objective account in this report, Kenyan giant Safaricom is like a hunter who has ventured into a primeval forest, believing he has mastered advanced weapons, but unaware that he has already fallen into a carefully designed trap.
The first trap is the "ticket." To obtain this ticket to Africa's second most populous country, Safaricom paid a staggering $1 billion licensing fee for 15 years of operation and a mobile payment license.
This means that even if the company doesn't sell a single data package, it will still incur approximately $66.7 million in fixed amortization costs annually. Meanwhile, its competitor, the state-owned enterprise Ethio Telecom, obtained the same license for zero cost.
The second pitfall is the settlement mechanism known as MTR (Mobile Terminal Rate). The logic is simple: when a user of company A calls a user of company B, company A pays a toll to company B. Since Safaricom was a new player, almost every call its users made was essentially a tribute to Ethio Telecom.
According to World Bank estimates, Safaricom pays its biggest competitor nearly $20 million annually for this alone. Furthermore, Ethiopia lacks an independent third-party tower company, forcing Safaricom to lease base stations and fiber optic cables from Ethio Telecom to build its network. This transforms their business competition into a ludicrous parasitic relationship: every new user Safaricom acquires, every kilometer of fiber optic cable it lays, is essentially feeding its biggest competitor.
Despite these heavy burdens, Safaricom still managed to carve out a niche for itself with superior service, surpassing the ten million user mark. Seeing that its "soft" tactics had failed to wear down its competitor, Ethiopia began employing administrative measures to deliver a decisive blow.
In the tax process, the government mandates that all government-related transactions must be processed primarily through Telebirr. Safaricom, a major taxpayer, was surprisingly required to use Telebirr's payment system when paying its taxes.
In the data price war, Ethio Telecom has driven data prices down to approximately $0.16/GB. This is nearly 40% lower than the African average ($0.25/GB).
The World Bank characterized this strategy as "predatory pricing," which means that state-owned enterprises deliberately set prices below cost by taking advantage of their monopoly position and ability to bear losses, thereby squeezing out competitors with tight cash flow from the market.
In December 2025, when M-Pesa attempted a final breakthrough through the LeHulum app, Ethio Telecom finally lost its patience. It stopped playing games and stopped adhering to the rules. That unplugged network cable became the final period in this years-long hunt.
Why is the Ethiopian government so radical, even at the cost of breaking its global commitment to telecommunications liberalization?
In Addis Ababa's power game, mobile payment has never been a matter of "convenience." The core issue lies in two words: foreign exchange and surveillance.
Ethiopia receives up to $6 billion in remittances annually through underground channels. Among these, the Hawala, an ancient underground money exchange prevalent in the Middle East and Africa, is the most troublesome for the government. It does not rely on banks but on personal credit, completely bypassing regulatory oversight.
For the Ethiopian government, which is severely lacking in foreign exchange reserves, Telebirr is more than just a wallet; it's a "financial trap." The government urgently needs to use this official channel to nationalize every dollar scattered among the people.
A more covert ambition lies in central bank digital currencies (CBDCs). In the government's grand vision, Telebirr, with its 54.8 million users, will be the only legitimate outlet for future digital fiat currency issuance. According to the logic of power, financial infrastructure must be firmly in their own hands, and no foreign capital should be allowed to taint the nation's creditworthiness.
However, has this "absolute sense of security" built under the Iron Curtain truly brought prosperity?
In July 2024, Ethiopia implemented currency reform, causing the local currency to plummet by nearly three times. Ethio Telecom, burdened with massive dollar debts to suppliers such as Huawei and ZTE, saw its foreign exchange losses surge from 3 billion birr to 42 billion birr, an increase of 1825%, resulting in a 70% drop in after-tax profits.
This is the true face beneath the Iron Curtain: the government stifles competition for its own security, foreign capital bleeds under unfair rules, and state-owned enterprises are severely damaged by currency fluctuations. For ordinary users, however, they have no choice but to continue using the apps designated for them.
The Tragedy of Freedom in Kenya
Since Ethiopia's Iron Curtain is suffocating, could neighboring Kenya, which embraces a free market, be a promised land for commerce? After all, it's M-Pesa's homeland, its proudest stronghold.
Here, M-Pesa doesn't face any administrative bans. It holds a 90% market share, and nearly 60% of Kenya's GDP flows through this network. It's not just a payment tool; it's the lifeblood of the country's financial system.
But when regulation is absent for a long time, this absolute freedom eventually turns into absolute chaos. M-Pesa, which was originally a pipeline to inclusive finance, has now become an out-of-control highway of crime.
The first thing running rampant on this highway is gambling. In Kenya, gambling is a tacitly acknowledged money-devouring behemoth, and M-Pesa is its largest conduit for funds, with up to $1.5 billion (169.1 billion Kenyan shillings) flowing into gambling networks through M-Pesa every year.
The Kenyan government is heavily reliant on the huge tax revenues from the gambling industry, and therefore turns a blind eye to the source of funding, making M-Pesa a haven for criminals. The government collects taxes, the gambling companies make money, and M-Pesa pockets the commissions. In this perfect business loop, only social order pays the price.
What chills ordinary people even more than money laundering is the rampant fraud. In 2024, M-Pesa-related fraud losses surged by 344% year-on-year. M-Pesa has 30 million users in the country, and more than 80% of them have been targeted by fraud gangs.
Moreover, the scams have evolved several times. They are no longer satisfied with just stealing the balance in your wallet; instead, they directly steal your identity to apply for loans.
The most typical example is the attack on Safaricom's loan service. The criminal group illegally obtained 123,000 SIM cards and exploited a vulnerability in M-Pesa's credit system to apply for massive overdraft loans, instantly stealing millions of dollars.
Why are criminals able to bypass identity verification so accurately? The answer points to something inside Safaricom.
In 2024, the company laid off 113 employees in one go, citing their involvement in fraud. Those insiders who possess user privacy data and have backend privileges are becoming a key link in the black market supply chain. No matter how sophisticated the technical firewall, it is as thin as a cicada's wing in the face of human greed.
Common underground root system
When we try to explain Ethiopia's Iron Curtain and Kenya's Abyss using the logic of civilized commerce, we often overlook the deeper, more unsettling world beneath the surface.
Technology is neutral, but humanity is not.
In the Tigray region of northern Ethiopia, illegal gold mines are expanding like a malignant tumor across the wasteland. Investigations have revealed that in these vast mining areas, visible even from satellite imagery, legal order has long been relegated to the sidelines, replaced by a violent network woven by mysterious foreign capital and local armed groups.
Mysterious "foreign investors" provided millions of dollars to purchase heavy mining equipment; local military forces were responsible for setting up checkpoints and guarding the area, turning it into an independent nation.
Every day, thousands of miners toil under gunfire, and the gold they dig doesn't end up in the central bank's vaults. Instead, it flows through military-controlled smuggling lines to Sudan or the UAE, turning into billions of dollars in illicit money.
Leveraging the convenience of mobile payments—including their divisibility, immediacy, low cost, and multi-point payment capabilities—massive smuggling funds were broken down into smaller amounts and quietly flowed back to their origin. Lured by gold prices exceeding $4,000 per ounce, so-called inclusive finance ultimately became the most efficient tool for monetizing illegal mining operations.
Even harder to track than gold is cash. Ethiopia receives up to $6 billion in remittances annually, supporting countless families. However, due to a significant 15% difference between the official and black market exchange rates, the vast majority of these funds don't go through banks but instead flow into Hawala.
In its efforts to combat money laundering, the Central Bank of Ethiopia has launched a high-profile crackdown on Somali-backed remittance companies, accusing them of funding illicit activities. However, for the poor in remote areas, where formal bank branches are scarce, these underground networks are their only option.
If you block it, you're cutting off the livelihoods of the poor; if you let it run rampant, it becomes a breeding ground for terrorists and money launderers. In this vast mobile payment network with 118 million dormant accounts, funds flow like mercury, completely unregulated.
If gold and money laundering are merely a game of money, then on the other end of the mobile payment network, blood flows.
In 2022, 29 bodies were found in an abandoned truck in the forests of northern Malawi. They were all young Ethiopian men who had attempted to cross the infamous southern route to South Africa in search of a way to survive, but suffocated to death.
This is not just a simple case of human smuggling tragedy. Investigations show that mobile payment technology is inadvertently reshaping the business model of the bloody human trafficking industry.
In the past, human traffickers demanded lump-sum cash payments, which was risky and had high barriers to entry. Now, using tools like M-Pesa, criminal gangs have invented an "installment payment" smuggling model. The real-time nature of mobile payments allows traffickers to manage human trafficking like a supply chain, paying at each stop along the way. If the family's transfer doesn't arrive, the migrants face abandonment, abuse, or even death.
Whether Ethiopia tries to use the Iron Curtain to monitor everything, or Kenya tries to use freedom to connect everything, the undercurrents can always find cracks; they know no borders and do not care about systems.
On these digital highways built by M-Pesa and Telebirr, not only are the ideals of inclusive finance racing along, but so are the crimes of money laundering, smuggling, and human trafficking. Technology has built the roads, but it can't control whether the cars on those roads are carrying life-saving food or cold corpses.
Capital Choice
Faced with such a distorted and fragmented East African market, international capital always has the most sensitive and ruthless instincts.
In December, South African telecommunications giant Vodacom announced a stunning decision, spending a whopping $2.1 billion to increase its stake in Safaricom from 35% to 55%, gaining absolute control.
This was far from an ambitious offensive; it resembled more of a desperate defense. Safaricom's home turf in Kenya remains a cash cow, generating a net profit of 58.2 billion shillings (approximately $450 million) in the first half of 2025 alone, with M-Pesa contributing half of that. However, in Ethiopia, it is bleeding money at an alarming rate.
Financial reports show that Safaricom Ethiopia lost 15.5 billion shillings in just six months, and revenue from its M-Pesa business plummeted by 45.6% year-on-year.
This put Vodacom in a very passive position; it couldn't just stand by and watch Ethiopia, this bottomless pit, drag down Kenya, its cash cow.
Vodacom's decision to invest heavily in acquiring a controlling stake at this time is clearly motivated by a desire for direct control and management. This could be achieved either by forcibly mitigating losses in Ethiopia or by leveraging its multinational resources to restructure its operations. This $2.1 billion is essentially a lifeline to preserve the core profits of its Kenyan base.
Compared to Vodacom's forced takeover in order to save Kenya, the choice made by another shareholder—Japan's Sumitomo Corporation—is more cautionary. As the second-largest shareholder, Sumitomo actually purchased a 10-year political risk insurance policy for its investment in Ethiopia.
This insurance does not cover commercial losses, but specifically covers "government seizure of assets", "currency non-convertibility" and "default risk".
In the international investment community, this is considered the highest level of red alert. Even after years of deep cultivation in Africa, Japanese conglomerates have completely lost confidence in the rule of law there. In their contingency plans, the government turning its back on them and confiscating assets or rendering currency worthless is no longer a "what if," but "anytime."
However, the giants of the old world may have miscalculated one thing. While they were still meticulously calculating their market share for local fiat currencies, stablecoins were dismantling everything in a way that was like a game-changer.
As Kenyan software engineers begin demanding stablecoins for pay to combat inflation, and as wealthy Ethiopians use stablecoins to circumvent foreign exchange controls and transfer assets, the very foundation upon which M-Pesa depends—the local fiat currency system—is crumbling from within.
Users no longer need an e-wallet that can only store depreciating currencies, but a digital dollar that can preserve value. In Ethiopia, even with strict government bans, retail stablecoin trading volume has still surged by 180%.
What Vodacom bought for $2.1 billion may just be an expired ticket to the old world. The ship to the new world has already quietly left port.
The Third Road
In the ancient yet turbulent land of East Africa, mobile payment is writing the most intense confrontation in human commercial history with unprecedented force. But beneath the glamorous packaging of "inclusive finance," the core is a history of a power struggle between power and greed.
On one hand, there is the Ethiopian-style "blockade," using the iron tower of administration to protect financial sovereignty, but inadvertently stifling future possibilities; on the other hand, there is the Kenyan-style "runaway," using the iron hooves of the market to trample the red line of security, but in the chaos, turning ordinary people into lambs to the slaughter.
This is the most paradoxical aspect of the African mobile payment revolution: it has made the flow of funds simpler than ever before, yet it has made the lives of ordinary people more complicated than ever before.
Those who shout for revolution talk about changing the world from the wine glass of capital. But those who actually live on that land have to face digitalized fraud, human trafficking paid for in installments, and the possibility of their internet being cut off at any time.
Between the Iron Curtain and the Abyss, a third path has yet to emerge.
We once hoped that technology could eliminate injustice, but we have ultimately discovered that technology merely amplifies it. It amplifies the arrogance of power and the savagery of capital.
On the ship sailing towards a new world, we need not only a powerful engine, but also that often-overlooked mooring line called the "bottom line." Otherwise, this magnificent digital transformation may ultimately leave the world not with a monument of universal benefit, but with a pile of expensive wreckage.
