East African mobile payment giant trapped in the iron curtain of government and the abyss of the black market

In China, mobile payment is a revolution about "convenience." Whether in bustling cities or remote villages, blue and green QR codes have transformed our mobile phones into digital wallets. In our understanding, mobile operators (China Mobile, China Telecom, and China Unicom) are simply defined as "data pipelines," with the real financial and payment battle taking place between the two giants, Ant Financial 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 shattered. Here, operators are not just pipelines; they are banks themselves. SIM cards are not just communication credentials; they are bank cards. Whoever controls the communication network controls a country's financial lifeline. It is this "lifeline" allure that has fueled an extremely brutal hunt. In December 2025, African mobile payment giant M-Pesa faced a direct ban from the "national team" in Ethiopia. To break down the data silos between operators, M-Pesa launched the ambitious universal 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 allow 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 mobile data access for M-PESA. Faced with absolute administrative will, even the most sophisticated business logic is no match for a network cable being directly pulled. Why would a "national team" risk being branded as stifling innovation to take such drastic measures against a foreign giant? The answer lies in those dominant statistics: Ethio Telecom, as Ethiopia's "crown prince," and its payment platform Telebirr, is an unshakeable behemoth. It boasts 54.8 million users, controls nearly 90% of the country's market share, and has an annual transaction volume of $43 billion. For a company like this, when M-Pesa attempted to bypass barriers to connect with all users, it no longer saw 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, user numbers 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 harsh reality behind the Iron Curtain: users can only treat foreign operators as cheap data cards to take advantage of, while the "national team" still firmly holds onto the custody and clearing business. In July 2025, a World Bank report titled "Ethiopia Telecommunications Market Assessment" tore away the last fig leaf of the local market. In the objective account of this report, Kenyan giant Safaricom is like a hunter venturing into a primeval forest, believing it possesses advanced weaponry, unaware that it has already fallen into a meticulously 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 a 15-year operating license 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 trap is the settlement mechanism known as MTR (Mobile Terminal Rate). The logic of this mechanism is simple: when a user of Company A calls a user of Company B, Company A needs to pay Company B a toll. Since Safaricom is a new player, almost every call its users make is a tribute to Ethio Telecom. According to the World Bank, this alone costs Safaricom nearly $20 million annually to its biggest competitor. 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. Their business competition has thus evolved into a ludicrous parasitic relationship: every new user Safaricom acquires, every kilometer of fiber optic cable it lays, is feeding its biggest competitor. Even burdened by such heavy shackles, Safaricom still managed to carve out a niche for itself with superior service, surpassing the ten million user mark. Seeing that its "soft approach" failed to wear down its competitor, Ethiopia began employing administrative means to deliver a decisive blow. In the tax arena, the government mandated that all government-related transactions must be prioritized through Telebirr. Safaricom, a major taxpayer, was even required to use its competitor Telebirr's payment system when paying taxes. In the data price war, Ethio Telecom drove 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," exploiting the monopoly power and loss-bearing capacity of state-owned enterprises to deliberately set prices below cost, squeezing out cash-strapped competitors from the market. In December 2025, when M-Pesa attempted a final breakthrough with the LeHulum app, Ethio Telecom finally lost its patience. It stopped maneuvering and stopped playing by the rules. The pulled network cable marked the end of this years-long hunt. Why is the Ethiopian government so radical, even at the cost of reneging on 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 doesn't rely on banks, but entirely on interpersonal 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 penny of US dollars scattered among the people. A more covert ambition lies in central bank digital currency (CBDC). In the government's grand vision, Telebirr, with its 54.8 million users, will be the only legitimate outlet for the issuance of future digital fiat currency. In the logic of power, financial infrastructure must be in their own hands, and no foreign capital should be allowed to taint the nation's creditworthiness. However, has this "absolute security" built under an 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 like 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 behind the Iron Curtain: the government stifles competition for a sense of security, foreign capital bleeds under unfair rules, and state-owned enterprises are severely damaged by the currency storm. For ordinary users, they have no choice but to continue using the apps designated for them. The Tragedy of Freedom in Kenya Since the Iron Curtain in Ethiopia 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 blockade. It holds 90% of the 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 channel to inclusive finance, has now become an out-of-control highway of crime.

First and foremost, gambling runs rampant on this highway. In Kenya, gambling is a tacitly approved money-devouring behemoth, and M-Pesa is its largest channel for funds, with as much as $1.5 billion (169.1 billion Kenyan shillings) flowing into gambling networks through M-Pesa every year. ...>

Moreover, the scams have evolved several times. They are no longer satisfied with simply stealing the balance in your wallet; they directly steal your identity to apply for loans.

The most typical case is the attack on Safaricom's loan service. The criminal gang illegally obtained 123,000 SIM cards and exploited a vulnerability in M-Pesa's credit system to apply for massive overdraft loans, instantly absconding with millions of dollars.

Why were the criminals able to pass the identity verification so accurately? The answer points to Safaricom's internal operations.

Why were the criminals able to pass the identity verification so accurately? The answer points to Safaricom's internal operations.

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 access are becoming a key link in the black market supply chain; any sophisticated technological firewall is as thin as a cicada's wing in the face of human greed. When we try to explain the Iron Curtain in Ethiopia and the Abyss in Kenya using civilized business logic, we often overlook the deeper, more unsettling world beneath the surface. Technology is neutral, but human nature is not. In the Tigray region of northern Ethiopia, illegal gold mines are expanding like a malignant tumor across the wasteland. Investigations reveal 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" provide millions of dollars to purchase heavy mining equipment; local military forces are responsible for setting up checkpoints and guarding the areas, turning them into independent states. Every day, thousands of miners toil under gunfire, their mined gold not ending up in central bank vaults, but flowing through military-controlled smuggling routes to Sudan or the UAE, turning into billions of dollars in illicit funds. Leveraging the convenience of mobile payments—their divisibility, immediacy, low cost, and multi-point payment capabilities—massive smuggled funds are broken down and quietly flowed back to their origin. Tempted by gold prices exceeding $4,000 per ounce, so-called inclusive finance has ultimately become the most efficient tool for monetizing illegal mining. Even harder to trace than gold is cash. Ethiopia receives up to $6 billion in remittances annually, supporting countless families. However, due to the significant 15% difference between the official and black market exchange rates, the vast majority of funds did not flow through banks but instead went to Hawala. The Central Bank of Ethiopia, in its efforts to combat money laundering, has launched a high-profile crackdown on Somali-affiliated remittance companies, accusing them of funding illegal activities. But for the poor in remote areas, formal bank branches are scarce, and these underground networks are their only option. If you shut it down, you cut off the poor's livelihood; 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 at the other end of the mobile payment network flows blood. 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 better life, but suffocated to death. This was more than just a simple human trafficking tragedy; investigations revealed that mobile payment technology is inadvertently reshaping the business model of this bloody industry. Previously, smugglers demanded upfront cash payments, making it risky and difficult to access. Now, using tools like M-Pesa, criminal gangs have invented an "installment payment" smuggling model. The real-time nature of mobile payments allows smugglers to manage human trafficking like a supply chain, paying at each stage of the journey. If the family's transfer doesn't arrive, those who cross the border illegally face abandonment, abuse, or even death. Whether Ethiopia attempts to use an iron curtain to monitor everything, or Kenya tries to connect everything with freedom, the undercurrents always find cracks; they know no borders and disregard no system. On these digital highways built by M-Pesa and Telebirr, not only are ideals of inclusive finance running, but also the crimes of money laundering, smuggling, and human trafficking are rampant. Technology has built the roads, but it can't control whether the vehicles on those roads are carrying life-saving food or cold corpses. Faced with such a distorted and fragmented East African market, international capital is always the most astute and ruthless. In December, South African telecommunications giant Vodacom announced a stunning decision, spending a staggering $2.1 billion to increase its stake in Safaricom from 35% to 55%, gaining absolute control. However, this was by no means an ambitious offensive; rather, it resembled a desperate defense. Safaricom's home business in Kenya remains a cash cow, generating a net profit of 58.2 billion shillings (approximately US$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 M-Pesa revenue plummeted by 45.6% year-on-year. This puts Vodacom in a very passive position; it cannot afford to watch this bottomless pit in Ethiopia drag down its cash cow in Kenya. Vodacom's decision to invest heavily in a controlling stake at this time clearly indicates its intention: to gain direct control and management through absolute ownership. The options are either to forcibly cut losses in Ethiopia or to restructure operations using its multinational resources. This $2.1 billion is essentially a lifeline to preserve the core profits of its Kenyan base. Compared to Vodacom's forced takeover to save Kenya, the choice of another shareholder—Japan's Sumitomo Corporation—is even more cautionary. As the second-largest shareholder, Sumitomo purchased a 10-year political risk insurance policy for its investment in Ethiopia. This insurance does not cover commercial losses but specifically covers "government asset seizure," "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 environment there. In their contingency plans, the government's sudden reversal of fortune and the confiscation of assets or the rendering of currency worthless is no longer a "what if," but a "anytime." However, the giants of the old world may have miscalculated one thing. While they are still meticulously calculating their market share for local fiat currencies, stablecoins are dismantling everything in a way that is utterly devastating. When software engineers in Kenya began demanding stablecoins for their salaries to combat inflation, and when wealthy Ethiopians used stablecoins to circumvent foreign exchange controls and transfer assets, the very foundation upon which M-Pesa thrives—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 transaction 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 departed. 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 power struggles and greed. On one hand, there's the Ethiopian-style "blockade," using administrative iron towers to protect financial sovereignty, yet inadvertently stifling future possibilities; on the other hand, there's the Kenyan-style "runaway rush," using the iron hooves of the market to trample the red lines of security, yet turning ordinary people into lambs to the slaughter in the chaos. 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 complex 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 way has yet to emerge. We once hoped that technology could eliminate injustice, but 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 rope called the "bottom line." Otherwise, this magnificent digital transformation may ultimately leave the world not with a monument to universal benefit, but with a pile of expensive wreckage.