It's early in the afternoon, yet small groups of men have already started to gather around the khat stands in the city of Jijiga. Hundreds of these stands form part of the urban scenery in Ethiopia's Somali region, where the amphetamine leaf is widely consumed. The practice of khat-chewing has a long tradition, but the business is modernizing.

Mohammed Abdehashi, a regular user, is not paying in cash for the first of his two daily fixes of the shiny green plant, but with mobile money. The digital form of payment is becoming increasingly common in Jijiga, and the COVID-19 pandemic has accelerated what was already a trend.

"I am afraid of COVID-19," the middle-aged man admits. "The counting of money with the hands causes disease, so instead I use HelloCash."

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Mobile money leader

The dramatic increase in the number of mobile-money providers and subscribers in recent months has made Jijiga a leader among Ethiopian cities. In the Somali region, the main providers are HelloCash, which has been present there for years, E-Birr and Sahay.

Ethiopia has lagged behind its neighbors like Somalia or Kenya in this business. The government's protectionist policies in the cash-oriented society have stood in the way.

In the Somali region, the shift was in part influenced by the mobile-money market in Somalia. Ethiopia's federal government is starting to promote the technology, too. 

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Abdulaziz Hassan is the CEO of Sahay, a new microfinance institution, known for its mobile-money branch. The company has been operating in the Somali region since the end of February and now has more than 200,000 customers.

"It's easy to penetrate in this region and that's because [it's easy for] the customers who are in this area to adapt to new technologies, and they like simplicity and all those things," he says. 

Easy and safe

Anywhere you look in Jijiga, posters and stickers promoting mobile-money providers incite consumers to pay using their phones. Cafes, small shops and even some transport providers now accept mobile payment. The technology aims to make transactions safer and allows users to leapfrog credit card technology.

Card payments are still very expensive and facilities for carrying them out are almost nonexistent in Ethiopia. With mobile money, a phone is used to send and receive payments.

Abdukani Mohammed, who works as a cashier in one of Jijiga's many cafes, says mobile money has brought many advantages. "We are getting our money faster," he says. About half of his customers use mobile banking to pay for coffee.

One of his regular customers, Mohammed Abdulrahman, says he enjoys paying for drinks, food and clothes without carrying large sums of cash. "The mobile-money service is very good because it makes easy to access your money. It's safe money because even if you lose your phone, you can still retrieve your money easily."

New users targeted

In Ethiopia's capital, Addis Ababa, using a phone to pay checks is not yet commonplace, but companies such as Amole have found ways to target new users. Football fans pay for tickets via the mobile-money facility of the company, which is partnered with the government-owned Dashen Bank.

Customers of Addis Ababa's high-class supermarket chains such as Shoa who are already familiar with mobile technology also have the option to use the payment method.

It is still difficult to reach the wider population in a country where about 80% of people live in rural areas. A recent policy shift allowing non-financial institutions to act as mobile-money providers could make mobile money more accessible.

"The previous regulation was more or less focused on the financial sector. The new proclamation enables technology services providers like ourselves to have an electronic payment issuer license, giving us more flexibility acquiring customers, merchants, agents and running transactions," says Samson Getu, the vice president of operations at Amole. "It really gave us a lot of room for growing and expansion."

Ethiopians still feel "more comfortable carrying cash," says Samson Getu. "So we need a lot of behavioral change and education, not from the mobile-money perspective only, but from the financial inclusion aspect of it as well." 

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A pandemic opportunity

Despite its many negative impacts, COVID-19 has given the mobile-money market a boost. The government introduced incentives for citizens to increase their use of digital payment methods. But it's too soon to say whether and how exactly the pandemic has benefited the mobile money market.

The transfer of money from one bank to another, or from one digital wallet to another, has just recently become possible. Not all banks have finalized the process, but mobile-money professionals like Samson Getu are optimistic. "We are 100% sure that this will increase the mobile usage," he says. 

One challenge still remains untouched, and that is the issue of connectivity, as Ethiopia's internet and mobile networks are very unreliable. Internet shutdowns are sometimes even enforced by the government in times of political turmoil.

Tuk-tuk driver Hussein Ali asks his passengers to pay cash. "Sometimes the network is saturated or absent for several days in a row. For me it's better to receive cash and leave than to wait for the money to be sent slowly through the phone and thereby waste time," he says before riding his blue three-wheeler back into the Jijiga traffic.