Safaricom targets $150m in Ethiopia local-currency bonds as it cuts FX risk and deepens expansion in Africa’s newest telecom frontier.
Safaricom Targets Birr Bonds in Ethiopia Shift
Intelligence Report | By Charles Wachira
Safaricom PLC is moving to raise up to $150 million (about Ksh19.6 billion) in Ethiopia through local-currency bonds. The plan marks a major shift in how the telecom giant funds its fast-growing Ethiopian business.
The company will issue birr-denominated bonds once Ethiopia launches its new securities exchange. The rollout is expected in the third quarter of 2024.
The strategy reflects a clear change in Safaricom’s funding model. It is shifting away from dollar debt toward local-currency borrowing.
Shift Away From Dollar Debt
Dilip Pal says the company is watching Ethiopia’s new bond market closely. He confirms Safaricom is ready to use it when conditions allow.
“We are closely monitoring this space and will consider listing at the right time. We are very interested in the new bond market,” Pal said in comments to Business Daily after FY2024 results.
The statement shows growing interest in domestic funding tools across Africa. It also reflects rising pressure on firms that rely on dollar loans in volatile markets.
$100–150 Million Funding Plan
Safaricom plans to raise between $100 million and $150 million over several years. The final amount will depend on network expansion needs and market conditions.
The company will not raise all funds at once. Instead, it will spread issuance across multiple phases.
This phased model helps match funding with project rollout in Ethiopia. It also reduces financial pressure during early-stage investment.
Ethiopia remains one of Africa’s largest telecom growth markets. It has more than 120 million people and low mobile penetration compared to regional peers.
Currency Pressure Reshapes Strategy
Safaricom is adjusting its strategy due to currency swings in key markets. The Ethiopian birr and Kenyan shilling have both weakened in recent periods.
These moves have raised the cost of dollar loans. They have also increased financial risk for companies operating across borders.
In the six months to September 2023, Safaricom repaid a $120 million (Ksh15.6 billion) syndicated loan early. The firm had taken the loan to fund Ethiopia expansion.
It repaid the loan four years before maturity. The move cut exposure to exchange-rate losses.
Ethiopia Market Reform Opens New Channel
Ethiopia is building a new securities exchange. The reform aims to open the country to corporate bonds and equity listings.
This creates a new funding channel for companies like Safaricom. It also allows firms to borrow in the same currency they earn revenue in.
This reduces currency mismatch risk. It also improves financial stability for long-term projects.
Strategic Meaning for Safaricom
Safaricom’s shift reflects a wider trend in African telecom markets. Companies are moving away from dollar debt toward local funding.
Local pension funds and domestic investors are becoming key lenders. This deepens financial systems in emerging markets.
However, risks remain. Ethiopia’s capital market is still new. Liquidity is limited. Rules are still evolving.
Pricing and demand for bonds may also vary in early stages. This could affect fundraising speed and cost.
Outlook: Early Test of Ethiopia’s Bond Market
Safaricom’s plan will be one of the first major tests of Ethiopia’s bond market. Success could attract more global firms into local funding.
Failure could expose gaps in investor depth and market readiness.
Either way, the outcome will shape investor views on Ethiopia’s financial reforms.
For Safaricom, the move signals a deeper shift in strategy. It is building a financing model tied directly to local markets rather than global dollar cycles.