M-Pesa Ethiopia, the mobile money arm of Safaricom Ethiopia, has forged a landmark partnership with the Amhara National Regional State Revenue Bureau, enabling taxpayers across northern Ethiopia to settle obligations securely via their phones. Announced on March 21, the memorandum of understanding (MoU) allows over 450,000 individuals and businesses in the Amhara region to make tax payments through the platform, slashing the need for time-consuming visits to revenue offices plagued by manual processes.

This deal positions Amhara as the first regional tax authority in Ethiopia to integrate mobile money into its collection system, a pivotal step in modernizing a tax administration long hobbled by paper-based workflows and fragmented operations. "With this partnership, taxpayers in the Amhara Region will be able to make safe, fast, and convenient tax payments through M-Pesa from anywhere," said Mengesha Fentaw, head of the Amhara Regional Revenue Bureau. He highlighted how the initiative would ease administrative bottlenecks, bolster record-keeping, and drive revenue mobilization, urging other regions to follow suit in support of Ethiopia's Digital Ethiopia agenda.

BOOSTING MOBILE MONEY MOMENTUM

The MoU arrives at a moment of explosive growth for M-Pesa Ethiopia. Safaricom Ethiopia's Q3 update for the period ending December 2025 revealed three-month active customers on the platform surging 258% year-on-year to 5.2 million. Transaction volumes nearly tripled to 364.3 million, while values more than doubled to ETB 20.37 billion ($129 million), fueled by integration with the national EthSwitch payments system in October 2025. Across Safaricom's broader operations, three-month active customers hit 12.2 million—a 72% increase—while service revenue climbed 54% to $74.7 million (KES 9.68 billion).

Getachew Mengiste, a representative of M-Pesa Ethiopia, underscored the company's mission: "M-Pesa is already being widely used in several areas, and we are committed to expanding inclusive digital financial services and making government services more accessible." This tax collection venture builds on M-Pesa's established role in utility payments like water and electricity, as well as emerging uses such as video streaming and AI tools, amid intensifying rivalry with Ethio Telecom's telebirr.

ETHIOPIA'S DIGITAL TAX OVERHAUL

Ethiopia's tax system has historically depended on in-person services, with taxpayers enduring multiple office visits and manual receipts. The Amhara partnership addresses these pain points head-on, aligning with national reforms to digitize public services. By enabling mobile payments, it promises real-time tracking, reduced corruption risks, and higher compliance rates—outcomes seen in similar mobile money integrations elsewhere in Africa.

The Amhara region, home to a key agricultural hub in northern Ethiopia, stands to benefit immensely. Businesses and farmers, often burdened by travel to distant revenue offices, can now pay from remote areas, potentially unlocking economic activity. Fentaw noted the move's role in strengthening Ethiopia's digital infrastructure push, which gained steam since Safaricom's market entry in 2022. That year marked the liberalization of Ethiopia's telecom sector, ending Ethio Telecom's monopoly and inviting foreign players like Kenya's Safaricom, whose M-Pesa revolutionized financial inclusion in East Africa since 2007.

REGIONAL AND NATIONAL IMPLICATIONS

As the first of its kind, the Amhara MoU could catalyze nationwide adoption. Other regions face similar administrative hurdles, and success here might prompt federal revenue authorities to explore mobile integrations. Analysts view this as part of Ethiopia's broader digital transformation, encompassing e-government portals and expanded broadband under the Digital Ethiopia 2025 strategy.

For Safaricom Ethiopia, the deal diversifies revenue streams beyond person-to-person transfers. With mobile money penetration still nascent, the platform eyes government disbursements, merchant payments, and microloans next. Challenges persist, including network coverage in rural Amhara and digital literacy gaps, but early indicators are promising. M-Pesa's user base explosion suggests Ethiopians are ready for cashless convenience.

AFRICA-WIDE PRECEDENT

This initiative echoes M-Pesa's successes elsewhere. In Kenya, it collects national taxes and salaries; in Tanzania, it handles utilities and school fees. Ethiopia's version adapts to local realities: a cash-heavy economy transitioning amid inflation and conflict recovery. By streamlining collections, Amhara could boost its tax-to-GDP ratio.

Stakeholders praise the partnership's efficiency gains. Vaughan O'Grady of Developing Telecoms noted it "improves access to digital financial services while streamlining tax collection processes," enhancing public service delivery. As Ethiopia balances security concerns in Amhara with economic revival, such innovations signal resilience. M-Pesa's foothold in tax collection not only empowers citizens but fortifies the region's fiscal foundation, paving the way for sustained growth in Africa's second-most populous nation.