Biometric data deal signals advancing liberalisation of Ethiopia’s financial markets

British digital payments company IrisGuard has partnered with Ethiopian financial services firm Arifpay, as Addis Ababa continues to open up its finance market to foreign participants.

IrisGuard provides payments infrastructure – the EyePay Network – that uses biometric data derived from the human eye to authenticate and process transactions. This is designed to cut out the need for manual compliance processes and physical documentation which, in emerging markets such as Ethiopia, can often prove a barrier to financial inclusion. The solution therefore helps entities overcome issues associated with connectivity, location, or literacy.

As the Ethiopian government continues to pursue a programme of liberalising financial services, which have long been dominated by domestic state-owned companies, the entry of a British company signals that the market could be becoming increasingly attractive to foreign firms.

Imad Malhas, CEO of IrisGuard, tells African Business that “the Ethiopian government’s economic reforms, promoting private sector growth and serving as a gateway to East African markets, were recently emphasised by Mr. Beyene Gebremeskel, deputy head of mission at the Ethiopian Embassy in London, at the International Business Week in London. This aligns with our strategy to broaden our reach across Africa, targeting countries like Nigeria, Sudan, South Sudan, Kenya, and Ghana.”

The CEO of Arifpay, Bernard Laurendeau, also believes that this move demonstrates Ethiopia’s determination to liberalise its finance sector and overall economy. He tells African Business that “Ethiopia is one of the African Union member states who signed and ratified the AfCFTA protocol to harmonise policies and facilitate trade and investment between member countries. The country is also in the process of joining the WTO. The economy is opening up and our policymakers are in the final stage of giving licences for international service providers.”

Laurendeau suggests that domestic service providers, such as Arifpay, are poised to benefit from these trends. “Arifpay is fully integrated into the National Payment Switch (EthSwitch) and is working with all the local banks here in Ethiopia,” he says. “We have the capacity to work with international banks coming to join the market. Our business model is simple: partnership and collaboration within the framework of National Bank of Ethiopia rules and regulations.”

Lucrative market

Both IrisGuard and Arifpay see the Ethiopian market as a potentially lucrative economic opportunity. Malhas points out that “just a third of its population own bank accounts and [Ethiopia] hosts over 820,000 refugees.”

He adds: “Alongside Arifpay, we aim to tap into this market, extend financial services to underserved communities, attract new customers, and play a crucial role in reducing poverty and promoting economic development.”

Laurendeau notes that Arifpay is “committed to driving improved efficiency in payments service delivery” and “long-term inclusive growth,” with more sophisticated digital solutions promising “to unlock more opportunities while serving the community.”

Greater levels of foreign direct investment (FDI) and the participation of foreign institutions in Ethiopia’s financial system could also help drive up the quality of financial services in the country. Ethiopia’s prime minister, Abiy Ahmed, has expressed his hope that liberalisation of the financial sector, as well as other strategic industries, could spur long-term economic growth as he attempts to instigate a fundamental change of direction in the Ethiopian economy.