Ethiopia has established a Universal Access Fund requiring telecom operators to contribute 1.5% of their revenue to bridge the digital divide in rural and remote communities, according to Capital Ethiopia.
The Council of Ministers approved the regulation as part of Ethiopia's digital economy transformation strategy. The mandatory levy will apply to all telecom operators, including state-owned Ethio telecom and Safaricom Ethiopia, which launched commercial services in October 2022.
The fund is designed to finance telecommunications infrastructure in underserved areas where commercial operators find it economically unviable to expand services. Rural connectivity remains a significant challenge in Ethiopia, where an estimated 80% of the population lives in rural areas but internet penetration lags behind urban centers.
Ethio telecom generated approximately 89 billion birr in revenue for the 2023-24 fiscal year, which would translate to roughly 1.3 billion birr annually under the new levy. Safaricom Ethiopia, while still building its subscriber base, would contribute proportionally based on its growing revenue stream.
The Universal Access Fund represents a significant policy shift for Ethiopia's telecommunications sector, which underwent liberalization in 2021 when the government awarded the country's first private telecom license to Safaricom Ethiopia. The fund mechanism follows similar models across Africa, where countries like Kenya, Nigeria, and Ghana have established universal service funds to expand connectivity.
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Kenya's Universal Service Fund, established in 2013, collects 0.5% of gross annual turnover from telecom operators and has funded fiber optic infrastructure, mobile towers, and digital literacy programs in remote areas. Nigeria's Universal Service Provision Fund uses a 2.5% levy on telecom operators' revenue.
The Ethiopian fund comes as the government pursues ambitious digital transformation goals, including the Digital Ethiopia 2025 strategy aimed at making the country a middle-income digital economy. The strategy targets 100% mobile network coverage and 50% internet penetration by 2025, up from current levels of approximately 25% internet penetration.
The regulation establishes the legal framework for fund administration, though specific implementation details including governance structure and project selection criteria have not been announced. The fund is expected to support infrastructure deployment in areas where market forces alone cannot deliver affordable telecommunications services.
