Visa pushes for more access to barely-tapped Ethiopia

May 26 (Reuters) - Visa Inc., which is piloting Ethiopia's first international debit card, is seeking to persuade the government to ease tight restrictions on banks in an effort to boost the use of electronic payments.

Ethiopia has one of Africa's fastest-growing economies bu

The government bars foreign banks, saying it needs to protect domestic lenders, and local debit cards have until now not worked abroad.


Jabu Basopo, Visa's manager for southern and east Africa, said the focus was on persuading leaders of the $43 billion economy that is dominated by state enterprise about the benefits of electronic payments.

"They are willing to try some things," said Basopo. "They have agreed to a pilot for international cards. It is a very controlled environment."

Users of Visa's international card, which is being trialled by government officials, will be restricted to spending an amount that has been pre-loaded on the card. Visa said the government was pleased with the trial so far.

Basopo said local banks lacked muscle to push the central bank to drive change in an industry where the largest commercial lender is run by the state and holds two-thirds of all deposits.

He pointed to Rwanda as an example of where business-friendly reforms to liberalise banking regulations in the past four years had led to a swift deepening of the market.

"Rwanda was in a similar situation. (Now) every bank is listed to Visa. All the ATMs in the country are linked to Visa ... and we've seen a lot of growth in terms of retailers actually accepting Visa cards now," Basopo said.

Retail transactions in Ethiopia are primarily made in cash. Retailers say a scarcity of debit cards hinders growth in the retail sector, which is also off-limits to foreign chains.

"If you look at the main efficiencies brought by electronic payments ... more money stays in the banks and the banks are able to lend that money back to retailers to do more business," Basopo said.

Visa, the world's largest credit and debit card company which counts 10 Ethiopian banks as members, first entered the country in 2004.

The International Monetary Fund has warned that Ethiopia's huge public spending on roads, railways and power is suffocating private lending. It says Ethiopia should row back on public spending to allow the private sector greater access to credit.
t few people in the Horn of Africa nation of 90 million have bank accounts and the range of services is limited.
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