Nearly four years after Safaricom Ethiopia rolled out its commercial operations, it has registered an operating loss of 42 billion birr in the financial year that ended March. The losses occurred despite the company’s increasing revenue by 270% from the last financial year to reach 7.2 billion birr. Safaricom Ethiopia attributed part of the losses to the foreign exchange reforms Ethiopia implemented since July, alongside it still being in the investment stage.
Ethiopia transitioned from a managed currency regime to a market-based policy at the end of July, resulting in the Birr sliding by 30% against the US dollar on the first day, with a progressive descent over the past eight months. The Birr’s value against the US dollar has plummeted from around 57 birr in late July to around 134 since the currency float. Companies that collect funds in Birr while having to settle payments in foreign currency were severely impacted by the initial depreciation of the currency.
“This loss is largely in line with our expectations at this heavy investment stage of the company’s growth, but it also includes the impact of foreign exchange reforms, that we expect to normalize going forward,” Safaricom Ethiopia said in its statement.
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