Telebirr Lent 13.2 Billion Birr in One Year—but Borrowers Say They’re Paying the Price













Telebirr recently announced it has disbursed more than 25.8 billion ETB in digital microloans to over 11.9 million customers since its 2021 launch. Developed by Ethio Telecom in partnership with Dashen Bank, the Commercial Bank of Ethiopia, and Sinqe Bank, the platform has also mobilized 24.6 billion ETB in digital savings from 3.9 million users over the same period. In the just-concluded fiscal year alone, 6.88 million customers took out loans totaling 13.2 billion ETB, while 1.77 million deposited a combined 11.2 billion ETB in savings.

The platform aims to bridge the gap in access to traditional banking services, enabling users to easily access digital finance and mobile money through self-service tools, nearby agents, and service centers across the country—advancing Ethiopia’s shift toward a cashless society.

Despite these impressive numbers, user concerns are growing. Many borrowers say what initially offered quick financial relief has become an overwhelming burden. Rising interest rates and facilitation fees are making repayments increasingly difficult. At the same time, savers complain that their returns are disproportionately low compared to the high loan costs. What began as a promising financial tool is now raising questions about fairness and affordability in Ethiopia’s digital finance ecosystem.

Fikadu Girma, once an enthusiastic user of Telebirr’s microfinance services, recalled how simple and fast the process was—no paperwork, just a few clicks. But that changed. He borrowed 15,000 birr, only to see the amount balloon to 56,000 birr—an increase of nearly 273%. “I’m struggling to keep up,” Fikadu said, explaining how a tool meant to support him now feels like a crushing weight.

Hussein Addis shared a similar experience. “I just had a shocking experience with a digital loan on Telebirr,” he said. After borrowing 1,200 birr, his total debt climbed to 6,000 birr—even after he had already repaid 1,000 birr. Frustrated and confused, Hussein said he is considering throwing away his SIM card just to escape the growing debt.

This wave of discontent is spreading on TikTok, where users are sharing stories of ballooning loans and financial distress. A growing number of borrowers say they feel trapped, with some seriously contemplating discarding their SIM cards to avoid repayment.

Telebirr offers loan products for both individuals and businesses. The Telebirr Mela loan allows individuals to borrow up to 10,000 birr, while businesses can access loans up to 100,000 birr. Another offering, Telebirr Endekise, helps customers cover payment shortfalls for purchases, with repayment expected within a month. Ethio Telecom also runs Tele Sanduq, a savings product that combines both interest-free and interest-bearing options, starting with as little as 26 birr.

These services come at a cost. Facilitation fees range from 1.5% to 6.5% on day one, with daily charges reaching up to 1.2%. Monthly interest rates vary between 9% and 36%, depending on the borrower’s credit history. Late payment penalties can go as high as 2% per day. After 90 days, debts may be recovered through deductions from savings or bank accounts.

For example, a 10,000 birr loan with typical fees, interest, and a 10-day late payment could end up costing about 14,000 birr—roughly 40% more than the original loan. Over a year, consistently borrowing 10,000 birr monthly under such conditions could cost approximately 46,200 birr in fees and interest alone—meaning borrowers may repay 166% of the original loan annually. Early repayment can reduce interest but may trigger a 3% fee on the remaining principal.

Experts argue that the problem is not limited to Telebirr itself but lies with the commercial banks that fund these loans. While Telebirr acts as a facilitator, the banks—motivated by profit—set the terms. In Ethiopia’s current financial environment, the rapid growth of unsecured digital lending is risky. Without proper safeguards, the risk of default is high, pushing banks and microfinance institutions to impose steep interest rates. Non-performing loans (NPLs) can carry regulatory penalties, and in the absence of effective risk management systems, defaults lead to direct losses that shareholders and auditors scrutinize closely.

Still, some analysts caution against abandoning the platform’s core mission. They argue that Telebirr was designed to serve underserved communities and that this original purpose should be protected. For borrowers with limited access to formal credit, the service was a rare bridge to financial inclusion. Critics suggest the way forward is not dismantling the system, but reforming it to ensure greater affordability and fairness.

“They justify the high interest rates by pointing to the lack of collateral and increased default risk,” said Tilahun Girma, a seasoned financial expert. “But the costs are excessive and ultimately unsustainable.”

An anonymous economist added that growing frustration with digital microloans reflects deeper structural weaknesses in Ethiopia’s financial system. While digital loans have opened doors for many excluded from traditional banking, rising costs and unclear repayment terms are triggering serious concerns about accessibility and transparency.

He pointed to several underlying issues. First is the pricing model, based largely on perceived credit risk. Most borrowers lack formal credit histories, so lenders rely on mobile usage data and behavioral patterns—metrics that are often unreliable. To hedge against risk, lenders raise fees, a practice that disproportionately harms low-income users when proper consumer protections are lacking.

The second challenge is Ethiopia’s broader economic environment. High inflation, a weakening birr, and tight liquidity mean lenders face rising capital costs. These pressures are ultimately passed on to borrowers, making loan repayment increasingly difficult.

Regulation hasn’t kept pace. While the National Bank of Ethiopia has begun developing digital finance frameworks, specific consumer protection measures for microloans are still lacking. This regulatory gap allows for opaque pricing and poor communication around terms and conditions.

“Ethio Telecom’s evolution from a telecom company to a major digital finance player brings both innovation and new risks,” the economist noted. “The push to monetize lending can create tensions between public service goals and commercial pressures.”

Experts further point out that Ethiopia lacks a dedicated legal framework for digital lending, leading to inconsistent borrower protections and weak enforcement of fair lending standards.

As Ethiopia prepares to roll out its first credit card, the urgency to educate the public about responsible borrowing and digital financial literacy is greater than ever. Many borrowers face vague terms, unpredictable limits, and insufficient guidance. Regulators and digital lenders must urgently collaborate to ensure borrowing is transparent, fair, and accessible to all.

Tilahun recommends mapping assets such as homes and vehicles on a secure digital platform linked to the lending system. This would allow borrowers to use personal guarantors, increasing accountability. In the event of a default, the guarantor would be held liable—potentially lowering the risk for lenders and reducing the need for punitive interest rates.

He also advocates for expanding credit to small and micro-enterprises based on their credit history. “Microloans should do more than cover short-term emergencies,” Tilahun said. “They should help build livelihoods. That won’t happen unless lending criteria are revised to reward reliability with better access to capital.”













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