Companies Economic headwinds facing Safaricom’s Ethiopia ventureA Pedestrian walking past Safaricom Shop along Kenyatta Avenue in Nairobi on May 7, 2023. PHOTO | EVANS HABIL | NMGBy EDNA MWENDAMore by this AuthorSafaricom’s new venture in Ethiopia is facing several headwinds which, if they persist, will hurt the returns from the capital-intensive expansion. “We recognise that in a period of inflation, an entity holding an excess of monetary assets over monetary liabilities loses purchasing power, while an entity with higher monetary liabilities than monetary assets gains purchasing power,” Safaricom says in its latest annual report. “With this context in mind, Safaricom Ethiopia has more monetary liabilities than monetary assets, due to the significant vendor financing liabilities. There are also concerns that the economic challenges facing Ethiopia could cause the country to devalue its currency, a move that will erode the value of future profits and dividends from Safaricom Ethiopia.

Source: Ethiopian News July 24, 2023 21:27 UTC