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Five companies are in contention to win a contract
worth as much as 60 million Br for the installation
of the Electronic Payment System (EPS) for the
state-owned Commercial Bank of Ethiopia (CBE).
CBE plans to spend 50
to 60 million Br for the installation of the system,
50 Automatic Teller Machines (ATM) and 300 Point of
Sales (PoS) machines, according to the tender
document.
The winner is required to supply servers, security
modules, ATM and PoS machines, card printing
machines and cards, as well as the software to
operate and network all of the hardware.
When the Bank last week invited technical offers
from prospective bidders, half of the six
contestants were Kenyan companies: Fintech (Kenya)
Ltd, Technology Associates and Paynet.
Xiamen Longtop Systems
Co. Ltd, a Chinese company established in 1996, ACI,
a US-based company and Moti Engineering Plc, a local
company, are the other three companies that have
submitted offers. However, ACI, which installed
Ethiopia's first payment system for Dashen Bank SC,
has been rejected on the grounds that the company's
local representative, SSC Plc, reportedly did not
submit its offers before the tender deadline.
Some bidders have complained that Kenya-based
Fintech issued its bid bond, an amount of money set
aside during the tender process as a guarantee of
the bidder's commitment, through a Kenyan bank,
rather than through a local bank.
Fintech began in 1993
as a provider of solutions to the financial sector
in Africa.
Technology Associates has been building technology
infrastructure in sub Saharan Africa for the past
decade, and Paynet was born out of a company called
CF Tulley Associates, which had worked offering
technology solutions in the Zimbabwean and South
African markets. The latter two companies are also
competing in a similar tender issued by Wegagen Bank
SC.
Though CBE has a capital almost equal to all of
Ethiopia's private banks combined, it will likely be
the third bank to adopt the technology, following
Dashen, the pioneer to install the VISA Payment
System in 2006, and Wegagen, which is in the final
stages to hire a contractor to develop a service
that enables customers to transact in different bank
branches and markets. Dashen had been a member of
the VISA Association two years before it installed
the gadgets.
"CBE
could not launch EPS because the VISA Association
denied to grant it permission on the grounds that
the service would not find enough customers in
Ethiopia, though the Bank has been member of the
Association earlier than any other local bank,"
Welela Seyoum deputy head of CBE's Public Relation
Department, told Fortune.
Globally, four trillion dollars are transacted per
day through electronic payment systems across banks
all over the world, yet Ethiopian banks have yet to
integrate with this electronic system.
Though CBE is behind Dashen in the adoption of
technology it is still a leader in number of
customers and deposits. Dashen has 403,995
depositors, out of which 10,000 are VISA card users
that are served by the bank's 10 ATM and 218 PoS.
Having 42 branches, Dashen that has six billion Birr
worth assets has mobilised 4.9 billion Br in
deposits.
On the other hand the CBE, which has 1.3 million
account holders, has total assets worth 35.8 billion
Br. With its 194 branches all over the country, the
Bank increased deposits by about 35 billion Br in
2006/07 fiscal year.
"The amount of money the Bank will spend is
negligible compared to the benefit it gets from
EPS," Arkebe Asgedom, a banker who conducted a study
on banking automation told Fortune. "The technology
partially reduces the cost for extra manpower and
the bureaucracy associated with transacting, thereby
increasing efficiency."
On top of that, the EPS boosts the deposits of a
bank from two kinds of clients: both the ATM user
and PoS have to maintain an account at the Bank to
make use of the service.
However, a banking expert downplays the importance
of the technology for the local context.
"The fact that
international transactions cannot be undertaken with
debit cards in Ethiopia, where foreign exchange is
regulated, means EPS is not that useful here," the
expert told
Fortune.
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