The National Intelligence and Security Service (NISS) of Ethiopia, an agency typically preoccupied with counter-terrorism and regional stability, has opened a new front in a less conventional theatre: the back offices of sports-betting applications.
In a statement that points to the desperation of Ethiopian authorities to stem capital flight, the agency announced the detention of 24 individuals this week. Their alleged crime? Orchestrating a sophisticated financial plumbing system that siphoned more than 100 billion Birr ($730 million) out of the government’s reach.
For the licensed fintech sector — once heralded as the vanguard of Ethiopia’s digital modernization — the raid signals a chilling shift. No longer just neutral service providers, payment aggregators and mobile wallet operators are now being treated as accomplices in the nation’s currency wars.
The Betting Arbitrage
The mechanics of the alleged fraud, as detailed by NISS, reveal a market adapting faster than its regulators. Investigators claim that sports-betting companies, working in concert with domestic fintechs, were not merely taking wagers on the Premier League; they were running a shadow foreign exchange desk.
Earnings from local gamblers were reportedly funnelled through licensed payment aggregators, only to be converted into foreign currency via cryptocurrency platforms and international hawala networks. When regulators came knocking, they found “several licensed operators” had already abandoned their registered premises, leaving behind little more than empty desks and server logs.
The authorities were unamused by the defence offered by the remaining payment providers, who cited “client confidentiality” for their failure to report suspicious flows. For the NISS, privacy is a luxury the Ethiopian economy can no longer afford. The agency noted that operations were being directed by foreign nationals using powers of attorney and offshore software, rendering local supervision all but impossible.
A Central Bank Under Siege
The crackdown comes as the National Bank of Ethiopia (NBE) fights a two-front war to defend the Birr. On the streets of Addis Ababa, the currency has cratered to 166 against the US dollar, a staggering divergence from the official commercial bank rate of 154. This 7.8% per cent spread acts as a relentless incentive for the black market; why sell dollars to a bank when the street corner offers a premium that effectively covers a year’s worth of inflation?
The NBE’s response has been a mix of coercion and cajolery. Its “DEBO” initiative, launched last year, attempts to charm the diaspora with promises of mortgage access and car loans if they remit funds through official channels. Ethiopian banks have even pooled 100 billion Birr to back these incentives.
Yet, the formal sector is losing the user-experience battle. The state-owned Telebirr may be a domestic giant, but for cross-border flows, the diaspora prefers the speed and rates of the grey market.
For Ethiopia’s licensed fintechs, the message from the NISS raid is stark: in a time of forex scarcity, neutrality is complicity. The government’s Homegrown Economic Reform Agenda, intended to liberalize the market, has paradoxically led to a tightening of the police state’s grip on financial flows.
As the spread between the official and parallel exchange rates widens, the incentives for “creative” accounting will only grow. The government may have arrested 24 people, but as long as the market logic dictates a 12-Birr premium on every dollar kept out of the banking system, the NISS will find itself chasing ghosts in the machine for some time to come.