Posted by The Ethiopia Observatory (TEO)
Mela Electro Manufacturing Plc is inaugurating, the first assembly plant for automated teller machines (ATMs) in Ethiopia, introducing a new form competition to a market currently dominated by handful of foreign brands and their local representatives.
To-date local companies, such as Moti, CBM Integrates, and SSC have been in the sector representing NCR, Computer Business Machines (CBM) and WINCORE, with CBM manufacturing the Diebold brand, while the other have ATM brands called by their own names.
Giant among these local representatives is Moti, which has directly or indirectly supplied 1,616 NCR brand ATMs to banks, with over 1,500 of them going to the state owned Commercial Bank of Ethiopia.
Mela comes into the business offering locally assembled machines at a time when CBE has started buying directly from manufacturers instead of through their representatives, as it had done until the end of the last fiscal year.
“This decision has come after a gap in performance of local suppliers in terms of delivery and the procurement process being very long and cumbersome,” said Ephrem Mekuria, communication director at CBE.
Mela was established in 2012 with a capital outlay of 50 million Br by a husband and wife team, Naoll Addisu, CEO and Lilia Hailu, Chief Operations Officer. Both have worked in information technology for years, with Naoll having 10 years’ experience in the financial sector in the US, working for financial services firms Sallie Mae and JPMorgan Chase. Mela has erected its plant on 5,000sqm plot of land in Sebeta town, 21Km south-west of Addis Abeba.
It is now working on machines with parts which the company says are sourced from the US, Europe and Asia, although Naoll declined to give details.
Mela has determined that 10,000 to 15,000 ATMs will be deployed in Ethiopia in the coming five years, Naoll said. The regulatory push on banks to reach the unbanked by at least increasing their number of branches by 25pc is another comparative advantage the study found in the context. There are now 2,500 ATMs deployed by both private and public banks.
Mela initially targets the domestic market but could expand to cover the eastern African market. It has now the production capacity of assembling four ATMs per day and later with the construction of a new plant inside the compound it plans to expand it to 10 to 15 ATMs.
The new company has now employed a staff of 50 people, including seven electro-mechanical technicians and two engineers. The service of the company extends to maintenance and other ATM service provision.
In this regard, it is in the process of securing a licence to be a local agent for internationally dominant brands including NCR, Diebold, Wincore and Fujitsu, Naoll said. NCR is currently the most dominant brand in Ethiopia.
One of the local agents claims to have exclusive right which could prevent Mela from offering maintenance services for the existing brands.
“There are no such agreements,” argued Naoll. “It all depends on the preference of the banks.”
It is like giving exclusive rights for local agents of various brands of vehicles to give their respective maintenance and not allowing garages to exist, added Naoll.
As Fortune visited the plant on January 6, 2015, technicians of Mela were busy assembling NCR ATMs.
Given experience of the existing local importers and service providers it might be difficult to penetrate the market, Naoll said, but price competitiveness would give his company an advantage. Mela could offer prices reduced by 25pc to 40pc as well as an 18-month warranty for its customers.
“We give the guarantee to make sure that we earn the trust from our customers,” said Naoll.
The company will join the market with three models of ATMs – Mela 20015 Lobby and Through the Wall (TTW) ATMs, and Mela 20025 TTW deposit Automation ATMs. The models have five cassettes for five kinds of currency notes. They have the capacity to handle from 500 to 5,000 transactions per day.
Mela will use certified software that has EMV compliance and PIN pads that are certified by PCI-DCI.
Mela is also preparing to introduce a new component to ATM supply and deployment service, that is, a pre-assessment consultancy identifying how much and where ATM booths should be deployed.
“With the hope that the regulatory framework will be conducive, we have a plan to even manage transactions of the banks through ATMs,” Naoll said.
Speaking for the bankers themselves, an official with Bunna International Bank, S.C. remarked, “it is a good thing to have them on board, as they will bring more options.”