Planning for drought relief and floods in developing countries is greatly hampered by the lack of a sufficiently dense network of weather stations measuring precipitation. In this paper, we test the utility of three satellite products to augment the ground-based precipitation measurement to provide improved spatial estimates of rainfall. The three products are the Tropical Rainfall Measuring Mission (TRMM) product (3B42), Multi-Sensor Precipitation Estimate–Geostationary (MPEG) and the Climate Forecast System Reanalysis (CFSR). The accuracy of the three products is tested in the Lake Tana basin in Ethiopia, where 38 weather stations were available in 2010 with a full record of daily precipitation amounts. Daily gridded satellite-based rainfall estimates were compared to (1) point-observed ground rainfall and (2) areal rainfall in the major river sub-basins of Lake Tana. The result shows that the MPEG and CFSR satellites provided the most accurate rainfall estimates. On average, for 38 stations, 78 and 86% of the observed rainfall variation is explained by MPEG and CFSR data, respectively, while TRMM explained only 17% of the variation. Similarly, the areal comparison indicated a better performance for both MPEG and CFSR data in capturing the pattern and amount of rainfall. MPEG and CFSR also have a lower root mean square error (RMSE) compared to the TRMM 3B42 satellite rainfall. The bias indicated that TRMM 3B42 was, on average, unbiased, whereas MPEG consistently underestimated the observed rainfall. CFSR often produced large overestimates.