Ethiopia opens airline and telecoms to private, international investors

by EthioForum

NAIROBI, Kenya—Ethiopia said it plans to sell stakes in some of the country’s most-prized assets after decades of state control, including telecommunications company Ethio Telecom and booming Ethiopian Airlines, liberalizing one of the world’s fastest-growing economies.

If implemented, the move, announced late Tuesday by the Ethiopian People’s Revolutionary Democratic Front, will present one of the biggest business opportunities in Africa to foreign and domestic private investors, but also one of the most complex.

Ethiopia’s economy, despite being hampered by near-total state control, droughts and social and ethnic unrest, was the world’s fastest-growing in 2017 and is set to expand 8% this year, the International Monetary Fund said.

It is Africa’s second-most-populous nation after Nigeria, with more than 100 million people, vast territory and a powerful, professional army.

Major telecommunications firms like South Africa’s MTN have opened offices in the capital Addis Ababa and are waiting for the part-privatization of state monopoly Ethio Telecom to be announced.

On Wednesday both MTN and Vodacom through representatives said they were interested in exploring acquiring a stake in Ethio Telecom following the government’s announcement.

“MTN is excited by the potential opening up of the Ethiopian market as it would be a natural fit for MTN’s existing and extensive Pan African footprint,” a spokeswoman for MTN said.

Meanwhile, the partial privatization of Ethiopian Airlines comes as the carrier rolls out ambitious growth plans. The airline has built one of the youngest fleets of aircraft in the world and its passenger count is expected to surpass 10 million by the end of 2018.

The announcement is a sea change for Ethiopia, where the ruling EPRDF party has controlled almost every aspect of citizens’ lives, including the economy, rights and privacy since coming to power in 1991. It comes two months after Abiy Ahmed became the first prime minister from the EPRDF to take office not following a revolution or the death of a previous leader.

“The new leadership in Addis is smartly modifying and adopting policies and strategies that will sustain Ethiopia’s growth,” said Zemenedeh Negatu, chairman of Fairfax Africa Fund LLC, a U.S.-based investment firm. ”I also strongly believe that these enterprises should be privatized by listing their shares in a local stock market, which should be established as soon as possible,” he added.

But the move to privatize is also seen as a pressing necessity after years of severe foreign-exchange shortage. In January, the IMF urged the government to open up key industries to investors, cautioning that the state’s accumulation of debt, used to push high growth rates and job creation, was unsustainable.

Ethiopia has seen some smaller privatizations since the mid-1990s, including tobacco, brewery and mining companies, and has tightly controlled partnerships with private-sector actors in services like health care and construction. It is particularly close, both commercially and politically, to China, but remains a key U.S. ally in the war on terror.

In another announcement late Tuesday, the EPRDF said it would comply and implement a United Nations-backed international-court ruling that granted its much smaller neighbor and former territory Eritrea the border area of Badme.

Ethiopia’s occupation of Badme has given Eritrea’s long-term dictator, Isaias Afewerki, grounds to keep his tiny country in a state of emergency, conscripting the entire population and sparking one of the world’s biggest refugee movements to Europe.

“#Ethiopia & #Eritrea have the most unique cultural, historical & blood ties,” said Fitsum Arega, Mr. Ahmed’s chief of staff, in a tweet from his confirmed account. “The suffering on both sides is unspeakable because the peace process is deadlocked. This must change for the sake of our common good,” he added.


Lagos, Nigeria (CNN) Ethiopia is opening key economic sectors, including the state-owned Ethiopian Airlines and state-run telecoms, to local and international private investors.


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