In a major policy shift, the Government of Ethiopia decides to liberalize major state monopoly companies including Ethiopian Airlines, Ethio Telecom, Ethiopian shipping Lines and Ethiopian Electric Power Corporation.
The decision was made on Tuesday during the Ethiopia’s ruling party coalition, the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF) Executive Committee meeting. The shares of these companies will be offered to both local and foreign investors while the government remains to hold major shares, according to the decision.
In 205/16 Ethio Telecom has generated total revenue of 28.4 billion birr (around $1.1 billion at the current exchange rate). It is not yet clear if the new decision of the government allows other telecom operators to compete with the Ethio Telecom.
In the nine months before April 2017, Ethiopian Shipping Lines & Logistics Service Enterprise profited 10 billion birr (around $370 million) at the prevailing exchange rate.
While in ten months before May 2017 Ethiopian Electric Power Corporation has earned $165m in revenue for sale of electric power.
In 2017 Ethiopian Airlines, one of the fastest growing and largest aviation group in Africa, has reported a total profit of $232 million. The Group also aims to generate $10 billion annual revenue by 2025.
The government has also decided to sell wholly or partly the state owned sugar factories and fertilizer production projects.
The government decision will enable the country to mobilize money for other investors and solve the current foreign currency shortage as well as strengthen the role of private sector in the economy, according to Ahmed Shide, the new Minister for Government Communications Affairs of Ethiopia.
Commenting if the decision signals the end of developmental state policy of Ethiopian government, Mr. Ahmed, “The role of developmental state is not the same when it is started and when it is completed,” said
The fact that the private sector was premature in the previous years has forced the government to take a major role in the economy of the country, according to Mr. Ahmed who stated that the decision to liberalize has come following the development of the private sector in the country.
Ethiopian government has been refusing to liberalize the telecom and financial sector including banks and insurances. Following this decision it is not yet clear if the government is going to open the financial sector for foreign investors.
Liberalization of telecom sector in Ethiopia will lead to improvement in quality which calls a policy measure to improve the current telecom service status, according to Miyahel Desta’s paper, “Liberalization of telecommunication in Ethiopia challenges and prospects: citizens’ view and opinion’.
“Hence, opening the sector for competitions will help in achieving this goal because service provider to attract the customers and stay in the market will deliver quality service to the customers that ultimately help the economy grow and be competitive in the international market,” the paper concluded.