Ethiopia’s privatization urgency sparks debate

Ethiopia’s privatization urgency sparks debate


Intellectuals and business leaders gathered in Addis Ababa this morning debate about the benefits of Ethiopia’s “urgency” to privatize the state owned mega enterprises such as Ethio Telecom and Ethiopia Airlines among others.

“We have been cheated for the past 50 years or so by privatization ad liberalization policy promoted by the IMF and the World Bank,” said Kibur Gena, one of the panelists who, is also chairman of Africa Chamber of Commerce.

He cited as example what privatization has done to the former Soviet Union (now Russia) and how China smartly applied liberalization and privatization I a way that benefits its people and the economy.

Mentioning as example the experience of the neighboring Kenya, which about a decade ago privatized its airline, which is own in bankruptcy, Mr. Kibur urged the government to slow down its rush to privatize Ethio Telecom and Ethiopia Airlines as well as other mega public companies.

He stated that the objective of the state enterprises in Ethiopia is to fairly provide services to all people. But when the companies will be transferred to the private sector their motive will be only profit making.

“Why are we I a rush to sell these assets of the people,” Kibur Gena questions, expressing his suspicion that there is ideological agenda behind Ethiopia’s rush to liberalize the economy ad privatize its mega public enterprises. “I don’t think we are free from the international financiers pressure such as, the World Bank…We are all grow up and know it,” he said.

Kibur Gena argued that there should be other options to improve the efficiency of these state enterprises if the motive behind government decision to privatize the companies if it is really about improving efficiency of the companies.

Studying the successful Ethiopia Airlines, which is a state enterprise but globally competitive company and replicating its best practices in Ethio Telecom ad other companies can help to improve efficiency instead of rushing to privatize the public asset, according to Mr. Kibur Gena.

He further suggested that if privatizing the public enterprises is a mandatory ad the companies need additional capital injection to improve efficiency, the enterprises should be sold to the local people instead of to foreign companies, like the Chinese did.

He suggested that if it is about generating additional revenue by selling the companies, the government can organize the people to buy shares in order to make sure that all the people continue to get the services they used to get fairly at an affordable price.

Supporting his argument, may participates of the panel raised their concerns related to the speedy privatization process of by the government of Ethiopia. “We should approach privatization in terms of maintaining our sovereignty and bringing social justice,” said one of the participants.

Biruk Taye (PhD), senior adviser at the Ministry of Finance of Ethiopia, who presented a paper on the progress of the privatization process, stated that the rush to privatize the state enterprises has nothing to do with ideology.

He stated that the current high inflation, inefficiency of the companies and debt burden of the country, are among the reasons that forced the government to embark on massive liberalization and economic reform.

Indicating that currently only 44.3 percent of the people of Ethiopia have access to electricity, Ethiopia needs to increase that figure to 86.2 percent electricity needed to become middle income country.

The highly indebted state owed electricity company needs to raise additional capital and investments to reach the people living in the darkness.

He also stated that industrial parks will be fully privatized because the government will not get its huge investment on the parks in a short period of time by just collecting only service fees from investors operating in the parks.

Commenting on the possibility of Ethiopians to take part in the privatization and ownership of the state enterprises, Dr. Biruk stated that the doors are not closed for Ethiopians.

The forum this morning is organized by Forum for Social Studies (FSS), which has been serving as knowledge sharing platform organizing such dialogues on social, economic ad political issues relevant to Ethiopians.