Ethiopia, like most African countries, looks to privatise key state enterprises to sustain economic growth

Ethiopia’s finance minister says the government is preparing to privatize some state-owned entities. However, the plan to sell off parts of the country’s once-guarded crown jewels is getting a mixed reaction.

At a corner of the Ethiopian Airlines complex in Addis Ababa sits a DC-3 jet, a constant reminder of the milestones that Africa’s most successful national carrier has made since its first international flight 73 years ago.

Now, the airline is seeking a partner as part of Prime Minister Abiy Ahmed’s plan to privatize some of the country’s state-owned entities.

Ethiopia’s Finance Minister Ahmed Shide explains.

“In the past, we have been actively involved in the economic affairs, but now we are rebalancing. We need to facilitate the sustainability of growth. We will first privatize four sectors: the telecom, aviation, energy and logistics, as well,” Shide said.

One of the crown jewels, state monopoly Ethio Telecom, has a customer base of 65 million people.

The finance minister says those numbers should be enough to whet any investor’s appetite.

“The most important incentive is the market potential itself. There is growing market potential in all areas, but we are also revising a lot of laws and procedures and customs as a way of ease of doing business,” Shide said.

Some companies say the decision to open Ethiopia’s markets could not come at a better time. Daryl Wilson, managing director of East African Bottling Share Company, a subsidiary of Coca Cola, agrees.

“I think the opening up of the economy will bring up a whole lot of benefits, as well. Like one of the biggest challenges at the moment is access to foreign exchange and dollars. I think when it opens up — if it opens up, and how it opens up — it will be beneficial to all the players that operate within Ethiopia,” Wilson said.

Not everyone is convinced that privatization is the best path forward.

Getachew Alemu, an investments and development consultant based in Addis Ababa, says the country’s economic problems will not be solved through privatization.

“There are serious concerns about the decision itself and the process by which it is being implemented, the pace of implementing the policy, as well as other related issues like accountability and transparency, and the future of these sectors,” he said.

Alemu also said there needs to be a regulatory framework in place to ensure that shares of the state-owned enterprises are not sold for less than they are worth.