Ethiopia aims to offer foreigners stakes in some state firms

Ethiopia aims to offer foreigners stakes in some state firms

By Reuters For Citizen Digital

Ethiopia aims to offer foreigners stakes in some state firms
Ethiopian Prime Minister Hailemariam Desalegn gestures during a news conference in Addis Ababa, Ethiopia, October 11, 2016. REUTERS/Tiksa Negeri

(Citizen digital) –Ethiopia aims to offer foreign firms stakes in some state-owned companies to help modernize the businesses, the prime minister said on Monday in a shift from stressing state investment to drive growth.

The move would include offering a stake in state-owned Ethiopian Shipping and Logistics Services Enterprise, Prime Minister Hailemariam Desalegn told a news conference, without naming other firms or giving the size of any stakes on offer.

It was not immediately clear if the initiative would mean opening up the state-run telecommunications sector or banks, which are either owned by the government or private Ethiopian investors. Foreigners have eyed those sectors in particular.

“We are trying to privatize some equity of some of the companies we have … It is not because of a shortage of finances, but because we want to modernize the system itself,” he said in the Ethiopian capital Addis Ababa.

“When foreign companies get into these kinds of companies, they will obviously bring technologies, know-how and managerial capability,” he said.

Ethiopia’s economy is one of the fastest growing in Africa, but the expansion has mainly been fuelled by huge state investment in dams for hydroelectric power, new highways and an electrified railway linking the landlocked nation to a port in neighbouring Djibouti.

The International Monetary Fund has said Ethiopia needs to attract more private sector investment to maintain growth. But the government has in the past tended to brush off such advice and said it would keep charge of key sectors.

Improving transport is vital to Ethiopia’s bid to become an industrial hub for the region. The new railway will cut the journey time for exporting goods to the coast to a few hours from what would in the past take at least two days.

Referring to Ethiopian Shipping and Logistics, the prime minister said: “The newly inaugurated railway will substantially decrease the cost of transportation in this country. But the logistics issue is critical as well.”

“That is why we want to bring new insight and introduction of new ways of doing business and to modernize the system with some renowned companies’ intervention into the logistics system,” he said.

He did not give details about what stake might be on offer but it is likely to hearten foreign investors, keen to have greater access to a nation with almost 100 million people and which offers cheap power supplies and labour.

Foreign investment has already been rising from a low base, including farms producing flowers and other horticultural products for export and in manufacturing.

Some foreign-owned firms’ facilities were damaged last year in protests sparked by a government development plan for the capital area but which broadened into broader anti-government protests. The government imposed a state of emergency in October, saying at the time it would last six months.

The prime minister told Monday’s news conference that emergency rule had helped restore “normalcy” but the government now had to “consolidate the gains”, giving no clear timeline for lifting the measure.