REFORMS

Africa’s most promising economy is opening up to international investors

Quartz africa
Quartz africa

Domestic and foreign investors will soon be able to get a slice of Ethiopia’s booming economy

In a major policy shift, the government is set to loosen its monopoly on several key economic sectors, including aviation and telecoms. The new policy will allow investors buy stakes in major state-owned enterprises, including Ethio Telecom and Ethiopian Airlines. The airline is already Africa’s largest and fastest-growing in terms of the size of its fleet of aircraft and its annual passenger numbers.

The government will also allow “outright full privatization” in several other sectors.

The government says the policy changes are crucial to boost and modernize a promising economy which has grown at around 10% for the past decade and has become a regional reference point: East Africa led Africa’s economic growth rate in 2016, mainly thanks to Ethiopia.

The potential of a more open Ethiopian economy is bound to appeal to investors drawn by the market size given Ethiopia’s 100 million population and work it’s already done in building out some much-needed infrastructure, like transport. Increased investment could also help the government solve a crucial jobs problem given high unemployment rates among young people. Even before international investment Ethiopia has already been one of the world’s fastest growing economies since 2000.

MTN, Africa’s largest telecoms operator with operations in 17 African countries, has already signaled its interest. The telecoms company says Ethiopia would be “a natural fit” for its existing “pan African footprint.” South Africa’s Vodacom also expressed interest in an “attractive” Ethiopian telecoms market.

The policy shift is the latest of several changes implemented by Ethiopia’s new government, led by prime minister Abiy Ahmedthe youngest head of government in Africa. Since taking office in April, Abiy’s government has ended an internet blackout and freed thousands of political prisoners including opposition leaders and journalists. The government has also confirmed it will end a nationwide state of emergency two months ahead of schedule and will fully accept a peace deal with neighboring Eritrea after decades of tension between both countries.

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