Ethiopia might scrap telecom privatisation if the expected amount of capital is not invested

According to State Minister Eyob Tekalign, after careful analyses of the value of Ethio Telecom as well as the license it plans on giving to two other telecom operators, the Ethiopian government now has a definite amount of capital it plans on bringing in. The minister did not give a specific figure but indicated that if that amount is not met, the privatisation process might be cancelled or postponed.

The comments are the first time since the privatization process began that a government official has suggested that it may not be implemented. Of course, other experts and even bidders have cast doubt on the process, especially when it comes to the restrictions on online banking and infrastructure use that have been put in place.

Much like the criticisms on the regulations, many also find the idea of Ethiopia’s telecom sector (and others) not undergoing massive reforms that allow for the private sector to play a larger role, an unfeasible one. 

Considering the country’s need for foreign exchange reserves, debt repayment strategies, improved services, and jobs, it certainly does not seem advisable to disengage from privatisation efforts; especially ones that have already used up a good amount of the country’s limited financial resources. 

Addressing some of these concerns, the State Minister confirmed that the Ethiopian government is going to provide an even playing field and make sure that prospective licensees do not incur unnecessary losses, although he did not give any specifics as to how this would work. Regulations prohibiting foreign entities from participating in the financial sector remain in place.

Bloomberg

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