Ethiopia plans cautious privatization of some state-owned firms

Ethiopia is open to selling off a host of state-owned firms, either partially or entirely, as part of a major economic reform drive designed to “unleash the potential of the private sector”, its information minister said on Wednesday.

In an interview with Reuters, Ahmed Shide said the government of Prime Minister Abiy Ahmed – which has announced a stream of reforms since coming into office in April – would retain majority holdings in the state-run airline, logistics, telecoms and energy companies.

However, everything else from hotels to sugar farming to cement production could be up for sale, with the sole exception of the tightly controlled financial services sector whose fate was yet to be decided, he said.

“The main objective of this is to encourage private sector development in the country,” Ahmed said, making clear that Ethiopia was turning the page on decades of reliance on the state to drive economic growth in the nation of 100 million people.

“The role of the private sector is very fundamental. We did a lot of state development projects. Now we need to unleash the potential of the private sector,” he said.

Ahmed did not give a time-frame for the privatisations but said Addis was tendering for advice from global business consultancies including McKinsey and PwC.

“The detailed planning is not complete but precautions will be made not to have mistakes,” he said. “So we will do it with caution.”

Having come to power less than four months ago, 41-year-old Abiy has turned the Horn of Africa nation – the most populous in Africa after Nigeria – on its head with his bold plans to reshape politics and the economy.

Besides his desire to attract foreign capital to one of the continent’s most closed states – a consequence of Ethiopia’s chronic lack of foreign exchange – Abiy has brokered peace with arch-enemy Eritrea, with whom Ethiopia fought a brutal border war two decades ago.

The first commercial flights from Ethiopia to Eritrea in 20 years took off early on Wednesday.

REUTERS