Ethiopia’s economy is expected to grow at 9% in 2019/2020 financial year according to Finance Minister Ahmed Shide. This is more than 1.5% higher than the International Monetary Fund‘s growth projection of 7.7%.
The East African nation which is ranked one of the world’s fastest growing economies hopes to boost its foreign currency earnings once it opens up some of its state owned corporations to international private investors.
Inside an Industrial Park in Bole Lemi, an hour’s drive from Addis Ababa Central Business District, young women bend over sawing machines in a rush against time to meet tight deadlines.
This is one of Ethiopia’s 11 industrial parks. The five operational parks have created 250 000 jobs. These special economic zones are dominated by garments and textile industries, which manufacture for big European and American brands.
Eating with the eyes. pic.twitter.com/5AOapw9Ot6
— Sarah Kimani (@sarahkimani) June 10, 2019
“What I benefit here is skill transfer from the experts, the other thing I am getting myself is income,” says Quality Control Supervisor Mulu Tiku.
Ethiopia is betting on such parks to end poverty and reduce the country’s high unemployment rate. “We have exported more than $186 million since we started to export,” says Industrial Parks Promotions Director Likyelesh Abay.
To attract investors the Ethiopian government offers incentives including income tax exemption. The East African economic giant took a bold step mid last year announcing that it would privatise some of its most prized state corporations, in a bid to shore up dwindling foreign currency reserves and boost growth.
“We will partially privatise four of state owned enterprises, the telecom, aviation, energy and logistics, other sectors we can privatise up to 100%. We want our economy to be competitive; we want to use the potentials of private sector to diversify the source of growth in the economy,” says Shide.
Later, we sat down with Ethiopia's finance minister Ahmed Shide and discussed plans to privatise state Corporations in the country. #SABCNEWS pic.twitter.com/NnNEaXFVNW
— Sarah Kimani (@sarahkimani) June 10, 2019
Economists have long argued that the country’s led growth is in the long run unsustainable.
Major telecommunications companies including South Africa’s MTN have expressed interest in a stake at the lucrative state monopoly Ethio Telecom. “Very broad interest from the global community particularly with the fast economic growth and the big population size in Ethiopia, the market potential is very huge,” says Shide.
Ethiopia is however approaching the privatisation with caution, the banking sector will remain off limits for now. “We need to consolidate on the comprehensive reforms that we are embarking on after seeing the success; maybe in future we will be open for that.”
The decision will present big opportunities for international investors to enter the $80 billion economy in Africa’s second most populous country with at least 110 million people.
