◼ ECONOMICSTHEBOTTOMLINE Ethiopiaaverages10%annualgrowth,butthe
stateplaysanoutsizerole.Thegovernmentis seekingtochange
thatbysellingsugarfactories,thephonesystem,andrailroads.31COURTESY
JOHN
BOWKER.
DATA:
WORLD
BANK
Eritrea.Withaverageannualgrowthofalmost
10%,EthiopiaisamongAfrica’smostdynamic
economies.Yetit remainsoneoftheregion’smost
state-controlled, a legacy of the Marxist-Leninist
Derg regime that ruled from 1974 to 1991. “The pri-
vate sector is not playing its natural role,” says Eyob
Tekalign, a former diplomat and private equity exec-
utive hired by Abiy as state minister for finance.
“Our growth had shortcomings in terms of quality,
job creation, inclusivity, and benefiting the poor.”
The government aims to raise at least $7.5 billion
fromthesugarindustry,thephonesystem,rail-
roads,andotherinfrastructure.Ethiopianeedsfor-
eignexchange:Exportshavedwindled,andexternal
debthasgrown26%since2016,to$27billion—more
thana quarterofthecountry’slikely 2020 gross
domesticproductofroughly$100billion.Firstup
willbe 13 sugarfactoriesandplantations,withini-
tialsalesexpectedbyJune—thoughtheentirepro-
cesswilllikelyextendintonextyear.Theministry
saysroughlytwodozencompaniesfrom 10 coun-
tries are considering bids.
That will soon be followed by the sale of assets
of state-owned Ethio Telecom, which struggles to
provide anything more than basic voice service in
most of the country. The government plans to sell
as much as 49% of the company this year and issue
two mobile and broadband licenses to boost compe-
tition. France’s Orange, South Africa’s MTN Group,
and Safaricom of Kenya have all expressed interest
in licenses, which bidders estimate will fetch $1 bil-
lion, as well as another $1 billion-plus to build out
networks. With its growing economy and a pop-
ulation of 100 million on track to double by 2045,
Ethiopia is “the biggest prize left in Africa from a
telecoms point of view,” says Michael Joseph, acting
chief executive officer of Safaricom Ltd.
After that could be Ethiopian Railway Corp.,
especially the line that covers the 466 miles from
Addis Ababa across the border to the port city of
Djibouti. The route, opened in 2018 with $4 billion in
funding from China, links landlocked Ethiopia with
the coast. Also likely to be sold are assets of the elec-
tric utility, with more than a dozen hydro plants,
and a series of industrial parks built with yet more
loans from China.
One company not for sale is Ethiopian Airlines,
Africa’s biggest carrier. When news of the privatiza-
tions became public, investors worldwide began
eyeing it, but the government says a sale is unnec-
essary. The airline has turned Addis Ababa into the
busiest hub for traffic from the region to the Middle
East and Asia, putting it in competition with rivals
worldwide and forcing it to be efficient. Privatization
“is not a priority,” says CEO Tewolde Gebre Mariam.While Abiy has strong backing from investors,
his economic record is mixed. Black-market foreign
exchange rates stand more than 30% above the offi-
cial bank price, and the World Food Program is pre-
dicting food crises in some areas this year. The price
of injera, the staple flatbread, has jumped as infla-
tion has climbed to about 20%.
The political situation is equally iffy, giving some
potential investors pause. Abiy has been criticized
for an authoritarian style and surrounding him-
self with loyalists, and more than 200 people have
been killed in demonstrations and ethnic clashes
since July. Even the Ethiopia-Eritrea peace process
appears to have stalled, with the land border once
again closed. Miltiadis Gkouzouris, CEO of Dutch
agricultural development firm HVA International,
says he’s “absolutely interested” in returning to
Ethiopia’s sugar industry almost a half-century after
his company’s licenses were taken away by the Derg
regime. “But we are waiting to see how the political
situation develops,” he says.
The entrepreneur pushing the community
ownership plan near Irba’s farm is Bitew Alemu,
a stocky 37-year-old owner of a computer acces-
sory and printing business. He’s competing against
far larger companies from abroad, so his local ties
and the support of farmers and factory hands are
essential for his pitch. “We are working with them
because we are part of them,” Bitew says after meet-
ing with maintenance workers outside a 65-year-old
sugar factory that’s been out of commission since- While his plan would require investment from
farmers, he says he’s lined up bank financing for
those who need it, and he insists a united effort
will let everybody prosper. “If they work hard and
the company becomes profitable, they’ll get a divi-
dend,” Bitew says. “Then we can deploy more fac-
tories and boost production—invest and expand the
business.” �John Bowker
▲ Sugar plantations
are suffering under
mismanagement▼ Ethiopia’s GDP
growth
Estimated2009 202012%96