Ethiopia has fully impressed the Public Private Partnership (PPP) since the reformist Prime Minister Abiy Ahmed (PhD) took office in April 2018 through enhancing the legal framework. In the first place, Ethiopia has enacted a new Proclamation No. 1076/2018 facilitating Public-Private Partnership (PPP), recognizing that the private sector is essential to support the country’s economic growth and improve the quality of public services, particularly in infrastructure.
The government has also formed a PPP Board to grant approvals at key milestones in the project development process, especially, it has the responsibility of approval of PPP pipeline projects, approving a PPP project to tender and award. The Board consists of the Ministry of Finance (that chairs the Board), National Bank of Ethiopia, Ministry of Water and Energy, Transport and Logistics Minister, Public Enterprises Holding and Administration Agency, Ministry of Planning, Ministry of Peace, and two members from institutions representing the private sector.
Within the Ministry of Finance Public-Private Partnership Directorate General (PPP DG) is also established and acts as Secretariat to the Board. The directorate general endeavors to meet the growing demand of the public on service delivery and infrastructure.
Moreover, it promotes PPP conceptualize, identify and categorize projects, make recommendations, establish policy and guidelines, coordinate activities and ensure compliance. These are core powers in the Proclamation, depending on the level of delegation to it agreed by the Board.
The Board as well approves appropriate structures and feasibility studies, set minimum standards, and require a value for money to be demonstrated. There are three main departments which are organized in the General Directorate. These are PPP Project Development and Monitoring Directorate, PPP framework Management and Contract support Directorate and Capacity Building, Knowledge Management, and Communication Directorate.
To augment the government’s commitment toward PPP, the Federal Democratic Republic of Ethiopia, represented by the Ministry of Finance and Ethiopian Electric Power (EEP), has signed a Memorandum of Understanding (MoU) with the African Trade Insurance Agency (ATIDI), a leading pan-African multilateral trade and investment insurer on February 18.
This breakthrough agreement is designed to accelerate Ethiopia’s transition to clean energy by attracting foreign investment into renewable energy projects through ATIDI’s Regional Liquidity Support Facility (RLSF).
The MoU establishes a framework for collaboration between Ethiopia and ATIDI, ensuring that Independent Power Producers (IPPs) or Public Private Partnerships can leverage RLSF, a liquidity support mechanism developed by ATIDI in partnership with KfW Development Bank and Norad. RLSF provides financial protection to IPPs/PPPs by availing and accelerating payments owed by state-owned utilities, addressing a key challenge in the energy sector by enhancing payment security and financial stability.
In his key message, Ahmed Shide, FDRE Minister of Finance, said “Through this partnership, Ethiopia aims to facilitate timely payments to developers, mitigate financial risks, strengthen the bankability of power purchase agreements (PPAs), and enhance the creditworthiness of EEP.”
He further strengthened the message by stating that these efforts will create a more attractive investment environment for renewable energy projects.
Ethiopia becomes the 11th ATIDI member state to sign the RLSF MoU joining Benin, Burundi, Côte d’Ivoire, Ghana, Kenya, Madagascar, Malawi, Togo, Uganda and Zambia. Since its inception, guarantees worth USD 24.7 million have been approved under the RLSF portfolio; in turn facilitating investments totaling USD 373.1 million and the development of 181.95 MW of installed renewable energy capacity across Africa.
With hydropower serving as the main source of its electricity generation, Ethiopia has achieved notable progress in growing its energy sector. By utilizing its abundant renewable resources, such as wind, solar, and geothermal energy, the Ethiopian government hopes to diversify this energy mix and improve sustainability and dependability.
This partnership is a big step towards making Ethiopia’s renewable energy environment more resilient and investor-friendly. The nation is well-positioned to meet its energy transition objectives and provide financial stability for its power sector stakeholders with ATIDI’s assistance.
Furthermore, Minister Ahmed Shide, noted: “Ethiopia has embarked on a comprehensive economic reform agenda known as the Homegrown Economic Reform Agenda (1 and 2). This initiative aims to address structural challenges and promote sustainable economic growth.”
The establishment of macroeconomic stability, trade, and investment are the main focuses of the reform. By streamlining laws, enhancing infrastructure, and promoting private sector involvement, efforts are being undertaken to improve the investment climate and advance commerce, Ahmed elaborated the commitment of the government towards PPP.
The Regional Liquidity Support Facility (RLSF) is expected to play great role by enhancing the bankability of PPP projects and the sustainable implementation of such projects.
The reform also aims to boost productivity in key sectors such as agriculture, manufacturing, and services to drive economic growth and create jobs. Investment attraction too focuses on creating improved investment climate that has already attracted foreign direct investment, particularly in sectors like energy, manufacturing, and agriculture, Ahmed reiterated hoping: “We look forward to expanding this positive collaboration with ATIDI to cover additional sectors other than energy.”
BY DIRRIBA TESHOME
THE ETHIOPIAN HERALD THURSDAY 20 MARCH 2025
