ADDIS ABABA – The Ethiopian Public Enterprises Holding and Administration Agency (PEHAA) announced that it has already finished preparation to privatize state-owned enterprises. Ethiopian Airlines, Ethio-telecom, Ethiopian Electric Power Corporation, and Ethiopian Shipping and Logistics Services Enterprises are among the enterprises that would be privatized; and some of the sectors opened for bid.
The Council of Ministers, in its 76th Regular Session, approved the draft bills forwarded to it to amend the privatization bill, and referred it to the Parliament for approval. The bill drafted by the Ministry of Finance to amend the privatization law aims to sustain economic growth and transformation in the country, and create favorable investment climate for the private sector.
It also intends to raise funds for infrastructure, give more space to the private sector and increase the competitiveness of state-owned enterprises. The current rate of inflation, inefficiency of the companies and debt burden of the country, are among the reasons that forced the government to embark on massive liberalization and economic reform.
The Ethiopian Public Enterprises Holding and Administration Agency (PEHAA) disclosed that since it started to partially and fully privatize two state-owned enterprises, the process is going step-by step, and accordingly six sugar projects are set to be privatized at the first quarter of 2020, which is expected to help exploit the country’s potential for sugar production.
Agency Public Relations Head, Wondafrash Assefa told The Ethiopian Herald that the progress for privatizing enterprises is going well. Since the privatization process started in 1987, over 370 public enterprises with their branches were transferred to private, and brought in 49.1 billion Birr. Close to 80 percent of these enterprises shifted to private owners, he noted.
While privatizing state-owned companies creates more job opportunities and lead to efficient service delivery, the process should be handled delicately. According to Wondaferash, Ethiopia’s privatization process is better compared to other countries since they tend to move to mass privatization, but in Ethiopia, the process goes in a gradual manner working its way up from the smallest to the biggest companies step-by-step.
As to him, the transfer is underway in a transparent manner, and the Agency considers buyers’ knowledge, experience, technological as well as managerial capacity before deciding. Well-designed policy and regulatory framework has been put in place to protect the domestic industry from distorted international price, and the regulation will create different price regime between domestic and export markets and ensure equitable export obligations among producers.
Dr. Tilaye Kassahun, General Manager at PRIN International Consultancy and Associate Professor at St. Mary University, for his part said that the government needs to take necessary caution and set criteria while privatizing state-owned companies. The process to privatize state-owned companies needs due caution, he noted.
Privatization will bring benefits for the overall development of the country both in quality and experience sharing as the companies will be equipped with modern technology, and better service and experience. And through this process, the consumer will get quality service with a better price, while the local companies benefit from the competition, he said.
He stated that the objective of the state enterprises in Ethiopia is to fairly provide services to all people. But when the companies are transferred to the private sector, their motive change to only making profit; due to this, it is necessary to take necessary caution, he concluded.
The Ethiopian Herald, December 4/2019
BY HAILE DEMEKE
