BY DANIEL ALEMAYEHU
Among the government responsibilities, Planning better economic policies and supporting both public and private sectors can be mentioned. Decisions made by the government have the potential to bring positive or negative outcomes.
To advance economic progress particularly boosting export and garnering hard currency, substituting import and reducing dependency on foreign financial support is vital. Economic prosperity has positive implication on one’s country sovereignty. The aftermath of the Russia and Ukraine war brought negative economic consequences on developed and developing countries.
As a Sub- Saharan country, Ethiopia is struggling to make the nation better place for its citizens even though numerous pressing challenges it faced. At this point, the incumbent has been working aggressively to achieve economic growth. However, due to the war which was broke out in the northern part of the northern part of the country two years ago, some western countries leveled Ethiopia as belligerent with no evidence and impose economic sanction. The AGOA incidence is the case in point in this regard. With all the odds, the nation has not stopped searching for a way out of the existing challenges.
Since the reform government took power, it has been taking various measures to alleviate poverty and transform the economy to be a hub in the horn. The government has also made various efforts widening the space for the private sector to play pivotal role in the economy. So far the sector involves in service provision such as hotels, tourism, education, health etc.
In the last budget year, the government gave green light to foreign companies to operate here and the entry of Safari-com, the Kenyan based private company by partially privatizing Ethio-telecom can be mentioned as good example. Prominent economists have expressed the benefit drawn from privatizing public owned enterprises. Such venture encourages foreign companies to invest their capital here. Enhanced competition between companies creates self- sustaining private sector and boost government revenue collection capacity.
While he made an exclusive interview with the Ethiopian Press Agency (EPA), Economist Costantinos Berhetesfa (Ph.D.) said that the decision made by the government to advance privatization scheme is applaud able. He also said that the government has to work on opening more doors and create favorable environments for the private sector to play its own part in the economic activities. He also appreciated the government’s commitment to privatize institutions such as Ethio-telecom, sugar corporations and other public owned profit making institutions. In addition he admired its will to open the door to foreign financial institutions to operate here. The economist has also elaborated on the negative quensequence of the monopoly ownership of government on various public enterprises.
State monopoly of enterprises paves the way for corruption, mismanagement and nepotism due to the absence of sense of ownership. Showing green light for the coming of Foreign Direct Investment enables the nation to garner hard currency and shore up shortage of finance. For instance, the government could secure a 3.5 billion USD in the form of loan from China for upgrading Ethio- Telecom. Currently, the loaned money is being paid. Similarly, when Safari-com started business here it invested millions of dollars.
When foreign companies operate here, the nation could draw lesson from the best practices of other countries, enables to tap the opportunities for transferring technology, skills and knowledge. “When I was working at the United Nations, there was a debate to privatize the telecom in Nigeria. Later, we consulted and convinced them and they implemented it. Currently, the country is earning 19 billion USD from the privatized firms. Therefore, it is feasible to privatize profit making organizations to private and foreign companies.” Said Costentinos Berhetesfa.
The companies also created more jobs for skilled and semi-skilled professionals. When the government lets private sectors get involved as shareholders in the state-owned sectors like the telecom, finance, transportation, and others, it will make the economy stronger, the economist stressed. It is also reported that Ethio- Telecom issued an international tender that shows its interest to privatize 40 % of its share.
The Ethiopian Press Agency (EPA) has also interviewed Fairfax Africa Fund, Global Chairman, Zemedeneh Nigatu on permitting the third Telecom operator into the Ethiopian market. He said that allowing foreign company to operate here will strengthen the nation’s development endeavor.
As to Zemedeneh, the peace agreement between the Government and TPLF in South Africa, Pretoria, would build confidence in international investors to invest in the country. Besides, the decision will bring blessings for Ethio-Telecom to enjoy the international market. Bringing international companies to the nation also has numerous advantages for attaining prosperity to the people of Ethiopia. The involvement of foreign financial companies help in transferring knowledge and experiences, increasing the efficiency of the nation’s financial sectors, introducing advanced technologies, and reducing poverty.
Zemedeneh explained that, 40 % of Ethio- Telecom shares will be on sale, and the government plans to own 55 % of Ethio- Telecom, and decided to let the rest, 5 %, to the local investors. In this regard, having three telecom companies in Ethiopia will speed up the nation’s development through strong competition. Such decisions and the peace accord signed earlier this month showing the nation is a good place for investors.
According to the chairman of the Kenyan based Safari-com which recently began to operate here in the Tele-com business here the company registered one million customers within a short period of time. This shows that the telecom sector still has the potential to become the major area to attract foreign direct investment. Expanding and promoting the telecom sector which brings multi-dimensional advantages to the development of banking and ICT sectors that give chance achieving economic acceleration.
From the onset of the reformist government’s assuming power to rule the country, it has taken actions to revive the nation’s economy by addressing its past ills. In order to broaden the role of the private sector in the economy, the government decided to privatize specific institutions so that foreign and local private investment can print their fingerprints on the economic development of the country. Working in collaboration with the private sector will definitely help the nation to achieve its goals through reducing poverty and moving to prosperity.
Ethiopia is still an agrarian economy and agriculture plays vital role in all aspects of people’s life. It is a means of living for 80 % of the population, utilizes 75 % of the nation labor force and contributes 90 % of foreign currency earning. The other sectors such as the service and the manufacturing though they are rapidly growing their role in job creation and contribution to the Growth Domestic Production is not satisfactory. They rather lag behind. Therefore, to transform the economy from agriculture led to that of industry bringing structural change is essential and to that end the labor force stranded in the rural areas must be shifted to the none agriculture sector which are the service and the manufacturing.
Though the government long ago aspired to bring structural change, it plays a dominant role in the economy. Therefore to support the structural change endeavor the role of the prsivate sector in the economy should be widened. The ongoing privatizing the ill-performing public enterprises must be strengthened.
Privatization as mentioned above brings opportunity to attract local and foreign investment, to obtain better management skills and knowledge transfer. Moreover, it minimizes the role of the government in the economy and will give sufficient time to engage in regulatory activities.
The increment of private investment plays key role in job creation for hundreds of thousands of unemployed labor force which again gears to attain structural change.
The Ethiopian Herald December 1/2022
