Ethiopia needs $2.2bn to modernise its overburdened telecoms sector

Addis Ababa — Ethiopia could require as much as $2.2bn to modernise its creaking, overburdened telecoms sector, a senior government official said on Wednesday.

“The need for (telecoms) infrastructure investment is huge,” state minister of finance Eyob Tekalign Tolina said. “We have said clearly that public investment has run out of steam. We are not going to do unsustainable public investment.”

His comments mark a radical departure from the policies of late prime minister Meles Zenawi, who insisted that the public, not the private sector, must control the economy.

Decades of heavy, public investment aimed to set Ethiopia up as a regional economic powerhouse.

But revenues from Ethiopia’s fledgling manufacturing industry and state-controlled sectors like power and sugar have not grown as expected, necessitating reforms by Prime Minister Abiy Ahmed to rebalance the economy, Eyob and new technocrats appointed by Abiy argue.

Competition and foreign investment

Abiy’s reforms aim to encourage competition and foreign investment, and Eyob said the telecoms sector — long dominated by state monopoly Ethio Telecom — must be the priority.

“Telecoms really affects all sectors. It’s absolutely critical. When you want to unlock potential that was locked, one key enabler is that sector. So naturally we have to focus on telecoms,” he said.

Reuters reported on Wednesday that the government is aiming to award telecom licences to multinational mobile companies by December in hopes they will be up and running in 2020.

Efforts to create an environment conducive to private investment are under way.

Parliament is due to debate a law creating a new telecoms regulator that could issue licences to multinationals.

“We need to establish a competent, independent regulatory body and that independent authority must ensure a level playing field,” the minister said.

The government has worked to make Ethio Telecom more attractive because there are also plans potentially to sell off a minority stake in the company.

Like most Ethiopian state-owned enterprises, Ethio Telecom is struggling with debt. But Eyob said that over the past nine months the authorities had cleared three years of arrears.

“Our vision is to see Ethio Telecom to start taking loans without necessarily requiring the government sovereign guarantee ... bringing Ethio Telecoms to the level of Ethiopian Airlines in terms of the credit rating,” he said, referring to the state-run carrier, which has become a major African success story.

Reuters