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2nd July 2019

Ethiopia opens the door to foreign investment with a new legislation on Telecoms

Ethiopia’s government approved a draft legislation that allows foreign companies to invest in the telecommunications industry of the second-most populous country in Africa.

The law establishes an independent communications regulator, accountable to the prime minister, that will be responsible for promoting competition

Lawmakers have “approved into law the Ethiopian Communication Regulatory Proclamation,” Innovation and Technology Minister Getahun Mekuria said in a tweet. “This is a massive step in reforming the telecom sector.”

Key Insights:

  • The legislation is the latest in a series of grandiose reforms Prime Minister Abiy Ahmed has implemented since he became the premier two years ago, as he seeks to loosen state control of the economy. He’s pledged to split the government-owned monopoly, Ethiopia Telecommunications Corp., and sell shares in the two new entities piecemeal to international operators.
  • Ethiopia offers a rare opportunity for interested foreign parties to access one of the continent’s biggest markets. With one of Africa’s fastest-growing economies and more than 100 million people, it’s coveted by firms including MTN Group Ltd. and Vodacom Group Ltd., the continent’s largest mobile-phone companies.
  • Vodacom unit Safaricom Plc, Kenya’s biggest company by market value, is already providing Ethiopia Telecommunications with fiber connectivity and many additional facilities. The partnership has potential to be expanded, according to Safaricom Chief Executive Officer Bob Collymore.

This change is happening at a time when Ethiopia’s planned sale of state-owned assets will help expand an economy that could be among the world’s fastest-growing over the next three years, Prime Minister Abiy Ahmed said.

The government has outlined proposals to sell stakes in companies including Ethiopian Airlines Enterprise and Ethio Telecom. The planned disposals are part of a strategy to attract investment to an economy that credit-ratings companies forecast will grow an annual average of more than 8 percent through 2021.

Ethiopia is undergoing “significant institutional reforms” to make it easier to do business, and increase private-sector investment to boost growth, Abiy has said. The government is seeking to achieve a “fast-paced, sustainable” expansion.

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Ethiopia foreign investment Telecoms