Prime Minister Hailemariam said in an interview with Reuters this week that Ethiopia plans a debut Eurobond once it has secured a credit rating but it will not open up the telecom sector or state banking to foreigners while revenues from these sources are needed to fund new infrastructure.
The Prime Minister said a company was working on the rating process but it would take some time to finalize. Securing a rating would help progress towards an Eurobond issue, but the Prime Minister said plans involved "not only a Eurobond but other bonds as well." He said the government engaged in infrastructure development in order to make the private sector competitive because in Africa the lack of infrastructure was the main bottleneck. The financing comes from government banks," he added. "We engage in railway construction simply because we get revenues from telecoms." The country had been able to finance about 20,000 km of new roads over the past eight years or so because state banks offered funding. Change would depend upon "on how fast we move building the basic infrastructure in the country."
He said foreign investors were keen on the telecom sector because it was a "cash cow" that required none of the effort to make profits that were needed to establish factories in manufacturing, the area which would create jobs and growth. The Prime Minister said criticisms that Ethiopia was starving private enterprise of cash were inaccurate. The government was channeling loans to business, while income for the state from selling licenses or taxes could not match Ethio Telecom's annual revenue of 6 billion birr ($318 million). He noted that neighbors which had opened up their banking industry to foreigners had lost a source of fund: "They handed over their banks to the private sector and the private sector is not giving them loans for infrastructure development."
The Prime Minister said that Ethiopia had received US$2billion of foreign direct investment in the financial year 2012/13 and he expected this figure at least to be matched for each of the next two years. He said a number of large international firms were interested in investment in Ethiopia because of the "huge potential in light manufacturing in Ethiopia," adding that new industrial zones would offer tax breaks, free land and other benefits and could speed up investment flows. He expected growth to pick up to 11 percent in 2013/14 and 2014/15.