The Ethiopian government is pushing to adopt a credit rating system in the country to assist foreign companies, the Ministry of Finance and Economic Development (MoFED) has disclosed.
Asked by BNP Paribus - a French bank which co-financed the Ashegoda wind farm in Ethiopia - about the issuance of sovereign insurance and bonds here, Sufian Ahmed, the minister for MoFED, said that plans are well under way to have Ethiopia rated for financial and credit worthiness by international agencies. Though he did not mention the agencies currently undertaking the foreign credit rating process, Sufian said that they have chosen a French company Lazard Limited bank and asset management to initiate proceedings and tender bids. Fitch, S & P, Moody's and Trading Economics are the most renowned rating agencies, used by many countries.
Sovereign credit rating is the rating of a sovereign national government, and it indicates the level of risk when investing in any given country. The credit rating takes political risk into account, and is used by anyone looking to invest abroad
Total Ethiopia and BNP Paribus were some of the companies that accompanied the minister at the signing of loan agreements, held at MoFED. Total Ethiopia requested that MoFED consider the fuel profit margins, which are critically low in Ethiopia. Alstom, another French company that has been building and renovating high voltage electric stations and turbines, requested the resolution of the tax issues the company has experienced since 2011. Nicole Bricq, the French foreign trade minister, urged the Ethiopian government to be a "loyal and fair competition" agent. The minister was forced to call for fair play following the reference by the Ethiopian Chamber of Commerce and Sectoral Association (ECCSA) to the poor trade and investment relationship between the two countries, despite the longstanding political and economic ties.
Mulu Solomon, president of the ECCSA, commended China and Turkey for investing more in Ethiopia, while mentioning that France has acted poorly in this regard. Nicole agreed that the business and economic ties of the two countries have not been to the level of her expectations. "We know that we are not alone. The competition is loyal and fair, but we are not afraid of the Chinese or Turkish," she said.
On Thursday, Bricq signed two concessional loans of 70 million Euros. According to the agreement, 50 million Euros is destined to finance the implementation of a power transmission network which borders the Bishoftu, Dukem, Modjo and Ginchi towns of the Oromia Regional State. The remaining 20 million Euros will help the solid waste management of the capital, Addis Ababa. The existing landfill, Koshe, will be relocated to Sendafa-Buke town, some 38km northeast of the capital.
Bricq arrived in Ethiopia on Thursday for a two day official visit, leading some 25 French companies keen to invest in the country. She met with higher government officials, attended a business-to-business meeting held at the Sheraton Addis on Thursday, and visited the Ashegoda wind farm power project, constructed through the concessional loan of 210 million Euros by France.