22 June 2018

Ethiopia: Privatizing for Noble Cause!

State ownership of public enterprises which Ethiopia has made almost a tradition over the last decades served the country beyond its natural life time. The current climate of business and investment favors private ownership. The size of customers is enlarging at an unprecedented rate with ever emerging demands making the government unable to catch up with it.

For instance, the state-owned Ethio-Telecom for instance focused more on mobile services than automating the service sector such as health and education as Prime Minister Dr. Abiy Ahmed exactly said it while addressing questions to members of parliament last Monday.

Few who masked themselves behind short-lived, yet lavish, benefits are trying to deflect the decision which the party in office, Ethiopian Peoples Revolutionary Democratic Front (EPRDF) Executive Committee's economic reform that aimed at privatizing public sectors, in some case making the majority stake in its holding--mixing ideology and other trivial issues as fig leaf for their claim.

In the first place, the government cannot have the expertise and time to simultaneously invest in the service sector and carry out regulatory tasks. The government's primary role should be making sure that its policies are implemented properly, and setting the way straight for the private sector. And the private sector can do the tasks for its own sake, to stand competitive in the market and float in the business for long time

Second, given the government can do both tasks, the current reality does not prove the claim true. Our logistics services are not competitive in terms of price compared with other countries, the energy sector is also facing same or even more challenges.

Worse than this is the sugar and irrigation projects which ate up huge amount of finance and cannot come to finalization. What does it show? It does not require mental gymnastics to answer this question: it is inefficiency. Had it been private investment, given ample supports of government, they could have come to reality long time ago.

Above and beyond, the ultimate goal of developmental state is not singing 'the ideology'; the thing is that step by step, the government leaves the investment space to private investors. That is why the government is investing hugely in plug and play industrial parks. Plus, the country has attached much attention to economic diplomacy--resulting in the attraction of anchor private investors.

Indeed, some of them are our flag-carries, the Ethiopian Airlines and Ethiopian Shipping and Logistics Services Enterprise. Ethiopian has earned reputations for its successes in a row over the decade. But both have to further expand involving seasoned investors.

If go unchecked, and we are to remain adamant with our economic policies, the 24.7 billion USD debt cannot be dealt with. And the country keeps its position in the list of high risk of debt distress nations.

The decision of the party has to be put in such context.

The bottom line is clear. The privatization move should be implemented in a way that citizens can participate; it should not go from state monopoly to private monopoly and it should not create oligarchs as well. And in one way or another, the premier has addressed such concerns eloquently.

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