The decade-long double-digit growth of the economy is lately showing signs of slowing at a critical time and this is what pushed EPRDF to announce it will allow foreigners to take minority shares in some of its biggest state-owned industries
By Chris Stein (AFP) |
ADDIS ABABA―Ethiopia’s move to open its markets has been hailed as a seismic policy shift, but analysts say the new government had little choice after years of tight control took their toll on the economy.
Ethiopia boasts Africa’s fastest-growing economy and a slew of new, ambitious infrastructure projects — but beneath this jeweled facade are problems.
Despite the heady growth, the economy is showing signs of slowing at a critical time. Just when the country is facing a demographic crunch, dollars have become scarce, debt is unsustainable and sectors that are booming elsewhere in Africa are moribund.
This, say analysts, is what pushed the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) to announce Tuesday it will allow foreigners to take minority shares in some of its biggest state-owned industries, among them the country’s sole telecom company and Ethiopian Airlines.
It also announced plans to privatize a swathe of industries, from railroads to factories to industrial parks.
“This is potentially a massive change, yes, but it is a change made by necessity,” said Aly-Khan Satchu, an independent economic analyst based in Nairobi.
Prime Minister Abiy Ahmed “understands Ethiopia has their backs against the wall because the model where the government is the main borrower, guarantor and investor does not work anymore.”
Ethiopia’s growth has largely been driven by Chinese investment and loans.
Though it remains one of Africa’s poorest nations, the EPRDF has guided Ethiopia through a decade of double-digit growth.
This year the International Monetary Fund (IMF) predicts its economy will expand by 8.5 percent — the fastest in the continent.
Yet this is a drop from 2017’s rate of 10.9 percent — a dip largely attributed to recent political turmoil.
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