New Bill for Telecom Sector Privatization Attracts Investors to Ethiopia

 A draft bill passed recently by the Ethiopian government opens Ethiopian telecommunications sector for privatization and foreign investment. This draft has been referred to the House of People’s Representatives for approval.

“The Proclamation for Regulation of Communications Service” also establishes a federal authority to regulate telecommunication services.

This has become the major investment talking point of the coming conference of the annual TMT Finance Africa where leaders from the largest African telecom, media and technology companies, investment banks and investors are meeting in Cape Town 2019 conference on March 28, to assess the latest investment opportunities in Africa.

After decades of a centralized economic model, Ethiopia is opening up to the world.

Ethiopian authorities announced its telecommunications company Ethio-Telecom will be the first of four state-owned firms to be privatized. Founded in 2010, the company is the sole voice and data provider and caters to over 60 million customers.

The move was part of sweeping reforms introduced by prime minister Abiy Ahmed, who ended hostile relations with neighboring states, prioritized regional integration, and reduced the military’s stake in key infrastructural projects.

Abiy has said the government plans to sell a 30 to 40% stake to top-rated industry firms and will split the state-run company into two competing businesses to spur competition, according to Reuters.

“The Ethiopian Communications Regulatory Authority” will be created as is referred in the draft proclamation.

The Regulatory Authority is tasked, among others, “to implement policies for Communications Services; to regulate tariffs relating to Communications Services in accordance with the provisions of this Proclamation; as well as to license and supervise operators of Communications Service and modify, renew, suspend or revoke licenses.”  

It also clearly states that “the ownership of a Telecommunications Operator or a Telecommunications Network shall be open without limitation to private investors including both domestic investors and foreign investors.”

This new bill, which Somaliland.com has found out a copy of it, has sparked interests globally from companies including from France’s Orange, along with Kenya’s Safaricom,  the South Africa-based MTN and Somaliland-based Telecoms. The potential here is the ability to not only register more users but also enhance financial inclusion by introducing mobile money services like Zaad (Somaliland) and M-Pesa(Kenya).

The Horn of Africa nation has an emerging e-wallet sector, with transfer platforms like MBirr and HelloCash by the Netherlands-based Belcash only introduced in 2012. There’s also the prospectus of championing more mobile-based Fintech products like crowdlending, e-commerce, and insurtech, especially to the more than 20 million smartphone users in the country.