Ethiopia is shaking up its economy by opening many industries to foreign investors. Just don’t expect the government to loosen its grip on banks yet.
“Banking, insurance, micro-credit and micro-saving services” will be reserved only for domestic investors, according to draft regulations released by the Ethiopian Investment Authority. International aviation, where state-controlled Ethiopian Airlines dominates, power, postal services and weaponry will be done by, or in partnership, with the government, the document shows.
Prime Minister Abiy Ahmed is seeking to privatize state-owned companies in a bid to reform the economy of Africa’s second-most populous nation. His administration still intends on keeping un-starred hotels, gaming and trading, except for high-capital items like petroleum imports, for locals.
Several foreign banks have representative offices in the Horn of Africa country, including Kenya’s Equity Group Holdings Plc. Lease companies, such as a unit of New York-based Africa Asset Finance Co., which pledged to bring in equipment worth $600 million after being licensed in August, can also operate there.
Telecommunication, where international carriers including Orange SA, MTN Group Ltd. and Vodacom Group Ltd. have expressed interest to invest in the market of 108 million people, will be open to foreign ownership. The state has already announced plans to partly liberalize state-owned monopoly Ethiopia Telecommunications Corp. and license two other operators next year.
Abiy’s administration wants foreigners to invest in capital-intensive projects while leaving small and some strategic businesses to nationals, according to the state’s investments-promotion agency.
The drafts propose that external ownership of businesses like domestic air and certain transport and logistics services be capped at 75%, with the rest held by domestic partners. Enterprises like media and so-called grade-two construction services should take only as much as 49% foreign ownership.