Business Edge | Ethiopia Continues Deregulation Drive

With its status as the largest population in East Africa and the second-largest economy in the region after Kenya, Ethiopia is set on moving its economy from a largely agrarian-based to a mid-level industrialized country. As a result, it has commenced a deregulation drive that seeks to move government out of corporations and organizations into the private sector. It has already made inroads in the banking sector where it has 18 banks, two of which are state-owned. Following this is the liberalization of the telecommunications industry. Business Edge of today explores the potential of the Ethiopian economy as the country continues its deregulation drive. Tolulope Adeleru-Balogun is joined by guest analyst Aly Khan Satchu, CEO RICH Management and Africa geo-economist.

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As one of the few remaining closed economies in the world, Ethiopia began to open up its economy to private sector participation after Prime Minister Abiy Ahmed got into office in 2018. His promise to do was met favourably with investors who were eager to do business with and in Ethiopia. The government’s reform has scored some success in the telecommunications sector and banking appears to be next. “The first big reform drive was with telecoms licence and Safaricom and Vodacom have taken those licenses and have opened up shop in Ethiopia,” Aly Khan Satchu says. “Everyone has been salivating for the banking sector opportunity. There are 100 million people who are largely untapped.”

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A major cog in the wheel of Ethiopia’s progress is the political instability and insurgency that have hindered the reform process. For years, the Tigray People’s Liberation Force (TPLF) has engaged in a conflict that is inimical to the growth of the country. Prime Minister Ahmed in recent months has agreed to engage so as to have a peaceful atmosphere that will encourage local and foreign investors.

All of these point to a fair to good projection for Ethiopia’s economy in 2022 and beyond, going by the African Development Bank’s forecast. On the contrary, the International Monetary Fund has refused to place a forecast for Ethiopia’s economic outlook, mainly as a result of the uncertainty in the country’s political instability and armed conflict.

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The full conversation on Business Edge is above.

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