MTN, Vodacom express interest in Ethiopia’s liberalized economy

South Africa’s MTN Group and Vodacom Group have expressed interest in the Ethiopian market, following the announcement by the East African nation that it would partially liberalise its economy.

Ethiopia said on Tuesday it would open its state-run telecoms monopoly and state-owned Ethiopian Airlines to private domestic and foreign investment, a major policy shift that will loosen the state’s grip on the economy.

MTN said it was excited by the potential opening up of the Ethiopian market “as it would be a natural fit for MTN’s existing pan African footprint”.

Ethiopia presents many exciting telecommunication opportunities and we look forward to furthering discussions with that nation’s authorities on potential partnerships and opportunities.

“Ethiopia presents many exciting telecommunication opportunities and we look forward to further discussions with that nation’s authorities on potential partnerships and opportunities,” the mobile network provider said.

Vodacom Group also said that it will be following ‘what becomes available’ and investing accordingly since ‘Ethiopia is an attractive market’.

It is unclear whether the government would consider licensing foreign mobile operators. Interest might be limited if the only option is a minority stake in the monopoly.

The ruling party coalition in Ethiopia, the Ethiopian People’s Revolutionary Democratic Front (EPRDF) said that economic reforms are needed to sustain rapid growth and boost exports.

The statement issued by EPRDF’s executive committee referenced foreign exchange shortages that are draining shops of goods that suppliers cannot access hard currency to import.

The economic reforms come two months after Abiy Ahmed took power as Prime Minister promising political changes to address roiling anger among young people over ethnic marginalisation and unemployment.

It is one of many policy shifts announced since the 41-year-old took office in early April, moves that could reshape Ethiopia’s relations with its neighbours and have equally dramatic impacts inside the country of 100 million people.

Whether the new measures, including liberalisation of the state-controlled economy, end up addressing critical challenges from high youth unemployment to rising government debt remain to be seen. But they are shaking the country up.

“All that we have achieved from the situation of the last 20 years is tension,” Abiy said.

Ethiopia’s move is a “drastic departure” from its longstanding – and failed – policy, said Ahmed Soliman, Ethiopia analyst at London based Chatham House.