Ethiopia Partially Privatizes Its Telecommunications Company

The Ethiopan government has announced a proposal bid for the privatization of government-owned telecommunications company known as ‘Ethio Telecom’.

The authorities of the East African country had part of the bidding process invited private investors to acquire a 40 percent stake in the country’s official Telcom service provider.

Ethiopia Finance Ministry, in the fore front of the bidding process has delivered a ‘Request For Proposal’ (RFP) for partial privatization of ‘EthioTelecom’, a move that is designed to attract investments from interested firms and private entities that can “add value to the company by bringing in best practice in terms operations, infrastructure management, and next-generation technological capabilities,” according to the ministry’s statement.

A partial privatization of a government owned institution, a known method of giving some certain percent of equity to private firms is a common practice adopted in countries of Central and East Europe, a method that allows a more or less large number of residual shareholdings to still be in the purview of the government. It also has a remarkable constructive effect on the profitability of enterprises, its productivity and subsequent investment.

Implications Of This RFP On Ethiopia’s Telecommunications Industry?

A lot of questions may begin to ring in the minds of the average reader what the Request For Proposal (RFP) for the partial privatization of ‘Ethio Telecom’ portend for  the telecommunications sector in Ethiopia.

As enumerated earlier, partial privatization is a means to an end for the government to attract investors and in essence investments into its public enterprises to accelerate efficiency. The process will play a vital role in opening up a fast-growing economy that is majorly directed at millenials. The low number of fixed telephone connections per 100 people in a marked geographical area in the country will be fixed up with a high private investment rate that will help in the achievement of “a huge untapped potential in Ethiopia’s telecommunications sector.”

The authorities in Ethiopia are also seeking to privatize several of the country’s private public firms that are expected to be released under the Public Enterprises Privatization Proclamation.

“A proclamation to provide for the privatization of public enterprises whereas it has become necessary to introduce reforms to sustain the country’s economic growth and transformation and to create an enabling policy environment for private sector investment,” the Proclamation states.

The latest move by the government is aimed at enhancing public enterprises’ efficiency and its functionality, provision of better means to access higher capital rates in investments and future operations,  instigatecompetiveness between enterprises, and further strengthen the accessibility and quality of service.

Interested bidders will have access to the RFP, and companies that earlier demonstrated interest on the matter will not be excluded, but enterprises drawn to the RFP must part with a non-refundable payment of $20,000 to initiate  the request, which will be followed by the submission of a ‘confidentiality report’ to the Ethiopian authorities.

The Ministry of Finance statement read thus:

“An interested party may obtain the details of the account for payment of the RFP fees as well as the form of the confidentiality undertaking by sending a written request to telecombid@mofed.gov.et ”.