Ethiopia offers scant hope of financial liberalization
Despite a new prime minister and growing economic pressures, Ethiopia seems unlikely to seize the opportunity to open up its financial sector and lure more foreign investment.
By William Davison
A Chinese contractor and local labourers work at a metro-line station in Ethiopia's capital Addis Ababa
When members of Ethiopia’s banking and business community gathered in the glitzy Sheraton Addis for an audience with the reform-minded new prime minister, Abiy Ahmed, in the middle of April, any hopes for an opening up of the financial sector were dashed: they were told there would be no liberalization of the banking sector, which bars foreign ownership, according to Reuters.
The president, who has a mainly ceremonial role, reiterated Abiy’s message a week later, while Abiy’s predecessor, Hailemariam Desalegn, who did offer some fresh thinking, then corroborated the new prime minister’s message further in an interview with Bloomberg.
Ethiopia’s economy has expanded at an enviable clip; growth was estimated at 10.9% in the 2016/17 financial year, and averaged just over 10% a year from 2005/06 to 2015/16, according to the World Bank, compared to a regional average of 5.4%. But much of that dynamism has been in the public sector. Domestic and foreign state-owned banks, often Chinese, have funded transport links and power plants, while multilateral lenders have sunk cash into education, health, water and agriculture.