US Ready to Back Ethiopian Reform With $5bn Investment

Addis Ababa ( PP) ⁠— The US is ready to invest $5bn in Ethiopia through its newly created International Development Finance Corporation in an effort to support private-sector reform and counter China’s influence in one of Africa’s fastest-growing economies. “More than $5bn is expected in the coming
three to five years,” said Ahmed Shide, Ethiopia’s finance minister, adding
that the US institution had expressed interest in investing in telecoms,
geothermal energy, logistics and sugar, all sectors undergoing some degree of privatisation.

Speaking in an interview in Addis Ababa, Mr Ahmed said the deployment of
funds would depend on Ethiopia’s successful implementation of “certain
reform measures”. Those changes are understood to be related to foreign
investors’ ability to hold offshore accounts, repatriate foreign currency
and settle disputes under New York arbitration rules. Washington is
keen to encourage the expansion of the private sector in Ethiopia,
a strategically located country of 110m people, which has historically
followed a state-led development model, partly funded by infrastructure
investment from China. “We are working in partnership with Ethiopia
to undertake economic reforms that will further attract private
sector capital,” Adam Boehler, chief executive officer of the DFC, told the
Financial Times.

© EU/ECHO/Anouk Delafortrie

These reforms could position Ethiopia for a significant DFC commitment
that would catalyse billions in financing from the private sector.”
The DFC replaced the US Overseas Private Investment Corporation
in 2019 with an expanded lending capacity of $60bn and a remit to
help Washington’s foreign policy aims, including countering the
influence of China — and Russia — in Africa.

EM Squared Ethiopia seizes crown as fastest-growing country
in the 2010s Premium The agency, which has received the backing of
Donald Trump, the US president, can support American and other
private companies investing in developing countries through loans, insurance and now equity, a tool used by European equivalents such as
Britain’s CDC Group. Last month, Mike Pompeo, US secretary of state, told an audience in Addis Ababa, Ethiopia’s capital, that Washington was offering an attractive investment alternative. Without naming China, he said that “authoritarian countries” came with “empty promises” and encouraged corruption and dependency. Mr Ahmed said the anticipated US
investments would help Ethiopia’s efforts to correct the side-effects
of a development model that had produced 15 years of near double digit growth but had created what he called “macro imbalances”, including
balance of payments problems and inflation. In December, Ethiopia
clinched a $2.9bn IMF programme, one of the biggest in the fund’s
history in Africa, in an endorsement of Ethiopia’s so-called Homegrown
Economic Reform plan. Under Abiy Ahmed, prime minister since 2018,
Ethiopia has committed to opening up its economy and is planning a
series of privatisations, including the sale of a 49 per cent stake in
Ethio Telecom, the world’s largest remaining telecoms monopoly, and
the allocation, through a competitive auction, of two new telecoms
licences. Mr Ahmed said he expected the telecoms sale to be completed in
four to six months and to raise several billion dollars, though elections
scheduled for August could delay the sales, according to some observers.

Source: Financial Times