By Jason McLure, Bloomberg.com- Ethiopia will pursue membership of the World Trade Organization, though it has no plans to liberalize its telecommunications and financial-services industries to gain access, Trade Minister Girma Birru said.
Ethiopia is currently fielding questions about its trade policies from countries including the U.S. and Canada, as it attempts to negotiate entry into the global trade regime, Birru said in an interview on Feb. 17 in the capital, Addis Ababa.
The Horn of Africa nation, twice the size of Texas and with a population of 82.5 million, applied for membership of the Geneva-based trade arbiter in 2003. The country is counting on membership to open new markets to boost its $25.1 billion economy.
“Primarily we will join the WTO not to make others happy, but to make our economy work,” Birru said. “So to the extent it helps our economy we will liberalize things, but if it’s not going to assist our goals in trade and development we will not liberalize. Why do we have to?”
The country’s protected telecom and financial industries will be points of contention in the talks with WTO-member countries including the United States and United Kingdom, Tewodros Mekonnen, a researcher with the Ethiopian Economic Association, said in a phone interview on Feb. 19.
“I don’t see any plan” to break up or sell Ethiopian Telecommunications Corp. to private investors, Birru said. “If there are some problems it has nothing to do with ownership. It has only to do with management. Management and ownership don’t necessarily go together.”
Private Investors
Ethiopia has resisted pressure from the World Bank and trade partners like the U.S. to sell the telecommunications company to private investors.
Ethiopian Telecommunication’s monopoly enables it to charge $35 for a mobile-phone SIM card, which is required to obtain a mobile-phone number. In neighboring Somalia and Kenya, which have private mobile services, cards cost less than $5. Click on 'Read More.'
A 1-megabyte per second Internet connection costs more than $2,000 a month in Ethiopia. In South Africa, the continent’s biggest economy, a similar service costs between 600 rand ($59) and 760 rand, according to the http://www.mybroadband.co.za Web site.
“In Ethiopia, if there is any problem I don’t think it’s the price,” said Birru. “It’s the quality of the service. This has to be improved. And to improve this I don’t think it would be wise to privatize it.”
Ethiopia’s government is reluctant to sell the company because it is profitable and is expanding services to rural areas, Newai Gebre-Ab, Prime Minister Meles Zenawi’s top economic adviser, said yesterday in an interview.
Cash Generator
The company is “generating a lot of money and that money is being put to good use for development of infrastructure,” Gebre- Ab said.
Birru also said the Ethiopian central bank lacks the capacity to regulate large foreign financial institutions. The country is also unsure whether foreign banks would play a positive economic role in the country. As a result, the country is unlikely to liberalize the financial-services industry.
“At this stage, given the capacity that we have in terms of managing things and supervising them at the National Bank level, I don’t see why we’d allow that,” he said.
Ethiopia’s three state-run retail banks control about two- thirds of the capital in the country’s banking industry, according to the National Bank of Ethiopia. Until last year, no bank in Ethiopia could process MasterCard transactions. Banks in the country are also reluctant to lend to businesses that cannot provide real estate as collateral.
