Ethiopia may favour privatisation over liberalisation

Subject Ethiopia's privatisation initiative. Significance Ethiopia’s announcement in June that it would open key economic sectors to private investment signals the new administration’s intent to reform the economic system of the past three decades. However, recent indicators suggest it will do so in a tightly managed fashion that retains the government’s predominant role in the economy. Impacts Backlash from government-affiliated elites with vested interests will be a key risk to privatisation of lucrative enterprises. The government may offer additional investor incentives to encourage export-led growth, especially in labour-intensive sectors. Barring a significant domestic backlash, Ethiopia is likely finally to accede to the WTO in November or, failing that, by mid-2019. Privatisation will create niche opportunities for foreign investors, but barriers will remain formidable compared with peer countries. Financial sector liberalisation, long sought by South African, Kenyan and international banks, will not feature among the initial reforms.