Ethiopia keeps a grip on telecoms, banks
Negotiations on WTO membership still on track
February 22, 2009
By Jason McLure
The country was currently fielding questions about its trade policies from countries including the US and Canada as it attempted to negotiate entry into the global trade regime, he said.
The Horn of Africa nation applied for membership of the WTO in 2003. It is counting on membership of the trade body to open new markets to boost its $25.1 billion (about R250.6 billion) economy.
Birru said: "Primarily we will join the WTO not to make others happy, but to make our economy work. So, to the extent it helps our economy, we will liberalise things, but if it's not going to assist our goals in trade and development, we will not liberalise.
"Why do we have to?"
Ethiopia's protected telecoms and financial industries will be points of contention in the talks with WTO member countries including the US and the UK, according to Tewodros Mekonnen, a researcher with the Ethiopian Economic Association.
"I don't see any plan" to break up or sell Ethiopian Telecommunications Corporation to private investors, said Birru.
"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."
Ethiopia has resisted pressure from the World Bank and trade partners such as the US to sell the telecoms firm to private investors.
Ethiopian Telecommunication's monopoly enables it to charge $35 for a cellphone SIM card.
In Somalia and Kenya, which have private cellphone services, cards cost less than $5.
A 1 megabyte a second internet connection costs more than $2 000 a month in Ethiopia. In South Africa a similar service costs between R600 and R760.
Birru said: "In Ethiopia, if there is any problem I don't think it's the price. 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 privatise it."
Birru said the Ethiopian central bank lacked the capacity to regulate large foreign financial institutions.
The country is also unsure whether foreign banks will play a positive role in its economy. As a result, Ethiopia is unlikely to liberalise 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 could process MasterCard transactions. Banks are also reluctant to lend to businesses that cannot provide property as collateral. - Bloomberg
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