The U.S. is planning to support the expansion of Ethiopia’s private sector through investment.
The newly created International Development Finance Corporation, a Washington D.C.-based government agency that finances private development projects, says it plans to invest $5 billion in Ethiopia to support private-sector reform and counter China’s influence in one of Africa’s fastest-growing economies, according to FT.
Ethiopia is in the process of opening up its economy to investors and is planning a series of privatizations.
U.S. Secretary of State Mike Pompeo visited Ethiopia in February as part of a trip that included stops in Senegal and Angola.
Ethiopia is Africa’s second-most populous country with 108 million people and the headquarters of the African Union.
It is a key U.S. security ally in the Horn of Africa and has undergone dramatic political and economic reforms since Nobel Peace Prize-winning Prime Minister Abiy Ahmed was elected in 2018.
Ethiopia’s traditionally state-controlled economy is undergoing macroeconomic, structural and sectoral reforms that are expected to enable job creation, poverty reduction, and inclusive growth.
The emphasis of these reforms is in sectors including agriculture, manufacturing, mining, tourism, and information, communication, and technology, according to AfricaNews.
The U.S. is particularly interested in investing in Ethiopia’s telecommunications, geothermal energy, logistics, and sugar sectors, FT reports.
These are some of the sectors, traditionally controlled by state-owned companies, that Ethiopia plans to open up to investors through different degrees of privatization.
At the end of 2019, Ethiopia announced that it would need as much as $10 billion to successfully implement its three-year national economic reform plan.
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The U.S. is keen to invest $5 billion in Ethiopia’s private sector dependent on Ethiopia’s ability to successfully implement “certain reform measures”, Ahmed explained.
These reforms are related to foreign investors’ ability to hold offshore accounts, repatriate foreign currency and settle disputes under New York arbitration rules, according to FT.