Ethiopia Develops Cold Feet Over Liberalization Ahead Of Joining WTO

Ethiopia Develops Cold Feet Over Liberalization Ahead Of Joining WTO

Ethiopia, one of Africa’s fastest growing economies but with a very tight state grip on local industries, has developed cold feet over opening up of its markets to foreign investors ahead of joining the World Trade Organization in 2015, VoA quoted its trade minister saying on Tuesday.

The horn of Africa country’s vast market of over 90 million people has some of the most attractive manufacturing, telecommunication, banking and energy sectors that have lured investors both from neighboring countries like Kenya and overseas ones like Sweden, US, China and Turkey.

Laws restricting foreigners operation in the country have however kept investors from these countries at bay.

Kebede Chane told lawmakers that member countries had raised dozens of questions with Ethiopian Prime Minister Hailemariam Desalegn’s government, focusing on the time frame for opening up the service sector to international competition.

“A lot of issues are being raised regarding the service sector,” Kebede said in parliament. “We are being asked to clarify our timetable for privatizing these sectors.”

Sectors such as telecoms, banking and power are viewed by local authorities as domestic cash-cows or politically sensitive.

VoA reported that Washington, which wants Ethiopia to allow more competition, said it was committed to renewing its African Growth and Opportunities Act with Addis Ababa, an accord that gives Ethiopia-made textiles preferential access to U.S. markets.

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U.S. retail giant Walmart’s unit Massmart  told Reuters Ethiopia offered a “compelling growth opportunity.”

“[Washington] is interested in ways to update the legislation to encourage diversification within Africa’s economies, which will better support the continent’s growth, development and competitiveness,” U.S. Secretary of Commerce Penny Pritzker said in a statement after visiting Ethiopia.

Other big brands are prising open the door in areas opened up by the government. Drinks giant Diageo DGE.L bought a brewery and fashion retailer Hennes & Mauritz makes garments in Ethiopia. Trade officials said last year that Unilever  and Nestle were both sniffing around.

However, Ethiopia has held onto control of its telecoms monopoly and kept foreigners out of retail and banking.

Kebede said Addis Ababa was under pressure to deepen reform to liberalize its service industries before the conclusion of its current five-year economic plan ending in 2015.

“We need to give serious thought to this issue,” Kebede said. “Right now, our economy is small and still needs to develop a lot.”

New WTO rules adopted in 2012 lowered the bar for joining for the world’s least developed countries. They allow members to open fewer sectors, liberalize fewer types of transactions, and only open up their markets as their economies develop.

“We are now looking into which laws are compatible with WTO’s regulations and which are not. We are taking one step at a time. As a result, membership might not be completed [in 2015],” Kebede said.