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Ethiopia’s economic reform drive splutters for foreign investors

ADDIS ABABA (Reuters) – When Ethiopia awarded its first private telecom licence last week, Prime Minister Abiy Ahmed hailed it as the crowning achievement of his plan to open up Ethiopia’s tightly controlled economy of over 109 million people.

FILE PHOTO: A general view shows the cityscape of Ethiopia’s capital Addis Ababa, January 29, 2017. REUTERS/Tiksa Negeri/File Photo

But for many foreign investors who feted him getting the top job in 2018, hopes of cracking one of the world’s last major untapped markets are waning, stifled by the slow pace of reforms and ossified bureaucracy.

On paper, Abiy can boast of having opened up Ethiopia’s health, e-commerce and transport services sectors through a new investment law. It is a key part of his pitch as Abiy faces his first national parliamentary election on Monday – which he has billed as Ethiopia’s first free and fair polls.

But foreign companies now operating in Ethiopia are struggling to repatriate profits amid a crippling foreign exchange crunch and inflation that consistently exceeds 20%.

The economy is on track to grow just 2% this year after consistently topping 10% before the pandemic.

Abiy heads the biggest national party, one of the few that tries to appeal beyond a particular ethnic bloc. He pledged to continue the reform process during the ceremony awarding the telecoms licence to the winning consortium.

Mamo Mihretu, Abiy’s senior policy adviser, told Reuters the government would not be deterred and investors were still interested in Ethiopia.

“Despite the ongoing pandemic, locust invasion and other challenges, the government is pushing through the home-grown economic reforms,” he said.

Some of Ethiopia’s challenges are also home-grown.

A seven-month war in the northern Tigray region has shuttered many firms operating there, although other parts of the country remain unaffected.

Main roads are often closed by the military for weeks at a time and fighting is frequent. Bangladeshi textile firm DBL,…

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