Ethiopia embraces unbridled capitalism, promises massive privatisations

The competition in Africa for the best economic policies is hotting up. South Africa is switching from an antiquated centralised approach to the “entrepreneurial” development state model promoted by star economist and author Mariana Mazzucato, whose work is admired by many in Ramaphosa’s cabinet. But that might not be enough.

Over the weekend, Ethiopia’s new prime minister Abiy Ahmed told the Financial Times of London his government will launch a massive privatisation programme later this year. First on the block is the state’s 49% in 60m subscriber-strong mobile company Ethio Telecom followed by holdings in energy, shipping and sugar.

Abiy told the FT: “My economic model is capitalism…we need the private sector.” This free market-focused approach replaces Ethiopia’s temporarily successful developmental state model. It was abandoned two years ago after the country hit capacity constraints and chronic foreign exchange shortages.

The article’s most telling quote references Miguel Azevedo, Citibank’s head of investment banking for Africa, who told the FT: “When I speak with international investors about opportunities in Africa, the first name that pops up is Ethiopia.” Continental competition has suddenly become a lot tougher. SA needs to up its game. Fast.