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Privatization process encounters vociferous criticism

Privatization process encounters vociferous criticism

After making a bold decision to privatize state-owned enterprises, the government is drawing fierce criticism with the latest one coming from the former president of the Addis Ababa Chamber of Commerce and Sectoral Association, Kebour Ghenna.  

Kebour, a staunch private sector advocate and a noted businessman, argued that the government’s haste to denationalize public assets would probably undermine “the sovereignty” of Ethiopia.

According to Kebour, the privatization approach the government has initiated “will do no good, but rather drag the nation into a messy passage. If once entered, there will be no way out.”

The outspoken Kebour heavily criticized the government and argued with Brook Taye (PhD), senior advisor to the Ministry of Finance on privatization, during a public dialogue, the Forum for Social Studies (FSS) organized and held on Thursday.

The senior economic advisor was introduced by Alemayehu Tafesse (PhD), country director with the International Growth Center (IGC) and moderator of the forum and invited Brook to put into perspective the ongoing privatization process.

Brook said that privatization is part of the whole economic reform agenda that has been wheeling for months now. According to Brook, the privatization process has to do with mending the inept public enterprises that lack good corporate foundations.

Public enterprises have inflicted not only debt distress, but also forced Ethiopia to veto sourcing commercial loans which was mostly coming from China. The government is facing shortage of hard currency, and is not being able to service its close to USD 30 billion external debt as well as supply the local economy. Hence, to mend these and a number of serious shortcomings, the government has initiated a partial and complete privatization of public enterprises. The list includes the Aviation, Telecom, Electric, Industrial Parks, Railway, Sugar factories and a few others.

According to Kebour, privatizing Ethio-Telecom, a state monopoly that existed for 70 years, will seriously undermine Ethiopia’s “sovereignty”, saying that bestowing the telecom sector to private operators will likely lead to damaging outcomes once companies exit on bad terms. He argued that the indebted situation will not be reinstated due to privatization.

Kebour recommended that the government slows-down the process and let local enterprises and Ethiopian nationals acquire the public enterprises, instead of selling them out to foreigners that predominantly seek profits with short-term objectives.

In fact, the whole idea of privatization, according to the critic, is a prescription of the likes of the WBG. By the views of Kebour, China has succeeded in its own way of running national companies, while Russia faces grim outcomes following the advice of Brentwood Institutions. In the same way, Ethiopia should follow the path China took, he suggests.  

Brook defended the stand of the government and was vocal countering with the very idea of external ideological influence is what is behind the privatization move. “It’s Ethiopia’s pragmatic approach to its economic reform and privatization is one area that we are looking to go about with economic efficiencies and resource mobilizations,” Brook said. He also decried privatization will not endanger Ethiopia’s sovereignty stressing the whole concept of privatization is solely on the basis of economic principles.

In fact, both Brook and Kebour were not alone in the bout with each other, as the participants sided for and against the process. For instance, Girma Seifu, an opposition politician and currently a member of the advisory council, Prime Minister Abiy Ahmed (PhD) formed last year, argued that privatization of Ethio-Telecom and perhaps others will not jeopardize the sovereignty of the country. He emphasized that, “if privatization happens on Monday, I would like to see Ethio-Telecom being the first to be privatized.”

However, against Girma’s position, Terefe Ras-Work, who had served in the telecom sector during the imperial government and with an expansive external exposure and experience, refuted Brook and Girma, and stood with Kebour. He highlighted Frances telecom sector, owned 80 percent by the public.

The forum concluded with two polarized stands, while both sides exerted their best efforts to convince the audience. However, it felt that the forum was one that signaled the privatization processes needs, to be conversed and debated on a wider scope rather than the perceived consensus the government considers it has achieved.