Ethiopia's Privatization Bombshell: SOEs Going Public, But at What Cost?
Hold onto your hats, investors! Ethiopia is about to unleash a wave of privatization, with major SOEs like Ethiopian Shipping & Logistics and Ethiopian Insurance Corporation hitting the public market. 🚢 But is this a golden opportunity or a risky gamble?
ECONOMY AND STOCK MARKET
10/13/20241 min read
Ethiopia's capital market is poised for a significant shake-up as several prominent state-owned enterprises (SOEs) prepare to go public. Following the footsteps of Ethio telecom, which will offer 10% of its shares to the public in November, other major players like Ethiopian Shipping & Logistics, Ethiopian Insurance Corporation, and Berhanena Selam Printing Enterprise are also gearing up for listing. This bold move towards privatization aims to inject new dynamism into Ethiopia's financial ecosystem, attract much-needed investment, and boost the country's economic development. However, the ambitious plan also raises important questions about the potential loss of government control over strategic assets and the long-term impact on national interests.
Dr. Abush Ayalew, a prominent Ethiopian stock market expert, suggests that the government should draw lessons from the experiences of other countries that have successfully listed SOEs while maintaining strategic control. He points to China, which has retained majority ownership in strategically important SOEs while listing minority stakes, and Brazil, which has implemented a "golden share" mechanism granting the government special voting rights even with minority ownership. Dr. Ayalew recommends that Ethiopia adopt similar safeguards, such as retaining majority ownership in key SOEs like Ethiopian Airlines and Ethiotelecom and implementing a golden share mechanism for other SOEs to ensure continued government influence.
Dr. Ayalew also believes that listing Ethiopian Airlines would generate significant investor interest and provide a major boost to the stock market. He argues that the listing of both Ethio telecom and Ethiopian Airlines would create strong momentum for the market, given their established reputations and profitability. By carefully considering international experiences and implementing appropriate safeguards, Ethiopia can successfully list SOEs, promote economic growth, and protect national interests. (For more news and financial market coverages , get the digital copy of Adwa Finance magazine here on this page, just click on the magazine, read, download or share.
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