Ethiopia is poised to transform its telecoms industry. In the coming months, two new full-service telecommunications licenses will be awarded in a market that has been served solely by state-owned Ethio-Telecom. Opening the market to competition and new investment will expand and improve services for consumers. Importantly, this expansion will underpin a digital transformation in Ethiopia.
An expansion in mobile communications, internet access, and other telecom services is critical to accelerating economic growth and service delivery in Ethiopia. Sectors such as agriculture, health, trade, insurance, and transport will benefit tremendously from digitalization and increased inclusion. Digitalization of government services will also expand and improve the efficiency, reliability, and transparency of those services.
The Government of Ethiopia has sought to improve the enabling environment for the telecoms industry by reforming and updating existing policies, laws, and regulations. The Government has also evaluated international experiences and best practices in order to mitigate risks and manage change. Analysis of global experiences (such as in Korea, Japan, Myanmar, United Kingdom, China, and United States of America) demonstrated that deregulation and liberalization of the telecommunications sector in state-owned, state-operated, or operated in protected, monopolistic markets, led to economic growth and employment generation. On the African continent, in Nigeria, where information and communications technology attracted huge investment and generated significant revenues and employment opportunities, deregulation of the telecom sector jump-started strong economic growth.
The Ethiopian Parliament adopted the Communications Service Proclamation which is a key legislative and regulatory milestone in the process of liberalization. This proclamation allows for private investors, both domestic and international, to enter the sector, including building telecommunications infrastructure. It also establishes the Ethiopia Communications Authority (ECA) which is responsible to administer, monitor, and enforce telecommunications regulations and issue licenses to existing and new operators.
The Government of Ethiopia cannot deliver on this vision by continuing with the status quo. Technological advancements in the telecommunications sector evolve rapidly and require expertise and regular updates and investments in new infrastructure. Liberalizing the telecoms sector is a prerequisite to jump-starting Ethiopia’s digital revolution.
Simultaneously, Ethio telecom will be partially privatized to bring on board a strategic investment partner that has well-established experience as a telecom operator. This will boost Ethio telecom’s financial and technological capacity. The Government of Ethiopia will continue to be a major stakeholder in Ethio-telecoms with a 55% majority stakeholder. A 5% stake of Ethio telecom will also be sold to citizens.
This process is a win-win. As new operators come into the market and digital services and access expand, opportunities in new industries, with new customers, by new firms will expand as well. Private-sector-led technology and innovation are foundational for employment growth in Ethiopia, including among the youth. This digital transformation will change the way we live and do business in Ethiopia.