VENTURES AFRICA – Ethiopian Prime Minister, Hailemariam Desalegn says his country is planning to launch a Eurobond once it secures its credit rating, but it will not open its telecoms and banking sectors to foreigners as revenue drawn from both sectors helps fund development of infrastructure.
Foreign appetite for African bonds has been strong as investors scramble for high yields.
However, Prime Minister Desalegn’s declaration may disappoint foreign investors who had hoped for a paradigm shift from the state-led policies of former Prime Minister Meles Zenawi, who died last August.
The Prime Minister told journalists that he would stick to a policy that has kept the telecoms monopoly in state hands and the banking sector – dominated by three state institutions – off limits to foreigners, as income or financing from those entities is being used to develop the country’s infrastructure.
Dasalegn also said that the East African nation is willing to harness the international debt market by issuing an external bond to relieve the country’s foreign currency shortage.
According to him, Ethiopia will also launch other bonds alongside Eurobond.
Although Prime Minister Desalegn did not give an exact date on when the country will get a credit rating, he hinted that it is at a critical stage alongside the issuance of the bond.
A credit rating allows countries to access funds outside their country. The possession of a good credit rating attracts Foreign Direct Investment because it gives investors information about the economic stability of the country they are investing in.
Ethiopia’s credit rating is likely to be handled by an independent agency which will provide up-to-date and real time credit information.
Meanwhile, Ethiopian State Minister of Finance and Economic Development, Abraham Tekeste said the Ethiopian economy grew by 9. 7 percent in the past fiscal year.
Sub-Saharan Africa is estimated to have grown by 5.4 percent in 2013.
Ethiopia, sub-Saharan Africa’s fifth largest economy, expects FDI of about $2 billion a year through 2015.