Liberalization of telecoms in Ethiopia: The dawn of a new era

Ethiopia is one of Africa’s thriving markets with a solid digital strategy that will place the country in a strategic position. H.E. Abiy Ahmed, Prime Minister of Ethiopia, has a clear vision that puts ICTs and telecommunications at the heart of economic growth and prosperity objectives.

In the framework of the Prime Minister’s plan to drive the country’s economic growth through ICTs, Ethiopia embarked on the liberalization of its telecom market and launched the licensing process to allocate new telecom licenses. In this exclusive interview with Telecom Review Africa, H.E. Abiy Ahmed highlighted the opportunities that the liberalization process will offer to Ethiopia and how it aims at realizing the country’s ambitious digitization agenda.

PM Abiy Ahmed also explained the role of ICTs in the country and how they are leveraged to boost Ethiopia’s economy and achieve digital transformation.

The telecommunications sector in Ethiopia is currently undergoing a liberalization process. Why was this step decided? And what are the opportunities that it will bring to the telecoms sector and the country as a whole?

The main objectives of the telecom liberalization process are underpinned by the country’s ambition to drive economic growth through utilizing the fruits of technology. Ethiopia aspires to be an African beacon of prosperity and has embraced this vision through its National Ten-Year Perspective Plan. The government’s decision to liberalize the sector will enable it to address several binding constraints across the economy including in critical sectors such as agriculture, healthcare, logistics, education, tourism, and manufacturing.

Universal and reliable connectivity is a crucial element of digitizing our economy. Connectivity is expected to pay vast dividends in terms of market access, service delivery and payments for Ethiopians from all walks of life as well as the Government and businesses that look to serve them.

What are the existing challenges at the level of the telecommunications and ICT sector in Ethiopia? Will the liberalization allow you to address them?

Currently, the Ethiopian telecom market is controlled by a single operator with several legacy issues. As such, it lacks the capital and the expertise that are needed to advance its services. This has brought multiple issues including poor quality of service and regular disruptions that limit the expansion of the ICT sector in the country. With the liberalization process, the entry of the two new telecom operators will introduce competition in the marketplace and expand the ICT sector to become one of the major economic growth drivers in the country.

What would attract companies to invest in the telecommunications sector of Ethiopia?

The large addressable market in Ethiopia with a growing economy are the two key attractions for telecom investment in Ethiopia. Ethiopia is a country with young population. With its more than 100 million population, Ethiopia represents one of the biggest opportunities in digital economy for tech companies as hundreds of millions of Africans started using smartphones and accessing the internet in recent years.

The B2B sector and the government’s drive for connectivity provide confidence to telecom sector participants that the Ethiopian telecom market is one that is not yet fully developed with significant growth potential. With additional capacity and investment in both license and infrastructure, large potential bidders have expressed their interest in investing so that coverage and benefit from their entry is provided to all Ethiopians and they intend to be long-term partners in Ethiopia’s development, which we wholeheartedly welcome

The ICT industry is a key sector in every country. How are you leveraging ICTs to transform Ethiopia?

The digital sector is both a source of growth and a key competitive enabler of other productive sectors.

The digital future is already here. Our risk-taker youth – capable and hopeful, connected and technology savvy—is busy at work addressing problems as diverse as public service delivery, health care, digital finance with entrepreneurial flair and ingenuity.

The government aims to leverage the ICT sector in the forms of service export, manufacturing, and agriculture that Ethiopia has a competitive advantage. For example, with an incredibly attractive electricity tariff the country is well positioned to accommodate data centers and cloud servicing. To this effect, the government has completed a large ICT park that will house service export companies, manufacturers, and data centers.  The government will also work with new telecom licensees to ensure that knowledge transfer and local capacity building are core to each of their businesses.  The liberalization provides an enormous opportunity for Ethiopia to leverage the technical and operational know how of the large international potential entrants.

What is your vision to achieve digital transformation? And where are you on that journey?

We have launched Digital Ethiopia 2025 – A Digital Strategy for Ethiopia’s Inclusive Prosperity and passed implementing laws and institutional structures. We have also taken bold measures to make it easier and more rewarding to do business in Ethiopia.

In this Strategy, we have identified four foundational building blocks for the digital economy – the establishment of a national digital ID, building interoperable payment platforms, strengthening e-government applications, and finally enabling e-commerce. These are supported by the reforms in the power and in the telecom sector. In parallel, we are also investing in digital skills and cybersecurity. Already we are seeing good results as a clear demonstration of the soundness of our national development strategy. Our renewed focus in the digital economy has started to attract large investments in the ICT park mainly around data centers, digital innovation and training centers, device manufacturing plants and business process outsourcing companies hiring hundreds of people.

What do you aspire to achieve once the liberalization process is done?

The liberalization process is just the starting point for realizing Ethiopia’s ambitious digitization agenda.  The new telecom licensees will build the required infrastructure so that every Ethiopian has access to high quality telecom service.  Once the infrastructure is in place, the government and private sector can then provide valuable digital services across critical sectors such as agriculture, healthcare, logistics, education, tourism and manufacturing that will drive efficiencies in these areas and provide a much more inclusive economy.  It also allows for a more reliable payments and digital financial services ecosystem that can drive higher financial inclusion.