With one of the largest sub-Saharan economies, and some of Africa’s greatest potential for renewable power production, Ethiopia is an untapped market investors should be able to access more easily in future thanks to public–private partnership (PPP) projects, say Bruk Geremew and Iyasu Teketel.
“Our amended PPP Proclamation is part of the whole process the government is undertaking to reform our economy and make it more attractive for investors to come and engage in important sectors,” explained Iyasu, a banking expert at leading Ethiopian firm DABLO Law.
The main aim of Ethiopia’s PPP policy is to come up with alternative ways of financing public infrastructure by involving the private sector in major infrastructure projects like energy, roads, and railways, noted Bruk, a co-founder and deputy managing partner at DABLO Law. Since its introduction in 2018, the policy has undergone a few amendments which broaden the range of projects it covers, and which could help speed up the process.
“The 2023 amendments empower public enterprises to act as independent entities and negotiate PPP contracts on their own with either foreign governments or private parties,” Iyasu explained. “The amendments also relax some stringent rules for submitting a bid. For example, the government or private parties can call for direct negotiation without the need for the stringent procurement process, and the board has more power to make the process more flexible; to shorten the process. These amendments are expected to garner new interest and investments.”
The signs are there for an exciting future for PPP projects in Ethiopia, but Bruk and Iyasu note that the regime is still in its infancy, and that while some foreign PPP investments for solar in the Somali region and geothermal in Oromia are in the pipeline, none have yet come to fruition.
There are, however, some domestic PPPs already underway in Addis Ababa, including two large low-cost housing developments and a grand mall project that DABLO have advised on.
“The capital city’s council promulgated its own PPP law following the federal proclamation amendments that allowed government agencies to have their own mandates,” said Bruk. “Private sector developers with 20- to 25 years’ experience build, finance, manage and maintain the buildings, and the government comes up with the land free of lease, provides utility lines, and eases bureaucracy by granting duty-free privileges for construction materials.”
DABLO was very happy to be involved in these pilot projects. Given that Ethiopia is underdeveloped, there are ample opportunities and great potential for investment in many sectors, says Bruk.
“We’ve taken baby steps so far with PPPs, but Ethiopia has a really promising future,” Iyasu emphasised. “Africa is the least interconnected continent on the planet, but the African Continental Free Trade Area Agreement aims to change that. It’s a huge market with a billion-plus population that could trade among themselves, and, as one of the biggest economies, Ethiopia has a role to play. We have a lot of things to export, including power, and a lot of things to consume. I think we’ll attract much greater investment once our potential is analysed and understood.”