INTERVIEW-Ethiopian PM eyes Chinese, Indian investment boost

Tue Nov 23, 2010 9:44pm IST

Related News

* Meles wants to industrialise agricultural economy

* Reiterates 11-15 percent growth prediction

* Ethiopia to export power within two years

By Barry Malone

ADDIS ABABA, Nov 23 (Reuters) - Ethiopia is hoping to attract more investment from Chinese, Indian and Turkish companies as part of efforts to industrialise its largely agriculture-based economy, Prime Minister Meles Zenawi said.

Though still one of the world's poorest countries, Ethiopia says it has posted double-digit growth rates for six years in a row making it Africa's fastest growing non-oil producer.

"Our hope is that industry will grow faster than agriculture over the next five years," Meles told Reuters in an interview. "We will maintain an export-led industrialisation strategy. The main approach will be to try to attract investment."

Meles said his government would target Chinese, Indian and Turkish firms who wanted to invest in the country's fledgling textile and leather industries.

"We expect more investment from Turkey," Meles said. "We also expect more investment in the textile sector from Indian companies. In the leather industry, a lot of Chinese companies have shown an interest. Some Europeans, too."

Ethiopia's new five-year plan, unveiled in August, predicts a "base-case" scenario of 11 percent average annual growth and a "high-case scenario" of 14.9 percent growth for the period.

Meles said the economy would grow this year at between the 11 percent predicted by his finance ministry and a more ambitious 15 percent.

Ethiopia is Africa's biggest coffee exporter and the world's fourth largest exporter of sesame. It is also one of Africa's biggest potential markets -- with a population of 80 million -- and most of its people have no telephones or bank accounts.

But Meles stood firm on his long-held position that there would be no liberalisation of telecommunications or banking.

Despite that, the 55-year-old said he hoped talks for Ethiopia to enter the World Trade Organisation, would finish soon: "The negotiations are beginning to pick up momentum now."

The former rebel said foreign reserves, which fell to $850 million earlier in 2009, had recovered on booming exports.

POWER PLANS

He dismissed concerns that a 16.7 percent devaluation of the Ethiopian birr, the fourth since January 2009, could spur inflation. The year-on-year inflation rate hit 10.6 percent in October -- way over the government's target of single figures.

"The impact of the devaluation programme is going to be a one-off affair because the massive devaluation was a one-off affair. So we believe the average yearly inflation rate will be in the range of 6-7 percent this year," Meles said.

Inflation in Ethiopia hit a high of 64.2 percent in July 2008. After that peak, the government halted state borrowing and increased bank reserves to drive down the rate and it had been in single digits this year until after the devaluation.

Meles said that power shedding -- which the government says cost the Ethiopian economy 1.1 percent of gross domestic product last year -- should end when a hydroelectric dam that suffered a tunnel collapse is repaired in three months.

Ethiopia, with ambitions to generate 10,000MW, is building Africa's biggest hydropower dam and Meles said the country could become a power exporter within two years.

"I think by the end of the five-year plan we'll be very significant exporters but we should start exporting in a year or two," he said. "Djibouti will probably the first country to get power supply from Ethiopia."

Meles rejected claims from the opposition and some foreign analysts that his government inflates growth figures to attract investment.

"Our economic growth is evaluated very carefully by the IMF and they have never said that we have cooked the outturn figures," Meles said. "They have accepted them as facts. And cooking figures is a very dangerous thing to do."

(Editing by David Clarke)

(For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

BACK IN JAIL

REUTERS SHOWCASE

Modi Hurdle

Modi Hurdle

Appointment of Arvind Subramanian as chief economic adviser hits Modi hurdle.  Full Article 

USL Board

USL Board

Diageo bars United Breweries from appointing independent director at United Spirits.  Full Article 

Amazon in India

Amazon in India

Amazon to sell packaged food and beverages in India - Economic Times.  Full Article 

iOS 8 Issue

iOS 8 Issue

iOS 8 causing Bluetooth connectivity issues - Apple news blog  Full Article 

NYT Job Cut

NYT Job Cut

New York Times to cut jobs as new products disappoint  Full Article 

Factory Activity

Factory Activity

Factories expand at slowest pace this year in September  Full Article 

Monetary Policy

Monetary Policy

RBI not biased towards either raising or cutting rates - Rajan  Full Article 

Weak Demand

Weak Demand

Weak demand hits factory activity across Asia, Europe  Full Article 

Pimco Fund

Pimco Fund

Pimco Total Return Fund posts record $23.5 bln net outflow in Sept  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage