Horn Diplomat

Ethiopia to focus on Public Private Partnership (PPP)

Photo - Abraham Tekeste (Phd), Ministry of Finance & Economic Cooperation

By:Muluken Yewondwossen – Capital

Public private partnership (PPP) law will be one of the priority proclamations tabled for the parliament when it returns from recess.

In his budget speech Abraham Tekeste (PhD), Minister of Finance and Economic Cooperation (MoFEC) stated that ties with the private sector about developmental projects will be undertaken in the budget year instead of accessing more commercial loans.

During the press conference held on Tuesday July 18, he told journalists that the new bill will be ratified in early October.

The PPP will be undertaken using two methods. The first option is undertaking projects with a joint venture (JV), while the other will be fully managed by the private sector.

The country external debt ratio has transferred to a moderate level from low. The public sector debt bulletin indicated that up to the end of March 2017 the country’s external debt reached over USD 22.6 billion, which was over USD 11.2 billion five years ago.

The government stated that it has refrained from accessing more commercial loans until exports grow.

To tackle the money supply shortage the government will include the private sector in state run projects like infrastructure and industrial endeavors.

Recently Girma Amente (PhD), Minister of Public Enterprises, said that they will engage in some joint venture projects.

For instance the Sugar Corporation has signed a MoU to work via a JV with Amibara Agriculture Development, which has been supplying sugar cane in the past budget year, as part of the Kesem Sugar project.

Other investments like roads, railways or energy generation are the others.

The National Bank of Ethiopia (NBE), recently added a single sub article to expand the investment percentage of banks.

Notwithstanding Directive No. SBB/65/2017, sub-article 4.7 stated that, the National Bank may waive the investment limit where it deems necessary.

Experts stated that this amendment may target the new proclamation that invites private actors to public investment. Banks currently must invest up to ten percent of their net worth.

The NBE directive also added that no bank shall invest more than 10 percent of its net worth in real estate acquisition and development, other than for their own business premises, without prior approval of the National Bank.

SOURCE:HORNAFFAIRS

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