ADDIS ABABA (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.
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.”