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340 Diagnosing Corruption in Ethiopia
• Hesitating over market liberalization. Although the ETC has been unable
to keep pace with demand, there are no firm plans to allow another
operator to enter the market.
Market Liberalization
The slow rate of progress in liberalizing Ethiopia’s telecoms sector
remains a source of considerable contention. In recent years, the hesitation
has led the World Bank to reduce its Poverty Reduction Support
Credit to Ethiopia (World Bank 2008) and may constitute an obstacle to
Ethiopia’s entry into the World Trade Organization (WTO).
No firm schedule has yet been set for liberalization. The ETC continues
to control all telecommunications services in Ethiopia except for
the sale of customer premises equipment, which is still subject to ETA
authorization, even for private use. No licenses have been granted to
private operators to sell or resell telecoms services. The authorities
tolerate Internet cafés, although Internet telephony and call-back services
are illegal.
The government has, since 1996, been planning the partial privatization
of the ETC as a means of bringing to bear new funding, management
techniques, and skills into the sector. In 1998, the Investment
Proclamation was amended, providing for the possibility of private companies,
national or foreign, to invest in the telecoms sector in partnership
with the government.
In 2002, the Ethiopian Privatization Agency invited international
investors to acquire a 30 percent stake plus management control in the
ETC. The intention was that the company would be granted exclusivity
periods of between 5 and 25 years for the provision of fixed, mobile,
Internet, and data services. Though several companies expressed interest
in acquiring a stake, no progress was made until mid-2005, when the
government announced a new plan that entailed selling 49 percent of the
ETC. This plan was taken off the agenda when the chief executive officer
(CEO) was replaced in 2005. Although there are reports that the privatization
of the ETC will take place after the current phase of infrastructure
investment results in rural areas being fully connected, the ETC
notes that this is not an official position of the government of Ethiopia
(ETC 2010).
Organizational Structure of the ETC
Since its creation, ETC has been restructured many times, sometimes
more than once in a single year. Following the latest, most definitive,