In the latest effort to counter the influence of China in Africa, the United States has almost checked all the boxes needful to invest USD 5 Bn in Ethiopia.
The reform-supporting investment will come through America’s newly established International Development Finance Corporation (DFC), and it will be going into the East African country’s private sector.
Ahmed Shide, Ethiopia’s finance minister said the USD 5 Bn will be invested in a stretch of 3 to 5 years. According to him, the US institution has expressed it interest in investing in telecoms, logistics, geothermal energy and sugar among other sectors which are undergoing privatization.
November last year, Adam Boehler, the CEO of DFC visited Ethiopia for roughly two days, bidding to promote US investment in the country and strengthen ties with strategic partners towards the support of mutual development goals.
The DFC is equipped with more than a doubled investment cap of USD 60 Bn and a set of new financial tools. This is why it has enough resources to mobilize private sector capital to address development challenges and promote the foreign policy of the US in priority regions such as Sub-Saharan Africa.
Just last month, US secretary of state Mike Pompeo told an audience is Addis Ababa that Washington offers an attractive investment alternative—a subtle way of saying Ethiopia should prepare to severe economic ties with China.
But Pompeo’s mindset was further understood when he said that “authoritarian countries” came with “empty promises” and encouraged corruption and dependency
In Ahmed’s opinion, the US investments would help Ethiopia’s efforts to correct the side-effects of a development model that had produced 15 years of near double-digit growth but had created what he called “macro imbalances”, including balance of payments problems and inflation.
Interestingly, this is not the first time Ethiopia—one of Africa’s fastest-growing economies—is attracting substantial investment to bolster its Homegrown Economic Reform. In December 2019, the country hurled in an IMF program of USD 2.9 Bn. The investment marked one of the biggest in the fund’s African history.
In an interview in Addis Ababa, Mr Ahmed said the deployment of funds would depend on Ethiopia’s successful implementation of “certain reform measures”.
Those changes are understood to be related to foreign investors’ ability to hold offshore accounts, repatriate foreign currency and settle disputes under New York arbitration rules.