The World Bank has backed Ethiopia’s moves to open its telecoms market with $200 million of investments to support its digital economy, but warned policies pushing new entrants to lease infrastructure from Ethio Telecom could hamper network rollout efforts.
In a blog, World Bank country director for Eritrea, Ethiopia, South Sudan and Sudan, Ousmane Dione said rules limiting participation of independent tower companies could slow rollout of networks by incoming operators, especially in rural areas.
Dione insisted it would be better if new mobile players, which are in the process of bidding on licences to compete with monopoly Ethio Telecom, were able to “make rational decisions whether to build their own infrastructure”.
“Ultimately, policies that seek to protect Ethio Telecom’s infrastructure by allowing it to charge high prices for interconnection will end up harming the company,” he added.
In addition to rules around building private infrastructure, Dione highlighted competition issues from regulation on foreign ownership of finance providers preventing new entrants running mobile money services.
“To benefit fully from competition does not mean offering preferential treatment to Ethio Telecom but rather creating a level playing field on which it can compete fairly with its new rivals,” he added.
Among the players competing for one of two new licences in the country are operator groups Orange, Etisalat, Saudi Telecom Company, MTN Group, and Global Partnership for Ethiopia: a consortium comprising Vodafone Group and its affiliates Safaricom and Vodacom.
Although pointing to risks from specific government policies impacting new competitors, the World Bank supports the country’s efforts to open the telecommunications sector and is set to invest $200 million through a new Digital Ethiopia Foundations project.
The scheme is designed to help “prepare the legal and regulatory building blocks for the digital ecosystem, in areas like e-commerce and Digital ID,” Dione explained.
It also plans to purchase capacity from operators to support government and educational institutions to develop digital services, alongside grants for related projects.