Nairobi, 19 May, 2022 – Following liberalization of Ethiopia’s telecom sector, the African Trade Insurance Agency (ATI) has provided a 10-year Investment Risk Insurance cover issued to Sumitomo Corporation on its investment in a new telecom company in Ethiopia – Safaricom Telecommunications Ethiopia Plc (STE). The project is considered one of the largest investment in Africa by the Japanese investors and the single largest Foreign Direct Investment (FDI) in Ethiopia.
ATI was established in 2001 by African governments with financial and technical support from the World Bank, in a bid to ease the concerns of investors, by providing investment and trade credit risk insurance, consequently helping Africa to attract more investments and promote intra-regional trade. Ethiopia became a shareholder of ATI in 2016 with capital provided by the African Development Bank. ATI has since then supported business worth USD1.6 billion (including this deal) in financial services, telecommunications and extraction & distribution of gas.
The project also marks a continuous strategic collaboration between ATI and Japan’s Export Credit Agency – Nippon Export and Investment Insurance (NEXI), where ATI and NEXI agreed to facilitate the development of Japanese reinsurance support to ATI. The two organizations signed a Memorandum of Understanding to support businesses into the African region through various activities – including a Japanese desk hosted by ATI in Nairobi. To date, ATI has received business enquired valued at USD1.5 billion in the financial services, infrastructure and manufacturing sectors.
ATI’s support to this project is in line with Ethiopia’s strategic plan (2020 – 2025), with one of the pillars focusing on private sector’s leadership in the economy. With ATI’s cover on this deal, the Government is well within its objective of enhancing access and quality infrastructure to attract quality FDI while providing reliable and accessible communication for Ethiopians. The project is poised to support rapid economic growth and transformation by maximizing opportunities presented by the digital technology and it will also increase foreign exchange earnings for the country – through the initial equity investment and future FDI flows, job creation and encourage more foreign investors.
Since the appointment of Prime Minister Abiy in 2018, his administration has been implementing a range of economic reforms designed to revitalize the Ethiopian economy by expanding the role of the private sector. These reforms are characterized by market liberalization which entails opening up the private sector for competition and foreign participation. In line with the government’s efforts to liberalize the economy, this transaction entails support of Sumitomo Corporation private equity investment in STE, which is in the process of being established following the award of the recently issued telecom license to the consortium that Sumitomo Corporation is participating in. The Consortium is led by Safaricom Plc and it includes Vodafone (UK), Vodacom (SA), Sumitomo Corporation (Japan) and British International Investment previously known as CDC.
Statement from Manuel Moses, CEO of ATI
Ethiopia is a country with great long-term potential and the ongoing reforms, especially in the telecommunication sector, are a major benefit to its economy. This project is a leap forward in supporting private sector participation which is the engine of economic development and showcases the Government’s commitment to enabling a conducive investment climate in Ethiopia. ATI is proud to be part of this great milestone in Ethiopia.
Statement from Tadao Saida, General Manager for Africa of Sumitomo Corporation
Through this project, we will bring about transformational economic and social impact in Ethiopia. The provision of accessible, affordable and high quality mobile and internet connectivity will enable greater social inclusion as millions more Ethiopians access quality telecom services. Increased connectivity in Ethiopia will also boost the economy, impacting over 1 million jobs with digital training and skills, and bringing about productivity improvements for countless micro-entrepreneurs and small and medium sized enterprises. Insurance coverage provided by ATI is essential factor for Sumitomo Corporation to keep our commitment in the project.
Statement from Atsuo Kuroda, the Chairman and CEO of NEXI
NEXI is pleased to contribute to the sustainable growth of Ethiopia through supporting this project. This is in line with the policy outlined as Investment in Quality ICT Infrastructure, set out in the Infrastructure System Overseas Promotion Strategy 2025 advanced by the Japanese government. NEXI will continue to work closely with ATI to develop an environment that will encourage Japanese companies to make trade and investments to Africa.
