Opportunity in Ethiopia

Opportunity in Ethiopia image

A reforming African nation offers new avenues for investment

As the energy industry combs the earth looking for development opportunities, the possibility of discovering a major new energy source diminishes accordingly.

At times opportunities remain untapped because of socio-political circumstance and when the situation changes, it can lead to unprecedented possibilities for cunning investors.

One such golden opportunity is emerging in Ethiopia where Abiy Ahmed, the nation’s recently-elected prime minister, has implemented reforms to the country’s social and economic policies. Elected in April 2018, Ahmed is leading the fight against corruption while reaching out to neighbouring regions, and working to privatise various  nation’s industries.

Taken together, these reforms represent a powerful new direction for the East African nation, as well as a potential hotbed for investment activity. With tremendous renewable resources which have yet to be exploited, financial and technical support is required to reach ambitious goals. So far, progress is promising: in 2018 the International Monetary Fund predicted that Ethiopia would be Sub-Saharan Africa’s fastest-growing economy.

 

Neighbourly relationships to boost growth

As Ethiopia emerges from a complex recent history, the opportunity to renew relationships with East African neighbours could represent the most promising development for economic growth. In addition to offering new avenues for energy partnerships, these neighboring nations also offer valuable lessons in terms of best practices for energy exploration and international cooperation.

One of the most powerful examples of regional collaboration can be seen in the East African Crude Oil Pipeline (EACOP), a partnership developed to transport crude oil from Uganda to a Tanzanian port on the Indian Ocean. The EACOP, a $3.5 billion agreement between the two nations, demonstrates the potential for partnerships that combine natural resources with strategic geographic positioning. The new pipeline, set to be completed in June 2020, will offer significant economic benefit to both partners, as the crude oil will supply energy to surrounding countries including Kenya, Burundi, South Sudan, and Rwanda.

Ethiopia’s ample natural resources put the country in a strong position to develop partnerships with its neighbors, and a mutually beneficial agreement between Ethiopia and Kenya is already in progress. Bolstered by support from the World Bank and African Development Bank, a new power line inter-connector between Kenya and Ethiopia will be completed in July 2019. Supported by Ethiopia’s sizable hydro-power capabilities, the inter-connector will deliver stable energy supplies to the country’s southern neighbor.

 

Growing Possibilities

The Kenyan partnership only scratches the surface of Ethiopia’s capabilities in terms of exporting energy resources. Emphasizing renewable resources like wind and hydro power, Ethiopia has ambitions to become Africa’s biggest energy exporter. Private companies, bolstered for the first time by the Ahmed government, are developing multiple geothermal plants which are expected to produce 1,000 MW of power between them. This enhanced capacity is necessary not only to develop export revenues, but also to support the increasing industrial need of Ethiopia’s fast-growing economy.

As Abiy Ahmed continues to breathe fresh air into the Ethiopian political environment, investors can expect business development conditions to continue to improve. Vast wind, water and geothermal resources remain ready to be developed, and those with the technical knowledge and experience to bring those resources to the market for the benefit of disconnected communities will be handsomely rewarded. With government support of new private companies as well as sizable opportunities for investment from government institutions, the future of the energy industry in Ethiopia has never looked brighter.

 

For more information on the opportunities in Ethiopia, join us at the Regional Energy Co-operation Summit: East from 27th - 29th March in Addis Ababa, Ethiopia. Download the brochure here