Ethiopia aims to wean local millers off state budgetary support and improve local production by selling eight sugar factories.
This week, the government announced Ernst& Young LLP will advise on the sale of the sugar millers.
The move is part of the government’s broad sugar sector reforms aimed at increasing private sector participation to improve the efficiency and performance of firms.
Ethiopian Investment Holdings, the main marketing authority for the government, invited local and foreign investors to acquire up to 100 per cent ownership in the eight sugar firms. These include Omo Kuraz 1, Omo Kuraz 2, Omo Kuraz 3, Omo Kuraz 5, Arjo Dedessa, Kessem, Tana Beles and Tendaho.
The Ethiopian Sugar Industry Group (ESIG) has taken over the administration role of Kessem and Tana Beles while owning the remaining enterprises.
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Ethiopia has been one of the fastest-growing economies globally, with double-digit gross domestic product growth per annum over the last decade.
However, the Covid-19 pandemic slowed down growth to about 6.1 per cent in 2020 from 8.4 per cent in 2019 As of May 2022, ESIG had 12 sugar enterprises with an annual total sugar production capacity of 450,000 metric tones.
The privatisation of the sugar firms is expected to reduce reliance on the exchequer for funding and raise additional capital to support projected expansion and modernisation.
The transaction will also create opportunities for refined and raw sugar exports, enabling foreign currency inflows into the country.
SOURCE: The Kenya wall street
