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The WTO accession process allows Ethiopia and its member countries
to negotiate the entry conditions for the first. As part of the
entry conditions, it is expected that a number of WTO member
countries will insist that Ethiopia open its telecommunications
sector to competition. The final agreement with Ethiopia will be a
binding one but has to first be approved by all (not a majority) of
its members.
To begin with, the Ministry should be commended for seeking
professional advice on what Ethiopia's approach should be with
regards to the telecommunication sector during its bid to enter the
WTO. It is clear that failure to agree on opening the financial and
telecommunications sector will be a showstopper for the whole
accession process. And assuming that Ethiopia has decided to enter
the WTO at whatever cost, there is not much option for Ethiopia but
to eventually fully liberalise these two sectors.
The question is
timing and the negotiating capability before agreeing with all WTO
members on a phased market access until full liberalisation is
achieved.
Unfortunately,
the report [conducted by the United States (US) based Nathan
Associates] in question seems more an academic or research paper
than a realistic strategy. It goes into great detail about the
various negotiating provisions available under WTO, which will be a
good reference. But it could not convince me that it was written
with Ethiopia's best interest at heart or with the right credentials
to advise the government on this topic.
The report
clearly identifies the development objectives of Ethiopia in one
full chapter but ignores it completely when devising the possible
scenarios for WTO accession. It seems the only consideration the
report has made is on what Ethiopia has to do and abide by in order
to join this privileged club - a 'you must do this or else'
approach.
A look at the
consultant's website gives the impression that it is a free-trade
policy advocate for the US government; and, as a firm, it seems that
it has never advised anyone on this specialised sector. I personally
have a problem with a US free-trade consultancy company advising
Ethiopia on how to protect its best interests while negotiating at
the WTO and one of its main sponsors - the US government. It is like
showing your cards to your another poker player and asking which
cards to play next.
Understanding
the telecommunications sector in terms of its technology, business
and development dynamics is vital before drawing up negotiating
positions and possible accession scenarios. And the report has
failed to do this.
First, in the cost and benefits analysis of "WTO Accession" section,
it puts the main benefit as 'trade liberalisation in
telecommunications has led to uniformly lower prices'. There is
nothing wrong with that assessment in general but in the context of
Ethiopia, it is irrelevant. Already the cost of a three-minute local
call in Ethiopia is the lowest (in fact 50pc less expensive than the
next lowest) in the whole of sub-Saharan Africa region and probably
in the world.
The real question here should have been the sustainability or
otherwise of the pricing policy of the Ethiopian Telecommunications
Corporation (ETC) during post liberalisation.
Second, the report's analysis of ETC's financial and operational
performance has failed to identify the main weakness of the
Corporation - its inability to turn its investments into
comparatively acceptable penetration rates, a measurement of
telephone lines per capita. Ethiopia currently has the lowest
penetration rates in mobile and Internet use compared to most least
developed countries.
ETC's inefficiency in making the best investment decisions and the
most use of assets it deploys will turn it into a debt ridden
company, unable to compete with anyone and, with so much bad
unserviceable debt, eventually face the possibility of commercial
bankruptcy.
Finally, Nathan
Associates has failed to appreciate the fast changing dynamics of
telecommunications technology; instead it attempts to advice
Ethiopia to follow the exhausted routes that many have been trodden
in the past without due consideration of how the sector and its
technology will take shape in the next five to 10 years and
Ethiopia's ability to make best use of it.
For example,
the returns will be minimal at best if not already dead with the
uptake of Voice-Over-Internet-Protocol (VOIP). ETC is busy procuring
untested, untried and unnecessary futuristic Next Generation Network
(NGN) solutions from China costing billions when basic telephony
will suffice and when it can not even operate basic and already
installed SMS and GPRS technologies. While considering a strategy
for telecommunication liberalisation, investment and development,
changes in technology, ability to utilise technology in a timely
manner and the applicability of a technology to the particular
developmental stage of a least developed country are some of the
dynamics that the sector must be evaluated against.
What can and
should Ethiopia do next?
There are a number of issues that Ethiopia needs to consider as it
looks to prepare for negotiating this important and defining sector.
Four important areas should be explored.
First, as
Ethiopia enters this crucial stage of negotiations to enter the WTO,
it has to be careful to not loose sight of the true costs and
benefits of accession. Ethiopia has to be very clear on the
implications of each negotiating position and not strive for WTO
membership at any cost.
Second is the
question of liberalisation; it has to be resolved with or without
the WTO negotiation strapped around its neck like a noose. Still,
too many people view liberalisation as a danger and that Ethiopia
should not 'expose' corporations like ETC to competition. With this
kind of thinking, there is little hope of reaching Millennium
Development Goals (MDGs), let alone join the WTO anytime soon.
I think it is generally agreed that the liberalisation that has so
far occurred in the financial sector, although foreign ownership is
not yet allowed, has been a success for the public, shareholders,
government and the economy in general. Liberalisation should not be
seen as a threat but rather as an opportunity. Recall the origin of
the word "liberalisation"; it comes from the word liberate - which
means to set free. And no oppressed person or liberation fighter
with a just cause can argue that liberation is a bad thing.
The subscribers of ETC's services have been and continue to be
oppressed by the autocratic and incompetent successive leaderships
at ETC. They have been stifled with a lack of choice, respect and
care for far too long. The general public, businesses and even
government offices are crying out for their voices to be heard and
they are praying to be liberated.
Third, Ethiopia's development goals, expressed in both its
development policy under PASDEP and MDG targets must be the
paramount reason for joining the WTO or any other bilateral and
multilateral trade arrangement. It is, therefore, necessary to
negotiate entry to the WTO but armed with these critical development
goals.
Ethiopia, with its current position of 'no liberalisation' has very
little room to convince the big boys at the WTO that any possible
accession scenario from it will satisfy their powerful industry
lobby groups and their deep pockets. What might be better is to turn
the argument around and ask the WTO negotiating team how best to use
Ethiopia's meagre resources to achieve its goals without
jeopardising its accession to the WTO.
Finally, the advice that would be most useful for the negotiating
team at MoTI is on how countries that have recently acceded to WTO
have achieved (or not) their goals through the negotiating stage.
One of the most interesting and potentially useful case studies is
that of China.
While China has 'liberalised' its telecommunication sector with
minority foreign equity ownership, it seems to be extracting the
most in its favour and at great cost and suffering to foreign
investors. Maybe Ethiopia should consider seeking strategic
negotiation advice from the Chinese rather than procuring their
unreliable telecom equipment. |
