Identifier
Created
Classification
Origin
09ADDISABABA380
2009-02-11 13:48:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Addis Ababa
Cable title:  

OPIC INVESTMENT FUND: A GOOD CARROT, BUT ETHIOPIAN

Tags:  ECON EFIN OPIC ET 
pdf how-to read a cable
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DE RUEHDS #0380 0421348
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O 111348Z FEB 09
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3757
INFO RUCNIAD/IGAD COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEWMFD/HQ USAFRICOM STUTTGART GE PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORP PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEPADJ/CJTF HOA PRIORITY
RUEKDIA/DIA WASHINGTON DC PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
RHEHAAA/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
UNCLAS ADDIS ABABA 000380 

SENSITIVE
SIPDIS

DEPARTMENT PASS TO OPIC - BARBARA BRERETON

E.O. 12958: N/A
TAGS: ECON EFIN OPIC ET
SUBJECT: OPIC INVESTMENT FUND: A GOOD CARROT, BUT ETHIOPIAN
ENVIRONMENT NOT YET CONDUCIVE

REF: STATE 5207

UNCLAS ADDIS ABABA 000380

SENSITIVE
SIPDIS

DEPARTMENT PASS TO OPIC - BARBARA BRERETON

E.O. 12958: N/A
TAGS: ECON EFIN OPIC ET
SUBJECT: OPIC INVESTMENT FUND: A GOOD CARROT, BUT ETHIOPIAN
ENVIRONMENT NOT YET CONDUCIVE

REF: STATE 5207


1. (SBU) While an OPIC-supported private equity fund could
support U.S. and nominal Ethiopian Government (GoE) economic
development objectives in Ethiopia, we assess that Ethiopia's
current business and macroeconomic policy environment is not
conducive to taking full advantage of such a resource. Many
key sectors of interest for the program -- particularly
telecommunications, financial services, transportation,
distribution, and logistics -- remain subjected to severe
constraints to non-Ethiopian investment. The fund could
contribute significantly, even in the existing business
environment, to the development of Ethiopia's agribusiness
sector where the GoE has liberalized and facilitated
investment processes notably. While the business environment
in this sector may be conducive, we would hazard that
Ethiopia's current macroeconomic crisis -- which is driven as
much by statist ideology-driven policies as by global
dynamics -- does not present an adequately secure investment
environment to merit a strong USG recommendation for exposing
USG-backed funds to risk. Examples of potential hazards
include: the unavailability of foreign exchange to bring in
imported inputs, lack of adequate enforcement of contracts,
ad hoc reclamation by the GoE of land allocated to investment
activities, and potential political unrest.


2. (SBU) Despite these many challenges, we do believe that
Ethiopia's potential inclusion among recipient countries for
this fund may serve as an incentive to the GoE, particularly
in light of its emphasis of attracting foreign investment, to
be responsive to USG calls for economic reforms. As such, we
recommend that OPIC include Ethiopia in consideration for
investments under this fund, but subject any potential
ventures to case-by-case assessments of viability by Post
based on the enabling environment prevailing in country at
that time.
YAMAMOTO