Ethiopia’s Boom Runs into Limits on Finance
By Katrina Manson in Addis Ababa
Three banks rejected Tekeste Berhan Habtu for a loan to help build his 11-storey office block. Undeterred, the 59-year-old Ethiopian businessman ploughed in cash from his own software and logistics businesses. “I went to the banks but they ration people,” says Mr Tekeste, whose $1.6m real estate venture is nearing completion after three years of work.
His experience is indicative of constraints on the private sector in a country that has been one of Africa’s fastest growing economies, but whose government has chosen to eschew the neo-liberal western orthodoxies adopted by other African countries in favour of a more tightly controlled development model.
“The whole concept is similar to South Korea, Taiwan,” says prime minister Hailemariam Desalegn. But while the World Bank says Africa’s second most populous country after Nigeria has averaged growth of 10.6 per cent in the seven years to 2011, double the continental average, signs are growing that Ethiopia’s public investment-led boom is running up against its limits.
The IMF predicts the economy will grow at …
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