In a country five times as large as the UK, but without an extensive rail network, road transportation in Ethiopia is paramount. Over the last seven years there has been a massive increase in funds allocated for road construction. State spending on roads accounts for a quarter of each year's infrastructure budget and the government has earmarked the equivalent of $4 billion to build, upgrade and repair roads over the next ten years under the Road Sector Development Program (RSDP).
This reflects the government's recognition of the importance of the road sector for national economic growth and for profiting to a maximum from the country's assets. The RSDP was launched in 1997 and during its first five years, the intention is to maintain, rehabilitate and upgrade the main trunk roads, link roads and regional roads. The government will build 3,833 km of asphalt roads, 1,390 km of feeder roads and 5,399 km of gravel roads; recondition 2,613 of asphalt roads; and carry out ‘heavy maintenance' on 1,575 km of existing gravel roads. A Road Fund, which is being financed by a levy on fuel prices, is designed to ensure a flow of funds for the maintenance of the road network.
Spending is concentrated on the five main arteries radiating from Addis Ababa toward Jimma, Awassa, Adigrat and Djibouti. To kick-start the programme the World Bank is providing $309 million, the EU $300 million, the African Development Bank $104 million while the Ethiopian government is investing $940 million. Preparations are in progress for the 326 km Addis Ababa-Jimma road and the 513 km Addis Ababa-Woldiya road.
Ethiopia's new and upgraded airports facilitate the transport of goods and encourage investment. There are now two international airports – Addis Ababa and Dire Dawa – and both have seen an encouraging increase in passenger and freight transport over the last few years. New passenger and cargo terminals have been built at Dire Dawa airport and are now fully operational. Smaller airports such as Bahir Dar have been upgraded. In order to encourage tourism five major airports – Arba Minch, Lalibela, Mekele, Axum and Gondar have been singled out for upgrading; improvements at the first three airports are already complete and work on the last two will be completed by early 1999. The opening of the new airport at Arba Minch has opened up wide-ranging economic opportunities for the lush south.
Upgrading works have also been completed at Semera, Robe (Goba) and Jijiga airfields. Upgrading of Asosa, Combolcha (Dessie), Shire, Negelle, Kebri Dar, Shilabo, Humera, Gambella and Shire airfields will be completed by 1999.
Ethiopia was faced with the task of dramatically increasing the number of the existing 160,000 telephone lines and extending the service into rural areas, where most of the population live. In 1996 the Ethiopian Telecommunications Authority was split in two; the new Ethiopian Telecommunications Authority is responsible for regulating the industry, while the job of Telecommunications Corporation (ETC) is to expand and improve the services and revitalize the infrastructure.
In line with the policy of devolving power to the regional states, ETC has been decentralized so that the individual states are responsible for providing their own telecom services; decision-making now takes place at local level.
The main objectives are to support the free-market economy and investment ventures and satisfy the demands of the private sector and to fully participate in the rural development programme. This year ETC launched its three-year Accelerated Development Programme (ADP). Its aim is to increase the telephone density rate from one phone for every 1000 people to one phone for every 100. By the end of the millennium there should be 760,000 lines. The required 600,000 additional lines have been procured and state-of-the-art digital exchanges and transmission equipment for more than 120,000 lines have already been installed in some rural and urban areas.
In addition, more than a thousand villages will soon have phones, thanks to the installation of 470 Very Small Aperture Terminals (VSATs) and about 200 Digital Radio Multi-Access Subscriber Systems (DRMASs). Eighty of the latter have already been installed. Outdated open wire systems will be replaced. By the year 2000 each village will have at least one phone and the rural areas will begin their link into the global information network.
For international traffic ETC uses an earth satellite station. An additional satellite station will begin operating in the northern part of the country by the end of 1999. Internet services began in January 1997 and are currently being upgraded; the number of lines available to internet users recently doubled and a more efficient service will in future be provided to the business community, educational, health and agricultural sectors at competitive rates. In future the VSAT system will provide internet, digital TV services and interactive distance learning access, which will link higher education institutions with many colleges in the more distant regional states.
A 36,000 line capacity GSM mobile telephone service will provide Addis Ababa with mobile phones by the end of the year. They will be supplied to the regional states in the next phase.
The investment required for all these developments will be raised mainly through ETC's revenue and profits as these are now fed back into the company and not channeled to the government as they were under previous regimes. Furthermore the government is now encouraging the participation of domestic and foreign private investment in the telecommunications sector. ETC is one of the most efficient public enterprises and is highly profitable. Its rate of return now averages 17% on total assets, and its average profit margin is 28%.
Opportunities exist for private investment in the following services:
- exporting the country's various products except traditional export products like raw coffee, oil seeds, pulses, etc. by way of undertaking market promotion, quality improvement or packaging;
- construction ,comprising first grade contracting and rental of construction machinery as well as real estate development;
- social services, such as health, education and sports facilities;