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Ethiopia announces first diaspora corporate bond

Sanket Mohapatra's picture

Ethiopia announced perhaps the first sub-sovereign corporate bond aimed at the diaspora. A release by the Ethiopian Ministry of Foreign Affairs says that the bond launched on December 23rd will provide funds to the Ethiopian Electric Power Corporation (EEPCO) for investments which will increase power supply to the nation, where only 27 percent of the people currently have access to electricity.

The government-guaranteed bond will be issued for a minimum denomination of US$500, maturing in 5, 7 or 10 years (with interest rates of 4%, 4.5% and 5% respectively). The interest earned would be free of income tax.  The news that companies in developing countries are starting view migrants as a potential source of external (hard currency) finance is indeed noteworthy. I will post more details as they become available.

Comments

Submitted by Seifu S. Mehari on
Sanket: The News that Ethiopia announced the first sub-sovereign corporate bond aimed at mobilizing Diaspora financial resources is great news. The action taken by the government symbolizes the development challenges facing Ethiopia and; the government openness to work with its Diaspora communities on development matters affecting the country. Given this positive signal, it would be wonderful to see if the government could extend this call to other sectors such as telecommunication and land ownership which will go a long way in attracting more Diaspora investments into Ethiopia. For example imagine how much the telecommunication sector can contribute if it is opened to private investment. It can attract Diaspora investment into Information and Communication Technology (ICT). Encouraging investment in ICT can be used to harness the resources and capabilities of the Diaspora and can create conditions that enable Diaspora to provide services through virtual means. It can be used for the provision of medical services through telemedicine, online teaching, business trading and mentoring relationships. These are just a few that require well-functioning Internet access but can go long ways in reducing poverty and in creating opportunities. Again the action taken by the government is a symbolic move toward harnessing innovative financial instruments and should be seen as a call for joint development partnership between government and Diaspora. I personally encourage the government and fellow Ethiopian to seize this opportunity and pave the path for more development and investment partnerships.

Submitted by Anonymous on
Do you believe that any rational person person or institution will buy an Ethiopian government bond while no semblance of rule of law exists? The EPRDF government routinely confiscate property, takes away licenses, frequently change commercial codes, rates etc with no regard for laws and regulations. I would not trust them for a day with my money, let alone five years. Trust me, this is not politicizing on my part, it is just a fact. Do your homework before you are taken in by sweet talk and supposedly professional presentations.

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