A single Ethiopia state enterprise 1% share value, taking the transfer value of National Tobacco Enterprise back in 2016, was valued at $12.75 million USD. How high could the 1% share value of any state enterprise be in 2022 and thereafter?
Based on Article 1(5) of public enterprises proclamation 25/92, ‘’Capital” means the original value of the net total assets assigned to the enterprise by the State at the time of its establishment or any time thereafter. More emphasis shall be given to the word’ …at any time thereafter. If we assess the foreign investment amount based on the legally prescribed capital of the state enterprises, we will end up calculating the share sale value lower both in USD and Birr. Section two of the public enterprises’ privatization proclamation No.1206/2020, under article 4-7, clearly provided the pre-privatization process which bodily put the need for a valuation.
In addition, Article 1(3) of the proclamation also provides ‘“Total assets” which means all immovable and movable property, receivables, cash and bank balances of the enterprise including intangible assets, deferred charges, and other debt balances. This clearly shows that, for the share transfer value setting, the total value of the enterprise will include those receivables, cash balances, and deferred charges or debit balances.
Those articles clearly envisage, the transfer of government share may not, or shall not in clear terms, based on the earlier, which may have counted a decade, statutory assigned capital of the enterprise. Rather valuation of the assets in dollars shall be made before or at the time of transfer of government share to the private sector. For example, when the Ethiopian government transferred Ambo mineral water and national tobacco enterprise, in July 2016 and December 2016 consecutively, Ambo Mineral Water was transferred after valued at USD 60 million while national tobacco at USD 1,275,000,000(1.275 billion dollars). The latest transfer, National Tobacco Enterprise, 1% share value was 12.75 million USD
Keeping the premises that government share will be transferred after such asset valuation, can you guess the worth of a 1% share in 2022 which was valued at 1.275 million dollars in 2016? The answer surely will be three to five folds. This value is without the consideration of the most profitable and ‘top’ valued state enterprises which mainly include Ethiotelecom; Ethiopian Airlines, Ethiopian Shipping and logistics service enterprise; etc. In addition, licensing fees and other related revenues possibly collected during the investment period shall also be considered.
To achieve $150bn, I expect the government will hire a ‘successful’ transaction advisor that will run detailed market research and provide huge transaction amounts with an alternative transaction bringing the strategic investor on board.