Telecom Liberalization in Ethiopia: Challenges and Opportunities for Local Engineering Firms in the Sector

Abstract

The purpose of this study is to examine the prospect of telecom sector liberalization on local
telecom engineering firms in Addis Ababa, Ethiopia. The census method was used to collect data
from 33 local telecom engineering firms. Structured questionnaires were distributed and collected
from general or deputy general managers of local telecommunications engineering companies
who had direct information about the prospect of telecommunication liberalization in their
companies. Descriptive and relative importance index (RII) analysis methods were performed to
achieve the study's intended purpose. By using the relative importance index, this study found that
the biggest challenges that local firms are facing due to liberalization are a lack of clarity about
how foreign firms would be involved and the unavailability of legal or political control over these
foreign companies; a lack of incentives by the government to build local capacity; international
standards requirements by telecommunications operators; a shortage of standard tools and
equipment; and the unavailability of internationally recognized training institutions in the country.
The study also identified two key opportunities for local engineering companies related to the
liberalization of the telecommunications sector: the improvement of occupational health and safety
through the adoption of new project management skills and the readiness of the local engineering
companies to adapt to and cope with the new liberalized environment. Based on the findings, the
study offered important recommendations, such as the adoption of supportive laws, regulations,
and policies, as well as supportive tax and tax exemption rights for regional telecommunications
firms. The main proposals include covering mandatory joint ventures between foreign and
domestic businesses, defining the licensing requirements for foreign businesses, ensuring
management systems, and enhancing industry-standard tools and instruments.