5'-\S

Telecommunications in Ethiopia:
Past, Present, and Future

Abii Tsige and Girma Feyissa

I
 54-5

TELECOMMUNICATIONS IN ETHIOPIA
Past, Present, and Future

By

Abii Tsige
and
Girma Feyissa

(Response to Comments Sent by Editorial Committe)

July, 1992
Addis Ababa
1. THE HISTORY OF TELECOMMUNICATIONS DEVELOPMENT IN ETHIOPIA

Available historical sources indicate that the introduction

of telecommunications services in Ethiopia as early as 1894 was
realized as a result of the struggle for assertion of sovereignty
and consolidation of central government on the part of Ethiopia
and an effort of "peaceful penetration'' on the part of foreign
powers colonizing neighboring lands.

Assertion of Sovereignity

Article XVII of the Italian version of the famous Wuchale Treaty

signed on May 2, 1889 between Ethiopia and the Italian
government stated that Ethiopia could make diplomatic contacts
with other countries only through the Italian government offices.
The emperor, realizing the distortion of the provision in the
Treaty repudiated the agreement as of Feb. 1893 and soon applied
for membership to the Universal Postal Union CUPUI as a sovreign
state.

The request which was made in February 1893 to UPU office in

Berne, was rejected on the grounds that the country did not as
yet have modern postal services and also because of Art XVII of
the Wuchale Treaty. The Emperor then gave orders to be issued on
March 9, 1894 proclaiming the introduction of post, telegraph and
telephone services in the country. He soon helped establish a
company and gave concession to his advisor the Swiss engineer Ilg
and a French entrepreneur Mr. Chefneux for the construction of a
railway line joining Addis Ababa and the Port of Djibouti. Art.
VI of this concession stated that the company could establish
along the railway line, a telegraph line to be used free of
charge by the Ethiopian government for messages of state affairs
while other users would pay for the services.

Emperor Menelik had earlier tried to prove his Country's

sovereignity by having stamps printed with his own effigy on them
in 1893. Although he was not given international recognition, he
went on using them for domestic postal services. The emperor,
incidentally, was exposed to the use of the telephone as early as
 2

1889 in his palace compound and nearby residences of dignitaries.

This happened because Ras Makonnen, the Duke of Harrarghe and the
father of the late Emperor Haile Sellassie I, had brought the
telephone equipment, which he received as a gift from the Italian
government, on his return from his diplomatic mission.

Dealing directly with the French government and introducing

telecommunications system into Ethiopia may have del i vered
Menel ik's clear message of independence to the Italian government
and cleared the way to
international recognition, but the
technology was found by the emperor even more precious in his
effort of nation building and consolidating the powers of the
central government. Many boarder towns and centres of little
kingdoms in the hinterland were linked primarily to enable the
emperor control his subjects and guide them.

'Peaceful Penetration"

The other aspect of the introduction of communications

services into the country resulted from the political
developments which took place in the horn of Africa at the turn
of the 19th century. The British colony stretched south from
Egypt to the Sudan and Kenya and the British Somal iland in the
east thus almost encircling Ethiopia. The Italians had colonized
Eritrea in the north and had part of Somaliland. The French had
the French Somaliland (what is now Djibouti) in the east. These
powers were interested in ''peaceful penetration'' to Ethiopia not
only to aggrandize their respective shares of the continent but
also to keep each other in check.

The Italians saw Menelik's friendship with the French as a

threat and alleged the emperor to have broken the Treaty of
Wuchale and advanced south. War was eminent. The famous battle
of Adwa was fought and the Italians were defeated on March 1st
1896. This victory aroused such slogans as Viva" Menelik! Via
del 'Africa!" in many countries of ELtrope and Ethiopia's position
as a sovereign state was getting stronger than ever before.
After the war the Italians approached Menelik and signed the
Peace Treaty of Oct. 26, 1896 in which was stipulated, as war
 3

compensation, that the Italian government shall link Asmara with

Addis Ababa by a telephone line - a distance of about 861
kilometers altogether.

Menelik promised to provide labor, food and wooden poles.

The insulators, batteries, apparatus, wires and other equipment
were provided by the Italians. Work began on April 30, 1901 and
was completed three years later.

A convention which was well trimmed to the colonial desires

was drafted in Rome and Menelik was to cosign it with the
colonial representative in Asmara. Menel ik could not accept this
and finally to the dismay of the Italians it was redrafted
according to the mutual interests of both countries and was
signed by the rightful authorities. The 1 ine linked Addis with
Asmara and Massawa and was found to handle even more important
traffic of international nature.

The Ital Ian Government's intention was to use the project as

a pretext in their effort of ''peaceful penetration'' into
Ethiopia. Menel ik outsmarted them. He not only forced the
redrafting of the convention but succeeded in the
Ethiopianization scheme despite the resistance of the Italians,
who were forced to give in believing that the Ethiopians will
never learn the technology beyond the level of its simple
operation. A telegraph school, the first of its kind in the
whole continent was opened in Addis Ababa, in 1903 with only 11
trainees. By 1904 the trainees were using the Amharic language
morse code in Latin alphabet incomprehensible to the Italian
supervisors.

Expansion work took place in all directions in a relatively

short period of time. The service was managed by a director in
the Emperor's palace first by an expatriate, A.J.Medial and later
by the Ethiopian Lij Beyene Yimer who took over power in 1907.

2. Most Important Laws Affecting Telecommunications Sector.

The most important laws which have direct implications to
the telecommunications sector are those governing investment,
 4

institutional powers, labor relations, tax,import dues and other

financial transactions.

Investment laws have changed dramatically over the past two

decades. Before 1975 the market was the most important force in
investment decisions. Between 1975 and 1991 investment decisions
were made within a centrally-planned economic framework. Since
late 1991, a wider scope has been given to market forces
following the announcement of a new economic policy by the
Transitional Government of Ethiopia.

The Proclamation (No. 131 of 1952) establishing the Imperial

Board of Telecommunications of Ethiopia (currently ETA) is
another government act which has determined the way
telecommunications should be run during the past four decades.
This issue has been discussed at some length in the section
dealing with ''Telecom Operators''.

The labor law issued in 1975 has been the basis for all
collective agreements signed between labor and the employer in
every small and large enterprise in the country. This 1 aw,
issued at the time the labor movement was at its peak in the
country, has a number of articles favoring labor. In one of the
articles of Labor Proclamation No 64 of 1975, for instance, the
following is stated:

"For canceling a contract of employment on the grounds that

the worker does not show in carrying out his work, the
technical knowledge, conscientiousness, reliability or speed
which could reasonably be expected of him ..• the burden of
proof shal 1 1 ie on the undertaking".

Referring to this article and others, many employers

complain that the labor proclamation is strongly labor-biased.

Finance - related laws, mainly dealing with import dues,

taxes, management of net earnings and other government levies are
discussed in the section where "Financial Arrangements" between
the state and ETA are out 1 ined. In summary, 1 ike al 1 other
 •=
·-'
public enterprises (i.e state owned enterprises) the following
charges apply to ETA today:-

Income ta:-, 50 percent of taxable income

Capital charge 5 percent of capital plus

general reserve

Residual surplus 90 percent of income after

income tax

Import levy 24 percent of the value of

imported goods

3. F.TA's Pol icy Making eeocess

Various policies of telecommunications services are

processed in one or two or both ways i.e by the government and/or
by ETA authorities depending on the kind and nature of the
policies to be adopted. In its tasks of preparing the national
economic development plan and upkeeping the standard of living of
the people through improving social and economic services, the
government sets targets and apportions resources for
telecommunications services and investment funds for expansion
and maintenance work. As the service is believed to help
accelerate the development of activities in all economic and
social sectors the Ministry of Planning and Economic Development
ensures that the telecommunications sector interrel•tes with the
overall objectives and policies of the socio-economic development
set by the government. The government, through the the Ministry
of Transport & Communications and ETA, also adheres to global and
regional telecommunications policies and principles. To this
effect various studies are made by either the Ministry of
Planning and Economic Development which is the arm of the Council
of Ministers, or by the Ministry of Transport and Communications
through ETA and forwarded to the Prime Minister's Office for
consideration or approval.
 6

ETA operates on a profit making basis but is obliged to

connect remote areas or strategic border towns to the national
network by government policy disregarding the financial returns
from these rural stations. The role of telecommunications in
relief and rehabilitation efforts in drought-stricken and war-
affected areas is crucial and is provided wherever technically
possible as a government pol icy. Respective ministries or
commissions play active roles in the process of implementing
these po·1 icies.

The other direction of processing policies starts in the

organization. It may end up within the authority or may be
proposed to the ministry after being refined andexamined by
higher echelon for approval. There is a General Planning
Committee comprising members of heads of departments and
divisions. The Committee studies and recommends policy issues to
the General Manager who approves or, depending on the issue,
takes it over to the Board of Directors, the higher executive
body chaired by the Minister of Transport & Communications

Such matters as raising the capital or restructuring the

organizational set-up or approving the draft development package
programme, or change of rates, appointment of the General Manager
... etc are decided by the government. Other less significant
issues are handled by the Board of Directors in the Ministry of
Transport and Communications. The General Manager is delegated
for series of activities and expense authorizations which are
reviewed from time to time.

4. Electronic Equipment Manufacturing

The manufactLtring sector in Ethiopia is sti 11 in its

infancy. As indicated in section 3 of our main document, the
country's economy is dominated by agricLtlture, contributing about
44 percent of GDP, whereas manufacturing contributes only about
10 percent.

Electronic equipment manufacturing is virtually non-

existent. The only telecommunications network elements made
locally include, copper wires (only drawing and insulating) for
the subscriber loop, t2lephone poles and brackets.

In the fen Year Perspective Plan drawn up by the previous

government, setting Ltp manL1facturing facilities for electrical
and electronic goods were to be among the 216 industrial projects
to be undertaken during the period 1984-93. rhe most important
el ectrica·1 and electronic products envisaged by the Plan were
radio and television receivers~ electric motors and electric
bu 1 bs. None of these projects has materialized so far.

A new investment law has been issued based on the economic

:CJ □ l icy announced ~v r:.he ~ransitional Government .,t the end of
1991. This law provides a general guideline for the country's
development. rhe most significant departure of the Transitional
Government's economic pol icy from that of the preceding
Government lS l !l 1ts declared intention to move towards a
market - oriented economy. According to the stated pol icy, the
state sector will run and develop heavy engineering, fert i 1 izer
and chemical producing industries, while at the same time
encouraging the private sector to invest and run any industrial
enterprise deemed acceptable for the social and economic well
being of the people.

Major T,,lecommunications Equipment Suppl i<;>.r1>

Telecommunications investment in Ethiopia is mainly financed

through multilateral and bilateral lending agencies. As the past
six telecommunications development programmes show, major
portions of the external funds came from the World Bank, which
contributed to all the six programmes. The African Development
Bank as well as the Governments of Italy and Sweden contributed
to the financing of only the last (sixth) development programme.
These lenders have strongly influenced the procurement practices
of ETA. Where the World Bank and the ADB require international
competitive bidding as the basis for the choice of eqLtipment
suppliers. the bilateral sources allow only limited tender.
 8

Despite the fact that international competitive bidding

attracts a large number of suppliers, only very few suppliers
have dominant roles in the Ethiopian telecommunications network.
In the switching field, Ericsson of Sweden, Fujitsu and NEC of
Japan and Alcatel of France have strong positions; and in the
transmission area (including microwave and satellite systems),
NEC of Japan, Italcom of Italy and Alcatel have supplied a major
portion of the transmission network. Semens of Germany is
another important supplier of telex and transmission equipment.

In general, although choice of suppliers is dependent on the

mode of financing, technical factors (equipment performance
reliability, compatibility, etc.), price and after-sales support
remain the most important criteria for the selection of
supp 1 i ers.

5. Tari ff Structure

The Ethiopian Telecommunications Authority (ETA) follows the

policies and principles of CCITT in its tariff structure for the
various types of services it provides. The basic objective is to
cover cost and raise fund to ensure sustainable development. The
rates of charges for the types of services i.e. interurban
telephone calls, urban calls, international calls, initial
(installation) charges, subscription charges etc are structured
on per unit cost of service production basis but flexible enough
to set certain rates below cost which can be accommodated in the
general return from operation. There is a cross-subsidy concept
in the general structure as we shall see a little later on. A
brief glance at some of the services and the guiding principles
behind the setting of rates might help to have a general idea of
ETA's tariff structure.

A. Inter-urban Telephone Calls

Interurban telephone calls are transmitted by open wire,

radio or microwave and recently via domestic satellite services.
Despite the mode and quality of services, most of these calls are
charged on the basis of airline distance. They appear to be
 ,:::;:,

equitable but it is not hard to see that 2fficient and more

qualitative calls are charged equally with those hardly audible
rural distant calls. Prior to the application of this principle
interurban call s1 were charged based on the concept of only "Rate
lanes" - calling !'or arithmetical work for every ca·11 being
transmitted through various rate zones. The customer is
subjected to more charges simply because of the distance of the
routes instead of the distance of the place called. This
deficiency is being rectified by applying airline distance
principle.

8. S.T.D_Cal ls

lvhereas the operator-hand] ed interurban calls c,re cha,rged on

a 3-minute minimum basis, the calls handled by Subscriber Trunk
Dialing (S.T.DJ svstem are charged only for the duration of the
traffic. The pulse intervals are, however, adjusted slightly to
make up for the loss from calls lasting less than 3-minutes. For
distant calls by S.T.D the intervals are made even shorter.

c:. Urban Ca]lj;

The charge for urban calls where automatic exchanges are

available is USS 0.06 per call and free in places where manual
exchanges are installed. There is no pulse interval arrangement
for urban calls.

Apart from subscriber services, there are public telephone

services made available using coins. The charge per call is US$
0 .10 a charge meant to cover the costs of equipment,
maintenance, coin collection etc ..

D. Access

ETA tries to recover the investment costs on equipment,

training, installation and upkeep of facilities etc .. by applying
access charges which is the payment made to have access to
communication facil Lties. This includes initial subscription
charge which is about US$55.56 - per line and a monthly
 10

subscription fee which is about US$ 2,41. These charges do not

in any way match the investment cost but are payments for partial
coverage. There are additional rates for extension 1 ines and
extra apparatus and different rates for PBX equipment, which
varies according to their respective capacities and types (manual
or automatic) .

E. Telegram

Telegrams, with minimum of 10 words, are charged on the

basis of flat rates of US$0.05 per word, irrespective of
distance, for ordinary telegrams and double as much for urgent
ones. This rate does not at all cover the cost but it is
expected to be covered by charges on other services like
international telephone calls for instance. Telegram traffic is
generally on the decrease but the low tariff is expected to
encourage local traffic,

F. Telex

Telex traffic both domestic and international is handled by

automatic exchange equipment. Subscribers pay initial
subscription charges and monthly rentals. As for the traffic
charges there are two different rates for local as well as
international telex calls. Generally the charge for telex calls
per unit of time is about three-fourth that of the telephone
charge. However, international rates are subject to bi 1 ateral
negotiations. In few cases the tel ex rates equal or even e>tceed
the telephone call rates.

G. Fax

The rates for fax service are very much similar to the
telephone call rates except for the initial subscription and
monthly fee for the installation and use of the equipment which
is much higher than the telephone subscription rate.

Despite recommendations of CCITT, ETA does not make

distinctions between its customers and the value of services when
 11

setting the tariff structure. But this has to change in the

near future. A telephone call for a business man and an ordinary
customer making a social call of say greetings, should not be
evaluated on the same scale. On the other hand urban calls
should be charged on time interval basis to encourage efficient
use of equipment. The interurban call rates which vary from a
minimum of US$ 0.12 to a maximum of US$ 2.75 per 3-minute period,
depending on distance, should be revised with a view of putting
ETA in a better financial position to face the growing demand for
the service without affecting the volume of traffic.

6. Pi rec ti on and Magnitude of Change io Telecommunications

Policies

One can discern at 1 east two aspects of changes in

telecommun1cat1on policies - techno·logica·1 and operational. The
technical aspect is in the direction of adopting more private or
individual and more intelligent communication network. Such
trends include satellite broadcast, paging system, mobi 1 e
communications network and the I ike. The pressure comes from big
hotels like the Hilton or international organizations. The
magnitude of the demand for such services at present is not very
significant but there are growing indications of increasing
demands.

Another issue pertains to the future of the service

operations. There is an increasing pressure to partially
deregulate and I iberal ize the services. This can be done in a
number of ways, Certain customers terminal equipment whose
technical standard is approved by ETA, could be sold, rented or
maintained by private individuals or companies. The internal
installation of a big building complex can be sub-contracted to
the private sector. Local area networks may be handled by
individuals or private companies including collection of bills.
To this end a series of studies are being made and the 1 ikel ihood
is that they will soon be implemented. These changes and trends
are made or planned to respond to demands for services
originating from all directions. As such there are no particular
 12

pressure groups that caused any chanqe as far as

telecommun1cations is concerned.

7. Financial arrangements

According to proclamation No. 163 of 1979 dealing with

regulation and co-ordination of Public Financial 0perati.ons, the
following provisions are currently applicable regarding the
financial arrangements between ETA and the State.

Art. 5 State Capital

1) The government shall have state capital in every

publ 1c enterprise or financial agency.

Ar- t . ,,; Gener-al Reserve Fund

Each public enterprise shall annually put 10
percent of its surplus into the general reserve
fund until such reserve fund equals 60 percent of
the state capital .

Ar- t . 10 Annual Capital Charge

Any public enterprise or financial agency shall annually pay

to the government ... capital charge the amount of which
shall be five percent of the state capital plus the general
reserve fund as shown on the balance sheet at the end of the
previous fiscal year.

Art. 15 Payment of Residual Surplus

Each public enterprise or financial agency shall pay to the

Government its residual surplus (90 percent of net income
after income tax) within seven months following the end of
its fiscal year.

Art. 16 Financial objectives

1) Every pub! ic enterprise or financial agency sha I 1

 13

plan and conduct its financial operation in such

manner as its income is sufficient to cover:
a) al l eHpenses and other items properly
chargeable to current operations including
depreciation;

b) annual capital charge;

c) interest on loans;

d) ta>: l i ab i l it i es ;

e) appropriation to the general reserve fund;

a) amortisation of any fixed debt due and other

debts; and

g) residual surplus.

Art. 26 State Annual Financial Plans

The Minister (of Finance) and the Secretary General (of the
National Revolutionary Development Campaign and Central
Planning Supreme Council established by Proclamation No. 156
( 1978) sha 1 1 submit to the Council of Ministers currently
with the government draft budget:

1) a draft annual investment programme of the government,

public agencies, public enterprises and financial
agencies and the estimates of resources necessary for
financing thereof;

2) a draft state annual financial plan which shal 1

comprise the following:

a) the investment programme of the Government, public

enterprises, public agencies and financial
agencies;
 14

b) any revenue of the Government available for

investment;

c) transfers from residual surp ·1uses of pLiblic

enterprises and financial agencies;

d) borrowing from domestic sources;

e) foreign sources of financing.

ETA which is a public enterprise as defined by Proclamation

No. 163 of 1979, is required to transfer funds to the governments
general budget in the following ways.

1• Capital Charge:- As ETA is wholly owned by the state,

it is required to pay to the government an annual capital charge
amounting to 5 percent of its total capital plus the general
reserve fund.

2. Income Tax:- The countr-y's. pr-evai ling tax law requires

ETA to pay to the government income tax amounting 50 percent of
its taxable income, i.e.income remaining after all operating
expenses, annual capital charge and interest on 1 cans are
deducted from revenues.

3. Residual Surplus:- This amounts to 90 percent of the

net income after income tax of every public enterprise.
Proclamation No. 163 of 1979 requires every public enterprise to
transfer the amount designated as residual surplus to the
government annually. This, in effect, amounts to transferring
nearly all the earnings of public enterprises to the government.

The Proclamation was issued at the time when the Government

in power then was embarking on a centrally - planned economy
whereby investment expenditures of all public enterprises were
allocated by the Central Planning Supreme Council. This meant
that a public enterprise such as ETA financed its capital
projects from its own funds (drawing on its depreciation and
general reserve funds), government treasury and external loans.
 1 i:::·
··~'
Although Proclamation No 163 of 1979 is still effective, it
is clear now that it has out 1 ived its purpose. Today, there is
no longer a centrally - planned economy in the country. In fact,
a new economic pol icy with strong emphasis on the market to guide
economic activities has been announced and new laws are being
issued and drafted. Among the new laws that have already been
issued, the investment law is the most significant to
telecommunications development. This aspect has been discussed
in greater detail elsewhere.

8. Telecom Operatgrs

F'roc l amat ion No 131 of 1952, issued by the Ethiopian

Government to establish the Imperial Board of Telecommunications
of Ethiopia in 1952, gave the following mandate to the Board.

Act. 3

The Board shall have the exclusive right to engage in the

construction, operation and maintenance of telecommunication
other than military telecommunications; provided that the
Board may in its discretion enter into arrangement with
other persons, public or private for the operation of
specified telecommunication facilities.

The Proclamation <Article 3 of which is quoted herein above)

which is still in force, gives ETA the right to be the sole
operator of non-military, public telecommunications in Ethiopia.
ETA has indeed exercised the right to be the sole provider of
public telecommunications services for over four decades without
major challenges to its authority.

The only concession, with regard to point-to-point

communication, that ETA has made so far is in licensing private
operators to use private radio telephone systems for the
exclusive use of the 1 icensee. These private radio telephone
systems are stand-alone systems which have no interaction with
the public-switched network operated by ETA. The radio
 16

monitoring station run by ETA ensures that uni icensed radio

communications are not undertaken.

From time to time ETA has been approached by users to be

permitted to access ETA's network with their own terminal
equipment such as telephone apparatus, PBX etc. ETA's response
to such requests is generally discouraging to users. On a few
occasions, ETA's customers were permitted to import and install
PBX's of their choice, but ownership of the PBX's was transferred
to ETA with a partial reimbursement of the value of the PBX's.

According to current views of officials responsible for

telecommunications, except for some relaxation in the provision
of customer premises equipment, no major change in the provision
of basic telecommunications services is envisaged in the near
future.

'?. ETA's Basic Network Ar-chitectur-e

The basic telecommunications network consists of:-
11 Subscriber premises equipment

2) Subscriber Lines

31 Switching Centres

41 Transmission Network

1) Subscriber- Premises Equipment

The main components of the subscriber premises facilities,

include PBXs, telephone apparatus, teleprinters, fax-machines.
These instruments are a mixture of the analogue and the digital
type.

2) Subscriber- Lines

This includes the subscriber line pairs secondary and

primary cables-to the switching offices.
 J• --,
'
:3) Switching offices

The switching facilities currently 1n operation range from

the manually-operated rural switches and electromechanical
exchanges to the digital stored-program-controlled systems. The
degree of digitalization of the network is discussed in the main
document.

4) Transmission Eguipm._,nJ_

The transmission network consists of open wire lines,

symmetrical pair cable, radio-relay links and satellite systems.
□ pen-wire lines, with or without carrier systems are widely used
carrying traffic among the majority of rural towns. \/HF systems
ranging from l to 24 Channels as well as UHF Systems with 60 and
120 channels serve several routes. The main, long-di stance
transmission network linking all the regional cities and other
principal towns consists of 300-960 channels analogue microwave
systems. These routes are targeted for replacement with digital
radio relay systems during the STDP,
•

Satellite systems are used for domestic and international

services. Domestic satellite systems are a recent addition to
the network, currently linking two cities. The main application
of satellite systems in Ethiopia is in linking the country with
the rest of the world. In June 1991, Ethiopia had direct
satellite 1 inks with 17 countries.

10 Programme Implementation

According to the Sixth Telecommunications Development

Programme the following were to be realized by 1988.

1. Raise the country's telephone exchange capacity from

123 1 900 1 ines at the beginning of 1984 to 195,000 1 ines
in June 1988.

~-
''"\
Raise telephone subscription from 89,544 in 1984 to
140,000 □ ELs in June 1988.
 18

3. Expand automatic switching service l:o bring the

percentage of subscribers connected to aL1tomatic
exchanges to 95.

4. Extend the telephone service to an additional 150 rural

towns

5. Raise telex subscription to 890 in 1988

Furthermore, it was planned that all additional exchange

capacity was to be based on digital switching systems.

Examination of the status of the network by the end of 1988

reveals a significant gap between planned and actual figures. In
June 1988 the total exchange capacity was only 125,665 1 ines.
This was up only by 1765 l Ines as against 71,100 lines of planned
expansion.

As a consequence of the slow progress in putting up the

planned digital switches, the percentage of subscribers connected
to automatic exchanges stood at only 83 percent, 12 percentage
points below the planned target.

By 1988 there were only 492 telephone offices, an addition

of only 82 over that of 1984, which is 78 below the planned
f igL<re. Telex subscription was also below the planned target by
74 subscribers.

As the above comparison clearly shows, the expansion and

modernization programme of ETA did not progress as planned. In
fact the SXTDP, which was schedL<led for completion in 1988, is
still under implementation at the time of writing this paper - a
programme envisaged for five years has been stretched to cover
nine years'

11. Changes in TelecommunicatiQns In The tlext Ten .Lears.

The country's development pol icy, customer needs,

technological development - among other factors - will determine
 19

the pace and direction of change in the telecommunications sector

in Ethiopia.

Demand for basic telecommunications services has grown at a

rate much faster than ETA could cope with. 1-11e sing] e most
important task of any service provider (be it ETA or any other
telecom operator that might be setup during the next ten years)
wi l 1 be bridging the gap between the huge demand for basic
telecommunications services and the supply. No less important is
the rapidly growing demand for new telecommunications services,
such as data commun1cation, fax and mobile services.

Barring a i:echnol ogical break through~ the services

mentioned above will remain the area of focus for t.he coLtntry 's
telecommunications needs.

In this connection, the Ethiopian telecommunications

network, given a healthy economic growth, is expected to
experience a maJor overhaul. Side by side with the expansion of
the network, the most significant portion of the network will
have been converted to digital systems by the end of the decade.
During this period the introduction of ISDN is expected to appear
on the agenda of development discussions.

Liberalization and privatization will no doubt emerge as key

policy issues in the field of telecommunications. Although
1 imited 1 iberal ization is in sight, privatization of the
telecommunications network will call for a persistent push from
the protagonists of the privatization policv. In any event, the
monopoly role of ETA is unlikely to remain as it is in the coming
ten yearnsM

Another important area of change is in the manufacturing

industry. The development of local capacity in the manufacturing
of telecommunications equipment has been on the list of
development programmes of the country for some years now. Given
the current optimism of the private sector, telecommunication
equipment manufacturing plants will be among the numerous
factories that will be established during the coming ten years.
 20

12. Effect of Global Tr-ends

For the last 17 years, Ethiopia heavily depended on the

former USSR for military and technical assistance. The country
was hard hit by at least two major droughts and famine (1974,
1985), and was war-ravaged for over thirty years. Over 60 percent
of Its people are living below the poverty-] ine.

Ethiopia's leaning too much towards the socialist camp, her

settlement and v1llagization programmes, collectivization in
agriculture ... etc. were strongly criticized by some observers,
Her povertv was alleged to have been largely the result of
social ism. !n general the west was rather reluctant to rescue
the country from the political turmoil The over extended civil
war frustrated the government forces and crippled the economy
until defeat by opposing forces CEPRDFl was eminent. The former
president Meng1stu Haile Mariam fled the country in May 1991 and
soon after a Transitional Government, a temporary alliance of
various parties and organizations, was established with the EPRDF
playing the dominant role,

Even though the country was socialist-oriented previously,

telecommunications development programmes have always been funded
by western loans. The new economic pol icy of the Transitional
Government is basically a mixed economy pol icy. The private
sector is encouraged and assisted by the government to
participate in all economic sectors hitherto monopolized by the
state except in a few sectors. This places immediate pressure on
the supply side of telecommunication services, already too
scarce.

Popu I at ion

The first census ever conducted in the country in 1984

showed that the population has reached 42.2 million including
Eritrea. With an estimated 2.9 percent annual growth rate it
would have reached 49.9 million by the end of 1990. 90 percent
of the population is rural-engaged in agriculture. Out of which
3 percent lives in the lowlands mainly by cattle raising. The
 21

urban population which is concentrated in few towns (31.4 percent

living in Addis Ababa) grows at an annual average of 4.2 percent.
Forty-six percent of the population of Ethiopia is under 15 years
of age. The total fertility rate is about 7.5 while the death
rate is estimated to be around 15.2 per thousand population
11984). Life expectancy at birth was about 51.9 years based on
the Central Statistics Office report of 1984.

13. A telecommunication network map of Ethiopia has been

attached with the letter sent separately.

14 . INTRODUCTIQN

Tb!1 Country

Ethiopia 1s located in the eastern part of Africa stretching

from 3° N-l~N and from 33°E to 480E, bounded by the Sudan in the
west and north-west, the Red Sea in the north-east, Djibouti and
Somalia in the east and Kenya in the south. With an area of
1,223,600 sq.km its features are characterized by a rugged
terrain and major deep and precipitous valleys containing such
big rivers as the Blue Nile (Abay), Tekeze, Mereb, Baro, Omo,
Awash, Genalle and Wabbi Shabel le which drain their waters to the
neighboring areas except river Awash.

The Economy

The country's basic economy is agriculture which contributes

over 44 percent of GDP. The main produces are grains, coffee,
sugar, fruit, vegetables and 1 ivestock. The manufacturing sector
consisting of mainly food, textiles, beverages, leather and shoes
and non-metallic products including handicrafts mining and
construction, contribute only about 16 percent of GDP. The
service sector comprising mainly trade, public administration
transport and communications contributed about 40 percent of GDP
at current factor cost as at end of 1991.
 ,...,,...,
..::...::.

Resource 5,

The country's physical resource base potential for

agricultural production and its large livestock population (the
largest in Africa and contributing about 40 percent to the value
of agricultural output) are the most promising potentials,
Little exploited hydroelectric power potential, newly discovered
natural gas resource in the Ogaden region, minerals, particularly
primary gold, soda ash, tantalum, marble, potash and base metals
are also available important resources.

15. Source for table 1

1) In our copy of the diskette, we have indicated as the

source of table 1: ETA's statistical Bulletins (1987-
1991) and ONCCP plan documents (1985-1991).

2) The right column Telecom. contribution (¾ of GDP) is

derived from the ratio of operating revenues from
telecommunications services to GDP expressed as a
percentage.

16. References

1. Alemayehu Kibret, Price Policy and Revenue~Effectiveness of

Tariff Rates in the Ethiopian Telecommunication Authority
Ethiopia: A.A. 1985

2. Asfaw, Fikru, Management of Telecommunications in Ethiopia.

African Telecommunication Development conference <ATDC)
Zimbabwe: Harare, 1990

3. Pol ic>' consider·atU;rn on Licensing of Pri\/ate

Customer Premises Equipment for Accessing ETA's
Networks. March 1990 (Rev. 2)
 23

--L Imp,n-i .al Government of Ethtopia, Negarit Gazeta, 11

The
Establ i -~hment of ·(he lmper·i.3..l Board of Telecommunication of
E t.b....l...2,Q
i a. 11
F'r·oc l am.:f..
t i on t·,lo, 1 ~:1 of 1 '7'52.

5. Eshete, Alerne, The ronstruction of Italo-Ethiopia Telephone

and Telegr·aph line IE:98-1904, Ett-,iopia: A.A

,:6• ITU, African Telecommunication Statistics. ATDC, Z i rnbab1,.,._ie:

Harare, 1990.

ETA, Telecommunrcattons Development Programmes

8. Ethjopian Science and Technology Commission~ Working Papers

pr·esented tn the Fi r·st N.at i cor,al Cooflc'r~n_ce <;•D !:k i ence and
Tech no l ogy Pol 1c y of Eth i op i a. n e 20
1.Ju - 25, 1 98:3 A. A.

·.,· Lee, 1i 11 i .~m, From

1..-
.. Bush Te>1 egraphy to Microwave syste>rr,:
Te u~ommu n i cat i on i n J;;tbi op i a 1 E:97-1 973. Eth i op i a: A. A 1 ·;>73

10. Lemma, Taye, Price of Telecommunication Service in Ethiopia~

Ethiopia; A.A, 1987

11. Minisa.tr·,' o-i Post, Telegraph .and Telephone; Telephone_ ,c.ervJce

in __the_Er·itr·ea Pro,•ince 1~:53-1963: Asmara I I Pi l graphics
1969.

12. ~-Jis1_1~1onger, C, Ro! Ii n Etal, Accounting Pr inc i pl es, 12th

Edition. USA. South-Western Publishing Co. 1970

13. Office of the National Committee for Central Planning of

Ethiopia, National t,,lor k sh c,p on Population Pol i C/
Q~~~lopment. June 12 - 13 1990 A.A

14 ------Ten Year Perspective Plan (1984/85-1993/94 Ethiopia

A.A
 :24

15. Pankhurest, Rfchard, Transport and Communication in Ethiopia

1835-19~:5: The ,Journ-~l of Tr·anspor·t Hi=-tory 1975, l.)ol. 2.

16. Provjsional Government of Ethiopia, Negarit Gazeta 11

Labor
Proclam~tion. Proclamation No. 64 of 1975

17. Provisionai Mi 1 i tar·>' Government of Ethiopia, f,~egari t Gaze ta,

11
11
Regylation :,.nd cci-ordination o-f F'ublic Finance Op1;1e_~J_L_9n~

proclamation No 163 of 1979.

18 I :::e,·ed Mohammed, l··.Jotes. on Fin~ncial ,~o~lysis for Project

( u D pub I I s.h e d:, . i' th i op i «: A. A. 1 9J1,;,.

19. Transitional (3overnment of Ethiopia, Economic Policy o-f the

Transitional Go,,ernment of Ethiopia. Ethiopia: A.A. 1990

20; UNTACDA, Pr·ogramme r,f the ·a.ecc,nd United Nations. TransporJ

aru:! Com1m.rni cations Qecade in Africa, .. l't~)-200Q~

21. klB, Ethiopia•·s. Economy in the ... 1'!'80'·= .a.nd Fr·.a.rn;;,J,,ork for

AcceJs'c«teo Growth, No 8062-ET .. MB.rch, 1'?90

22. ---- t.,1,:;r·Jd _Dev eJ opme n t Rep or· ts, 1?83/.an d 1 989.

17. Governmen_t Change And Tel ecomm. Poli CY

May 1991 witnessed two major events in Ethiopian politics.

Having achieved military victory over the Ethiopian Government
which had been in power since 1974, the Eriterean People's
Liberation Front IEPLF) formed the Provisional Government of
Eriterea based in what used to be the Autonomous Region of
Eriterea under the preceding government of Ethiopia. .JLtst ,:about
the same time, the Ethiopian People's Revolutionary Democratic
1=-ront IEPRDF) formed a provisional government in the rest of
 24

15. Pankhurest, Richard, Transport and Communication in EthiopiJ

1835-193;i1 The )our·nal gf Transport History 1'?'75, ,)ol. 2.

16. Provisional Government of Ethic,pia, t,Jegarit Gazeta "L~l:1or·

Proc_l amat ion. Proclamation No. 64 of 1975

17. Pro•v•isa.ional Militar·>' Government of Ethiopia, r,Jegarit Gazeta,

"Regulation and co-ordination of Public Finar,ce Operation."
proclamation No 163 of 1979.

18. Se>'ed Mohammed, Notes on Financial Analysis for Project

(unpublished), Ethiopia: A.A. 1986,

19. Transitional Government of Ethiopia, Economic Policy of the

Transi tiona] Government oLEthiopia. Ethiopia: A.A. 1990

20. UNTACDA, Programme of the second United Nation:- Transport

and~oTILmunications Decade in Africa, 1991-2000.

21. WB, Ethiopia's Economy in the 1980's and Framework £gr_

/i~J;el erated Growth, No 8062-ET .. Mar·ch, 1990

22. ---- World Development Reports, 1983/and 19J35',

17. Government Change And Teleconm. Pol icy

May 1991 witnessed two major events in Ethiopian politics.

Having achieved military victory over the Ethiopian Government
which had been in power since 1974, the Eriterean People's
Liberation Front (EPLF) formed the F'rovisional Government of
Eriterea based in what used to be the Autonomous Region of
Eriterea under the preceding government of Ethiopia. Just about
the same time, the Ethiopian Peop·1 e's Revel Lttionary Democratic
 ~~­
..:.:,._1

Ethiopia (i.e excluding the Autonomous Region of Eriterea).

Later, in July 1991, the Transitional Government of Ethiopia was
established by a coal it ion of EPRDF and more than twenty other
political organizations.

According to the resolution passed by the July 1991

conference which established the Transitional Government of
Ethiopia, a referendum to decide the future of Eriterea will be
held in two-years time.

The most significant change with regard to

telecommunications administration since the establishment of the
Provisional Government of Eriterea is the fact that ETA no longer
manages and operates the telecommunications network in Eriterea.
The Provisional Government there has taken over its
administration. After eleven months of total absence of
telecommunications services between Ethiopia and Eriterea,
services have resumed since May 1992.

At the time the Provisional Government of Eriterea was

formed in May 1991, about 15 percent of Ethiopia's total
telephone exchange capacity was in Eriterea, whereas Eriterea's
population was 6 percent of the total population of Ethiopia.

Since Asmara was the second largest city in Ethiopia, the

Addis Ababa - Asmara Microwave Link carried the highest traffic
density. In addition, Asmara was the source and destination of a
significant portion of the international telephone traffic.

Although it is too early to assess the political statL1s of

Eriterea in relation to the rest of Ethiopia, the most extreme
case would be an independent Eriterea with Ethiopia using the sea
ports of Massawa and Assb as outlets to the sea. This scenario,
in itself assuming a low level of economic and social ties,
offers ample opportunities for the expansion of
telecommunications services between the two governments. A more
 ,·;'
~::.o

likely scenario would be very close economic ;and socia·1 ties

between the two geographic entities, no matter what political
status Eriterea assumes.

Regarding the implications of the changes of government in

Ethiopia to telecommunications, it suffices to mention the new
economic policy announced by the Transitional Government of
Ethiopia in December 1991. This policy states that the market
'"' i l l have a greater role to decide the country's economic
activities. While this statement has created great expectations
among the business community, the Economic Policy has highlighted
that some economic activities will remain under state control.
The Economic Pol icy issued in December 1991 states the following
in relation to telecommunications and po•ts:

" ~3ince posts and telecommunications provide essentia·1

social and economic services, they win remain under state
ownership. However, forms of private capital participation
in these activities wi 1 ·1 be studied and 1 egisl ated"

The implications of this policy statement in the way ETA is

to be re-organized and the role of the private sector as
telecommunications service provider is yet to be elaborated.
According to the Government policy statement quoted herein above,
decision on whether the private sector should be authorized to
engage in telecommunications as operator, is to be based on a
study which is yet to be conducted. It wi 11 , therefore, be
sometime (a year perhaps, with an optimistic estimate) before a
new telecommunications policy evolves.
 'J"'iui
066L-Slln:)l:JI:) 'U S38NVH:)X3 3NOHd3731 100001 •••

"160-1'"
l!l'flt ,,;nns m1oo11 - D
l!lNYH,n iv10N11J1 Jn!l01ffi'f - (:

1!1WIIH,U WHUHl)I 1'111:)10 -o

"H)JJ 1'JN011¥HIIJJHII IISNVH1 "@
ONJ')J 1

'rAHJM

"
•M

100\ 11)111
, ...... 11:,
,,,\,~

"'"
·1 n1-nv

'"'
OIJ11Jt ''I

"""
llJOl'IO')

\ ]!ltlTll'.IU 1WHIYl1 - @ e-Y'f ""''

J")HnlHl

J!lYIS
:)JIYNOlnY

·san,
fMJS

11011,1:1 -
- 0
D J..
•
,g:,.
1(!()011
J')U'l'M'.)1J Jn!)()l"rnT iY,01 ,H11'1U - • 6
]!lH'fll:l1l 1Yll!ll(I ,.,,,.,, ,IO.JH - •
'-._ J')H'rlln) ....,,.~
JISH'l'IIJ 7")01¥tfY !llfll'ilU - D
J!llt't'H:)U 1'::,01 Allfflllh:IIOtllBNO:, - {!l
]!lH'l'll'.)J] 1YNOlJ'f'HlfJU I IISHY>ll - rn
ON3~31