Ethiopia Reopens Sugar Privatization as Losses Narrow, but Investor Risks Persist

Ethiopia is once again reviving sugar privatization under its broader IMF backed economic reform agenda, after repeated failures since 2018. Finance Minister Ahmed Shide told the IMF that privatization will restart following financial restructuring and operational rehabilitation of the Ethiopian Sugar Industry Group, which recently posted positive EBITDA despite years of deep losses and chronic inefficiencies.

The Sugar Industry Group operates eight major estates, yet persistent structural weaknesses remain. Comprehensive losses reached ETB 22 billion in 2021/22 and ETB 9.6 billion in 2022/23, reflecting declining revenues, high operating costs, forex exposure, and security disruptions. Earlier privatization attempts collapsed due to conflict, weak balance sheets, delayed audits, and investor concerns over governance and asset valuation credibility.

Current reforms led by Ethiopian Investment Holdings focus on debt restructuring, efficiency gains, and improved financial disclosure to attract strategic investors. However, success depends on addressing security risks, pricing distortions, and market competitiveness in a liberalizing economy. Without sustained policy clarity and credible valuations, sugar privatization risks repeating past cycles of stalled tenders and investor hesitation.