Local companies Vs China

Investments mainly foreign direct investment (FDI) that lump overseas finances to the economy are crucial. To this end the government of Ethiopia has formed different policies and strategies to boost the investment as a whole and particularly the FDI.
In addition to that with good relationships with the global arena, the country has obtained a large amount of trust with its bilateral and multilateral partners including organizations to access finance for infrastructural projects that are crucial to facilitate the way for economic growth and expansion of the private sector on different economic actives.
Since the country settled the border conflict with Eretria in 2000 the country has focused fully on economic development, while the government has also directly injected public money into developmental projects rather than supporting the military.
Since then as the government claimed and even the international community recognized the country was able to register double digit growth for the past 12 years.
For this successful growth state led infrastructural projects have played a crucial role according to different data issued every year.
As stated mega projects focused on infrastructural developments like energy, road, telecom, and on the latest railway projects.
These projects are supported by international organizations and countries on multilateral and bilateral loan support.
In this regard the main multilateral project and financial partner is China, who also provides a lot of support for other developing countries mainly in Africa.
The biggest population in the world, China, has registered big economic growth in the past half a century that allowed the nation to finance several projects all over the world including during the global financial crisis that occurred in 2008.
As a major ally for the country significant numbers of projects in Ethiopia have been financed and undertaken by Chinese finance and companies. For instance the latest railway project that is worth close to USD 4 billion and most of the telecom expansions are managed by Chinese finance and companies.
On the other hand some of the companies based locally or owned by citizens in developed countries, who are working with Chinese companies on partnership or on sub contract bases have created different benefits for citizens.
Handling big projects, learning new technologies and sharing experiences and new jobs are some of the advantages created by the local based companies engaged in partnerships with Chinese lead state projects or their own investments in the country.
Meanwhile the government has to have a strong follow up on the projects backed by its big ally, who works with companies locally.
The latest story that media outlets in Tanzania covered about the controversy between the Chinese telecom firm and an Ethiopian owned company is a good example of something the government has to prevent in Ethiopia.
Betam Communication Limited owned by the Ethiopian Terrefe Ras-Work and the Chinese state owned China International Telecommunication Construction Corporation (CITCC) have been in a  controversy since the Chinese telecom company who undertook project in Tanzania with the support of a consultancy firm owned by an Ethiopian citizen refused to settle the adequate payment even though they had an existing agreement.
The two companies have been working together on the National Information Communication Technology Broadband Infrastructure Backbone Networks in Tanzania.
Betam was responsible for undertaking identification of the project opportunity in Tanzania for CITCC, negotiation of a memorandum of understanding and cosigning with CITCC and Tanzania and advice on technical, financial and business issues. In return, Betam was to receive 3.75 percent of the project value in two instalments.
According to the information Capital obtained as per the contract on April 24, 2007 CITCC managed to secure a lucrative fee for the installation of the fiber optic cable network valued at USD 170 million and Betam’s directors were instrumental towards such success. However the Chinese company breached the contract.
The case has been at the Tanzanian court for the last four years and the case is expected to receive a final judgment in the coming month. The Ethiopian owned company is suing for USD 6.255 million including interest.
A local company contracted with a Chinese company also called CREC to supply relief (sculpture) already installed at the railway stations is claiming that the company refused to settle the payment as per the contract.
The company stated that even though it finished the project as per their deal before the inauguration of the railway project it cannot secure its money from CREC.
The two parties have agreed to a 20 million birr project, while the local company secured only a 4.3 million birr down payment.
These types of disagreements are not new between foreign companies and local investors.
Experts claim that the government has to give due attention to protect local investments.
They claimed that China and its companies are strongly supporting the development of the country and its livelihood. “However not only Chinese but all foreign based companies have to respect the law of the land,” experts said.
They stated that the government has a strong stand to back Ethiopian entities and individuals but the problem is on the implementation process.
As a developing country we need more finance and know-how from aboard but this should not harm the interest of the country and its citizens, according to expertsg