Japanese company now monopolizes Tobacco business in Ethiopia

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Within a single privatization and acquisition process Japan is now listed as one of the major foreign direct investment (FDI) countries in Ethiopia. Late this week the Japanese tobacco giant Japan Tobacco International (JTI) made the second largest sale in the country for ownership of the remaining 30 percent share of the National Tobacco Enterprise (NTE) from the government.
The deal sealed on Thursday made Japan one of the six major FDI sources for Ethiopia; an amazing feat considering only two years ago their investment in Ethiopia was negligible, although Mitsubishi invests in the nation’s coffee industry.
A year ago JTI acquired 40 percent of NTE with a record sale of USD 510 million. The current deal is the second largest in the history of the country.
Currently JTI spends close to USD one billion on Ethiopia’s tobacco industry in just one year, through the privatization of NTE. They now own 70.95 percent share.
“This significant increase in our ownership of NTE shares reaffirms our strong belief in the company and Ethiopia as an increasingly important place to do business in Africa,” Eddy Pirard, President and CEO of JTI said. “By combining our international and newly acquired local expertise, we are confident that we can take NTE to a new level of growth,” the CEO added in a statement published on the JTI website.
So far Turkey is the leading FDI in Ethiopia followed by China, India, Saudi Arabia and the European Union countries respectively, according to recent data.
Yet now because of this single investment the FDI share for Japan may equal the European Union’s.
In the recent past Japanese companies have also been considering the manufacturing sector.
Ethiopia is highly keen to see Japanese investment in the country. Hopes are that this will transfer knowledge and improve the work ethic, according to experts.
The enterprise has been given an exclusive right to produce, process, manufacture, distribute, import and export tobacco and tobacco products in Ethiopia. The enterprise also has tobacco farms at Shewa Robit, Hawassa, Bilatie and Wolaita.
Wondafrash Assefa, Public Relations head of the Public Enterprise Ministry, told Capital that the shareholders have been negotiating to transfer the remaining share.
“We give priority to those interested in a direct sale as opposed to an auction,” Wondafrash said.
He said that two bodies have come up with the final deal to transfer 30 percent to the company. “In the history of privatization the deal is the second in terms of value after the USD 510 million dollar deal a year ago,” he added.
After the latest deal the government has left the tobacco sector fully. Currently Sheba Group, a Yemeni company has more than 29 percent share in the sole cigarette producer and importer.
The then Privatization and Public Enterprises Supervising Agency transferred Meta Abo Brewery for the UK top world distiller Diageo, at a price of USD 225 million in 2012. At the time the deal was the biggest in the country.