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Posted on Monday, 18 July 2016 14:37

Ethiopia: Japanese firm acquires huge stake in State-owned tobacco company

By Tinishu Solomon

Photo©Matt Rourke/AP/SIPAJapan Tobacco Inc. (JT) has sealed the purchase of a substantial share in Ethiopia's National Tobacco Enterprise – a state-owned tobacco monopoly.

Officials announced in May that the Japanese company, also seller of Camel and Winston cigarettes outside the U.S., had made a bid to acquire a 40 per cent stake in the monopoly.

Ethiopia will be an important expansion of our geographic footprint in emerging markets

An earlier bid by British American Tobacco Plc fell short of the Ethiopian government's expectations, paving the way for JT, which had the highest bid. The share purchase agreement with the government was concluded over the weekend.

"The JT Group is delighted to be entering the Ethiopian market, where we currently have no presence," Mutsuo Iwai, executive vice president and president of the tobacco business, said.

"Ethiopia will be an important expansion of our geographic footprint in emerging markets."

NTE is the only company allowed to trade, manufacture or sell tobacco products in Ethiopia, Africa's second-most populous nation, with about 100 million people.

"The country is currently experiencing double-digit economic growth, with industry volume also expected to continue to increase," Iwai added.

Studies in 2012 showed only 9 per cent of Ethiopian men smoked – the lowest ratio in the world, compared to 49 per cent in China and 26 per cent in neighbouring Kenya.

A smoking ban in public places is being implemented in Ethiopia after legislation was passed in 2014, which could impact local tobacco sales.

The Ethiopian government is banking its hopes on the Japanese firm to develop NTE into a world class company.

"JTI is recognised as a leading tobacco company and I expect them to bring their technical, business and management ability to develop NTE into a world class company, which will contribute to the overall Ethiopian economy," Demitu Hambisa, the Minister of Public Enterprises, said.

"We very much look forward to working with JTI and offer our full support in making this a success for all stakeholders."



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