Organisation: Department for International Development

Delivered on: 12 December 2013 (Transcript of the speech, exactly as it was delivered)

Page history: Published 10 January 2014

Policy:Helping developing countries’ economies to grow        Topic:International aid and development        World location:Ethiopia

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Some say the agribusiness Gadco’s presence in eastern Ghana is the best thing that’s ever happened in the region. Others fear that there are accidents waiting to happen.

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Sogakope, Ghana:

In the shadow of a small warehouse in the verdant Volta Region of eastern Ghana, Zikpuitor Awuku Atakli, the chief of the local Fievie community, is leaning casually against the side of his Nissan sedan.

He stands with one arm stretched across the top of the open door and looks around as a young employee from the agribusiness Gadco heaps a 50kg bag of rice onto the passenger seat. Not having to buy rice is one of the perks of Gadco’s presence in the area, Atakli explains with the faintest hint of a smile before signing a piece of paper that another employee is tentatively holding in front of him.

As chief of the Fievie – a people largely made up of small-scale farmers living in scattered villages across this region’s gentle valleys – Atakli has been the community’s main negotiator with Gadco. The firm began growing rice on Fievie-protected land 3 years ago, and relations between the company and community are currently very good.

“Gadco is the best thing that has ever happened to us as a people,” insists Atakli proudly, attributing this partly to his strong leadership and principled approach in negotiations. “Subjects have an inherent right to the land and you cannot deprive a subject of his property unless he consents, no matter how profitable the company may be,” he says.

Atakli has good reason to emphasise this point. Stories abound in Ghana of foreign agribusiness acquiring the rights to vast swathes of land, uprooting locals from their ancestral homes, and building closed-off farms whose produce barely falls to the ground before it is whisked away in huge clattering trucks. These arrangements don’t drive local development so much as displacement − a fate that Atakli was adamant would not befall the Fievie − and can also come back to haunt the companies that make them.

In fact, just down the road, the abandoned husk of Prairie Volta Limited (PVL) sits silent and motionless like a real-time cautionary tale of how easily things can go wrong. In 2008, it too had the big idea of growing rice, and its plan to cultivate thousands of hectares as part of a large-scale commercial farm was heralded as being the solution to Ghana’s rice woes. However, land disputes quickly flared up, only a fraction of the rice projected was ever grown, and the company soon plunged into debt. Today, it grows little more than weeds, and its impressive processing plant and equipment sit rusting behind a padlocked metal gate.

Fortunately for Gadco and the Fievie, their experiences over the same period could not have been more different to their rival’s down the road. While PVL was failing to meet targets and sinking into debt, Gadco was growing slowly but steadily. While PVL was getting caught up in clashes over land rights with locals, Gadco was successfully winning hearts and minds. And although Gadco’s operations didn’t start with a bang like Prairie Volta’s, it has not succumbed to a whimpering end yet either.

In fact, observers are now starting to point to Gadco’s project as an exemplar of how agribusinesses can be made to work, and last February, Ghana’s newly-appointed agriculture minister spent his very first day in office touring the company’s operations and celebrated the project as an example that ought to be replicated across the country.

But how did Gadco manage to avoid the fate of so many of its predecessors? And is everything really as rosy as it seems?

Children ride on the back of a tractor going through paddy fields in the Volta Region, Ghana.

Gadco was founded in the wake of the global financial crisis when Toks Abimbola and Iggy Bassi, two former high-flyers in the City of London, found themselves itching for a new challenge. They joined forces and – based on their sets of skills and experience – decided rice farming in West Africa was the path for them. At least from a business perspective, it doesn’t take a former investment banker to see why.

Rice consumption in the region is booming. Driven by rising incomes and changing lifestyles, the traditional staples of yams, plantains and cassava are increasingly being left in the past, while rice is seen as the food of the young, of the urbanised and of the future. In Ghana, yearly per capita consumption in 2001 was just 17.5 kg; ten years later in 2011, it had more than doubled to 38 kg; and by 2015 it is estimated to have accelerated to 63 kg.

At the same time, domestic supply is seriously lagging behind this soaring demand. West Africa doesn’t produce nearly enough paddy to meet its own consumption, and governments have to import millions of tons of rice each year from Asia to make up for demand. Not only are these supplies being cut back as consumption in Asia also increases, but this dependency on international markets soaks up precious billions in foreign reserves and leaves populations vulnerable to global food price shocks. In 2007-8, for example, rice prices skyrocketed due a perfect storm of speculation, protectionism and panic-buying around the world; social tension simmered in West Africa, and after the turmoil finally settled, several governments in the region moved rice self-sufficiency even higher up their lists of priorities.

For these reasons and more, Abimbola and Bassi saw that rice could be a potentially lucrative venture. They picked Ghana – one of the most stable and business-friendly countries in the region – and identified the east of the country – through which the mighty River Volta flows and where the government’s irrigation schemes are concentrated – as the most promising site for their endeavour.

For many, the next step might have been to acquire a big piece of land, but Gadco was wary of starting down that path, especially given the growing activist push back against foreign companies leasing vast tracts of land − occasionally rivalling the size of entire countries − at absurdly low prices – sometimes as little as 50 cents per acre for 99 years.

These arrangements can of course be highly attractive to profit-hungry business on paper, but Gadco was aware that they can also provoke local animosity, attract the ire of international campaigners, and ultimately lead to the demise of the companies that made them.

“Lots of big businesses have been caught out in so-called land grabs,” says Bassi. “They have irresponsible engagement models, destroy reputations, and fundamentally long-term shareholder value is affected. Why would we want to go into large-scale farming in Africa when it has failed so miserably?”

Small-scale rice farmers dry their paddy for processing.

Instead of going into huge-scale commercial farming therefore, the Gadco team hoped to follow a more sustainable and less controversial model.

Firstly, they decided to set up just a relatively modestly-sized farm, and rather than leasing the land for it, hoped to find a more inclusive agreement. The company began by seeking out communities with whom it thought it could develop a long-term partnership and eventually came across the approximately 10,000-strong Fievie people led by Atakli.

Following some early bumps in the road, a deal was agreed. For the first harvest, Gadco would gain access to 300 hectares of Fievie-protected land in return for 2.5% of the farm’s gross profits.

Unlike a lease for a set fee, this arrangement tied the fortunes of community and company together; greater profits for the farm would mean greater profits for the Fievie. All costs and expenditures were to be made publicly available, and the money paid to the community would be deposited into a special account to be used exclusively on local development projects. Meanwhile the handful of people displaced from their land would be compensated and given one hectare of the commercial farm on which to grow rice themselves.

Also built into the plan was a spirit of cautious growth. The initial 300 hectares was just a tentative first step, and if everyone was happy after the first harvest, more land would be made available. If things continued to go smoothly, Gadco would gain access to 5,000-6,000 hectares, while the returns to the Fievie would also be renegotiated upwards.

The second part of Gadco’s grand plan was to supplement production from this nucleus farm – which even at an 6,000 hectares would be small by most commercial standards – by working with smallholders in the region as part of an outgrower scheme.

Rather than relying on a big commercial farm to grow all the produce itself, outgrower schemes allow companies to tap into the productive capacity of existing smallholders. Firms support local farmers by providing things such as seeds, fertilisers and technical assistance, and then buy the crops the smallholders have produced after the harvest.

“Instead of investing in land – which is problematic for many well-documented reasons – these models of African agribusiness invest in people,” explains Jane Harrigan, professor in economics at the School of Oriental and African Studies (SOAS), University of London.

As well as allowing agribusiness to side-step the potential controversies involved in acquiring lots of land, outgrower schemes also require considerably lower capital investments than building a huge centralised farm, and labour costs are reduced as labour is essentially outsourced to the smallholders. Meanwhile, those smallholders stand to benefit through improved access to credit, markets and expertise.

For many of Ghana’s struggling rice farmers, it was exactly this kind of help they needed, and for those approached by Gadco, the company’s promise of credit-free inputs and a guarantee to buy the farmers’ rice at market prices was warmly welcomed. Many complained of previously having to borrow at 50-100% interest rates from local moneylenders to buy inputs and lamented their lack of access to markets which left them open to exploitation from rice buyers.

To date, Gadco has recently completed a successful pilot project involving around 500 smallholders, and the aim now is to scale up to 5,000 farmers in the next few years.

With each smallholder running a farm of an average size of one hectare, the outgrower scheme could mean Gadco gets an extra 5,000 hectares worth of production, 5,000 struggling farmers get the support they’ve long dreamed of, and 5,000 households in the region receive a significant financial boost.

While outgrower schemes are far from new – for example, they have long been common in tea plantations – it is because of developmental possibilities such as this, as well as concerns over other types of farming, that these models are increasingly being endorsed by the likes of the UN.

Gadco’s processing plant under construction.

However, for all the potential advantages of outgrower schemes, they have had mixed results. Several have been scuppered by the same difficulties that face all forms of agriculture – getting margins right, knowing the market, understanding the environment and so on – while many others have failed because they did not take enough care in learning their smallholders’ specific contexts.

As Nigel Poole, a researcher in agrifood systems at SOAS, explains, “Africa certainly needs innovative models for linking smallholders with business, but the key is understanding the farmers and their livelihoods, hopes, fears, capacities, motivations and commitment. It involves the economics of business, but also so much more.”

Indeed, outgrower schemes need to be highly sensitive to the specific challenges and hopes of their smallholders, which can vary dramatically from place to place. If the particular farmers being targeted are not interested in the programme, the scheme will never get off the ground; and if farmers do join but aren’t happy with it, they will withdraw and the whole thing can quickly unravel.

“Farmers enter the relationship with us completely freely so the only way we can keep farmers loyal to us season after season is to make sure the system works for them,” explains Bassi.

As well as offering interest-free credit and a guaranteed market therefore, Gadco also provides its smallholders with technical assistance and ensures farmers are given a clear run-down of all the costs and how they are calculated when they are paid.

This approach seems to be paying off. Although a few farmers who spoke to Think Africa Press had minor concerns at the end of the pilot, they all nevertheless expressed general satisfaction.

“I don’t know what the future holds, but the experience with Gadco has been very good so far,” says Eric Glate, one of the smallholders involved. “Before they came in, I had lots of problems with growing rice, but now Gadco is helping me out of poverty. I like them a lot.”

Enyonam Ankutse, another farmer in the pilot scheme, was similarly hopeful though more cautious.

“This is the first time. There are some things we don’t fully understand yet like the weighing issue,” she says, referring to the way in which Gadco deducts the weight of chaff and extra moisture when calculating what to pay the farmers, “but everything else is very good.”

Regarding the other part of Gadco’s model – the commercial nucleus farm – arrangements have also gone relatively smoothly. The farm has expanded from the initial 300 up to 1,000 hectares, and the Fievie’s 2.5% revenue share has gone towards upgrading street lighting, building a school block, providing furniture for a kindergarten, and buying a set of drums for a local youth group.

“Before Gadco came here, our development was lagging behind,” says Atakli, “but now many things have improved and we’re currently talking to Gadco about them helping us build a water pipeline.”

“It may be true that some in the community may not have benefited directly,” he admits, responding to the fact that some poorer Fievie were sceptical about Gadco’s presence, but adds, “everyone cannot benefit at the same time, and although they don’t have direct income flowing into their pockets, they are certainly benefiting indirectly through our community development.”

Looking across a neighbouring farm to Eric Glate’s.

However, while happy smallholders and happy landlords make a happy Gadco, not all who spoke to Think Africa Press were as positive as the Fievie leadership and the company’s smallholders.

Labourers who were working on Gadco’s nucleus farm complained that their boots and equipment were shoddy and that their requests for replacements had fallen on deaf ears. Some who had migrated from other regions of Ghana claimed that the company had failed to provide accommodation as expected, and many said that their wages of 9 cedis a day ($4) was lower than what they had earned doing the same job elsewhere.

Some also complained that the transportation to take them home at the end of the day was insufficient, and that although one of the perks of the job was that Gadco allowed them to buy some of company’s rice at a subsidised price, there wasn’t any available. When put to Bassi, he said he would raise these issues with his team and recently reported that some new equipment has been provided.

Nevertheless, the complaints of Gadco’s labourers – the one group the company can most easily replace and so arguably doesn’t need to try as hard to please – doesn’t reflect well, and some might be concerned that although other parties seem happy for now, the more the firm grows, the more it will be able to leverage its power to squeeze greater profits from those other groups too. There is a fundamental power imbalance between Gadco and its small-scale farmers, for example, which will only increase as the company develops a stronger monopoly on inputs and markets.

Bassi, however, vehemently rejects the possibility that Gadco might start changing its practices just because it can. “We’re not tree-huggers, but we’re not going to go chasing profit in ways that are irresponsible,” he says. “We’re not going to Africa to farm just for the sake of farming. We want to do it in an inclusive way and we are also trying to move the needle on poverty.”

In fact, Gadco’s website is full of talk about “sustainability”, the need to “transform livelihoods”, and the company’s “triple bottom line” of financial, social and environmental returns. “We want to make profit and a positive social impact as well,” insists Bassi.

These are all undoubtedly positive sounds and, riding on the trend of corporate social responsibility, they have become more common amongst businesses. Bernd Mueller, rural employment specialist at the UN’s Food and Agriculture Organisation, welcomes this and emphasises the importance of agribusinesses driving development under such principles, but he also warns against taking mere talk at face value.

“In rhetoric, you see this very often now,” he says, “but whether social and environmental goals are actually being fulfilled and whether they are seen to be equal to the drive for profit – and make no mistake about it, private business is ultimately about profit – is another matter.”

For example, before joining the UN, Mueller researched rural wage employment on farms across East Africa, one of which, he recalls, branded itself heavily on being socially engaged in contrast to the reality on the ground. “They were the complete opposite of what they painted themselves as – they paid very low wages compared to other employers in the industry, the working conditions were appalling, and there were even reports that social funds were misappropriated,” he says. “There are also examples of some very decent employers in the industry, but this shows that there is a huge potential for exploitation. In a situation with limited regulation and oversight, a lot depends on the genuine good will of the investor.”

Gadco does not refute this last point. “Personal objectives are fundamental to our inclusion of social goals,” admits Bassi, before pointing out that Gadco has also integrated ethical safeguards into the firm’s architecture.

The company’s board includes a mixture of business-minded and development-oriented people; its chairperson, for example, is Lord Mark Malloch-Brown, the UN’s former number two under Kofi Annan. And in setting up the outgrower scheme, Gadco deliberately sought partners from the development world – such as the Syngenta Foundation for Sustainable Agriculture, the Alliance for a Green Revolution in Africa (AGRA), and the World Bank – as well as private investors.

These safeguards are no doubt promising, though again, their actual significance should be approached with a degree of caution. The World Bank, for instance, has supported several projects that campaigners say fail to take full account of social and environmental concerns; the Syngenta Foundation is linked to the much-maligned agrochemical giant Syngenta; while AGRA – which is in fact chaired by Annan himself – has been accused of being a shill for biotech corporations and of undermining the sovereignty of local farmers.

Julius Ameku, Gadco’s community manager, gazes across the company’s nucleus farm.

For many observers, however, the biggest danger faced by those involved with Gadco is not so much that the firm will start acting in an intentionally malign manner. Rather, they fear that as this one company integrates itself into so many locals’ lives, the potential fallout if there are any setbacks − or if the firm collapses completely − could be huge.

“It bodes well the farmers seem very happy, but we also need to see what happens if things go wrong,” warns Harrigan.

This is particularly true regarding the smallholders. Indeed, one of the main dangers with outgrower schemes is that while they may provide an excellent opportunity for smallholders, they can also heap all the associated risks on those farmers too. “Sometimes what these outgrower schemes are doing is transferring all of the risks to the farmer so the commercial entity doesn’t have to bear any,” says Harrigan.

When everything is going well, everyone is happy; but when things go badly – for example, if there is a crop failure or shock in international markets – smallholders still have to repay the costs of inputs, even if they have produced nothing or made no profit at all. If the farmers were wage labourers on a commercial farm, they would still go home with their salaries while the company would pay the costs of a failed harvest. But under an outgrower arrangement, it is the company that is protected from losses, while smallholders are the ones that stand to take the hit of a bad season.

On a larger scale, there are also concerns about what might happen if Gadco were to fail completely once it had integrated itself in the region. Smallholders who had put their trust in the firm would lose their links to inputs and markets, while the implications for the broader local economy could be disastrous.

“There is an issue of insecurity due to dependence,” says Mueller. “Power relationships can be very unilateral, and while the initial agreement might be very positive and beneficial on many fronts, the problem could be that if anything goes wrong, it goes wrong for a lot of people who have no safety nets.”

Indeed, despite the firm’s strong emphasis on sustainability, Bassi concedes that the possibility of Gadco collapsing can never be ruled out, though he rejects the notion that the company would leave a decimated and abandoned community in its wake.

“Even if Gadco falls tomorrow,” he says, “that transfer of knowledge – that professionalisation, commercialisation and change of mindset in farmers – has already happened, and that’s really significant in the potential performance of that farmer in the future – whether that future is with Gadco or not.”

He also points out that thanks to the Fievie’s development projects, paid for by their revenue from the Gadco nucleus farm, the community would be left in better standing than before Gadco appeared on the scene.

Indeed, true sustainability refers not just to the longevity of a company’s presence, but what it leaves behind.

Zikpuitor Awuku Atakli leans against the door of his car by the Gadco offices.

Back in the shadow of Gadco’s warehouse, Atakli is expounding the importance of ensuring its deals with the company are “equitable” and “people-centred” rather than “individual-centred.” To guarantee this, he describes how the Fievie’s open communal meetings where agreements are discussed are “purely democratic.”

“We allow the people to ask any questions they want and we have to give clarifications,” he says. “After all, I am just a trustee; we are all just trustees in charge of the community’s resources. It’s not my land, it is our land. And whatever I do, I have to account for it.”

Atakli reveals that he is highly sceptical when it comes to unfettered market forces, revealing that he’s a proud reader of the left-leaning UK newspaper The Guardian. “I know that if you don’t stand up to companies, they will take you for a ride,” he warns.

But at the same time, the Fievie leader also asserts, more than once, that Gadco’s presence has transformed the region for the better. He recognises that the road ahead could be bumpy and strewn with risks, and acknowledges that Gadco is ultimately a profit-making venture following the dictates of the market, but he nevertheless concludes:

“I’m certainly not a big pro-capitalist, but I know that if we allow this company to develop, in 5 or 10 years, things will be so different to what they are like now.”

Sourced here:  http://thinkafricapress.com/ghana/companies-communities-friendly-farming-agriculture-ghana-gadco-rice

The trip for this article was organised by the Guardian’s International Development Journalism Competition and was hosted by the Syngenta Foundation for Sustainable Agriculture.

Photographs by James Wan.

About the Author

Think Africa Press welcomes inquiries regarding the republication of its articles. If you would like to republish this or any other article for re-print, syndication or educational purposes, please contact: editor@thinkafricapress.com.

For further reading around the subject see:

Experts Weekly: What African Agriculture Needs	Going With the Grain: New Breed of Rice Raises Hopes for Kenya’s Domestic Rice Production	Cameroon Pastoralists Fight for their Way of Life

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‘Trade barriers hinder growth of African economies’

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The Director of the Ethiopia Investment Agency, Mr Aklilo Kedebe, has attributed the slow pace of the African economy to the trade barriers existing among them.
According to him, one of the key ways to boost business activities among African countries is to remove the trade bottlenecks that prevent African countries from trading among themselves.

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Speaking at a forum organised by the agency in Accra, Mr Kebede said until the issue was properly addressed, it would be extremely difficult for economic activities on the continent to grow.
Mr Kebede said the economic atmosphere in African gave countries on the continent advantages to expand their trade activities. He added: “By so doing we pave the way for mutual trade to exist, which would lead to the creation of employment for the people of Africa”.
The purpose of the forum, according to the organisers, was to highlight economic and investment opportunities in Ethiopia.

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Ethiopian economy

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According to Mr Kebede, agriculture, energy, mining and tourism sectors have enormous benefits and opportunities for Ghanaian investors to tap into, “Each of these sectors has been designed to create a favourable business environment for investors.”
“The Ethiopian government has put in place effective measures to ensure that investors who plan to invest in the country will receive the needed incentives and support to grow their business,” he said.

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Why invest in Ethiopia

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Mr Kebede said apart from the excellent climate and fertile soil, abundant trainable labour force, competitive incentive packages, the current political and social stability in Ethiopia would pave the way for foreigners to do their business.
“It is only Ethiopia that has the lowest crime rate in the world. The level of security of persons and property is high,” he added.
According to him, with a population of over 80 million people, investors can expand their business without having to face any internal or external hindrances.

http://www.ghanaweb.com/GhanaHomePage/business/artikel.php?ID=298333

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Ethiopia prepares 50,000 hct of land for horticulture development

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Ethiopia has readied 50,000 hectares of land to be leased for horticulture development, according to the Ethiopian Horticulture Producers Exporters Association (EHPEA).
Despite its huge potential for the development of horticulture, the size of land developed with flower, vegetables, and fruit until 2011/2012 is 12,552 hectares.
However, during the past five or six years, the industry has been growing significantly. Currently, over 120 companies are engaged in the cultivation of horticulture products.
Due to the prevailing investment environment, attractive incentive, by the government and cheap labor, Ethiopia has now become a center of attraction for foreign direct investment (FDI) in horticulture development.
“In order to meet the increasing flow of investment in the horticulture sector, the government has identified five corridors consisting of 50,000 hectares of land,” Tewodros Zewdie, Executive Director of EHPEA told WIC.
According to him, these corridors are found in Oromia, Amhara, Tigray, SNNP and Eastern region where there is huge potential of land, labor and infrastructures.
Though horticulture development in Ethiopia started a decade ago, the industry has been playing a key role towards generating foreign exchange and creating labor.
The sector has generated some 265 million US dollars in 2011/12 and created million of jobs, Tewodros said. According to him, the revenue is expected to increase in the just conclude fiscal year.
Flowers made up the biggest share in export value, according to the executive director. Ethiopia is the second largest supplier and exporter of flowers in Africa.
Europe is the major market destination of Ethiopia’s horticultural produces, especially flower. But activities are underway to search other market destinations.
“Efforts are being made to export Ethiopia’s horticulture products to North America, Japanese and African countries’ markets,” Tewodros pointed out.

http://www.waltainfo.com/index.php/explore/12039-ethiopia-prepares-50000-hct-of-land-for-horticulture-devt

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Stratex Int’l issues Megenta project drilling results

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Stratex International has issued results from its second round of drilling at Megenta, saying the relatively high gold content of the narrow veins intersected to date is encouraging.

Executive director David Hall noted the company had yet to intersect true bonanza mineralization within cohesive quartz veins.

Highlights of the drilling included:

- Continuing definition of gold-bearing conduits at a high crustal level;

- 2,162 metre diamond drilling programme completed across 8 holes at Megenta gold project, within the Tendaho licence in Ethiopia, as part of earn-back to majority stake in the Project;

- Wider zones of lower-grade gold mineralization host multiple narrow higher-grade quartz veins. Best results include:

* 10.45 g/t Au over 0.5 m and 9.88 g/t Au over 0.6 m within 4.39 g/t Au over 2.6 m (MGDD13-03);

* 2 m @ 1.34 g/t Au, including 1 m @ 2.24 g/t Au (MGDD13-03);

* 0.7 m @ 3.56 g/t Au (MGDD13-05);

* 0.34 m @ 4.4 g/t Au (MGDD13-06);

* 6.67 m @ 0.77 g/t Au, including 0.64 m @ 1.15 g/t Au, 0.64  m @ 2.28 g/t Au and 0.7 m @ 2.14 g/t Au (MGDD13-07);

* 1.5 m @ 1.2 g/t Au (MGDD13-08);

* 4.15 m @ 0.72 g/t Au, including 0.8 m @ 2.73 g/t Au (MGDD13-08).

- The presence of calcite within many of the veins suggests that peak gold deposition, if present, will be at greater depths than those tested to date;

- Akehil and Lakeside discoveries still untested.

http://www.iii.co.uk/stockmarketwire/142086/stratex-intl-issues-megenta-project-drilling-results

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Ethiopian Air Seeks Fleet Upgrade as It Studies U.S. West Coast

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Ethiopian Airlines Enterprise is looking to add single-aisle and wide-body planes to feed an expansion as it studies Los Angeles, Madrid and Jakarta for future destinations, its chief executive officer said.

The airline has asked Airbus Group, Boeing Co. (BA:US) and Bombardier Inc. (BBD/B) for proposals for the purchase of 10 to 20 single-aisle planes, and is also considering twin-aisle planes, either the Boeing 777X or Airbus’s A350, of which it has already ordered 14, CEO Tewolde Gebre Mariam said today.

The Addis Ababa-based airline has 62 aircraft in its fleet, including 13 Boeing 737 new-generation planes and five 787 Dreamliners and wants to increase its stable in part to replace older Boeing 767s on lease and to expand across the globe, Gebre Mariam said in an interview at an aircraft finance conference sponsored by Airline Economics in Dublin.

“We’ve got Tokyo, Shanghai and Vienna coming this summer, and we’re studying flights to the West Coast, to Los Angeles,” he said. In the U.S., the airline already serves Washington with its large Ethiopian population, the CEO said.

In the single-aisle category, the airline is looking at Boeing’s 737 Max, Airbus’s A320neo, and also Bombardier’s CSeries. Gebre Mariam said it would be difficult to run a mixed-fleet of both Boeing and Airbus single-aisle planes, as there is no commonality in pilot training or spare parts.

“We’ll have to see what’s in the proposals,” he said. The airline needs new single-aisle airliners from 2015 or 2016. Airbus has said its A320neos are sold out until about 2019. Boeing’s first 737 Max aircraft are set to begin service in 2017.

Of the 12 Boeing 767s operated by Ethiopian, three are owned and the rest are leased. Gebre Mariam said he wants to replace the older leased planes with either 787s or Airbus A330s, which he would also lease.

http://www.businessweek.com/news/2014-01-20/ethiopian-air-seeks-fleet-upgrade-as-it-studies-u-dot-s-dot-west-coast

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Addis Ababa listed on The New York Times ’52 Places to go in 2014′

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The New York Times has listed Addis Ababa as one of the 52 places that should be visited in 2014.

The travel section of one of the biggest daily newspapers in the US labeled Addis Ababa as an ambitious art scene that is heading toward the international stage.

“Building on a strong historical legacy (Addis boasts one of East Africa’s oldest art schools) are a host of events scheduled for 2014: a photography festival, two film festivals and a jazz and world music festival. Thanks to the city’s diverse art institutions and galleries, including the artist-in-residence village Zoma Contemporary Art Center and the Asni Gallery (really more an art collective than a gallery), there is an art opening at least once a week. Even the local Sheraton puts on “Art of Ethiopia,” an annual show of new talent. But it’s the National Museum that, in May and June, will host this year’s blockbuster exhibit, “Ras Tafari: The Majesty and the Movement,” devoted to Emperor Haile-Selassie I and Rastafarianism,” The New York Times stated.

Apart from Addis, other African countries and specific cities and locations like Cape Town, South Africa, Laikipia Plateau, Kenya and Dar es Salaam, Tanzania are also picked by the newspaper.

http://www.ethiopiainvestor.com/index.php?option=com_content&view=article&id=4739:addis-ababa-listed-on-the-new-york-times-52-places-to-go-in-2014&catid=74:top-story

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Controversial Dividend Tax Finally Settled

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- The introduction of the tax was met with anger, after businesses were ordered to pay tax in arrears -

Ethiopian Customs and Revenue Authority (ERCA)’s head office which is located around Megenagna

The Ethiopian Revenues & Customs Authority (ERCA) expects all share companies and private limited companies that have recapitalised their profit to report to it with supporting documents, up until February 7, 2014.

Businesses are required to pay 10pc of the dividends of their profits, according to Income Tax Proclamation No. 286/2002. They are required to make the payments from the time the proclamation first became operational, which is 2012.

Dividend tax is an income tax payable on dividend payments distributed to the shareholders of a company. It became functional inEthiopiain 1979 and has been amended several times.

But it was when the ERCA asked those companies who have not shared the profits to pay dividend tax that complaints were brought forward.

The ERCA argued that companies should collect the tax whether profit is paid to shareholders or not, commenting that income includes all sorts of gains that a person acquires, whether it is paid, credited or received, according to the Commercial Code of 1960.

The Authority also argued that sub-article one of Article 10 of the Income Tax Proclamation entitles it to regard credited income as an income for tax purposes.

They then concluded that since the shareholders have rights over the profit, it falls under what is stated as “credited income” in the Income Tax Proclamation.

Another cause for complaints from taxpayers was that the Authority neglected the issue of collecting dividend tax for several years, allowing it to pile up. This accumulated tax was beyond the capacity of some companies to pay, taxpayers claimed,at a meeting held on Thursday, January 16, 2014 with officials of the Authority.

Part of the complaint revolved around the fact that some companies had recapitalised their profits, butfailed to present the supporting documents to the ERCA within the right timeframe. They were thus being subjected to paying dividend tax.

The Ministry of Finance & Economic Development (MoFED) reviewed all of these complaints and introduced some changes, which were sent to the Authority on August 6, 2013. The latter adopted the changes and began implementing them on August 26, 2013.

Four changes were introduced: Every company, both private limited companies and share companies, that have recapitalised their profits into any investment sector – beginning from the issuance of the income tax proclamation – would be exempted from paying dividend tax.

Secondly, share companies that present supporting documents stating that they have recapitalised profits, should be free from dividend tax, irrespective of the time of recapitalisation.

Companies that have neither distributed dividends nor recapitalised profits are given a three-year grace period, upfrom only one year.

Share companies are required to report to the ERCA within 12 months after the end of every fiscal year. This change, which will take place from the 2013/14 fiscal year, is irrespective of whether the companies have recapitalised dividends or distributed themto shareholders.

The ERCA sent a letter to its branch offices on October 12, 2013, explaining details of the changes. This was with the view of filling gaps in these offices. Share companies should have a certificate from Document Authentication and Registration Office (DARO) that clearly shows how much the capital raised  and also have a document that clearly show their capital from Ministry of Trade (MoT) or Regional or City administration trade bureaus.

The Authority, which plans to collect 116 billion Br during the 2013/14 fiscal year, has collected 24.5 billion Br, in the first quarter, from business profit tax.

http://addisfortune.net/articles/controversial-dividend-tax-finally-settled/

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Addis Fortune gossip: Prime Minister Hailemariam Desalegn is known by…

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Prime Minister Hailemariam Desalegn is known by those frequenting the power corridor on Lorenzo Te’azaz Road for his favourite adage – a developmental state will always remain cash strapped – gossip disclosed. Indeed, he runs an administration besieged by a massive funding gap between what it needs to pay to accomplish its objectives by the end of 2015 and the amount of money the national treasury can access, gossip observed.

Nothing of this apparent deficit is more visible than in a dispute that erupted between heads of three federal agencies, gossip reveals.

Sufian Ahmed’s Ministry of Finance & Economic Development (MoFED) is responsible for managing the fiscal expenditure of the state. But it needs to do this in tandem with Teklewold Atnafu’s National Bank of Ethiopia (NBE), which is the custodian of federal government’s wealth. Among several sources of revenue that end up with their funds at the NBE, there are proceedings that come from the sale of state-owned properties to private investors, as well as money collected from lease fees from those who manage state-owned industries.

However, the man in charge of these funds, Beyene Gebremesqel, director general of the Privatisation & Public Enterprises Supervisory Agency (PPESA), was clever in persuading the administration to redirect these funds to the recapitalisation of companies under his watch, gossip says. The intent is to beef-up the asset base and books of these enterprises, hoping that they can then generate a lot more money for the public coffer.

This is a tried and tested approach in the case of the brewing and textile industries, gossip observed.

To Beyene’s disappointment, someone at the Central Bank was undercutting him, transferring funds from his agency’s account to the MoFED, without first getting his consent, gossip disclosed. Over the past few months, funds amounting to no less than 1.1 billion Br were taken out of the PPESA’s account with the NBE and handed out to Sufian’s Ministry, which is under enormous pressure from every direction to release funds to finance public infrastructure projects, gossip disclosed.

One of these major projects that will forever remain a signature for the rules of the Revolutionary Democrats is the national railway. When they are completed, hopefully in two to three years, close to 5,000km of rail network is planned to crisscross the entire country. If there is any hurdle to this national ambition by the Revolutionary Democrats, it can only be limitations in funding, claims gossip.

Even the generous Chinese government’s appetite to find viable projects overseas to sterilise its abundant foreign exchange reserve has become wary of the stock of Ethiopian foreign debt, according to gossip. Unsurprisingly, the official version seems to want to maintain that the stock of foreign debt is 13 billion dollars. However, those at the gossip corridors inflate this figure by as much as seven billion dollars and call for caution.

Despite the dispute over the size of the national debt stock, the administration has the drive to get financing from wherever it is available. Although financiers in the western hemisphere tend to scrutinise the standing of their borrowers – appearing to be the most stringent in their requirements and expensive in their interest rates – Sufian is now actively pursuing an option of accessing a little over 800 million dollars from a bank in Switzerland, Swiss Bank, gossip disclosed.

But first, he has to take the country through the arduous process of listing it with one of the international rating agencies, which will put their mark on whether or not Ethiopia has an economy that is worth the risk to lend, gossip claims.

For now though, his Ministry is busy exchanging letters with those at the Central Bank and the PPESA in a bid to redress the withdrawal of billions of Birr from the latter’s account, gossip disclosed.  [ Addis Fortune ]

http://sodere.com/profiles/blogs/addis-fortune-gossip-prime-minister-hailemariam-desalegn-is-known

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WASH capacity building project to benefit 20 towns

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The project gives emphasis to hygiene and sanitation

as well as capacity building to ensure quality water supply

The WASH Capacity Building Project signed last Friday between the Ministry of Water, Irrigation and Energy and Water Aid Ethiopia targeted to benefit 20 selected towns in Oromia, Amhara, Tigray and Southern Nation, Nationalities and Peoples states.

Signing the partnership agreement, State Minister Kebede Gerba said that the project gives emphasis to hygiene and sanitation as well as capacity building to ensure quality water supply. Acknowledging Water Aid’s contribution in hygiene, sanitation, and providing pure water over the last 25 years, the State Minister said that the project would also contribute to minimizing water wastage.

Water Aid Ethiopia Country Director Teferi Abebe on his part noted that the 28 million birr project aims at increasing the efficiency ,effectiveness and relevance of the WASH service provision in the 20 towns through strengthening their capacity.

According to Teferi, the project also has specific objectives: improving water supply, towns’ sanitation and hygiene service providers performance by 20 per cent, as well as modernizing the documentation system to share experience, knowledge between towns in Ethiopia, East Africa and beyond.

Regarding the budget, Teferi said that besides the technical support, the project needs 28 million birr but would reach 33 million birr including various technical support for capacity building.

The findings of a baseline recently conducted by Water Aid indicate that the total population of the 20 towns targeted for this project is estimated at 914,847 people (169,596 Households).

http://www.ethpress.gov.et/herald/index.php/herald/national-news/5667-wash-capacity-building-project-to-benefit-20-towns

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Nation working to harness 5.3 mln.hectare irrigation potential

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The Ministry of Water, Irrigation and Energy said it is striving to harness its massive 5.3 million hectares of irrigation potential.

Ministry’ Public Relations and Communication Director Bizuneh Tolcha told WIC that the government has given due attention to its irrigation potential which lacked policy and strategic direction two decades before.

Before 1992, not more than 61 thousand hectares of land were developed through irrigation schemes. A change in government and policy direction meant the sector witnessed a huge transformation. In just two decades, the country managed to develop over 298 thousand hectares of land through irrigation schemes.

By the end of the Growth and Transformation Plan (GTP) in 2015, the country expects to harness 14.5 per cent of its irrigation potential, a big leap compared to the 2009/10 budget year where the country managed to harness just 2.4 per cent of its irrigation potential.

Bizuneh said the ministry is currently undertaking 15 irrigation development studies, design preparations and construction projects, out of which the ministry expects to finalize nine during the current budget year and four within the GTP period. The remaining two are expected to be finalized within two years after the end of the GTP.

http://www.ethpress.gov.et/herald/index.php/herald/national-news/5668-nation-working-to-harness-5-3-mln-hectare-irrigation-potential

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Healthy, sustainable  food systems key to  fighting hunger: FAO

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Strong and resilient food systems are the most cost-efficient

and sustainable way to prevent all forms of malnutrition

Healthy people need healthy and sustainable food systems, the United Nations said Friday that calling for agricultural research and development to become more focused on nutrition, as well as local biodiversity and diversified farming systems.

“Our common approach to food production is simply not sustainable today, or in 2050, when we will have to provide food for a population of 9.6 billion people,” said FAO Deputy Director-General Helena Semedo in a news release.

“We need to produce nutritious food for all people today while also protecting the capacity of future generations to feed themselves,” she added.

Food production has tripled since 1945 and average food availability per person has risen by 40 per cent, FAO said.

Despite the abundance of food supplies, there are still 840 million people that go hungry every day, according to FAO. The health of another two billion is compromised by nutrient deficiencies.

This, as another 1.5 billion people are overweight or obese, consuming more food than their bodies need and exposing them to greater risk of diabetes, heart problems and other diseases.

Much of the high food output achieved in the past has placed great stress on natural resources, Ms. Semedo said. These include degraded soils, polluted and exhausted fresh water supplies, encroached on forests, depleted wild fish stocks and reduced biodiversity.

Intensive farming systems, combined with food wastage on a massive scale, have also contributed to greenhouse gas emissions.

Among the challenges highlighted in FAO’s news release is the management of sustainable livestock. Demand for livestock products will grow 70 per cent by 2050, the UN agency noted. Consumption of meat, milk and eggs is growing rapidly in developing countries, providing nutritious diets to previously food insecure populations.

Consumers also need help to make healthy food choices, requiring “better governance, based on sound data, a common vision and, above all, political leadership,” Ms. Semedo said.

“If the global community invested $1.2 billion per year for five years on reducing micronutrient deficiencies, the results would be better health, fewer child deaths and increased future earnings,” she added. “It would generate annual gains worth around $15 billion – a benefit to cost ratio of almost 13 to 1.”

http://www.ethpress.gov.et/herald/index.php/herald/national-news/5671-healthy-sustainable-food-systems-key-to-fighting-hunger-fao

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Wollega Stadium first phase 80 per cent complete

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Wollega Stadium will also become the first fiberglass-roofed

stadium in East Africa. The natural grass was brought from

Italy. It makes  green and white pattern as European football

pitches

NEQEMTE- Neqemte, a burial place of Onesimos Nesib – a famous Oromo who pioneered in translating the Bible into Afan Oromo in collaboration with Aster Ganno – the most known supplier of Ethiopian coffee, a host town to the recently built Wollega University, is now getting additional attraction – Wollega Stadium – that will take the town to another height of growth.

The Wollega Stadium boasts of Olympic standard running track and field, FIFA standard football pitch, gymnasium swimming pool, tennis court, basket and volleyball fields.

It as well houses administration offices , a gymnasium, a public library, restaurants, shops and other service facilities such as first aid offices, stores, dressing rooms with massage centres, studios for live transmission, shops and public toilets.

The first phase construction work of the stadium, which was expected to be completed two years back, is now 80 per cent complete.

Asked about the delay in the construction work, Dr.Eng Mesele Haile, Stadium Construction Committee Addis Ababa Branch Chairperson and Designer of the Stadium told The Ethiopian Herald that the construction fund was not effectively raised. That is why it couldn’t be completed according to schedule. According to Dr. Eng. Mesele, the participation of the public is high since its inception. “We are constructing the stadium in three phases. The first phase, which includes the construction of bureaus, shops, players’ room and gymnasium, is 80 per cent through.

The remaining task, which makes 20 per cent of the first phase, includes the laying of the synthetic track, finishing the shops and setting work of the long jump and discus throwing areas. So far, 108 million birr has been expended on the overall construction work, he added.

According to Dr. Eng. Mesele, the second phase includes seat installation, volleyball and basketball court as well as swimming pool construction, which requires 87 million birr. He also said that the third phase would see covering the roof with fiberglass at a cost of 210 million birr.

Responding to mechanisms they apply to speed up the construction work, Dr. Eng. Melese said that they are trying to raise more funds approaching various organizations to cover the cost. In this regard, Sheikh Mohammed Hussein Ali Al-Amoudi provided 18.6 million birr to the first phase via his company MIDROC-Ethiopia Technology Group. The business tycoon has also promised to give one million USD grant for the fiberglass roofing work.

Regarding the quality of the fiberglass roof and the standard of the football pitch grass, Dr. Eng Mesele said that with Bahir Dar and Hawassa stadiums (both under construction) Wollega Stadium will also become the first fiberglass-roofed stadium in East Africa. The natural grass was brought from Italy. It makes green and white pattern as European football pitches.

Wollega Stadium ,which is expected to have 29,000 seats, was first launched by Dr. Eng. Melese and other few people to protect youth from HIV establishing sports recreational centre. But now, showing impressive progress the former field has been transformed into a stadium capable of hosting international competitions.

Taking his contribution into consideration, the Neqemte Town Administration has named one of the main roads in the town after Dr. Eng Melese Haile. He is on his part expressed gratitude to the town administration, especially the residents of Wollega.

Sadly, Wollega does not have at least one football club that would represent the zone either in premier or national leagues. If the stadium does not have a home club that represent it at national level, the case will be similar to like a delicious meal without a person to enjoy.

Regarding this issue, Neqemte Town Youth and Sports Bureau Head Wendimu Taye has something to say. “Currently, the town has a club competing in Oromia league with promising performances that would enable it join the National League next year. He said that the club is leading the group in Oromia League.”

“We plan to join the national league next year. The stadium itself says, ‘I need a lot of players!’. We have four youth projects in different age categories. We have teams of under 17,15,13,10 which are supported by the government, Oromia State and Neqemte Town Administration,” said Wendimu.

The Ethiopian Herald learned from Tolossa Wegari, Mayor of Neqemte,that Wollega is striving to establish competent club that can represent all four zones – East Wollega, West Wollega, Qellem Wollega and Horro Guduru Wollega.

The design of the stadium reflects local culture (both tangible and intangible heritages) like Gada system and natural resources of Oromia State. For instance, the design of the Public Library is generated from Oda tree in simplified and abstract form.

The form of the roof is analogous with the deep foliage of fully grown Oda tree; whereas the windows and the walls represent trunk and branches of the tree.

The stadium, with its accompanying facilities being constructed by Oromia Water Works Construction Enterprise on seven hectares of land. Excluding the cost of the fiberglass, the overall construction work is expected to consume 240 million birr.

http://www.ethpress.gov.et/herald/index.php/herald/news/5657-wollega-stadium-first-phase-80-per-cent-complete

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Colourful ‘Ketera’ celebration 

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Ketera, the eve of Timket –Ethiopian Epiphany, was colourfully celebrated at Jan Meda in the presence of Ethiopian Orthodox Church (EOC) Patriarch His Holiness Abune Mathias, the clergy and the faithful.

Resident ambassadors, members of the diplomatic corps, Adiss Ababa City Administration representatives, and tourists from various countries have also attended the religious celebration.

Tabots – replica of the arch of covenant – were carried to Jan Meda wrapped in brocade or velvet on the head of a priest with colourful ceremonial umbrellas to shade them it. Sunday school Students were in the procession chanting religious songs along a huge crowd of the faithful. The students adored in their colourful uniforms, cantors of different monasteries and churches in their ceremonial robe singing chants gave the celebration a bold seen.

On the occasion, chanters of Debri Negodguad St. John delivered the hymn, “ God the son has descended from the heaven’s to the baptismal site in joy and in peace,” for 20 minutes.

In his benediction His Holiness Abune Mathias blessed the faithful.

Over 300 corded instrument of religious music or locally known as Begena were brought into the event and were also played in group.

“ Carrying out of the Tabots from different churches to Jan Meda shows the fact that Jesus had moved to the River Jordan to be baptized by John the Baptist leaving his holy seat,” Megabi Haile -Sillasse Ze Mariam said.

Memehir Fantahun Muche said every Ethiopian citizen should assist in various means to get Timket celebration registered in UNESCO as it was for Meskel celebration.

Timket is the greatest festival of the EOC falling on the 19 of January (or the 20th of January once in every four years), it celebrates the baptism of Christ in the River Jordan by John the Baptist.

http://www.ethpress.gov.et/herald/index.php/herald/news/5656-colourful-ketera-celebration

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Also:

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-     18 January 2014 News Round Up

- The Ethiopian Shipping & Logistics Services Enterprise (ESLSE) has increased its freight carrying capacity at least threefold -

By  Girma Feyisa

One way of improving the foreign exchange earnings of Ethiopia is believed to be expediency. To this end, the government is leaving no stones unturned in its attempts to upgrade its transportation capacity, including shipping.

A recent report reveals that the Ethiopian Shipping & Logistic Services Enterprise (ESLSE) has acquired eleven new vessels, increasing its freight carrying capacity at least threefold. In what seemed to be an augmentation to this ocean breaking measure, the surface transport sector has issued a new directive to penalise heavy duty freight transporters if they fail to make their shuttle period within a given period of time. This is based on the assumption that transporters may deliberately drag their wheels in the Addis-Djibouti corridor.

At a time when the country depends very much on the export of agricultural products for its foreign exchange earnings, an expedient mobilisation of all its exportable products becomes of paramount importance. That course of action brings back memories I had during inspection trips I made to the two ports, Assab and Massawa,  before the political course of the country was changed.

The port, as a whole, was predominantly under the Maritime Transport Authority (MTA). The loading and unloading, as well as the stevedoring activity under the Port’s Administration, deployed thousands of workers who were also working in collaboration with the shipping lines and maritime transit companies. The freight transporters were being streamlined to load freight in turn. Businesses outside the ports were booming.

Things have changed, since I presume that the Port Administration activity is no longer under the jurisdiction of the MTA. Once Ethiopian vessels are permitted to anchor at the port, all the loading and unloading, or stevedoring activity, is carried out by the Djiboutian authorities or the company that might have been given the contract to manage the transiting activity. Our freight transporters cannot have any access to the Port where the goods are stored, unless they are invited to.

The timing element is important here. The goods and commodities can only be loaded after clearance of customs duties are finished and the necessary accounts are settled. The recording of shuttling time commences at the time when the freight trucks start their journey to Addis Abeba or any other place.

It goes without saying that the speed with which import and export activities are carried out very much depends on the transiting operation that takes place in the port itself. The delay is bound to have its impacts on the costing of goods and commodities involved.

Unlike in previous times, Ethiopian importers and exporters have to pay import/export taxes to the Djiboutian Maritime Authority, or the company that it delegates, unless a special agreement is concluded to exclude such taxes. Hence the sharp commodity price index increases over the last 20 or so years. When the transport authority decides to penalise trucks for the delay in their shuttle frequency, it could be an unjust retribution levelled on those parties unless the facts are scrutinised cautiously and free from any sort of corruption.

Another measure taken recently by the surface transport sector is the grading of trucks according to their load capacity. This decision will automatically stratify associations, based on their capacity and subsequent ability to be time efficient.

In effect, this will amount to the trucks being polarised into more privileged and the less privileged groups. This trend is expected to extend from the import/export corridors to other parts of the country. This will be particularly true after the completion of the railway line, which may well take the lion’s share of the import/export traffic, in due course.

The other day, I met Kidane G.Tensai, 38, an Eritrean driver who lives in Brussels, and asked him about the possibility of engaging the two countries in a peace process. Alleging the Assab case as a desire to simply grab land is just a hostility of some short-sighted perpetuators via social media, he said. There is nothing to prove that malicious allegation, he argues.

There seems to be a lot of hypocrisy in this line of thought. These people do not realise that Eritrean leaders are using the leverage of government power to self-impose economic sanctions when they see that the once prospering port is now being turned into ruins, with its oil refinery rotting and its buildings rusting (so much that these resources have become mere scarecrows).

There is, however, a glimmer of hope among the members of the Ethio-Eritrean Youth Association established in the Diaspora. They discuss the future of the two countries in the spirit of socio-economic integration without having to intrude into their respective sovereignty.

Here, we are talking about a mutual interest to bring employment and economic growth for the people of the two countries, and a breathing outlet, not grabbing land. The Ethiopian government, through its prime minister, on its part, has expressed time and again its readiness to restart the peace process. But one cannot clap with only one hand, as the saying goes.

The country is on good terms with its other neighbours. The hydroelectric power export to Djibouti can be repeated in Sudan, South Sudan, Kenya and even Eritrea, if the political obstructions could be resolved through mature and tangible discussions.

Going back to the subject of penalising the truck drivers for being unable to make it on time, there is another issue that has to be looked into.

What will happen if a truck faces a mechanical fault on the highway, given the poor situation of telecommunications?

At any rate, all the stakeholders involved in the transportation and transiting services should sit together and try to find a middle ground for agreement.

Sourced here:  http://addisfortune.net/columns/myths-of-expediency/

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Related articles

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-     Djibouti Backs Down from Ultimatum on Cargo Clearance

-     East African Infrastructure Development, Part 3: Ethiopian Surface Transport – Stratfor

-     COMESA’s Electronic Cargo Tracking System for Djibouti, Ethiopia in Limbo

-     Efficient Shipping, Logistics Need Competition: End Monopoly!

-     Ethiopia confident of completing Ethio-Djibouti rail project in GTP period

-     Djibouti expands its ports’ facilities to five

-     Is the private sector to blame for cargo sitting for so long in African ports?

-     Djibouti to Raise $5.9 Billion From Investors for Infrastructure

-     Nearly Half a Billion Br Profit for Shipping Enterprise Despite Mammoth Expenses

-     Ethiopian Shipping to Expand to New Ports

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Made in Ethiopia: Fashion retailer H&M looks to sub-Saharan Africa for suppliers

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BY Jaco Maritz | 21 January 2014

Sub-Saharan Africa’s potential to become a global low-end manufacturing destination has come under discussion lately, especially with rising cost pressures in traditional markets such as China.

Swedish-based fashion retailer H&M is one of the latest global companies to experiment with sourcing its products from sub-Saharan African countries. It has placed test orders for garments from Ethiopian and Kenyan suppliers. Retailers such as Tesco and Walmart reportedly already source some products from Ethiopia.

“We are a growing global company and we need to constantly look at how we can ensure that we have the capacity to supply products to all our stores where we have expanded rapidly. We do that as we increase production on existing production markets but also by looking at new ones. This does not mean we will stop buying from existing production markets. We see great potential in Ethiopia, it is a country with a huge development and growth and we see that we can contribute to jobs and reduce the unemployment in the country,” Elin Hallerby, a spokesperson for H&M, told How we made it in Africa via email.

However, she emphasised that the company is still in the early stages of sourcing from Ethiopia.

H&M doesn’t own any factories, but instead works with hundreds of independent suppliers, mainly from European and Asian countries such as Italy, Turkey, Bangladesh and China.

So what does H&M look for in a new supplier?

“We place orders at suppliers that can live up to our high requirements when it comes to quality, prices and lead times, but another crucial aspect is our high sustainability requirements,” says Hallerby.

“We always do a risk assessment before we enter into a new purchasing market. In Ethiopia we made extensive such analysis where we looked at human rights and environmental conditions in the country. Dialogue with the International Labour Organisation, the Swedish International Development Cooperation Agency and local organisations were part of the analysis. We lean against authorities such as the UN and follow EU trade directives.”

Hallerby also confirmed to How we made it in Africa that H&M’s plans to open its first outlet in South Africa in 2015 are still on track. A number of European fashion brands, including Topshop, Zara and Mango, have expanded to countries such as South Africa and Nigeria in recent years.

http://www.howwemadeitinafrica.com/made-in-ethiopia-fashion-retailer-hm-looks-to-sub-saharan-africa-for-suppliers/34310/

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South Korean president to attend the 22nd AU Summit in Addis Ababa

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ERCA set to reduce income tax

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The Ethiopian Revenue and Customs Authority (ERCA) is going to revise the current income tax proclamation by next year.
Girma Taffese, director of inland taxes at the Ethiopian Revenue and Customs Authority (ERCA) says that ERCA will consider revising income taxes and developing an improved tax code after the Growth and Transformation Plan sunsets in 2015.
ERCA officials fielded many complaints from around 1,000 business owners that are considered high tax payers who contribute 40 percent of the Nation’s tax income, on Thursday January 16 at the National Cultural Center, in Sidist Kilo. They responded by validating some of their concerns and promising that federal officials were working on revising tax laws and procedures.
One participant said that the decades old income tax proclamation should be revised in light of Ethiopia’s rapidly changing economic conditions. Currently anyone with a salary of 5,000 birr and above pays a tax rate of 35 percent. An individual making 3,500-5,000 pays 30 percent.  After that the tax rates are 25, 20, 15 and 10 percent respectively. At one time a 5,000 birr monthly salary was considered to be upper income but inflation has gone up dramatically since the tax rates were first imposed and as a result the government should revise them, they said.
Grima told Capital that some tax proclamations will be replaced by the end of the 2015 fiscal year.
Another speaker voiced concerns with the turn over tax (withholding tax) imposed when business owners provide ‘freelance’ services for other companies.
A person with a business license will have a tax identification number (TIN) that they receive from ERCA, they then have two percent of their gross income deducted by the company they provide services for and are responsible for paying a 30 percent profit tax at the end of the year. However, if the person providing the service does not have a business license and thus does not have a TIN number the company has to pay income tax for that individual which can run as high as 35 percent.
“The government needs to have some flexibility with these rules,” they said.
ERCA spent the day responding to many complaints and saying that they are only doing their job trying to make sure people pay the taxes they legally owe on time.
“We are not trying to hurt tax payers or scare people but we are implementing assessments on selected tax payers to make sure they are not evading taxes,” officials said.
But the business people in attendance said they have had a different experience.
“The business people cannot operate if they always have to be looking over their shoulder scared that they might make some mistake, to develop the country we have to be able to fearlessly invest, the government must respect the business community as we are all trying to help the country prosper,” one person said.
Participants at the discussion said that ERCA has to find another way to enforce tax laws besides frightening traders.
“We understand that there are individuals who evade tax but ERCA is taking a guilty until proven innocent approach on almost all businesses even though most people want to comply with the law and pay their taxes properly,” one of the participants explained.
Another said that they doubt ERCA will successfully end tax evasion by operating like they currently are.
“It is very hard for us to survive this way,” the participants said.
The business people also complained that the auditors who work for ERCA are either incompetent or corrupt.
“They only want to impose penalties on companies, they have no interest in educating tax payers or explaining the proper procedure,” one person said.
Some say that ERCA tax from profit that gose to raise their company’s capital. When tax penalties are levied they are often exaggerated, the participants said.
“These penalties may force companies out of business,” one participant said.
Participants also were concerned about a new management system where one staff member leads a group of five other staff members. This meeting, termed ‘one to five’ is seen as taking time that could be used providing services.
“ERCA should say when the meetings are being held so we do not waste our time waiting at their offices,” one person said.

http://www.capitalethiopia.com/index.php?option=com_content&view=article&id=3949:erca-set-to-reduce-income-tax&catid=35:capital&Itemid=27

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GE Chairman to talk oil

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General Electric Company (GE) Chairman and CEO Jeffrey R. Immelt is to visit Ethiopia in two weeks Capital learned.

It will be the Chairman’s first visit to the country and he is expected to hold talks with Prime Minister Hailemariam Desalegn along with a number of other high government officials. During his visit, Immelt is expected to talk about potential investment areas such as energy and the health sector. There are also expectations that there will be discussions regarding oil production in Ethiopia. GE operates as an infrastructure and financial service company. It’s Oil and Gas segment provides surface and sub-sea drilling and production systems, compressors, turbines, reactors, and industrial power generation. The company is engaged in the oil sector in several countries including Brazil and Nigeria. Reports show that GE businesses in Nigeria represent the biggest GE platform in Africa. It is involved in the Nigerian oil sector through its partnership with giant oil companies.

As Ethiopia’s potential oil findings spark attention, last week GCL Poly Petroleum, a Chinese petroleum company that signed a petroleum production sharing agreement (PPSA) with the Ethiopian Ministry of Mines (MoM) to develop the gas filed at Ogaden, also signed a Memorandum of Understanding (MoU) on Wednesday January 8, with the government of Djibouti that will allow the company to construct two pipe lines stretching from Ethiopia to Djibouti. GCL Poly Petroleum Investment that signed a deal with Ethiopia in November 2013 to develop gas reserves at Calub and Hilala has signed a MoU with the Ministry of Energy in charge of Djibouti’s Natural Resources that will allow the company to transport gas and oil products to the port.

Besides possible oil discussion, GE is also expected to make an investment in the health sector. The company’s health sector segment provides medical imaging and information technologies, medical diagnostics, and patient monitoring systems; and disease research. General Electric reported net income of USD 4.2 billion for the fourth quarter of 2013 on revenue of USD 40.38 billion. Reports show that profit in the company’s aviation, oil and gas, and appliances divisions all rose 20 percent or more in the last quarter.

http://www.capitalethiopia.com/index.php?option=com_content&view=article&id=3948:ge-chairman-to-talk-oil&catid=35:capital&Itemid=27

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Agriculture investors laud increased honey, milk consumption

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Twenty Ethiopian entrepreneurs in the sesame, dairy and honey sectors came together for the first Ethiopian Agribusiness Investment Forum, a presentation intended to entice investors to their business at the Sheraton Hotel on January 16, 2014.  The program, funded by USAID through its Ethiopia Sustainable Agribusiness Incubator activity, was implemented by Precise Consult International as part of the U.S. feed the future initiative. The investment requirements of the companies vary from USD 10,666 for B Honey, a company that produces pure and infused honey to USD 791,263 for Select Honey and Products Inc. which makes honey and honey by-products.

The twenty companies have average sales ranging from USD 33,627 to USD 2.4 million. “There are scientists, entrepreneurs, financers…in short all the relevant stakeholders in the value chain of agri-business here,” said Fitsum Arega, Director General of the Ethiopian Investment Agency. “Ethiopia has a lot of natural resources. We just need the technical expertise and financing,” He continued to say that the agency is interested in strategic investments, especially those in agro-processing and cotton farming.

The agency’s interests seem to be aligned with that of the U.S. Feed the Future Initiative which plans on transforming the Ethiopian agriculture industry by increasing the competitiveness of the entire value chain. “Investment in agriculture is 2.5 to 3.0 times more effective in increasing the income of the poor than non-agricultural investment,” said Gary Linden, Deputy Mission Director of USAID. Agricultural development is given precedence in the Agricultural Growth Program (AGP) of the Ethiopian government, he further elaborated.  Therefore in the next five years, USAID will invest USD 250 million in support of the AGP.

State Minister of Agriculture, Mitiku Kasa, who opened the event, said that the Ministry of Agriculture has been making a concerted effort to develop every type of commercial agriculture by private investors. This is why selected sectors that are labor intensive and use domestic raw materials like those in the agro-industry get special access to credit, land and tax incentives. “The current development plan of Ethiopia, the Growth and Transformation Plan (GTP) envisages continued and rapid growth of agriculture with an even faster growing industrial sector,” said Mitiku. “When we speak of industrialization we envision it to take place on the back of  strong agriculture.”

Ethiopia is the fourth largest sesame and beeswax exporter in the world. It is also the 10th largest exporter of honey in the world and the largest exporter of livestock in Africa. Ethiopia has a milk consumption of 24 liters per year for every person. The rise of income, population growth, increasing availability of production and a growing culture of milk drinking were said to be positive indicators of the dairy industry’s growth.

http://www.capitalethiopia.com/index.php?option=com_content&view=article&id=3942:agriculture-investors-laud-increased-honey-milk-consumption-&catid=35:capital&Itemid=27

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Addis Light Rail Project 50 per cent complete

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The Ethiopian Rail Way Corporation announced that Addis Ababa Light Rail Project is 50 per cent complete.

Briefing journalists about the current status of the project yesterday, Corporation Public Relations and Communication Directorate Director Abebe Meherete said that the construction of bridges, laying of grades and sideways has been undertaken in an accelerated manner in four directions of the city.
Presently, over six-km grades has been laid. On the other hand, other infrastructural development–telephone and electric lines as well as water pipelines are being laid side by side with the railway project.
In some project sites, the contractor, China Railway Engineering Corporation (CREC) has been working day and night to complete the task according to schedule, he said.
“Unless the project faces unforeseen challenges beyond the capacity of the corporation, the ongoing construction will not stop even for a minute and the contractor has been making utmost effort to finalize the project ahead of the schedule.”
Currently, the difficult part of the civil work is nearing completion. In some areas, 17- 22m depth excavation task has been taking place to erect bridges. Side by side, the corporation has been working with various stakeholders to prepare sideways both for pedestrians and vehicles, Abebe said.
To date, the project faces no financial and technical constraint. It is being undertaken at a cost of $475 million USD of which, 15 per cent of the cost is covered by the government.
The country is constructing nearly 2,400-kms of national electric railway and 34-kms of light rail in Addis as part of Growth and Transformation Plan ending in 2015.

http://www.waltainfo.com/index.php/explore/12066-addis-light-rail-project-50-per-cent-complete-

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Ethiopia passes law banning smoking in public

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Ethiopian House of Peoples’ Representatives pass a new tobacco control proclamation.

The proclamation prohibits smoking in public places and it also includes putting enormous taxes on and increasing the price of cigarettes.
The proclamation also enforces for the cigarette packages to have a notifying message as to the health dangers of tobacco.

Moreover, the proclamation forbids advertising and promoting tobacco products on the media.

http://www.waltainfo.com/index.php/explore/12063-ethiopia-passes-law-banning-smoking-in-public

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Ethiopia saves 2.3 mln. USD by blending ethanol with benzene

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Ethiopia has managed to save 2.3 million US dollars in the first quarter of this budget through blending 2.5 million liters of ethanol with benzene, the Ministry of Water, Irrigation and Energy (MoWIE) said.

Public Relations and Communication Director at MoWIE, Bizuneh Tolcah, told WIC today the 2.5 million liters of ethanol was produced by the existing Fincha and Metahara sugar factories.
According to Bizuneh, Fincha and Metahara sugar factories have the capacity of producing 20 million and 12.5 million liters of ethanol per year, respectively.
Ethiopia envisaged increasing the amount of ethanol production to 181 million liters when the new sugar factories planned to be constructed in the Growth and Transformation Plan (GTP) is completed, he said.
He said Ethiopia can save 57 million US dollars at current price by the end of the GTP period through blending only 64.4 million liters of the total ethanol produce.
Since it commenced blending benzene with ethanol in 2009, the country has supplied 41.77 million liters of ethanol blended benzene to the local market, thus saving 33.23 million US dollars, he said.

http://www.waltainfo.com/index.php/explore/12065-ethiopia-saves-23-mln-usd-by-blending-ethanol-with-benzene

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Meeting of Permanent Representatives Committee launches the 22nd AU Summit

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The 27th Ordinary Session of the Permanent Representatives Committee of the AU opened on Tuesday (January 21).
Opening the session, Dr. Dlamini Zuma, Chairperson of the African Union Commission, called for the strengthening of the working relationship between the AU Commission and the PRC in order to build a strong and efficient continental institution.
She expressed appreciation to the PRC and its sub-committees on multilateral affairs and other partnerships for working with the AU Commission.
The AUC Chairperson expressed worries over the conflict situations in Central African Republic and Southern Sudan while acknowledging progress made in Mali, Somalia and Madagascar which she said should make the Commission more resolute than ever to fulfill the pledge of the 50th Anniversary Solemn Declaration not to bequeath to future generations of Africans the legacy of wars and conflicts and silence the guns by 2020.
The Chair of the PRC, Ambassador Kongit Sinegiorghis of Ethiopia, called for deliberation on ways to enhance the institutional capacity of the Commission.
She expressed satisfaction with the progress made in the advancement of the peace, integration and development agenda as reflected in the Commission’s report for 2013 as well as the successful celebration of the Golden Jubilee of the Organization of African Unity, now the African Union. Ambassador Kongit stressed the need of the PRC and the AU Commission to improve their working relations.
The PRC will discuss items on the agenda in preparation for the 24th Ordinary Session of the Executive Council (January 27-28) which will in turn pass on recommendations to the Assembly of Heads of State and Government (January 30-31).
The PRC discussions are taking place against the backdrop of the launch of 2014 as the year of Agriculture and Food Security.
This year also marks the 10th anniversary of the adoption of the Comprehensive Africa Agriculture and Development Program.
The PRC meeting on Tuesday observed a minute of silence in memory of famous Ghanaian- born journalist and BBC broadcaster, Komla Dumor, who passed away Saturday.

http://www.waltainfo.com/index.php/editors-pick/12062-meeting-of-permanent-representatives-committee-launches-the-22nd-au-summit-

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Active public engagement to develop Abay    

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The Office of National Council for the Coordination of Public Participation on the Construction of Grand Renaissance Dam said the labour contribution of 28 million people in natural resource development and protection both during Kiremt and Bega seasons is valued at 35 billion birr.

In an exclusive Interview with The Ethiopian Herald Office Deputy Director General Zadig Abrha said the people have carried out natural resource conservation and drainage development in the river course of Abay thereby protecting the sedimentation threat of the dam and soil erosion. Accordingly, close to 7.7 million indigenous seedlings have been transplanted on the course of the river covering nearly 4.8 hectares of land over the last two years.

Apart from the significant role the people are playing in natural resource and drainage development, he said a huge sum of money has been collected from people in all walks of life who pledged at different times with their own will and aspiration for the realization of the construction of the Dam.

According to him, the promise and actual payment on the part of the business community is significant. Some made 100 per cent payment in time while others 50 per cent of their pledges. And of course, civil servants have a great share in this regard, he said.

He noted that the construction of the Dam would be further strengthened backed by vibrant public diplomacy to show the Egyptian people that their government is deluding them regarding the issue of Abay.

As the Dam is part and parcel of the country’ development drive, the momentum of public participation should be kept said Zadig.

In this regard, Water, Irrigation Development and Energy Minster Alemayehu Tegenu recently noted that Ethiopia is building a huge dam on the river course of Abay solely to meet its hydroelectric demand and this could be made feasible with the proven fact that the Dam wouldn’t cause any damage on the riparian countries.

He said the result which the study of panel of experts uncovered this past May 2013 depicted the building of the Dam creates no harm yet Egyptian are adamant in renouncing the project. “We will build the Dam to eradicate poverty not to harm Egypt.”

Sudan’s stance on feasibility of the Dam and its positive negotiation on the trans-boundary river are appreciable. Sudan will benefit from the Dam as it contemplate from Tekeze Dam, according to him.

It is learnt that the Dam construction is more than 30 per cent complete.

http://www.ethpress.gov.et/herald/index.php/herald/national-news/5688-active-public-engagement-to-develop-abay

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Zone harvests 8 million quintals

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Some eight million quintals of agricultural output was harvested in Kembata Tembaro Zone of Southern Nations, Nationalities and Peoples State during the main crop season, the Zonal Agriculture Department said.

Department Head Elias Wollencho told ENA that the stated amount was harvested from more than 80,000 hectares land.

The stated amount exceeds the previous year by 1.2 million quintals.

He attributed the success for timely and effective distribution of rainfall, utilization of inputs and modern technologies.

http://www.ethpress.gov.et/herald/index.php/herald/national-news/5691-zone-harvests-8-mln-quintals

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 Over the last four years, each household had got three to five hectares of land for farming and irrigation. They as well could plough mainly in rain-fed area as much as they can

“The image tainting report that was released by some institutions or groups like Human Rights Watch about the commune programme is merely a propaganda of ultra neo-liberals and a subtle way of imposing their political agenda on us. The reality is completely different. Indirectly, they opt to dissuade us from fighting poverty and backwardness, though the programme is being implemented on the will of the people. We have already carried out the commune programme in Gambella and Benshangul-Gumuz states.”

So said Federal Affairs Ministry Ensuring Equitable Development Directorate Director General Shanko Delelegn, in a recent exclusive interview with The Ethiopian Herald regarding the Commune Center Development Plan and Livelihood Strategy Programme in the four emerging states of Afar, Ethiopian Somali, Benshangul-Gumuz and Gambella.

Shanko said that these so-called whistle blower institutions and groups serve the interests of ultra neo-liberal political ideology and they want to inculcate their orientation contravening the overall economic growth of the country. They are fanning neo-liberal political orientation. The commune programme is aimed at ensuring equitable development and has nothing to do with the issues whose objective is encumbering development, he added.

Shanko said: “Had the programme been disrupted, there would have been a widespread poverty and backwardness in the states less favoured by the successive previous regimes. Hence, flourishing and sustainable development in these states would have been out of question.”

Shanko noted that the emerging states get support from the Federal Government based on Article 89 of the Constitution which acknowledges their rights to get support. The Federal Affairs Ministry has been supporting them and executing the commune programme jointly with the Federal Special Support Board. He further noted that the board was re-organized and re-established in 2003 E.C.

As to him, since these emerging states are found at the peripheries of the country and as such for ages they were not benefiting from any infrastructural development and capacity building programmes, among others.

According to Shanko, these states still face acute shortage of skilled manpower, well-organized structure and working system. As a result, their implementation capacity is very low in comparison with other states.

“The Federal Special Support Board is providing them support based on three conditions: constitutional enactment, capacity and development gap and request from them. The Board focuses on filling capacity and implementation gaps,” he added.

Regarding the programme, Shanko pointed out that the requisites for commune are the will of the people, the presence of underground water or water bodies where there is enough water for the community and their animals as well as the preparation of fertile land for farming at a walking distance from communal areas. Social institutions like schools, health stations and others are also among the requisites.

He further indicated that over the last four years, each household had got three- five hectares of land for farming and irrigation. They as well could plough mainly in rain-fed area as much as they can.

In addition, Shanko said the commune programme is backed by agricultural experts to enable the beneficiaries apply modern technology.

Supported by agricultural experts, farmers have adopted agricultural technology and improved seeds and began sowing in a row over the three -four years, he said. Even some have begun using tractors. In so doing, they have managed to boost production and create a viable market link, he added.

Regrading livestock trade, he said to put into effect a modern market system it has to be done taking into consideration cross boarder trade practices. But lack of market linkage and access remain the major problems in these areas.

“There is an ongoing effort in the areas under discussion. Establishing trade centres, organizing market information, creating market linkage and maximizing community’s benefit by selling their crop and heads of cattle,” Shanko added.

Moreover, the Ministry of Agriculture is establishing market centres, preparing veterinary facilities and quarantine services. Now, realizing the benefits of legal trade, pastorals are turning their face to the local market rather than going for contraband trade, he said.

Shanko noted that the implementation of the programme began in 2003 E.C with the launching of the GTP. Some 275,000 households were embraced in the commune programme from 2003- 2005 E.C in the four states. The programme benefited 1.5 million people in general.

Capacity limitation and failure to carry out projects according to schedule are slowing down the implementation of the programme. “We are determined to address the problem through time working with the states,” Shanko said

The Commune Centre Development Plan and Livelihood Strategy Programme was designed to bring scattered rural populations closer to schools, health clinics, roads, and other public services.

Sourced here:  http://www.ethpress.gov.et/herald/index.php/herald/news/5687-gambella-benshangul-gumuz-commune-programme-target-met-ministry

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Hunde Melka, chief geologist at the Geological survey of Ethiopia and State Minister Tewodros Gebregziabher (pictured, above) at the workshop

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Written by  Kaleyesus Bekele

The Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF-led) government has been criticized for not giving due attention to the mining sector.

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http://www.israelhayom.com/site/newsletter_article.php?id=17601

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Israel Chemicals to invest $600m in Ethiopian potash mine

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Idan Ofer told allAfrica: We want to turn Ethiopia into Africa’s potash hub.

Israel Corporation (TASE: ILCO) controlling shareholder Idan Ofer has promised to make Ethiopia “Africa’s center of potash production,” and invest in the country’s electricity infrastructure, reports allAfrica.

Israel Chemicals, controlled by Israel Corp. recently bought a 30% stake in Canada’s Allana Potash, which is preparing to mine potash deposit in the Dalol region in the Afar Regional State, in northeast Ethiopia.

Ofer who last year moved to London from Israel visited Ethiopia for two days last week. He visited the potash mine in the Dalol region and told journalists that he was satisfied with his visit. “I am happy with the development at the potash exploration site, the future potash mine. Officials of Allana are closely working with the local authority and they are conscious of the demand of the local community. They pay much attention to the local community. So I am happy with that.”

Ofer said that Israel Chemicals is planning to build a potash fertilizer factory at a cost of $600 million in Ethiopia. According to Ofer, before starting mining the potash deposit, Israel Chemicals will import raw materials and produce potash and phosphate fertilizers. “After we start mining the potash deposit we will locally manufacture the potash fertilizer. We will primarily supply the potash fertilizer for the local market in Ethiopia. But we will also export some portion of it. We want to turn Ethiopia into Africa’s potash hub.”

Ofer was accompanied by Israel Chemicals CEO Stefan Borgas who said that Israel Chemicals has already invested $25 million dollars in Allana’s potash project and was committed to invest an additional $59 million dollars in the near future. Borgas said his company will build the fertilizer factory within a year. “We will invest $600 million dollars in the fertilizer processing plant. The potash mine and the factory will together open up 5,000 jobs. We have already invested $600,000 in farmers education on the use of fertilizers. There are six hundred demonstration sites all over the country,” Borgas said.

Ofer and Borgas met with Ethiopia’s President Mulatu Teshome, Foreign Minister Tedros Adhanom, Minister of Mines Tolossa Shagi, and senior officials of the Ministry of Agriculture top discuss investment issues.

Ofer said, “They are supporting our investment projects. They promised us that they will build a 130 km road from the mine to the Djibouti border in the near future. What I like about the Ethiopian government officials is that they encourage investment and they deliver what they promised. That does not often happen in other countries and that is why we want to invest here. If we were not satisfied we would not invest this amount of money here.”

Ofer is also interested in the power generation sector. He said that if the Ethiopian government wants to sustain economic development of the country, it has to ensure power supply. “There should be a reliable power supply. And I am interested in investing in power generation,” Ofer said. Israel Corp. has two companies engaged in power and natural resources development – Quantum Pacific and IC Power. Quantum focuses on investments in Asia while IC Power is engaged in power development in Africa, particularly in Kenya, Nigeria and Congo.

Ofer said, “I will send a technical team to Ethiopia that will undertake a study on power generation. I did not yet decide whether it is hydro, geothermal or wind. But I want my company to invest in power generation. It is the technical team that conducts a study and recommends the type of power source.”

Published by Globes [online], Israel business news – www.globes-online.com – on May 19, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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State wins Israel Chemicals royalties arbitration

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The decision could be worth NIS 2.5 billion to the state up to 2030.

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The state has won a victory against Dead Sea Works of the Israel Chemicals Ltd. (TASE: ICL) group. At the end of the first stage of the arbitration proceedings between Israel Chemicals and the State of Israel, the panel of arbitrators decided that Israel Chemicals has to pay the state royalties for the past use of minerals it extracts from the Dead Sea and other sites that are natural resources belonging to the state. The decision was by a majority. Supreme Court judge (emeritus) Tova Strassberg-Cohen and Adv. Alex Hartman sided with the state, while Adv. Ram Caspi sided with the company. The amount that Israel Chemicals will have to pay is yet to be set.

Legal experts estimated today that, in the wake of the arbitrators’ decision, up to 2030, when its concession for mining at the Dead Sea expires, Israel Chemicals will have to pay the state some NIS 2.5 billion.

The state demanded that Israel Chemical should pay royalties amounting to $291 million for the period from 2000 to the date the claim was filed, March 2011. A substantial portion of the claim related to bromine-based products from minerals that the company extracted at Ramat Hovav. The state argued that these were products on which Israel Chemicals owed royalties that it had avoided paying for years, even though its managers were aware of the matter and had expressed concern at board discussions that a claim might arise.

Israel Chemical argued that the state itself had exempted it in the past from paying royalties when it privatized the company and sold it to Shaul Eisenberg.

The dispute between Israel Chemicals and the state hinged on the question whether Dead Sea Works was obliged to pay royalties to the state on derivative products produced by companies in the group with plants located outside the Dead Sea area. The state argued that by virtue of the fact that these companies were part of a concern that represented a single economic entity, Dead Sea Works had to pay royalties on the derivative products that they produced, and that the geographic location of the plants had no bearing on matter.

Dead Sea Works argued that it was liable to pay royalties on derivative products only if the plants concerned were located in the Dead Sea area.

Strassberg-Cohen and Hartman accepted the state’s argument. “Common sense, legal logic, and economic logic, as well as the purpose of the concession, are inconsistent with a situation in which if a compounds plant of the concern is located at the Dead Sea, Dead Sea Works pays royalties on its products, but if it is located a few meters away, Dead Sea Works will be exempt from paying royalties.” Strassberg-Cohen said that Dead Sea Works’ geographic approach distorted the delicate balance between its interest and the public interest.

Published by Globes [online], Israel business news – www.globes-online.com – on May 19, 2014

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Israel Chemicals threatens to halt local investment

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The Sheshinski Committee recommendations are bad mistake, the company said.

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Israel Chemicals Ltd. (TASE: ICL) has fiercely criticized the recommendations of the Sheshinski II Committee and warned that, “implementation of the recommendations might lead to a reduction of activities in Israel and badly hit the livelihood of 30,000 families in the Negev.

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Israel Chemicals said in a statement following publication of the recommendations today, “The interim recommendations of the Sheshinski Committee are a bad economic and social mistake that will compel Israel Chemicals to halt most of its investments in Israel, and force it to focus on lowering expenses and reducing activities in Israel in favor of increasing activities in plants overseas alongside new investments abroad.”

Israel Chemicals added that implementation of the recommendations would be a fundamental violation of its concession agreement and the salt harvesting agreement and rise in royalties from 2012, and the company plans realizing its legal rights.

Published by Globes [online], Israel business news – www.globes-online.com – on May 18, 2014

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Israel Chemicals isn’t going anywhere

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Israel Chemicals’ Dead Sea potash operation is simply too valuable for them to relinquish.

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The threats made by Israel Chemicals Ltd. (TASE: ICL) to end the majority of its investment in Israel and to fire many workers is one of the biggest and ugliest financial media spins we have seen in a long while.

Let’s begin at the end: Israel Chemicals cannot afford to abandon its Dead Sea potash resource. Moreover, if this company tries to lay off thousands of workers, it will encounter a brick wall in the form of the strongest workers’ unions in the Israeli market. Therefore, Israel Chemicals’ threat looks like a bluff, just like those made by Noble Energy Inc. (NYSE: NBL) and Delek Group Ltd. (TASE: DLEKG) when the first Sheshinski Committee published its recommendations on the state’s take from gas and oil discoveries.

ICL won’t leave

The draft recommendations of the Sheshinski II Committee seek to strike a balance between maintaining adequate profitability for ICL, and making adequate royalty payments to the government, i.e., the taxpayer. This follows many years during which ICL enjoyed tax benefits under the Law for the Encouragement of Capital Investment, which it lost eligibility for a little over two years ago, and, with it, the relatively low tax rates. Sheshinski II seeks to fix a years-old distortion, not to deliver a blow to ICL. Any attempt to otherwise describe the reality is itself a severe distortion, to say the least.

ICL will not abandon the Dead Sea, period. It doesn’t matter how many threats are sounded by management – ICL will not leave. The company’s revenue last year was $6.2 billion, half of it in Israel. You don’t walk away from $3 billion so quickly. Profit last year was $820 million. But there is another side to the story, beyond money. Dead Sea potash can be stored for long periods of time, due the environmental conditions, unlike potash at other mines around the world. This is a unique advantage of the Dead Sea, and it is one of the reasons that Canadian potash giant Potash Corp. is eyeing ICL and has tried to buy control of the company.

Potash

And on the topic of Potash Corp., we should mention that the company holds 13.84% of ICL, and is the second-largest shareholder, after Israel Corporation (TASE: ILCO), which holds 52.29%. Why haven’t we heard any threats from Potash Corp. in light of the Sheshinski II recommendations, which have been developing for such a long time now? Why aren’t we seeing a PR blitz coming from them, alongside threats to end their investment in Israel? Maybe, just maybe, Potash doesn’t want to make threats that it has no intention of following through on, because it knows that Dead Sea potash will be attractive after Sheshinski II as well?

Flashback to 2010

Threats have become routine at ICL recently, whether directed at the Sheshinski Committee, or at Minister of Health Yael German over the right to mine Sde Barir. Note what ICL CEO Stefan Borgas said last December at the Sheshinski Committee meeting: “Raising the state’s take from ICL will lead to a reduction in the company’s contribution, and harm public interests. We want to invest a lot in Israel in the coming decade, in order to preserve and expand our production operations here in Israel, but I simply do not understand why the government is doing everything it can to prevent us from being able to invest, and is pushing us almost forcibly to invest in other countries, which are actually very interested in our investments.”

Does that sound familiar? No? Allow me to refresh your memory. In 2010 Noble Energy and Yitzhak Tshuva’s Delek Group staged an all-out war against the first Sheshinski Committee, which recommended raising the government’s take from the gas discoveries, following the discovery of the Tamar gas field. Then, too, the companies threatened that the Sheshinski Committee would chase investors away, and said that the government could not change the laws retroactively. At one of the heated hearings on the subject in the Knesset, a Noble Energy representative even threatened that the US would take Israel to the International Court of Justice in The Hague.

And the rest is history. The recommendations of the first Sheshinski Committee passed, the Tamar field opened, and the gas is flowing. Because when you are holding onto a treasure, you don’t rush to let it go.

The layoffs that won’t happen

If there is a threat more hollow than the threat to leave Israel, it is the threat of massive layoffs at ICL. The same ICL that conducted months-long negotiations over the voluntary retirement of 115 Rotem Amfert Negev workers is now threatening to fire thousands of workers? The same ICL that sought to fire 127 workers, encountered a workers union as strong as a rock, and eventually reached a settlement in which it gave exceedingly generous benefits to the workers it let go – now it will fire thousands of workers? Hundreds? One would have to be very, very naive to believe this.

Government decision makers would be well advised to ignore ICL’s empty threats, and to act in favor of the public interest, to repair the historic injustice. The effects of Sheshinski II’s recommendations will be very similar to those of the first Sheshinski Committee: the threats will vanish, and the investment will continue.

Published by Globes [online], Israel business news – www.globes-online.com – on May 19, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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Sheshinski II to recommend surtax on bromine products

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The proposed change will greatly boost Israel Chemicals’ transfers to the government.

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The Sheshinski II Committee will recommend a surtax on downstream bromide products – a major change in the new draft published by the Ministry of Finance today, compared with the previous draft, published last week.

The Sheshinski II Committee decided to adopt the surtax method (a surtax on a return of over 11%), but the Ministry of Finance greatly feared that Israel Chemicals Ltd. (TASE: ICL), known for its aggressive tax planning, would succeed in evading the surtax by selling its products to affiliated companies at low prices, which would be the basis for collecting the tax.

Last week, Accountant General Michal Abadi-Boiangiu led a tough very line that was totally at odds to the position of Sheshinski II Committee chairman Eytan Sheshinski. She demanded a meeting with Minister of Finance Yair Lapid, in which she outlined the problem of downstream products, which would allow “a syphoning off of excessive profits”, in the words of the committee report. Taxing downstream products (the sale of products to Israel Chemicals affiliates) is at the heart of the arbitration between the State and Israel Chemicals. The main problem with bromine – a critical product for which there is no clear market price – the necessary figure for calculating the surtax. Worse, Israel Chemicals is the most influential player in the market as the world’s largest bromine producer.

The Sheshinski II Committee found that there are resources for which the market prices are difficult to calculate because of the industry’s market structure and the lack of a global index for setting the market price. These resources include bromine, which is mainly sold to subsidiaries or affiliated companies that manufacture or sell downstream products. There is considerable concern that it is impossible to set transfer prices in a way that will guarantee no leakage of extra profits to these companies.

The committee therefore plans to consider this key issue in subsequent discussions and review which supplements and changes are needed to deal with this key problem. The options that will be considered include setting a resource price “that takes into account the price of the compound or another method to be determined,” states the report.

The proposed change will greatly boost Israel Chemicals’ transfers to the government, reportedly amounting to hundreds of millions of shekels a year. The government’s take from natural resources alone will increase by NIS 500 million a year when the recommendations are approved. The Sheshinski II Committee recommends levying uniform royalties of 5% on natural resources, excluding oil and gas. The current royalties rate is 2-10% of the value of the quarried material (after legally mandated deductions).

The committee also recommends that the Israel Tax Authority closely track the basic price of bromine.

Deputy Budget Director Uri Adiri said in response, “There was no dramatic change in the bromine issue. The change is cosmetic and marginal.”

Published by Globes [online], Israel business news – www.globes-online.com – on May 18, 2014

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Israel Chemicals profit plunges

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Potash sales reached a record in the first quarter but were sold for lower prices

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Israel Chemicals Ltd. (TASE: ICL) reported a sharp fall in profits in the first quarter of 2014. Revenue was $1.61 billion in the first quarter, down slightly from $1.61 billion in the corresponding quarter of 2013. The fall from the corresponding quarter was mainly due to a drop in global prices, which was offset by a rise in sales volume.

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Gross profit for the first quarter of 2014 totaled $563 million, compared with $659 million in the first quarter of 2013. Operating profit for the first quarter of 2014 totaled $243 million, 33% down from $363 million for the first quarter of 2013.

The bottom line was that net profit to shareholders for the first quarter of 2014 totaled $131 million, down 57% from $305 million for the corresponding quarter.

Adjusted net profit was $189 million in the first quarter of 2013, after eliminatiing $58 million for non recurring tax expenses following assessment discussions in European subsidiaries and increased costs due to a strike at Rotem Amfert.

In the first quarter of 2014, Israel Chemicals unit ICL Fertilizers sold a record 1.46 million tons of potash, up 12% from 1.3 million tons in the corresponding quarter. The rise was mainly due to increased sales in China, Brazil and Europe.

The company’s board of directors will distribute $91.5 million in dividends on June 25.

Published by Globes [online], Israel business news – www.globes-online.com – on May 15, 2014

 

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Ethiopia: If the shoe fits, build zones

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Textile companies and retailers are setting up operations in and around Addis Ababa to take advantage of the low cost of labour

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Chinese shoemaker Huajian plans to employ about 100,000 people in Ethiopia by 2023. Photo©Petterik Wiggers/PANOS-REA

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At the Bole Lemi Industrial Zone, 15km east of Addis Ababa, Taiwanese footwear manufacturer George Shoe Corporation is preparing to begin production.

In mid-April, hundreds of eager new recruits – many of them university graduates – were preparing to begin work, making up to 1,500 pairs of shoes a day.

Like its Chinese competitor Huajian – which plans to create a light manufacturing zone on the outskirts of the capital by 2023, providing employment for around 100,000 people – George has big ambitions for its Ethiopian enterprise.

In just a few years time, the company plans to open its own industrial park in Modjo, one of the country’s main tannery districts, directly employing 10,000 workers.

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Leather, textile zones

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Bole Lemi is one of two indus- trial zones (IZs) being established in Addis Ababa – the second is Kilinto, situated in the capital’s southern suburbs – and the government has plans to construct similar complexes in other cities, starting with Dire Dawa, Kombolcha and Awassa.

These IZs are a key feature of the ruling Ethiopian People’s Revolutionary Democratic Front’s development strategy.

The idea is to provide the space and infrastructure needed for light manufacturing to thrive. “We are going to open zones in leather and tex- tiles, but also agroprocessing,” says Sisay Gemechu, the state minister for industry.

Ethiopia slipped 37 places – from 104 in 2007 to 141 in 2012 – in the World Bank Trade Logistics Index

However, only two of Bole Lemi’s 20 factories are occupied, both by George. Sisay says that all of the completed units are rented and that it is confident the 10 further facilities being constructed will be too.

Bole Lemi seems to be a perfect metaphor for the current Ethiopian manfacturing sector: enormous potential that is as yet unfulfilled.

United Kingdom-based leather goods manufacturer Pittards is steadily expanding production in Ethiopia, as is Turkish-owned Ayka Textile.

Retailers H&M and Tesco are sponsoring training for textile workers with the aim of sourcing garments from the country. Despite this, foreign direct investment (FDI) remains low, reaching $1bn in the 2012/2013 fiscal year.

One Western economist blames the modest level of FDI on “the heavy hand of the Ethiopian government in the private sector”.

A 2012 World Bank study on Chinese FDI in Ethiopia found that 54% and 84% of investors, respectively, cited tax administration and customs and trade regulations as major constraints on their businesses.

An underdeveloped financial sector and a dysfunctional foreign exchange market are other impediments, says Jan Mikkelsen, the International Monetary Fund representative in Ethiopia.

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Trading hurdles

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Trade logistics in this landlocked country are also problematic.

According to the World Bank, Ethiopia has dropped from 104th to 141th place in its rankings during the past five years.

The majority of Ethiopia’s imports and exports are trucked to and from the port of Djibouti along a treacherous highway and the cost is phenomenal. A new rail link to Djibouti, scheduled for completion at the end of 2015, will reduce costs.

Even with these considerable constraints, Helen Hai, former vice-president of Huajian, argues that Ethiopia will be able to exploit its major comparative advantage – a competitive and young workforce.

“The labour cost in shoemaking in China is about 22% of the overall cost portfolio,” she explains. “In China today, the cost of each labourer is $500 [a month]. In Ethiopia it is only $50. So, the question, comes down to the efficiency.”

She claims that after one year of on-the-job training, her Ethiopian employees were able to achieve 70% of the efficiency of Chinese workers, meaning that other investors could soon follow.

http://www.theafricareport.com/East-Horn-Africa/ethiopia-if-the-shoe-fits-build-zones.html

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Djibouti and Ethiopia Pursuing Geothermal Power Schemes

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Djibouti and Ethiopia are developing new geothermal power capacities that are intended to enable them meet increasing demand for electricity and enhance their sustainable-energy portfolio.

The World Bank has provided details about its contractor prequalification procedure for the drilling of four full-size geothermal production wells in Djibouti, while Icelandic powerplant builder Reykjavik Geothermal says it hopes to commence its $2-billion Corbetti Geothermal Power Project in Ethiopia in July.

The World Bank, one of the financiers of the $31-million Djibouti Geothermal Power Project, which is being developed by another Icelandic firm, Reykjavik Energy Invest, advertised the invitation for bids from qualified drilling companies to execute the project. Funds will come from a number of institutions.

The bank said the steam-well drilling program entails civil engineering preparatory works, to be funded by the African Development Bank (AfDB) at Lake Assal geothermal field.

The second component—the actual drilling of the four wells—is co-financed by Global Environment Facility, the OPEC Fund for International Development and the World Bank’s International Development Association (IDA). French financier Agence Française de Développement (AFD) will fund the acquisition of steel material needed during the execution of the drilling program, while the inspection and testing of reservoir flow rates will be supported by Energy Sector Management Assistance Program.

Technical assistance support will be provided by the AfDB for designing the drilling program and the well test protocol by a geothermal consulting company yet to be named.

The final component would involve executing the well test protocol and ensuring third-party certification of the results of the drilling program before preparing a technical feasibility study for the geothermal power plant, “provided that the geothermal resource is suitable for power generation.”

Djama Guelleh, Djibouti’s head of electricity, said if the geothermal resource is proven to be commercially viable for large-scale power generation, “a follow-on project will be undertaken to competitively offer the geothermal resource to the international independent-power-producer market.”

The project, to be developed under a public-private partnership, would help Djibouti cut reliance on imported electricity from neighboring Ethiopia and meet the country’s peak demand of 70 MW, of which Ethiopia meets 65%.

In Ethiopia, which gets up to 90% of its 2,000-MW installed power-generating capacity from dams, Reykjavik Geothermal said in March it will, by next July, commence the development of the $2-billion geothermal project with capacity to generate 500 MW.

http://www.ethiopiainvestor.com/index.php?option=com_content&task=view&id=5054&Itemid=88

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Large Foreign Presence at Ethiopia’s Second Hotel Show

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The second event saw an increase in the number of participants, including companies from Turkey, India and China

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Ozzie Managing Director Kumeneger Teketel (left), Minister of Culture and Tourism Amin Abdulkadir (centre) and Deputy Operation Officer of Bekele Abshiro Plc Ali Barbre (right) at the opening of the second Hotel Show.

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The second hotel show opened last Friday May 16, 2014, for a three-day hospitality trade fair. There was a modest improvement from the first event in the number of participants and brands.

The first fair took place eight months ago, in October 2013, at the United Nations Conference Centre. This event saw 50 participating companies and 120 brands, according to the event organiser, Ozzie Business & Hospitality Group. The second trade fair, officially opened by Amin Abdulkadir, minister of Culture & Tourism, and Kumeneger Teketel, Ozzie’s managing director, at the Millennium Hall, has attracted 70 participants with 200 brands in hospitality and related sectors, including from countries such as China, India and Turkey. State Minister for Foreign Affairs, Dewano Kedir, was also one of the invited guests attending the event.

Event sponsors included MNS and Ozti, both from Turkey, among several others from the same country, as well as Sealed Air and Italco, from the US.

MNS recently inaugurated a plant at Legedadi, Oromia, making beds, sofas, pillows, towels, spring mattresses and wall-to-wall carpets. The company’s brochure claims that 80pc of the product will be for export. Ozti supplies kitchenware, all imported from Turkey.

The event showcases hotels, resorts, lodges, consultancy firms and products, such as hotel equipment, hotel supplies, construction materials, interior design, food and beverages. Nergek, a local supplier of electromechanical products, is now importing toilet materials designed for people with disabilities, including toilet seats, sinks and a shower set on which people can sit or stand.

Ozzie’s original intention was to hold the hospitality trade fair every six month – a target that it missed by barely two months. The company wants to see African businesses in the hospitality sector at the next event, said Kumneger.

Not happy with the service of the hospitality sector in Ethiopia, Esayas Woldemariam, international service managing director at Ethiopian Airlines, said at the event that service providers needed to change their mentality and become more service-oriented. Ethiopian has many passengers that transit through Ethiopia and that have to stay at hotels, making the airline the main customer of the hotel industry.

http://addisfortune.net/articles/large-foreign-presence-at-ethiopias-second-hotel-show/

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Multi-Donor Initiative to Support Private Sector Development

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The Ethiopian government has signed a Governance Framework for a Multi-Donor Initiative (MDI) for its private sector development (PSD) in respect to the country’s Growth and Transformation Plan (GTP) on Thursday, May 15, 2014.

The document was signed between the Ethiopian government and donor partners such as the Department for International Development (DFID), the Italian Cooperation, the Swedish International Development Agency (SIDA) and the Canadian International Development Agency (CIDA). The International Finance Corporation (IFC), in collaboration with the Ethiopian government and donor partners, is acting as a secretariat, implementing entity, and administrator of donor’s funds.

The IFC’s strategy for Ethiopia includes bolstering direct investments in priority sectors, small and micro enterprise development and supporting the government in improving the investment climate.

“The overall aim of the MDI is to support Ethiopia’s GTP objectives, including promoting and investing in scalable private sector interventions, aiming to support development and increase access to finance,” stated Resident Representative of the IFC, Amadou Labara.

This signing serves to formalize the collaboration among IFC, the Ethiopian government and donor partners that has now existed for nearly two years.

http://addisfortune.net/articles/multi-donor-initiative-to-support-private-sector-development/

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Celebrated Ethiopian entrepreneur behind soleRebels reveals her next big idea

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BY Kate Douglas

Bethlehem Tilahun Alemu is one of Africa’s most celebrated entrepreneurs. In 2004 she founded soleRebels in Ethiopia, and the company has since become one of Africa’s largest footwear brands with its range of artisan-made shoes now selling in over 55 countries globally.

According to Making It magazine, soleRebels is set to generate US$15m-$20m in revenue by 2015. Alemu’s success has led her to be named by CNN as one of 12 “smart women” entrepreneurs in the past century, alongside Coco Chanel and Elizabeth Arden. She has also been featured on the front cover of Forbes magazine and in 2011 was selected as a Young Global Leader by the World Economic Forum.

Last week, Alemu officially launched her second company, Republic of Leather, an online startup that addresses the global trend of consumers wanting to have more control over how and where their products are produced. Republic of Leather allows just this.

Alemu told How we made it in Africa the idea stemmed from her love for leather products and the fact that her home country, Ethiopia, is a key source of quality hides and leathers used by many global luxury brands to craft high end articles.

“I have worked side by side with the producers of these very same fine leathers for years as I built my footwear brand soleRebels. I have deep relationships that span from the supply side – right from the origin and selection of the hides and skins themselves – through to our tanners network.”

The company’s online platform allows customers to select their products from a range of leather goods, such as jackets, bags and gloves. Customers can then use an online app to customise details, from the leather type and colour to the stitch patterns used, and can then choose the artisan and location around the planet where they want their designs to be handcrafted.

“I saw that there were many areas around the globe where leather crafting and production had been undermined and had withered, despite its economic importance,” explained Alemu.

“I knew that a platform that tapped into these rich global talents and resources would have the power to reinvigorate these centres of production and create fantastic employment opportunities in communities around the planet, while also reinterpreting how – and literally where – luxury goods are made.”

According to Alemu, the company also allows customers to choose from a list of 850,000 accredited charities around the world to which 5% of the purchase price will be donated on their behalf.

“Our vision at Republic of Leather is to re-imagine the luxury leather goods market by powering the creativity of our customers, creating jobs for craftspeople all over the planet, and energising the causes our customers are passionate about,” she emphasised.

At the moment, the Republic of Leather production sites are in Ethiopia’s capital, Addis Ababa, Nicaragua, the UK and the US, but Alemu aims to add 45 more country sites within the next six to 18 months.

http://www.howwemadeitinafrica.com/celebrated-ethiopian-entrepreneur-behind-solerebels-reveals-her-next-big-idea/39386/

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From Track to Highway

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Marathon motors, the sole importer and distributor of the South Korea-based Hyundai vehicles has introduced a new brand car: Grand i10, for the Ethiopian market on Friday, May 16, 2014. During the event that was held at the facility of the company around the Diaspora roundabout, the legendary athlete-turned-businessman Haile Gebreselassie, owner and chairman of the company, is seen here chatting with Kim Jang Gwan, Ambassador of the Republic of Korea to Ethiopia, immediate left and Taye Dibekulu, president of United Bank, far left and Melkamu Assefa, chief executive of Marathon Motors on his immediate right and Tsegaye Tetemqe, president of Zemen Bank on the far right.

http://addisfortune.net/articles/from-track-to-highway/

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Ethiopia receives nine new vessels in Djibouti

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By Mohammed Taha Tewekel

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ADDIS ABABA – The Ethiopian government on Saturday received nine new vessels worth over $300 million from China at a ceremony organized in Djibouti.

“The vessels are not only Ethiopian assets but they are also Djibouti’s properties,” Ethiopian Prime Minister Hailemariam Desalegn said at the ceremony.

“The vessels indicate the rapid development in Ethiopia,” he added.

Named after the capital cities of Ethiopia’s regional states, the vessels were built with loans from the Chinese government.

Most of Ethiopia’s exports and imports are transported through the Port of Djibouti, which is located 900km east of Ethiopian capital Addis Ababa.

“Djibouti benefits from Ethiopia’s rapid development and in turn Djibouti’s growth is an advantage to Ethiopia,” Djiboutian President Ismail Omar Guelleh told the ceremony.

“The relation between Ethiopia and Djibouti is not limited to a government-to-government level but it has been intensified in people-to-people ties,” he said.

The Djiboutian leader went on to say that relations between the two neighbors are boosting in different spheres, including the economic and social fields.

“Djibouti gives a port service to Ethiopia but it does not consider that it is giving the service to another country but regards it as it is doing it for itself,” he said.

“We believe that Ethiopia is Djibouti and Djibouti is Ethiopia, no difference at all,” he added, going on to reiterate that the new vessels will further help speed up the ongoing development endeavors in Ethiopia.

Ethiopia had used Eritrean ports until 1998 when the two countries engaged in a war of their border disputes.

Following the war, Ethiopian began to use Djibouti ports to export its products.

http://somalilandsun.com/index.php/component/content/article/5784-ethiopia-receives-nine-new-vessels-in-djibouti

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Thought for Food

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The International Food Policy Research Institute (IFPRI) 2020 Resilience Conference, held May 15-17, 2014 in Addis Ababa, Ethiopia, brought together policymakers, practitioners, and scholars to discuss how resilience can be strengthened for food and nutrition security. Ethiopia was lauded for its success in building resilience on the food front, specifically when the Horn of Africa was hit by the worst drought in 2011. It is systems like Ethiopia’s safety net program that are being rewarded and recommended on the road to having food and nutrition security.

http://addisfortune.net/articles/thought-for-food/

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MoI Partners up with a Chinese Company to Establish an Industrial Zone

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The Ministry of Industry and Zhejiang Jinda Flax Llc, a Chinese textile company, are going to establish an industrial zone designated for textile factories, around Bole Lemi area in the Bole District, according to the Memorandum of Understating (MoU) the Ministry of Industry (MoI) and the Chinese company signed on Tuesday, May 13, 2014.

The formal Investment Agreement is expected to be signed by the end of July 2014, when the land needed for the project is available. The two parties have agreed to work jointly for the establishment, development and construction of the coming Kingdom Linen Textile Industrial Zone in Ethiopia, a new company that will be established by the two parties for this purpose.

Zhejiang Jinda is a subsidiary of Chinese Kingdom Holdings Limited and produces textile decoration fabrics such as weave fabrics, yarn decorated fabrics and calico (not fully processed fabrics) printing fabrics which are widely applied to clothing sofas, curtains and bed appliances in its factory in China.

The MoI is expected to provide the Chinese company with the Red line and Coordinates Graph of the land and the soil analysis report of the future site of the industrial zone within two weeks after signing this MoU, according to the document.

Within two months after the signing of the Investment Agreement, Kingdom shall be granted all the necessary registration documents of the newly formed company in Ethiopia and the certificate of approval of investment of the project.

Before June 2015, the Chinese company will commence the construction of phase one of the industrial zone project. In addition, the Chinese company will train 50 Ethiopian recruits in industrial park production facilities.

For industrial purposes the Ministry has allocated a total of 5,130ha in four cities and towns across the country, including Addis Abeba, Dire Dawa, a self-administered city about 515km east of the capital; Kombolcha, 376km to the north of the capital in Amhara region; Shillabo, 1,140km from the capital in the Somali Regional State; Hawassa, 273km south of the capital in the Southern Region.

Eastern Industrial Zone in Dukem, 37km southeast of Addis Abeba on 200ha of land, is the only private operational zone that was implemented by Chinese investors. Eleven companies are already involved in the manufacture of leather and leather products, textile and garments and car assembly at this zone.

Bole Lemi is the only other functional industrial zone which was constructed by the government. It has five sheds which are constructed by the Ethiopian government, each on 5,500sqm of land with a total cost of 2.5 billion Br, and given to investors. The remaining 10 shades each on 11,000sqm are under construction financed by a loan, which the government has obtained from the World Bank (WB).

There are also projects of industrial zones in different levels of execution in Sendafa, Akaki Kaliti, Legetafo, and Mekanisa Lebu.

http://addisfortune.net/articles/moi-partners-up-with-a-chinese-company-to-establish-an-industrial-zone/

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Ministry Registers Impressive Gains in Irrigation Works

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Highlights from the opening session of the 2020 Conference

Source: M. Mitchell/IFPRI

IFPRI’s Shenggen Fan greets H.E. Hailemariam Dessalegn, Prime Minister of Ethiopia, before both deliver opening remarks.

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“If the past is any guide, we will face a barrage of shocks, both natural and man‐made, in the coming years. In just the past five years, we have seen a major earthquake in Haiti; drought in the Horn of Africa; earthquake, tsunami, and nuclear crisis in Japan; and conflicts that have left millions of people homeless, maimed, or dead. And let us not forget the food price spikes of 2008 that have made the global food system more volatile since then… The IPCC recently published a new report confirming that humans are causing climate change and warning of further shocks to come.”

Shenggen Fan, Director General at IFPRI, began his introductory remarks by outlining some of the major challenges that threaten the food and nutrition security of the world’s poor and most vulnerable people. He and the other distinguished keynote speakers from the inaugural session then went on to share their reflections on what building resilience looks like within the context of agricultural development. Rather than merely helping people “bounce back” from the negative impacts of shocks, building resilience, they agreed, involved a more transformative process in which individuals, households, and communities become better-off than before the shocks occurred.

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Defining resilience, of course, is just the starting point. Helping people become better off and more resilient to future shocks is the aim of myriad development efforts seeking to implement a resilience framework. To find such an example of people bouncing back stronger, several speakers pointed to the case of Ethiopia, which is subject to frequent drought, the most recent occurring in 2011. Though many worried about the possibility of another famine similar to the one that took place thirty years ago, such conditions never materialized.

What changed from the 1980s? Fan pointed to the country’s Productive Safety Net Programme (PSNP) and Risk Financing Mechanism as playing key roles in mitigating the most recent food security crisis. While the former initiative aims to better target benefits to most vulnerable people and provide them with predictable sources of income, the latter program’s flexibility allowed food assistance to be quickly scaled up and major food shortages were largely averted. Erastus Mwencha, Deputy Chairperson of the African Union Commission, observed that Ethiopia had “risen from the ashes” to become one of the most resilient and food secure nations in Africa. H.E. Hailemariam Dessalegn, Prime Minister of Ethiopia, underscored the government’s 15 percent allocation of its budget to agricultural development and food security− the highest percentage of any African nation− as a key component of the country’s resilience-building efforts.

Yet we must be careful not to attribute development successes to outside experts or processes. David Nabarro, United Nations Secretary-General Special Representative on Food Security and Nutrition, delivered his opening remarks via a video message, emphasizing that resilience is something that comes from within rather than without. If our resilience building efforts are to be successful, he argues, they must enable and empower people, societies, and institutions to strengthen their own livelihood systems and make them more resilient to shocks. Kanayo Nwanze, President of the International Fund for Agricultural Development (IFAD), drove this point home in stating that “development is not something that we do for people. Development is what people do for themselves. It must start and end from within. Our job is to facilitate the process.”

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Speaker videos and summary notes

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• Rajul Pandya-Lorch, Head of the 2020 Vision Initiative and Chief of Staff, International Food Policy Research Institute (IFPRI), USA
  Text Remarks | Video
• Shenggen Fan, Director General, International Food Policy Research Institute (IFPRI), USA
  Text Remarks | Video
• H.E. Hailemariam Dessalegn, Prime Minister of Ethiopia
  Text Remark | Video
• Kanayo Nwanze, President, International Fund for Agricultural Development (IFAD), Italy
  Text Remarks | Video
• Ertharin Cousin, Executive Director, United Nations World Food Programme (WFP), Italy
  Text Remarks | Video
• Fawzi Al-Sultan, Chair, Board of Trustees, International Food Policy Research Institute (IFPRI), Kuwait
  Text Remarks | Video
• H.E. John Kufuor, Former President, Republic of Ghana, (video message)
  Video
• Ban Ki-moon, Secretary-General, United Nations, USA (video message)
  Text Remarks | Video
• David Nabarro, United Nations Secretary General Special Representative on Food Security and Nutrition, Switzerland, (video message)
  Text Remarks | Video
• Rajiv Shah, Administrator, United States Agency for International Development (USAID), USA (video message)
  Text Remarks | Video

Sourced here   http://www.ifpri.org/blog/building-resilience-within

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By Nicholas Norbrook in Addis Ababa  -  May 20 2014

Spearheading the government’s interventions in the farming sector, the Agricultural Transformation Agency has already vastly improved yields for wheat and teff.

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Ecobank and Eleni Join Forces to Strengthen Africa’s Agricultural Financing Capabilities

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Ecobank Transnational Incorporated (‘Ecobank’ or ‘the Group’) has signed a memorandum of understanding (‘MOU’) with eleni LLC (‘eleni’), the leading proponent and developer of commodity exchanges in Africa, with a view to establishing a cooperative framework to promote and accelerate the development of Africa’s agriculture.

Mr. Albert Essien, Ecobank’s Group Chief Executive, and Dr. Eleni Gabre-Madhin, chief executive officer of eleni, signed the MOU at an official ceremony held during the AfDB’s Annual General Meeting in Kigali today.

Dr. Gabre-Madhin, a globally recognized thought leader in Africa’s development, is the former founder and CEO of the acclaimed Ethiopia Commodity Exchange (ECX), which has garnered various international awards and plaudits, including the Africa Investor Agriculture Initiative of the Year in 2011 and, a first in Africa, the CIO award for IT excellence in business. eleni LLC, established with co-founders Keith Thomas and Jawad Ali, is the only proven pioneer building commodity exchanges for frontier markets in Africa, with a demonstrated impact on the livelihoods of millions of smallholder farmers in Ethiopia.

The partnership between Ecobank and eleni aims to realize a shared vision of transforming Africa’s competitiveness in global commodity markets, enhancing value addition and processing in the domestic economy and enhancing food security. The partnership builds on the synergies between Ecobank’s unrivalled pan-African presence and its commitment to financial inclusion and eleni’s successful track record of creating and operating commodity exchanges in Africa, with projects in Ghana, Cameroon, Mozambique, and Nigeria. Ecobank recently announced that it was a keystone investor in the establishment of the Ghana Commodity Exchange (GCX), eleni’s first major foray in West Africa.

“As well as increasing market transparency and reducing transaction costs, commodity exchanges play a crucial role in the monitoring and assessment of risk,” commented Albert Essien, Ecobank’s Group CEO. “Instruments such as warehouse receipts reduce uncertainty and improve access to finance across the value chain. We look forward to collaborating further with eleni to enhance Africa’s agricultural financing capabilities.”

“We are very excited to be working with one of Africa’s leading financial institutions, with a solid pan-African focus, as this opens up a tremendous opportunity to establish the leading platform for commodity-related payments and transactions across the continent,” concluded Dr. Eleni Gabre-Madhin.

http://allafrica.com/stories/201405221708.html

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Alliance Generates Investments in Africa’s Agriculture

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21 May 2014

The 2014 Feed the Future Progress Report, released May 19 in Washington, says that organizations supported by the New Alliance for Food Security and Nutrition are showing results. One organization is the Alliance for a Green Revolution in Africa (AGRA), established in 2006 by the Rockefeller and the Bill & Melinda Gates foundations.

AGRA leads a $47 million Scaling Seeds and Technologies Partnership to expand production by African companies of high-quality seeds and increase the number of smallholder farmers who have access to innovative technologies.

Through the New Alliance and Grow Africa, more than 2.6 million smallholders have been reached through services, training or production contracts and 33,000 jobs have been created.

Grow Africa seeks to accelerate investment and change in African agriculture based on national agricultural plans. Grow Africa supports the Comprehensive African Agricultural Development Programme (CAADP), established in 2003 by the African Union’s New Partnership for Africa’s Development (NEPAD). So far, 40 African countries have now completed national agricultural plans.

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An employee of an Ethiopian poultry farm admires improved production as a result of advice from staff at the new Bishoftu Farm Service Center.

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The African Union has proclaimed 2014 as the “Year of Agriculture and Food Security.”

http://iipdigital.usembassy.gov/st/english/article/2014/05/20140521299510.html?CP.rss=true#axzz32PkRhAog

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Government plans to expand electricity access to 75% by 2015

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Ministry of Water, Irrigation and Energy (MoWIE) announced by the year 2015 it plans to expand access to electricity from the present 51 percent to 75 percent of Ethiopia’s population.
The move by the government will made to promote and support the development and expansion of social service as well as income generating activities in rural parts of the country, according to The Ethiopian Herald.
During the opening of a two day National Workshop, State Minister Kebede Gerba, commented the development of large scale hydropower projects is being done with assessments to environmental and social impacts of the projects.

Kebede also said developing small and micro hydropower has gained the attention of the government for they are suitable and economical in electrifying remote rural areas. In addition to this, they are helpful to establish agro processing plants and productive activities in rural part of the country.

He further noted since 2005 the country has shown great progress in the power sector by implementing Universal Electricity Access Program via grid expansion. In particular he lauded the success of the program with the supply of electricity to households of rural towns, villages and social service centers.

In addition to this, Kebede stated the government has established Off-grid Rural Electrification Fund in order to harmonize the efforts of grid expansion by involving the private sector and cooperatives.

http://www.waltainfo.com/index.php/explore/13480-government-plans-to-expand-electricity-access-to-75-by-2015-

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Special report| Ethiopian Sugar Corporation’s “May Day Dam”

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Posted on Wednesday, May 21, 2014  by Fetsum Berhane

http://hornaffairs.com/en/2014/05/21/ethiopian-sugar-corporations-may-day-dam/

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Ethiopia’s sugar production could grow five-fold in a year

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Ethiopia’s massive investment in sugar development projects across the country could see the nation produce 1.58 million tons of sugar annually, five times its current output, by mid 2015.

The expected output is 70 percent of the government’s plan as stated under the five-year growth and transformation plan (GTP), which set out to produce 2.25 million tons of sugar per annum.
The government expects at least seven of the ten sugar manufacturing plants currently underway in five regional states to be completed by the end of the plan period (mid 2015).
The boost in sugar production could come as early as this month when the first phase of Tendaho sugar factory which has the capacity to crush 13,000 tons of cane per day (tcd) begins operation.
“Dry testing has been conducted and we expect the factory to begin crushing before the end of this month,” Shiferaw Jarso, Ethiopian Sugar Corporation (ESC) director general with a ministerial portfolio, said today at a press conference.

At full capacity, Tendaho factory will crush 26,000 tons of cane per day (tcd) and produce more than 619, 000 tons of sugar annually, making it the biggest sugar factory in the country.
Launched in 2006, the Tendaho project, which is being constructed by Overseas Infrastructure Alliance of India, predates the establishment of ESC and has been marred by delays.
Next in line is the Kuraz I sugar factory, one of the five sugar factories being built in South Omo Zone (SNNP region) with a combined annual production capacity of more than 1.9 million tons of sugar.
According to Shiferaw, Kuraz I, which will have 12,000 tcd crushing capacity, is expected to be completed in September 2014. Factory plant erection is being carried out by the Metal and Engineering Corporation (MetEC).
ESC also expects the year 2014 to witness the completion of Kessem sugar factory, a plant with an annual sugar production capacity of 260,000 tons at full capacity. The sugar plant is being built in Fentalle and Dulecha weredas of Afar regional state by China Complant Group Inc.

“The project is going very well and it is on schedule. We are confident that the plant will be completed in November,” Shiferaw said.
Two of the three sugar projects in Tana-Beles sugar development projects each with 12,000 tcd are expected to follow during the first months of 2015, according to ESC’s director general.
The remaining sugar development projects including Welkait sugar factory in Tigray region is expected to go operational during the GTP II period. The project received a 500 million dollars financial boost from China during the Chinese premier’s recent visit to Ethiopia.

“Construction of the plant will commence in June [2014] and it is expected to be completed in 24 months,” Shiefraw told journalists.
Currently, Ethiopia produces some 300,000 tons of sugar per annum while the demand for sugar stands at around 500,000 tons. The country’s sugar production is expected to not only satisfy domestic demand but will be an export commodity in the not-so-distant future.

At full capacity, the entire sugar development projects including those expected to roll out during the GTP II period is estimated to reach 4 million tons of sugar per annum.
With improved productivity the massive goal can be achieved, the director general believes.

http://www.waltainfo.com/index.php/explore/13469-ethiopias-sugar-production-could-grow-five-fold-in-a-year

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Ethiopia, China establish textile industrial zone in Addis Ababa

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The Ethiopian government is collaborating with a Chinese company, Zhejiang Jinda Flax Llc, to establish a textile industrial zone in Addis Ababa.

The Ethiopian Ministry of Industry and the Chinese textile company had signed a Memorandum of Understanding (MoU) for the industrial zone, designated for textile factories in the Bole District in Addis Ababa.

Available data shows that Ethiopia is home to over 230 textile and garment industries with 20 training institutes, employing about 37 per cent of the country’s public sector work force.

According to a copy of the MoU in Addis Ababa on Wednesday, the ministry would sign a formal Investment Agreement with the Chinese company at the end of July when the land needed for the project would be available.

The two parties had agreed to work jointly for the establishment, development and construction of the coming Kingdom Linen Textile Industrial Zone in Ethiopia.

Zhejiang Jinda is a subsidiary of Chinese Kingdom Holdings Limited and produces textile decoration fabrics such as weave fabrics, yarn decorated fabrics and calico (not fully processed fabrics) printing fabrics which are widely applied to clothing sofas, curtains and bed appliances.

The ministry agreed to provide the Chinese company with the Red Line and Coordinates Graph of the land and the soil analysis report of the future site of the industrial zone within two weeks after the agreement.

It said: “within two months of the signing of the Investment Agreement, investors will be granted all the necessary registration documents of the newly formed company in Ethiopia and the certificate of approval of investment of the project.

“Before June 2015, the Chinese company will commence the construction of phase one of the industrial zone project. In addition, the Chinese company will train 50 Ethiopians in industrial park production facilities.“

The ministry said it had allocated a total of 5,130 km in four cities and towns across the country, including Addis Ababa, Dire Dawa, a self-administered city about 515 km east of the capital.

Others are Kombolcha, 376 km to the north of the capital in Amhara region; Shillabo, 1,140 km from the capital in the Somali Regional State; Hawassa, 273 km south of the capital in the Southern Region.

11 Chinese companies are already involved in the manufacturing of leather and leather products, textile and garments.

http://sodere.com/profiles/blogs/ethiopia-china-establish-textile-industrial-zone-in-addis-ababa

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ETHIOPIA RECEIVES 250 MLN USD WORLD BANK LOAN FOR JOB CREATION PROJECT

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ADDIS ABABA, May 22 (NNN-ERTA) — Ethiopia has received a 250 million US dollar loan from the World Bank to support Ethiopia’s efforts in creating new jobs in manufacturing sector through the development of industrial zones in Addis Ababa and enhancing linkages with the local economy.

State Minister of Finance and Economic Development Ahmed Shide said Tuesday that the establishment of industrial zones would spur both foreign direct and domestic investments in Ethiopia.

The country is now “establishing industrial zones to use as a platform for catalyzing investment and job creation, with a focus on export-led manufacturing”, he added.

This project will provide large and medium-sized firms with new, serviced industrial land and buildings, including water, electricity, and transport connections, and with a one-stop shop to reduce the cost of doing business in Ethiopia.

It will also target small and medium enterprises (SMEs) which will act as local suppliers for the light manufacturing sector, as well as sector institutes which will be involved in project implementation and in developing skills and training of workers with requisite skills.

The World Bank’s country director for Ethiopia, Guang Zhe Chen, said: Tthe project will help strengthen the government’s jobs-creation agenda by drawing lessons learnt from global practices, as well as attracting new investors.”

http://www.namnewsnetwork.org/v3/read.php?id=MjY5MzEw

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Mega Projects cement Ethiopia’s renaissance: DPM Demeke Mekonnen

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Deputy Prime Minister Demeke Mekonne said that Mega Development Projects, fruits of May 28, have significant roles in cementing the bases for the realization of the renaissance of the country.

Forwarding his welfare message of the 23rd anniversary of May 28 to all Ethiopians, the completion of Sugar, Railway, Power, Road and other Mega Projects, which are undergoing as planned, will lay a base for sustainable strong economic development of the country.

In his exclusive interview with WIC, the Deputy Premier said that the Mega Projects, included in the Growth and Transformation Plan, will obviously cement the bases for the development of the country’s export led industrialization.

“If we, for instance take the Sugar Projects,” he said, “they will raise the country’s Foreign Exchange Income in addition to fulfilling the sugar demands of the country.”

They also give a room to the government to allocate the huge money that had been spending to purchases sugar from abroad to other development projects, Ato Demeke said.

According to the DPM, Ethiopia will be first in Africa and one among the major Sugar Exporters in the world after the completion of the Sugar Projects, which are currently under construction.

These mega projects, the fruits of May 28, will fortify the base of sustainable economy development, WIC learnt.

He also urged all Ethiopians to strengthen their participation and commitment to realize these pioneering development projects, he added.

Ethiopia is building an integrated economy, enhancing the agricultural sector in such a way that it could promote industrialization and vice versa, which has been laying bases for the realization of the renaissance of the country.

He also elaborated that the performance of the country’s Growth and Transformation Plan so far can be viewed in three dimensions: those projects completed before the period, those on the right truck with the same pace to the given period and those that lag behind.

The reduction of child mortality, job creation, expansion and development of microfinance institutions are some among money projects that performed beyond the target set in the GTP, he emphasized.

On the contrary, the reduction of mothers’ mortality, export and expansion of manufacturing are some of the sectors that lag behind, Ato Demeke added.

Most of the sectors are underway in line with the GTP period and will be completed by next year, the Deputy Premier stressed, adding that as the year 2015 is critical for us in accomplishing all of our GTP projects, the government along with the people will exert more consolidated efforts.

http://www.waltainfo.com/index.php/explore/13461-mega-projects-cement-ethiopias-renaissance-dpm-demeke-mekonnen

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French Companies Considering Investment in Ethiopia

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Four French companies, working on the areas of chemical, water technology, construction, and food processing industries, are looking at investment alternatives in Ethiopia.

As indicated in an investment forum hosted in Addis, French companies, which often prefer to invest in French Speaking Africa, are now turning their eyes to the fast growing economy in East Africa – Ethiopia, to make it one of their investment destinations in the continent.

Ethiopian Investment Agency briefed the companies’ delegates that manufacturing, leather and leather industry, mining, agriculture and tourism are the most promising areas of investment here.

The French delegates head, Mark Schneider said that they will invest in various areas once they identify their areas of preference.

http://allafrica.com/stories/201405220161.html

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 New Abattoir’s Construction to Commence in 4 Months

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The Addis Ababa Abattoirs Enterprise is going to commence construction for a new abattoir, Capital reported. The new abattoir is going to be situated at Hanna Mariam and the construction is expected to start after the last and fourth round of study has been completed. The study is expected to be finished within three to four months.

According to Efrem Desalegne, Managing Director of the Enterprise, the study has already costed 20 Million Birr. And the last phase of the study is expected to reveal the cost and duration of the construction. The study is being carried out by a meeting consortium group from South Africa, New Zealand and Australia.

According to Efrem, the new slaughter house will replace the old one and upon completion the latter will be used for other purposes.

The new abattoir is going to be on 17,400 square meters and it is going to have the capacity to handle 14,000 animals per day. Compared to this, the old slaughter house has the capacity of only slaughtering 1,200 animals per day.

The old abattoir has seen some improvements in the past years. Nonetheless, expansion and improvement projects faced difficulties due to space limitation. With the new slaughter house, the Enterprise expects to render different new services such as export slaughtering service and environmental mitigation actions.

The export service is expected to be given through an automatic line which can handle bulls, sheep and goats.

An upgrading system for processing by products to produce animal tallow, meat bone meal, glue and pure bone meal will also be installed in the new abattoir. In addition to these the new abattoir will feature a biogas plant and water treatment plant to enable the treatment of water and reuse of water.

http://www.2merkato.com/news/alerts/2964-ethiopia-new-abattoirs-construction-commence-in-4-months

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Not so fair trade

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BUYING ‘Fairtrade’ coffee is not really helping the very poor, new research suggests. By comparing living standards in Fairtrade-certified producing areas in Ethiopia and Uganda with similar non-Fairtrade regions, four development economists from the School of Oriental and African Studies (SOAS) in London found that Fair Trade agricultural workers often earned lower incomes.

After four years of fieldwork in the coffee, tea and flower sectors in Ethiopia and Uganda, where they gathered 1,700 survey responses and conducted more than 100 interviews, the SOAS researchers found people living in ordinary rural communities enjoyed a higher standard of living than seasonal and casual agricultural workers who received an apparently subsidised wage for producing Fairtrade exports. Women’s wages were especially low among producers selling into Fairtrade markets, according to the researchers.

Comparing areas where the same crops were produced by similar, though not Fairtrade-certified employers, they found that workers received higher wages and benefited from better conditions. This was not because the Fairtrade cooperatives were based in areas with higher or particular disadvantages. The rationale of Fairtrade is that producers of commodities subject to price volatility should be protected through payment of a minimum price to cover living and production costs, a price which adjusts whenever the market shifts above the minimum threshold. In addition to this, traders should pay workers a “social premium” of around 5-10% for development and technical assistance.

The SOAS research suggests that Fairtrade has failed to make a positive difference. Within the areas studied, the poorest (typically wage workers in Fairtrade initiatives), often lacked access to schools, health clinics, improved sanitation and other social projects, even when they had worked on accredited processing stations or for compliant producers.

PS: The Fairtrade Foundation has published a lengthy reply: “We note the innovative methodology and large sample size that SOAS’s research project has used to answer its three research questions, only one of which focuses on Fairtrade. We also note however that the study has not sought to evaluate the impact of Fairtrade’s model and interventions as it has not followed an impact evaluation methodology.”

http://www.economist.com/blogs/baobab/2014/05/agriculture-ethiopia-and-uganda

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Building a green and resilient economy in Ethiopia

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by Sarah McMullan

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For us, anticipating, adapting to, and recovering from shocks are essential to our future.”  With those words, H. E. Hailemariam Dessalegn, Prime Minister of Ethiopia, highlighted the importance of resilience for his country.

In his inaugural address at the opening of the 2020 Conference on “Building Resilience for Food and Nutrition Security” Thursday evening, Prime Minister Hailemariam outlined recent steps his government has taken in its quest to become a “green and climate resilient” middle income country by 2025. These include a green economy strategy to rehabilitate degraded land, plant forests and build climate resilience in agriculture, water, irrigation, and energy.

Prime Minister Hailemariam noted the work of Ethiopia’s Agricultural Transformation Agency which aims to maximize the contribution of agriculture—the source of half the nation’s GDP and 80 percent of its employment— to the country’s development.  He also highlighted the resilience-building features of the Productive Safety Net Program, which provides conditional food and cash transfers to vulnerable households.  Acknowledging that there is still work to be done, he welcomed the opportunity at the conference to “share experiences and learn from others.”

http://reap.ifpri.info/2014/05/18/building-a-green-and-resilient-economy-in-ethiopia/

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Growing Africa’s agriculture 

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Sustainable commercial agricultural production is vital to the health and well-being of Africa’s economy and people. Smallholder farming accounts for the majority of African agricultural production, and subsistence agriculture – where farmers focus on producing what is needed to feed their families – is still widespread. In Uganda, for example, 86% of the population live in rural areas and rely on subsistence agriculture. Low inputs and low productivity result in stagnation, and stagnation in the developing world is equivalent to poverty, hunger and malnutrition.

As leader of a company that has been involved in Africa for over 100 years, I see enormous potential to more rapidly develop this area together with regional partners. There is a need for more partnerships between farmers, government, NGOs, local business and multinational corporations to accelerate Africa’s commercial agricultural growth. This will not only help thousands of farmers escape the subsistence trap but also offer benefits to all partners.

According to the Food and Agriculture Organization of the United Nations, the global demand for food is expected to increase by 60% by 2050. Smallholder farmers will need to play a key role in meeting the growing need. Africa’s food and beverage markets are to reach a threefold increase by 2030, the World Bank estimated in 2013, bringing more jobs, greater prosperity, less hunger and significantly more opportunity for farmers to compete globally.

There are, however, numerous challenges that subsistence farmers are faced with and that inhibit potential growth. These include limited access to infrastructure, to productivity-enhancing technologies and to education – issues that require substantial investment and long-term partnership of local business, farmers, corporations, governments and NGOs.

Two critical challenges are the inability to compete with low-priced international products – it is virtually impossible to compete with imported rice from Vietnam, for example – and the lack of access to a strong commercial market. These cause farmers to maintain production at levels merely enough to provide for their family, providing little or no incentive to invest in improved crops and fertilizers, or access to these products. As with cash crops such as cotton, coffee and tobacco, markets are most likely to be built on demand for the product and accelerated by large multinational corporations. Multinational companies such as Heineken can play a significant role in creating this demand, partnering with farmers, government and NGOs to help African agriculture gain a larger share of the world’s commercial market. Local sourcing creates shared value.

Heineken currently produces from 56 plants in 23 African countries and has made a Clinton Global Initiative commitment in 2011 to source 60% of its agricultural raw materials used in Africa within the continent by 2020. This is also part of the commitments we made under our Brewing a Better Future programme, Heineken’s approach to sustainability and one of our key business priorities. Together with the European Cooperative for Rural Development (EUCORD) and the Dutch Ministry of Foreign Affairs, we recently invested in three Public Private Partnership projects in Ethiopia, Rwanda and Sierra Leone and we appointed a local sourcing director to increase the focus on and coordination of these projects.

In the Democratic Republic of Congo, our commitment to train farmers to produce consistent volumes of high-quality rice has seen their average annual production increase by 62% between 2009 and 2012. We have committed to invest more than $4 million by 2017 to accelerate our sourcing initiatives in the region, which will reduce the number of crops imported from other countries, educate local farmers through support and training, and improve income for thousands of farmers and their families.

Through partnerships with government and international NGOs such as EUCORD, Heineken seeks to use its commitment to actively improve agricultural productivity in the countries in which we operate. Working together with NGOs, Heineken is using its agricultural experience and capacity to train and organize smallholder farmers to integrate as many rural families in their supply chain as possible. Our objective is to make the agricultural sector more competitive in order to lower the costs of local grains – both as a source for the agro-processing industry as well as for local food consumption.

For farmers, the benefits include improved agricultural knowledge, increased productivity and profitability, better food security and an improved overall livelihood. Governments will see improved employment, economic development and a growing international trading position. And for commercial corporations – whether local businesses or multinationals – the long-term benefits are significant as well. For Heineken, these include securing a long-term sustainable source of raw materials, reduced exposure to unavailability or potential volatile prices, reduced transport costs; and a smaller carbon footprint.

We believe in Africa and can see the immense opportunity it offers. We also realize it is our obligation to partner with the continent to stimulate sustained and sustainable growth. We are encouraged by the results of our partnerships and want to engage in dialogue with other multinationals, local business, farmers, NGOs and governments about successful partnering for shared supply chain value. Together, we will be able to stimulate the growth of a sustainable and commercial agricultural sector for Africa and take an important next step to increase the global food supply.

Author: Jean-François van Boxmeer is Chairman of the Executive Board & CEO, Heineken. He is a co-chair of the World Economic Forum on Africa 2014.

http://forumblog.org/2014/05/growing-africas-agriculture/

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Posted on Friday, May 23, 2014 

by Fetsum W. Berhane

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In western Ethiopia, about 576 km from Addis Ababa, lay a mega sugar project expected to double Ethiopia’s current sugar production.

Water extracted from Beles River, a tributary of the Blue Nile, will supply to the 75,000 ha sugar plantations, extended from Awi Zone and South Gojjam Zones of Amahara Regional State to parts of Benishangul Gumuz Regional State. It takes a 56 kms drive – just to finish one side of the plantation field.

Beles sugar project comprises three sugar factories – each with annual production capacity of 242,000 tons of sugar and 20,827 m3 Ethanol, when completed.

The entire plantation gets water supply from Beles River channeled via an 8 meters high and 21 meters wide diversion weir built over the river. The construction of the diversion weir and irrigation canals is completed. Sugarcane planting, with water being delivered through sprinklers, pumps and tunnels, is underway.

The project staffs are camped in Awi Zone, Jawi Woreda “Meles Village”, named after the late Prime Minister, where I spent two nights. Upon inquiry I learned they started living in the village the day after the passing of Meles Zenawi. They found it fitting to name the site of a mega project after the leader that set Ethiopia on a developmental path.

About 1525 households have been displaced to make way for the plantation field and were paid a compensation of 72 million birr, according to the chiefs of the project. The farmers confirmed to me they received a saving account where they withdraw at will. I observed a resettlement village with school and health facilities and a newly constructed ten kilometers road that connects the village to the main road. However, some of the resettled were not yet provided a farm land.

The re-settled farmers were provided lands in three areas that were said to be either uninhabited or taken from investors. Of which, in two areas the farmers received their plot.

It was in the third area that a group faced problems. The group of farmers who went to the third area, which was said to be uninhabited, faced hostile reaction. The semi-pastoral locals chased the farmers and escorting officials with arrows and characterized the situation as an indication that the government did not recognize of their existence.

My inquiry led me to conclude the mistake arose from the lack of coordination between officials of the two regions. This is one of those issues that require extra-caution in execution. Even though it was a minor conflict and there was no causality, it leaves a bad taste in future relationship of the communities and stained the otherwise satisfactory resettlement process.

Two of the three factories of Beles sugar project are scheduled to start production in about six months. The fact that it is being built by local contractors is its notable feature.

With three other sugar mega projects, named Kessem, Tendaho and Kuraz I, that are to be completed in 2007, the corporation can claim success in attaining “70 percent of the high case scenario” set under the Growth and Transformation Plan, according to Shiferaw Jarso, Director General of Ethiopia’s Sugar Corporation.

The GTP target for the sugar sector is set at building 10 new sugar factories and a 2.25 million tons of sugar production putting the nation in a club with Brazil and India.

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Related Posts

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• Special report| Ethiopian Sugar Corporation’s “May Day Dam”
  
• HRW tells Ethiopia: No shortcut to dev’t; Suspend Gibe III & Sugar plantations
• Briefing | Ethiopia’s sugar projects progressing steadily

Sourced here  http://hornaffairs.com/en/2014/05/23/beles-sugar-project-a-visit-to-meles-zenawi-village-resettled-farmers/

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Filed under: Ag Related, Infrastructure Developments Tagged: Agriculture, Allana Potash, Business, China, Economic growth, Ethiopia, Ethiopian government, Ethiopian Sugar Corporation, Fertilizer, Investment, Millennium Development Goals

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BY Kate Douglas | 23 May 2014

Filed under: Ag Related, Infrastructure Developments Tagged: Africa, Agriculture, Business, East Africa, Economic growth, Investment, Millennium Development Goals, Sub-Saharan Africa, tag1

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Ethiopia’s Farms and finance

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Ethiopia has yet to produce private sector champions. Photo©Ami Vitale/PANOS-REA

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By – Nicholas Norbrook in Addis Ababa.

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The government has a mission to use a strong state to build infrastructure and develop the industrial and agricultural sectors. It argues that it could repeat the rapid growth of East Asia in the 1990s, but critics warn about intimidation of the opposition and the risks of crony capitalism.

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The rebel army that chased the Derg military regime out of power in 1991 inherited a time bomb that could easily have spun out of control. Massively poor, plagued with chronic food shortages and with a population explosion around the corner, Ethiopia sat in a region gripped by post-Cold War insecurity.

Today, the neighbourhood is not any easier. The population has almost doubled from 50 million to 92 million people.

Now, Ethiopia is mentioned in the same breath as the East Asian miracle and is perhaps on the cusp of massive state-driven take off.

The unassuming Prime Minister Hailemariam Desalegn tells The Africa Report: “Everyone is now talking about the Ethiopian renaissance”.

Even institutions traditionally at odds with state-led models recognise the progress. In an October 2013 report, the International Monetary Fund praised Ethiopia’s “strong growth performance and impressive progress in decreasing poverty and inequality”.

Motorists in both the capital and further afield testify to and occasionally swear at the infrastructure outlay. Addis is one of the few capitals in Africa constructing cheap urban mass transit systems.

The $4.8bn self-financed 6,000MW Grand Ethiopian Renaissance Dam is one-third complete and should start generating 700MW by September 2015.

An old Model

Maternal mortality rates have fallen sharply, and the government is rolling out a pilot medical insurance scheme. Primary school enrolment has climbed to 85%. Investors from the East and West arrive daily at Bole International Airport, with Unilever, Ikea, Tesco and H&M just the latest. New industrial parks are being completed, with factories slowly swinging into action.

Ethiopia does not claim to have come up with the model it is following.

Several East Asian countries have run developmental states over the past 30 to 40 years: boost agriculture, protect and promote nascent manufacturing sectors, flaunt cheap labour, use the banks to steer progress.

It requires tight discipline in the leadership.

The ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) is closely modelled on the Communist Party of China, right down to ‘criticism and self-criticism’ sessions, where senior cadres can be dressed down by hundreds of colleagues.

Henok Teferra, vice-president of Ethiopian Airlines, says Ethiopia needs a plan tailored to local realities, but also the capacity to execute plans, including the government’s 2010-2015 Growth and Transformation Plan (GTP): “Action without vision is a nightmare, and vision without action is a daydream, isn’t that what they say?”

Will Ethiopia be successful in its developmental state? And can it avoid the crony-capitalism pitfalls of other countries that have taken the same path?

Within Ethiopia there is a passionate debate about it, and not just in the ranks of the EPRDF, whose former prime minister, Meles Zenawi, articulated the vision of an Ethiopian developmental state most clearly.

Scholars like Merkeb Negash at Jimma University argue, for example, that while Ethiopia may not have a sophisticated technocratic elite and strong autonomous institutions as do Japan and China, it does not necessarily follow that the state will be captured by rent-seeking business elites.

Just as the South Korean government relied on – but never fully trusted – advisers from Japan and the United States, Addis Ababa is importing expertise.

There is a strong level of cooperation between ministries, too.

One of the international advisers, requesting anonymity, says he was impressed that the customs department allowed the ministry of industry the latitude to draft legislation and procedures for bonded warehousing for the special industrial parks.

“It was incredible. Customs people worldwide normally protect their fiefdoms,” he says.

This sort of facilitation is also noticeable at the Agricultural Transformation Agency, modelled on the development agencies of South Korea and Malaysia. This may appear rosy, but the pitfalls are legion.

Bellwethers include the health of state-linked conglomerates, such as the Endowment Fund for Rehabilitation of Tigray – linked to the political elite of the Tigrayan ethnic group, involved in logistics and manufacturing – and the Metals and Engineering Corporation.

The latter is run by the top brass of the military and is set to build sections of the country’s dams and 10 sugar factories.

The sacking of the top three officials in the customs department for corruption in May 2013 suggests the current leadership is aware of the importance of oversight.

It is unclear, however, how successfully Ethiopia can simultaneously pick winners and prune bad companies, a hallmark of successful developmental states.

Building developmental states requires sacrifice and the ability to forge a national project that a majority accepts, something that Ethiopia’s federal character both helps and hinders.

Many people have lost their land for dams and big agribusiness projects. The villagisation project that agglomerates nomadic peoples has also been unpopular.

The ruling party runs a closed-off political system, as seen in the 2005 elections. There was a large turnout for the opposition, and the government responded with a wave of intimidation and arrests.

In its 2013 annual report, Human Rights Watch says “freedom of expression, assembly and association have been increasingly restricted in Ethiopia”.

One criterion for success of a developmental state is a sustained rise in industry’s share of gross domestic product.

In Ethiopia’s case, the sector’s contribution has remained steady at around 12%. Boosters say Ethiopia is only in the very early stages of development.

There are a number of projects that will come together in two to three years: a railway to the port of Djibouti, a large motorway that runs alongside the railroad, the dam to generate cheap electricity and a light rail line in Addis Ababa.

“It’s a jigsaw puzzle that is only just starting to come together,” says Zemedeneh Negatu, a partner at Ernst & Young Ethiopia.

Financial repression

But the tension between ambition and the funding reality is ever present.

Ethiopia’s debt levels are still low. But when vendor financing is factored into deals, such as the loans for the telecoms upgrade being carried out by Chinese companies Huawei and ZTE, the picture is less clear.

“These are only projected liabilities. The huge [$2.4bn] loan from China EximBank has not actually yet been approved because the Chinese government is also concerned about Ethiopia’s ability to repay,” says Guang Chen, the World Bank country director for Ethiopia.

“To support this developmental state, they are going to have to find more resources domestically,” he argues.

Just like China, South Korea and Japan before it, finance is the steering wheel for Ethiopia’s developmental state.

Ethiopia engages in what Shane Shepherd of Research Affiliates calls financial repression.

It is “a set of policies that keep real interest rates low or negative and regulate a captive audience into investing in government debt, resulting in cheap funding,” he says.

Hence the Ethiopian government’s policy that caps interest rates and another that requires private sector banks to spend 27% of their loans on government bonds that go towards building the Grand Ethiopian Renaissance Dam.

Alongside getting cheap funding for infrastructure, the government argues that the private sector leaves financing gaps and is unable or unwilling to invest in manufacturing.

“Look at Ethiopian private banks – all their loans go to services and trade,” Premier Hailemariam says. “They are not giving long-term loans to industry and infrastructure. So you have to have policy banks which can give low interest rates and support industrial production.”

Young spenders

Anecdotally, it might be working. Addis Alemayehu, a managing partner at advertising agency 251 Communications, is starting up a company to take advantage of two things: incentives for companies in the manufacturing sector and the huge young population that is starting to have some discretionary spending power.

“There are more university students here than the population of Djibouti. Imagine all these people buying soap for the first time,” says Addis.

But he says finance is still a problem: “You could have a purchase or- der from God himself, you still wouldn’t get the finance.”

Privately, officials accept they need to do more to create national champions that will become globally competitive.

At the 2 April presentation of the GTP at the United Nations Economic Commission for Africa office in Addis, the International Monetary Fund, World Bank and various diplomats stood up for private sector interests, with no representatives from either the private sector or the Ethiopian Chamber of Commerce in attendance. This told its own story.

Others say the emergence of private sector companies will take place quickly.

Helen Hai, who launched the Chinese shoe company Huajian’s factory in 2012, recalls: “When the first South Korean textile factories opened in Bangladesh, Daewoo trained up 200 workers. After two to three years, half of those had left to set up small manufacturing facilities.”

http://www.theafricareport.com/East-Horn-Africa/ethiopias-farms-and-finance.html

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Visa pushes for more access to barely-tapped Ethiopia

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By Richard Lough

ADDIS ABABA, May 26 (Reuters) – Visa Inc., which is piloting Ethiopia’s first international debit card, is seeking to persuade the government to ease tight restrictions on banks in an effort to boost the use of electronic payments.

Ethiopia has one of Africa’s fastest-growing economies but few people in the Horn of Africa nation of 90 million have bank accounts and the range of services is limited.

The government bars foreign banks, saying it needs to protect domestic lenders, and local debit cards have until now not worked abroad.

Jabu Basopo, Visa’s manager for southern and east Africa, said the focus was on persuading leaders of the $43 billion economy that is dominated by state enterprise about the benefits of electronic payments.

“They are willing to try some things,” said Basopo. “They have agreed to a pilot for international cards. It is a very controlled environment.”

Users of Visa’s international card, which is being trialled by government officials, will be restricted to spending an amount that has been pre-loaded on the card. Visa said the government was pleased with the trial so far.

Basopo said local banks lacked muscle to push the central bank to drive change in an industry where the largest commercial lender is run by the state and holds two-thirds of all deposits.

He pointed to Rwanda as an example of where business-friendly reforms to liberalise banking regulations in the past four years had led to a swift deepening of the market.

“Rwanda was in a similar situation. (Now) every bank is listed to Visa. All the ATMs in the country are linked to Visa … and we’ve seen a lot of growth in terms of retailers actually accepting Visa cards now,” Basopo said.

Retail transactions in Ethiopia are primarily made in cash. Retailers say a scarcity of debit cards hinders growth in the retail sector, which is also off-limits to foreign chains.

“If you look at the main efficiencies brought by electronic payments … more money stays in the banks and the banks are able to lend that money back to retailers to do more business,” Basopo said.

Visa, the world’s largest credit and debit card company which counts 10 Ethiopian banks as members, first entered the country in 2004.

The International Monetary Fund has warned that Ethiopia’s huge public spending on roads, railways and power is suffocating private lending. It says Ethiopia should row back on public spending to allow the private sector greater access to credit.

(Editing by Edmund Blair and Erica Billingham)

http://finance.yahoo.com/news/visa-pushes-more-access-barely-114022675.html

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Ethiopia pushes retail door ajar to foreigners

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Richard Lough / ADDIS ABABA — Reuters      

http://www.ethiopiainvestor.com/index.php?option=com_content&task=view&id=5071&Itemid=88

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MIDROC Gold to start production at Sakaro gold mine

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MIDROC Gold Plc., the sole primary gold producer in Ethiopia, is to start mining gold at its second mine in the Juji zone of the Oromia Regional State in a locality called Sakaro. 

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World Bank Approves $200m Loan for Geothermal Projects

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Guang Zhe Chen, World Bank country director for Ethiopia.

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The World Bank’s board of directors, based in Washington DC, US, has approved two hundred million dollars of credit for the Ethiopian government to develop its potential geothermal sites at Aluto and Alalobad, in the rift valley of Afar Regional State, on Thursday, May 29, 2014.

The loan will be financed by the International Development Association (IDA) and Scaling-up Renewable Energy Program (SREP) of the World Bank trust fund.

“In addition to providing energy security, the project will support Ethiopia’s efforts to build a climate change resilient green economy, by developing renewable energy sources with low carbon emissions,” said Guang Zhe Chen, the World Bank country director for Ethiopia.

The finance, which will be employed to support the Geothermal Sector Development Project of the country, is envisioned to help fulfill the increasing demand for electricity by tapping into the substantial geothermal energy potentials, according to the press release of the Bank.

http://addisfortune.net/articles/world-bank-approves-200m-loan-for-geothermal-projects/

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Drinks manufacturers set sights firmly on Ethiopia

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BY Dinfin Mulupi

Beverage manufacturers are pumping millions of dollars into expanding their production capacity in Ethiopia where soft drinks and beer consumption is poised for growth.

Amsterdam-based brewer Heineken is scheduled to open a US$127m brewery on the outskirts of Ethiopia’s capital Addis Ababa in a few weeks.

Last year, Coca-Cola Sabco invested $20m in refurbishing its plant in the city of Dire Dawa and building a new returnable glass bottling line. Meanwhile, Pepsi bottler Moha Soft Drinks is setting up a new bottling plant 780km north of Addis Ababa. Through its seven operating units Moha manufactures Pepsi Cola, Mirinda Orange, 7Up, Mirinda Tonic and Mirinda Apple.

Beverages industry growing

Brooks Washington, principal at business development fund Roha Ventures, says the beverages industry in Ethiopia is “growing insanely”. Roha is setting up glass bottle manufacturing plant Juniper Glass Industries in Ethiopia to meet growing demand.

“Ethiopia has a great consumer story. It is growing so quickly but there is still so little that is manufactured locally. One of the industries that people are really excited about is beverages but right now they import almost all of the glass bottles that they use for soda and beer. Currently between 120m empty bottles are imported into Ethiopia, [yet] you have everything that you need to manufacture glass bottles in Ethiopia.”

Juniper is expected to start production in the second half of 2015 and will manufacture between 120m and 150m glass bottles every year. Roha is pumping an investment “shy of $50m” into its Ethiopian venture.

Washington explains that some beverage manufacturers have expressed interest in purchasing bottles from Juniper once it starts production.

“Soda and beer consumption levels are growing and all the leading brands are making huge investments in Ethiopia. There is clear demand. Additionally, importing glass bottles is very difficult and expensive.”

The American investor says Ethiopia is an interesting investment destination for Roha Ventures due to its fast growing consumer market, expanding middle class and rapid urbanisation.

Ethiopia is Africa’s second most populated country with more than 90m people and is one of East Africa’s fastest growing economies.

“Ethiopia has the building blocks to be able to do this business well. The electricity is cheap, land is cheap, labour is cheap and all these things make it a really exciting place to do business.”

http://www.howwemadeitinafrica.com/drinks-manufacturers-set-sights-firmly-on-ethiopia/39960/

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Weaving a New Path with Ethiopia’s First Certified Organic Cotton Cultivation

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It is an important step for the Ethiopian textiles industry, as the European market demands organic cotton

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AYCOOM Agricultural Development Plc has secured 10,000ha of land in the South Omo Zone of the Southern Region. It will now start the first certified organic cotton cultivation in the country at a cost of 815 million Br.

This company, formed by a 55pc share from Ayka Addis Textile & Investment Group and a 45pc share from Omo Valley Agricultural Development Plc, will largely supply Ayka’s demand for organic cotton. Omo Valley is a company owned by the Amibara Business Group, which has already been supplying cotton to Ayka for the past six years from its 13,000ha of land in different parts of the country.

AYCOOM signed a land lease agreement on Tuesday, March 25, 2014, with the Gnangato and Hamer woreda administrations. Construction work on the workers camps had, however, already begun, according to Amare Teklemariam, CEO of Ayka. The agreement will have AYCOOM pay 158 Br a hectare a year for 25 years.

The total cost of the project may depend on the technology to be deployed on the farm, but the feasibility study puts it at 815 million Br, according to the CEO.

The need for organic and quality cotton has pushed the textile company, which sells most of its products in Europe, to engage in such a venture, says the CEO. Currently, there is no certified organic cotton farm in Ethiopia, according to the Ethiopian Textile Industry Development Institute (ETIDI).

The other reason for this move is the increasing foreign exchange that the Company is spending on organic cotton imported from abroad. The Company spent 72.5 million Br for the import of organic cotton in 2013 alone.

“This will also enable the Company to be an end-to-end producer, integrating its production processes,” says Amare.

The Company will also get its cotton from the Cotton Made in Africa Project, through farmers in Metema – 900km from Addis Abeba, in the North Gondar Zone of the Amhara Region. Ayka signed an agreement with the Metema Cotton Producers’ Union and member associations on Friday, March 7, 2014, for the supply of 50,000qts of cotton in the 2014/15 harvest season.

Garment made from organic cotton has a greater demand in the global market and could fetch better prices, saysYared Mesfin, cotton and textile marketing director at the ETIDI.

“There was not enough market for organic cotton in the country and the process of certification is cumbersome and costly for small-holder farmers,” said Assefa Aga, general manager of the Ethiopian Cotton Producers, Ginners & Exporters Association (ECPGEA), explaining the reason for the absence of organic cotton farms in the country.

Organic cotton farms cannot use manmade fertiliser and pesticides above a certain threshold level.

AMIBARA has been engaged in agriculture for the last 15 years; it comprises of 11 different companies as subsidiaries, with around 700 million Br capital and 3,000 permanent and 10,000 temporary workers. Its subsidiaries include – Gelista Agricultural Development, Middle Awash Agricultural Development Enterprise, Amibara General Aviation Service, Addis Modjo Edible Oil Complex and Amibara Agrochemicals.

The business group has been supplying cotton to Ayka since the textile Company first became operational in 2008. This has led to the partnership, according to Amare.

“We have been using their cotton for the last six years and we are happy with their performance,”Amare said.”They run some of the biggest cotton farms in the country.”

The business group believes that its expertise in cotton production will enable it to effectively run the farm, says Yusuf Omer (Sheikh), directing manager of the business group.

Amibara is hoping to access loans from the Development Bank of Ethiopia (DBE) and the Commercial Bank of Ethiopia (CBE).

There seems to be a trend with big textile companies in the country investing in cotton cultivation, with the list including Adama Textile, Elyse Textile and Almeda Textile. Such companies are trying to minimise the risks in cotton market volatility, says Yared.

“In the short run, this kind of process integration can solve the raw material problem in the market,” he said.

Yet this development will not pose a threat to already existing cotton farms, according to Assefa.

“There will not be a problem for existing cotton producers, as there is shortage of cotton in the market,”he said. “Even though major textile companies are beginning cotton production to secure their input.”

In the last harvesting season, 2012/13, 55,000ha of land were covered with cotton and 35,000tns of produce was collected, according to the ECPGEA. Total cotton production stood at 79,710tns in the 2011/12 harvest season. Ethiopia expects to import around 20, 000tns of cotton in the current fiscal year, in order to cover the growing demand from the textile industry, according to the ETIDI.

The Institute is trying to rectify problems in the industry by increasing productivity and working on modernising marketing practices, according to Yared.

http://addisfortune.net/articles/weaving-a-new-path-with-ethiopias-first-certified-organic-cotton-cultivation/

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US to Open Trade Liaison Office in Ethiopia

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Penny Pritzker, US Secretary of Commerce, said her country has made plans to open a trade liaison office in the capital of Ethiopia in order to facilitate commercial ties with Ethiopia.
Pritzker told President Mulatu Teshome her country is keen to strengthen the two nations’ trade relations. She added the opening of the office will boost the bilateral trade relations. In addition to this, she said, it will help to jointly solve commerce related problems.
Acording to the EH, the Secretary further noted US investors are interested in investing in Ethiopia’s renewal energy.
On his part Mulatu said Ethiopia is eager to boost the long standing diplomatic relation of the two countries. He added the economic and trade ties should also be strengthened.
Mulatu also raised the need to extend the AGOA program which provides African countries with the opportunity to export their products to the U.S without any tax. The program will expire in 2015, according to the current schedule.
Mulatu said Ethiopia has not fully utilized this opportunity for different reasons. But now Ethiopia has been building its capacity over the past years in order to compete in the international market and took other measures, it will be able to export more quality products to the U.S.

http://www.waltainfo.com/index.php/explore/13585-us-to-open-trade-liaison-office-in-ethiopia

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Tendaho Sugar to be inaugurated, Indians blamed for delay

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Shiferaw Jarso, director general of Ethiopia’s Sugar Corporation, under a ministerial portfolio lamented the performance of the Indian companies involved in the construction of Tendaho Sugar Factory that is due to be inaugurated in two weeks, far behind its schedule.

The Ethiopian government signed an Engineering Procurement Construction (EPC) contract with an Indian company Overseas Infrastructure Alliance (OIA) for the construction of the Tendaho Sugar Factory and the expansion of Fincha and Wonji Sugar factories on January 10, 2007. The project was enabled by a loan of 640 million dollars from Exim Bank of India; of which 400 million dollars was for the construction of the factory while the remaining was to be used for the expansion of the Fincha and Wonji sugar factories.

“We fell in their hands due to our need for finance”, Shiferaw said with an obvious frustration, adding that “this is the result of poverty.”

His made the remark at a press conference with local journalists who visited the 10 sugar factories under construction.

Answering questions as to why the Tendaho project delayed, Shiferaw gave an extended account of the whole process in which he handed the biggest share of the blame to the Indian companies involved.
[The quotes here is a translation as the original comment was made in Amharic]

We had no capital to finance the project by ourselves at the time. Hence we searched for foreign finance and the Ex-Im bank of India agreed to provide it. However the government of India has demanded for an Engineering Procurement Contract (E.P.C) as a precondition for releasing the loan. We did that since we had to get the loan. There is a lot that can be said about the Indian [financing] system but cannot be said in official venue. Any way the company was chosen thanks to the precondition and started selecting its own vendors instead of those we chose already. Secondly, there was disagreement and an extended legal battle between the companies. The main problem is their desire to get the export incentive given for Indian companies with overseas contracts. Their internal conflict was a reason for more delay.

In an E.P.C contract, the contractor delivers a final output completing the tasks. There is no role for us. But we were forced to intervene between them, mediating payment quarrels and supervision. They say they received the materials and hide it from us when we go to check due to their own problem. We could have cancelled the contract based on the agreement but to cancel the contract at that stage is a problem. It’s their fund hence it will only delay the project more. There is no gain for the nation from that. The government has considered that option at one point. There was a consensus on canceling and on our ability to finance it ourselves but was dropped after consideration of the relationship between our nations.

They are very difficult, in my experience. We can’t say all Indian companies are difficult but we found a lot of problems from our E.P.C. Anyhow we now finishing. Therefore, the answer to your question is Yes it will be completed at the end of this month (June 8). …Most of it is completed. I was there last week. There can be a 2-3 day delay in testing but it will definitely be completed up to Ginbot 30 (June 8). That’s our estimate. I talked a lot about Tendaho because it is a frequent question.

I hope it will be completed, i think it will. We will see what happens together. If my word fails…better to see it together.

He, however, admitted there was a lack of capacity with the government to manage these “difficult” companies even though that was “not their duty” in the framework of an Engineering Procurement Contract (E.P.C), in which the contractor is responsible for the project up to delivery. We are also responsible for the year and half delay caused due to flooding at the beginning of the project, he said.

Replying to a question about the Indian contractor failing to pay the wage of Ethiopian employees:

“They (Indians) are difficult on issues of payment. We had to fight and even make them pay on the spot. We fell in their hands due to our need for finance; this is the result of poverty. We would have done it ourselves If we had the money at the time” [Translation mine]

The first phase of the project is now complete and expected to be operational in two weeks, according to the corporation. The factory will be able to produce 619,000 tons of sugar and 63,000 cubic meter of Ethanol per year at full capacity after completion of the second phase making it the biggest in the continent.

http://hornaffairs.com/en/2014/05/28/ethiopia-tendaho-sugar-inaugurated-india-blamed/

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Oromia plans to reap over 208 mln quintals of agricultural output

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Preparations that enable to reap 208.5 million quintals of agricultural output in the upcoming Meher (production) season are underway in the Oromia Regional State, according to the state agriculture bureau.

Bureau Governemnt Communication Process Owner, Abera Lemma, told WIC the stated volume of crop will be harvested from the 6.12 million hectares of land which the state set to cover with various types of seeds.

Similarly watershed development activities were carried out on 3.3 million hectares of land during the past nine months of this budget year, according to Abera.

More than 8.2 million people took part at the watershed development activities which include planting of tree seedlings, terracing and fencing, among others, he said.

In order to carry out successful watershed development, short term training was provided to 16,477 development agents, 32,685 leaderships and 3 million farmers, he added.

http://www.waltainfo.com/index.php/explore/13570-oromia-plans-to-reap-over-208-mln-quintals-of-agricultural-output-

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EPRDF: Economic success is due to the firm hand of Meles Zenawi

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The May 28 victory has brought success in development and democracy in Ethiopia, said a statement by Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF).

As Ethiopia marks Derg Downfall Day, it is worth recognizing some of the impressive achievements made during the past 23 years, says the statement.

It is also indicated that Ethiopia ranks among the 10 fastest-growing economies in the world, averaging over 10% GDP growth over the last five years.

Ethiopia has already attained the Millennium Development Goals (MDGs) for child mortality and is on track for achieving them in gender parity in education, HIV/AIDS, and malaria.

Much of this economic success is directly due to the firm hand of the late leader Meles Zenawi who is considered the main architect of the drive to modernize this country of 90 million people.

His determination is best reflected in the ambitious Renaissance hydro-electric dam project that ultimately will make Ethiopia a regional power exporter by the turn of the decade.

His successor, Prime Minister Hailemariam Desalegn is continuing along the same lines. The government’s current five-year development plan (2010/11-2014/15), the Growth and Transformation Plan (GTP), is geared towards fostering broad-based development in a sustainable manner to achieve all the MDGs.

The GTP also envisions a major leap in terms of not only economic structure and income levels, but also the level of social indicators.

The current annual GDP growth rate of 11% is being benchmarked as a base figure, but plans are to double the size of the economy by 2015, with GDP per capita expected to reach $698 by 2015.

The Derg, (basically a military junta), came to power after ousting, Haile Selassie I, the former Emperor of Ethiopia from 1930 to 1974.

On May 28, 1991, the Derg, led by Mengistu Haile Mariam, was finally toppled by a coalition of forces under the umbrella of the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF).

http://hornaffairs.com/en/2014/05/28/ethiopia-eprdf-may-28-development-democracy/

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Textile Industries-University Forum Established

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Ethiopia established an Industry-University Forum to enhance the growth and textile industries by increasing the number of qualified human labour for industries, Ethiopian News Agency reported.

Industry State Minister, Tadesse Haile, said creating chain among the industries and universities is critical to generate qualified labour to the industries thereby improving their effectiveness and competitiveness.

In addition to this, the forum will enable universities to engage in researches that can be executed and transform industries to a better level.

The newly established forum is expected to create opportunity for jointly run activities between universities and industries to have a good management.

The Forum has established some 10 zonal structures for the leather-industry-university ties and 6 structures for textile industry-university ties.

http://www.2merkato.com/news/alerts/2997-ethiopia-textile-industries-university-forum-established

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Bole International Airport to Install New Baggage Handling System

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The Ethiopian Airports Enterprise (EAE) announced it is going to install a new baggage handling system (BHS) at the Bole International Airport. EAE said the new BHS is to be built at the cost of 92 Million Birr and the construction will commence on September 2014.

According to the Enterprise’s Public Relations and Communication Office Head, Wendim Teklu, the current BHS was installed 12 years ago and can only handle 1,500 bags per hour. Nevertheless, the proposed BHS can handle up to 6,000 bags per hour.

Wendim noted passengers that pass through Bole International Airport have increased from 900,000 to 6.5 Million. Tumber is estimated to reach 20 Million by the year 2017. The number of airplanes that are being accommodated have also rose to 45 airplanes from 19 airplanes in a single day.

In addition to installing a new BHS, a design work for the expansion of the passengers’ terminal is completed and the construction work will begin soon.

http://www.2merkato.com/news/alerts/2991-ethiopia-bole-international-airport-to-install-new-baggage-handling-system

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Ethiopia says may delay joining WTO to protect service industries

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By Binyam Tamene

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ADDIS ABABA (Reuters) – Ethiopia may delay plans to join the World Trade Organisation in 2015 if the country is required to liberalise its tightly regulated telecoms and banking industries sooner than it would like, the trade minister said.

Kebede Chane told lawmakers late on Tuesday that member countries had raised dozens of questions with Prime Minister Hailemariam Desalegn’s government, focusing on the time frame for opening up the service sector to international competition.

Ethiopia’s fast-growing market of 90 million people has lured foreign investors from Sweden, China and Turkey to its manufacturing sector. But laws deny outside firms access to areas viewed domestically as cash-cows or politically sensitive.

“A lot of issues are being raised regarding the service sector,” Kebede said in parliament, referring to the telecoms, banking and power industries. “We are being asked to clarify our timetable for privatising these sectors.”

Addis Ababa, with its strong state-interventionist policies, has one of sub-Saharan Africa’s fastest growing economies and its fifth biggest.

But it has spurned the liberalising approach of other African markets to shield its infant private sector from foreign competition and to keep profits at home.

Reuters revealed this week that Ethiopia – once run by communists – was pushing the door ajar to outside investors by offering management of government-owned enterprises while leaving the state in full control. [ID:nL6N0OC2RQ]

U.S. retail giant Walmart told Reuters Ethiopia offered a “compelling growth opportunity”.

STATE CONTROL

Other big brands are prising open the door in areas opened up by the government. Drinks giant Diageo DGE.L bought a brewery and fashion retailer Hennes & Mauritz makes garments in Ethiopia. Trade officials said last year that Unilever and Nestle were both sniffing around.

However, Ethiopia has held onto control of its telecoms monopoly and kept foreigners out of retail and banking.

A U.S. management consultancy firm this week announced its deal to run Ethiopia’s just-launched state-owned cash-and-carry chain, the first such concession in the retail sector. [ID:nL6N0OD3K2]

Kebede said Addis Ababa was under pressure to deepen reform to liberalise its service industries before the conclusion of its current five-year economic plan ending in 2015.

“We need to give serious thought to this issue,” Kebede said. “Right now, our economy is small and still needs to develop a lot.”

The minister cited Asian powerhouse China, which he said took 50 years to accept membership into the global trading club.

New WTO rules adopted in 2012 lowered the bar for joining for the world’s least developed countries. They allow members to open fewer sectors, liberalise fewer types of transactions, and only open up their markets as their economies develop.

“We are now looking into which laws are compatible with WTO’s regulations and which are not. We are taking one step at a time. As a result, membership might not be completed (in 2015),” Kebede said.

http://sodere.com/profiles/blogs/ethiopia-says-may-delay-joining-wto-to-protect-service-industries

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Sur Construction Handed 2.1 Billion Br Tigray Road Project

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Tadesse Yemane (Left), general manager of Sur, is promising to deliver the construction of the road even before the stated time to Zaid Woldegabriel, general director of ERA

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Despite being just 53kms in length, the cost is high due to the difficult nature of the terrain

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Sur Construction has landed a 2.1 billion Br project for the design and construction of a 53km road in the Tigray region.

The contract, signed on Thursday May 22, 2014, covers a segment of  the 275km road project from Maytsemri to Frewoyni, which is ongoing in four phases. Sur has been awarded the third phase, from Tekeze River to Abadi.

Phase one of the project has already been finalsed by Gemshu Beyene Construction Plc, who are already at work on the second phase – an 87km segment for which it will be paid  777 million Br. Another company is undertaking the fourth phase, a 101kms road, for 874 million Br.

“The third phase of the project is divided into two because of the difficult terrain,” according to Samson Wondimu, communications head at the ERA. “The first one is awarded to Sur; a contractor will be selected for the remaining 34kms during the next fiscal year.”

The projects are part of the ERA’s fourth Road Sector Development Program (RSDP IV).

The consultant for Sur’s project is Towers Consulting Engineering, a local firm.

The Tekeze River-Abadi road project will connect Maytsemri and Hauzen – two detached Tigray cities. The total cost of the project will be funded by the government of Ethiopia.

The road has a 10mt carriageway width within town limits and a seven metre carriageway width in rural areas. The project will include overpasses and bridges, as well as drainage pipes, and it is expected to be finalised within three years, according to the statement of the ERA.

The contract was signed between Zaid Woldegabriel, the ERA’s general director, and Tadesse Yemane, general manager of Sur Construction Plc , at the ERA’s headquarters on Ras Abebe Aregay Street, near Mexico Square.

“As the terrain is difficult for construction, I hope Sur will start the construction of the road before the rainy season comes and becomes an obstacle,” Zaid said.

This is the 40th project for Sur with the ERA; it has so far finalised 37 projects.

Tekeze Hydro Electric Power, Tis Abay II Hydro Electric Power, Semen Terminal-Karalo Asphalt Road, Merawi-Gondar asphalt road, Humera Air Field and Mekelle University are the major projects Sur has undertaken for the ERA, according to the company’s website.

Over the past five years, the ERA has worked on the rehabilitation of 728 km of trunk roads and the upgrading of 5,023kms of trunk and link roads. It has also carried out the construction of 4,331 km of new link roads and maintained 4,700kms of asphalt and gravel roads.

http://addisfortune.net/articles/sur-construction-handed-2-1-billion-br-tigray-road-project/

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World Bank Cash Injection Takes Total Loans to Record High

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From left to right: Guang Zhe Chen, World Bank Country Director for Ethiopia , Sisay Gemechu, state minister for Industry and Ahmed Shide, state minister for Finance and Economic Development.

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The latest loans will help to finance industrial zones, a geothermal project and, potentially, the Modjo-Hawassa highway

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Latest and expected  injection of 430 million dollars from the World Bank to Ethiopia is bringing the country’s total loans for the year to a record high of 1.64 billion dollars.

Ethiopia’s loans from the Bank, coming through the International development Association – the Bank’s interest free facility for 80 of the world’s poorest countries- have been growing by hundreds of millions of dollars every year for the past few years, They have shot up from 640 million dollars in 2011 to 974 million dollars in 2012 and 1.15 billion dollar in 2013.

The latest figure of 1.64 billion dollars is believed to be the largest sum the Bank has ever extended in a single fiscal year to a client country, in this modality.

One of the latest loans, a 250 million dollar agreement signed on May 20, 2014, is the first time the Bank has forwarded financing for industrial zones in Africa. The financing goes towards attracting investment and improving enterprise competitiveness and productivity in targeted industrial zones at the Bole Lemi and Kilinto sites. The second loan, a 180 million dollar agreement also expected to be signed this month, will go towards financing a geothermal project.

“We are investing in the industrial zones because it is a basic instrument in the industrialisation process of the country and it is what is required of a country that aspires to join the middle class,” Guang Zhe Chen, World Bank Country Director for Ethiopia, who signed the agreement with Ahmed Shide, state minister for Finance and Economic Development (MoFED), told Fortune.

The bank believes this investment will enhance the competitiveness of the country, even though prior investments in the sector have had mixed results at best, according to Guang.

“There is only one industrial zone that is fully operational at this time and it is the eastern industrial zone, which is still not fully occupied despite its establishment five or six years back,” he said, adding that he has concerns with the gap in the legal framework and institutional capacity to enable effective and successful implementation of the project that the Bank will finance.

The loan for the geothermal project, through the Geothermal Sector Development Project (GSDP), will bring the total current loans and grants portfolio of Ethiopia to around six billion dollars.

The World Bank is also likely to provide financing in the range of 250 million dollar to 300 million dollars for the 218km Modjo to Hawassa Highway. The government has been looking for financing since 2011, targeting the Africa Development Bank(AfDB), the World Bank, China and Korea as possible sources. The African Development Bank extended a 126 million dollar loan in December 2013 to finance a 56km segment of the 93kms from Modjo to Ziway; the other section is supported by the Korean EXIM Bank. The World Bank’s loan is still in the making, though, according to Guang.

There are 39 countries in Africa which are to benefit from IDA loans; Ethiopia’s credit portfolio at the Bank is exclusively facilitated by the IDA.

Since its inception, IDA credits and grants have totaled 161 billion dollars, averaging seven to nine billion dollars a year in recent years and directing the largest share, about 50pc, to Africa, according to documents from the bank. Ethiopia gets the lion’s share from that.

The IDA loans finance primary education, basic health services, clean water supply and sanitation, environmental safeguards, business-climate improvements, infrastructure and institutional reforms. The IDA has supported 150 projects in Ethiopia to date, including 25 that are now active.

http://addisfortune.net/articles/world-bank-cash-injection-takes-total-loans-to-record-high/

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Environmental Network Seeks Solar Dissemination in Ethiopia

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Participants of the national workshop held at Gullele botanic garden.

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The solar products are intended to be used predominantly for lighting and mobile phone charging

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The Horn of Africa-Regional Environment Centre & Network (HoA-REC&N) is looking towards a third attempt to procure 10,000 solar lanterns for distribution in Amhara, Oromia and Tigray.

The Centre, an autonomous institution under the Addis Abeba University (AAU), is a body that promotes more than 40 higher learning institutions and research centres, endigenous civil society and community based organisations in Djibouti, Ethiopia, Kenya, Somalia, South Sudan and Sudan. It held a National workshop on May 19 and 20, 2014, at the Gullelle Botanic Garden, on the dissemination of solar energy technologies in Ethiopia.

The workshop was organised in collaboration with the Energy & Resource Institute of India (TERI) to discuss challenges and market availability for solar powered products in Ethiopia.

Participants came from the federal Ministry of Water Irrigation & Energy (MoWIE) and six regional water & energy bureaus, as well as the National Bank of Ethiopia, NGOs, solar product suppliers and researchers.

The Network has twice tried to buy the lanterns it intends to distribute to the regions,  Araya Asfaw (PhD), the executive director told Fortune. Both tenders failed, however, because of the high prices offered by suppliers. He did not specify the time, but a third tender is in the pipeline. This project is supported by the European Union Energy Facility, and the lanterns are expected to be distributed in September 2014.

The lanterns will allow mobile phone charging. The project will also include establishing 20 solar mini grid shops mainly to recharge the distributed lanterns for household lighting, Asfaw said. That is to complement the small panels on the lanterns, which require 12 hours of charging for just six hours of lighting.

The mini grid shops will be run by TVET students, who will receive training for that purpose, Asrat said.

The workshop had four private businesses displaying the solar powered products they had imported for sale. A supplier told the workshop that one of the problems facing the solar products sector in Ethiopia was that the government did not have enough awareness and expected to buy state-of-the art products for a cheaper price than they were actually worth.

Most of the products displayed included mainly solar lanterns and home lighting systems. One company displayed a solar powered cooker it made in Ethiopia.

http://addisfortune.net/articles/environmental-network-seeks-solar-dissemination-in-ethiopia/

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Farmers return to coffee as global demand hit new highs

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As global demand for coffee reaches unprecedented highs, Kenyan farmers are replanting what they uprooted decades ago due to its poor returns and this time even the government is keen to reap from the international demand.

In the 1980s Africa produced about 30 percent of the world’s coffee, but today, going by current statistics, it only accounts for 13 percent, a far cry from its potential according to data from the Ministry of Agriculture.

According to International Coffee Organization, Ethiopia with 7.45 million bags in 2010 was lead producer, followed by Uganda with 3.1 million, Ivory Coast with 2.2 million, Tanzania 917,000 and Kenya 850,000. Coffee is the second most traded commodity in the world after oil with an estimated value of $80 billion annually.

A reality check on the performance of most African producer countries indicates that all is not well as evidenced by recent statistics that the continent produced an estimated 17 million bags in 2010. This accounts for only 13 percent of the global coffee production compared to 30 percent in the 80s. In Kenya despite the good prices and government interventions, coffee production has remained low averaging between 40,000 metric tones and 55,000 metric tonnes.

“In 10 years the supply gap will be 30 million bags. This is a big opportunity for farmers in the country to increase production and earn more from their produce,” said Coffee Board of Kenya Managing Director Ms Loise Njeru. The government projects to introduce coffee production to 100,000 metric tonnes according to Vision 2030. This however will still be below the peak of 130,000 metric tonnes achieved in 1988/89.

World coffee prices are expected to remain high for over 10 years according to experts with supply falling below demand last year. About 158 million bags of coffee were consumed in the world in 2010 compared to 159 million bags the previous year.
In 2010 the country received Sh16 billion, an improvement from Sh10 billion registered the previous year. Coffee earned the country Sh22 billion in 2011. “We have witnessed crazy prices at the Nairobi Coffee exchange. Speculation may correct this in the long run, but the prices will not come to the low levels they were due to constrained supply,” said Mr. Kennedy Gitonga an economist at Coffee Research Foundation.

He said the Columbian mild which is similar to Kenya’s coffee will be coming to the market in few years after maturing, which will tilt the coffee market with added supply. However prices will be stabilized by rising demand, estimated at 2.5 percent per year.
Mr. Gitonga said Kenya could exploit the anticipated decline in coffee production in the world, by taking measures to mitigate the effects of climate change and increasing production per tree. “Kenya has no carryover stocks, even in times of high supply, indicating that local coffee is highly sought after at the world market,” he said.

And as researchers brace for challenges associated with the climate change, they are advising farmers to introduce measures that ensures that production is not reduced. Some of the challenges expected are new diseases and insects, drought and floods. Coffee Research Foundation, the body charged with carrying out coffee research in the country has advised farmers to initiate primary farming practices that have long been forgotten, to cushion the crop from the vagaries of nature.”The threat of climate change is real and the time to act is now to avoid being caught up a few years down the line. That is why we shall factor in climate change in our development of new varieties,” said the director of research Mr. Joseph Kimemia.  Among the measures cited by the research body include plating coffee friendly trees to keep the crop shaded. Planting grass strips in coffee rows and regular pruning are others.

Tree shaded Mr. Kimemia said can reduce temperature by 4 degrees Celsius while the other measures can hold more water for the plant. Firms like Kakuzi have reduced acreage of coffee to reduce risks as production plummeted. They have converted some of the land under coffee to mango growing.

But with the fast growing markets in China, India and Brazil, global supply of coffee is expected to be in a tight supply situation for several years and Africa has an opportunity to increase its production, the meeting convened for African coffee producer states and which deliberated on how to increase production and consumption noted.

A growing middle class in these countries that is increasingly taking to drinking coffee, has led to reduced exports from some of the traditional coffee growing countries. There are other emerging markets like Russia that the continent could use to increase exports. The continent with an estimated population of 1 billion also has a potential to increase local consumption but also has to increase value addition and produce brands for local and export markets.

However Kenyan coffee is a favourite in the global scene where it is purchased to blend produce from other countries.  This demand is rekindling hope to thousands of farmers who had previously abandoned the crop due to poor returns.

That coffee sector is on the road to recovery can be seen from the eyes of  farmer Jeremiah Muthomi of Meru Greens who says that in parts of Eastern and Central where his firm has contracted out growers, farmers have gone back to coffee on parcels where they were growing horticultural produce. “With the current coffee boom, farmers have started replacing horticulture with coffee trees,” he said.
Elgon Kenya Ltd is positioning itself to be a lead supplier to the coffee industry following the encouraging developments.

But on the flipside of all this interesting developments, local consumption remains low. Compared with other continents, Africa has an average consumption of only 750 grammes per person per year. In Brazil consumption is at 2.8 kilos. Ethiopia which is the top producer in Africa consumes nearly half of its produce while in Kenya only 3% is consumed locally. Algeria, Morocco, South Africa and Egypt which are non producing countries have a combined demand of 3.5 million bags every year and growing.

A coffee expert from Brazil Mr Carlos Bando, said the continent needed to invest in local consumption habit surveys to understand their needs in a bid to encourage more consumption. According to ICO, coffee consumption is estimated to be growing at 2.4 percent per year, and in 2010 the volumes were 158.2 million bags, a slight drop from the 159.2 million in 2009.

Among the reasons raised in the meeting for low coffee productions were concerns that farmers were aging and that it was necessary to encourage the youth to be active in reviving the crop. “We have to find innovative ways to encourage the youth to participate in growing coffee. Coffee has to appeal to the youth and has to be fashionable and trendy,” said Mr Ishak Lukenge from Uganda.

He said a youth programme had been initiated in his country where tournaments are organized around coffee, where youths plant coffee and discuss the crop before tournaments.

http://www.farmbizafrica.com/index.php?option=com_content&view=article&id=1074:farmers-return-to-coffee-as-global-demand-hit-new-highs&catid=10:market-trends&Itemid=144

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Heated human waste to heal Kenya’s sick soil

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Written by Bob Koigi for Farmbizafrica

A researcher is exploring various methods of increasing soil nutrients to Kenya’s tired soil including burning human waste at higher degrees and mixing it with urine in what is seen as a cheaper alternative to conventional fertilizers whose prices have hit sky high.

Leilah Krounbi a Ph.D. candidate in the field of crop and soil sciences has been working on a method of increasing soil nutrient dubbed pyrolysis

The use of pyrolysis, thermal combustion in the absence of oxygen, of woody materials to produce biochar has been hailed as a potentially powerful tool to capture carbon and add it back into soils. The transformation of sewage sludge into a “bio oil” for energy has also been studied.

Krounbi wondered if pyrolysis could also be used to turn human waste into fertilizer. So she teamed up with crop and soil sciences professor Johannes Lehmann and joined the Climate Foundation and Sanergy – a latrine project based in Nairobi, to answer the Bill & Melinda Gates Foundation’s “Reinvent the Toilet” challenge.

The urea in urine is high in nitrogen, and feces contain a lot of phosphorus – both nutrients that are lacking in many soils. By burning feces at temperatures between 200 degrees C and 500 degrees C, the waste matter could be converted into solid, sanitized biomass. Soaking that biomass in urine, either before or after pyrolysis, would add nitrogen.

Krounbi is trying to figure out the right mix and optimal pyrolysis temperature, while also studying logistics and its effectiveness in the field. There are several challenges to overcome, such as the conversion of nitrogen in urea to ammonia.

“There is a lot to consider as I’m looking at how to take human waste and turn it into something useful. While serious soil degradation is a problem, it’s not being remedied with inputs ” Krounbi told her peers at a Department of Crop and Soil Sciences seminar.

Her experiments have been fueled by Fido. Krounbi collected dog feces from for her studies. While her initial findings have been promising, Krounbi said she is looking forward to testing her methods in the field and measuring the results in Kenyan soils and crops.

“The rural dilemma is a dearth of nutrients, including carbon, nitrogen and phosphorus. The urban dilemma is excess nutrients – human waste going to waste,” Krounbi said. “This could provide a way to close the urban-rural nutrient cycle and char away the dilemmas.”

http://www.farmbizafrica.com/index.php?option=com_content&view=article&id=1171:heated-human-waste-to-heal-kenya-s-sick-soil&catid=20:crop-types&Itemid=142

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Africa Hotel Investment Forum drops Nairobi and shifts to Addis Ababa

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By Prof. Dr. Wolfgang H. Thome, eTN Africa Correspondent | Jun 02, 2014

http://www.eturbonews.com/46487/africa-hotel-investment-forum-drops-nairobi-and-shifts-addis-aba

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Moving Women Out Of Poverty In Ethiopia

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Author:  Masha Hamilton, VP for Communications, Concern Worldwide U.S.

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http://www.trust.org/item/20140602182619-vqetx/?source=search

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Ethiopia: World Bank Approved cash to Develop Potential Geothermal Sites

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Photo:  In 2013, Ethiopia has entered into a deal worth $4 Billion with American-Icelandic Company, Reykjavik Geothermal, for the development of a 1000-megawatt geothermal farm.

Ethiopia has a huge wealth of renewable energy including a potential 45,000 MW from Hydro Power, 10,000 MW from geothermal energy in Oromia, Afar and Somali regional states.

The Ethiopian heavy investment in renewable energy including wind, solar and hydropower is part of its climate resilient green economy strateg

Ethiopian Electric Power Corporation CEO, Miret Debebe, said the geothermal project would also boost “trade with neighbouring countries.”
The World Bank’s board of directors, based in Washington DC, US, has approved two hundred million dollars of credit for the Ethiopian government to develop its potential geothermal sites at Aluto and Alalobad, in the rift valley of Afar Regional State, on Thursday, May 29, 2014.

The loan will be financed by the International Development Association (IDA) and Scaling-up Renewable Energy Program (SREP) of the World Bank trust fund.

“In addition to providing energy security, the project will support Ethiopia’s efforts to build a climate change resilient green economy, by developing renewable energy sources with low carbon emissions,” said Guang Zhe Chen, the World Bank country director for Ethiopia.

The finance, which will be employed to support the Geothermal Sector Development Project of the country, is envisioned to help fulfill the increasing demand for electricity by tapping into the substantial geothermal energy potentials, according to the press release of the Bank.

U.S.-Africa Energy: The U.S. Secretary of Energy, Dr Ernest Moniz, will lead a high-level U.S. official delegation to the forthcoming U.S.-Africa Energy Ministerial meeting from June 3 to June 4 in Ethiopia.
The Africa Regional Media Hub of the U.S. Department of States said in a press statement in Lagos that the delegation would meet with northern and sub-Saharan African energy ministers.
The listed U.S. officials on the delegation to include Dr Rajiv Shah, Administrator of the U.S. Agency for International Development, and Mr Fred Hochberg, Chairman of the Export-Import Bank.

`The Ministerial will also bring together representatives from government, private sector, and academic communities to discuss best practices and technologies for sustainable energy development in Africa.

http://www.geeskaafrika.com/ethiopia-world-bank-approved-cash-to-develop-potential-geothermal-sites/3698/

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US-Africa Energy Ministerial Conference opens

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Addis Ababa, 2 June 2014 (WIC) - The US-Africa Energy Ministerial Conference opens today (June 3) in Addis Ababa.

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The Conference, jointly hosted by the Ethiopian Government and the US Administration, is focusing on the theme of “Catalyzing Sustainable Energy Growth in Africa” and will provide a forum for commitment to support energy development throughout Africa.

The meeting is bringing together ministers from sub-Sahara and North African countries, as well as senior U.S. government officials, multilateral development partners, regional and sub-regional African energy organizations, academia, civil society, and U.S. and African private sector leaders.

It is providing opportunities for government-to-government, government-to-industry, and company-to-company informational exchanges, and networking on a variety of topics including clean energy technologies, increased power generation, rural electrification, regional integration, oil and gas development, policies and regulatory issues, investment opportunities, and financing.

The meeting will provide a showcase for energy development and explore strategies, detailing effective practices across Africa and the United States for accelerating the development of clean energy sources and the adoption of energy efficient technologies as well as reviewing best practices in oil and gas resource development, and highlighting progress on the President Obama’s Power Africa Initiative.

According to Ministry of Water, Irrigation and Energy the two day conference will dwell on making Africa’s energy supply reliable. The conference will be attended by Energy Ministers from around Africa and US officials, and representatives of US financial institutions and energy companies. Discussions will focus on improving Africa’s energy development capacity, networking African countries in energy export and sale, making Africa’s political and legal framework conducive and on financial alternatives for energy development along with investment on energy.

The African Energy Ministerial will also include panel presentations, high-level plenary sessions, break-out discussions, and a minister-level meeting as well as featuring a U.S.-Africa Energy Expo Center where U.S. and African companies can highlight technologies and business solutions.

http://www.waltainfo.com/index.php/editors-pick/13617-us-africa-energy-ministerial-conference-opens-tomorrow

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Fertilizer plant inaugurated

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A fertilizer factory built in Tulu Bolo, Oromia Regional State, with a cobined capital of 31.2 million birr was inaugurated yesterday.

The factory, with a capacity to produce 100 metric tons fertilizer per year, is believed to play a pivotal role towards increasing agricultural productivity of farmers.

The three fertilizer plants being built in Tigray, Amhara and SNNP Regional States are well in progress, it was noted. (FBC)

http://www.waltainfo.com/index.php/explore/13619–fertilizer-plant-inaugurated-

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Nation Earns 90 million USD from Export of Agricultural Products

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Ministry Working to Enable Companies Export Value Added Minerals

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 Efforts are being exerted to improve capability of companies that supply value added ornamental minerals to local and foreign market, the Ministry of Mines said.

The State Minister Tewodros Gebre’egzabher told ENA that activities have started to increase number of companies that produce ornaments and improve their capacity.

Companies that are exporting valued added minerals are few in number, he added, amount of value added minerals the country exports is also small. The country is adding value to only 20 percent of the total mineral products.

The Ministry is working to increase variety of value added minerals during the coming year, he said. It has decided that rough opal export should be stopped in the coming year, the last year of the first growth and transformation plan period.

Activities are being undertaken to improve capability of exporting companies by helping them import the necessary technologies which enables them add values to rough minerals, he said.

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Enterprise to Construct Five Airports

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The Ethiopian Airports Enterprise announced that it has completed preparation to construct five new airports in various parts of the country.

The airports are going to be built in Semera, Robe, Shire Endasilase, as well as Hawassa and Jinka towns in Afar, Oromia, Tigray and South Ethiopia Peoples states respectively, said Wendm Teklu public relation and communication head with the Enterprise.

The construction of these airports will enable to realize the goal set in the growth and transformation plan to raise number of airports to 21.

In addition to constructing new airports, the Enterprise is also undertaking upgrading in existing airports to improve their capacity, Wendm said.

Expansion has carried out on six airports over the past years with an outlay of 205 billion Birr.

The expansion works were carried out in Jijjiga, Jima Aba Jifar, Assosa, Semera, Bahir Dar and Mekele airports.

The expansion includes construction of passengers’ terminals, taxiways and cold warehouses.

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Ethiopian Launches Direct Flight to Vienna

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Ethiopian has started direct flight to Vienna, the capital city of Austria, and its 82nd international destination.

Speaking at a ceremony organized in connection with the opening of the new route, Ethiopian Chief Operating Officer, Mesfin Tasew said the airline began flying to Vienna as it is a diplomatic seat of various nations and United Nations offices. In addition, it is named a heritages city by UNESCO and has huge flow of tourists, he added.

First Secretary and Deputy Head of Mission of Austria’s Embassy in Ethiopia, Lydia Ladurner, said on her part the direct flight will strengthen the socio-economic ties of the two countries.

Lydia noted that as Ethiopia and Austria are countries of huge tourist attraction and where diverse activities are undertaken, the air route would strengthen the people to people relations of the two countries.

The flight to Vienna has increased the destination cities of the airline to Europe to 9, it was indicated.

Above items sourced here:  http://213.55.98.22/enae/index.php?option=com_k2&view=itemlist&layout=category&Itemid=187

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Prime Minister Hailemariam Says Turkey Contributes to Ethiopia’s Development Narrative

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Prime Minister Hailemariam on Friday (May 30) opened the Ethiopia-Turkey Trade and Investment Forum in Addis Ababa. Welcoming a Turkish business delegation of 86 people representing 63 companies, he said the Government of Ethiopia strongly supported concrete initiatives for unimpeded trade and investment to achieve mutual benefit and win-win progress. He emphasized that the developmental state’s right mix of policies and strategies had placed Ethiopia on the roads to renaissance, rejuvenation and prosperity. He noted Ethiopia was committed to create an enabling business and investment climate to fast-track the momentum and resilience of its economic development. Its engagement with the Confederation of Businessmen and Industrialists of Turkey (TUSCON), he said, was an “edifying experience” allowing it to much experience from the development of Turkey.

He said Turkish companies had become major contributors to Ethiopia’s remarkable economic growth and its development narrative, adding that TUSCON’s c engagement with Ethiopia, the established market networks of Turkish companies and their immense experience in manufacturing and other priority areas would pave the way for collective rejuvenation and development of Ethiopia and Turkey. The Prime Minister also welcomed the establishment of Turkish educational institutes in Ethiopia and appreciated Turkey’s commitment to join hands with the Government of Ethiopia to improve and raise the quality of education. He said Ethiopia greatly valued the importance of quality education and considered it as a necessary and solid foundation to Ethiopia’s sustainable development. Mr. Rizanur Merel, President of TUSCON, described Ethiopia as “a shining star of Africa” and a state committed to maintain the momentum of economic development with large scale investment and business potential for international investors. He emphasized that TUSCON was ready to share successful experiences in the fields of manufacturing, agriculture, construction, and energy.

He suggested that both sides should advance and reinforce efforts to encourage people-to-people relations and cultural exchanges to enhance mutual understanding and expand further cooperation. Solomon Afework, President of the Ethiopian Chamber of Commerce and Sectoral Association (ECCSA), gave details of the continued growth in trade and investment relations, and noted that the total trade turnover between the two countries had reached over US$550 million last year, up from US$110 million in 2004. He said Turkey had become one of the five leading sources of investment in Ethiopia, and he called on both sides to strengthen existing ties and diversify and enhance economic cooperation. Aklilu Wolde-Mariam, Director of Information at the Ethiopian Investment Agency, explained that Ethiopia was now a champion of political and macro-economic stability, endowed with ample investment opportunities, incentives, services and transparent legal frameworks to protect investors from expropriation or nationalization. At the close of the forum, the Ethiopian Chamber of Commerce and Sectoral Association and the Confederation of Businessmen and Industrialists of Turkey signed a Memorandum of Understanding on ways to expand further economic and investment cooperation between the two business communities. The Forum was also attended by senior government officials and representatives of the Ethiopian and Turkish business communities here in Ethiopia.

http://allafrica.com/stories/201406022011.html

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PM – Ethiopian Aptness Improving to Foreign Investment

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Ethiopia’s suitability to foreign investment is improving, said Prime Minister Hailemariam Desalegn.

The premier opening theEthio-Turkey Trade and Investment Forum in Addis Ababa on 30 May 2014 indicated that the foreign investment is increasing in Ethiopia which testifies the country’ suitability to attract foreign investors.

From Turkish manufacturing sector, 70 investors discussed with Ethiopian government high officials on 30 May 2014 in Addis Ababa at the Prime Minister’s Office concerning investment opportunities in this country.

Hailemariam indicated that Turkish investors participating in Ethiopia are contributing to its development.

Though India and China investment projects are larger in number in Ethiopia, Turkish are superior in Capital amounting to more than 7 billion USD, he said.

In addition, trade exchange between Ethiopia and Turkey has grown to 550 m USD now where it was 110m USD 10 years ago.

Though the trade exchange between the two countries is encouraging, it needs more growth, the premier said.

Turkish Confederation of Businessmen and Industrialists president, Rızanur Meral told the participants that it is not rules and regulations which facilitate investment, but implementation.

In addition to incentives to investment, wide opportunities in export trade makes Ethiopia preferable, said Ethiopian Chamber of Commerce and Sectoral Association president, Solomon Afework.

http://allafrica.com/stories/201406022262.html

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Sufian Ahmed Likely Candidate for AfDB Presidency

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Sufian Ahmed, Ethiopia’s long serving Minister of Finance and Economic Development (MoFED), was among the six likely candidates whose names surfaced during the recently concluded annual summit of the African Development Bank (AfDB) as a potential candidate to run for the presidency of the African Development Bank (AfDB) group.

Donald Kaberuka, the current President of the Bank, will be leaving his post of the last ten years by the end of this year. The other candidates expected to run for the top job include: Birma Boubacar Sidibe, Vice President of the Islamic Development Bank (IDB), Samura Kamara, Sierra Leoone’s Minister of Foreign Affairs, Jalloul Ayed, Tunisia’s former Minister of Finance, Kordje Bedoumra, Chad’s Minister of Finance, and Akinwumi Adesina, Nigeria’s Minister of Agriculture and Rural Development.

Big shoes to fill

Donald Kaberuka is a Glasgow educated economist who was the Minister of Finance and Economic Planning for eight years from 1997 to 2005 in his native Rwanda and is globally credited for stabilizing the Rwandan economy in post 1994 genocide that deprived his country of its finest academicians, as well as its ordinary citizens.

In July 2005 Donald Kaberuka was elected president of AfDB and took office the next September. Under his leadership the pan-African institution, which will celebrate its 50th year Golden jubilee come November, was in 2013, rated “Aaa/Prime-1, with a stable outlook,” by Moody’s, which further said, “The Bank’s ratings reflect a combination of its intrinsic financial strength, prudent financial management and policies and very strong shareholder support.”

This is despite the bank operating from exile starting from two years prior to the coming of Donald Kaberuka as its president. AfDB moved its headquarters to Tunis, Tunisia, in 2003 following the civil war in Cote d’Ivoire, where it was housed since it was first established. In 2012 Donald Kaberuka announced the first group of staff will begin returning to Abidjan, Ivory Coast’s second-largest city, by the end of the year. “The AfDB will celebrate its 50th anniversary in November 2014 in Abidjan,” Kaberuka said in a statement.

Donald Kaberuka hosted the Bank’s annual summit, his last, in his country Rwanda in the third week of May this year and reassured the Ivorian government when he told his audience, “there is no doubt in my mind, and yours, that the safe return to Abidjan is the most important undertaking for us in the next year.”

‘Veteran’

In his position for more than 20 years, Sufian Ahmed is known to many as a ‘veteran’ who supervised his country’s finance through thick and thin. He is also credited for brining a galloping inflation that had picked a high of more than 50% in the aftermath of the 2005 disputed election to its current single digit. He is also the man who has helped Ethiopia achieve the double digit economic growth that put the country as one of the top five non-oil producing fast growing economies in the continent.

However, Sufian is known to many as a non-socializing individual and lacking in his grip of continent-wide dynamics of socio-political affairs. His lack of other languages widely used in the continent, particularly French, one of the working languages of the bank, is also considered a big minus for his candidacy if he decided to put through his name when the nomination for the post will be formally tendered this July. Sufian holds bachelor’s degree in economics and master’s degree in economic development and planning from the country’s grand university, the Addis Ababa University (AAU).

Along with the European Bank for Reconstruction and Development (EBRD), the Inter-American Development Bank (IAfDB), the Asian Development Bank (AsDB), and the World Bank (WB) AfDB brings the number of multinational development banks in the world to five.

http://allafrica.com/stories/201406020736.html

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Once known for its series of devastating famines that affected millions of people in the 1980s, Ethiopia is today portrayed as an attractive investment destination with immense potential. It is Africa’s second most populous nation with 91m people and one of the fastest growing economies in the region with a booming middle class.

Ethiopia is also well endowed with resources. One of its key attractions is the agriculture industry thanks to the country’s large and fertile tracts of land.

Investors and companies looking to expand in East Africa have their eyes set on Ethiopia, but many complain about the difficulties of entering and doing business in the country. For starters, Ethiopia is landlocked and relies on sea access from the port of Djibouti, described as one of the most expensive ports in the world. Investor concerns also include bureaucracy, difficulty in accessing foreign currency and government control on many processes.

The World Bank’s 2014 ease of doing business report ranks Ethiopia 125 out of 185 economies. According to the report, Ethiopia has adopted reforms in areas such as access to electricity and in the legal realm. However, it is still a difficult place in which to do business when it comes to accessing business licences, establishing a company and trading across borders.

Brooks Washington is the principal at business development fund Roha Ventures, which is setting up a glass bottle manufacturing plant in Ethiopia. For the last 18 months, Washington has been concentrating on setting up Juniper Glass Industries. He tells How we made it in Africa that Ethiopia was an attractive investment destination for the fund because the beverages industry there is “growing insanely”, driving demand for glass bottles.

A lot of curiosity

Washington says he sees more and more investors keen on doing business in Ethiopia, but there is a big gap between those who are curious about the country and those who actually invest.

He explains that there are a lot of unknowns about Ethiopia which make people “sceptical”.

“I have worked and set up businesses all over the continent. I don’t know if it’s harder or easier [to do business in Ethiopia compared to other African countries]. I would say it is just different,” he says.

“The government has a vision for where that country is going and I think their vision is exciting and it’s right, but it also means that they are very clear and prescriptive about what you do and how you do it. So wading through some of the bureaucracy can be challenging, but I think it is very rewarding at the end of the day.”

Worth the trouble  

Doing business in Ethiopia can be a “pain” because of the processes, but Washington says it is “worth” the trouble. For instance, he explains, the Ethiopian government owns all the land in the country and people have to lease it. Getting a lease can be a time consuming process that involves negotiations with the federal and local governments.

“It took us a long time to get the land… but now we have over 10ha in a great industrial area with a long-term lease and very attractive rates. So it is completely worth the process. If you follow the process and you have patience and you are very persistent, then I think it is completely worth it.”

The language barrier can also be a challenge for foreign investors. Washington explains that in other parts of Africa people speak English, French or Portuguese, languages that “westerners are more comfortable with”. In Ethiopia, however, people speak Amharic. Although a good number of the population is also fluent in English, Washington says communication can be difficult.

He advises people interested in doing business in Ethiopia to have “a change in mindset”.

“The rigidity of processes in Ethiopia is surprising to many people. There are no shortcuts [and] there is not a way to make [things] faster. I think that can be really challenging. You need a different perspective.”

Washington notes that many difficulties of doing business in the country are possible to work around with a little bit of “creativity and persistence”. On the plus side, he adds, Ethiopian authorities “really go out of their way to help” investors.

Also:  http://www.foreignpolicy.com/articles/2014/05/29/where_to_invest_around_the_world_2014_edition_bpi

Sourced here  http://www.howwemadeitinafrica.com/trouble-of-doing-business-in-ethiopia-worth-the-rewards-says-investor/40057/

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Investment Agency to Report Direct to the Prime Minister

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-  New bill see the evolution of powerful investment board with composition not yet defined.

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Fitsum Arega, director general of EIA.

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The administration of Prime Minister Hailemariam Desalegn is soon to introduce a sweeping restructuring at the Ethiopian Investment Agency (EIA), hoping to transform it from a mere permit and licensing entity to a nucleus where the attraction of foreign direct investment (FDI) is directed, source disclosed to Fortune.

A bill has been tabled to Parliament last week, introducing amendments to the existing proclamation, which includes provisions that open industrial development zones to private investments. This has been an area that was exclusively given to the state or carried out in a joint venture with it.

The bill sees changes including the redrawing of the Agency’s governance structure from reporting to the Minister of Industry direct to the Prime Minister, these sources confirmed.

The flow of FDI to Ethiopia remains one of the lowest in the world, even when compared to Ghana and Kenya, as well as India’s six billion dollars and China, which had 10 times larger than India’s. And its share to the GDP is seen on a decline lately. At two percent, what Ethiopia gets from the inflow of foreign capital to its GDP was far less than China’s 3.9pc and Vietnam’s 5.7pc.

“It’s clear that there is an opportunity to improve the promotion of incoming foreign investment,” says a study carried out by the World Bank in 2012, surveying what impedes investment to Ethiopia.

One significant drawbacks is the federal agency entrusted with this task “has limited influence and autonomy in the investment promotion sphere, and there is limited coordination with regions,” according to a new study conducted by Monitor Deloitte, a subsidiary of Deloitte, one of the four largest global audit and consulting firms. Jointly commissioned by EIA and the Agricultural Transformation Agency (ATA), the firm has completed a 45-page study and presented it to the Prime Minister’s Office few weeks ago.

Many of the changes soon to come to the Agency led by Fitsum Arega, a young technocrat who climbed the stairs of power, is advised by recommendations from this study, according to those involved in the process. The study is seen as an icebreaker to roll the changes at the Agency, although there was a desire to do that earlier, according to an aide in the Prime Minister’s Office.

With its designation changed from “authority” under the Proclamation enacted in 1996 to “agency” under the yet to be amended law, and to “Commission” under the proposed amendment, the governance structure of the investment agency is one of the changes under the bill.

In a return to the trend under the investment law that was repealed and replaced by the recent one eight years ago, the bill includes three organs that comprises the investment administration with the addition of investment board to the list under the proclamation to be amended.

Nonetheless, details on the board composition, its powers and duties as well as meeting procedures are not included. These were present in the repealed proclamation years back. It was the Prime Minister who was chairman of the board, a practice which will soon see a comeback.

“EIA is unable to influence or take key decisions in the investment process, and is perceived to lack autonomy,” finds the study by Monitor Deloitte.

The Agency is not currently, “visible or influential enough, and requires more authority and power,” according to the study. It is a federal agency, with an old and shabby headquarters on Africa Avenue (Bole Road), undermined by uncoordinated decentralisation of the duty to chase foreign capital for the realisation of the nation’s potentials, the study finds. Besieged by poor logistics that limited its staff provide in-house services, the investment process at the Agency is not “sufficiently transparent and efficient.” Many of its 250 staffs are “lacking skill and expertise,” while they are paid an amount Monitor Deloitte finds “too low.”

“Employees have limited knowledge on the government’s policies, economic and sector priorities and the overall strategy of the Agency,” says the confidential study.

Neither has the Agency equipped with information technology infrastructure, which the study sees will take it more than a year to acquire.

The study strongly recommends that the federal investment agency should be made, “more visible in the national architecture, and requires backing from the highest government office in Ethiopia to execute its mandates in other states.”

The Administration appears to have bought these recommendations. In a separate brief presented to MPs, alongside the bill, authors of the restructuring suggest that “monitoring and supporting to directly administer the development of the industrial zones through a board that shall be led by the Prime Minister will speed up” and attract industrial investments within a short period of time and increase the manufacturing of export goods.

The board will have the authority to write directives outlining the duties and rights of investors in these industrial zones. The bill has introduced a significant change from the existing proclamation, granting the board powers – such as granting of new or additional incentives other than what is provided under any previously existing regulation – which are currently assumed by the Council of Ministers, the highest executive organ in the federal government, also chaired by the Prime Minister.

Under the bill, the investment board can authorise the opening up of investment areas for foreign nationals, otherwise exclusively reserved for domestic investors. Members of the private sector and those in the academia have been calling for a progressive investment regime that allows opening of restricted areas and additions of incentives.

This is a move from a relatively stringent and strict investment regime to a discretionary investment regime, for experts in the area. A lecturer at the Addis Abeba University (AAU) in public finance and investment sees the existing investment regulation as restrictive and highly technical.

“It micro-manages the sectors,” he told Fortune. “Foreign investors have had to tip toe through these restrictions.”

However, if the proposed amendment is to be ratified and become part of the law, it will enable the regime to be flexible enough to treat individual investment issues separately in accordance with the nation’s policy priorities. Such an open ended power scheme should not be left without caution, the lecturer reckoned.

“Anything discretionary can also be arbitrary,” he told Fortune. “As good as it may get, the decision making process should be anchored around the fundamental policy objectives of the country.”

He sees the evolution of a board overloaded and become bogged down in entertaining large number of investors’ claims and appeals.

However, the bill tabled to Parliament tries to emulate the experiences of Rwanda, where the president has so much say, as in Malaysia and Nicaragua.

http://addisfortune.net/articles/invest-agency-to-report-direct-to-the-prime-minister/

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KKR Makes Maiden African Investment

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Kohlberg Kravis Roberts has moved into, for it, uncharted territory with its first-ever investment in Africa.

The private-equity giant has taken a stake in Ethiopia’s Afriflora, which grows roses for sale in the European market. Nor is KKR alone: P.E. investment in sub-Saharan Africa jumped 43% last year, to US$1.6 billion.

KKR will invest about US$200 million from its European fund in Afriflora. The money will be used to increase the company’s size by two-thirds and to add some 5,000 employees. The farm’s founders, a Dutch family named Barnhoon, will continue to manage the operation and will remain investors in the company.

“We see Africa as a long-term attractive investment destination,” KKR’s head for the continent, Kayode Akinola, said. “The potential is astounding. But the work to get there is going to be considerable.”

KKR added Kayode from Helios Investment Partners last year. He will join Afriflora’s board, along with another KKR executive, Matteo Bozzo.

https://www.finalternatives.com/node/27234

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Minister of Agriculture visits Japan

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Ethiopian Minister of Agriculture, Tefera Derbew, visited Japan from 27 to 31 May upon the invitation of the Government of Japan.

According to a statement the Embassy of Japan sent to WIC today Tefera was accompanied by Fitsum Arega, Director General of the Ethiopian Investment Agency (EIA).

During his visit, Tefera met with several, Ministers and high ranking Japanese government officials, such as the Minister and the Senior Vice Minister of Agriculture, Forestry, and Fisheries, the Vice Minister of the Ministry of Foreign Affairs, the President of the Japan International Cooperation Agency (JICA), and the Executive Vice President of the Japan External Trade Organization (JETRO).

The main event during his visit was the Agro-Business Seminar and B2B Session on 29 May, which was co-organized by JETRO and the Embassy of Ethiopia in Japan.

More than 200 participants from related Ministries, private companies, business people, and Development Partners attended the Seminar. Tefera made a keynote speech at the Seminar, and also chaired one of B2B sessions.

The agenda included food value chains in Ethiopia, Trade and Investment potential in the Agriculture and Agro-Processing Sectors in Ethiopia, the status of private sector investment and future trends in Ethiopia, and B2B meetings.

Tefera also visited the suburbs of Tokyo to see Japanese style suburban farming, and made several visits to various agricultural laboratories, such as the National Agriculture and Food Research (NARO) center and the Japan International Research Center for Agricultural Sciences (JIRCAS).

Tefera, expressing his appreciation for the invitation from the Government of Japan, concluded that this visit was meaningful and successful for both countries, and that each program during this visit would further strengthen the bilateral economic relations between Ethiopia and Japan, through the enhancement of Agricultural relations. He also expressed his gratitude to the Japanese companies that showed interest in doing business in Ethiopia.

http://www.waltainfo.com/index.php/explore/13675-minister-of-agriculture-visits-japan

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Ethiopian, Japanese Companies Agree for Joint Venture

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Participants of the recent Ethio-Japan Agro Business Seminar held in Tokyo agreed for joint ventures in food and agro business areas, the Ministry of Foreign Affairs said.

Over 115 Japanese and Ethiopian companies engaged in agro business, flower and sesame production took part in the seminar, a press release the Ministry sent to ENA said.

Agriculture Minister Tefera Derbew said on the occasion that trade relation between Ethiopia and Japan is not as such strong.

But Ethiopia’s export of agricultural products to that country is showing progress over the past few years.

Japan is among the major development partners of Ethiopia, said Ethiopian Ambassador to Japan, Markos Tekle. The development endeavors supported by JICA demonstrated this fact.

The seminar helps to strength relation between companies of the two countries in food and agro business areas, he said.

http://www.ethiopiainvestor.com/index.php?option=com_content&task=view&id=5106&Itemid=88

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US-backed scheme lines up investors for African energy projects

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Private Sector Involvement on the Spot Light During Ministerial Meeting

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The US-Africa Ministerial Meeting focused on issues of private sector involvement, new approach for rural electrification, energy efficiency and how to continue working with Obama Power Initiative.

During a joint press conference Alemayehu Tegenu, Water, Irrigation and Energy Minister, said the Ethiopian government has highly benefited from hosting the meeting and further commented it was successful.

Alemayehu also spoke of the issues that were discussed during the meeting. He said discussions were made on the issues of private sectors’ participation, new approach for rural electrification and energy efficiency.

According to the Minister, participants of the meeting assessed and explored with US Secretary of Energy, Ernest Moniz, on how to continue working with Obama Power Initiative. He added, “Totally, I can say the objective of our conference is fully completed in a very successful way”.

On his part Moniz said, “We were very pleased that the collaboration was excellent. The meeting was extraordinarily successful. The Prime Minister’s presentation emphasizes the risks in Africa from climate change were well spoken”.

The meeting stressed on the tremendous resources in Africa- renewable resources, natural gas being developed strongly and oil as well.

Moniz further noted the issue of climate was well discussed for Africa’s clean energy resource should be developed.

http://www.2merkato.com/news/alerts/3013-ethiopia-private-sector-involvement-on-the-spot-light-during-ministerial-meeting

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U.S. Works With Ethiopia on Renewable Energy

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United States of America has disclosed that it wants to work on renewable energy production in cooperation with Ethiopia.

The country’s Energy Secretary, Ernest Moniz talking to Premier Hailemariam Desalegn in Addis Ababa, at AU Headquarters said that Ethiopia will be exemplary to Africa allowing the private sector to participate in renewable energy production.

He also expressed that Ethiopia has performed successfully on development projects carried out in cooperation with the United States.

Moniz said United States will continue working in providing finance which is the impediment for the private sector’s participation in renewable energy production.

Prime Minister Hailemariam Desalegn expressed that Ethiopia still needs the support of United States on rural electrification, capacity building and integrated infrastructure development.

Ethiopia has the capacity to generate 37 thousand megawatts of energy from water, wind, solar and geothermal sources by 2037.

http://www.ethiopiainvestor.com/index.php?option=com_content&task=view&id=5107&Itemid=88

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Import Solution as Malt Factory Faces Barley Shortage

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-  The rapid growth of Ethiopia’s beer industry has led to the increased demand for malt

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The newly expanded Assela malt factory, which is having a hard time getting malt barley from local sources, is turning its eyes towards the international market.

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The Assela Malt Factory’s investment of 300 million Br, intended to halt the import of malt, has ironically forced its management to import 260,000qls of barely at an estimated cost of 272.5 million Br, Fortune learnt.

Located on the outskirts of Assela town in the Arsi Zone, Tiya Woreda of the Oromia Region, the factory assumed that it would get its inputs from the surrounding areas, famed for their barley production.

However, the contemplated amount of barely supply in the expansion project is not flowing all year round. This has presented the Company with the risk of running out of stock in two months time.

“The domestic supply has basically stopped, yet the factory needs 40,000qls of malt barley every month to continue production,” said Amare Wakjira, managing director of the Assela Malt Factory. “We need to have a secured channel of supply; otherwise the situation is not sustainable.”

The factory normally gets more than 90pc of its domestic barley inputs through traders who collect the crop from smallholder farmers in the Arsi zone of Oromia Regional State and the Sidama zone in the Southern Regional State. Nonetheless, the factory tries to encourage farmers’ cooperatives and unions to supply it directly, according to its strategic plan.

But the domestic supply has not proven to be reliable, especially in recent years. Consequently, the factory has imported barley in the past, most recently last year.

Even though the extraction amount of imported barley is better, the locally produced barley also has its own merits in terms of better taste, experts in the industry agree.

The Company currently buys a quintal of local malt barley at a cost of 900 Br to 1,050 Br, depending on the quality of the product. Whereas, the management plans to import barley from abroad at around 1,048 Br a quintal, including transportation costs up to the factory gate, Amare said.

Officials from the Agricultural Bureau of Oromia Region have various reasons for the shortage of malt barley, according to him.

“They believe that there is a hoarded harvest by the farmers and we are looking into this possibility with them,” the manger told Fortune.

If the supposedly hoarded product does not materialise, the management has decided to order the import of around 260,000qls of barley, which will see it through until the next harvest season in January. But this will go ahead after the approval of the board of directors of the Company, which is expected to happen within a month.

The Malt Factory needs more than 600,000qls of raw malt barley to produce 360,000qls of malt in a year.

“If we didn’t import the barley and produce malt, the beer factories would import the malt directly, with which they are covering more than 60pc of their demand already,” the manager of the factory, which employs about 260 workers, noted.

According to data from the Ethiopian Revenue & Customs Authority (ERCA), 5,425tn of malt was imported in 2003 at a cost of 2.8 million dollars. This number had grown more than 15 fold by last year, forcing the country to spend 47.3 million dollars on the import of malt.

Established 30 years ago, the factory has been the sole supplier of malt to the local beer industry, the production capacity of which has reached about four million hectolitres. This, in turn, has raised the demand for malt by the industry to 99,540tns, in 2011/12.

This was before the coming of the Gondar Malt Factory of the Tiret Endowment Investment Organizstions (TEIO). Established with an investment of 670 million Br, in Gondar, in the Amhara Regional State, the factory has a production capacity of 16,200tns of malt a year. Close to three quarters of its produce is for its  sister company, Dashen Brewery.

There are five companies, namely – BGI Ethiopia, Harer Brewery Share Company, Bedele Brewery Share Company, Meta Brewery Factory and Beer Garden – that buy malt from the factory.

Assela Malt Factory sold close to 220 quintals of malt worth 345 million Birr to these five companies in 2011/12. BGI Ethiopia, producer of Saint George beer, was the main buyer, taking 56pc of the total sales in 2011/12.

Barley is the fifth most important cereal crop in the country after maize, wheat, teff and sorghum, and it is produced on about one million hectares of land. Of the total barley production of 1.7 million tonnes in 2010/11, Arsi and Bale contributed close to 20pc.

Yet, this has not resulted in a sustainable supply of barley to the malt factory in the locality. Nega Wubeneh, senior director of Value Chain Programs at the Agricultural Transformation Agency (ATA), criticises the uncoordinated value chain in crop production for this.

There are also farming differences between wheat and barley on the level fields of the Arsi and Bale lands, according to Nega.

Since the production of wheat is more economically reasonable, with higher yields in amount and price, farmers prefer to plant wheat. Therefore, high yielding malt barley seeds must be distributed and buyers should give a better price for the farmers with future market if possible, to change the trend.

There are at least two projects that have been initiated by two international brands operating in the country to help solve the malt barley shortages.

Deageo – owner of the Meta breweries and Heineken breweries, which acquired the Harar and Bedele beer factories – have started production improvement programs of malt barley on small holder farms in tthe Sebeta and Arsi areas of the Oromia Regional State. This has been done in collaboration with the Ministry of Agriculture and the ATA over the last two years, even though the results are not enough to satisfy the factory’s demand.

http://addisfortune.net/articles/import-solution-as-malt-factory-faces-barley-shortage/

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HPR Ratifies Loan Agreements

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The House of Peoples Representatives (HPR) ratified on Thursday (June 5) three draft bills.

The HPR , in its 36th regular meeting, endorsed the 50-million-Euro loan agreement between Ethiopia and France. The loan would be used for the implementing the project for installation of high electric power transmission lines.

The agreement, besides enhancing the social and economic development of the country by significantly increasing electric power  qualitatively and quantitatively, will hugely contribute toward achieving the power expansion and distribution goal of the Growth and Transformation Plan.

Furthermore, it would remarkably boost power supply to industrial areas and enable villages without power supply to access electricity.

The House also ratified over 20-million-Euro loan agreement for the execution of the dry waste disposal project of Addis Ababa city.

The agreement signed between Ethiopia and France would enable to construct dry waste disposal area for the city. The loan agreement will help move the over 50-year-old disposal site from Qoshe-Repi.

Similarly, the HPR approved the 208.5-million-USD loan agreement between Ethiopia and the International Development Association.

The loan would improve the program in road sector and support the organizational structure of the sector, it was indicated.

All the loan agreements were ratified after the House checked that they are consistent with the loan strategy of the country.

http://213.55.98.22/enae/index.php?option=com_k2&view=item&id=2161:hpr-ratifies-loan-agreements&Itemid=260

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Norway Extends 17.4 million USD to Ethiopia

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The government of Norway yesterday donated over 17.4 million USD to Ethiopia through UNICEF and UNFPA to support the adolescent and youth development program.

Norwegian Ambassador to Ethiopia Odd-Inge Kvalheim signed the agreement with representatives of UNICEF and UNFPA.

The finance is aimed to fund the second phase of the program being implemented by the government of Ethiopia and the two partners.

Over 400,000 at risk adolescents and youth between the age of 10-24 will be benefitted from the four year program being carried out in 30 selected woredas of Addis Ababa and five regional states, namely Amhara, Oromia, Tigray, Afar and South Ethiopia.

The Norwegian government extends this fund seeing the encouraging results gained from the implementation of the first phase of the program, said the Ambassador.

Director of the Federal HIV/AIDS Prevention and Control Bureau Birhanu Feyssa on his part said the fund will help to reduce vulnerability of at risk youth and adolescents for new infections.

UNICEF Representative for Ethiopia Peter Salama said Ethiopia has managed to reduce prevalence of new HIV infections to 1.3 percent, which he said is encouraging.

http://213.55.98.22/enae/index.php?option=com_k2&view=item&id=2159:norway-extends-174-mln-usd-to-ethiopia&Itemid=260

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Garment Growth With Middle Eastern Company’s $80m Deal

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-  With sector performance little over a half of GTP targets, continued growth is crucial

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Upon joining the growing textile sector of the country, the Company has been granted a loan amounting to a quarter of its establishment cost, by the Development Bank of Ethiopia (DBE).

The Company, which has already secured 100ha of land in Mekelle, the capital of the Tigray region, 780km north of Addis Abeba, in order to erect its factory, is expected to commence construction in a few months, according to Taddese Haile, state minister at the Ministry of Industry (MoI).

Delegates of the Company, which supplies its products to renowned international stores like Target, Gap and Wal-Mart, were in town last week for final talks with government officials from the Ministry and the Ethiopian Textile Industry Development Institute (ETIDI).

The construction of the integrated garment factory is planned to be undertaken in three phases. The first phase of construction, which will be dedicated to garment production, is expected to be finalised a year after its commencement. The finalisation of this phase will cost the Company 30 million dollars.

Established in 1990 with a turnover of 100 million dollars in 2013, the company secured the loan from the DBE two weeks ago. To secure the loan, it has provided the Bank with the necessary documents, including the 30pc equity from the total investment cost of the first phase of the project, Sileshi Lemma, director general of ETIDI, told Fortune.

The Company, which will export almost all of its products to its already established markets, has requested a bonded warehouse customs duty service when it becomes operational.

The government has accepted the request in principle, according to sources.

Ten new factories with a combined production capacity of 100tns a day are also expected to start production during this fiscal year. An additional three new projects are expected to start production by 2014/15, according to Sileshi. This is in addition to six ongoing expansion projects in the textile industry.

Among these, the most recent to join the sector wass SVP Textiles Plc, from India.

The Company have started the construction of a 10-billion Br textile plant on a 50ha plot within the Kombolcha Industrial Zone, in Kombolcha town of the Amhara regional state, this year.

Despite all this development, the industry that now comprises of 115 textile factories and 40,000 workers, was only able to earn 52pc of the 111 million dollars that it was supposed to achieve in the first half of the year, according to the Institute. The target for the year is set at 317 million dollars.

The underutilised capacity of existing factories is still a big problem in the industry, according to an expert, who talked to Fortune on condition of anonymity. Factories in the textile sector are currently only utilising around 60pc of their production capacity, he said.

Around 99 million dollars worth of textile products were exported in the last fiscal year. This number is expected to reach one billion dollars by the end of the Growth & Transformation Plan (GTP) period, which is only one year away.

With a per capita fiber consumption of roughly one kilogram – far below the world average of 8.7 kg and the African average of 3.2kg – the country has great potential, which needs to be used properly, according to a research conducted by the African Growth & Opportunity Act (AGOA), three years ago.

http://addisfortune.net/articles/garment-growth-with-middle-eastern-companys-80m-deal/

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Samsung’s First Printer Assembly in Africa Inaugurated

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Last Monday witnessed Tana Communication Plc and Samsung Electronics East Africa inaugurating Samsung’s first printer assembly plant in Africa.

During the inaugural ceremony Tana’s CEO, Sium Adugna, said that in addition to creating job opportunities the plant will facilitate Ethiopia’s efforts in knowledge and technology transfer.

Sium further noted the establishment of the plant will minimize the production of printers which in turn will make Samsung printers competitive in Ethiopia.

Through his representative Robert Nigeru, Iso Samsung Vice President, said the opening of the plant is a sign for Samsung’s commitment to build Africa’s information and communication technologies capacity.

Robert further noted, his company will bring printer assembly engineers from Korea in order to equip local talent with necessary skills for running the assembly.

The products of the assembly are the first printer models of ML-2160, SCX- 3405W, ML5015ND and SL-M3820D which are Mono and Multi function printers.

Currently the plant has the capacity of assembling 70 printers per day.

http://www.2merkato.com/news/alerts/3014-ethiopia-samsungs-first-printer-assembly-in-africa-inaugurated

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Ethio-South African Business Forum Opens in Addis

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A three day Ethio-South Africa Investment and Business Forum opened June 01 in Addis Ababa with representatives of over 25 South African companies involved in education, health, infrastructure, manufacturing and agro-processing taking part in the discussions on possible cooperation in trade and investment.

In his welcoming address, Endalkachew Simie, Deputy Secretary General of Ethiopian Chamber of Commerce and Sectorial Association, noted that Ethiopia and South Africa had a longstanding bilateral relationship which has been strengthened by bilateral agreements in different areas including education, tourism and agriculture. In addition, he noted, imports and exports between the two countries have been growing in value and in volume.

Endalkachew said the Forum would contribute towards increasing existing economic ties between the two countries.

Stanley Subramoney, Chairman of the NEPAD Business Foundation, said Africa was at a critical juncture and the continent currently provided a new edge of opportunities. He noted that intra-Africa trade was increasing and pushing back the frontiers of poverty.

Ethiopia’s Agriculture Minister, Tefera Deribew, stressed the Forum could help elevate existing Ethio-South Africa social, economic, and political relations to a higher level through fostering strategic economic alliances and solid business partnerships.

He underlined the Ethiopian government’s commitment to make the country a real destination for Foreign Direct Investment, emphasizing that the country enjoyed a conducive business environment, political stability, sound economic policies, and macro-economic stability.

Fistsum Arega, Director General of the Ethiopian Investment Agency also noted the government’s full support and the incentives available for investment in the priority sectors. He South African businesses to make use of Ethiopia’s quota-free and duty-free access to European and other markets.

http://www.waltainfo.com/index.php/explore/13647-ethio-south-african-business-forum-opens-in-addis-

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07 June 2014 Written by  Henok Reta

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Mahamoud el-Solh (Ph.D) is the director general of the International Center for Agricultural Research in Dry Areas (ICARDA), an organization dedicated to investing in agricultural research with a special focus on enhancing productivity in dry areas.