Huawei, a leading global Information and Communications Technology (ICT) solutions provider, today announced that it has been selected as the sole provider of Ethiopia s light rail communication system in Addis Ababa, the main administrative capital of the African Union. The integrated telecommunications system will be Africa s first comprehensive commercial eLTE communications infrastructure for urban railways built with innovative eLTE technology, high-performance storage and high-definition video surveillance.
Addis Ababa, as the capital city of Ethiopia and hub for the economy and transportation, has high population density and congested traffic. Commuters using public transportation often rely on minibuses that offer infrequent service, long queues and sparsely located stations. To address this, the Ethiopian government invested US$475 million on the Addis Ababa Light Rail Transit project, which is expected to be completed by January 2015 by the China Railway Eryuan Engineering Group Company Limited (CREEC).
The first phase of this project consists of the roll out of a 31 kilometer South-North and East-West railway lines with a control center and 39 stations. Once completed, the entire railway is expected to run at 80 kilometers per hour and will be able to carry 60,000 passengers per hour. Communication plays an important role to ensure effective services and monitoring of operations throughout the entire railway system.
Ethiopian Railways Corporation (ERC) and CREEC has stringent requirements for the implementation of the Addis Ababa Light Rail Transit s communications system. This system is required to achieve high end-to-end performance and high levels of reliability and stability. After assessing the project requirements, Huawei designed a high quality full range Mass Transit eLTE Multi-Service Unified Bearer (eLTE-MT) communications solution to facilitate reliable communications with advanced technologies.
The urban mass transit communication solution includes multiple technologies such as fixed network, eLTE wireless network, high definition (HD) video surveillance, IP Telephony and IT. The subsystems facilitate dispatching, multi-service bearing, surveillance, data storage and unified communications to provide Addis Ababa Light Rail Transit with an effective three dimensional communications network infrastructure.
Huawei s wireless network subsystem adopts ultra broadband technology to support wireless dispatching, unified transmission of ticketing traffic and other traffic from services that require high bandwidth. The subsystem also supports a nine-level hierarchical QoS that provides broadband and a real-time, secure and reliable train-to-ground wireless communications platform.
6th Northern Corridor Integration Projects Ministerial Meeting held
.
Image may be NSFW. Clik here to view.The 6th Northern Corridor Integration Projects Ministerial Meeting was held yesterday (July 2, 2014) in Kigali, Rwanda.
According to MoFA, the Meeting was attended by Dr. Tedros Adhanom, Foreign Minister of Uganda, Sam Kutesa, Barnaba Benjamin Marial, Foreign Minister of South Sudan, Louis Mushikiwabo, Minister of Foreign Affairs and International Cooperation of Rwanda, Engineer Michael Kamau, Cabinet Secretary of Kenya , Dr. Richard Sezibera, Secretary General of the East African Community (EAC) and representative of the government of Burundi and other high level officials.
The meeting deliberated on the performance report of the senior officials meeting based on the directives of the 5th Northern Corridor Summit. Ethiopia participated in the meeting as an observer.
In his remark, Dr. Tedros Adhanom attributed the progress in the Northern Corridor Projects to the strong political will of the leadership of the region.
He as well hailed the vitality of the focus given to human resource development schemes in making it project oriented as vital step to boost overall capacity of the region.
He also noted the importance of infrastructure integration as a key to give further impetus to the positive growth trajectory of the East African Region. In relation to Ethiopia’s efforts within the region, he said, “Ethiopia’s mega infrastructure projects in railways, highways, hydro dams, power interconnection and telecom are contributing in a concrete way to expedite the economic integration of Ethiopia and its neighbors.”
He further noted that the northern corridor projects will complement the Lamu Port South Sudan –Ethiopia Transport Corridor Project (LAAPSSET) between Ethiopia, Kenya and South Sudan which includes road networks, standard gauge, railway, oil pipeline, oil refinery and airports thereby connecting the wider East African region with a web of infrastructure networks.
The North Corridor Ministerial Meeting approved the formal joining of the Republic of South Sudan while Burundi decided to stay as observer for the coming three months and eventually join the projects.
The projects under the Northern Corridor also rose from 8 to 14 to expedite holistic integration of countries of the Northern Corridor.
The Ministers also deliberated on the importance of diversifying finance sources to move forward with speedy implementation of the projects. http://www.waltainfo.com/index.php/editors-pick/14014-6th-northern-corridor-integration-projects-ministerial-meeting-held-
.
Government To Create Favorable Condition For Manufacturing Sector
.
Image may be NSFW. Clik here to view.
Prime Minister Hailemariam Desalegn said a favourable condition wherein local investors could engage in manufacturing would be created by removing the obstacles that hamper them from entering the sector.
Speaking at the Second National Business Conference, the premier said his government will strive to solve the problems local investors face with respect to good governance, finance, land provision, power interruptions and the like.
The government and investors should work jointly as the private sector plays a key role in the economy of the country and determines the growth of the nation, he added.
The PM said the manufacturing sector is largely left to the private investor and the government will invest only in the sectors the private investors could not embark upon.
With respect to taxation, Hailemariam stated that extensive reform works have been undertaken to establish a modern payment system and it is important to create a system in which the investor would pay tax without entering into dispute with the government.
In relation to this, the premier urged investors to meet their national obligation by keeping their accounting books in order.
The other bottleneck that has obstructed the growth of both the government and the investors is rent seeking, he noted, calling on both parties to join hands in the fight to eliminate the scourge.
Prime Minister Hailemariam Desalegn said auditors hired by the private sector and incompetent civil servants are hindrances to the tax payment system and these should be responsibly checked.
Responding to the complaint of investors about shortage of loan, the premier said government banks would lend 52 percent of the allotted amount of loan to private investors.
However, he added, there is discrepancy of supply and demand of loans as the amount of money collected from the public is low since the saving culture in Ethiopia is weak.
In spite of this, the Ethiopian Development Bank has disbursed 20 billion birr to the private sector in the last Ethiopian fiscal year, according to the prime minister. The government will set aside special loan to investors who engage in manufacturing sector, he further stressed.
President of Ethiopian Chamber of Commerce and Sectoral Associations, Solomon Afework, on his part said lack of technical capability, capital and the red tape in government offices are the factors that discourage the investor from engaging in the manufacturing sector.
He added that support of the government to the private sector is therefore essential to consolidate the industrial sector and make it competitive in export trade.
Mental Health Care Service to be Provided in All Health Institutions
.
Image may be NSFW. Clik here to view.
A system that enables to provide mental health care service in all health institutions has been established, according to Ministry of Health.
Amanuel Specialized Mental Hospital Manager, Dr. Dawit Assefa, said the provision of mental health care service in all health institutions would relieve the burden of Amanuel Specialized Mental Hospital.
Disease Prevention and Control Director, Dr. Abdissa Kurke on his part said efforts of expanding the service are being made on the basis of the National Mental Health Strategy for 2004-2007.
He said Amanuel Specialized Mental Hospital has been working in collaboration with institutions of higher learning such as Jimma, Hawassa, Haramaya, Mekele and Bahirdar universities and regional health bureaus to expand the coverage of the service.
The universities, according to him, have recruited two experts from each of the 100 health institutions around their respective localities and been providing regular and short-term training.
Leather Institute to Train Labour with First Degree
.
Image may be NSFW. Clik here to view.
The Leather Industry Development Institute (LIDI) said it has finalized preparation to open a post graduate program in footwear and leather goods production in the coming academic year. The Institute has tabled the curriculum for discussion.
Speaking on the occasion here today, Institute Director General Wondu Legesse said the Institute has been working with Science and Technology Institute under the Addis Ababa University to open the program.
It will enrol 20 people in September 2014 to ease shortage of skilled labour in the sector, he said.
The program will help to produce skilled labour required in the area and add capacity to the country’s leather industry, Wondu said.
The Institute in collaboration with the Science and Technology Institute, the Indian Central Leather Research Institute (CLRI) and Footwear Design and Development Institute (FDDI) is training teachers in first, second and third degrees.
The Industry has been training people in technical and vocational college level.
The history of modern leather industry in Ethiopia dates back to the middle of 1920s. It was introduced by Armenians mainly in response to the growing local market demand for leather shoe.
As a result, the first two tanneries were established and vertically linked to two shoe factories: Darmar tannery & shoe factory (the present Awash tannery and Anbessa shoe factory) and Addis Ababa tannery & Asco shoe factory (the present Addis tannery and Tikur Abbay shoe factory).
Image may be NSFW. Clik here to view.Ethiopian Tourism Organization (ETO), which has been established to develop the nation’s tourist destinations and promote good images, has officially announced the start of its operations.
The launch of the ETO operation has been inaugurated officially with the presence of Ethiopian Federation House Speaker, Kassa Teklebirhan and World Tourism Organization representatives.
ETO board Chairman, Tewolde Gebremariam said that the organization coordinates tourism development activities in the country to make the nation one of the best tourist destinations.
Ethiopian Culture and Tourism Minister, Amin Abdulkadir, has called upon the private sector and investors to increase their participation on tourism development.
The international partners have also expressed their support to the development of Ethiopia’s tourism industry.
According to ERTA, Ethiopia has 9 UNESCO registered World Heritage Sites.
A new silo suitable for use by smallholder farmers in Africa has been launched in Nairobi, Kenya
The 6.2 tonnes capacity silo made by Brazilian company, Kepler Weber, is fit for rural farmers and small sized commercial farms, the firm stated.
The silo has been designed using corrugated iron sheets and is solar power operated so that it can be used in rural areas with no electricity connection, Kepler Weber said.
The cylindrical tapering silo dubbed ‘Kikapu silo’ is easily loaded by hoisting grain bags manually using ropes, the Brazilian firm revealed.
The silo is easily assembled for easy handling and erection during times of grain harvesting and conservation.
“It has ventilation for drying the crop. Warm air is sucked upwards using solar power and this lowers the moisture content of the grains from 15 per cent to the recommended 13 per cent,” observed Antonio Carlos de Campos, the foreign trade manager with Kepler Weber, during the unveiling of the silo in Nairobi.
According to Campos, the silo is suitable for farmers in sub-Saharan countries such as Mozambique, Ethiopia, Rwanda, Burundi, Uganda and Kenya.
“Currently, the silo is priced at US$4,500 (Ksh 382,000) and is fit for a group of farmers. Those with five hectares or more will need to purchase two silo for their grain,” explained Campos.
Wire, Cable Production Plant Commence Pilot Production
.
Image may be NSFW. Clik here to view.
The wire and cable production plant under the Ethiopian Power Engineering Industry (EPEI) has started pilot production, the Industry said.
During the trial period, the factory expects to produce 500 tons copper wires per annum, according to EPEI General Manager, Major Asefa Yohannes.
The factory was established in 2012 with 80 million Birr in Modjo town around 80km south west of Addis Ababa by the Metals Engineering Corporation.
The plant established with a bid to produce copper wires for transformers, electronic products and motors of generators.
Up on going fully operational, the factory will produce 2,500 tons copper wires annually thereby substitute the product the country has been importing.
According to the Manager, the factory will help to interconnect plants that produce transformer, cable and motor.
The plant produces wires with a diameter between o.7 to 2.5, in accordance with the local demand, Head of the Plant, Captain Waltanigus Tesfaw said.
The wire and cable production plant was established in September 2012 by the Metals and Engineering Corporation as part of the plan to lead industrialization in the country.
Dangote signals shake-up with new cement plant plans
.
Image may be NSFW. Clik here to view.
Mr Aliko Dangote, the Nigerian tycoon behind the Dangote Cement. Photo/FILE
By VICTOR JUMA
In Summary
Dangote is also constructing major cement plants in Ethiopia, Tanzania, and Zambia; pointing to a bruising market share battle once production starts.
Kenya’s biggest cement maker, Bamburi, has a capacity of 2.25MTA (excluding its 0.9MTA factory in Uganda), making Dangote the biggest producer upon completion.
Nigerian tycoon Aliko Dangote has doubled the estimated production capacity for his upcoming cement factory in Kenya, pointing to a looming shake up of the market that could see a drop or further stagnation of prices.
Dangote Cement, which already has a license to prospect for limestone in Kitui, says it has revised the upcoming factory’s annual production capacity to three million tonnes from the previous 1.5 million tonnes.
The company owned by the multi-billionaire Nigerian, who is ranked among Africa’s wealthiest businessmen, is also constructing major cement plants in Ethiopia, Tanzania, and Zambia; pointing to a bruising market share battle once production starts.
“We are reviewing plans for Kenya with a view to increasing the scale of our proposed factory from 1.5 million tonnes per annum (MTA) to 3MTA,” Dangote says in a trading update report for the first quarter of the year.
Dangote’s upcoming plants in Kenya, Tanzania, and Ethiopia will give it a total capacity of 8.5MTA, putting it ahead of Kenya’s Bamburi and Uganda’s Tororo that currently have capacities of 3.1MTA each.
Kenya’s biggest cement maker, Bamburi, has a capacity of 2.25MTA (excluding its 0.9MTA factory in Uganda), making Dangote the biggest producer upon completion.
The cost of building the Kenyan plant was estimated at $400 million (Sh34.8 billion), but the decision to scale up its capacity could see the capital outlay rise substantially.
“We are confident there will be sufficient demand both in Kenya and neighbouring countries,” says the report.
The multinational added that it is in the process of upgrading its prospecting license issued by the Kenyan government in March to a mining license, having found “ample sources of limestone”.
Dangote did not specify where it found the large limestone deposit but the company has been linked with prospecting activities in Kitui, where more cement firms are rushing, attracted by the vast quantities of the raw material.
ARM Cement, for instance, is expected to start construction of its $300 million (Sh26 billion) Kitui factory in October in what will give it an additional capacity of 2.9MTA.
Besides being rich in limestone, Kitui is also attractive due to its proximity to the Mui basin which has large reserves of coal. The coal is tipped to replace the relatively expensive diesel fuel in firing energy-hungry cement factories.
Dangote’s entry into the East African cement market is expected to intensify the raging price wars that saw margins plummet to an all-time low of 22.1 per cent in 2012, according to estimates by Standard Investment Bank (SIB).
Empowering communities saves women’s lives in Tigray, Ethiopia
.
TIGRAY REGION, Ethiopia – Mitslal Giday has been working as a community mobilizer in the Tigray Region of northern Ethiopia for the past 20 years – and the last two have been some of the most exciting of her career, she says.
Two years ago, Mrs. Mitslal, leader of a volunteer network known as the Women’s Development Group, helped roll out the Maternal Death Surveillance and Response (MDSR) initiative, which undertakes community-level efforts to prevent maternal deaths. The programme is coordinated guided by the Regional Health Bureau, which UNFPA is a member of.
Mrs. Mitslal advises pregnant women in the women’s group to attend at least four antenatal check-ups and to give birth at a health centre, under the care of a skilled birth attendant.
When a woman is in labour, Mrs. Mitslal summons an ambulance, and if one is not available, she arranges for a ‘traditional ambulance’ – the community’s term for a stretcher – to transport the pregnant woman to a health facility.
Mrs. Mitslal works closely with Beruho Gebrezgi, a health extension worker, to promote safe motherhood. Together, they create a list of local pregnant women for the Hewone health post and the nearby health centre, which helps to closely monitor the provision of maternal health services.
Community-level data-gathering
When a woman does, tragically, die at home from a complication of pregnancy or childbirth, Ms. Mitslal and Ms. Beruho meet with her family and write a detailed account of the circumstances surrounding her death.
Health professionals at the Adi Godum Health Centre, which oversees the Hewone health post, are also dispatched to the scene to file a report of their own. The accounts are compared, signed and reported to the District Health Office.
Through this and other data-gathering processes, the MDSR initiative is generating local, real-time information on maternal mortality, improving officials’ understanding of the issue and informing future preventative efforts.
A steering committee at each level evaluates the system. “This has ensured the quality of and authenticity of the data gathered,” said Fisseha Ashebir of the Tigray Health Bureau.
Creating a culturally sensitive environment
Maternal death is on the decline.
In 2011, 217 women died per 100,000 live births in the Tigray Region. By contrast, in the last nine months of the current Ethiopian fiscal year, there were 89 deaths per 100,000 live births. And in some districts of the region, like the Hintalo Wajirat District, no maternal deaths have been registered this fiscal year, according to Tsegaye Tadesse, head of the District Health Office.
Contributing to this progress is the fact that pregnant women are increasingly delivering at health facilities.
To further encourage pregnant women to deliver under skilled care, health centres are providing more culturally sensitive environments. For example, women are allowed to eat porridge with relatives after giving birth, part of a local tradition. At health centres, makeshift kitchens with cooking utensils have become a common sight, and community members are contributing grain and other supplies in support of the initiative.
Skilled attendance at birth has reached 56 per cent – a few points shy of the 62 per cent national target for 2015 set by Ethiopia’s Health Sector Development Programme.
Challenges remain
Although there has been improvement, health facilities continue to require better medical equipment, reliable supplies and skilled professionals.
Maternal deaths continue to be undercounted and misclassified, and data are sometimes not readily available for reference. An attempt to digitize the information was undermined by persistent network problems.
Still, the tireless efforts of people like Mrs. Mitslal have shown that the tide of maternal deaths can be reversed – and that communities are the best place to start.
“The greatest success of the initiative lies in the strong ownership of the matter by the community,” emphasized Mr. Fisseha.
AAU got patent for a new technology of cleaning fluoride from water
.
Image may be NSFW. Clik here to view.Addis Ababa University (AAU) announced the discovery of a new technology to clean water off fluoride using a mineral named Zeolite in a collaboration with Spanish National Research Council.
The university has got patent for the new technology from the Ethiopian intellectual property office.
The ground water reserve in the Ethiopian rift valley has a huge fluoride concentration which is hazardous for bone and teeth health of the area’s residences. Fluoride which is found in the natural environment is damaging for the bone and teeth when its level is high in water.
The technology is expected to solve the problem of fourteen million Ethiopians living in the rift valley area.
Since the technology mainly relies on mineral Zeolite which is readily available in most Ethiopian rocks, the technology is hoped to be cost effective.
Nizhny Novgorod region Governor meets Consul of Ethiopia to Russia
.
Image may be NSFW. Clik here to view.
Nizhny Novgorod Governor Valery Shantsev had a meeting with the consul of the Republic of Ethiopia to Russia, Kasahun Dender Melese, on Tuesday, July 1. The parties agreed to cooperate.
“In 2013, the foreign trade turnover between the Nizhny Novgorod region and Ethiopia made up USD 288,000. The entire turnover – 100 percent – falls for exports,” said Valery Shantsev during the talks with the Ethiopian diplomat.
“The turnover is insignificant yet – one needs to expand cooperation. I know that you have an busy program of your visit – a roundtable meeting with representatives of the business sector, the discussion of education issues with rectors of our universities, a visit to the GAZ factory. Following the results of the visit, I am sure there will be opportunities to expand our cooperation,” the head of the Russian region said.
Kasahun Dender Melese said in turn that Ethiopia was planning to establish an honorary representative office in the Nizhny Novgorod region.
Valery Shantsev offered Ethiopia to participate in the international business summit to be held in September this year in the Nizhny Novgorod region.
The African republic in Russia intends to deliver coffee beans and flowers to Russia. At the same time, Nizhny Novgorod business has an opportunity to invest in the Ethiopian agriculture, electro-mechanical technology and railway infrastructure.
On September 10-12, 2014, the Nizhny Novgorod region will host the Third International Business Summit 2014. The summit is organized by the Government of the Nizhny Novgorod region, with the support of the Government of the Russian Federation. As the head of the region Valery Shantsev noted, this year, the forum will focus primarily on discussions of major investment projects, including the construction of a high-speed railroad.
Image may be NSFW. Clik here to view.Ethiopia and Russia have signed an agreement which would enable them to cooperate in areas of agriculture and energy, according to Ministry of Foreign Affairs.
The 5th session of the Joint Commission established for the collaboration of the governments of Ethiopia and Russia in economy, science and technics was held from June 24-28 in Moscow.
According to the Office of the Spokesperson of the Ministry of Foreign Affairs, the joint commission evaluated the performance of the 4th meeting and explored new fields of cooperation.
The two countries subsequently signed an agreement that would enable them to further collaborate in areas of trade, economy, science and technique.
The Ethiopian delegation compose of representatives of 15 institutions was led by Alemayehu Teganu, Minister of Water, Irrigation and Energy. During its stay in Moscow, the delegation held talks with Russia’s Deputy Minister of Mine Resources and Ecology, Valery Pak.
Microsoft, Cojengo Develop App For African Livestock Healthcare
.
Image may be NSFW. Clik here to view.
VENTURES AFRICA- Cojengo, a technology company based in Scotland has partnered with Microsoft and its 4Afrika initiative to develop a mobile app that will allow Vets and farmers in East Africa diagnose livestock disease and provide suitable drugs for farm animals.
The VetAfrica app, which is designed as a decision support system for proficient farmers, animal health workers and veterinary professionals, gives users diagnostic advice on animal diseases as well as the most effective drugs for the ailment. It also helps farmers to record animal data, thereby addressing the challenges faced by livestock farmers in Africa.
“Working with Microsoft, the company has embraced and tapped into the mobile revolution sweeping Africa,” Scotland’s Deputy First Minister Nicola Sturgeon said.
“Cojengo is a shining example of a new generation of creative Scottish companies with the ambition and skills to create and grow successful businesses,” she added.
The App which has already undergone field testing will help to change the lives of farmers in Africa for the better.
Specifically, the app is now available to farmers in Kenya, Ethiopia, Uganda and Tanzania. Adopters of the app will be able to use the health solution through their mobile phones.
Of all the regions in Africa, East African countries, particularly Kenya and Tanzania, have been hailed for their quick adoption of digital and mobile technologies towards improving living standards.
Addis Ababa – Djibouti electric locomotives ordered
.
Image may be NSFW. Clik here to view.A contract for CSR Zhuzhou to supply 35 electric locomotives for the future Addis Ababa – Djibouti standard gauge line was signed on June 19.
According to railwaygazette.com, delivery of the three passenger locomotives and 32 freight locos able to haul trains of up to 4,000 tonnes will begin in October 2015, ahead of the planned opening of the line in 2016.
CSR said the 7•2 MW locomotives would be based on proven technology, drawing on designs developed for South Africa and adapted for local conditions.
These include the 2 000 m altitude difference along the 850 km route, and the desert environment with strong sunlight and daytime temperatures of 50° C contrasting with cold nights.
Image may be NSFW. Clik here to view.The Omo Kuraz sugar project has so far created over 21,000 jobs for the local community.
The project is found in the Southern Nations, Nationalities and People (SNNP) Regional State. It is a huge project where five sugar factories will be built.
The five sugar factories will have production capacity of 278,000 tons of sugar per annum each when they begin production.
“The project has so far created a total of 21,000 jobs for the local community,” public mobilization, compensation payment and rehabilitation head at the project, Asres Adaro told WIC.
Natives of Bodi, Mursi, Konso and Meanit tribes are among beneficiaries of the job opportunities, he said.
Omo Kuraz sugar development project is expected to create job opportunities for more than 300,000 peoples when the five sugar factories begin production, it was learnt.
Last month, Moody’s Investors Service assigned a debut sovereign rating of B1 to the government of Ethiopia. A B1 rating is equivalent to a B rating in Fitch Ratings’ scale, which is the agency that rates most African sovereigns. The rating puts Ethiopia on par with Rwanda but a notch below countries such as Kenya, Ghana and Zambia, all rated B+ by Fitch. Oil exporters such as Angola and Nigeria are rated better at BB-.
Moody’s Investors Service rating of B1 for Ethiopia is based on four main key drivers: (1) the country’s small economy and low per capita income, balanced by a track record of strong economic growth over the past decade; (2) weak institutional setups in comparison with B-rated countries; (3) moderate fiscal strength, with debt burden and related financing costs remaining low given a largely concessional funding base balanced by its increasing reliance on non-concessional financing; and (4) moderate susceptibility to event risk, which balances credit strength and credit constraints.
Ethiopia’s sovereign rating is an indicator of its government’s ability and willingness to repay its debt. Typically, obtaining a sovereign rating is a precursor to a government’s access to international debt markets. However, the Ethiopian government announced late last year that it would be seeking a sovereign credit rating to attract foreign investment rather than to issue debt. Unlike international borrowing, foreign direct investment (FDI) puts little or no burden on public finances, is less volatile than portfolio flows, and is more likely to increase economic growth.
As one of the fastest growing African nations, with a population of over 85 million, an expanding middle class, growing urbanization and a budding green energy sector, Ethiopia has large potential for attracting FDI (Figure 1). In addition, increased FDI would help finance Ethiopia’s worsening balance of payments (Figure 2). It should also lead to higher economic growth if accompanied with the right measures, especially those leading to a deeper and well-supervised financial sector and those improving governance.
Image may be NSFW. Clik here to view.
Image may be NSFW. Clik here to view.
To understand the importance of the need to increase foreign investment to Ethiopia, it is useful to review the country’s current policy environment. Ethiopia follows a public sector-led development strategy based on high public investment under its Growth and Transformation Plan (GTP). Reports from the Ethiopian government and international financial institutions like the International Monetary Fund indicate that under the GTP, Ethiopia has made considerable progress in terms of economic growth, poverty reduction and stabilizing inflation. However, the GTP requires huge investments that the country cannot generate domestically. In the absence of sufficient domestic funding for large scale projects, Ethiopia will have to rely heavily on FDI to achieve the objectives of the GTP.
Some studies indicate that, for sub-Saharan African countries, obtaining a credit rating has a positive and significant impact on attracting FDI. This trend is not surprising as credit ratings are explained largely by a few, mainly macroeconomic, indicators. In general, though, additional factors drive FDI depending on whether investments are market-seeking (driven by economy size and country location), efficiency-seeking (driven by human capital or infrastructure quality) or resource-seeking (driven by the availability of natural resources or other strategic assets). Attracting FDI also depends on a country’s institutional and regulatory frameworks, which include judicial independence, labor market flexibility, corruption, level of indirect tax rates on foreign firms and business regulations.
Lessons for Attracting FDI
Ethiopia’s record on a number of these factors is at best mixed—hence the B-rating. In our view, the Ethiopian government should quickly draw the lessons from its recent experience in attempting to attract FDI. We focus on the following five issues:
First, critics of the macroeconomic policy of the Ethiopian government often cite the former misguided policy of continuous currency devaluation, as the major reason for the current macroeconomic imbalances in Ethiopia. Instead of inducing export growth, past devaluations aggravated inflation, in part because of the nature of export items and the limited role of the domestic private sector in the economy.
Second, Ethiopia’s policies to attract foreign investment in the agriculture sector have faced some challenges. Thanks to government incentives, foreign investors started leasing vast areas of agricultural land—a trend that is often criticized as a “land grab.” Environmentalists and human right groups have also objected to these policies, citing the associated risks of environmental degradation and human displacement. Investors were given huge tracts of forested land in southwestern Gambella in western Ethiopia at very low lease rate of $1 per hectare per annum. So far, the record of these ventures and other similar foreign investments in agriculture are, at best, mixed to say the least. Thus, Ethiopia’s efforts in encouraging FDI in agriculture have not yet led to higher exports.
Third, the government’s recent strategy to attract foreign investment in urban areas is also facing challenges. The government has recently focused on attracting investment to cities located around the capital Addis Ababa in Oromia regional state. The new “master plan” may lead to the displacement of more than 6 million inhabitants without compensation. The government is being accused of violently repressing fierce public protests in Oromia against this policy. Moreover, the government is also attempting to attract FDI by leasing large areas of farmland, displacing farmers in the vicinity of Addis Ababa, to flower companies. Again, concerns have arisen about the displacement of farmers and their compensation.
Fourth, the institutional environment remains challenging. There is an economic and political polarization of the majority not affiliated with the ruling party; growing youth and female unemployment rates; and a widening income gap between the poor and the emerging rich. These factors aggravate the pre-existing grievances of the marginalized and vulnerable poor. Moreover, there are concerns that antiterrorism rules and draconian media laws are mainly being used to crack down political opponents. Rampant corruption also increases the cost of doing business, while the restrictive rules that regulate civil society organizations narrow the political and economic space needed to enhance economic growth. These could be some of the reasons why the World Bank’s 2014 Doing Business report ranks Ethiopia 125 out of 189 countries.
Fifth, in contrast to most of sub-Saharan Africa, Ethiopia won’t allow foreign investment in services such as banking, telecommunications and other industries monopolized by the state or restricted to only Ethiopian companies. Sectors that typically attract foreign investors—and which have attracted the lion’s share of FDI on the continent induced by high demands associated with rising income—are closed to them. This policy will limit the efficacy of the credit rating because other areas such as agriculture have not so far proved attractive to foreign investment.
Given the difficult institutional environment, Ethiopia appears to be increasing its reliance on foreign investment to specific sectors (like land) or from specific regions (China, which accounts for 20 percent of total FDI in 2010 and rising). In addition to reducing the size of the public sector and giving more space for the Ethiopian private sector to develop, the government of Ethiopia should definitely take a second look at the determinants of foreign investment mentioned above if it wants to succeed in attracting FDI sustainably, in more sectors, and from more types of investors. At the end of the day, the goal should be for FDI to also lead to higher economic growth. But not all FDIs are equal in this regard, as shown by the poor record of African natural resource-rich countries. Ethiopia, which is resource poor, can pave the way on how African countries can attract FDI beyond those related to oil, gas and other extractive industries..
The Africa Hotel Investment Forum (AHIF) recently announced it was moving its 2014 event to Addis Ababa. The organisation said the move was prompted by a “surge in interest from sponsors”, leading to a need for a bigger space. It now will be held at the Sheraton Addis(pictured, below right) on September 29-October 1.
This move is interesting, as it reflects growth in the country’s nascent MICE activities. The African Union Commission is also based in Addis, in the striking, 100m-tall AU Conference Centre complex, built and funded by the Chinese.
Image may be NSFW. Clik here to view.
AU Conference Centre
.
The United Nations Conference Centre has 1,200sqm of exhibition space, plus up to 20 meeting spaces, including auditoria for up to 800 delegates. International hotels with meetings facilities include Sheraton, Radisson Blu, Hilton and Intercontinental, plus there is a range of independent or locally branded properties. Marriott has two properties in the pipeline for Addis Ababa – a 104-unit Executive Apartments slated to open in 2015, and a 209-room Courtyard planned for 2016.Image may be NSFW. Clik here to view.
A growth in summits and conferences taking place in Ethiopia has prompted Ethiopian Airlines’ in-house tour operator, Ethiopian Holidays, to develop MICE services alongside its leisure products. The tour operator can capitalise on its leisure portfolio for MICE venues – such as the smart, well-appointed Haile Resort, owned by legendary Olympic gold medallist runner Haile Gebrselassie, and overlooking the spectacular Rift Valley lake Hawassa.
Other venues meeting international standards include the Kuriftu group’s Diplomat restaurant in Addis, its luxury lakeside spa resort at Debre-Zeit, 45km south of town, and in Ziway, Kuriftu’s excellent Wine House and Restaurant – in partnership with the nearby wine estate run by leading French vintner Castel.
The tour operator can also take advantage of Ethiopia’s world-class attractions. It boasts nine UNESCO World Heritage Sites, and national parks in diverse landscapes that range from dusty Rift Valley plains, to lush rainforests teeming with wildlife, to dramatic ‘Afro-alpine’ mountain peaks soaring to more than 4,500m.Image may be NSFW. Clik here to view.
Memorable destinations include the luxurious Bale Mountain Lodge eco-resort. With just eight guest rooms and cottages, it is hidden in the pristine cloud forests of the Bale Mountain National Park, and immersed in spectacular wildlife.
The only factor that restricts adding these attractions to MICE itineraries is distance and infrastructure: Ethiopia is a big country, and drives can be long and slow – however Ethiopian Airlines has an internal network of 18 destinations, so domestic air links can be an option. Image may be NSFW. Clik here to view.
If MICE activity is likely to reflect the wider business environment, then expect to see it grow in Ethiopia: GDP growth rate was 9.7 per cent in 2013, and there’s a lot of infrastructure investment both by government and foreign investors, particularly from China and India. Projects include major road-building schemes and a national rail network.
Ethiopian Airlines says this upward economic trejectory – in the country and more widely on the African continent – is driving its own ambitious plans: Its ‘Vision 2025’ strategy, which it launched in 2010, aims for growth that will see $10 billion revenue and $1 billion profit by 2025.
Is it likely to achieve this? Well, IATA’s latest World Air Transport Statistics (WATS) report, for 2013, ranks Ethiopian as Africa’s largest carrier by revenue – over $2.3bn – and profit. The Star Alliance member took delivery of its seventh B787 Dreamliner in May, and says revenue has grown more than 530 per cent in a decade. So it’s probably fair to say, anything is possible.
EJERE WOREDA, Ethiopia (Thomson Reuters Foundation) – Thirty years after the famine that killed more than a million people in Ethiopia and shocked the world into belated action, the country’s scientists and farmers are taking the fight against climate change and food insecurity down to the ground.
The famine was a product of both natural and human causes, but scientists at the state-owned national gene bank for seeds say that even at the time of the crisis they had identified a lack of multiple seed varieties adapted to changing weather conditions as a major factor in the failure of crops.
That conviction has been acted on in the past few years through the establishment of community-based seed banks and training centres for farmers. The most recent one was inaugurated at the beginning of June in the farming locality of Ejere, in the centre of the Oromia region.
Regassa Feyissa, director of Ethio-Organic Seed Action (EOSA), an NGO that promotes agricultural biodiversity and seed security programmes, says a failed planting season used to be a death sentence for farming communities. The centralisation of the national gene bank in the 1980s led to inefficiency and a slow response to the hunger emergency, he believes.
There are now 18 seed banks spread across Ethiopia’s three most populous states – Oromia, Amhara and Southern regions. They have been created by EOSA and the Ethiopian Institute of Biodiversity, which oversees the national gene bank and is partly funded by Norway. There are plans to expand into more areas of the country.
“Climate change…is a problem that’s complex and unpredictable,” said Feyissa. “We’re seeing an increase in heat, and a growing shift in the pattern of the seasons, which is confusing farmers.”
One of the lessons learned from the famine was that farmers needed more information and greater variety in the seeds they sow to cope with the effects of climate change, he added. For example, different varieties of sorghum can be planted at different times of the year to lessen the impact of climate variability.
Local seed banks will eventually enable farmers to boost their food security by practising sequential cropping rather than mono-cropping, Feyissa said.
Melaku Worede, who was head of the national gene bank during the 1984 famine, believes that developing specialised seed varieties should not just be a matter for scientists in laboratories.
It is essential to combine scientific knowledge with local farmers’ knowhow to meet their needs, giving communities ownership of the seed products, he argues, while acknowledging that this idea meets with scepticism from some local and international partners.
WOMEN COME OUT OF THE KITCHEN
Bayush Tsegaye of EOSA also sees the local seed banks as a way to ensure sustainable food security and democratise seed assets among the community.
Women and young people, who form the majority of the rural population, can only be included in rural economies if they’re given access to adapted seed varieties to plant on their plots, Tsegaye said.
“We’ve seen an increasing incidence of farmers selling their lands and moving to urban centres, and it tends to have a disproportionate psychological and economic effect on the young and women,” he added.
As well as providing seed varieties, the seed banks also serve as training centres for local farmers, including women, in beekeeping and horticulture, Feyissa explained.
Elsa Abate, a farmer from the northern region of Amhara, said having a local seed bank has allowed her community to plant seeds in more than one season without fear of crop failure. This frees up space and time for other activities, and has helped them diversify into poultry, livestock and vegetable gardening.
“We women used to not be visible outside of the kitchen, as we didn’t have the means and access to seed varieties,” said Abate, whose home province of Wollo was one of the epicentres of the 1984 famine.
That has now changed, enabling women like her to farm their own plots and get reliable harvests.
“The seedling process and knowhow is in our hands,” said Abate. “What we need to do and are doing is using the organic seedlings wisely. That will ensure…famine doesn’t happen on our watch.”
E.G. Woldegebriel is a journalist based in Addis Ababa with an interest in environmental issues.
Ethiopia PM cites major shift from Egypt on Nile dam
.
Image may be NSFW. Clik here to view.
Egyptian President Abdel-Fattah al-Sisi (L) is welcomed by Sudanese President Omar al-Bashir (2nd R) upon his arrival at the Kahrtoum International Airprot in Khartoum, Sudan on June 27, 2014.
.
ADDIS ABABA - Ethiopian Prime Minister Hailemariam Desalegn said Monday that Egypt has shown a major shift of stance toward its controversial multibillion-dollar hydroelectric dam being built on the upper reaches of the Nile.
“Ethiopia welcomes the recent shift in stance demonstrated by the new egyptian leadership,” Desalegn told the parliament, hinting at a new chapter of mending fences between the two Nile-basin nations.
Desalegn’s remarks came to show thaw in ties between the two countries after they agreed last month to resume tripartite talks – also including Sudan – to discuss the construction of the massive dam.
The understanding came after Desalegn agreed with recently-elected Egyptian President Abdel-Fattah al-Sisi during late June’s African summit in Malabo to resume talks on the mega-dam Addis Ababa is building on the Nile, which Cairo fears will reduce its traditional share of river water.
“The tripartite talks will not be simple and we expect some tough proposals from the Egyptian side,” Desalegn said. “ Ethiopia will keep its calm and follow through the tripartite engagement.”
Desalegn went on to say that he asserted during his meeting with Sisi that the construction of the dam would not be disrupted.
“Instead of suspicions and distrust, it would be better for Ethiopia and Egypt to cooperate on a basis of understanding and mutual trust,” the premier said. “The two countries should cooperate [in other fields] beyond the Nile,” he added.
Set up in 2011, a tripartite technical committee was tasked with studying the impact of the multibillion-dollar Grand Ethiopian Renaissance Dam on the two downstream countries.
The panel’s work, however, was suspended in January amid mounting tension between Cairo and Addis Ababa.
Ethiopia insists that the dam is necessary for its national development, saying that the project will not impact Egypt’s traditional share of Nile water, which has long been set by a colonial-era water-sharing treaty that Addis Ababa has never recognized.
Tension has marred relations between Ethiopia and Egypt in recent years over the former’s construction of the Nile dam, given the fact that the river represents Egypt’s only source of water.
Egypt fears that construction of the Nile dam could potentially reduce its water supply and hurt local agriculture.
Great Britain will continue extending the 300- million Pound Sterling assistance it provides annually to Ethiopia, the International Development Cooperation Minister said.
Prime Minister Hailemariam Desalegn held talks on Monday, July 7, 2014 with a delegation led by UK International Development Cooperation Minister, Lynne Featherstone.
During the occasion, the premier said Britain should strengthen the financial support to help Ethiopia realize its poverty reduction program.
The prime minister, who said that Ethiopia has been utilizing the financial assistance obtained from Britain for the intended purpose, added that the contribution of UK in the structural change Ethiopia is making from agriculture to industry-led economy is huge.
The premier also urged the UK to continue its financial support during the Second Growth and Transportation Plan.
Minister Lynne Featherstone on her part said the support of her government would further be consolidated in the future.
Djibouti President, Ismaïl Omar Guelleh puts himself under Ethiopia’s protection
.
Indian Ocean Newsletter
THE plan for economic integration devised by Djibouti and neighbouring Ethiopia could ultimately lead to a kind of political unification between the two countries. During the last few weeks, certain Ethiopian dignitaries have hinted at it and one of them even went so far as to utter “a single country with two chiefs”.
Ethiopian desire to secure its Djibouti port outlet is nothing new and some people in Addis Ababa have been talking about “an obligatory merger” with Djibouti for years. So far this trend has been latent but is now coming into the fore, because President Ismaïl Omar Guelleh (IOG) needs an Ethiopian umbrella in various sectors, including that of guaranteeing his immunity when he is no longer in power.
Weakened President
The Djibouti president was born in Dire Dawa, Ethiopia, and owns a house in Addis Ababa. He is beginning to show his age (he is 67 according to his official birth date) and his health is not what it used to be. He is currently getting over an operation at the Val-de-Grace military hospital in Paris and he is losing his mobility. Moreover, the traditional Independence Day garden party on 27 June was not held this year, the first time in decades.
During the military parade, all measures were taken for him to make the least possible effort: IOG did not even get up to return the salute of the commanders of the parading troops. Nor did he appear on 21 June at the Hotel Kempinski for the presentation of Djibouti Vision 2035, even though it is under his High Patronage. The government, and in particular finance ministerIlyas Moussa Dawaleh have been working on this project for many years. Finally, the cabinet meetings, which are normally held every week, are getting further and further apart.
No successor in sight
IOG has several times reiterated that he will not run in the 2016 election and his state of health suggests that this will indeed be the case. However, from 2006 to 2009 he had also promised that he would not amend the constitution so he could run for another mandate, which he did finally do. At present, he does not give the impression of being particularly keen to prepare a successor.
The best placed potential candidate for his succession, presidential secretary general, Ismaïl Tani, from the same Issa/Mamassan ethnic group as IOG, is at the moment not in the good books of the highly influential First Lady Kadra Mahamoud Haid.
In the event of choosing a non-Mamassan, the most likely candidates would be Ilyas Moussa Dawaleh, former health minister Abdallah Abdillahi Miguil, and even the Afar Prime MinisterDileita Mohamed Dileita. But such a change would probably produce strong tension inside IOG’s party Rassemblement populaire pour le progrès (RPP) – an opportunity that the opposition coalition still lying in wait, Union pour le salut national (USN), would not fail to seize. Thus, whether IOG stays in command or hands over the helm in 2016, a turbulent political time is in store and Ethiopian protection could be necessary for him.
Furthermore, France and the other western powers present in Djibouti would not intervene militarily to support the regime, unless there is serious foreign aggression.
Economic merger
Many of the companies operating in Djibouti do not want to hear anything about a merger with Ethiopia, as they fear that Djibouti could move from its quite open economic system at present to the frequently more protectionist approach of Ethiopia. However, the current infrastructure projects (railways and roads, for example) favour increased economic integration and good political entente between the two countries.
Ethiopia depends on its neighbour for its trade to transit and is extremely wary of Djibouti becoming destabilised by radical Islamists or Eritrea.
Djibouti, for its part, has become dependent on Ethiopia on several counts: importing electricity, attributing land in Serofta in the Oromia Regional State to cultivate cereals for the Djibouti market; another land concession near Shinile (eastern Ethiopia) to extract 100,000 cubic metres of drinking water a day and the construction of a 70 km aqueduct to Djibouti.
The firm MAI Resources International (Switzerland) AG chaired by the Swiss national of Kuwaiti extraction Rashad Shawa is working with the Djibouti authorities on this particular project. Djibouti could then sell the water from Ethiopia on to other countries in the Gulf of Aden.
National Action Plan Launched to End Fistula within Six Years
.
Image may be NSFW. Clik here to view.
Ministry of Health announced that it has prepared a national action plan that helps eliminate obstetric fistula from Ethiopia in the coming six years.
The ministry, in cooperation with key stakeholders, launched on Monday, July 7, 2014 a national conference in Addis Ababa with a motto “Ending Fistula, Transforming lives.”
Opening the conference, Health Minister Dr. Kesetebirhan Admassu said the action plan is launched with the belief that the country would eliminate fistula caused by delivery in the coming six years.
He said the activities carried out by the health sector over the past two decades have created capacity which enables the sector to eliminate fistula cases.
According to Dr. Kesetebirhan, the huge boost in the number of health centres, trained midwives, hospitals and trained surgical officers over the years have created favourable situation for eliminating fistula cases.
He said the main objective of the action plan will be preventing fistula by making mothers deliver in health centres, and tracing and treating mothers that suffer from fistula.
The minister said a recent analysis of the problem shows that there are 39,000 women currently living with this problem and over 3,000 obstetric fistula cases occur in Ethiopia.
United Nation Population Fund Country Representative, Faustin Yao, on his part said UNFPA would work to cure victims of fistula.
Yao said UNFPA will continue providing technical and financial support for the effort by the government to eliminate obstetric fistula by 2020.
The number of trained midwives in Ethiopia, which was 1,275 in 2008, has reached 6,900 through accelerated midwifery training programs.
Amhara plans to reap 166 mln qtls agricultural produce in Meher
.
Image may be NSFW. Clik here to view.The Amhara Regional State agriculture bureau planned to reap 166 million quintals of agricultural output in the upcoming Meher season.
Representatives of public relations process leader at the bureau, Getnet Tarik, told WIC the stated volume of yield will be garnered from 4.5 million hectares of land.
More than one million hectares out of the total land has so far been covered with seeds, according to the representative.
Out of the 3.3 million quintals of fertilizer which the bureau readied for use, over 2 million quintals have so far been disbursed to beneficiaries, Getnet added.
Some 194,000 quintals of select seed are also prepared for the season, of which 72, 695 quintals have already reached in the hands of farmers, he added.
Some 7,626 quintals of lime that enables to treat acidic soil were also distributed for farmers, he said.
Ethiopia launches tourism body to target higher earnings
.
Image may be NSFW. Clik here to view.
.
Ethiopia has launched a tourism body to target a two-fold increment in the number of tourists visiting by 2015 and make the country one of Africa’s five top tourist destinations in five years.
The Ethiopian Tourism Organisation, created recently to market the East African nation as a leading tourist destination, is mandated to bring together government agencies and local businesses to create jobs.
“We will be proactive in the identification of the market opportunities and partnerships and we will search for innovative approaches to tourism development and marketing,” Solomon Tadesse, the ETO Chief Executive Officer, said during the launch of the organisation.
Ethiopian Prime Minister Hailemariam Desalegn called for the establishment of the tourism body in August 2013 through a Federal Regulation, which also set up the Tourism Board as a new institution to promote the country.
“It is not too late to establish this new entity. The setting up of such a particular agency has its particular reasons at this time,” Solomon said. “There was no infrastructure but now, we have the infrastructure.”
Ethiopia is counting on at least nine World Heritage Sites recognized by the UN Educational, Cultural and Scientific Organisation (UNESCO), the highest such concentration in any single African country, to attract visitors.
“It is time to work hard. We are projecting that we will become one of the top five tourist destinations in Africa in the next five years. We are realistic not to expect too much because you can only bite what you can chew,” Solomon added.
The UN Development Programme (UNDP), which has financed the initial setting up of the new entity, said Ethiopia’s huge potential as a tourism giant has not been fully exploited.
“Ethiopia’s potential and expectation has not yet translated into a thriving tourism industry and we are left to lament over the unfulfilled promise,” said Eugine Owusu, the UNDP Ethiopia Representative.
Ethiopia hopes to double the tourist arrivals by 1 million visitors every year and grow the average tourist spending from US$250 million to US$3 billion by 2015.
“When approached in a sustainable manner, it is true that tourism may not be a silver bullet to transform a country but it can help a country do a number of things. It can help grow and alleviate poverty,” Owusu said.
Ethiopia still needs to improve manpower in the tourism sector and build more world class hotels.
The country is also required to invest more in its wildlife parks to attract more visitors while sustaining the investments in the hotel sector.
Addis Ababa Light Railway System to Go Operational on New Year
.
Image may be NSFW. Clik here to view.
The Addis Ababa light railway system will go operational in January, 2015, the Ethiopian Railways Corporation disclosed.
Corporation General Manager, Dr. Getachew Betru said the overall progress of the project has exceeded 70 percent while civil works, bridges and underground (cave) constructions jumped over 90 percent.
The project is currently undertaking works on advanced electrification, signalling, communication and railway stations, he added.
According to the General Manager, the great challenge the project faced was proper railway administration, which it is trying to tackle with professional companies that help operate the railway system.
The Addis Ababa Light Railway Project General Manager, Engineer Behailu Sintayehu, on his part said civil work is completed while welding of rail track and construction of power generating poles are being finalized.
The Addis Ababa light rail transit will cover more than 34 kilometres with proper stations in every 700 meter distance on average, he added. The project has so far created more than 3,000 jobs, it was indicated.
The Addis Ababa Light Rail Transit Project commenced on January 31st, 2012.
NEBE set to make upcoming elections free, credible
.
Image may be NSFW. Clik here to view.
The National Electoral Board of Ethiopia (NEBE) said it is undertaking preparation for the 5th general elections scheduled to take place next year. Presenting NEBE’s 11 month performance report to the House of Peoples Representatives (HPR) yesterday, Prof. Merga Bekana Chairperson of NEBE said the board is undertaking all the necessary preparations to make the upcoming election free, fair and credible.
Preparation of ballot boxes and training of political parties are among the activities being carried out by the board, he said.
In a related development, HPR ratified the draft bill providing for establishment of the Infrastructure Development Coordinating Institute to coordinate infrastructure development activities at the federal level.
It is necessary to establish the Institute to manage the infrastructure development across the country through one system and create coordinated activities among implementers.
The establishment of the Institute will help to lead such activities in a coordinated manner and minimize challenges related to resource management, service interruption and environmental degradation.
According to ENA, the House also ratified the agreement between Ethiopia and Djibouti for supply of water.
The agreement which will enable Djibouti to get 37 million cubic meter water per annual from Ethiopia for the coming 30 years said to boost the cooperation between the two countries.
Ethiopia’s Banking Industry Finally Opens Up To Adopt Electronic Payment
.
Image may be NSFW. Clik here to view.
.
Ethiopia has a population of about 90 million people, and you would be surprised to know that very few local Ethiopians have a bank account. This is because the Ethiopian banking services are very limited, and the government does not allow foreign banks to operate locally. The Ethiopian government does this in a bid to protect the domestic lenders. With such limited banking services, all local retail transactions are done primarily in cash; retailers complain that the scarcity of debit cards greatly limits the growth of their businesses. Foreign chains are also restricted from the domestic retail industry.
But despite this, the Ethiopian economy has been steadfast and is one of fastest growing economies. It however goes without saying that they are still crippled with a lot of inefficiencies when it comes to money transfers and payments. Ethiopia’s economy stands to benefit greatly if the government backs down the strict regulation it has imposed on the country’s banking sector.
Thanks to Visa Inc. it would appear the time for such a change has finally come. Visa has been able to introduce the first debit cards in Ethiopia. After an aggressive campaign to try and convince the government on the potential benefits, the Ethiopia’s economy would enjoy by adopting electronic payments. Visa Inc. citing examples of how electronic banking has improved other African countries economies; it increases international trade, thereby placing the country in a more favourable balance of trade with its foreign trade partners among other benefits.
According to Visa’s Manager for Southern and East Africa, Jabu Basopo, Visa’s aggressive campaign in Ethiopia has yielded fruits and Ethiopia is now ready to adopt electronic payments. Currently, the Ethiopian government is running a pilot program for electronic payments; government officials have been issued pre-loaded cards that will enable them transact via electronic payment, but still their spending will be checked. So far the government has been impressed with the trial program, and this is a good indication of further adoption of electronic payment in other sectors of the economy.
Basopo has also raised concerns on the lack of muscles by the Ethiopia’s local banks to push the Central Bank into effecting the necessary changes in the country financial sector. The state has too much power and influence on the local banking industry; the leading commercial lender is owned by the government and holds about two-third of all of Ethiopia’s deposits.
An engine factory being constructed in Mekele Town of Ethiopia with 300 million Birr will be operational in the coming year, the Ethiopian Power Engineering Industry said.
Industry General Manager Major Asefa Yohanes said that the factory will manufacture engines for light and heavy vehicles.
It will also produce engines for water pumps.
The factory will get input from the Akaki Metal Products Factory and Hibret Manufacturing Industry under the Metals Engineering Corporation.
Since the automotive industry is booming, manufacturing engines locally will help to save expenses for engines importation, the Manager said.
Japan constructs new bridge linking Addis, Djibouti
.
Image may be NSFW. Clik here to view.
.
- Will provide loan for Alto Langano geothermal project
- The only existing bridge that links Ethiopia and Djibouti and was built 43 years ago is to be replaced by a new 145 m long and 40 m high two-way bridge with a 230 million birr finance secured from the Japanese government.
The old bridge, which is currently limited to serving trucks, only allows one to pass at a time. The vehicles crossing over the bridge are required to wait for some two or three minutes for their turn. The bridge is built over the Awash River, some 350 km from Addis.
Officials of the Japanese project contractor, Sato Kogyo, and the consulting firm Central Consultant Inc. under the implementing agency, Japan International Cooperation Agency (JICA), told reporters on Thursday at the site that building the bridge and equating one km road on both directions (Addis Ababa, Djibouti) required the import of a special type of reinforcement bar from Japan. Some 700 tons were imported. In addition to that, polymerized asphalt was vital to level the roads and serve longer years ahead. Hence, Sato Kogyo brought in an additional 2,000 drums of polymerized asphalt. In a nutshell, the construction consumed some 12 thousand tons of cement.
Osamu Hasegawa, project manager for the replacement of Awash Bridge on A1 truck road, said the construction of the new bridge took two years and is expected to be finalized by the end of next September. As of June 25, some 84 percent of the work was accomplished, Hasegawa said. The Japanese contractor signed the deal for the job in 2012.
The lifeline for the import and export sector of Ethiopia, the bridge, is assumed to be in service for some fifty years and if flooding and other calamities are contained, it can serve for 100 years, Hasegawa affirmed.
Driving from the capital, on the left side of the A1 truck road Awash Bridge, the Chinese are stretching a railway structure heading to the Port of Djibouti. There are two existing bridges extending over the Awash River adjacent to these two new structures. The existing truck road bridge was laid during the reign of Emperor Haile-Selassie, and next to this bridge stretches an old metallic railway bridge nonfunctional anymore built under the same Emperor.
According to Hasegawa, it was a hectic and time-consuming experience to import anything into Ethiopia. The custom clearance and documentation, he said, were very unfriendly for such a construction to idle for months. The other difficulties faced include the deep bedrocks, which made the excavation stage tougher for the 100 or so men Hasegawa employs. In about four months, however, the smooth construction would go on. According to Jun Fujimura, chief resident engineer for the project, the 43-year-old existing bridge will retire to serve only for emergency diversion and mostly will remain as a pedestrian bridge. The speed limit of vehicles is expected to increase to 85km/h rather than 20 km/h following the construction of the new bridge. In the same way, the weight limit at present under 34 tons will go up close to 41 in the near future.
In a related news, Japan is sponsoring to provide a loan facility for the Alto-Langano geothermal project. The ongoing geothermal project’s feasibility study will be expected to prove it has the capacity of generating some 70 MW. In that regard, Koo Nakahmura, spokesperson at the embassy, told The Reporter that the amount Japan may extend to the project depends on further studies.
The Canadian oil firm, Africa Oil, is to collect seismic data from a new oil exploration block in southern Ethiopia, around Arba Minch town, Southern Nations and Nationalities Regional State.
Africa Oil acquired the new oil exploration block in southern Ethiopia rift valley system in February 2013 from the Ethiopian Ministry of Mines. The block is a large area covering 42,000 sq.km of land in the great East Africa Rift Valley.
Reliable sources at Africa Oil told The Reporter that the company has put up a tender to hire a company that will undertake a seismic survey in the concession area. Sources said five international companies specializing in conducting seismic surveys submitted their technical and financial proposals to Africa Oil last May. According to sources, Africa Oil will disclose the results of the bid this month. European and Chinese companies are bidding to win the contract.
The Vancouver-based company has been prospecting for oil in the Ogaden and in South Omo basins. A senior official at the Ministry of Mines said that Africa Oil, in collaboration with Tullow Oil and New Age, is undertaking encouraging oil exploration activities. The official said Africa Oil has a rich experience in exploration and extracting oil in African countries.
The company has three projects in Ethiopia consisting of blocks 7 & 8 in the Ogaden Basin of eastern Ethiopia, the Adigala Block close to the border with Somalia and Djibouti and the South Omo Block which lies in the Omo Rift Valley of south-western Ethiopia.
The Ogaden Basin blocks are relatively underexplored with limited well and seismic data to constrain the petroleum system proved by the Calub and Hilala fields to the east. The Adigala block is a wildcat opportunity with no wells in the area. An analogue petroleum system is predicted based on nearby outcrop data and field surveys. The South Omo Block is within the Tertiary age East African Rift, just north of Lake Turkana, Kenya and within the same petroleum system as the Company’s Kenya Block 10BB and Tullow’s Uganda discoveries.
Africa Oil operates in an exploration area measuring 50,000 sq. km of land in the Ogaden. The company bought the concession in Ogaden from a Swedish company, Lundin Petroleum and the South Omo concession from a British and South Sudan consortium, White Nile. Africa Oil later sold 50 percent stake on the South Omo concession to Tullow Oil, the UK company that is prospecting for oil in South Omo.
The Washington-based World Bank Group this fiscal year has approved and disbursed a historic record high funding to Ethiopia, The Reporter has learnt.
According to the information obtained, this fiscal year alone the WB has approved USD 1.6 billion and disbursed some 1.3 billion for eight projects in the country.
The World Bank published statements on its website saying it had extended loans to more than 150 projects in Ethiopia centered on infrastructure, protection of basic services, food security and education. As of January 2014, the portfolio has 25 active projects with a net commitment value of more than USD 6 billion.
According to the bank’s recent history, it was during the 2008 financial crisis that USD 900 million was committed to Ethiopia. The size of the commitment grew steady except in 2011 when the bank limited the amount to USD 640 million. But one reason for the diminishing size of the commitment was that 2011 was the high time when the Ethiopian government made itself busy in preparing the ambitious five-year term Growth and Transformation Plan (GTP).
Since then the bank has extended sizable loans and grants to the country. This year witnessed many document signings of the commitments and disbursements. Guang Z. Chen, country director of the bank for Ethiopia, frequented the offices of Sufian Ahmed, minister of the Finance and Economic Development, located off King George VI Street, to ink agreements.
Ethiopia says expanding zones to become industrial hub
.
BY AARON MAASHO - ADDIS ABABA
(Reuters) – Ethiopia will start setting up a new industrial park in September and will expand another at a total cost of $250 million, an official said, part of efforts to shift away from farming and become a hub for textiles and other industries.
The Horn of Africa nation aims to attract investors who are moving some manufacturing from China and other Asian markets, where costs are rising. Ethiopia offers cheap labor and fast improving power supply, transport and other infrastructure.
Luring new industry is seen as vital to maintaining high growth rates in Ethiopia’s still largely agrarian economy. The economy has expanded annually by double digits in the past decade and is forecast to grow by 8 percent or more this year.
Yaregal Meskir, deputy director general of the Ethiopian Industrial Development Zones Corporation, said plans were being finalised to expand the existing Bole Lemi Industrial Zone, on the southern outskirts of the capital, while a new industrial hub was planned at Kilinto, 30 km (20 miles) further south.
“We have witnessed many investors have come to acquire sheds and land and there is a long queue,” he told Reuters in an interview on Friday. “We prefer labour-based industries like garment manufacturing and shoe manufacturing for exports.”
After selecting a designer, he said building Bole Lemi phase two and the Kilinto Industrial Zone would start in September.
A third of the 156-hectare Bole Lemi site was developed at a cost of 2.5 billion birr ($127.5 million), financed by the state, in the first phase and has attracted Korean garment-maker Myungsung Textile Company and Taiwan’s George Shoe Corporation.
The Kilinto zone will cover 243 hectares.
Both the expansion work and new site would be financed by a $250 million World Bank loan, Yaregal told Reuters.
The industrial parks are central to Ethiopia’s plans to build an industrial base, with textiles and garments seen as a key sector, in part because the country benefits from the U.S. AGOA trade pact allowing duty-free exports to the U.S. market.
The industrial zones offer land for factories at $1 per square meter a month, tax holidays for up to seven years and customs and other services on site for those investing in the nation of about 90 million people, officials say.
NEW HUBS PLANNED
“Ethiopia has developed a strategy that gives priority to certain industries,” Taddese Haile, State Minister of Industry, told Reuters. “The aim is to see Ethiopia as a globally-known cluster for textiles and garment products.”
Another three manufacturing hubs are planned across the country in the next decade, including a Special Economic Zone in the eastern town of Dire Dawa of 3,000 to 20,000 hectares. Details of the Special Economic Zone are still under study.
Ethiopia faces tough competition from other African countries seeking to benefit from increased interest among foreign investors in a continent with a fast-growing middle class with rising disposable incomes.
In countries like Ghana, for example, small, prefabricated ‘pop-up’ factories are providing low-cost, low-risk ways to churn out consumer goods for global markets by circumventing onerous local regulations and corruption. [ID:nL2N0P80ME]
Ethiopia, once ruled by communists, has driven up its economic growth rates with strong state intervention as well as rising farm output. Industry accounted for just 10 percent of economic output last year, official figures showed.
The International Monetary Fund forecasts economic growth of 8 percent to 8.5 percent for fiscal 2013/14 and 2014/15 but has also said the state must avoid squeezing out private firms.
Strong growth has helped fuel projects that include hydro-electric dams and other power projects to offer cheap electricity and a growing network of roads and railways. The capital will soon have its own urban metro, a rarity in Africa.
In a bid to encourage investment, the government is allowing private firms to build their own industrial hubs. One such enterprise is the Eastern Industrial Zone, whose shareholders included China’s Jiangsu Qiyuan Group.
Firms operating in that zone include Huajian Group, which produces around 300,000 pairs of shoes and sandals a month for Western markets. The firm is planning its own industrial park.
Bill Gates is helping to improve Africa’s dairy supply chains by assisting SME farmers to maximise the quality and quantity of milk they are able to sell.
Image may be NSFW. Clik here to view.
Bill Gates is supporting an initiative to help dairy farmers in Africa.
Global Good, a collaboration between Intellectual Ventures and Gates to improve life in developing countries, has invented and is now making commercially available a container designed specifically for milk collection and transportation.
In Kenya alone, approximately 80 per cent of the country’s milk is produced by more than a million small-scale farmers who have limited options available for collecting, storing and transporting milk.
Global Good explained: “Traditional milk pails can be kicked over during milking and gather contaminants that accelerate spoilage. From these pails, farmers often pour milk into repurposed jerry cans that break easily and are difficult to clean.
“To address these breakdowns in the dairy supply chain, Global Good and Intellectual Ventures Laboratory set out to invent an improved milking and transportation system optimised for farmers in developing countries.”
SNV Ethiopia – a local office of the SNV Netherlands Development Organisation which aims to alleviate poverty – will invest $1 million (£583,616) as part of an ongoing dairy project in the region to coordinate local manufacturers, as well as supply chains throughout Ethiopia, Somalia, South Sudan and Sudan.
“Global Good’s milking and transportation system is exactly the type of impact-focused innovation that SNV Ethiopia looks for,” said Jan Vloet, SNV Ethiopia country director. “By addressing the needs of smallholder farmers, they’ve developed a product that has the potential to strengthen the entire rural dairy value chain.”
Affordable dairy nutrition in sight for Ethiopian children
.
Image may be NSFW. Clik here to view.
Low-income families should gain from a new initiative to develop the dairy value chain
Ethiopia was the destination when the partners in a new Nordic multi-sector initiative met to find ways to produce affordable, nourishing food for young families living on a few dollars a day.
Led by the Global Alliance for Improved Nutrition (GAIN), the initiative focuses on the unexploited potential of Ethiopia’s dairy value chain. The aim is to establish cooperative partnerships between Nordic companies and local Ethiopian businesses.
Joint venture opportunities
.Arla Foods Ingredients from Denmark and Sweden-based Tetra Pak joined the fact-finding trip, along with GAIN, the Danish NGO DanChurchAid and Confederation of Danish Industries (DI). Over five days, the partners met with Ethiopian dairy farmers, manufacturers, aid organisations and authorities to investigate opportunities for new joint ventures that can help alleviate malnutrition and create local jobs.
One of the projects discussed was the development of a multi-nutrient powder supplement for children aged two and below. Here, Arla Foods Ingredients expects to contribute processing expertise and dairy ingredients in the form of whey protein and whey permeate.
“Clinical studies have shown that whey-derived ingredients can provide some of the essential nutrients which undernourished children and their mothers lack in their daily diet,” says senior project manager at Arla Foods Ingredients, Charlotte Sørensen.
Not about food aid
To secure the long-term success of such ventures, GAIN stresses that they must be economically sustainable for the companies involved. Local commercial partners are also essential to drive these initiatives and develop them on a regional scale.
“The initiative is not about food aid,” says special advisor at GAIN Henrik Gundelach. “It targets ordinary citizens who need to buy food on an overall budget of $2-5 a day.”
Danida – the development cooperation organised under the Danish Ministry of Foreign Affairs – is helping to fund the preliminary investigations. According to programme officer at the Danish Embassy in Addis Ababa, Nynne Solvej Warring, Danida may provide further support for future business cases or joint ventures that link Danish and Ethiopian companies in the dairy sector.
“Ethiopia can come a long way with the right partnerships and knowledge from Danish companies such as Arla. Right now there is a high demand for green growth,” she says.
Dairy growth potential
With 54 million cattle to draw on, the highest number in any African country, Ethiopia’s dairy industry has such growth potential. However, a series of hurdles need to be overcome, such as raising the milk yield of Ethiopian cows, which currently produce less than two litres a day.
“Much of the milk produced is consumed by the farmers themselves. Many families do not have access to a market where they can sell their products,” Warring explains.
A lot of milk also goes to waste due to the lack of a proper cold chain for distribution.
In line with NGO goals
Mads Schack Lindegård, DanChurchAid’s regional representative in Ethiopia, welcomes the initiative, which he says is in line with the NGO’s focus on sustainable development and food security.
“The project is an opportunity to link the many poor farmers we work with on a daily basis to a scalable business model,” he explains. “We see this initiative as a way to promote inclusive investments that also benefit local farmers.”
Senior advisor at GAIN, Charlotte Pedersen, hopes the visit to Ethiopia has laid the foundation stone for a series of beneficial projects in Ethiopia and other countries in East Africa.
“Now we have gathered the partners. The next steps are to prepare the business case and secure financing,” she says.
In this guest post, Richard Mkandawire, Vice President of the African Fertilizer and Agribusiness Partnership (AFAP) calls on African leaders to fulfil the 2006 Abuja Declaration that pledged to raise fertilizer use in Africa to 50 kg/ha by 2015. AFAP works with private businesses to establish more competitive and sustainable fertilizer markets in Africa and to contribute to an African Green Revolution.
Half a billion people in sub-Saharan Africa rely on agriculture for their livelihood. But the 226 million people who continue to be chronically undernourished on the continent are a testimony to the ineffective investments towards the agricultural sector over the past decade. Africa cannot and should not be allowed to remain an island of poverty in the midst of a sea of global plenty. As a global community we must not sit passively as Africa remains the hallmark of hunger and poverty.
Agriculture is fundamental to achieving the continent’s food security and socio-economic development goals. Not only can improved agriculture systems in Africa produce the food to feed a growing global population, it can also generate jobs, wealth, economic growth an ultimately, eradicate poverty.
By recognizing 2014 as the Year of Agriculture and Food Security, a doorway to 2015, the African Union has once again given special focus to the illusive MDG goal number one, of eradicating extreme poverty and hunger. The reality is that many constraints still stifle productivity levels of the continent’s smallholder farmers. A critical aspect that is still neglected is access to fertilizer.
Fertilizers have been proved to double or even triple yields within a single cropping season. For every 1 kg of nutrient applied, farmers obtain 5-30 kg of additional product. Yet fertilizer in Africa is woefully underused. It is estimated that African soils lose 8 million tonnes of nutrients per year and that 75% of the continent has been degraded to the point of greatly reduced productivity.
Although African Heads of State took action in the Abuja Declaration of 2006, making the commitment to raise fertilizer use to 50 kg per hectare by 2015, the current average rate is still close to 10 kg per hectare. When compared to the global average of over 100 kg per hectare, it is clear that not enough progress has been made.
What is stopping fertilizer reaching the 500 million smallholder farmers in Africa, and what can be done?
High transaction costs, particularly transport cost, mean retail fertilizer prices in Africa are significantly higher than in the rest of the world, making them prohibitively expensive for the majority of small farmers.
But improving access to fertilizers, and closing the Africa yield gap once and for all is not impossible. This week, my organisation and seven others from both the public and private sector demonstrated their willingness to improve fertilizer access to African smallholders, by issuing an open letter to the African Heads of State meeting at the AU Summit in Equatorial Guinea. In this letter we called upon African leaders to work with the private sector, researchers and civil society in six key areas:
Provide access to credit, finance and insurance. If farmers are loaned the capital to purchase fertilizer, they will be able to repay these loans with their increased income. The work of One Acre Fund shows just how this can work.
Facilitate imports and the distribution of diverse fertilizer products. Remote areas must be reached with these vital products, so improved distribution networks must be created.
Invest in infrastructure: transport, handling, storage, and blending facilities. Without ports, roads and warehouses, an effective distribution network cannot exist.
Develop mobile technologies to provide information on markets, extension services and prices. Timely information is key to farmers making the most profit; mobile technology puts power back into the hands of the farmer.
Train extension workers to help farmers organize themselves. When organized into groups, farmers can aggregate demand for fertilizer and purchase higher volumes.
Disseminate best practices based on the integration of organic and mineral nutrients and balanced fertilization. Farmers must be educated on how to use fertilizer in both a cost effective and environmentally sound way, as overuse can be just as detrimental as underuse.
I believe that transformation of the agriculture sector in Africa does not simply lie in the hands of African governments, but rather in the hands of “a global coalition of the willing”. It is our job to raise our voices and put our technical expertise at the disposal of governments who can change policies and implement change.
Raising Africa’s agricultural productivity is one of the most pressing challenges of our time. As President Nwanze of the International Fund for Agricultural Development commented this week, “it is not a dream, it is a responsibility”. We are ready and willing to close the Africa yield gap – let us take action today.
Europeans finance the Awash – Weldya railway project
.
Image may be NSFW. Clik here to view.
Seven financial institutions along with the Ministry of Finance and Economy Development (MoFED) and the Ethiopian Railway Corporation (ERC) are going to sign a loan agreement to construct the railway project that has been awarded to a Turkish company.
The signing ceremony was consecutively postponed, though it has been set to be held here in Addis Ababa in the presence of top government officials.
The signing ceremony will take place in the beginning of the coming budget year that will start on July 8. It will enable the Turkish construction giant, Yapi Merkezi to commence the 400 km railway project connecting Awash to the northern town of Weldya (Hara Gebeya), a section of the larger railway network running from Mekele via Weldya and Semera, to Port Tadjourah in Djibouti.
The Turkish EXIM Bank already has approved USD 300 million for the railway. It is the largest ever amount the bank has provided for one project in a country. “It is the first time one project has received this big a loan in Ethiopia from the side of Turkish and European financial firms,” Emre Aykar, chairman of Yapi Merkezi, told Capital at his head office in Istanbul.
The total amount that will come from Europe for the stated project is USD 1.4 billion.
He said that his company has created a link between European financial institutions and Ethiopia.
“We have managed to convince different European financial sources like SACE Group, Italy, EKF (Eksport Kredit Fonden), Denmark and others from Sweden, Austria and two from Switzerland,” Aykar said.
He said that during the current rainy season the company will focus on the establishment of camps, soil investigation and other related works and the ground work will commence in September.
The company has signed a USD 1.7 billion contract with the corporation to undertake the project.
The loan agreement ceremony was expected to take place in May, but some procedures with the banks and MoFED contributed to the delay, the chairman said.
Yapi Merkezi has handled big projects in places like Dubai, Saudi Arabia, Morocco, Algeria and Sudan.
The company officials stated that the current railway project in Ethiopia is a breakthrough for the company as they hope to expand their activity.
“We have big interest to be part of the country’s development,” Aykar said.
The project is expected to end within 40 months.
The China Communication and Construction Corporation (CCCC) will build the Mekele to Weldya part of the rail line. The estimated USD 1.5 billion cost is financed by the Chinese EXIM bank and covers some 260kms.
The section that stretches from Mekele to the Port of Tadjourah, Djibouti, covers a total distance of 675kms, and is expected to link the northern part of the country. The Indian EXIM Bank has also pledged USD 300 million for the Asayita to Port of Tadjourah segment of the Mekele-Port of Tadjourah railway line.
The Chinese contractors, China Railway Engineering Corporation (CREC) and China Civil Engineering Construction Corporation (CCECC) are currently constructing the Sebeta-Mei’so-Dewele railway line. For the 657km project, the Chinese Export Import (EXIM) Bank has provided the majority of the USD 2.3 billion needed.
Djibouti’s government said it rescinded DP World (DPW)’s concession at the Doraleh Container Terminal after finding evidence of corruption and has begun arbitration proceedings.
The agreement was canceled after an investigation that showed an accord signed with the company “unfairly favored” Dubai-based DP World, according to a statement e-mailed by Consulum, a London-based communications consultancy, on behalf of the government. Talks aimed at resolving the matter have broken down and the state will seek damages for losses it has incurred, it said.
DP World rejected the accusations and will “vigorously defend our position during arbitration,” the company said in an e-mailed response to a request for comment. “We are disappointed that the government has chosen to take this action after working so closely with us as partners over the past 14 years.”
Djibouti’s $1.2 billion economy relies on services related to the country’s location on the Red Sea, one of the world’s busiest shipping lanes. Transport accounts for a third of gross domestic product in the Horn of Africa nation, which is targeting doubling capacity at Doraleh to 3 million containers a year by 2015. DP World is the world’s third-biggest ports operator.
The government will take “all necessary steps to ensure the continued smooth running of its ports,” it said in the statement. The terminal is the country’s largest employer.
30-Year Concession
DP World and Djibouti’s government established a joint venture in 2006 with the signing of a 30-year concession to operate the container terminal, which the company describes as “the most technologically advanced” depot in Africa. The facility, inaugurated in 2009, has a 1.05 kilometer-long (0.66-mile) quay and the capacity to handle eight super-post-panamax cranes, according to its website.
The government offered DP World the opportunity to continue running the port until the arbitration tribunal ruling.
“Whether or not DP World accepts that offer, Djibouti has measures in place to avoid any disruption to the increasing number of customers using its facilities,” it said.
Djibouti, slightly larger than New Jersey, hosts a U.S.-led military task force at Camp Lemonnier, a base and staging area for tracking and launching assaults on al-Qaeda militants in Yemen and Somalia.
UN Report Finds African Growth Lacking, Unsustainable
.
- Development of productive capacities and structural transformation, two key components of poverty reduction and job creation, are lacking
.
Image may be NSFW. Clik here to view.
Taffere Tesfachew (right), director for Africa, least developed countries & special program presenting the report prepared under his overall supervision, which was commanded by Mekonnen Mayazewal (middle), commissioner of the national planning commission of Ethiopia with Samuel Bwalya (left), UNDP, country director to Ethiopia.
.
A report about Economic growth in Africa released on Thursday July 3, 2014, by the Conference on Trade & Development (UNCTAD) – a UN economic think tank- revealed that the growth narrative of Africa over the past decade is lacking two of the vital elements for generating productive employment and laying the foundation for sustained poverty reduction.
To the delight of Mekonnen Manyazewal, commissioner of the national planning commission, who is also working on the second generation of the Growth and Transformation Plan (GTP 2), the report also calls for priority to be given to a substantially increased allocation to the public sector.
Characterising the nature of the recent growth in Africa as contributing to the slow progress in poverty reduction, the report says that “Africa’s recent growth has not led to the development of productive capacities and structural transformation”, which are the two vital aspects of poverty reduction and employment generation.
Structural transformation is a shift of resources and policy focus from traditional sectors to modern sectors, from traditional activities to modern activities and from low productivity and limited technology to high productivity and advanced technology, according to Taffere Tesfachew, director of the UNCTAD division for Africa, least developed countries and special programs, who presented a summary of the report last Thursday.
The fast growing economy of Africa is basically consumption driven, which makes it import dependent and difficult to sustain, according to Teffere.
“Consumption driven growth is difficult to sustain,” Taffere said, during his presentation of the findings of the report at the launching ceremony. “It is time to shift to investment driven growth.”
Given the fact that the continent is in the early stages of its development, the structural change observed in Africa defeats the normal expectations, according to the report. The high and steady growth of the continent is not backed by a shift from low productivity activities to high productivity activities, it says.
The structural transformation concern of the report has, however, overlooked an important element that precedes it, for Eyob Tesfaye (PhD), a macroeconomic analyst who was also in attendance on the launching of the report.
“Intra-transformation within the sectors has not been undertaken yet,” he told Fortune. “For instance, the agricultural sector, which is still backwards, rain fed and powered by low technology, needs to be transformed.”
The share of manufacturing has declined, with the services sector dominating African economies, it states. It has declined from an average of 14pc for the period between 1990 and 1999 to 11pc during the period between 2000 and 2011, according to the report.
“The continent has experienced a deindustrialisation over the past two decades, as evidenced by the fact that the share of manufacturing in total value added fell from 13pc in 1990 to 10pc in 2011,” it reads.
Highlighting the problem on the supply side in the African growth narrative, the report considers the dominant role played by the services sector as unusual. This is worrisome because it is mostly driven by low productivity activities in informal and non-tradable services, it claims.
“Africa’s recent growth is fragile and is unlikely to be sustained in the medium to long term if current trends continue,” it concludes, calling for investment driven growth backed by high productive and tradable services.
In what Taffere has called “the untold story” in the African economic growth trend, the degree of inefficiency in the use of the capital accumulated in the economy has declined in Africa.
Measured by the incremental capital-output ratio (ICOR), Africa’s capital productivity increased significantly from the 7.4pc it was for the decade between 1990 and 1999 down to 4.1pc after the following ten years. An economy with a higher ICOR has lower efficiency or productivity of capital, in economic terms.
Ethiopia has also benefitted from this untold story, according to the report.
Ethiopia is in third place in the list of countries where the accumulated capital had a very high productivity in the period between 2000 and 2011, the report identified. Angola and Equatorial Guinea are the first and the second, while African countries, such as Liberia, Mozambique, Nigeria, Rwanda and Sudan, are also among those with high productivity of capital.
This is neither for all African countries nor for the public investment areas, though.
“Although there has been an improvement in the efficiency of total investment in Africa, more works need to be done, particularly in the area of public investments,” it comments.
The inability of the economic growth to generate jobs has led to Taffere concluding that the growth narrative of Africa is in essence a “jobless growth”. The African economies are not absorbing the 15 million new entrants every year, he said. The growth of employment in the predominantly youth populated Africa is 2.8pc, with many of the new jobs created coming from the informal sector, which is difficult to sustain and less productive.
Here again, Ethiopia is singled out by Taffere in his presentation. Ethiopia has created about 1.4 million new jobs over the past decade, registering a 3.4pc growth in employment – 0.6 percentage points more than the average growth for Africa, he said.
The employment growth account of Ethiopia, however, is due to the casual employment opportunities being created by the booming construction sector in the country, according to Eyob Tesfaye (PhD), a macroeconomic analyst who was also present at the launching of the report.
The report person at the helm of Ethiopia’s national planning commission, Mekonnen, commended the findings of the report in many respects. Highlighting what Africa should take from the report, underlines the need for the provision of institutional support to domestic investors, which the report considered as an aspect not accorded with adequate attention in the growth of Africa.
Mekonnen, rather questions the nature of the leadership and the state in Africa as a challenge to the implementation of the recommendations of the report. He calls for the developmentalist model of state and government for the proper mobilisation and channelling of resources to the appropriate directions.
“The UN system is serving as the intellectual voice for Africa,” he said. “We will give the report adequate weight and eternalise in our future plans.”
Michel Wormser, Vice President and Chief Operating Officer of the Multilateral Investment Guarantee Agency (MIGA) the political risk insurance and credit enhancement arm of the World Bank Group will visit Ethiopia from July 8-11. Wormser s visit underscores MIGA s continued support to the country s development goals through private sector investment.
The aim of Wormser s visit is to identify areas where MIGA can help the country mobilize capital for important projects including those in the infrastructure, energy, agribusiness, and manufacturing sectors and other job-creating enterprises that can help the country meet its development objectives. Wormser will meet with government ministries and private sector entities.
MIGA has supported private sector investment into Ethiopia in agribusiness and manufacturing. The purpose of my trip is to underscore our willingness to continue to support foreign direct investment in Ethiopia and identify priority areas where MIGA s support can be the most helpful in advancing the country s development agenda, said Wormser.
Canadian investors with a total capital of 367 million Canadian dollars (CAD) have secured licences to invest in Ethiopia, according to the Canadian Ambassador to Ethiopia.
The trade exchange between Ethiopia and Canada has also reached 141.3 million CAD.
In an exclusive interview with ENA, Ambassador David Usher said the investors are engaged in importing machinery, leasing construction equipment, education, health, consultancy, tourism and information technology.
In addition, 12 Canadian companies have secured mineral exploration licenses in the country, of which two have substantial assets, he said.
Many Canadian investors are also showing huge interest to engage in the various investment sectors in Ethiopia, according to Ambassador Usher.
The trade flows are, however, modest despite the half-a-century old relationship of the countries, he said.
According to the ambassador, joint consultative forums are being organized with the Ethiopian Ministry of Foreign Affairs to boost the trade exchange between the countries.
Ethiopia imports aircraft and parts, machinery, precious stones, metals (coin) electrical machinery from Canada. Canadian merchants, on the other hand, import mainly coffee, tea and spices, oil cereals and other agricultural products, it was learned.
The direct flight of Ethiopian airlines three times a week to Toronto has highly contributed toward raising investment and cultural ties, according to Ambassador David Usher.
Canada applauds Ethiopia for its open door policy towards refugees on all its borders alongside showing great effort to bring stability in the Horn of Africa, he pointed out.
Canada has raised its developmental support to Ethiopia to 210 million CAD in the current year, it was indicated.
BEIJING, July 8 (Xinhua) – Chinese Premier Li Keqiang met with Ethiopian President Mulatu Teshome in Beijing on Tuesday, vowing closer cooperation.
Li recalled his trip to Ethiopia in May, during which he reached broad consensus with the Ethiopian side on friendly cooperation.
China hopes to help with Ethiopia’s transportation and power infrastructure through a regional aviation center, manufacturing center and a demonstration center of development and poverty reduction, Li said.
He proposed more projects including economic and industrial zone, expanded energy exploration, personnel training and agricultural cooperation, to set an example for China-Africa cooperation.
Hailing cooperation between China and Africa, Li said China hopes to work with African countries and the African Union to build railway, highway and aviation networks.
Mulatu, on his first China trip since taking office last October, said Li’s Ethiopia visit has promoted bilateral ties to a new level.
Ethiopia-China relations are based on mutual understanding, trust and mutual benefits, he said.
Calling China a best cooperation partner, he vowed joint efforts with China to implement the achievements of Li’s visit to promote greater progress of bilateral ties as well as Africa-China cooperation.
- The draft document has now been tabled for approval by the board of commissioners
Member states of the Common Market for East & Southern Africa (COMESA) have finalised a draft document entitled “Merger Guidelines”, after a validation workshop held on July 1-2, 2014. It has now been tabled for approval by the board of commissioners in August of this year.
Aimed at providing merger guidance for companies within the common market, the guidelines have been prepared in response to calls for greater clarity and legal certainty in the supranational merger control regime of the regional competition law dubbed COMESA Competition Regulations. The enforcement of said law was announced in January 2013, following its ratification by the council of ministers established under the treaty that established the common market, according to the guidelines document.
The regulation has established a separate entity, named the COMESA Competition Commission, which has the power to apply the part of the regulation that deals with trade between member states and promotes competition within the common market. The commission has a board as its supreme policy body. Launched in December 2008, the commission officially commenced operations on January 14, 2013. It is composed of the secretariat, headed by a director, which is responsible for investigation; the Committee of Initial Determination (CID), responsible for making initial determinations on notification and complaints, and a Board of Commissioners also mandated with the adjudicative functions.
The board shall consist of not less than nine and not more than 13 Commissioners appointed by the council of ministers of the common market on the recommendation of the secretary general. The first board was appointed in the year 2011.
It was through this commission that the current guideline was prepared with financial assistance from the International Finance Corporation (IFC) of the World Bank (WB).
The first draft of the guideline was publicised in April 2013, in order to collect comments from stakeholders. The draft is designed to clarify parts of the COMESA competition regulations, in force since 2004, which deal with mergers and acquisitions.
Following the submission of the initial deliverables by the consultants, which included the revised draft merger control guideline, the Commission, in collaboration with the IFC, organised a regional workshop, which took place in April 2014, in Johannesburg, South Africa. Here, the Member States deliberated on the guidelines produced by the Consultants. Since then, the consultants, in collaboration with a steering committee, have been working to perfect the document taking into account inputs from the member states and other stakeholders.
The draft was finalised last week during a workshop organised by the commission in collaboration with the Ethiopian Trade Practices & Consumer Protection Commission (TPCPC). The draft has now been sent to be approved by the supreme policy organ of the commission, the board of commissioners, who are scheduled to meet in August this year, according to George K. Lipimile, director and chief executive officer (CEO) of the Commission.
In addition to the representatives from the national competition authorities of the COMESA member states, the workshop was attended by a cross section of competition law experts and practitioners from the region and beyond, according to Lipimile.
“The merger control guideline is expected to be in line with international best practices and should meet the expectations of the users,” he said.
Among the detailed clarification on the regulations provision concerning merger is the meaning attached to merger control by the regulation. Accordingly, the merger control mandate of the commission – based in Lilongwe, Malawi – concerns those mergers capable of having a regional dimension, with an appreciable effect on trade and which restricts competition.
It also provided much more detailed clarifications on the control of merger, notification of a proposed merger, merger proceedings and considerations of a merger, which are generally provided in the competition regulations. Further detail clarifications and explanations are made under the guideline on the matter of what constitutes a merger to territorial nexus; from pre-notification consultation and comfort letters to the notification process; from assessment of the merger and merger assessment considerations to analytical approaches and methodologies.
VENTURES AFRICA –Ethiopia’s parliament Monday, approved a 178.6 billion-birr ($9.2 billion) budget for 2014-2015 in which more than 64 percent of the total amount is earmarked for development spending against the advice of the International Monetary Fund (IMF) to cut its public spending.
The 2014-2015 budget- a 15 percent rise from the previous year- which will boost spending on education, health and road building defies the IMF’s warning that Ethiopia’s huge spending is suffocating private lending. In 2013, the IMF warned that the expanding public expenditure as well as the government’s tight monetary policy, to bring down inflation, could imbalance macroeconomic development by depriving the private sector access to credit and foreign currency.
However, Ethiopia’s intervention over the past decade has boosted the economy with the IMF forecasting that its economy will grow to 8.5 percent in 20014/15 from 8 percent in 2013/13. The government embarked on Infrastructural projects like hydro-electric dams and other power projects to offer cheap electricity and also focused on expanding the network of roads and railways.
With its latest budget, the East African country, which is second in population to Nigeria in Africa, aims to expand its road network to 136,000 km (84,500 miles) by 2015 from less than 50,000 km in 2010.
There are also plans to build 5,000 km of railway lines by 2020. The capital will soon have its own metro, a rarity in Africa.
The budget, which was unanimously passed by the parliament, also sees a 6.7 percent rise in Defence spending, from 7.5 billion birr in the previous budget to 8 billion birr. Ethiopia has the largest army in the Horn of Africa, it is also a key U.S ally in the region and is fighting al Qaeda-linked insurgents in Somalia as part of an African Union mission. It has also deployed peacekeepers in South Sudan.
ECX to Launch Commodity Traceability, Online Trading Projects
.
Image may be NSFW. Clik here to view.
The Ethiopia Commodity Exchange (ECX) said it would implement commodity traceability and online trading projects this Ethiopian fiscal year.
ECX Interim Chief Executive Officer, Shimelis Habtewold, told a press conference on Tuesday July 8, 2014 that the traceability project will be realized with an outlay of 1.3 million USD in collaboration with USAID.
The traceability project is expected to provide buyers with origin and processing information on commodities traded, in addition to creating market access to ECX members and clients.
Similarly, the online trading project will be implemented with an outlay of 3.8 million USD in collaboration with Investment Climate for Africa (ICA).
According to the CEO, “when the project begins service, it will enable market actors to participate directly in trading from remote online trading centers established in different parts of the country, including Humerra, Gondar, Adama, Hawassa and Jimma.”
Online trading is envisaged to increase access to ECX and its service. In addition, it will build the capacity of various stakeholders groups and increase efficiency, it was pointed out.
Meanwhile, the total value of the traded commodities in the just-ended fiscal year reached 26.2 billion birr from the sale of sesame, coffee and white pea beans during the last budget year, it was learned. The amount exceeded that of the previous year by 7.3 billion birr or 38 percent.
The number of ECX members which was 100 upon its establishmnet has now reached into346, and 14,725 clients as well as 10 percent farmer cooperative unions reaching out to 2.7 million small farmers.
Kenya’s stock exchange will become the second publicly traded African bourse with a share sale that was planned at least five years ago.
Nairobi Securities Exchange Ltd. will hold an initial public offering from July 24 to Aug. 12 and list stock on the market, it said today in an e-mailed statement. The FTSE NSE Kenya 25 Index has climbed 15 percent this year, compared with a 17 percent gain in the MSCI FM Frontier Markets index.
“We are putting our money where our mouth is,” Head of Market and Product Development Donald Ouma said by phone today. “We are saying capital markets are the best place to raise long-term capital.”
Kenya’s stock exchange first announced plans for selling shares in 2009. The market has been seeking ways to deepen trading and attract listings from companies in East Africa’s largest economy. The 62-member all-share index has a value of 2.14 trillion shillings ($24 billion), according to data compiled by Bloomberg.
“We are also looking into new products and services such as derivatives and real-estate investment trusts, and we are better suited to do so as a listed entity,” Ouma said.
JSE Ltd. (JSE), the operater of the Johannesburg Stock Exchange and Africa’s first listed exchange, gained 11 percent this year, compared with a 12 percent increase in the FTSE/JSE Africa All Share Index.
A sugar shortage hit major manufacturing industries, including soft drink manufacturers after two of the nation’s three sugar factories ceased production of sugar due to mechanical and sugar cane failure. Wonji Shoa and Finchaa Sugar factories stopped production slashing the quotas of manufacturing industries by two thirds forcing them to stop or minimize production significantly.
Sources told Capital that, machines at Wonji Shoa Sugar Factory were broken and are currently under maintenance. The other sugar factory Finchaa, also faced a crop failure, forcing the factory to stop production.
Soft drink companies are also slashing working hours as the corporation is not providing them with enough sugar for production.
Sources at one of the soft drink companies told Capital that their company is reviewing a plan to lay off some of their employees if the problem persists.
The country has faced a shortage of sugar from time to time. The shortages have led to the price of sugar increasing over the limit set by the Sugar Corporation in recent years.
The three state-owned sugar factories Wonji Shoa, Metehara and Finchaa produce 2.8 million quintals of sugar per annum, while the demand has reached 4.6 million quintals per year.
However, as part of the five year Growth and Transformation Plan (GTP) 12 new factories are to be constructed making the country a sugar exporting state.
Ethiopia expects seven of the sugar factories to start operating by end of 2015.
The Sugar Corporation said that once commissioned the seven factories will significantly boost the country’s sugar production capacity to 1.58 million tons – a five-fold increase. This is however lower than the 2.25 million tons the country would have produced if all 10 sugar factories came into operation.
Sugar production has been one of the cornerstones of the government’s plan to increase the country’s competitive advantage in agro-processing sub-sector.
The factories that are expected to be fully operational by the end of next year are Tendaho – 1 and 2, Omo-Kuraz-1, Kesem, two of the Tana Beles factories and Arjo- Dedesa.
Government urged to foster sugar development endeavor
.
Image may be NSFW. Clik here to view.Native residents of the Omo-Kuraz Sugar Development Project surrounding areas requested the government to foster the sugar development effort so that they can significantly benefit from the development.
In the discussion held at Jinka town of South Omo Zonal Administration between clan leaders, elders, women and the youth of the project surrounding areas comprised of Boddi, Murssi and Mieinnit nationalities and the leaderships of Sugar Corporation as well as the SNNP regional government, the resident participants requested the government to foster the sugar development activities in order to maximize their social and economic benefits.
Some of the participants of the discussion represented from South Omo Zone disclosed that they are eagerly waiting to see the sugar factories under construction in their area commence sugar production like that of Wonji Shoa Sugar Factory which they have paid a visit to earlier.
According to the Bodi community just from the outset of the development process they have got access to infrastructures and social services. Moreover, the project has enabled them introduce themselves with farming so that they have started enjoying their own harvest.
On the other hand, the Murssi nationalities from South Omo Zone and the Mieinnit nationalities of Keffa and Bench-Maji zones who came from areas where the project activities have not reached yet asked the government to accelerate the sugar development activities which will enable them improve their living condition like those residents of other areas where the project’s activities are already underway.
Disclosing their firm commitment to overcome whatever challenges they might face in the process of realizing the late Prime Minister Meles Zenawi’s development vision which he shared them while he had visited the area, they declared their readiness to contribute their part for the realization of the sugar development effort.
Moreover, the participants noted that the development endeavor has brought all nationalities which were used to view one another as enemies rather than friends stand together in fostering the development effort.
The sugar development work has, therefore, brought about a strong social link to them, they also mentioned.
Director General of Sugar Corporation at the level of Minister, Sheferaw Jarsso, while presiding over the discussion forum, on his part, said that the points raised in the meeting showed the encouraging results achieved in the sugar development activities.
In addition to creating access to canal schemes, the government’s effort to ensure infrastructures and social services accessibility to all areas irrespective of the command areas clearly demonstrates the government’s firm commitment in benefiting the local community, he further added.
He at last called up on the native residents to play their part in facilitating the sugar development endeavor.
On the other hand, Tagesse Chaffo, Vice President of the SNNP Regional Administration, reminding the government’s effort in making the natives the first beneficiaries when diverting the Omo River, disclosed that both the federal and regional governments execute any development activity at any area giving priority to the benefit of the natives.
Moloka Webneh, Head Chief of South Omo Zone, on his part, said that the reflections of the participants during the discussion showed the evasion of suspicions and fears which were used to be noticed earlier on similar discussion forums. The villagization program under execution has native residents to access various infrastructures and social services.
The Omo-Kuraz Sugar Development Project is found at South Omo, Keffa and Bench-Maji zones of SNNP Regional State in which five sugar factories in total will be constructed with 175 thousand hectares of sugarcane plantation field.
US based footwear producer, Brown Shoe Company, will establish an office in Ethiopia to buy domestic footwear products for its international market.
Recently large shoe makers have seen Ethiopia’s potential and invested in the country and there are some international garment companies like H&M but this is the first time a global shoe company has entered the Ethiopian market.
Wendu Legesse, Director General of the Leather Industry Development Institute (LIDI), told Capital that the company is expected to open its office in the coming fiscal year which starts next week.
Wendu said Brown Shoe mainly exports to China but now is encouraging Chinese firms to produce footwear in Ethiopia.
Leather industry experts are hopeful this will bring more leather technology and experience into Ethiopia.
“This is a good example of how international producers can contribute to Ethiopia,” Wendu added.
According to LIDI’s head, the Brown Shoe’s investment will not only increase production but will also bring international knowledge and standards.
He said that the company will not only open an office here, but will also provide laboratory service and capacity building.
“Brown Shoe has provided scholarships for seven experts who worked at LIDI and four of them are already taking the training,” the director general said. LIDI is the government institution responsible for overseeing the leather industry. It also has a training center that provides higher education in leather technology.
The government’s goal is to bring in half a billion dollars from leather exports by the end of the Growth and Transformation Plan (GTP). Currently that target is not on track to be met because experts explain that the number of companies expected to invest in Ethiopian leather has been less than expected.
Even though the GTP ends in a year government officials are hoping that as more large companies enter the market they will still be able to meet the leather earnings target. The government is not only encouraging footwear producers to invest in the country, but companies who have the potential to export the products.
For example international footwear companies like Huajian Shoe Company, and Gorge Shoe Corporation are coming to Ethiopia and joining the sector and they have the potential to produce a large amount of leather products.
According to Wendu, another global footwear producer, Stella, which makes 52 million pairs of shoes every year has demonstrated an interest in investing in Ethiopia.
“Stella paid two visits to the country and is interested in investing here. We are also encouraging synthetic leather shoe producers, who produce sneakers and sports footwear, to invest in the country,” he added.
Brown Shoe Company, based in Missouri, is a USD 2.6 billion footwear company with worldwide operations. It owns the 1,100-store Famous Footwear chain, 100 specialty retail stores in the United States, Canada and China under the Naturalizer name, as well as Shoes.com, the Company’s e-commerce subsidiary. Brown Shoe’s wholesale divisions own and market leading footwear brands including Naturalizer, LifeStride, Via Spiga and Sam Edelman. The company also markets licensed brands including Franco Sarto, Etienne Aigner, Dr. Scholl’s, Carlos by Carlos Santana, Fergie Footwear and Vince branded footwear.
Image may be NSFW. Clik here to view.Addis Ababa, 15 July 2014 – A three-day workshop on ways of scaling-up action to achieve MDG 5 kicked off here yesterday.
Representatives from ten countries with high burden of maternal mortality namely; Afghanistan, Bangladesh, DRC, Ethiopia, India, Indonesia, Nigeria, Pakistan Sudan and Tanzania are attending the workshop.
Opening the workshop Ethiopia’s Health Minister Dr. Kesetebirhan Admasu said Ethiopia managed to reduce maternal mortality by 69 percent over the past two decades, putting the nation on the right track to achieve the target.
“If we keep up the tremendous efforts made over the past years, the country will meet its MDG 5 target,” he said.
Ethiopia’s achievements in family planning and reducing maternal mortality should be considered as best practice by other countries with high burden of maternal mortality, the Minister said.
Ethiopia is keen to learn from best practice of India, Indonesia and Bangladesh on provision of quality health service, improve sustainability of medical equipments and medicines, and technology utilization, he said.
He added that the country also managed to reduce under-five mortality and new HIV infections by 77 per cent and 90 per cent, respectively. It has also reduced new malaria and TB cases by 60 per cent.
According to Dr Kesetebirhan, this demonstrates the political commitment of the government.
Allocating good amount of budget for the health sector, deploying large number of health professionals and the operationalization of health development army contribute for the good results, the Minister said.
UN Population Fund (UNFPA) Country Representative Faustin Yao on his part said “ending preventable mortality is critical for the health of women and to sustain development.”
Maternal mortality is rife in many parts of the world and 75 per cent of these deaths can be averted if women have access to comprehensive sexual and reproductive health and family planning services as well as interventions for preventing or treating obstetric complications, he said.
Online trading is coming to the Ethiopian Commodity Exchange (ECX). Since ECX began operating in 2008 with the goal of implementing a modern transparent trading system for major agricultural commodities traders had to bargain on the ‘floor’ of ECX headquarters near Mexico Square.
Now it will introduce online trading at a cost of USD 3.8 million.
As a result, now it will not be necessary to visit the ECX exchange center in Addis Ababa to trade thanks to a new technology brought in with collaboration from the Investment Climate for Africa (ICF).
ECX officials say they have already completed 95 percent of the preparations needed to start the electronic trading.
“We are in the trial stage and we are also giving training to traders,” Shimelis Habtewold, interim CEO of ECX said. The exchange will begin online trading in selected towns of Hawassa, Jimma, Adama, Humera and Gonder, according to ECX officials. The online trading system will be tested at the headquarters of the exchange.
“When it begins service, it will enable market actors to participate directly in trading from remote online trading centers established in different parts of the country including the towns mentioned above,” the head explained.
“Online trading is designed to increase access to ECX and its services. It will be more efficient and give traders the ability to accomplish more,” Shimelis added.
According to the head, the electronic trading system will help them make more informed decisions because they will have the ability to access more information.
High Tech Tracking
Another advantage of the electronic trading system is that it will involve a commodity traceability system allowing traders to keep track of their exchanges. The project will cost USD 1.3 million.
Traceability provides buyers with information about the origin and processing of the commodities being traded. “In addition to creating market access, traceability will enable ECX members and clients to meet the demands of international buyers who want to know the whereabouts of the commodity, ensuring sustainability, quality, safety and security of commodities,” the interim CEO said.
Products that are traceable when they are traded will have more value which in turn is good for the traders.
“The traceability system will be applicable with new software. We have come to terms with the company and it will be available soon,” Shimelis explained.
. Moving on up
.
ECX hopes these new services will help it expand its trade volume by 20 percent compared with the past year’s achievement.
In this past fiscal year 586,164 metric tons (MTs) of commodities were traded on the floor of ECX and this year that number should rise to 697,137 MTs. “Agricultural production is forecasted to grow this year so we believe the trading volume will increase by 20 percent,” Abenet Bekele, chief strategy officer of ECX, said.
Another reason for the increase in trade volume is the emergence of the mung bean. It was included during the 2013/14 fiscal year, but the legal procedures for trading it were in the process of being finalized, now this year the exchange will be the exclusive place for trading the commodity.
“This will also increase the amount of items being traded,” he said.
In addition to coffee, sesame and white pea beans, traders and exporters will now be legally required to go through ECX to or buy mung bean. Previously people could trade using either ECX or alternative methods.
Soon, according to Abenet, ECX will also trade red pea beans, which will increase the number of products traded on the floor to eight. The exchange also facilitates the trade of haricot beans, maize and wheat using a different system.
This previous fiscal year, which just ended, USD 1.3 or 26.2 billion birr worth of commodities were traded.
Since the second CEO Anteneh Assefa left the country for the US a few months ago the exchange has been in the hands of interim CEO Shimelis Habtewold. He says the exchange has been experiencing magnificent success when compared with last year. The interim CEO who was appointed in March pointed out that this year’s 7.3 billion birr in earnings was a growth of 38 percent when compared with the earning in the 2012/13 fiscal year.
“This growth is the result of a increase in the value secured from all the commodities including sesame, coffee and white pea beans,” the interim CEO said.
. Open Sesame
.
Sesame trading heated up lately, becoming one of the reasons for the dramatic improvement in results at ECX. According to ECX report, sesame has become the leading commodity traded on the floor, growing by five billion birr this fiscal year.
“The 280,552 MTs of sesame traded at the exchange was 106 percent more than what we hoped to achieve,” the chief strategy officer of ECX, said.
On the other hand, coffee, which was greatly affected by fluctuations in international prices during the earlier part of this fiscal year still managed to grow by 1.7 billion birr but declined in volume when compared to the previous year.
A year ago coffee led the way with 240,551 MTs while sesame and white pea beans followed at 215,234 and 82,675 MTs respectively.
According to Abenet, the coffee trading this fiscal year met 88 percent of the target with an actual trading volume of 239,778 MTs, compared with the goal of 270,000 MTs.
White pea bean trading also increased. The exchange disclosed that transactions of white pea beans skyrocketed by 445 million birr worth of 65,702 MTs. Meanwhile 100 MTs of mung beans were traded at ECX last fiscal year.
. Trade Volume
.
The total traded volume of the commodities traded reached 586,164 MTs by the end of the 2013/14 fiscal year which is an increase of 47,000 MTs or nine percent more than the volume during the 2012/13 fiscal year.
“We have met 92 percent of our target,” the exchange head said.
Compared with the 2012/13 fiscal year performance the trading volume of coffee decreased slightly in the just ended fiscal year, while sesame trading demonstrated outstanding growth. The white pea bean trading volume also decreased significantly in the 2013/14 fiscal year compared to last year’s performance.
The exchange chief strategy officer said that the actual achievement of white pea bean trading volume was 65 percent, which is the weakest performance of the commodities.
According to officials of the exchange in the past fiscal year 13.5 billion birr worth of coffee was traded on the exchange, which made coffee the major commodity traded in terms of value. “Changes in the international market are contributing to an increase of coffee trading at the exchange,” one expert said. Abenet said that the international market is showing some improvement compared with the beginning of the past fiscal year.
The trading value of other major products; sesame and white pea beans was 11.2 billion birr and 1.1 billion birr respectively.
. Futures trading
.
The focus of ECX is to facilitate a modern market system. It plans to offer futures trading and it has teamed up with market experts in Asia and North America to study the possibility.
“We plan to trade futures and we will implement this when the right time comes,” Abenet said.
In the past six years since ECX began operating, there have not been any defaults on transactions. There have been some illegalities that were tracked by the exchange and its regulatory body and this led to some prominent traders being suspended.
Image may be NSFW. Clik here to view.Sudan is ranked as the second biggest investor in Ethiopia after China with an estimated $2.4 billion in investments, Awad al-Kareem Sa’eed, President of the Sudanese Investors Society in Addis Ababa announced.
He said obtaining investment permits and licenses is a very smooth procedure, contrary to Sudan.
According to the chairman there are 800 Sudanese businessmen registered at the Ethiopian Ministry of Industry, which is in charge of investments in the country.
He noted that the Ethiopian Parliament is expected to debate a new bill for investment, if approved will raise minimum investment capital from $200 to $3 million.
Boosting Economic Opportunities In Ethiopia Via India-Ethiopia Relations
.
Image may be NSFW. Clik here to view.VENTURES AFRICA – A 14-man delegation from the Confederation of Indian Industry (CII) is billed to visit Addis Ababa beginning from 14-15 July to talk about multi-sector projects that will boost Indian business in Ethiopia.
Industry sources have it that among the delegation to the capital of Ethiopia, are resident representative of EXIM Bank of India, Karthikeyan B., country head and CEO of State of India, Subramanian Venkataraman, and international regional director of Africa, Gulf and Middle East of CII, E.B. Rajesh and others.
The delegates will meet higher officials and business partners, plus Addis Ababa Chamber of Commerce and Sectoral Association (AACCSA), the Ethiopian Chamber of Commerce for a business to business (B2B) agreement with the Ethiopian businesses.
During the three days 10th CII EXIM Bank Conclave on India – Africa Project Partnership organized earlier this year in March with the theme “Accelerating Economic Growth through Innovation, Transformation, and Inclusion and Governance conclave, Ethiopia was one of the countries that benefited immensely.
As part of the benefits from the 9th to 11th conclave, Ethiopia, a population of over 91 million people, was given a line credit of $1 billion for the construction of sugar and power industries and rail network in an attempt to bring the country to a middle class country status.
Again, among other programmes, the delegation will meet with officials from the Ethiopian Investment Agency (EIA) in order to talk and harmonize all the business opportunities that could allow the Indian companies participate in boosting businesses in Ethiopia. As part of the programme, they will meet with the Ministry of industry (MoI) and Minister of Water, Irrigation and Energy (MoWE), the Ethiopian Minister of Agriculture Investment and Land (EAIL). Even interaction with CEOs is not left out in the meeting.
This visit is targeted at opening up new business frontiers in Ethiopia and find out possible areas of investment which can deepen Indian companies’ presence in the country that is making rapid effort in eradicating poverty and becoming self-sufficient in food, Source from the Indian embassy in Addis Ababa, quoted Vijayakumar K., the first secretary and head of chancery at the embassy.
He maintained also that the meeting will indeed promote strong industrial relationship between Ethiopia and India and ultimately bolster economic opportunities.
Investments in Ethiopia from the United States and Europe have been increasing rapidly over the past few years with their proportion equivalent to the amount of Asian investment.
Of 40.61 billion Birr (about US$2.06 billion) of foreign direct investment (FDI) in Ethiopia between mid-2010 and mid-2014, the share of U.S. and European investment was more than 19.27 billion Birr or about 47 percent of the total, according to official data.
During the past 10 years, Chinese and Indian investments had formed the lion’s share of FDI in Ethiopia but the situation has changed today. “When we see the FDI flows over the past ten years, most of the investments had come from Asian countries especially China and India, but now investment flows are nearly at an equal rate from Europe, America and Asia,” said Ethiopian Investment Agency public relations director Getahun Negash.
The year 2011 was the start for the boost in U.S. and European investment to Ethiopia with the trend continuing in subsequent years.
During the just concluded fiscal year, the U.S. and Turkey were just behind China in the number of investment projects and aggregate capital invested.
U.S. investment reached a high in 2012 with 194 projects involving 1.4 billion Birr in capital approved.
European investment reached higher in 2011 when 29 projects with 4.6 billion Birr projects were licensed (US$1 = ETB19.72).
Image may be NSFW. Clik here to view.A new conference center named Nile International Conference Center was inaugurated in Bahirdar July 14, 2014 in the presence of Deputy Prime Minister Demeke Mekonen, Foreign Minister Dr. Tedros Adhanom, Ambassadors of the Nile Riparian states and other high level dignitaries.
The Center which was constructed with a cost of more than half billion birr has one main hall and 10 syndicate boardrooms. The 10 syndicate rooms are named after the 10 basin states.
The center which rests on 110,000 square meters comprises also an amphitheatre, photo gallery, café and restaurant among other things. On the occasion Demeke Mekonen noted that Ethiopia’s federal governance is playing great role in speeding up the development of the regional states.
He went on to add that apart from its natural attractions, the fact that Bahirdar has now conference center, a stadium and its advances in acquiring modern technologies should be taken as a symbol of the national development.
He also noted that the designation of the syndicate rooms after the 10 Nile basin states will have a role in consolidating the close ties of the basin states and their aspiration to grow together.
Abate Yalew, Speaker of the Amhara Regional Council said that the 10 states are allowed to keep artworks which reflect their culture and history in the designated rooms.
Dr. Tedros Adhanom for his part underlined that the centerpiece of Ethiopia’s foreign policy is predicated on ensuring common development and peace of Ethiopia with its neighbors in a bid to guarantee the benefit of the people in general.
He said Ethiopia’s stride in development of mega projects will have a big role in integrating the region through development and eventually realize a prosperous, democratic, conflict-free continent.
The fact that syndicate rooms are named after the basin states in Bahirdar which is the source of the Nile, shows that they should play their role in realizing common development and the development of the continent in general.
Egypt’s Ambassador to Ethiopia Mohmmed Edris and Philp Karenzy, Deputy Head of Mission of Rwanda said that the designation of the syndicate rooms after the basin states symbolizes Ethiopia’s contribution to the realization of the continental integration and regional development.
It also reflects Ethiopia’s contribution to Africa’s peace and security and promotion of rapid and inclusive development. The construction of the conference center took 4 years.
The government has significantly raised the salaries of civil servants and the topic has excited the nation, even though the amount of the increases has not officially been disclosed. However, according to a document Capital obtained, the salary of government employees is doubled. Workers at the bottom of the pay scale will see their salary grow by 129 percent, while others with higher salaries have also gotten about a 76 percent raise.
Civil servants have secured a very impressive and unprecedented salary increment. Three weeks ago Prime Minister Hailemariam Desalegn disclosed that the government will increase salaries of state employees as of this month (the beginning of the budget year). The exact sum has not officially been confirmed. Sources close to the issue told Capital that the amount the government added is significant and as high as 129 percent.
According to the new salary rate, the minimum starting salary has been raised to 1,031 birr from 450 birr and the ceiling amount has reached 11,713 birr, for professionals.
Experts indicated that the minimum salary for sub professionals’ that previously stood at 450 birr, has now grown to 1,031 birr, which is a 129 percent increase.
The starting salary for professionals and scientific or fresh graduates that was 1,499 birr has now risen to 2,649 birr, which is about a 76 percent increase.
The previous maximum basic salary for professional and scientific recruits was 4,343 birr and now it has been raised to 7, 815 birr, which is also about a 76 percent rise.
According to the new salary scale that Capital obtained the minimum salary increase is not lower than 76 percent, even though the percentages vary on different levels.
Civil servants, who were earning the lower amounts, have secured the biggest raise.
Experts said that the percentage of the new pay raise is much higher than in the past.
Four years ago the government raised salaries for civil servants and then after that it also increased pay for teachers.
When the PM announced the salary hike during the Civil Service Day Celebration held at the African Union Conference Hall on June 23, he said that the government decided to increase its employees’ pay starting from the first month of the budget year (July 8, 2014) aiming to inspire them to engage in the nation’s development.
“It is intended to improve the working atmosphere as well as the living conditions of civil servants,” Hailemariam said.
“The increase will be made with consideration to the government’s financial capacity, in a way that avoids awakening inflation or disturbing the stability of the economy,” Hailemariam added.
He said that the increase was approved about a year ago, but the government suspended it with the intention of seeing the trend of the inflation remain in single digits.
Even though there are not accurate statistics, the number of civil servants in the country is believed to be about 1.3 million.
Since the government disclosed the salary increase three weeks ago price hikes and new tariffs are being observed in some market places. Some experts say that the inflation may return, but the government is dismissing fears of price hikes. It also stated that price hikes and inflation would not be seen in relation with the salary increase.
Some of the government bodies also stated they would take legal action against traders who impose artificial price hikes on the public. Early this week the Trade Competition and Consumers’ Protection Authority announced that consumers are informing the authority about price increases related to the pay raise of civil servants. In a statement that the authority sent to Capital it reiterated that it will take legal measures against the traders who apply price hikes without any economic reason. The authority also advised the public to inform them by calling a 8478 toll free line when they perceive that price hikes are occurring.
Due to fears of artificial price hikes the newly organized wholesale public enterprise, Alle, has disclosed that it will terminate the contract of retail traders if they sell consumer products at high rates.
- Two committees have been established to look into how the application of direct and indirect taxes could be revised
.
Image may be NSFW. Clik here to view.
Sufian Ahmed, minister of MoFED
Image may be NSFW. Clik here to view.
Beker Shale, director general of ERCA
.
Ethiopia is likely to see major tax law revisions and consolidation if a proposal the customs body submitted to the Ministry of Finance & Economic Development (MoFED) sees the light of day.
The revision and consolidation process of these tax laws was initiated by the Ethiopian Revenues & Customs Authority (ERCA). The proposed changes are based on the different clarification questions it has been receiving from taxpayers and others concerned; problems encountered while applying the laws and questions forwarded by tax payers at different times during the enforcement of these laws.
The Authority established two committees to look into how the application of direct and indirect taxes could be revised. The revisions the committees are suggesting would affect many of the tax laws currently in place – some of them since 2002, including income, excise and turnover taxes; VAT registration; classification of taxpayers; settlement of tax disputes and the issue of the highly debated hefty deposits for settling those disputes.
The revision suggests a higher minimum income, for salary and businesses, that will be taxed, says Seyoum Woldaregay, legal advisor to the Director General of the ERCA.
The exemption threshold for salary income tax currently is 150 Br, while for businesses it is set at 1,800 Br. After exempting this amount, the tax rate progressively grows from 10pc up to 35pc under the income tax proclamation. The amount of employment income exceeding 5,000 Br shall be taxed by a flat rate of 35pc, while if the income is from business activities the same rate is applied for the amount exceeding 60,000 Br. The suggested revision affects both the minimum taxable income and the maximum from wherein the flat rate is applied.
The ERCA also wants to change the conditions for the classification of taxpayers into small, medium and large; the existing system categorised those businesses with an annual turnover of 100,000 Br or less as small and those with half a million Birr or more as large, with the rest falling into the medium category. This has been in place for over 10 years, and the ERCA wants to revise it so that it accommodates the depreciation of the Birr over the years.
The proposal also includes having a dedicated section to deal with tax disputes and also limiting the 50pc deposit requirement of those who appeal for tax revision to just the base tax levied on them, excluding penalty and interest payments, as is the practice now. Currently there is a tax review committee, whose function is a secondary responsibility for its members in different departments of the ERCA.
The mandatory VAT registration also applied for minimum annual turnover of half a million Birr in a practice that has been in place since 2002. This could now go up to one million Birr. The 2007 regulation that enforced the use of cash register machines based on other tax laws could also be elevated into a proclamation all on its own “in a comprehensive and inclusive manner,” according to a source who declined to be named.
The MoFED received the proposed amendments two months ago, but it is yet to see them to the next stage.
Image may be NSFW. Clik here to view.African Wildlife Capital, a mission-based investment company has signed agreements with a British-Ethiopian venture to build a world-class boutique hotel in Ethiopia’s Simien Mountains National Park, one of the heritages of Ethiopia inscribed by UNESCO.
Called Limalimo Lodge, the hotel will offer high-end accommodation, tailor-made activities, and gourmet cuisine in one of the most beautiful places in the world, according to a press release the Lodge sent to ENA.
The Lodge, funded by African Wildlife Capital with one billion USD, scheduled to open in fall of 2015 and bring benefits to area’s wildlife and people
The investment will bring tangible benefits to the neighboring Limalimo community by employing locals to both help during the construction phase and to work at the lodge once open.
Shifteraw Asrat, CEO of Limalimo Lodge, said together with the African Wildlife Capital, African Wildlife Foundation, and the Ethiopian Wildlife and Conservation Authority, “we can develop long-term, sustainable conservation practices in the Simien Mountains and showcase the potential for well-managed tourism projects in Ethiopia.”
As the lodge draws more visitors to the Park, it will generate ‘much-needed’ revenue through conservation fees for the Authority and establish a financially and environmentally sustainable model for conservation tourism that can be replicated across other parks in Ethiopia, the statement said.
Listed as a World Heritage Site in 1978 by UNESCO, Simien Mountains National Park offers dramatic mountain scenery with a wide variety of endemic fauna and flora, including the Gelada monkey and the Walia Ibex, a type of mountain goat.
It offers excellent trekking opportunities, including Ethiopia’s highest mountain Ras Dashen/Dejen.
The area, which is under threat from livestock grazing and agricultural sprawl, was put on UNESCO’s List of World Heritage in Danger as a result of declines in a number of native species.
African Wildlife Capital hopes to improve conservation around Simien Mountains through its investment in sustainable tourism.
“We have seen how lodges like Limalimo can play a key role in the conservation of sensitive areas such as the Simien Mountains National Park,” said African Wildlife Capital Investment Manager Giles Davies.
“In Ethiopia, tourism is still in its infancy but is growing fast, and rarely have we been able to engage in a country during this stage of tourism development.”
“The Simien Mountains, a key tourist destination in the country, will benefit, both from a socioeconomic and conservation perspective, from a well-managed and thoughtfully constructed lodge such as Limalimo.”
Solomon Taddesse, the director of the newly established Ethiopian Tourism Organization, acknowledged the benefits the lodge will bring to both wildlife and people.
“This is a tremendous investment for Ethiopia,” said Taddesse. “This public-private partnership will create jobs for the local community as well as improve Ethiopia’s national parks,” according to the release.
Sugar may soon be imported from abroad to alleviate the current shortage, Capital has learnt. The industry was already experiencing some problems as Tendaho Number One which was expected to produce 75,000 tons as of January 2014, is not yet completed. This coupled with the sudden crop failure at Finchaa sugar factory in early May 2014, has forced the Sugar Corporation to reduce quotas or eliminate sugar subscriptions.
As a result, Moha Soft Drinks Share Company- one among the biggest subscribers of the corporation- and maker of Pepsi products stopped production for the last two weeks. Moha, was usually consuming 16,062 quintals of sugar each month from the corporation, however has not received anything from the corporation since June 28, 2014, according to a spokesperson for Moha. As a result all seven of its factories are currently idle.
“When we have received sugar it was lower quality than our standards so it has to go through another process to be used as a raw material. But we can still tolerate that because we want to keep our good relationship with the corporation. However when we can’t get any sugar at all obviously it becomes very difficult,” Solomon Bekele, Sales and Marketing manager of Moha, told Capital.
Though the damage varies, a number of the industries- especially soft drink and biscuit manufacturers like the East Africa Bottling Share Company (Coca Cola) – another giant subscriber- are facing challenges, although the East Africa Bottling Share Company declined to comment.
Some have brought the issue to the Ministry of Trade (MoT) and the Ministry of Industry (MoI).
The corporation is hoping, to minimize the problem by pushing Tendaho One to start production within the coming week. “We are hopeful that Tendaho will start production within the next few days. It is already completed. The impact will then be high,” Zemedkun Tekle, communication director at the corporation told Capital.
“Now that it is almost finished we will make up for the lost time by working through the summer starting next week,” Zemedkun said.
Kesem – another state owned sugar factory being constructed by a Chinese company will start production in November 2014, according to the corporation.
Yet the margin in the demand and supply of sugar in the country remains high. The quota for the total of 129 subscribers which are manufacturers was 90,000 quintals of sugar. The rest is distributed to associations for household consumption. “Normally, our demand is 25,000 quintals per month. We want to expand it so we can increase our taxable revenue from the current 1.9 million birr but with the current situation we cannot sustain the current amount,” Solomon said.
“At such moments, we give priority to households” said Zemedkun from the corporation. Currently, the quota set by the government for household consumption per month is 507,000 quintals of sugar – 102,000 for Addis Ababa and 405,000 quintals for other regions- per month.
Two New Dams Planned to Provide Flood Protection to Sugarcane Farm
.
- The MoWIE is also looking to restructure itself into the Water Resources Development Engineering Corporation
.
Image may be NSFW. Clik here to view.
The current pump station for water supply to the Awash town and its surroundings, the amount and the pulling power of which will be enhanced upon the construction of the new dam understudy.
.
The Water Works Design Services Enterprise (WWDSE) has finalised an inception report for the construction of two multipurpose dams on the Middle Awash River and Logia River – a lower basin tributary of the Awash. The Enterprise has also begun conducting a feasibility study for the construction.
The Enterprise was awarded with the task of conducting the feasibility study and design of the two multipurpose dams by the Awash Basin Authority of the Ministry of Water, Energy & Irrigation (MoWEI) in April 2014. It signed an agreement during the same month, according to Leulseged Abayneh (Eng), Lower Awash Multipurpose Dam and Irrigation Project manager with the WWDSE. It will be paid 8.5 million Br for the study and design of the dam on the middle basin of the Awash and 13 million Br for the same task on the dam and irrigation project on the Logia River, he said.
Upon signing the agreement, in May the WWDE started conducting a pre preliminary study to prepare an inception report, which it submitted to the Authority in the first week of June 2014. It has reviewed available documents on the project areas, identified data gaps and additionally required data, revised the work plan it has submitted in the tender proposal and conducted site visits and inquiries at this phase of its activities. After a discussion is made with the basin authority on the draft inception report, comments from the client were received at the end of June 2014. The enterprise is working on the inclusion of the comments, as they prepare the final inception report to begin the feasibility study, according to Leulseged.
As one of the main objectives of the pre-feasibility study is to prepare the inception report, engineers at the WWDE have identified and proposed two alternative sites for each of the dams, in addition to identifying the areas that required additional data and collection methods.
It was at these sites that they have started gathering field data, as part of the preliminary study the enterprise is required to perform under the contract. The feasibility study for both the dams includes a topographic survey of the dam site and reservoir area, climate and hydrology study, hydrogeology study, engineering geological and geotechnical investigation, updating irrigation agronomy study, environmental impact assessment (EIA), socio-economic study, financial and economic analysis and engineering study and feasibility level design, according to the contract agreement
The feasibility study on the Lower Awash includes eying a total area of 10,000ha for irrigation, which may be reconsidered based on the findings of the study on the soil and water volume of the river.
After finalising the preliminary study and getting approval from the client, the enterprise will prepare the detailed design for the dam and structures, as well as irrigation and drainage system design. It will also conduct a dam break analysis, as a safety measure in case of failures in the dams. The enterprise finalises its tasks under the contract by preparing the detailed engineering specification for the construction of the dams, preparation of tender documents and engineering cost estimation – the rough estimation of which will be known at the end of the feasibility study.
The major objective of the two projects – Middle Awash Multipurpose Dam and Lower Awash Multipurpose and Irrigation Dam – is to curb the recurring floods that are threatening threaten the sugarcane farm of Tendaho Sugar Factory, which is under construction and expected to begin production in the new fiscal year, says Ashenafi Negia, the Middle Awash Multipurpose Dam project manager at the WWDSE
The multipurpose dam on the Middle Awash is found in the Afar and Oromia regions around Awash town – 223Km north-east of Addis Abeba and two kilometres from the Addis Abeba-Djibouti road. While the Lower Awash Multipurpose Dam and Irrigation Project will be constructed on the Logia River – one of the downstream major tributaries of the Awash River, flowing most of its length southwards. It is located about 80km upstream of the Addis Abeba-Djibouti road main bridge.
Besides the main objective of controlling floods, the dam to be constructed at the middle stream of the Awash River will also be used to supply water for Middle Awash irrigation development schemes, already in place, mini hydropower generation, a recreation centre and water supply for Awash town. The dam on the Lower Awash basin will primarily be used for flood control and the provision of water for irrigation development schemes, according to managers of both projects.
Operating at its headquarters – newly built at an outlay of 100 million Br, near Bob Marley square in Gerji, Bole District – the WWDSE is the major operator in the fields of waterworks design and study. It has done design works for the Tendaho, Kuraz and Kesem Bollhame sugar development projects, as well as the Halele Warebessa hydropower project and many other similar tasks since its establishment in 1999, as a profit making public enterprise with a paid up capital of 35.2 million Br. Currently, it has more than 38 ongoing projects, including more than 11 projects for which it is conducting feasibility and prefeasibility studies and 15 projects under its supervision.
It has been expanding ever since its establishment by increasing its annual turnover from eight million Birr in 1999 to 220 million Br over the past 11 months of this fiscal year, with its net profit growing from a little more than one million in the year of its establishment to 43.5 million Br in 2013. Its gross revenue during the past 11 months of this fiscal year has been about 105 million Br, according to the recent financial report of the enterprise.
On top of this success, the MoWIE has drafted a reorganisational regulation that will make it the Water Resources Development Engineering Corporation, with a capital of 700 million Br. Its areas of operation and responsibility, as well as its organisational size will be enlarged accordingly upon approval of the regulation, which is expected before September 2014.
In recent years there has been a change in thinking and narrative when it comes to Africa’s representation in western media. A good example of this is The Economist’s special report last year that referred to Africa as the “Hopeful Continent”, a mere 13 years after publishing the front cover that dubbed it the “Hopeless Continent”.
Today, Africa’s investment and business potential is making headlines, with McKinsey’s statistics of growing consumer spending power commonly quoted alongside the fact that the continent is home to six of the world’s 10 fastest growing economies. With this narrative shift comes the view that Africa needs trade, not aid, to prosper, as the former results in sustainable development, while the latter leads to dependency on handouts.
According to Nigerian-American journalist and author, Dayo Olopade, the perception that Africa needs western assistance to survive is often exploited by profit-seeking businesses.
Olopade is the author of The Bright Continent: Breaking rules and making change in modern Africa, a book she spent three years researching whilst travelling across the continent. She says a key goal of her work is narrative correction concerning Africa.
In a recent interview with How we made it in Africa, Olopade explains that some for-profit western companies reinforce and leverage the existence of poverty as a clever marketing tactic and brand differentiator. She uses the example of US shoe company, Toms Shoes, which has trademarked the slogan “One for One” where for every pair of shoes the company sells, a pair of new shoes is given to a needy child.
“The fact that they leverage the existence of people without shoes, or more specifically the perception that there are people without shoes, is kind of dishonest… Not only are there shoes available across many parts of sub-Saharan Africa for local purchase, there are people who are making shoes in Africa who are employing people, creating capacity, creating skills and training, and steady income and formal sector employment,” argues Olopade.
She adds that companies like Toms, which seem charitable in their donations, are actually depressing the local economy and “reinforcing the incorrect perception that people in poor countries can’t afford anything”.
The Toms ‘One for One’ model
Last year, Fast Company reported that Toms had given away their 10 millionth pair of shoes. The company was founded in 2006 by American serial entrepreneur Blake Mycoskie who was inspired during a visit to Argentina where he met a group of women who were collecting shoes for school children. In an interview with The Business of Fashion last year, Mycoskie described his motivation behind starting the company.
“I went with these women to this village [in Argentina] and saw kids and families who were so excited to get these shoes – and they weren’t even new shoes. They were used shoes. And it just hit me right in the heart. This was what I wanted to be doing. I mean business is great. Making money is fun. But making people have tears of joy? That’s what life’s about.”
Mycoskie says that his first thought was to start a charity, but he hated asking people for money. And so the idea was formed to have a business where for every pair of shoes sold, he would give one away.
“It was the birth of the ‘One for One’ model,” adds Mycoskie. “But it wasn’t like, ‘oh this is going to be the greatest tagline in the world’ or “this is the best way to connect with customers”. The easiest way to keep track of everything was simply: you sell a pair, you give a pair. It just seemed really simple.”
In 2011, the ‘One for One’ model was expanded and Toms Eyewear was launched, where for every pair of sunglasses purchased, “Toms helps restore sight to a person in need”, according to the company’s website.
While Toms did not respond to How we made it in Africa‘s request for a comment on Olopade’s views, Mycoskie did address some of the common criticism around his business model in an interview with The Huffington Post. “If you really are serious about poverty alleviation, our critics said, then you need to create jobs. At first I took that personally, but then I realised that they were right… using our model to create jobs is the next level.”
The company states that its shoes are made in China, Ethiopia and Argentina and, according to Mycoskie, by the end of 2015, Toms plans to have one-third of all shoes produced in the countries to which the company donates.
Mycoskie describes himself as a social entrepreneur and says the company remains profitable because the footwear and eyewear categories are two of the highest margin businesses in the fashion industry. This, along with using social media to reduce marketing expenses, is why Toms can carry the cost of giving away a second pair of shoes for free, says Mycoskie.
According to Olopade, the ‘One for One’ model is simply a way to differentiate the Toms Shoes brand from others.
“So for a company… that has no particular brand advantage other than the pseudo-altruistic for-profit scheme – because again, people think it’s a charity but it’s a for-profit company – I find it to be super disingenuous.”
She added that there are a number of other companies employing the same “charitable” business model, and thereby reinforcing common misconceptions about Africa and third world economies.
“People realise this gimmick works. So you have all kinds of other companies – from food to coffee to sunglasses – emulating this model… It has its own incentives, its own profit motives and is very often misaligned with the addressable needs of people who are poor.”
Aid versus trade: do charitable donations do more harm than good?
Olopade says that the common perception that Africa is waiting on western assistance is “patently false” and the impression that “people are sitting around refugee camps with flies on their eyes waiting for some handout” undermines the population’s potential.
“If you spend any time in sub-Saharan Africa, people have two jobs, three jobs, working twice as hard to get half as far. And are extremely energised and animated and motivated to solve exactly the problems that folks in Geneva, Brussels or New York are pondering in conference rooms.”
During a recent Zócalo Public Square event, a non-profit ideas exchange platform based in the US, Olopade said that many perceptions on Africa have been manipulated.
“Most images of Africa arrive from sources that are interested in making you feel bad about Africa. And I say this not to discount the important humanitarian work that can be done in situations of crisis.”
Olopade holds the view that Africa needs trade, not aid, for sustainable development and noted that charitable donations, such as second-hand clothing, can actually do more harm to an economy than good.
“Mali is always the example I use. It’s one of the biggest cotton producers in the world but it no longer makes T-shirts, in part because of the flood of donated items that come from countries like the US, and put workers out of jobs.”
The Maritime Affairs Authority (MAA), a maritime operation supervisory organization, has excluded customs clearing agents from being involved in forwarding operations with the goal of halting the traditional operation system, Capital learnt.
The authority has ordered the customs clearing agents to engage only in services stipulated in a 2004 Customs Clearing Agents Regulation, sources said.
According to experts, agents who have a license for customs clearing were also working in the freight forwarding business, which also has its own laws and procedures. Under the new rules that MAA disclosed this week, the customs clearing agents will not be able to work in the forwarding business.
The country’s law stated that customs clearing agents are only allowed to work in customs issues inside the country and cannot be involved in international transportation activity.
The Customs Clearing Agents regulation issued in 2004 stated that ‘Customs Clearing Agent’ means a person authorized to deal with the customs, for and on behalf of another person, to carry out customs formalities related with the importation, exportation and in general with the movement and storage of such goods within the customs territory of Ethiopia.
The regulation also indicated that ‘Customs Formalities’ means any customs operations carried out in connection with importation, exportation or transit of goods from the time of arrival at the customs port until released from the customs control.
However there was a growing trend, until a week ago, for agents with a customs clearing license to get involved in the forwarding process from the port of Djibouti or other similar facilities to import their customer’s cargo.
“The previous trend was very wrong and it is the right decision taken by the authority to exclude the stated type of agents from the forwarding business,” experts stated.
It was unclear how the customs clearing agents were able to simultaneously get involved in the freight forwarding business. Because there are different criteria needed to transport cargo from international ports; for instance the agent must open a letter of credit to settle the payments in the third country (Djibouti) and only freight forwarding agents are allowed to open a letter of credit “But customs clearing agents were carrying out this business previously,” an expert said.
Individuals who are involved in the freight forwarding business that Capital interviewed said that it is the right decision taken by the authority, because their business was affected by the involvement of the customs clearing agents.
Since the authority declared the new system the business community engaged in the customs clearance claims they have discontinued freight forwarding.
MAA was established in 2007 in accordance to the proclamation No. 549/2007, but it began operating in November, 2008. The authority is accountable to the Ministry of Transport and is engaged in expanding the maritime sector with a modern system.
Ethiopia, which is the most populated nation in world without a seaport, is mainly using the port facilities at Djibouti which is rapidly expanding the number of ports and services to meet the growing cargo of east African landlocked countries, Ethiopia and South Sudan.
Capital’s efforts to get details about the issue from Mekonnen Abera the director general of the authority, on Friday July 11, were unsuccessful.
New Mineral Deposit Sites Identified Despite Lagging Performance
.
- Rain, scarcity of vehicles, old machinery and the lack of skilled manpower were among the issues identified for poor performance
Image may be NSFW. Clik here to view.
According to the map by GSE, there is the potential in Ethiopia for 200tn of gold, 4.7 trillion cubic feet of petroleum, 100 million tonnes of marble, 360 million tonnes of coal and 5,000 MW of geothermal energy
.
The Geological Survey of Ethiopia (GSE) has identified 20 new mineral deposits, pushing the national total up to 143 in the 2013/14 fiscal year, although revenue from its services was only 62pc of its target that planned to collect 21.7 million Birr.
Eighteen of the deposits involved gypsum, limestone, marble and potash. Nineteen of these deposits are found in Oromia, with seven in the Gugi zone, six more in south-west Oromia and six in Holeta and Meki. The 20th, a coal deposit, was found in Wolkite town in the Southern Regional State.
The GSE collected only 13.3 million Br from the services it provides for its local and international clients in the just ended fiscal year – 62pc of its 21.7 million Br target. The company managed to collect 10.5 million Br from core drilling services, two million Birr from sample testing and the remaining 845,000 Br from the sale of geosciences information and consultation services. It attributed its failure in attaining its target to delays in the import of chemicals for its laboratory and late orders from clients, which didn’t start coming in until February, according to Tamiru Mersha, communication directorate director at the GSE.
It offered core drilling services to the Ezana, LL, Berber and Kripto Mining companies for the exploration of gold and conducted a study for the Tigray Water Development Bureau for the construction of a dam.
The GSE has conducted the geological mapping of the country, with a coverage of 74pc. According to this mapping, there is the potential in Ethiopia for 200tn of gold, 4.7 trillion cubic feet of petroleum, 100 million tonnes of marble, 360 million tonnes of coal and 5,000 MW of geothermal energy. Its geothermal excavation has only been 200m, out of a plan for 6,750m.
The GSE, now under the Ministry of Mines(MoM), was established in 1968, with the responsibility of collecting basic geosciences information from the whole country to disseminate to all stakeholders. The GSE carries out geological mapping and investigations related to mineral resources, oil and natural gas, hydrogeology and engineering geology. It also undertakes geochemical analysis of solid and liquid samples, physical property testing and petro graphic and mineralogical studies.
It has carried out soil tests for the Great Ethiopian Renaissance Dam (GERD) project and also engaged with 11 additional capital exploration projects. Six of the ongoing projects have faced issues of poor performance.
The projects showed poor performance because of untimely rain, scarcity of vehicles, old machinery, lack of skilled manpower, repeated breakdown of machinery caused by the incompatibility of the area and high worker turnover, according to its annual report.
Geological Survey of Ethiopia (GSE) disclosed that there is over 20,000 tons of tantalum deposits in Oromia Regional State.
EGS Communication Director, Tamiru Mersha, told Ethiopian News Agency that the deposit would help the country in its efforts to become an industry-led economy.
He said the mineral is abundantly found around Kenticha in Guji Zone of the Oromia State.
Tantalum is used as input for producing medical equipment, mobile accessories and other industrial purposes, according to the director.
Exploiting tantalum within a short period would, therefore, help in transforming the country from an agricultural-led to industry-led economy, he further elaborated.
Communication Director of Ministry of Mines, Bacha Faji, on his part said seven companies, including Chinese, Israeli and the Ethiopian Mineral Development Share Company, have secured licenses for exploring tantalum.
Among the companies, only Ethiopian Mineral Development Share Company is developing the resource, the director said, adding that the others engaged in exploration would hopefully soon undertake development.
The Ethiopian Mineral Development Share Company secured over 3 million USD by exporting 80 ton tantalum to China during the past Ethiopian budget year.
Traditional miners obtained about 1.3 million USD, he indicated.
In the first ten months of the 2013/14 fiscal year, export earnings stand at 249 million dollars – 22 million dollars short of the earnings for the entire 2012/13 fiscal year.
There is no crop that creates as much confusion for policymakers as Khat – a popular stimulant. They are regularly seen being put in a difficult position when the issue of the crop is raised. On the one hand, they are happy about the export earnings the crop brings to the nation, which suffers from a long overdue foreign currency conundrum and expanding budget deficit. On the other, they seem to be concerned of the impact of the stimulant crop on the health and psychology of its ever-increasing consumer population across the country. As a result, there is no clear policy on the crop, which continues to bless the nation with huge export earnings. In the first ten months of the 2013/14 fiscal year, export earnings stand at 249 million dollars – 22 million dollars short of the earnings for the entire 2012/13 fiscal year. Further enlightenment over the policy confusion with the crop is the fact that growers are left alone. They do not receive any coordinated agricultural support. Despite the confusion, however, the demand for the crop has continued to increase from countries as varied as Somalia, Israel, the United Kingdom and the Netherlands. Yet, a headwind has come in the trading of the crop, with a recent ban in the UK – the third largest importer of the crop from Ethiopia, with a total import value of 14 million dollars in the 2012/13 fiscal year. The ban, informed by medical researches and psychological surveys, which illustrated a significant negative impact on consumers themselves and the wider community, has become the latest test to the export regime of the nation. But, little has transpired from policymakers over the ban, even though Kenyan politicians, whose nation also exports the crop to the UK, are trying to push back the implementation of the ban by at least one year.
.
- Foreign Ban Challenges Khat Export, While Gov’t Remains Indifferent
.
Image may be NSFW. Clik here to view.
Supply chain actors react as destination markets clamp down on Khat
.
Just like most of his countrymen in the East and West Haraghe Zones of the Oromia region, there is a lot at stake for Abdella Yusuf, 41, with the one item he knows most, Khat, coming under threat.
The legend behind the discovery of this addictive leaf is very much the same as that of coffee: A Yemeni herdsman, on seeing his goats becoming overactive after chewing the leaves, tried it for himself, before sharing his wisdom with the world.
As the elder son of a Khat farmer in East Hararghe Zone, Abdella has been on the farm helping his father since early childhood.
.
Image may be NSFW. Clik here to view.
Only demand has kept khat as one of the top commercial agricultural commodities
.
Khat has served many purposes in his locality. On top of being a means of making a living for almost all of his neighbourhood and extended family members, it is used to welcome and entertain guests, in mourning, at weddings and during collective labour.
He withdrew from school in grade eight, becoming one of the numerous small scale Khat traders supplying different varieties of the crop with different vernacular names in Dire Dawa. He expanded his business upon reaching the market in Addis Abeba during his early 20s.
Successful enough to find foreign markets for the green leaf he regards as “the one I know most”, he began exporting Khat to China a decade and a half ago. Business was going well; so too was life. He has married and became a father to a daughter. There were no problems of supply from the East and West Hararghe Zones. No problem of market too. He was sending between 800kg to 1000kg of dry and fresh Khat he acquired from farmers in Aweday – the place most famous for quality Khat – and Baddessa, another famous region for the crop. Almost a decade in the business and with an increasing number of daughters, now four, the first blow came when China banned Khat from crossing its border.
“When China banned Khat, I was quite confused at first,” he recalls. “My best experience and knowledge is all about Khat, I don’t know what to do if not Khat.”
Thus, a shift in the destination to the two types of Khat he has been exporting. He succeeded in gaining access to Khat chewers in The Netherlands. But, not such a large amount as was being sent to China is possible there. The scale of his exports, as well as his earnings, have decreased by half. But now, the same blow comes from the government of The Netherlands.
A third market destination had to be found, in order to reach members of the Somali, Yemeni and Ethiopian communities, accustomed to chewing the green stimulating leaf, beginning from the time spent back in their home countries.
However, this Ramadan has not come with good news for Abdella, though he was aware of it ahead of time. Right at the beginning of the fasting season, on Saturday, June 22, 2014, Ethiopian Airlines informed him that it will no longer carry Khat to the UK. And in the UK, two days were left for the deadline that activated a legislation by the House of Commons to add the crop to the banned category C drugs in the country. Amidst this, Abdella’s 1,700 Kg of Khat ready to be transported to the UK on Saturday and Sunday has been left in the store.
“I thought I would be sending on those days and so brought 700kg to Addis Abeba and collected 1,000kg in my stores in Aweday and Baddessa,” he said.
With the latest classification of Khat as a category C drug, penalties for possession could lead to two years in prison. For the supply and production, up to 14 years of imprisonment could result.
“Police can issue a warning or an on-the-spot fine of £60 for the first two times that \ person is found with Khat,” says the UK government’s document on drug penalties. “If you’re found with khat more than twice, you could get a maximum penalty of up to two years in prison, an unlimited fine or both.”
It seems that the decision has been made in the west that Khat is a harmful drug, with the UK joining the league of nations that have banned its import, use and distribution. In the producing countries, such as Ethiopia and Kenya, however, the repercussions are unsettling in many respects.
Abdella is one of the 300 exporters of Khat to different destination across the globe, with Somalia and Djibouti taking the lead.
Their collective exports make Khat one of the top three export items in terms of dollar revenues for Ethiopia. The amount of dollars it has brought to the nation, as well as the volume of export, has been steadily rising. The country exported 22,000tn of Khat in 2007/08, earning 108 million dollars. This increased by 3500tn the following year, with 31 million dollars in additional earnings. The volume of exports increased to 36,000tn, 41,000tn, 41,100tn, respectively, for the three consecutive years that followed 2008/09. The country has also earned 209 million dollars, 238 million dollars and 240 million dollars during those years.
The rise, both in terms of volume and earnings, has also continued in 2012/13, reaching 271 million dollars in earnings from the export of 47,000tn of Khat. This was followed by 249 million dollars being earned from 44,000tn over just the past ten months.
Among the top three export destinations of Khat from Ethiopia, the UK is third, with Somalia taking the lead followed by Djibouti, in terms of dollars earned. In 2012/13 alone, the country reaped 14 million dollars from the Khat exported to the UK. Somalia, which is contributing 78pc of the earnings, bought 201 million dollars worth of Khat, followed by Djibouti, with 42 million dollars. A small portion of the earnings, 1.6 million dollars, is also earned from export to Israel.
Nonetheless, the country is exporting only a small portion of the total amount of Khat it has been producing. In 2012/13, only 47,000tn made its way to the foreign market, out of the 190,000tn produced by close to 2.5 million farmers cultivating the crop on a total area of 201,115ha.
It is mainly produced in the Oromia region, which accounted for 64pc of the total production in 2012/13, with close to 1.5 million farmers engaged in its cultivation. Next is the Southern region, which contributed 24pc of the total production through its 714,276 million smallholder farmers. A considerable amount of farmers also produce 3.2pc of its production in the Amhara region, with other regions, including Somali, Harari, Dire Dawa and Benishangul Gumuz, contributing the remaining amount.
If there is one thing puzzling about the cultivation and trade of this plant in Ethiopia, even as a premier export item, it is its power to prove itself both on the domestic and foreign markets, completely independently and with no policy provisions from the government.
The only one section within the Ministry of Trade (MoT) working on issues related to Khat is the Khat Marketing Team under the Food Crops Marketing Directorate. The main task of this team is to oversee the export aspect of the Khat market, according to Tesfaye Amare, the team’s coordinator.
“There is neither research nor a package for extension support for the product,” he told Fortune. “It seems that the government is not concerned, even if the whole world bans it.”
Officials at the Agricultural Extension, Crop Department within the Ministry of Agriculture (MoA) and the Agricultural Research Institute have also confirmed that the cultivation and distribution of the plant is being operated solely by the farmers, without any support from them.
“We do not have any package or program regarding Khat, thus we have no policy ground to take action in any way,” says the crop department section head at the MoA. “However, as one of the major sources of foreign currency, it needs to be packaged and supported by the government.”
Only demand has kept it as one of the top commercial agricultural commodities, though, according to Tesfaye.
With the latest ban coming from the UK, Abdella, unlike the government, is not remaining indifferent. He is looking for other market opportunities.
- Although initially only available for overseas issued cards, Dashen will soon begin providing cards to local customers
.
Image may be NSFW. Clik here to view.
Berhanu Woldeselassie, president of Dashen Bank.
.
Dashen Bank is to begin accepting American Express cards as of July 26, 2014, in addition to MasterCard, VISA and UnionPay. The service will initially only be available to people who have acquired the card from foreign banks.
The Bank’s deal with the American Express Company has cost a few million dollars, although bank officials declined to say how much. The new deal will enable local and international American Express card holders to access the services of Dashen’s 170 ATMs to withdraw money and 800 POS terminals to make payments at hotels, supermarkets and other stores. Where ATMs are not functioning and where queues are long at the Bank’s branches, card holders can issue a receipt for the amount of money they need from encashment POS terminals available at the Bank’s branches. The Bank gives priority services to clients presenting these receipts, says Estifanos Befekadu, head of the Promotion Division at the Bank.
The payment Dashen has made on signing the agrement enables it to deliver services to domestic clients obtaining the cards from Dashen, whereas foreign banks, whose clients come to Ethiopia and use the cards they bring along, pay Dashen a commission for that service.
Dashen will begin issuing this card to its domestic clients in September, in addition to the VISA card it is already issuing. It does not have such provisions for MasterCard – an American electronic payment service – or UnionPay, which is a Chinese service.
Though officials of the Bank refrained from disclosing the amount paid to American Express for the right to acquire as well as issue these cards exclusively in Ethiopia, it is said to be in the millions of dollars.
Dashen Bank pioneered Visa and MasterCard into the Ethiopian banking industry. It is also the first private commercial bank in Ethiopia to sign a similar agreement with the Chinese UnionPay. It made the move to include American Express following persistent demands from operators of hotels, supermarkets, restaurants and jewellers in Ethiopia, says Estifanos.
It is also a lucrative business, as the Bank has discovered with the other cards already in business, he added. Transactions of the VISA card through ATM and POS outlets has reached 3.6 billion Br, as well as generating 100 million dollars in foreign currency. Dashen has 1.2 million customers, as of June 30, 2014, of which 300,000 are VISA card holders, according to Estifanos.
With its total deposits reaching 18 billion Br, the Bank is also underway in its bid to launch mobile and agent banking, through which companies and commercial establishments, through an agreement with the Bank, provide services to the Bank’s customers. It is set to start serving through agents within the coming three months, which will also be followed by internet banking services, according to Estifanos.
Established over a decade ago, with an initial capital of 50 million Br, Dashen has increased its total capital to two billion Br in 2012 – 737 million Br of this is paid up. It is the biggest private bank in the country, with deposits of 18 billion Br mobilised from 1.2 million depositors.
Dashen’s dividend per share has been one of the highest in the industry over the past few years. It achieved a staggering 926 Br earnings a share from its operations in 2011/2012, up from 753 Br the year before and 609 Br in 2008/09. The earnings per share for the year 2012/13 were down to 823 Br, which was due to the declining net profit to 607 million Br in 2012/13 from 652 million Br the previous year. The Bank operates 134 branches and five forex offices in the country at present.
Cereals are still at the core of what people eat, but diets are becoming higher in protein, fats and sugar in many parts of the world as incomes rise and urbanisation increases – Special focus on India
Agriculture has to provide not just more food for human consumption, but also raw material for industrial purposes, such as biofuels and animal feed.
.
11 July 2014, Rome – The recent fall in prices of major crops is expected to continue over the next two years before stabilising at levels above the pre-2008 period, but markedly below recent peaks, according to the latest Agricultural Outlook produced by the OECD and FAO.
Demand for agricultural products is expected to remain firm while expanding at lower rates than in the past decade. Cereals are still at the core of what people eat, but diets are becoming higher in protein, fats and sugar in many parts of the world, as incomes rise and urbanisation increases.
The OECD-FAO Agricultural Outlook 2014-2023 says such changes, combined with a growing global population, will require substantial expansion of production over the coming decade. Led by Asia and Latin America, developing regions will account for more than 75percent of additional agricultural output over the next decade.
Presenting the report in Rome, OECD Secretary-General Angel Gurría said: “Agriculture markets are returning to more settled conditions after a period of unusually high prices. This has been helped by governments showing restraint in the use of trade measures. But we cannot be complacent. We must do more – on trade, on productivity, and to tackle poverty. Governments should provide social protection for the most vulnerable, and develop tools to help farmers manage risks and invest in agricultural productivity. Achieving gains in ways that are both inclusive and sustainable remains a formidable challenge.”
FAO Director-General Jose Graziano da Silva said: “This year the Outlook’s message is more positive. Farmers reacted very rapidly to the high prices and increased their production so that now we also have more stocks available. We foresee that prices related to cereals will decrease for at least the next two years. The picture is different for meat and fish where we are facing growing demand. The good performance of the agricultural sector particularly in developing countries will contribute to the eradication of hunger and poverty.”
In a special focus on India, the Outlook projects sustained food production and consumption growth, led by value-added sectors like dairy production and aquaculture. Investment in production technology and infrastructure together with subsidies in a range of areas have contributed to strong output expansion over the past decade, the report says, and pressure on resources is expected to reduce production growth rates over the coming years.
While remaining largely vegetarian, Indian diets will diversify. As consumption of cereals, milk and dairy products, fish, pulses, fruit and vegetables grows, the intake of food nutrients will improve. India is currently home to the largest number of food-insecure people in the world.
The Agricultural Outlook says global cereal production is projected to be 15 percent higher by 2023 than in the 2011-13 period. The fastest production growth is expected to be oilseeds, at 26 percent over the next 10 years. The expansion of coarse grain and oilseed production will be driven by strong demand for biofuels, particularly in developed countries, and growing feed requirements in developing regions.
The expansion of food crop production will be more moderate over the coming decade, the report says, with wheat output growing by around 12 percent and rice by 14 percent, well below the growth rates of the previous decade. Sugar production is expected to increase by 20 percent over the coming decade, concentrated mainly in developing countries.
The Agricultural Outlook projects developments in a broad range of commodities over the coming decade:
Cereals: World prices of major grains will ease early in the outlook period, boosting world
trade. Stocks are projected to rise with rice inventories in Asia reaching record high levels.
Oilseeds: The global share of cropland planted to oilseeds continues to increase albeit at a
slower rate than in recent years as growing demand for vegetable oils pushes prices up.
Sugar: After weakening in late 2013, prices will recover, driven by strong global demand.
Exports from Brazil, the world’s dominant sugar exporter, will be influenced by the ethanol market.
Meat: Firm import demand from Asia, as well as herd rebuilding in North America support
prices which are expected to remain above the average levels of the previous decade, when adjusted for inflation. Beef prices are seen rising to record levels. Poultry should overtake pork to become the most consumed meat product over the next 10 years.
Dairy: Prices fall slightly from their current high levels due to sustained productivity gains
in the major producing countries and resumed growth in China. India overtakes the European Union to become the largest milk producer in the world, building considerable skimmed milk powder exports.
Fisheries: Aquaculture production growth will be concentrated in Asia, and will remain one of the fastest-growing food sectors, surpassing capture fisheries for human consumption in 2014.
Biofuels: The consumption and production levels of biofuels are expected to increase by
more than 50 percent, led by sugar-based ethanol and biodiesel. The ethanol price increases in line with the crude oil price, while the biodiesel price more closely follows the path of vegetable oil prices.
Cotton: The expected release of accumulated global stocks will boost consumption, helped by lower prices which should then recover by 2023.
China has acted quickly to finance two multibillion-dollar tenders in Kenya and construction of a multitude of others. While this has angered other international and local investors, they have been slow to put their money where their mouths are. Aamera Jiwaji looks at the increasing fractiousness within Kenya’s construction industry.
Image may be NSFW. Clik here to view.
A 21-gun salute at Kenya’s State House welcomed the 500-strong Chinese delegation in mid-May, and over the next three days, a record 15 agreements were signed between Nairobi and Beijing.
Various sectors attracted China’s attention, including aviation, agriculture, energy, manufacturing, technology and wildlife, but it was infrastructure that was most keenly watched. China’s Prime Minister Li Keqiang did not disappoint. He and Kenya’s President Uhuru Kenyatta signed two infrastructure related deals worth a combined $4.5bn.
The first was a $3.8bn (KSh 332.5bn) financing for the standard-gauge railway that will connect Kenya’s port city of Mombasa to Burundi’s capital Bujumbura through Kampala, Kigali and Juba, the ground breaking for which took place in November. The second financed the $743m (estimate from 2008–2012 Strategic Plan for Tana and Athi River Development Authority) Grand Falls Multipurpose Dam Project in Mwingi in Eastern Kenya.
Both projects will help to revive the failing fortunes of the multibillion-dollar Lapsset (Lamu Port, South Sudan and Ethiopia Transport) corridor, but the deals are overshadowed by concerns about China’s monopolistic control over Kenya’s megaprojects.
The need for African economies to prioritise infrastructure was emphasised by Head of the IMF, Christine Lagarde, in June when she urged Africa to spend $93bn a year to bring its economies up to speed.
Lapsset is one of the key infrastructure projects in Kenya’s development blueprint Vision 2030. It includes a port at Manda Bay in Lamu; a 1,500km standard-gauge railway line to the Ethiopian and South Sudanese capitals; a road network and oil pipeline connecting Lamu with Southern Sudan and Ethiopia (and now Uganda); an oil refinery in Baragoni; and airports and resort cities in Lamu, Isiolo and Lake Turkana.
It will be the country’s second transport and economic corridor, and will facilitate an equatorial land bridge connecting the Indian Ocean to the Atlantic.
The project is also hoped to revive the country’s growth, which stood at 4.7% in 2013 according to the 2014 Economic Survey, falling short of a 5.5% prediction.
The Lapsset Corridor Development Authority (LCDA) suggests it will contribute between 8% to 10% of GDP once investors come on board, especially since projects in poorly developed areas yield higher growth figures.
Ground breaking on stage one – the initial three berths of the planned 32 berths at Manda Bay – took place in March 2012 but a long silence followed, with the finger of blame pointed at the messy land ownership situation in Lamu, the 2013 national elections and fighting in Isiolo. Critics have, however, questioned whether the project stalled because of a funding shortfall.
At the time of its launch, Lapsset was costed at $30bn – equivalent to nearly half the country’s 2012 GDP. The government undertook to fund 25%, and has since allocated $48m to the roads, railway and first three berths at the port in the hope that it will attract private sector participation in the remaining components.
According to LCDA CEO, Silvester Kasuku, the port building and police station in Lamu are 95% complete.
Locally based NGO, Save Lamu, confirms that offices for power generation company KenGen, and an access road from Lamu’s main road to the port site at Kililana have also been completed.
Other Lapsset roads have reached a completion rate of between 7% and 43%, according to LCDA. The power connection for the port has also been completed. Lengthening of the Lamu-Manda Island Airport runway is finished, and the Isiolo Airport will be operationalised in mid-2014. Dredging for the first three berths in Lamu is expected to begin in June.
The high level of government activity has excited commercial banks and in the last year Equity, DTB, ABC and Gulf opened branches on Lamu island and the mainland.
.
Chinese footprint
.
The Lapsset financing agreements with China have been sealed in an era when they are aggressively chasing deals across the country.
Three Lapsset projects are being handled by Chinese companies: construction of the first three berths by a consortium associated with the China Road and Bridge Corporation at a cost of $484m; the standard-gauge railway by China Communications and Construction; and the Grand Falls Multipurpose Dam project by China State Construction Engineering Corporation.
The Greenfields terminal at Jomo Kenyatta International Airport is also being handled by a Chinese firm, Anhui Construction.
According to State House Kenya, about 50 Chinese companies have been contracted for 80 projects with a value of $2bn in sectors including transport, housing, water processing, power upgrading, energy, and ports and airports.
Auditing firm Deloitte estimates that China funds 17% of East Africa’s construction and that they build 19% of it.
The trend is replicated across the continent, and in 2013, Sino-African trade stood at $210bn, according to Beijing, with this figure projected to rise to $400bn by 2020.
China’s project management strategy has, however, come under scrutiny because of a heavy reliance on Chinese labour and reluctance to transfer technological knowledge to the locals. This prompted an outcry during the construction of the Thika superhighway, and China Wu Yi was forced to bring in some Kenyan manual workers.
The building of Nairobi’s tallest office block, the 40-storey Hazina Trade Centre Towers, also attracted media attention after China Jiangxi International contested the award of the tender to a local developer. The disagreement highlighted growing antagonism between local and Chinese developers, and came just months after Kenyan traders took to the streets to protest the influx of Chinese hawkers peddling cheap wares.
Such discontent in the face of growing immigrant communities is not unique to Kenya but it sours the high-level agreements being signed between Nairobi and Beijing.
.
Contested field
.
For a while it seemed as if Western countries were locked out of the Lapsset project, even though the World Bank, African Development Bank and European Union funded the roads linking Kenya with South Sudan and Ethiopia. Before the end of his term, former President Mwai Kibaki was prompted by the Japanese to introduce the Lapsset project to investors from other countries, and he also wooed investments by South Korea and Brazil.
In mid 2013, three South African banks expressed an interest in funding Lapsset, according to LCDA CEO Kasuku, and in the same year, Japanese trading company Toyota Tsusho tendered for construction of the oil depot and pipeline. The LCDA has also alluded to talks with the government of Spain to set up a desalination plant.
In 2014 there has been a similar pattern of interest from foreign investors. In March, Chinese news network Xinhua reported that President Kenyatta had met the Aeolus Kenya and Manda Bay Consortium to discuss a $3.29bn investment in building three berths at Lamu, an 850 megawatt gas-fired power plant, Lamu International Airport, Lamu-Isiolo highway and a water desalination plant.
The consortium is a group of Kenyans with backing from Nairobi’s US embassy, US conglomerate General Electric, Spanish energy firm Iberdrola, Norwegian gas company Hoegh LNG, AKL Wind Energy, transport solutions provider Indra Systems and independent power producer Aeolus Kenya.
And a month later, during his visit to Qatar, President Kenyatta mentioned how Qatari money was already plugged into Lapsset.
But despite the interest expressed by foreign investors, no deals seem to have been finalised. While there is much promise that other governments will eventually weigh in on the Lapsset corridor, for the moment it continues to be an all-China affair.
Image may be NSFW. Clik here to view.Farmers and breeders can now have unlimited access to high yielding seed varieties that were traditionally a preserve of big seed companies thanks to an initiative that is breaking the intellectual properties and patenting rules in seed distribution.
Today, many countries place complex international legislation on seeds, involving rules on patents and other forms of intellectual property protection. This means farmers are prohibited from harvesting seeds and using them the following season. Farmers are generally prohibited from saving seed from their crops to plant the following year, for example; new seeds must be purchased for each planting.
Seed giants like Monsanto argue that this approach encourages innovation by allowing companies to protect the investment of time and money they put into developing new plant varieties. Furthermore, the concentration of the industry into a few big players – just three companies sell more than half the seeds on the market, according to the Center for Food Safety – means that the biological diversity of crops is declining, making our food supply less likely to adapt well to climate change
Majority of Kenya’s smallholder farmers for example have been unable to access good-quality seeds developed by multinationals therefore using low-end crops harvested locally. US-based Open Source Seed Initiative (OSSI), has launched an initiative dubbed open-source’ seed initiative which has so far released 36 varieties of 14 food crops to poor farmers across the world.
The project’s ultimate aim is to help change the international rules that limit the exchange of seeds of crops such as carrot, kale, lettuce, broccoli and quinoa.
Looking for solutions to these concerns, OSSI drew inspiration from the open-source software movement, which creates computer code available to anyone to study, modify, or distribute. Much open-source software is regulated by legally binding licenses that give users wide latitude to alter and even commercialize the code.
To adapt the open source concept to seeds, OSSI decided to use a less formal pledge rather than a licensing system. Each packet of OSSI seeds sold will be printed with a statement that reads, in part, “By opening this packet, you pledge that you will not restrict others’ use of these seeds and their derivatives by patents, licenses, or any other means. You pledge that if you transfer these seeds or their derivatives you will acknowledge the source of these seeds and accompany your transfer with this pledge.”
“We cannot be sure that someone will not try and patent or restrict [the seeds we’ve released], but we will do our best to survey what happens to these materials as they go out into the community. “We want to restore the practice of sharing planting materials freely between breeders. That was a wonderful way to work until more than 20 years ago,” said Irwin Goldman, a vegetable breeder and horticulturalist at the University of Wisconsin-Madison who was involved in the release.
“We’re letting people know diversity is threatened,” said Jack Kloppenburg, a University of Wisconsin-Madison professor of community and environmental sociology. Previous interventions to have farmers unlimited access to seeds have proven successful. ‘Cooperation 88’, a potato variety released almost 30 years ago by Yunnan Normal University in China after free exchange of genetic material with the International Potato Center. She says this variety is now sown across more than 390,000 hectares in the developing world — almost twice the area covered by the United States’ leading potato variety.
Plant breeders and agricultural officers in Kenya have received the news with welcome relief arguing that this would go along way in boosting yields in the wake of failing weather patterns. “We are in communication with OSSI and have expressed interest in having our farmers access these seeds. This is because our farmers have been particularly affected by lack of access to parent seeds. This has depressed yields even as the same farmers struggle with weather changes and emergence of new diseases,” said Matu Kinyua from the Ministry of Agriculture.
In this case study, Sustainability Manager at IKEA Australia, Richard Wilson, unpacks how a humble light bulb and flatpacked shelter deliver shared value to a range of beneficiaries. Image may be NSFW. Clik here to view.
A shared value strategy seeks to answer the following question:
What do you or your organisation have to offer in the way of value you can share with others to solve your issues?
Working at IKEA, you soon get accustomed to the many references to the flat pack, our meatballs and of course the humble Allen key. In some respects it is the mainstay of the IKEA concept.
The flat pack concept happened purely by chance. The year was 1956 and one of IKEA’s furniture designers was struggling to find the right angle to fit ‘Lövet’ – a three legged side table into the back of his car. In the end he hit upon the idea of removing the legs, albeit by saw, so I’m not so sure the tables’ functionality survived the journey, but the flat pack generation was born.
The flat pack reduces space, cost, potential damages and is easier to transport. To leverage this benefit and create a shared value strategy, we ask: How can this advantage lead to a broader role in society? How can you strive to be a good neighbour?
A global focus for our business is the needs and development of children, families and the homeless. Every year millions of children and their families are forced to flee their homes because of conflict or natural disaster. Working together with partner UNHCR, we applied our flat pack expertise to the problem and our designers developed a solution in the form of a robust flat pack shelter for refugees.
Time is something those living in refugee camps typically have in abundance – the average camp could be in existence for 12 years. Upon arrival, refugees are usually provided with a canvas tent, which in harsh conditions only lasts for six months. The IKEA flat pack shelter is made from a lightweight yet sturdy polymer, requires no specialised tools, not even an Allen key. It can be built in four hours, has thermal insulation, a solar panel, a built in light and a USB outlet. It can be easily taken down, moved,rebuilt and even made into something more permanent over time.
Fifty of these flat pack shelters are currently being trialled in Ethiopia, with our designers applying program learnings to finalise and produce large volumes of low cost robust flat pack shelters that can be shipped anywhere in the world. This isn’t a commercial venture, but one that taps into IKEA expertise, resource and time to help our global partner UNHCR address the basic need for shelter around the world.
We have also managed to generate momentum through the principle that the customer does their bit, we do ours, and together we save money.
Another problem that our business is tackling head-on is the lack of lighting in many refugee camps. Lack of light can have a devastating effect on safety, education and prospects. Without light, the day stops at sundown and even simple things like using the toilet, collecting water or returning to the shelter can be dangerous.
On a store level, IKEA launched the inaugural ‘Brighter Lives for Refugees’ campaign this year. The premise is simple, for every LEDARE LED light globe sold in our stores the IKEA Foundation donates 1 Euro (about $1.50 AUD) to UNHCR.
The campaign raised Є7.7 million enabling UNHCR to bring sustainable lighting and energy to over 350,000 children and families living in refugee camps in Ethiopia, Chad, Bangladesh and Jordan by providing solar street lighting, solar lanterns and giving primary school access to children in refugee camps.
Our east coast stores welcomed volunteers from UNHCR, all of them ex-refugees themselves who talked candidly to both our co-workers and customers to help them understand the power of light.
Not only did this campaign help raise the profile of the plight of those forced into refugee camps, it also allowed us to increase awareness on the benefits of LED lights in the home – they are 85 per cent more efficient than traditional globes, contain no mercury and last up to 20 years.
But the key outtake? For the 7.7 million IKEA customers who bought LED globes, by the time they need to replace that LED globe again, today’s refugees will have benefited – they will no longer be living in the same camps, their children will have had an education and all in all they will be looking forward to a brighter future.
About the Author: Richard Wilson is a sustainability and environmental management professional currently working within the retail sector at IKEA Australia. Previously Wilson had eight years Local Government industry experience managing the 3-Council Ecological Footprint Program, between Randwick, Waverley and Woollahra Councils. Wilson is interested in developing strategies and implementing large-scale programs that help organisations and communities adopt sustainable living practices.
Recently our country hosted two of our world’s super power countries’ high level delegation in a span of one week – American and china. In American side, it was led by the country’s secretary of state John Kerry, while the China’s delegation was led by the country Premier Li Keqiang. At a time when our world’s balance of power has shifted from Uni-polar international system to a bi-polar one, the fact that world’s economy number one and number two, Washington and Beijing, visited our country in the same week is really something. This also shows how much our country is in demand from Africa and East Africa.
In my opinion these world’s top two politico-economic giants have their own reasons behind their visit and interest on our country. I believe they are well aware that the country is rapidly growing; it has conducive investment policy and suitable climate, immense potential, political stability, blooming democratic culture and order, successful diplomacy at various international, continental and regional arenas and its commitment in fighting terrorism. And as far as I can understand, the fact that the country served as a politico-economic centre of gravity for both American and china in a matter of days shows the country’s weight and how much it’s in demand.
Dear readers I hope you understand that this article doesn’t concern with the visit of the country, but rather it makes a probe into what made Ethiopia the object of desire for both Washington and Beijing. Thus, in this article I will try to walk you through how our country reached to its current allure status by probing into what kind of two-way relationship the country set up with both countries. I will start with the Ethio-American relation ……
As its known, the Ethio-American relationship, except for its brief disruption during the ‘derg’ era, has flourished through many generations; along with positive starts. And today, the relation of both countries is laid on a firm base. And this firm relationship is led by policy and principle protects the both countries’ national interest, and is based on respect and mutual interest.
On our country’s part, a relation that’s based on clear and concise policy, with regards to America, is established. Its tuned to our country’s national interest and adheres to ‘give and take’ approach. And the relation respects Ethiopia as a sovereign country and does not have an opening for it to be meddled by foreign forces on its internal affairs. And the way the government operates makes our country beneficiary and does not allow for foreign forces to interfere in any internal matter.
And this fact is clearly understood by our American counterparts. I think when Washington was setting up the bilateral relationship; they understood that they cannot impose their will on Ethiopia. They have their own reasons for this. The fact that our country is invested in building a democratic order and development, its geo-political importance in the region, and the fact that it’s playing a major role in bringing peace and stability to the region along with its acceptance in the international and continental arena are some of the reasons. And since these realities and key activities of our government and people are in the domain of American’s interest and wishes, they have served as a cornerstone for mutual benefit of the bilateral relation.
The core of the relationship revolves around even benefit based on equality; it does not take the one as “master” and the other as “servant”. Washington knows very well that there’s no logical reason for it to meddle in our internal affairs with regards to policy issues, as our country does not enter its hands in American’s affair. The principle of International diplomacy does not allow for this to happen. I think it’s appropriate to understand that ‘do this, don’t do that’ approach is not acceptable in relationship that’s based on mutual interest.
America believes that the FDRE government is developing the country in the economic and other sectors. This is what the country’s secretary of state John Kerry tried underline during his visit in our country. He has said …
“… I’m really pleased to be back in Africa and to be back in Addis Ababa, a city of enormous energy, and in a country that is really changing and on the move …. I think it’s fair to say that Ethiopia, in terms of its economy and in other ways, is really on the move, and it is a place that is generating enormous energy. All you have to do is drive through Addis, as I have several times in the last hours, and you see the economic activity, you can see the numbers of cranes and construction that is taking place, and it provides a snapshot of the country’s rapid development.”
“It is no wonder that Ethiopia is one of the eight African economies that is one of the 10 fastest-growing economies in the world. The United States remains committed to supporting Ethiopia’s growing prosperity, and we do that because strong commercial ties and this rate of development are critical to having shared prosperity, critical to providing opportunity to the broad population, and they also – it helps to provide stability and helps to provide the capacity for Ethiopia to be able to lead in some of the other initiatives that are so critical to stability in the region.”
Secretary of state John Kerry’s speech did not end with this. He has stated his admiration of Ethiopian leaders for the efforts they put out to solve Somalia’s and Sudan’s problems. He also showered praise commendation on the FDRE defense forces on securing peace in the controversial Abeiy region and for its recent successful effort in liberating towns from Al-Shabaab control, as part of the UN’s AU mission in Somalia, and on working diligently to promote. What this testament of the American government shows is that there is seasoned diplomacy that exists between both countries that’s based on mutual interest and respect, and non-interference approac - a strong relationship that have spanned more than a century.
Here I like to say one thing to some of the would-be oppositions and the extremist Diasporas, which want to take shortcut to power by disregarding their own people’s sovereign power, and who are hard time hearing Secretary Kerry’s testament, as they are pervious to a standard bilateral relation. That is, a democratic order that is under the sphere of influence and pressure of the American Government cannot exist in our country. If these forces can have their way, they won’t back down from entering into anti-public activities as they don’t understand the principle of mutual benefit. They should know that, there won’t be a democratic order that will be established by foreign forces interference in our country if we take into the county’s current facts on the ground into account – but only through the will of the people and government of our country.
Although the oppositions dream to import a version of democracy that’s not in sync with our country’s realities from foreign lands, they should understand the bitter fact that the developmental democratic order that’s being built in our country does not need anyone’s approval. The likes of Engineer Yiliqal and ‘leaders of ‘Andinet’ party, the self-contradicting oppositions, Abebaw Gelaw, the supervisor of ‘Ginbot 7’ propaganda machine ‘ESAT’; should know that no matter how much sack of lies they carry to foreign embassies, persistence in the media or hilariously stalk President Obama to ask him to give democracy to Ethiopia, it won’t amount to anything as there will be no democracy that will build outside of the people’s consent and wishes. Dear readers as you can understand, our country’s democratic system is established upon the people’s vote and consent. And our constitution, the fulcrum of our democratic order, is a document that’s ratified by the wishes and consent of Ethiopia’s nation, nationalities and people. Colliding with the document means a direct clash with the voting public. Nevertheless, the opposition camp has been undermining the constitution in the past four elections by disregarding the public – in order to take a short take to power.
However, in this entire bustle the public was sending a message to the opposition to get its hands out of the constitution. And the oppositions reply was ‘I won’t bow to your wishes, I’m working to setup foreign powers puppeteered democratic order’. During the 2002 election, the public responded back strongly. As the opposition camp came at its existence, the public replied by saying – ‘what we want is not an unconstitutional party; and an unfit or copied democratic order’. Going further than this, the public punished the oppositions through its vote.
Here dear reader, it should be noted that anyone can have dreams and wishes – as long as it takes realities on the ground into account. Trying to import a democratic establishment or order from foreign lands, as a commodity, is a discreditable effort. As I have tried to mention it earlier, the democratic order that’s being built in Ethiopia is through the people’s vote and consent, and not through the wishes of foreign powers. So, the culprits behind the building of our country’s democratic order are the people of Ethiopia, and not the likes of President Obama; unlike what some extremist Diasporas like Abebe Gelaw are assuming.
America is not the alpha and omega of democracy. And I don’t think the country to be that by meddling in other countries’ internal affairs. Of course the Washington authorities or neo-liberal extremist might say whatever they want coming from their own perspective and interests. In my opinion, these comments are taken and respected as comments. As done in every other country, these comments are accepted if they are constructive criticisms, but if they are just some random rumors that don’t fit with our country’s realities or if they are just plain hateful blabbers, I don’t think they will find any ears.
Other than this, people like Abebe Gelaw; who work for organizations that are deemed as terrorist by our country’s highest authority, the house of peoples’ representatives, should know their shouting won’t amount to anything as they won’t stir any change on our country’s democratic order building process. This is because it’s only our country’s people and government that are important in this respect. And a certain government and people do what’s necessary to protect their national interest; there won’t be anything they would do to satisfy foreign powers orders or commands, or extremist Diasporas empty shouts.
Dear readers, let me stop probing on John Kerry’s correct assessment testament of our country, and the power-crazed extremist Diasporas’ day dreaming here, and move the second visit our country hosted – the visit of the China’s Premier. I should start by looking into Ethio-Chinese bilateral relation first …
As it’s known, Ethiopia and People’s Republic of China have historical ties based on mutual values that has spanned many and long years. When both countries think of their relationship, it takes both countries’ ancient civilization and long history into account. However, information shows that their diplomatic relationship started only after 1970. They have been able to setup much political and economical relationship within these years. It can be said they have been able to establish a bilateral relation in which one does not interfere in the other’s internal affairs and where peaceful cooperation reigns.
Within these years of diplomatic relation, china has demonstrated that it’s dependable and a genuine partner. The country has and still is playing an irreplaceable major role in our country’s struggle against poverty. The current strong level of relationship both countries reached is a testament to this. In addition to this, the growing top official to top official links and raft of treaties that are signed on various bilateral issues goes out to show the strength of the relation and level of appeal.
In his official visit to our country, the political capital of Africa, in the first leg of his African tour which included 129 top officials, Premier Li Keqiang has stated his country’s wish to further grow and deepen its relation with Ethiopia hinting to work in a ‘win-win’ approach. Considering the fact that the Premier also stated China’s interest in development of potash, oil and gas exploration and development and management of special economic zones, goes out to show how much our country is evoking the interest of the East’s super economy as well.
Premier Li stressed that China was willing to transfer industrial technologies to Ethiopia, and to share experiences in establishing special economic zones and industrial areas, echoing his commitment to encourage Chinese enterprises and financial institutions to invest in Ethiopia. Chinese ministers and company executives accompanying Premier Li have signed 16 deals with their Ethiopian counterparts, on various infrastructural and economic cooperation.
The agreements include a comprehensive framework agreement for the period 2015-2024, signed by Ethiopia’s for Finance and Economic Development Ministry and china’s Minister of Commerce, loan release for the Dire Dawa-Dewalle highway (which is more than 34% completed), extending interest free 150 million Remnibi loan for Welkait sugar development project, Implementation Program for the years 2014-2017 under the cultural cooperation agreement, Treaty on Mutual Legal Assistance in Civil and Commercial Matters, Agreement on China – Ethiopia Economic and Trade Cooperation Zones. In relation to the industrial parks, it was announced that four Chinese companies have finalized arrangement with Ministry of Industry to start industrial park in Ethiopia.
There is one thing though we should not forget looking at these issues. That is these two superpower countries not only have the biggest economies but also a political clout that reaches. And as far as I can understand, the bilateral relation Ethiopia has with two countries can be the cornerstone of a partnership that’s based on the principle mutual benefit.
Although it’s obvious that a country should work to grow through developing its own inner potential, it can’t be denied that it should also work cooperatively with other countries on issues that are outside its own capabilities. Especially, in this day and age of globalization, a single country cannot do much alone. It’s not a time where one can live compartmentalized from the rest of the world. As the world is changing into a single village where one can get anything from others easily, in parallel, the interrelation is deepening. Thus, I think the high delegation visit of both American and china, on top of confirming our country’s attractiveness; it should be looked from this perspective as well.
Our country’s relation and agreements with the likes of china will facilitate and hasten its development by enabling it to utilize its scant resource. As the science of economics suggests, if a country is able to utilize its abundant resources and save its scarce resource, there is nothing to hold that country from entering a path of development. And if we look this from our country’s reality, Ethiopia’s abundant resources are its land and manpower; and its scarcity capital. And if the country is able to properly utilize its abundant resources and save its scarce resources whilst doing investment with other countries, then the country’s prospect of joining middle-income countries will become a sure thing – as this strategy has already enabled the country to reach the continent’s high’s of development.
As its known, the world is in a rapid change. The Uni-polar international system which reigned after the end of the cold-war is now giving way to a multi-polar international system. In this system, on top of American, China and India are creating new centers of power. In fact, according to new studies, in less than 40 years there will be five giant economies – American, India, China, Russia, Brazil and South Africa.
As American has been able to build a large economy, the whole world is now giving attention to the new five economies that are known simply by their acronym ‘BRICS’. The ‘BRICS’ are group of countries that have been able to propel their economy, outside neo-liberalism ideology, with their own pragmatic approaches. As the countries have a huge role and influence in UNs Security Council, they are garnering the attention of many countries.
Africa is establishing various relations with these developing countries. Out of these relations, the Indian-Africa and China-Africa forums that took place in our capital at various times can serve as instances. Of course the economic relation these countries established with Africa cannot be seen from the perspective of competition. Instead it envisions benefiting the involved parties evenly. And it is this principle our country relationship with these countries is based upon. Thus, it should be understood the agreements our country made with either China or the other countries follows this path.
However, it has become to see some of our country’s opposition and extremist Diasporas, who are impervious to this international reality, opening smear campaign against our country’s effort to develop its untapped natural resources through cooperating with various countries. These forces either don’t know or does not want to know the fact that leasing natural resources that cannot be developed by our country, to other countries that can, in a manner that can reap mutual benefit to all parties involved, instead of just sitting with it, is profitable and more advantageous. And they don’t our country and people to reap benefits from schemes like these. They just simply utter out the words “our natural resources are given to foreign forces”.
Here it should be asked, “What is the harm in our country developing its natural resources – resources it can’t develop on its own – through foreign investment?” and the answer to this question is simple. Unless it’s to quench their opposition-for-opposition-sake ritual, they themselves don’t know any other source of finance needed to develop our natural resources. Thus, denying the truth just to gain petty personal political expedience will nt gain them anything expect being judged in the court of the public opinion.
All in all, as a consequence of its adhered sound policies and the subsequent rapid and sustainable development has made our country the most attractive destination in Africa, as seen from the visit of the two largest economies.
Michel Wormser, vice president and chief operations officer (COO) of the Agency came to Ethiopia last week.
One of the five agencies of the World Bank Group, a multilateral financial institution, the Multilateral Investment Guarantee Agency (MIGA), specialises in political risk insurance. With private investors becoming overly cautious in their investment decision in these days of global economic crisis and increasing political uncertainty, MIGA’s role is becoming more important with each day. With Africa being perceived as the last frontier of investment – typified by high returns – the Agency is seen increasing its presence on the continent. No wonder, then, that its senior executives take the time to discuss with governments on the continent about possible ways to enhance cooperation. It is with such a mission in mind that Michel Wormser, vice president and chief operations officer (COO) of the Agency came to Ethiopia last week. An experienced bureaucrat with over 36 years in the World Bank Group, Wormser became COO of MIGA in 2011. A French national, trained in both France and the US, Wormser is a cautious optimist. In this interview with TAMRAT G.GIORGIS, MANAGING EDITOR, Wormser discusses the institutions of Ethiopia and crosscutting issues, such as governance and human rights.
FORTUNE: I understand that the World Bank Group, in general, is under reform and restructuring. I believe this will affect the way you do business. To what extent will that impact on your activities? Or has it already affected you?
Michel Wormser: The Multilateral Investment Guarantee Agency (MIGA) is one part of the World Bank Group. It a part of the Group and provides political risk insurance to investors. And for us, change in the World Bank Group is going to make one big difference, which is that the three parts of the group are going to work better together.
That is one of the major directions being perused by the President. What he affirmed is that a few years back you had the World Bank working in one direction, then you had the International Financial Corporation (IFC) providing its services to private companies and then you had MIGA. What was missing was much more of these three organisations coming together to propose to the clients some solutions, which combine both the public and the private to advance their purpose.
And, the other thing which is also going to be different is that the organisations are going to work on different ways to facilitate knowledge transfer across the entire World Bank Group. In the past, if you are working with the African region, you could dispose of the knowledge and capacities of the people working in the Africa region. The expectation is that, with the organisations effectively working together, it will be easier for a country to get access to the knowledge and the best practices we might have as a solution.
Q: Among the five agencies within the Group, yours is the least understood and known. I am wondering, does this bother you?
We do care that the countries understand the impact that they can get out of MIGA. Today, a number of countries understand that the public sector can do so much. But when it comes to the creation of jobs, transfer of knowledge, investment and infrastructure, they know that the priority is private investment and its modern solutions.
Countries understand that MIGA can provide sound support and is very useful to compliment what the WB and IFC are providing.
And, in the same way, we have considerably increased our involvement in Africa and we have seen the doubling engagement of MIGA over the last 35 years. Last year, alone we have put in 3.2 billion dollars of guarantees, which is now becoming a very important compliment towards what the other organisations are doing.
Hence, it does matter that your country should know about what MIGA is doing and the reason for my visit is precisely to discuss with government of Ethiopia how we can complement the WB and IFC in some of the subject areas important to them.
Q: Here you are in Ethiopia. And you are dealing with a government that prides itself on its achievement in putting the country on the map of international investors. They are talking quite a lot about FDI coming into the country and the nation being one important FDI destination. The narrative out there is that Ethiopia is growing and everything is going well. You, being a person who has been here before, do you see that narrative fitting to the reality down on the ground?
I have certainly seen a huge amount of progress that Ethiopia can be proud of. There are very few countries in the world that have grown by double digits for such a long period of time.
There are few countries in the world that can pride themselves on meeting six of the eight millennium development goals (MDGs) two years early and probably due to meet all of them in just a short while. And there are very few countries where life expectancy has increased by 10 years in a 12-year period.
For me, there is an incredible level of success that this country can be proud of. But it is also true that, when you look at the rest of the continent, Ethiopia is not the country where the private investors are going as a priority.
In fact, the country has not been; I mean it is looking forward to attracting much more private investment in some of the areas that create jobs. I had a discussion in the last couple of days with members of the government. They were mentioning to me how important the light manufacturing sector is for them.
They know that textiles and agro-processing could be creators of jobs. And they also know that, in order to get the private sector enough, an agency like MIGA can be an additional support to convince investors to choose one country over another.
So, they were telling us that they were welcoming MIGA into the country because, while the public sector has been greatly helpful in generating that growth and cross checking infrastructure, they also see the role of the private sector increasing in the future. And that was not only in job creating companies, but also in some of the renewable energies.
We talked about geothermal and wind resources, which are available in this country and we have a private sector that has a lot of experience and could do so much here as well.
Q: Basically, MIGA provides risk insurance and, in order to provide that, you have to assess as to whether a particular country is stable, politically risky or otherwise. Considering this, how do you see Ethiopian institutions? Are you comfortable with their shape and nature, especially in view of inclusiveness and sustainability?
We have been here for years and in fact we have even guaranteed some projects here. We have supported a cement factory in this country; more than 23 million dollars of guarantees have been provided by MIGA in Ethiopia.
We have provided a guarantee, for example, for a project involving juice – Africa Juice. That project was very interesting because it was creating more than 3,000 jobs, half of them were women and it is a company that is going to be an example for the rest of the county in terms of the knowhow that it is going to use and with the inclusion of the organic farming it is developing. So, that is the sort of project we would like to provide support to.
Projects that are environmentally and socially sustainable, oriented towards development and help the country achieve some of its goals. The risk that investors are usually concerned is concerning the availability of foreign currency. Some investors, when they go to a foreign country, are worried about expropriation, wars, civil disturbances and the like. This country is not high risk in many of these areas.
But, at the same time, an investor looking to the long term will find it very comforting if MIGA is there. That is what our role is.
Our volume has been low. But as our volume of the exposure increases on the African continent, there is no reason why the most populous country, which is seeking right now to attract foreign direct investment, could not avail investors with more than they have received in the past from the services that MIGA can offer.
Q: Do you have any target as to how much you are prepared to guarantee for investments coming to Ethiopia?
We do not have target as such, but we can tell you that there is ample capacity to serve the needs of Ethiopia. Certainly, in all of these manufacturing companies that I mentioned, the industrial parks that are currently being created, many of them with the support of the WB, we have a lot to offer.
Q: Let me ask you this question about a continent, in general. Do you share this narrative that, “Africa is Rising”?
Africa is definitely a region of great opportunity for investors. It has been growing at more than six percent for more than a decade. And, therefore, when investors, located in Europe or the US, look at Africa, they see it as a great destination of opportunity, which they cannot find in their home countries. It is, therefore, not surprising to see that there has been a lot more interest in Africa, even though some countries are going through difficulties. But there is opportunity. With opportunities come risk and I see these countries trying to find ways to diffuse this, whilst improving the returns on investment.
Africa is such an expanding part of our portfolio. It shows both the interest of investors and the greater need for ways to absorb or mitigate risks.
Q: But how do you reconcile the fact that there still are pockets of problems, from Somalia to the Democratic Republic of Congo (DRC), and risks of instability in countries as varying as Kenya and Nigeria, amidst this enthusiasm about the expansion in GDP and the subsequent narrative about a continent rising?
Investors have become much savvier about risks. They know that if a pocket of a country is in trouble, it does not mean the whole country has difficulties. And it does not mean that there is no opportunity in that country.
They also know that if something happens in another country, it does not mean that the next country cannot have a verifiable position at the time. There is a maturing sense of analysing risks on the side of investors.
But they also understand the role that organisations, such as MIGA, can play in helping them to become key investment destinations. Banks have become very cautious. They have regulations that are determining how much money they can put into emerging countries, in general, and that includes Africa.
Thus, both from the banking side and the investors’ side, they are looking for a different way of building partnerships, which allows them to keep them afoot and develop their exposure in emerging countries, while, at the same time, taking reasonable risk. For the countries, it is a great opportunity, because the time when the public sector and development assistance offered the only solutions has gone.
They know that part of the solution will come from the private sector. And if they set the conditions right and if they are sufficiently welcoming, investors will come and contribute to the job creation and improvement of their services.
Q: Working with all these different types of investors, wherever they come from, one of the outstanding issues has been MIGA’s accountability policies. I am sure that you remember the issues related with the “Risky Business” Report of the early 2000s, prepared by a coalition of civil society groups, that criticised your disclosure and accountability policies. Since then, has anything changed in your conduct and policies?
One of the prides of MIGA is to make sure that every project that we are getting involved in is scrutinised on both its environmental and social aspects. We have the same norms with the IFC and are consistent with the World Bank. We also have very close oversight of our processes by civil society and our internal processes.
This is true in our engagement in Africa. We carefully look into issues with the environment, community and the relationships with the beneficiaries. By doing that, we make sure that the projects are not only financially viable, but also provide benefits to the society.
Q: Close to 30pc of your portfolio goes to the financial sector, which itself is criticised as having done little to the greater cause of poverty reduction in developing countries. Is there any discussion within your organisation with regards to how to address that issue as it relates to impact?
Actually, since 2008, we have substantially increased our portfolio in the financial sector. And this is mostly in Europe and Central Asia, at the time of the substantial financial crisis.
At the time, we had a key role in stabilising the financial sector and ensuring it reained operational, especially in countries which were highly exposed. More recently, we have seen our role in infrastructure, especially in the power sector, increasing in Africa. We are also seeing our engagement increasing in job creating sectors, such as manufacturing and value-adding companies. The latter has even become one of the most important segments that we are looking into.
We have also been working with banks, which are serving the small and medium scale enterprises (SMEs) and are trying to find a way to work with equity funds that are supporting agro-processing in Africa. We have done that in Zambia and we are doing it in Tanzania, and we will do it in other countries.
But we are essentially taking a wholesale approach to support SMEs that create jobs on the continent.
Q: The whole climate, if one could generalise, that is emerging in Africa is a case where states are emerging as major forces of investment in economies. Much of the things one sees in these countries are state-driven. And a large part is driven by finance coming from China. As MIGA strives to work with the private sector, which are largely being pushed out, does the emergence of China as an alternative source of finance to the traditional modes bother you?
I see China as a very important force, not only on this continent, but everywhere in the world. Certainly, when you look at the need for investments in Africa, I think governments need the Chinese contribution.
When you look at the growth of infrastructure on the continent, the Chinese contribution has been enormous. But that does not take anything away from the need to also bring the private sector and private financing into the continent, to introduce new technology and diversify the sources of growth.
In that respect, organisations, such as MIGA, are very helpful. We do not put conditions on the projects we support. What it does is to make sure that the projects are sustainable, from an environmental and social point of view. That is exactly why I came to Ethiopia – to present how MIGA could help in achieving the ambitious development goals that the government has set.
Q: How about the issues of human rights and governance? Much of the investment would be affected by to what extent governments are accountable to their own constituents and the extent to which they observe their international obligations in governance and respect to human rights. Are you comfortable by the way these things are handled in Ethiopia?
I do not have a view about the overall situation. What I can tell you is that the World Bank Group standards on human rights requires us to look at the situation carefully in the way our projects are conducted. This is an aspect that we are going to continue to look into. And we are not going to engage in any project that contradicts these standards.
Q: Personally, what kind of project would you like your agency to get involved in for five years or ten years to get a sense of pride?
I would take a great sense of pride if we could manage to complement the public investment the government is undertaking with investments by the private sector. I see an enormous need for energy in the country.
The government has the drive to diversify the sources of energy, including renewable sources. This is one area where MIGA is well positioned to support.
I would also like to see MIGA helping to change the view of investors, who used to see Ethiopia as an unattractive destination for investors, to the contrary.
Q: Am I right in sensing that you actually share the view of the World Bank and the IMF that the Ethiopian private sector is not given its rightful place in the economy?
I think there is a larger role that could be played by FDI in this country. The government is ready to get more of that in the contribution to the creation of jobs, especially in light manufacturing. And we can help in that transformation.
AFAR (NORTHEASTERN ETHIOPIA) , 18 July 2014 (IRIN) – Ethiopia’s Productive Safety Net Programme (PSNP), set up in 2005, aims to make fully food secure the millions of people still dependent on food aid, provide support to the vulnerable to prevent the depletion of livestock, and create productive assets at community level. But nearly a decade on and over US$3 billion spent, how successful has it been?
PSNP claims to be a programme that bridges the response gap between emergency relief and long-term development aid, and helps build resilience.
Initially, it was available in four regions – Tigray, Amhara, Oromiya, and the Southern Nations and Nationalities’ Peoples’ Region – and was later extended to the more remote regions of Afar (in 2006) and the Somali Region (2007), according to the World Bank, one of its main backers.
The Ethiopian government spends 1.1 percent of GDP on PSNP and a complementary scheme called the Household Asset Building Program (HABP).
Both schemes are largely donor funded. The current phase of PSNP (2010-2014) which includes HABP, costs more than $2 billion. Donors include the World Bank, International Development Association (IDA), the US Agency for International Development (USAID), Danish International Development Assistance (DANIDA), UK Department for International Development (DFID), European Commission, the Swedish International Development Cooperation Agency (SIDA), the governments of Canada, Ireland, Netherlands and the World Food Programme and the UN Children’s Fund (UNICEF).
PSNP provides transfers – cash or food – to between six and eight million chronically food insecure Ethiopians for six months each year, according to DFID. At least 85 percent of the beneficiaries receive cash transfers as wages for labour on small-scale public works projects. These projects are selected by the community and contribute to environmental rehabilitation and local economic development, while 15 percent are “direct support” beneficiaries (disabled, elderly, pregnant or lactating women) who receive unconditional transfers.
Both donors and the government have become increasingly aware that PSNP does not really help secure those who have very limited or no assets against shocks, and help them “graduate” from a chronic situation to a state of food security.
Hence HABP was introduced in 2010 to help people build their livelihoods and create assets. Credit, agricultural extension and microenterprise advice, and linkages to markets, are part of the support provided. “These initiatives help households build their asset base, diversify their livelihoods and achieve food security, so ‘graduating’ from PSNP,” according to DFID.
HABP has so far provided technical advice on how to improve livelihoods to 1,059,044 households; of these, 812,655 have prepared business plans.
The government says about 495,995 households “graduated” from PSNP between 2008 and 2012 out of more than seven million beneficiaries (till 2012), a figure some Ethiopian officials acknowledge as low. A household has “graduated” when, in the absence of receiving PSNP transfers, it can meet its food needs for 12 months of the year and is able to withstand modest shocks.
A recent study by Oxford University ranked Ethiopia the second poorest country in the world after Niger.
A view from the ground
Duba Oundanumo, chief of Anderkelo kebele (municipal ward) in the arid Afar region, a northeastern pastoral community frequently dependent on food assistance, does not think PSNP will help local people emerge from chronic poverty and food insecurity any time soon.
“It is very hard for these families to become food secure. They are too poor… When you have nothing – no animals [no assets] – it is very difficult to recover from shocks [like droughts],” he said.
“Any small variation in rainfall or world prices (for coffee) affects the incomes of 30 to 40 million people and can mean hunger for 10 to 15 million people”
Fatuma Ahmed, 20, another pastoralist here, says the very poor need more support than just PSNP assistance. “We need micro-loans provided by cooperatives to buy animals, assistance with irrigation to be able to grow some crops.”
The community has created a protected pastureland in exchange for food from WFP, one of the implementing partners of PSNP.
PSNP is being implemented in places as remote as Sebana-Demale, a village just 60km from the Danakil depression in the Afar Region, one of the hottest places on earth, with temperatures of 40 degrees Celsius or more all year round. The village is only accessible during the dry months.
Government insiders say the current focus is on ensuring PSNP is accessible across the Afar and Somali regions; HABP will come later.
Aid has failed to protect livelihoods
Over the decades, drought and the inability to produce enough food have pushed millions of Ethiopians into hunger. The World Bank says agriculture accounts for 45 percent of Ethiopia’s GDP, while providing a source of income to 80-85 percent of its population. “Any small variation in rainfall or world prices (for coffee) affects the incomes of 30 to 40 million people and can mean hunger for 10 to 15 million people,” says the Bank.
The men of Sebana-Demale in Ethiopia’s Afar region try to divert the water of the River Demale towards their crops
.
“Both predictable (chronic) and unpredictable (acute or transitory) needs have largely been met through emergency relief [in Ethiopia],” says the Bank. While aid has saved millions of lives over the decades, it has failed to protect livelihoods and assets. “The unpredictable timing and level of relief resources flowing through the emergency channel means there are few opportunities to do more than address humanitarian needs,” it adds.
Meanwhile, the debate continues within aid circles on how to determine if a household is indeed “food secure”, as some households who were seen to have “graduated” have sunk back into poverty after a few shocks. IRIN did not come across anyone who had “graduated” in the villages it visited in Afar.
HABP, which could give people a better chance of “graduating” is not available everywhere yet. Getting “people to work in Afar [and Somali Region] under PSNP is a big achievement on its own,” reckons an aid worker who preferred anonymity, referring to Afar’s notoriety as “Ethiopia’s Wild West”, where AK-47 wielding pastoralists would rather face a dispute over a livestock theft allegation than do actual physical labour such as planting trees and lifting boulders to shape the course of a river.
Evaluation
“The implementation of the PSNP in Afar and Somali regions of Ethiopia is ambitious,” said John Hoddinott, a senior research fellow at the International Food Policy Research Institute (IFPRI), who led the most recent impact evaluation of PSNP and HABP for the World Bank in 2012.
“While high levels of chronic food insecurity are indicative of the need for a safety net intervention, poor infrastructure and widely dispersed populations make implementation challenging. While there is some evidence of programme success in reducing food insecurity, we are likely to see additional efforts aimed at strengthening programme performance in 2014 and beyond,” he added.
The evaluation – a collaborative effort between IFPRI, Institute for Development Studies and Dadimos Consulting in Ethiopia – says: “PSNP has significantly improved food security in all regions between 2010 and 2012. While there remain differences in food security across regions, these differences are narrowing. Food security improved for both male and female headed households…” It has also rehabilitated the environment and natural resources, and improved access to education and health care.
The evaluation said that in 2010, PSNP and HABP together increased food security 2.5 times more than PSNP alone.
“In the highlands, the PSNP is well targeted. Beneficiaries are poorer and more food insecure than non-beneficiaries,” says the evaluation. But it goes on to note that PSNP is “poorly targeted in Afar and Somali”, and that in some areas “beneficiaries are selected by kebele or clan leaders without input from the wider community.” Further, the identification of deserving candidates has been marred by sporadic allegations of political influence in drawing up the list of PSNP beneficiaries, though past evaluations have shown that this is not systemic.
DFID’s 2014 review said political influence was “scattered and localized” and that it could be countered by strengthening a kebele-level appeal process for deserving people left out of the list, and by conducting roving audits.
Food or cash?
People are also unhappy with the 15kg of cereal handed out by WFP as monthly payment for public works under PSNP. “We need something more – some oil, beans perhaps,” said Amina Aliyou, a resident of Sebana-Demale.
However, WFP’s head of programmes Hakan Tongul said the amount is set: “It is not supposed to cover the food needs of the family” and should rather be viewed strictly as “payment for public works”.
Tongul notes that WFP also has “resource shortages and competing demands in meeting development needs of communities/women farmers. Hence, linkages become ever so important. We, in WFP, have looked at purchasing some maize from Asaita [a major town in Afar] and will probably do so with next harvest, and it is these kinds of market linkages that go a long way for development.”
Another way to cut dependency on foreign food aid, which is already happening in Ethiopia, is to purchase food from local surplus areas, he added.
DFID envisages a gradual shift from food to cash transfers, which puts more disposable income in the hands of the people, allowing them to build up assets. Food currently accounts for over 40 percent of total PSNP resources. More tinkering with the programme is likely in its 2015-2020 phase, said DFID.
“At the end of the day, what PSNP has achieved so far is an example to other developing countries of what political will can do. The Ethiopian government is really committed to making this work, and will do anything to get its people off food aid for good,” said an aid worker who preferred anonymity.
New Nile Petroleum Company Headquarters in Ethiopia
.
Nile Petroleum Company announced that new headquarters of the company will be inaugurated soon in Addis Ababa, the capital of Ethiopia.
The placement of the headquarters for the leading petroleum company indicates that the company is keen on benefiting from the Ethiopian market and marketing its petroleum products in the Horn of Africa.
Image may be NSFW. Clik here to view.
“The idea of opening a branch for Nile petroleum in Addis Ababa refers back to 2005,” said Manager of Nile Petroleum Company-Addis Ababa, Eng. Mohammad Azhari.
According to Azhari, the shopping centre owned by the Nile Petroleum Company in Addis Ababa is considered one of the largest centres in the continent.
Azhari also told Sudan Vision that Nile Petroleum ranked as the fourth biggest petroleum company in Ethiopia.
“Our company is the only one that produces ethanol in Africa,” said Azhari.
He added a product has been developed called, Nile Ultra-Ten, which consists 90 percent of benzene and 10 percent of ethanol.
Image may be NSFW. Clik here to view.
Nile Petroleum
Azhari clarified that around 90 percent of benzene consumed in Ethiopia comes from Sudan – namely from Shajara Repository – pointing out that the total monthly amount loaded to Ethiopia totals 16,000 tonnes of benzene.
He said that the company has twelve petrol stations in Ethiopia, announcing that it is preparing to construct 24 more stations in different parts of Ethiopia.
Azhari asserted that the Nile Petroleum Company is providing cement, ceramic and textile factories with fuel.
He announced that he has met with the Ethiopian Investment Minister to investigate the appropriate approaches to facilitate Sudanese investment in Ethiopia.
The Ethiopian minister disclosed that Sudanese investment in Ethiopia totals $3.5 billion.
Ethiopia grants oil exploration concession to Russian firm
.
Image may be NSFW. Clik here to view.
Ethiopian Mines Minister Tolosa Shagi and GBP Global Resources have agreed to an exploration agreement.
World Bulletin / News Desk
Ethiopia’s Ministry of Mines on Thursday granted an oil-exploration concession to Russian energy company GBP Global Resources.
The exploration agreement was signed by Ethiopian Mines Minister Tolosa Shagi and GBP Global Resources representative Alexander Ivanov.
In the event of any oil or gas discoveries, according to the agreement, resource sharing will depend on the type and volume of the resource discovered, the ministry said in a press release.
No further details were provided concerning the concession.
“The agreement shows the ministry’s persistence in regard to working with capable business partners to explore for and discover the petroleum resources of Ethiopia,” Shagi said.
“It should be clear that we are working over different parts of the country, including the vast Ogaden Basin in the east, the Abbay Basin, the Southern Ethiopian Rifts (South Omo) and the Gambella Basin in the west,” he added.
“We believe an enormous scientific undertaking is being accomplished to understand Ethiopia’s petroleum potential and ultimately make discoveries that will contribute to the country’s economic development,” Shagi said.
IFC, a member of the World Bank Group, today announced that it will participate up to $150 million in a $450 million trade finance facility arranged by Natixis to finance Ethiopia’s import of refined petroleum products. The facility will support the supply of critical energy products in Ethiopia; powering the country’s economic growth.
Under the agreement, IFC, Natixis, Standard Bank and other lenders will help finance Independent Petroleum Group’s import of petroleum products into Ethiopia over one year. The Group maintains a strong relationship with Ethiopia Petroleum Service Enterprise, being one of the main suppliers of petroleum products to the country for the last four years. Independent Petroleum Group recently secured the 2014 annual tender to supply over half of Ethiopia’s imports of refined petroleum products.
The second-most populous country in sub Saharan Africa; Ethiopia imports all of its petroleum products, which are critical for transportation, industrial and household uses.
“Natixis has a longstanding experience with Ethiopia for over 30 years”, said Felipe Lopez Cruz, Natixis Regional Head of Global Energy and Commodities Dubai branch. “Our expertise in commodities, our presence in the Middle East, as well as the partnership with IFC and Standard Bank has allowed Natixis to finance Ethiopian oil imports successfully. We are proud of this achievement given the strategic nature of this flow to Ethiopia and to our client, Independent Petroleum Group”.
“The established facility will provide flexibility and support to the Ethiopian Petroleum Supplier Enterprise by extending the credit period for importing petroleum products and introducing new financial institutions and banks to the country”, said Abdullah Al-Khandari, the Chief Financial Officer of IPG.
Ethiopia’s economy has experienced strong growth over the past decade, reaching 7% in 2013. Still, almost 30% of the country’s population continues to live below the poverty line of $1.25 per day. A landlocked country; Ethiopia relies on road transport to move critical goods such as construction materials and agricultural commodities. Imports of petroleum products are thus crucial for several key sectors of the economy.
Oumar Seydi, IFC Director for East and Southern Africa said, “Ethiopia depends on imported petroleum products to meet its infrastructure, agriculture and energy needs. IFC is committed to encouraging trade that supports economic growth and job creation in Ethiopia.”
IFC’s strategy in Ethiopia involves working closely with the private sector to support infrastructure, agriculture and entrepreneurs.
Image may be NSFW. Clik here to view.The World Bank said that the growing capacity of Ethiopia to pay back loans has helped it secure huge supply of loan.
The Debt Sustainability Analysis of the World Bank indicates that the challenge the country faces in securing loan is simple as its debt burden is low.
World Bank Country Director Guang Z. Chen told ENA that the reimbursement capacity of Ethiopia is growing from time to time.
The growth of foreign direct investment and the relative increase of export trade are also among the factors cited.
Some eight projects were launched in Ethiopia last year by utilizing the 1.6 billion USD loan given to Ethiopia, it was indicated. This has raised the total number of projects supported by the bank to over 35.
It is possible to further increase foreign trade by adding export items and diversifying products, the Country Director said, adding that encouraging the manufacturing sector is essential to this.
The success attained in utilizing loans for the targeted objects has ensured the continuity of supply of credit, he added.
According to Chen, loans extended for agriculture, roads, safe water supply and similar programs are being finalized as per the schedules.
According to ENA, data obtained from the bank state that 20,000 hectares of land has been readied for irrigation development and WB has provided 2 billion USD in loan and donation for the expansion of roads since 1991.
Even if the Ethiopia’s banking industry is close to foreign banks, it is now seeking the Indian banking system, State Bank of India, to engage in it’s economy and open a representative office.
Ethiopia’s Minister for Industry, Ahmed Abetew, said “Previously the Ethiopian government tried to support (investment funds) by availing investment finance with 70:30 ratio – 70 percent loan and 30 percent equity”.
Ahmed added, “But nowadays, the demand for loan is higher than available loanable funds”. “That is why the presence of SBI presence is very crucial here in Ethiopia for availing investment funds for Indian companies as well as other companies.”
SBI is expected to deliver assistance to private investors with feasible project ideas, the Minister added.
Subramanian Venkataraman, country head and CEO of SBI, commented “Ethiopia’s economy is predominantly agriculture-based and India is also per se the same but the banks in India have done a tremendous job in promoting agriculture and modernizing agricultural activity by providing soft loans to agriculturalists.”
Venkataraman furthered, his company would like to discuss with the Ethiopian government and work with the Ministry of Finance and Economic Development (MoFED) or National Bank of Ethiopia (NBE)., if there is any opportunity.
He also advised the Ethiopian government to work with it’s Indian counterpart in order to understand how the banking industry has enhanced India’s economic development.
Other banks are can also extend their support to the Ethiopian government to bring changes in the Ethiopian banking industry, Venkataraman noted.
“Ethiopia has the opportunity and India has the potential if the two governments work together in the financial sector. Our governments could ensure access to our people appropriate financial products and services needed,” he added.
He further asserted NBE should encourage expansion of bank branches, in particular in rural areas and semi urban areas for their significant proportion of household.
Ahmed answering the CEO’s questions said, the Ethiopian government would give any support to have the presence of SBI as it has learned from the results achieved from the ExIm Bank of India, which also has a representative office in Ethiopia.
UK Ambassador: Economic development in Ethiopia very impressive
.
Image may be NSFW. Clik here to view.
UK Ambassador to Ethiopia Greg Dorey said the consecutive economic development registered in Ethiopia over the past years is “very impressive”.
In an exclusive interview with ENA, the Ambassador said the development in Ethiopia is “very impressive” and “potentially sustainable” as well if the government continues to take the right decisions.
“I think it is very impressive whether you take the government’s figures or you take IMF figures … in terms of GDP growth. That is very very impressive and its potentially sustainable growth as well if the government takes the right decisions on the economy then that growth can continue into the future.”
The economic growth in Ethiopia has been accompanied by a huge social investment in human development.
The Ambassador appreciates the strides that have been taken in improving the health, education and social wellbeing of the people.
“Of course this has been accompanied by a huge social investment in human development which is equally important. And you can see the tremendous strides that have been taken in improving the health, education and social wellbeing of the people in Ethiopia really is very acknowledgeable what has been done in a relatively small space of time.”
“Ethiopia is still a poor country so that work needs to continue.” he added.
“So I have to say everything is moving in the right direction it just needs the right decision” to be taken to continue those achievements.
He expressed hope that the economic growth in Ethiopia will continue to benefit the people through job creation and sustainable development.
The bilateral relation between Ethiopia and UK is ‘very diverse, mutually beneficial and very good’ according to the Ambassador.
“Our bilateral development cooperation is the biggest such program in the world for Ethiopia it has been for some years and I expected to continue to be.”
UK provides over 300 million pound sterling annually to Ethiopia in connection with development programs.
Trade and investment relationship is also taking off from a ‘low base’. UK imports of goods from Ethiopia have grown by 48 percent from 48 million pound sterling in 2009 to 70 million pound sterling in 2013. In the same period UK exports to Ethiopia have also grown by 29 percent from 77 million pound sterling to 99 million pound sterling.
Climate change is one of the areas the two countries are working together.
The Ambassafor recognizes the efforts of the government to create a climate resilient green economy by 2025 and achieving a middle income status with zero carbon emissions.
Ambassador Dorey said the Climate Resilient Green Economy Policy of Ethiopia can be a model to other countries.
“It is an absolutely adorable policy. I could recommend it highly enough not just for Ethiopia but it’s a model to other countries as well.’
The UK government is putting 45 million pound sterling into this area partly into creating or enhancing institutions which deal with climate change both public and private.
Image may be NSFW. Clik here to view.A farmer sorts tomatoes in Ethiopia. Here and elsewhere around the world, smallholders often lack farm inputs and information to increase productivity.
.
For 70 percent of the developing world, agriculture is the main source of income and employment. In Ethiopia, agriculture accounts for almost half of the country’s gross domestic product and 90 percent of its exports. It’s the main source of income for more than 85 percent of the population, which these days is nearing 100 million people.
Despite its mass importance, agriculture in Ethiopia is characterized by low productivity, with most smallholder farmers having limited access to inputs, information and services. Smallholders also suffer from a lack of training on the productive benefits of quality inputs and improved cultivation practices. Unfortunately, this makes for an uphill plight if one wants to rise out of poverty.
Imagine you are one of these smallholder farmers. Imagine you know that an improvement in the quality of your life — your ability to better feed your family, to send your children to school, to access proper health care — depends on what you are able to harvest and sell at the market.
But what if you could access the inputs you need at a store that guarantees high quality and fair prices? What if you could talk to an expert agronomist or veterinarian when you have a question or concern? What if there was a place to learn about how to change the way you manage your farm and livestock so that the land you cultivate and animals you raise yield a higher quantity and quality range of products?
Well, if you are a smallholder farmer in the Oromia Region of Ethiopia, things may be looking up. As part of a two-year pilot program funded by the U.S. Agency for International Development, theCommercial Farm Service Program is establishing what agriculture and livestock producers need most: an Ethiopian-owned one-stop shop where smallholder farmers can access the inputs, consultation and trainings they need to increase their yields and eventually improve their livelihoods.
The entry of French firm Danone into Kenya through the acquisition of a 40 per cent stake in Brookside, the country’s biggest milk processor, is likely to cause a significant change in the local dairy sector landscape.
The firm, which deals in fresh dairy products, early life nutrition, water, and medical nutrition, announced on Friday it had entered into a deal to acquire shareholding in Brookside as it seeks to expand its operations in Africa.
The manner of its entry gives Danone control a major share of the growing local and regional market for dairy products without having to start from scratch.
The Paris-listed company has been actively exploring opportunities to extend its footprint on the continent, and the partnership with Brookside will be beneficial as it targets a share of the East African market.
Brookside already has a presence in Tanzania, Uganda and Ethiopia, and there has been talk of the company launching operations in Rwanda and Nigeria. “This partnership will enhance the platform Danone is currently building in Africa,” the firm said in a statement.
Brookside spokesman Wilson Okong’o declined to disclose the value of the transaction.
Last year, Danone bought a 49 per cent stake in Fan Milk International, a frozen dairy products and juice maker in West Africa, as well as a controlling interest in Morocco’s top dairy firm, Centrale Laitiere.
The Kenyatta family, which previously held a 90 per cent stake in the milk processor, will now control 50 per cent, with the Dubai equity firm Abraaj Group retaining 10 per cent. Abraaj’s Africa Fund bought the stake in 2009 for Sh1.6 billion.
Locally, the deal will be a big boost to Brookside Dairy’s ongoing expansion and will help it tighten its grip on the Kenyan market. Experts expect that the processor will ride on the financial muscle and the extensive experience of Danone to increase production and execute growth strategies.
Brookside has been on an expansion drive over the past year that has seen it buy out rival processors, making it as the dominant player in the dairy products market.
Last year, Brookside acquired Buzeki Dairy, the producers of Molo Milk, in a deal estimated to be worth at Sh1.2 billion. It had previously acquired other local dairy brands including Ilara, Tuzo and Delamare.
The acquisition of Buzeki automatically gave Brookside a presence in South Sudan, thereby enlarging its regional reach. The processor currently controls over 44 per cent share of the dairy products in the Kenyan market.
PUT UP A POWDER PLANT
As part of its growth plan, Brookside has put up a Sh3 billion milk powder plant, expected to double the capacity of milk processed at the plant to 2.4 million litres daily.
“By uniting Danone’s international expertise in fresh dairy products with Brookside’s regional expertise and robust supply chain, the partnership will enable Brookside’s growth acceleration by expanding its product portfolio and strengthening its geographical presence in key markets in the East African region, including Uganda and Tanzania,” Danone said on Friday.
There are, however, concerns about the impact on the local dairy industry and Kenyan dairy farmers if Brookside entrenches its market dominance. By buying out its competitors, Brookside, whose CEO is President Uhuru Kenyatta’s brother, Muhoho, has limited farmers’ choice of where to sell their milk. Brookside’s biggest competitor is state-owned New KCC which lacks the financial muscle to battle it out in the market in terms of prices.
This could leave Brookside with the prerogative of setting milk prices, for both farmers and end consumers.
Danone joins a growing list of French firms that have ramped up investment in the Kenya over the years as more western companies eye a piece of the African consumer market.
House speakers sign deal to build new parliament complex at cost of 2 bln birr
.
Image may be NSFW. Clik here to view.
The new parliament complex
.
Speakers of the House of Peoples’ Representative (HPR) and the House of Federation (HoF) signed a design deal on Wednesday at Jupiter International Hotel to build a new parliament complex estimated to cost some two billion birr.
Abadula Gemeda, speaker of the HPR said that the process for the preparation and awarding a winning design to the new building took an extended amount of time. According to the speaker, the time the process took was necessary to assure the best design is selected to erect a complex that will serve many generations to come in 100 to 150 years. “It’s a well thought project that is planned to remain permanent and represent the nations and nationalities of the country symbolically.”
Kassa Tekleberhan, speaker of the House of Federation on his part explained that the new planned building show the country’s vision of 100 years to the coming generations.
Such said new complex, according to Addis Mebratu, architect and owner of the Addis Mebratu Design Studio, the building will have three major halls. One of them is destined for the MPs office and related activities. The second will accommodate members of the House of Federation. The third hall is designed for public assembly purposes. Other amenities include training facilities for MPs. Addis and his colleagues detailed that the complex will also host research corners and a printing press among others, a playground for children, restaurants and a cafeteria, parking and a garage will also be included in the complex.
Addis said that the two billion birr parliament complex will be designed to host some 900 MPs. A year and half ago the budget assigned for the building was one billion birr. However, if the construction is taking place according to the international design standard the estimated cost will double.
The Ministry of Urban Development and Construction (MoUDC) is assigned to oversee the overall process by the two houses on their behalf. Hailemeskel Tefea, minister of state for MoUDC detailed how the process for the design competition was made. Both local and foreign companies have been involved and Addis Mebratu Design Studio has finally been awarded for its technical competencies.
The proposed building will be erected closer to the existing 72-year-old parliament hall, in the Arat kilo area, in the center of the capital Addis.
In related news, the Association of Ethiopian Architects (AEA) is to award veteran and junior professionals for their architectural achievements. Addis, who serves as president of AEA, told The Reporter that on the 16th annual convention, AEA would award prizes in six categories. The categories include prizes of outstanding achievement in architecture, town planning, prizes for lifetime achievements, prizes for improvement of the quality of human settlements (sustainable architecture,) prizes for best student projects and architectural criticisms or architectural education. According to Addis, 19 architects and institutions have been nominated so far. The convention will take place on July 25 and 26 at the Sheraton Addis sponsored by the African Union of architects.
French company wins Bole airport expansion consultancy bid
.
Image may be NSFW. Clik here to view.
.
A French company, ADPI, won the bid that the Ethiopian Airports Enterprise floated to hire a consultant for the Addis Ababa Bole International Airport passenger terminal expansion project.
Early this year, the Ethiopian Airports Enterprise had put up an international tender inviting companies that would supervise the construction of the state-of-the-art passenger terminal at a cost of 250 million dollars. Thirty-eight companies bought the bid document out of which only five submitted bid proposals. The enterprise bid committee has been evaluating the technical proposals presented by the five international consulting firms.
Wondim Teklu, head of communication affairs office with the Enterprise, told The Reporter that a French company has won the bid. He added that an agreement would soon be signed with the company. The incumbent will also undertake a study on the new mega airport project planned to be built outside of Addis Ababa. The enterprise is contemplating building a giant international airport in a low land area out of Addis Ababa. The French company will be tasked with undertaking a study on the site selection for the new airport and how to integrate it with the Addis Ababa Bole International Airport.
ADPI is a French architecture and engineering company operating worldwide on complex development and construction projects.
Its range of architectural and engineering services includes consultancy, planning, prime contractorship and project management. ADPI was formed in 2000 as a subsidiary of Aéroports de Paris. Landmark projects include Terminal 3 at Dubai International Airport, the final assembly line factory complexes for the Airbus A380 at Toulouse and the A400M at Seville, the passenger terminal extension at Bogota Airport or the French Embassy in Tokyo.
The Chinese construction firm, China Communications Construction Company (CCCC), has already commenced work on the Addis Ababa Bole International Airport passenger terminal expansion project. The enterprise will expand the passenger terminal at a cost of 250 million dollars. The loan is secured from the EXIM Bank of China. The project is aimed at transforming the passenger terminal into a state of the art terminal and boosting its capacity substantially. CCCC, which has built a number of highway roads in Ethiopia is the contractor. The design of the new passenger terminal is drafted by a Singapore company called CPG Airports.
The expansion project includes the construction of a new passenger terminal as an extension of the existing Terminal 1 (domestic and regional terminal) and Terminal 2 (international terminal) with all related equipment and the construction of a new VIP passengers’ terminal.
The new terminal will house boarding areas, lounges, recreation centers, shopping malls, offices and other facilities. New boarding gates, boarding bridges, and a parking area are parts of the expansion project. The new parking area will serve passengers and staff members.
A major component of the expansion project is the VIP terminal. The first of its type in Ethiopia, the VIP terminal will be dedicated to leaders, senior government officials, diplomats and other dignitaries. The VIP terminal will have various saloons, lounges, conference rooms, recreation centers, duty free shops, an IT center and an exclusive parking lot.
At present the two terminals accommodate 6.5 million passengers every year. When the new terminal is completed it will accommodate 25 million passengers per annum.
The Ethiopian Airport Enterprise owns and operates 18 airports, 15 of which are asphalt. To cope with the fast growth of Ethiopian Airlines, the Ethiopian Airport Enterprise is building new airports in different parts of the country. The enterprise recently built two airports in the Jimma and Assosa towns. It will also soon embark on the construction of a new airport in the town of Hawassa.
East African oil and gas discoveries are poised to fundamentally transform the economies of the region as the fuel resources usher in new investment in road, rail, power and industrial infrastructure, according to Standard Bank.
Uganda, Kenya, South Sudan, Ethiopia, Tanzania and Mozambique have emerged as one of the most prolific oil and gas exploration regions in the world over the last 10 years, says Simon Ashby-Rudd, the London-based global head of oil and gas at Standard Bank. These discoveries will establish the region as a major hydrocarbon province in the decades to come and drive wider economic growth throughout East Africa.
“Over and above the traditional oil and gas regions in Africa, notably West Africa, East Africa has essentially been a forgotten desert in terms of upstream oil and gas exploration over the last 40 years,” said Ashby-Rudd. “This has changed completely over the last decade. Oil and gas companies are starting to realise the potential in nations along the East African rift valley and Standard Bank believes this is going to fundamentally transform the region’s economy.”
Oil exploration in East Africa was sparked off by the discovery of between 1.5 and 2bn barrels of commercially viable oil reserves in northern Uganda in the middle of the last decade. Last year the country announced that the total known oil reserves in the country were estimated at about 3.5bn barrels.
The discovery of oil in Uganda coupled with the fact that exploration licences in East Africa were comparatively cheap due to the fact that the region was not regarded as an oil rich area, ushered in further exploration activity in other countries along the Rift Valley. As a result, further oil discoveries were made in southern Ethiopia and Kenya with additional gas finds in Tanzania and Mozambique.
One of the biggest indicators that the region is likely to experience an oil and gas-led boom in the next half decade is the fact that several projects in East Africa are likely to come on stream at similar times. Mozambique’s and Tanzania’s gas and liquefied natural gas projects are expected to come on stream in 2019 with Kenya and Ethiopia expected to begin commercialisation of their oil deposits over the next six to seven years. Uganda is set to begin oil production by 2018/19, while South Sudan is already producing.
“Oil investment could accelerate the economic growth of several economies in the region,” said Ashby-Rudd. “While the discoveries might be fairly modest in a global context, they’re very significant in a regional economic context.”
Plans are now underway to construct an oil pipeline linking Uganda’s oil fields to the coastal port of Lamu in Kenya. In February this year, Uganda signed a memorandum of understanding (MoU) with oil companies operating in the country to facilitate the development of an oil refinery in Uganda as well as a pipeline that enables crude reserves to be exported.
“A pipeline would really kick-start economic growth in the region as it would usher in additional investments, the necessary infrastructure which in turn will enable further investment in industrial operations,” said Ashby-Rudd. “Oil thus becomes the catalyst for an economic transformation across the region. An oil pipeline could become the backbone on which an entire infrastructure corridor could be constructed.”
Ashby-Rudd says Uganda’s efforts to link its oil reserves to the coast to facilitate exports could be replicated by other landlocked nations in Africa. This would allow additional infrastructure corridors to be developed as a means of harnessing the economic potential of central and east African nations such as Tanzania and the Democratic Republic of Congo.
Burgeoning economic growth in East Africa is also likely to result in increasing demand for fuel within that region, which imported a collective $10bn of fuel and petroleum products in 2012. Standard Bank expects total demand for petroleum products in East Africa to treble by 2030 with Kenya likely to remain the largest market in the region, which the bank estimates will record compound annual growth rates of between 5% and 7% over the next half decade.
Local manufacturers to cover 90pc demand of corrugated sheet
.
The Ethiopian Institute of Metals and Industry Development indicated that local metal industries have achieved a maximum level of production, meeting up to 90 percent of the local demand.
Corporate Communication Director, Fitte Bekele, told The Reporter that though the government does not stop companies from importing the corrugated iron sheets, it highly encourages the use of the locally manufactured product, which is abundant.
He further indicated that as part of the government’s plan of expansion of the industry sector, the local manufacturers’ annual production capacity surpasses over 31 percent.
According to government sources, there are around 25 factories across the nation of which three are owned by foreign companies.
The Ministry of Industry earlier announced that power shortages and frequent cuts are one of the biggest challenges that the manufacturing sector has had in the concluded budget year, which also caused the export performance to decline from what was set for the fourth year of the GTP.
Fitte also told The Reporter that still, to upgrade the capacity of factories and to increase their productivity, the government is working to address the prevailing shortage of raw materials and inputs.
“Now we can utilise the prevailing capacity with the existing local factories so that we are not promoting foreign companies like we do in the other businesses of the manufacturing sectors. We have reached a level that may not require importing additional corrugated iron from abroad,” Fitte added.
He further indicated that local factories are looking forward to extending their market destinations to more African nations. For quite sometime only one company has been exporting its products mainly to Djibouti and Sudan, Fitte said.
Expansion being carried out in five hospitals in Addis Ababa with 448 million Birr are expected to commence operation in the coming September, the Government Construction Agency said.
In a press conference he gave here yesterday, Agency Director-General Tilahun Kebede said the expansion is being undertaken in Yekatit 12, Dagmawi Minilik, Ras Desta, Gandhi and Zewditu hospitals.
Up on completion, the expansion of the hospitals will help to raise the health coverage of the city to 100 percent, he said.
Administrative offices are also being built in five sub-cities with 1.1 billion Birr, he said. Of the total 541 buildings being constructed, 391 have been completed.
Schools, youth centres, shades for small enterprises, and health institutions are among the buildings, he added.
These constructions created jobs for over 28,000 people.
A US non-profit organisation aims to become a self-sustainable business selling condoms in Ethiopia, but it’s encountering competition from some unlikely and even well-intentioned sources. James Jeffrey’s report from Addis Ababa reignites the old debate over whether free donations are stifling sustainable local businesses.
.
Members Only is the latest condom brand released by DKT Ethiopia that, despite being part of US non-profit DKT International, has every intention of building a successful business model enabling it to shed its NGO status and become a profitable business in its own right.
Since 1989, DKT Ethiopia has sold the country’s most popular brands, usually well below market cost and heavily subsidised – UK’s Department for International Development has pledged £18m ($11m) from 2011 to 2015 – as part of the effort to tackle problems such as HIV and improve family planning for the country with Africa’s second-largest population.
At the same time, Ethiopia’s burgeoning economy – averaging 10% GDP growth since 2007 and set to continue by a somewhat reduced but still-high 8% in the coming years – is enabling DKT to shift strategy.
For Members Only is not subsidised and is instead being sold at full market cost in an attempt to get a clear picture of what consumers might be willing to pay for as the company strives to move toward establishing a fully self-sustainable business model.
This is something DKT has achieved with condom programmes in Indonesia, Philippines and Brazil, and if successful in Ethiopia, would provide the country with a more sustainable condom supply. Currently Ethiopia receives millions of free condoms from donor organisations each year.
“Our model [for Members Only] is based on the economic development of the country, and there’s reason for enthusiasm,” says Andrew Piller, in charge of DKT’s condom distribution network in Ethiopia – sending out more than 60m of them a year. There are about 40m stacked in the main Addis Ababa warehouse right now.
DKT is certainly making concerted and bold efforts to achieve its goal. Across the Ethiopian capital, Addis Ababa, huge billboards dominate horizons advertising Members Only and stressing how “membership has its pleasures”.
On first viewing one could be forgiven for connecting such a billboard with the types of adverts seen in the likes of New York for so-called gentleman’s clubs. But it is meant to be eye-catching and thought provoking in a bid to stir potential consumers’ interests, and is notably upmarket for the same reason, with three condoms packaged in a sleek-looking black metal container.
A pack costs 20 birr (about $1), which is up to 10 times more than DKT’s other condom brands, such as Hiwot Trust and Sensation, sell for. And as you read this article, there’s every likelihood that somewhere in Ethiopia one of DKT’s distribution trucks is toiling along a road or even a dusty track, with no corner of a country the size of France and Spain combined, too remote for delivery.
“Distribution in Ethiopia is complicated,” says Messele Abebe, DKT’s logistics’ manager. “But we even get to the Afar desert, where we go door to door visiting pharmacies, and to the Somali border region.”
DKT’s greatest competition isn’t coming from other businesses, however, as one might expect, but from aid organisations such as US Agency for International Development (USAID) and the US President’s Emergency Plan for AIDS Relief (PEPFAR) providing a relentless supply of free condoms to Ethiopia.
Unlikely competition In 2015, USAID plans to procure up to 35m condoms for Ethiopia at an estimated cost of $0.03 per condom, according to USAID.
“Ethiopia is still very popular with donors and there is still a lot of aid money flowing in,” Piller says. “Sometimes donors struggle with how to spend their funds – and condoms are easy to provide and seem like a self-evidently good idea.”
The private sector used to be the major source of condoms in Ethiopia up until 2011, Piller says. But DKT has seen its market share slide from about 70% in 2009 to 30% currently, making the goal of achieving a sustainable and profitable business, and a sustainable condom supply for Ethiopia, that much harder.
“We support market segmentation, but there is a limit to what we can expect people to pay for given the financial situation,” says Keith Hummel, commodities and logistics adviser for USAID in Ethiopia. He notes that 29% of Ethiopians subsist on less than $2 a day and that targeted distribution of free condoms combined with health promotions can actually create demand to purchase condoms.
.
Piller doesn’t want to see free condoms stopped, he emphasises, rather better coordination between the differing supply systems and the organisations behind them, so that private sector condoms have a chance to succeed and the business model behind them take root.“Commodities can’t talk and so donor programme managers can blame the product, saying there’s a shortage, and so donors give more,” Piller said. “It’s a bit like taking vitamins: when you overdo it and it doesn’t help any more.”
Sex workers are a focus for free condom programmes, though Piller notes surveys conducted have illustrated how sex workers are happy to pay for affordable, quality retail condoms, which are already easily accessible at kiosks, grocery stores, pharmacies and the like.
“Everyone involved could do with being a little more data driven,” Pillar says. “Free condoms have a role for the poor and those in most need, but don’t flood the system.”
And too often, free condoms don’t actually reach those for whom they’re intended, and instead permeate the private sector, Piller notes.
DKT’s condoms used to be the ones that Ethiopian hotels habitually stocked in rooms and receptions. I remember finding packs of Hiwot Trust, DKT’s oldest brand, regularly in bedside drawers in hotels during previous travels. But nowadays it’s not DKT’s brands found in hotels but free condoms, much to Piller’s chagrin.
“We could be the distributary core, and what we do is more cost efficient,” he argues.
Tough choice inside his room on the Addis Ababa University campus, 23-year-old Bereket reached into a cupboard and showed me a pack of Sensation Honey condoms. He prefers this brand because it’s “modern”, adding that he avoids free condoms because he cannot be sure of their quality.
On the other hand, 26-year-old Negede, a graduate student at the university, said she remembers visiting the university clinic and seeing four male students turn up and start collecting handfuls of free prophylactics.“They’re my regular customers!”, a nurse told her.
Ethiopians have become much more aware of condoms during the past five to 10 years due to advertising, media messages and health concerns, Negede says. The use of condoms, whether free or paid for, seems to have worked well in helping stem the spread of HIV in Ethiopia; the infection rate is relatively low, estimated at between 1.3% and 2.4%.
So which is the better approach – to price condoms just like any other product, and encourage free market development, or to treat them as potential life-savers which should be available to anyone, anywhere, free, at any time? It’s a dilemma for all involved.
Ethiopia’s condom situation appears emblematic of the wider policy debate that has dominated aid and the question of how best to encourage economic growth in Ethiopia and Africa: the merits – or lack of them – of giveaway – aid culture versus
capacity building.
Western governments have responded to the debate by increasingly endeavouring to tie aid to business opportunities. The US-Africa Leaders Summit this August is intended to “advance the administration’s focus on trade and investment in Africa”, according to the White House.
In January of 2014, British International Development Secretary Justine Greening announced that the UK would be devoting £1.8bn to growth-boosting investments in 2015–2016. “Economic development is, without question,” Greening said, “the only way countries can leave behind enduring and chronic poverty for good.”
DKT’s goal is to be fully participant in Ethiopia’s economic development, and emerge with a business model that is mutually beneficial to its profitability and to Ethiopia, where condoms clearly still have a vital role: World Bank projections predict Ethiopia’s current population of about 91m will grow to 134m by 2030.
So far Members Only condoms make up just 1% of DKT’s sales. But it still early days, Piller points out; he’s hopeful that within the next eight to 10 years, DKT can achieve its goal of transforming itself into a profitable business operating within a more flourishing Ethiopian economy.
“I like to be optimistic even though there’s lots of variables that we can’t control,” Piller says. “But if things remain steady we should get there.”
After completing a master’s degree in journalism at the University of Texas at Austin in May 2012, James Jeffrey spent a year freelancing in US focusing primarily on business, including writing for the Austin, Houston, San Antonio and Dallas Business Journals. In October 2013 he moved to Addis Ababa, Ethiopia, to write about business-related features primarily, while endeavouring to cover other topics of interest in a remarkable country.
.
Indian manufacturers stride to join local investment landscape
.
- Construction firm interested in railway, airport, industry zone projects – Giant tractor manufacturer willing to assemble here
The Confederation of Indian Industry comprising 15 Indian business delegates spent three days in the capital looking at opportunities that will enable them to take part in Ethiopia’s industry sector.
The delegates met with public officials and posed questions.
From July 14 to 16 the group was busy meeting officials and local businesspersons to grasp what can be tapped in Ethiopia. Tanmony Bhattacharya, head of Africa initiatives at Larsen & Toubro Limited (L&T) was one of the vocal persons from the group. A USD 14 billion conglomerate, L&T is interested in technology, engineering, construction, manufacturing and financial services across the globe. According to Bhattacharya, the company will venture on three major areas in Ethiopia. The company expressed interest in joining the railway sector. Bhattacharya said that L&T would bring in its own finances from the State Bank of India. If intentions are realized, the 670 km stretching Woldia-Mekelle railway project will be handled by L&T, to which the Ethiopian government is required to agree on terms for concessional loans.
Bhattacharya expressed keen interest in areas of airport expansion projects where the firm is waiting for announcements by the Ethiopian Airports Enterprises for bid results. If needed, L&T will avail its own finances for such projects too. The emphasis the government currently is giving is developing industrial zones across the nation. Some projects are pending lacking funds.
During the discussion held at the offices of the Ministry of Industry in Kasanchis, near the UNECA headquarters, Ahmed Abitew, the minister and all his minister d’états were present. Ahmed was eager and gave some accounts of the incentives the Indians may tap into. Minister d’état Sisay Gemechu, in charge of the development of industry zones asserted that he would be available to cooperate and provide the technical details required.
The other Indian giant willing to situate itself here is TAFE, the major manufacturer and seller of tractors and farm equipment. According to Sukhdeep Sing Grover, general manager for exports at TAFE, it will see the assembly line of Ethiopia. He gave his companies details that according to him generate USD 1.6 billion a year. TAFE has a record figure as the third in the world for tractor sales. Yearly it exports some 20 thousand tractors and manufactures, some 180 thousands. India’s major exporter, TAFE will soon establish a business relationship with the Metal and Engineering Corporation (MetEC).
A member of Confederation of the Indian Industry however raised concerns over access to finance, customs clearance, investment license fees, and availability of raw materials such as pig iron and others.
Between 2007 and 2011, the number of flower stems Ethiopia exported quadrupled to more than 2 billion stems, according to the Ethiopian Horticulture Development Agency. The EHDA is a government agency that aims to make Ethiopia a leading African country in exporting horticulture, including flowers.
Image may be NSFW. Clik here to view.After Kenya, Ethiopia is the second largest exporter of roses out of Africa, says Dawit Woubishet, director and owner of Tradepath International Plc., which began flower transport operations in 2007.
Tradepath is a freight forwarder, airline representative, trucking company and distributor based in Addis Ababa, Ethiopia.
Every week, Tradepath operates an average of 10-12 freighters full of flowers, says Woubishet (pictured right). During holidays such as Mother’s Day and Valentine’s Day, that number can jump to 15 freighters, which is about 900 tonnes of flowers per week. The majority are roses, but carnations and azaleas are also in the mix, Woubishet says.
Tradepath uses trucks to collect flowers from farms and then puts them in a refrigerated warehouse space operated by Ethiopian Airlines. The flowers fly to Liege, Belgium, and then are trucked to Amsterdam for auction. After that, the flowers go to customers in Scandinavia, Russia, Japan and parts of Western Europe.
“The cool chain is very important because the temperature has to be controlled,” Woubishet says. “If that’s not the case, if we kept all the flowers all together for a longer time, the flowers breathe. So when they breathe, they will touch all the other flowers, and then the heat will come out of them, and this will affect all the other flowers. They’re going to have a bad quality.”
The former Addis Ababa Restaurant in Washington DC on 18th street has now become Washington Hotel in Addis Ababa. An estimated 180 million birr has been invested to realize the concept of from capital to capital as the owners aim at fostering the sisterly cities’ cultural and people to people connection.
For over 30 years Asfaw Amde and his family have resided in Washington DC promoting Ethiopian cuisine and traditional lifestyle on 18th street. “A time has just come to get here,” he said. According to the family, Addis Ababa Restaurant in Washington DC has served the country in promoting the authentic religious and cultural values of the country.
Washington Hotel is located off Cape Verde Street in the commercial district of Addis Ababa in Bole Sub City on the road to the European Union (EU) Ethiopia office. “We have dealt with global hospitality companies to realize a distinct service,” Girum Legesse sales and marketing manager said. “We had sold our restaurants in DC and Silver Spring in 2005 to fully focus on Washington Hotel in Addis,” Meraf Asfaw, creative director told The Reporter.
After seven years of construction, the hotel is now open creating jobs for 135 citizens. It typically features a penthouse for presidential guests at a price of USD 950, which is hardly available in other hotels in Addis. It also offers prices ranging from USD 95 -160 for its 65 rooms designated as standard single rooms, twin bed rooms, and Washington suites. The hotel is laid down in on area of 1200 sq meters from which ground parking is secured for 50 vehicles and “a terrace that helps guests observe the city at 360o,” Girum added.
Because it lacks a swimming pool to claim a spot in the five-star hotels, it has now opened as a four-star luxury hotel waiting for an expansion to construct a swimming pool and other facilities, the owners explained.
Prime Minister Hailemariam Desalegn disclosed that government provides every support possible for companies and business people interested to invest in Ethiopia. The premier held talks in Addis Ababa with Chinese business delegates having big share of investment in China on Thursday.
Hailemariam briefing the delegates said that government creates conducive environment for those committed to invest in Ethiopia. After the talks with the premier number one linen producing, Chinese Kingdom Holdings Textile Company has signed a memorandum of understanding with the Ethiopian Ministry of Industry.
Company’s owner Mr. Wimen Pen said that provision of land and other incentives is encouraging to invest in Ethiopia.
His Textile Industry in Ethiopia will fall on 300,000 square meters of land at Lebu with investment capital of 50 million USD.
Ethiopian Investment Agency Head Fitsum Arega the Coming of such larger companies to invest in Ethiopia will play a great role in knowledge and skill transfer, and job creation as well.
Kingdom Holdings is expected to create up to 5,000 jobs in Ethiopia.
This Company has a capacity of producing 11 thousand tons of textile to date and has been a leading in generating foreign currency in China for the last 11 years.
Document Authentication & Registration Office (DARO) announced it launched new registration and authentication method for share companies which only require the presence of half of the shareholders plus one.
Previously it was demanded all the founding shareholders should present themselves in order to establish a share company.
According to Fortune the shift was made after DARO concluded a MoU with Federal Investment Agency (FIA), Ministry of Trade (MoT) and Ethiopian Chamber of Commerce & Sectoral Association (ECCSA), two weeks ago.
Communication Director at DARO, Alemayehu Debassu, said his office got to work after the conclusion of the MoU in order to avoid the extended time it was taking to establish share companies.
The topic was brought up during the Public Private Consultation Forum of the ECCSA which witnessed the Trade Minister Kebede Chane.
According to a presentation that was made, the system was culprit for a huge expenses and a desperate wastage of resources.
After forum MoT organized a team electing its members from itself, DARO, ECCSA, Ministry of Justice and the Investment Agency. The committee studied the problems and made some suggestions.
On Saturday, May 19, 2014, the committee tabled a study which stipulates nine solutions, out of which five are going to be implemented by DARO, and the rest by MoT and FIA.
Commenting on this Alemayehu said, “The improvement is going to be done in the process of work implementations, without amendments to the law”.
According to Fortune, the new system will enable founding share holders to make legitimate minutes and decisions with only 50 plus one percent of the total share holders. DARO will attend the meeting and collect the signatures of those who are present and approve the minutes and decisions on the spot. Election for board of directors will also be approved the office if six of the total 11 directors are
present.
Almayehu noted, “The new implementation system became operational from the day we signed the agreement”.
Ford has aggressive plans to expand its business in Africa and will be launching 25 new vehicles into the Middle East and Africa region by 2016, with 17 of these models launched into sub-Saharan Africa.
Jim Benintende, the president of Ford Middle East and Africa (MEA), said yesterday Ford had launched earlier this year its fifth business unit, MEA, comprising 67 markets that represented “the final frontier for growth within the global automotive industry”.
“The MEA automotive region is expected to grow by 40 percent to 5.5 million vehicles by 2020. By creating sub-regions within Fords MEA’s business unit – South Africa and sub-Saharan Africa, as well as the Middle East and North Africa – Ford is strengthening its presence in this dynamic region, which is recognised as one of the fastest growing regions in the world,” he said in Sandton at the first Ford Go Further event in Africa.
Benintende said Ford recognised the massive growth potential of the African continent and the opportunities it presented and by the end of next year would have refreshed more than 50 percent of its product line-up in South Africa and 20 percent of its line-up in sub-Saharan Africa.
He said Ford was also supporting its dealer network throughout the region to better serve customer needs, which included expanding its parts and service capability throughout the Middle East and Africa to ensure the shortest possible delivery times.
Jeff Nemeth, the president and chief executive of the Ford Motor Company of Southern Africa, said South Africa remained Ford’s engine of growth for the continent going forward and its vision was to become the first choice for mobility in Africa.
Nemeth said Ford launched a total of six new products into the South Africa last year, which contributed to its exceptional 40 percent year-on-year growth to 64 500 units over 2012 and the improvement in its market share to 10.4 percent.
He said the same growth trend had continued this year and Ford’s sales were 26 percent higher in the first half of this year compared with the corresponding period last year.
Nemeth stressed that for Ford to ensure its sales growth in Africa, it was vital to provide an affordable product offering.
“Africa is one of the youngest markets in the world and presents a huge business opportunity.
“The buying power of African consumers is on the rise as the continent’s middle class increases exponentially. Despite the infrastructure challenges, Africa has demonstrated an impressive return on foreign direct investment, which led to a 5 percent increase in foreign direct investment across sub-Saharan Africa last year alone,” he said.
Nemeth added that Ford sales had grown by almost 60 percent in sub-Saharan Africa in the past four years, with Nigeria and Angola its largest markets and accounting for 50 percent of its total sales in the region.
But he said Ford only participated in 24 of the 46 markets in sub-Saharan Africa, which meant there was a massive opportunity for growth.
Nemeth said Ford would become an even stronger contender in the commercial vehicle segment by expanding the Transit brand family across the region.
Thanks to its ideal climate in the high plateaux of Eastern Africa, Ethiopia is producing some of the best coffee in the world with unique arabica varieties not found anywhere else. Coffee is also a great source of income for the country, representing about 30 percent of its total export and is grown over an area estimated at about 400,000 hectares. Unlike the vast coffee plantations found in other parts of the World, in Ethiopia coffee is still grown mainly by small scale farmers who do not benefit from the same technology and awareness of quality as their counterparts elsewhere.
The Agricultural Marketing Improvement Programme (AMIP) supported by the International Fund for Agricultural Development (IFAD) in Ethiopia, started working with coffee producers to train them on improved agronomical practices. Coffee production is still extremely traditional with most of it done by hand and very little technology used. As a result, the quality of the coffee beans can be unequal with wide variation from one farmer to the next and from one season to the next. Even with the best marketing system in place, the quality of the coffee first depends on the farmers growing it. They are the ones nurturing the plant so it can have good yields, picking the cherries at full maturity and not too early, and washing or drying the beans with care.
Using the extended network of agricultural extension workers and primary cooperative, AMIP helped introduced a training programme aimed at small scale coffee farmers to improve the quality of their coffee to reach regular export standard. Using simple graphic tools such as drawings and pictures, farmers were taught to pick the cherries at full maturity (when they are red) and pay attention to the quality of the cherries, by discarding the damaged ones. “Coffee is their livelihood, so it is important that those farmers get a good income from it,” explained Shimekit Gebretsadick, AMIP project coordinator in the Southern Region, “in many cases, they needed support to improve agronomical techniques to reach export standard and fetch a better price.”
As part of its objective of improving marketing infrastructure, the AMIP project financed a number of coffee washing stations to introduce better post-harvest technologies to small scale farmers. After harvest, coffee cherries can be either sun-dried or washed. The more traditional method of drying coffee involves manually placing the cherries on raised purpose-built drying beds and living them in the sun until they are ready to be hulled and roasted. Dried cherries usually produce a sweeter and more intense aroma, however, the quality can be irregular. With the washing process, the pulp is mechanically removed and the beans cleaned using water, resulting in a cleaner, brighter and fruiter aroma with a more consistent quality. The pulp waste can be used to make compost to fertilize vegetable garden plots.
In the Damot Gale district, farmers from the Garagudo primary cooperative have benefited from the support of AMIP for the construction of a new coffee washing station. The programme opened a credit line of 400,000 Birr which the cooperative will pay back over the next two years.
Thanks to the new technology, farmers are now able to add value to their crop by selling washed coffee beans to their cooperative union as opposed to raw cherry beans. “We used to sell coffee beans for 56 Birr per kg, now we can fetch a price of 91 Birr/kg thanks ot the washing station,” said Iyasu Moliso, the cooperative’s manager. As a matter of comparison, retail export quality coffee in Addis may fetch a price of over 300 Birr/kg. In the last season, the cooperative was able to pulp 4.2 tonnes of coffee. The cooperative counts 447 members, including 174 are women of which three are serving on the committee. “The added value has translated into a greater income for us which is very good,” said Iyasu. Before the washing station and the agronomical training, the cooperative was producing a grade 9 coffee, now its production is of export quality at grade 1 or 2. They have opened a bank account and through the assistance of their local marketing and cooperative Office (a sub-office of the government’s Regional Cooperative and Marketing Bureau), they have established relations with a micro-finance institution to develop further their business. “Life is gradually improving for us,” unanimously said the cooperative members.
Coffee is an important commodity in Ethiopia, representing almost a third of the country’s export. As well as being the largest export crop and one of the best quality of arabica in the world, coffee is also a traditional beverage consumed daily. Half of the coffee produced is consumed nationally. Drinking coffee in Ethiopia is part of a traditional ceremony which involves not only the art of consuming the beverage but also the strengthening of family, friendship and social bonds.
In Ethiopia, the majority of the coffee produced is still grown by small scale farmers with scattered plots, who tend to sell their production through primary cooperatives which are part of larger cooperative unions selling directly to the market. As a result, they depend on a well functioning value-chain to maximize income for their commodity. Since the Agricultural Marketing Improvement Programme (AMIP) supported by the International Fund for Agricultural Development (IFAD) started working on improving the coffee value chain for small scale farmers, their income and livelihood have improved as well as their knowledge of the market.
The development of regional coffee testing centres was one of the successful features implemented by AMIP. “The AMIP project financed the building of regional liquoring centres where the quality of the coffee is tested and graded,” explained Shimekit Gebretsadick, AMIP project coordinator in the Southern Region. “Before that, coffee grains had to be transported all the way to Addis to be graded.” Such exercise was inefficient as well as costly for the traders and consequently for the farmers, who got a lower price for it because of the added transportation cost. In addition, farmers had little knowledge of quality requirements because the coffee was graded so far away from their farm.
With AMIP support, the so-called liquoring centres were built in the four main coffee producing centres of the Southern Nations, Nationalities and People’s Region (SNNPR), namely in Awasa, Dilla, Sodo and Bonga. “One of our project’s objectives was to improve marketing infrastructure,” explained Shimekit, “in that respect, we built the liquoring centres.” Once operational, the management of the coffee liquoring centres was taken over by the Ethiopia Commodity Exchange (ECX), the country’s new trading platform started in 2008 to make the market more transparent and efficient. “Now we have a functioning marketing infrastructure at regional level as opposed to have everything centralised in Addis,” Shimekit added.
As part of the new system, farmers take their coffee crop to the liquoring centre through their local cooperative Union. There, the coffee is tested and graded on a scale of 1 to 9 (1 and 2 being the best export quality coffee) and according to one of four defined origins in the region(Sidamo 1,2,3 and 4). The information is sent electronically to ECX in Addis where the crop is traded and the price set. Once trade has taken place, the buyer transfers the total amount of the sale to the account of the supplier (a Union or an individual trader). The buyer then collects the goods from the ECX store and organises transport to Addis. After further cleaning, the coffee is packed for export and shipped to foreign clients. “Now we have a smooth coffee value chain, and efficient marketing is taking place,” explained Ato Jemo, manager of the Sodo coffee liquoring centre. “The coffee given to traders is of standard quality and just as importantly, farmers get feedback on what the market wants, so they can improve quality.” Before the grading centres were established at regional level, farmers had little knowledge of the required quality for the international market. In a rush to sell their crop, they often picked the coffee cherries too early instead of patiently waiting for them to reach maturity. As the result, the coffee was not suitable for export, and they got a much lower price for it.
The coffee grader professionals in the centre are selected by the Ministry of agriculture and trained full-time for three months with the support of the AMIP programme which has a dedicated budget line for it. They received an internationally recognized qualification following the training, which enables them to assess the quality of the beans through smell, taste and look.
In total, the AMIP project financed the construction of eight liquoring centres in the region, where farmers cooperatives can bring their crop and receive direct feedback on the quality of the beans. They also receive immediate information on national and international market prices through the liquoring centres as well as the huge electronic price boards ECX put in place in the main coffee producing centres. “We now have farmers who are better informed and more aware of their market,” concluded Shimekit.
The increasing degradation of earth’s peak soil through over cultivation and nutrient mining is putting pressure on food production with researchers warning that by 2050 agricultural production will dip by up to 30 percent even as population is expected to hit 9.6 billion, up from 7.2 billion last year.
This is already becoming evident in Sub Saharan Africa where soil degradation has hit unprecedented highs.
In East Africa, One of the most comprehensive studies on soils ever undertaken has confirmed that farming practices have leeched the soil of nutrients without replenishing them, to such a degree as to be halving many key crop yields, threatening the income and food security of over 85 per cent of East Africans.
Measuring the organic and mineral content of the soils, the researchers found that the levels of important soil minerals that sustain plant growth were low, and that the little fertility left was mainly from topsoil organic matter.
The researchers said the problem was made more severe in that East Africa has one of the lowest rates of fertilizer use in the world and a rapidly increasing population to feed.
The barren soils are the result of years of farming with insufficient replacement of nutrients by small-holders, mostly practising low-input agriculture. But the results now threaten future farming and the food and income of millions of people in the region.
“We know far more about the amount of oil there is globally and how long those stocks will last than we know about how much soil there is,” said John Crawford, Director of the Sustainable Systems Programme in Rothamsted Research in England in an earlier interview.
Demand for food and natural resources has led to aggressive soil mining and aggressive cultivation with overgrazing, and deforestation stripping the top soil of vital nutrients and beneficial organisms while reducing the soil’s ability to hold water.
According to Food and Agriculture Organization (FAO), 25 percent of agricultural land is highly degraded, while a further 8 percent is moderately degraded.
“If we keep treating our soil the way we do, we will have to convert about 70 percent of the earth’s surface into agriculture to meet demand for food by 2050 (from about 40 percent now),” Crawford said.
Emerging nations are also embracing Western diets that include more consumption of meat, which will add further to the strain on agricultural resources.
Food security became a hot topic after record high grain prices in 2008 marked the start of a period of volatility.
Agricultural markets are still unstable, after near-record prices in 2012 prompted increased production, which led to surplus.
The French beverage giant Castel, which bottled its first batch of Ethiopian wine this year, is helping change the way outsiders view the country and doing its bit to boost government hopes of attracting foreign investment.
Beyond the donkeys on a potholed road in southern Ethiopia, is an unexpected sight – vineyards bursting with merlot, syrah and chardonnay grapes ripening in the African sun.
The scene is more reminiscent of France’s Beaujolais region than this corner of the Horn of the Africa, which for many still conjures images of famine, poverty and war.
“People outside Ethiopia may know of the drought 10 years ago,” Industry Minister Ahmed Abtew told AFP. “But when they see wine with ‘Made in Ethiopia’ on it, their mind automatically changes.”
The French beverage giant Castel, which bottled its first batch of Ethiopian wine this year, is helping change the way outsiders view the country. It is also boosting government hopes of attracting foreign investment, key to its plans to reach middle income status by 2025.
The country’s growth rates are already among the highest in Africa, hitting 11.2 percent last year according to the government, although the International Monetary Fund puts the figure at 8.2 percent.
For Castel, the ambition is merely to produce good wine, and Ethiopia is an ideal — if surprising — place to do that.
“We don’t find it difficult because the climate is good, it’s not too hot,” said Castel’s Ethiopia site manager Olivier Spillebout, at its vineyards in Ziway, 160 kilometres (100 miles) south of the capital Addis Ababa.
The sandy soil, short rainy season, cheap land and abundant labour were what drew the company’s billionaire president Pierre Castel. The company has been working in Africa for half a century, and in Ethiopia since 1998 when it purchased a state-owned brewery, St George.
But the late prime minister Meles Zenawi thought a vineyard would boost Ethiopia’s image abroad, and asked Castel if it would be interested. So in 2008 the firm spent $27 million (20 million euros) setting up Ethiopia’s first foreign-owned vineyard.
Castel aims to sell half of this year’s production of 1.2 million bottles on the domestic market, and half to Ethiopian diaspora communities in North America, Europe and elsewhere in eastern Africa.
But Spillebout has been startled by some surprise customers, including a Chinese buyer who snapped up 24,000 bottles.
“It’s a big surprise,” he said, standing amid rows of merlot vines.
China, however, is home to the largest number of wine drinkers in the world, and in recent years Chinese investors have bought scores of French vineyards as they have become significant players in the wine world.
In Ethiopia, a bottle of Castel wine sells for $10 dollars, and is of better quality than comparably priced imported wines from South Africa or Italy.
The bottle’s design echoes Ethiopian traditions, showing the bulbous carafe traditionally used to serve the still popular, and potent, honey wine.
Even so Spillebout claims his wines are popular with drinkers of sweet and syrupy traditional wines, which are often served with raw meat, a local delicacy.
Ethiopia is hoping to emulate the growth of Asian nations that have focused on manufacturing to develop rapidly.
“Our vision is that Ethiopia will be a hub for labour-intensive, light industries in Africa,” Abtew said.
But exports have declined from $3.08 billion in 2013 to $2.6 billion in the past year, according to the trade ministry.
Despite its eagerness to attract foreign investment, the country is still losing out to more established African markets like Kenya and Nigeria.
The World Bank ranks Ethiopia 125th out of 189 on its Ease of Doing Business index, with bureaucracy, access to key infrastructure and investment protection rated poorly.
For now, the country is considered a long-term investment destination. Although cheap labour drawn from its population of 91 million, ready access to publicly owned lands and tax breaks make it attractive, investors should not expect a quick return.
Castel, for example, said it does not expect to earn profits from its Ethiopia vineyard until 2016, eight years after it set it up.
France’s ambassador to Ethiopia, Brigitte Collet, said “pioneers” like Castel could attract other investors.
“This important investment is also a very strong statement of confidence in the future of Ethiopia,” she said.
French companies have earned contracts worth €3.0 billion ($4.0 billion) in the last five years with 50 companies operating in the country today, up from 15 only a decade ago.
Castel’s main concern is keeping up with demand, having sold nearly a quarter of its first batch of wine since April, and said it plans to expand the vineyard to eventually boost production to three million bottles a year.
Though sales are modest today, Spillebout is not ruling out Ethiopia’s potential to become a premier wine-producer and exporter in Africa.
“Exports are small now, but year after year the sales will grow very quickly,” he said.
Many young people in Africa view agriculture as a deadend, but seeing the business potential could reap benefits.
.
When we talk about African development, there is a belief that its booming population can only equal crisis. By 2040, Africa‘s workforce could be one billion strong, so finding jobs for this young population should be at the forefront of government agenda. This challenge is coupled with Africa’s increasing demand for varied and nutritious foods.
The solution to both is obvious: build successful agribusinesses. These will not only provide food for Africa, but jobs and wealth for young entrepreneurs.
A new report from the Montpellier Panel sets out recommendations on exactly how this can be done. There is, however, a long way to go before this becomes a reality. Africa’s agricultural value chains are underdeveloped and in places non-existent.
One concrete way to strengthen an agribusiness value chain is to cater for new customers, according to the report. Fragmented producers or businesses can be brought together to combine their resources. Growth of national and regional trade for the urban retail sector should also be supported. Investments that aid these three processes will deliver a stronger environment for jobs and wealth to be created.
Young people still view agriculture as a dead-end career that entails life-long labour on a farm. However, it does not have to be this way. With the right investments to support entrepreneurs in agriculture, profitable careers could await Africa’s young population.
For example, take 27-year-old Senai Wolderfael. A business administration graduate, he spotted a gap in the market for exporting spice blends to Ethiopians living abroad in the US and Europe. Since he set up in 2012, demand for his products has increased, and he now exports to African markets. He has carved a successful career from agriculture – without a hand hoe in sight.
So how can development professionals help fledgling entrepreneurs in rural food production to become business people?
The first intervention that the report recommends is bridging gaps in education. This does not only mean better higher education programmes in agriculture, but also business training courses that equip young people with the skills to run small businesses.
Access to finance is also crucial. And should not stop at access to microfinance. The businesses that have outgrown microfinance, but are still not ready to receive help from mainstream banks, also require finance. They should be supported with their own tailored financial products that will help them grow to a size where they can bank with commercial banks.
Lenders should also to take into account the viability of the whole value chain in which an agricultural entrepreneur operates, sharing the risk among other actors and allowing borrowers to benefit from higher lending on better terms.
Finally, it is important to realise you cannot create an entrepreneur. But you can create the environment that will help them thrive. Governments and donors must invest in the institutions and infrastructure that support them. Economic policies and financial incentives must be put in place to inspire a generation of agriculture entrepreneurs.
Investment in the rural food sector can do more than produce food. It can produce jobs, wealth and robust livelihoods for a young continent that wants a challenge. Let’s show Africa’s youth that agriculture can turn a profit and be an attractive career.
VENTURES AFRICA – The GSM Association has released a state of the industry report under the umbrella of the Mobile Money for the Unbanked (MMU) programme. The report tracks the progress of the mobile money industry each year and provides historical context. This year’s report indicates some interesting information on the success of mobile money in Africa.
Globally, the industry is growing and expanding across more regions. At the beginning of 2014, nine markets already had more mobile money accounts than bank accounts compared to just four markets a year before. At the end of 2013, mobile money was available in most developing and emerging markets with the majority of services remaining in Sub‐Saharan Africa. In this region, mobile money is available in 36 out of the 47 countries that make up the region; this could be easily estimated at a 77 percent penetration.
Kenya is a household name as far as mobile money is concerned but the success of mobile money in Africa transcends Kenya. In Tanzania, for instance, 90 percent of the population had access to mobile financial services by September, 2013 all the way from 1 percent in 2008. 43 percent of the adult population was actively using the service in September, 2013. According to the report, the National Bank in Tanzania played a key role in working with mobile operators to expand mobile financial services.
Mobile Money has proven to be a veritable driver of Financial Inclusion in Africa as it extends access to payments and financial services beyond the reach of traditional financial institutions. As more mobile financial services develop, service providers will be able to deepen financial inclusion by offering financial services beyond mobile money transfer and payment. Such emerging mobile financial services include mobile insurance, mobile credit and savings.
In what is being seen as a recognition of the heavy traffic generated on its routes to the Indian subcontinent, the flagship carrier of the East African nation of Ethiopia has named its newest Boeing 787 Dreamliner after India’s most famous monument.
The Ethiopian Airlines (ET) has named its eighth 787 Dreamliner after the Taj Mahal, Mughal emperor Shah Jahan’s monument of love to his wife. This is the first time that the airline has named an aircraft of its Dreamliner fleet after a historical or heritage site outside of Africa.
To meet the demand from the Indian market, Ethiopian Airlines has decided to operate big-bodied aircraft connecting this Ethiopian capital. Officials said the airline has already deployed the 787 Dreamliner and is exploring new direct destinations in India.
More than 13 million people travel out of India every year. Hence, with its large African network, ET hopes that it will be in a position to benefit from the heavy tourism business from India and the large number of those travelling across the region.
Ethiopian, which currently flies daily to New Delhi and twice daily to Mumbai, is also looking at other Indian destinations like Bangalore, Hyderabad, Kolkata, Kochi and Thiruvananthapuram.
It also has a code sharing agreement with Air India and is set to start services to the south Indian city of Chennai, which it considers to be a gateway to a larger market.
ET has named its previous seven Boeing 787s as Africa First, Lucy, Queen of Sheba, Lake Tana, Walia Ibex and Serengeti, all Ethiopian and African sites.
“In doing so we are heralding the renaissance of Africa globally and we will continue promoting iconic international figures found in the destinations we serve,” the ET official said.
“This will also strengthen our already established relations with India as we have an increasing number of Indian travellers.”
“As a pan African airline, ET is reflecting the global vision and scope of its services through such a naming,” an official from ET told IANS. “This is to also show ET’s commitment to recognise the world’s famous places by carrying their names globally,” he added.
ET is the first African carrier to put Boeing’s new state-of-the-art airplane into regular service in Africa. The first arrived last December and Ethiopian has nine more on order. This comes as Ethiopian becomes the 26th member of the Star Alliance, the world’s largest airline alliance.
Ethiopia wins award for making tourism major income source
Image may be NSFW. Clik here to view.Ethiopia received an international award for making tourism resources a major source of income.
Prime Minister Hailemariam Desalegn, on a panel discussion kicked off earlier today, declared that Ethiopia will carry on with its efforts to make use of its tourism resource.
Secretary General of World Tourism Organization Dr. Taleb Rifai for his part said Ethiopia’s exertion in the tourism sector is exemplary one.
According to the premier, the government has given due attention to tourism sector to make it a major source of income, and tremendous improvements have been registered after the establishment of Tourism Transformation Council which allowed the country expand and strengthen tourism destinations.
Dr. Talib Rifai has able to witness Gonder, Lallibela, Aksum, Najid Mosque and more sites during his five-day visit in Ethiopia.
He said Ethiopia has able to won an international award for its strenuous activities – using tourism as source of income.
UNWTO Pledges to Support Ethiopia’s Tourism Industry
.
Image may be NSFW. Clik here to view.
.
Addis Ababa, Ethiopia – The World Tourism Organization (UNWTO) said it would continue supporting Ethiopia in promoting its tourist destinations.
UNWTO Secretary General, Dr. Taleb Raifi, stated that the organization will help protect heritages, expand tourism infrastructures, develop products, and establish multi- tourism organizations.
The Secretary General noted that as Ethiopia is a museum of mankind his organization has practical plans to work jointly in introducing Ethiopia’s historic, religious and natural attractions.
State Minister of Culture and Tourism, Tadelech Dalecho, on her part said the talks she had with Dr. Raifi was fruitful and would help create capacity.
She added that UNWTO is helping Ethiopia in publicizing its tourist attractions and the development of facilities such as hotels and tour operators.
Image may be NSFW. Clik here to view.Ambassadors of Nile upstream states said their countries will incorporate the Cooperative Framework Agreement (CFA) into their respective laws.
Ambassadors of Uganda, Burundi and Rwanda residing in Ethiopia disclosed that they will ratify the agreement as their domestic law since it has an indispensible role in bringing the overall development of their respective nations.
Uganda’s Ambassador to Ethiopia, Mull Sebujja Katende, stated that the CFA signed in Entebbe before five years is a historic agreement that irreversibly corrects the age-long unjust utilization of the Nile River.
According to the ambassador, the legislative organ will incorporate CFA as part of Uganda’s law since the framework is a key tool to ensuring the country’s socio-economic benefits.
Katende said the agreement, in addition to enabling all the Nile riparian countries to utilize the river fairly and equally, will permit to undertake conservation activities around the river.
Burundi’s ambassador to Ethiopia, Alain Aime Nyamitwe, recalled that his country signed the CFA two years ago and the agreement would bring economic and social benefits to Burundi.
Rwanda’s Ambassador to Ethiopia, Professor Nsengimana Joseph, said his country is the second upper riparian country to sign CFA after Ethiopia and pointed out that the agreement will have huge importance to improving the livelihood of the inhabitants of the riparian countries.
The ambassador, who noted Ethiopia to become the leading country in implementing the agreement, said the Grand Ethiopian Renaissance Dam will in particular be the major source of electricity to neighboring countries.
Professor Joseph underscored that those who oppose the agreement and the construction of the GERD are only the countries that have been utilizing the Nile River alone. He added that the other riparian countries will also undertake different constructions on the River.
Economic development in Ethiopia very impressive: UK Ambassador
.
Image may be NSFW. Clik here to view.UK Ambassador to Ethiopia Greg Dorey said the consecutive economic development registered in Ethiopia over the past years is “very impressive”.
In an exclusive interview with ENA, the Ambassador said the development in Ethiopia is “very impressive” and “potentially sustainable” as well if the government continues to take the right decisions.
“I think it is very impressive whether you take the government’s figures or you take IMF figures … in terms of GDP growth. That is very very impressive and its potentially sustainable growth as well if the government takes the right decisions on the economy then that growth can continue into the future.”
The economic growth in Ethiopia has been accompanied by a huge social investment in human development.
The Ambassador appreciates the strides that have been taken in improving the health, education and social wellbeing of the people.
“Of course this has been accompanied by a huge social investment in human development which is equally important. And you can see the tremendous strides that have been taken in improving the health, education and social wellbeing of the people in Ethiopia really is very acknowledgeable; what has been done in a relatively small space of time.”
“Ethiopia is still a poor country so that work needs to continue.” he added.
“So I have to say everything is moving in the right direction; it just needs the right decision to be taken to continue those achievements.”
He expressed hope that the economic growth in Ethiopia will continue to benefit the people through job creation and sustainable development.
The bilateral relation between Ethiopia and UK is ‘very diverse, mutually beneficial and very good,’ according to the Ambassador.
“Our bilateral development cooperation is the biggest such program in the world for Ethiopia it has been for some years and I expected to continue to be.”
UK provides over 300 million pound sterling annually to Ethiopia in connection with development programs.
Trade and investment relationship is also taking off from a ‘low base’. UK imports of goods from Ethiopia have grown by 48 percent from 48 million pound sterling in 2009 to 70 million pound sterling in 2013.
In the same period UK exports to Ethiopia have also grown by 29 percent from 77 million pound sterling to 99 million pound sterling.
Climate change is one of the areas where the two countries are working together.
The Ambassafor recognizes the efforts of the government to create a climate resilient green economy by 2025 and achieving a middle income status with zero carbon emissions.
Ambassador Dorey said the Climate Resilient Green Economy Policy of Ethiopia can be a model to other countries.
“It is an absolutely adorable policy. I could recommend it highly enough not just for Ethiopia but it’s a model to other countries as well.’
The UK government is putting 45 million pound sterling into this area partly into creating or enhancing institutions which deal with climate change both public and private.
Russia’s Gazprombank unit inks PSA for Ethiopian oil field
.
Image may be NSFW. Clik here to view.
MOSCOW, Jul 21 (PRIME) – GPB Resources, an affiliate of Russia’s Gazprombank, has signed a production sharing agreement for an oil and gas field in the Afar Region of Ethiopia and will invest at least U.S. $2 million in the development of the deposit, Kommersant business daily reported Monday, citing a GPB Resources representative Sergei Togashev.
GPB Resources will have seven years to explore the deposit and 25 years for the development, Togashev said.
The territory is mostly unexplored and its potential resources are unknown. The company will spend $2 million during the first three years of exploration and then decide whether it needs to prolong works, Togashev said.
Ethiopian authorities have proactively given licenses for local exploration. Large companies deem the region to be too risky, while independent Ireland’s Tullow Oil and Canada’s Africa Oil found signs of commercial reserves of oil in the country in 2013.
“The general geologic logic is the following: Ethiopia stands on the way of the Great Rift Valley, which starts in Mozambique and finishes in the Red Sea. Large oil and gas deposits have been found on the borders of the Earth’s surface fault in Mozambique, Tanzania and Sudan, and lately in Uganda and Kenya,” Togashev said.
Image may be NSFW. Clik here to view.The Addis Ababa University (AAU) said on Saturday that it will provide an honorary doctorate degree to Bill Gates, the founder and owner of Microsoft.
In a statement, the university said that Gates will arrive in Addis Ababa on Tuesday to receive the degree.
Gates is selected to receive the degree “for his efforts to enable African students benefit from technology and the philanthropic works he is undertaking in Ethiopia through the Bill & Melinda Gates Foundation,” the University said.
The degree will be given to Gates in a ceremony to be organized at Nelson Mandella Hall in the University next Thursday.
Gates is an American tycoon and philanthropist, who stood first and second in the list of the world’s richest persons during the last ten years. This year, with over $79 billion, he stands second in the list.
The Bill & Melinda Gates Foundation’s Ethiopia Office undertakes programs in different areas including, family planning, maternal health, HIV, malaria, polio, and vaccination services.
The Foundation made its first program investment in Ethiopia in 2,000. On February 27, 2012, the foundation appointed an Ethiopian native to serve as the Foundation’s first representative to Ethiopia.
So far, Gates has received eight honorary degrees from different universities of the world.
ADDIS ABABA, July 21 (BERNAMA-NNN-ENA) – Ethiopia would consolidate its campaign against terrorism so as to protect its growth and development from obstruction, Prime Minister Hailemariam Dessalegn said.
In a press statement, the premier noted that Ethiopia has been working closely with its neighbours to fight terrorism in East Africa.
It is on this basis that one of the leaders of Guenbot 7, Andargachew Tsige, who was working in collaboration with Shaebia and other parties that do not wish to see the prevalence of peace and stability in Ethiopia, was apprehended.
Individuals engaged in terrorism under the disguise of journalism and memberships in political parties were also detained, he added.
Those terrorists are not individuals or groups that should be taken lightly as they are supported by governments which want Ethiopia to be in chaos, the PM said, adding that cutting to shreds the network is therefore the responsibility of the Ethiopian government.
Since terrorism is an international crime everyone engaged in terrorism, even if he or she changes citizenship or is a citizen of another country, is held accountable, the premier stressed.
The crackdown on those terrorists has nothing to do with the upcoming election in 2015, and efforts will be made to make the election peaceful, democratic, fair and credible, he elaborated.
With respect to peace keeping and other areas Ethiopia has been gaining acceptance by strengthening its role as a voice of Africa, Hailemariam noted.
Referring to the big projects underway in the country, the Prime Minister said the GERD, railway, sugar and other similar projects are progressing as per the schedule.
To solve problems related to infrastructure, the government has devised short, medium and long term plans. The completion of the projects would solve the problems, even if satisfactory results cannot be registered in the short and medium range, the PM indicated.
Efforts would also be exerted to gradually solve problems of governance witnessed in the country, according to Hailemariam.
Legal measures would be taken against merchants who try to create inflation following the salary increment made to civil servant this month, he concluded.
Prime minister and Commander-in-Chief of Defense Forces, Hailemariam Desalegn said that Ethiopia has built a modern military having a capacity of accomplishing different missions at once.
The premier, graduating 58 military officers from Defense Command and Staff College, said that because of the Defense Forces and other bodies’ capacity to protect the national peace and security from internal and external enemies, Ethiopia can advance its development.
According to Hailemariam Ethiopia has built a military capacity being effective in peace keeping missions in the neighboring countries beyond assuring the national peace and security.
He noted that Eritrean government is continuing destabilizing the region, supporting anti-peace elements and terrorism ignoring the peaceful alternative Ethiopia has offered to settle the disagreements between the two countries.
The graduating military officers said that the training they got enables them to accomplish their missions in a better way scientifically.
Out of 58 masters’ degree and diploma graduates 10 are from South Sudan and Burundi.
The 6th Northern Corridor Integration Projects Ministerial Meeting was held yesterday (July 2, 2014) in Kigali, Rwanda.
Ethiopian Tourism Organization (ETO), which has been established to develop the nation’s tourist destinations and promote good images, has officially announced the start of its operations.
Addis Ababa University (AAU) announced the discovery of a new technology to clean water off fluoride using a mineral named Zeolite in a collaboration with Spanish National Research Council.
Ethiopia and Russia have signed an agreement which would enable them to cooperate in areas of agriculture and energy, according to Ministry of Foreign Affairs.
A contract for CSR Zhuzhou to supply 35 electric locomotives for the future Addis Ababa – Djibouti standard gauge line was signed on June 19.
The Omo Kuraz sugar project has so far created over 21,000 jobs for the local community.
Image may be NSFW.
![images[1]](http://africapotashblog.files.wordpress.com/2013/06/images1.jpg?w=610)
