ECO-opia » Infrastructure Developments

By Adam Robert Green

Local agricultural processing is vital as Africa’s food imports continue to rise – but not all commodities are well suited to domestic value addition

A rising middle class and expanding population are pushing Africa’s food import bill to worrying highs. While rising capital imports suggest growing productive capacity, booming consumption imports – especially for products that can be produced domestically – are a red flag, according to Jean-Louis Ekra, president of the African Export-Import Bank in Cairo. They suggest economies are failing to keep pace and running up unnecessary trade imbalances.

Africa lost its status as a net exporter of agricultural products in the early 1980s when prices for raw commodities fell and local production stagnated. Since then, agricultural imports have grown faster than agricultural exports and by 2007 reached a record high of $47bn, yielding a deficit of $22bn. The value of agricultural exports from Thailand is now greater than for the whole of the African continent below the Sahara.

Nature is partly to blame. Weather-related damage has hit rice crops in Benin, Burkina Faso, Cameroon, Niger and Madagascar. Foot and mouth disease has hurt Egypt’s bovine exports, and cassava – one of Africa’s major offerings to world agricultural trade – is being felled by a fast-spreading virus. Policy volatility is also at fault. Nigeria – Africa’s largest rice importer – announced heightened import taxes last year, which prompted a sudden rise in purchases. And across Africa, weak infrastructure hinders markets.

But rising food imports are also a consequence of wealth and one of its tell-tale effects: a taste for protein. Poultry import growth last year was around 12 percent, driven by higher incomes in the likes Angola, Benin, Ghana, and the Democratic Republic of the Congo. “Africa is growing at a base of 5 to 6 percent a year, which translates into a growing middle class with an increase of consumption,” says Mr Ekra. “In west Africa, for instance, you see an increasing taste for luxury Thai rice.”

This is not only the case in the more affluent economies. In Sierra Leone, which languishes towards the bottom of the United Nations’ Human Development Index, rice imports have run to about 15 percent of consumption in the last few years, and have reached as much as 45 percent in the recent past. “That means an import bill of several hundred million dollars, a truly frightening percentage of the $3.8bn GDP,” says Paddy Docherty, chief executive of Phoenix Africa, a company investing in post-conflict countries.

Companies testify to the challenges of agricultural import-dependence in their continental operations. “We have 13 factories in Africa that use products like soft oils, tomatoes or starch-based compounds on a daily basis, but much of this is imported, wasting foreign exchange and increasing our carbon footprint,” says Marc Engel, chief procurement officer at Unilever.

But to an optimist, import-dependence spells opportunity. Firstly, structural imbalances are a symptom of fast growth. China’s annual agricultural consumption needs have now overtaken production too. For companies and investors, the import profile signals strong domestic demand which could be tapped through investment in domestic agribusiness and food retail.

Attention is turning to greater domestic processing of agricultural resources, to ensure raw products can reach finished form within African markets. Raising productivity is key to this. “In order to have a sustainable, solid rural sector you cannot have poverty. You must have prosperity,” says Howard-Yana Shapiro, global director of plant science and external research for Mars. “And how will that come without productivity? So productivity is the key piece.”

Mr Docherty agrees that productivity increases are needed to drive local value addition. “The vast majority of imports are of bagged rice, i.e. already milled and packaged,” says Mr Docherty. “There is great potential to do this milling in situ in places like Sierra Leone, if there is the primary production in country to feed the mills. I know from experience that the tiny areas in production in Sierra Leone, and the low yields currently being achieved because of the lack of inputs such as fertiliser and lime, means that there is milling capacity which is unused.”

One Beijing-funded demonstration farm in the Bo region has a decent rice mill which is shut because it lacks the raw product to justify keeping it in operation, says Mr Docherty: “Processing capacity alone is no good without sufficient volumes of local production. I do not imagine the economics would work if raw rice was imported for local processing. Processing capacity must grow alongside local production, and the two together are essential for achieving food security and more efficient markets in Africa.”

It is also important to ensure local processing is technically advanced, otherwise it can consume large amounts of labour without a value payback. Cassava processing, for instance, is often low productivity – and traditional processing methods can lead to contamination of cassava crops.

Practitioners must distinguish between commodities which make sense to process locally, and those that do not. Technoserve, the NGO, has conducted analysis across several African markets and their findings challenge the view that local processing is always best. Measuring the domestic resource cost of a range of Mozambican commodities threw up a number of interesting insights. Local processing of cashew nuts was seen to be highly advantageous, while local varieties of rice (Chokwe and Zambezia varieties) were not found to be financially profitable without credit access and technical assistance. Potatoes command low prices but production costs are modest, suggesting a good market, while paprika was found to be “somewhat profitable” for farmers, although pesticide and fertiliser interventions would be needed.

Simon Winter, senior vice president for development at Technoserve, says market dynamics signal where and how to go about value addition. “Once you have identified the market and where processing needs to be, then you optimise your logistics,” he says. It does not make sense, for instance, to develop cashew roasting and packaging facilities too close to the production source if the consumer market is far away, due to the damage that will be caused during transportation. “If cashew kernels are in vacuum packed 2kg bags, they are less likely to get broken and crushed than in a small foil packet,” Mr Winter notes. Chocolate, on the other hand, would make more sense to process locally (currently, Europe and North America dominate this segment). While high temperatures are a struggle in west Africa, there is less risk of product damage during transportation of chocolate. “You have to understand this commodity by commodity,” says Mr Winter.

There are many constraints to value addition, even where economic arguments are strong. First is a lack of resources, including refrigeration and cold storage, vehicles and skilled personnel. Then there are deficient or confusing standards, especially between countries. And there are serious health dangers to some locally-grown produce, such as aflatoxin that can be found in large quantities in maize and nuts.

Local processing means being able to identify and have the means to flush out such health dangers, for instance through aseptic processing. Important assistance here can come from government agencies. The Kenya Agriculture Research Institute, for instance, provides disease and pest management support, as does Cocobod, the cocoa sector agency in Ghana.

When exploring the market dynamics of local processing, it is also important for companies and practitioners to distinguish between producer- versus buyer-driven chains. Buyer-driven chains can be evident in agriculture, when freshness standards and protected varieties are important, when there is high product differentiation, when packaging and logistics are complicated, or when R&D and other knowledge elements in production or processing are critical. So it may well be large retailers and brand companies – from Massmart to Unilever – who could provide the impetus to local processing in Africa, saving themselves money and reducing supply chain complexity.

Written by ALAZAR SHIFERAW

Agricultural inputs have tremendous role in improving agricultural productivity

Ethiopia‘s move toward ensuring food security is heavily dependent on the agriculture sector. Agricultural productivity and yield increment in turn depends on the adoption and adaptation of improved agricultural technologies and techniques by the rural farmers. Multifaceted approaches to improve agricultural productivity are needed to reverse the existing poor livelihood status of farmers in particular , and citizens at large.

Hence, the role of agricultural inputs such as seeds, fertilizers, pesticides, improved farm tools in bringing the much needed agricultural productivity is paramount. Therefore, sufficient supply of these inputs along with delivery of efficient extension service would enable the country to produce high yields and increase hence improve over all agricultural productivity. However, insufficient inputs supply and lack of awareness about the significance of agricultural inputs have have been responsible for the low agricultural production in some parts of the country.

The national strategy road map for poverty reduction realizes that poverty reduction in Ethiopia is impossible without significant growth in crop yields. Thus, improving farmers’ access to fertilizers, improved seeds supply, agricultural credit and other inputs is a matter that is given due emphasis.

In connection with the supply of agricultural inputs The Ethiopian Herald recently made an exclusive interview with Eastern Manager of Agricultural Inputs Supply Enterprise, Belayneh Aseged. He said that the main purpose for the establishment of the Enterprise was to import the required agricultural inputs demanded by the Ethiopian farmers and supplying them across the country. Creating agricultural inputs market stabilization and carrying out other related activities have been the enterprise’s major duties since its establishment too.

He further said that the majority of Ethiopian farmers have been using traditional ways of agricultural practices. And this practice has contributed to the decline in agricultural productivity so far. To improve these problems, governmental and non-governmental organizations have made efforts to bring about changes in Ethiopian farmers agricultural production system.

Today the Enterprise has been responsible for the disbursement of improved agricultural technologies like fertilizers, high yielding varieties of seeds, pesticides, farm tools, etc. As a result, farmers who have utilized agricultural inputs and participated in the extension package programme have become successful in increasing agricultural yield. However, the task of improving agricultural productivity at national level requires the collective action of different stakeholders. In this regard agricultural input suppliers are one of the actors that are responsible for delivering agricultural inputs according to the demand of the farmers.

As of its establishment, it has been carrying out various reforms to facilitate and create conducive atmosphere to the country’s agricultural input needs. To expand inputs supply accessibility, the Enterprise has opened various market centres in the country. Among the market centres, Adama, as it has been nearby the port , it imports fertilizers, and performs multifaceted duties, such as importing, storing, distributing among others activities, he said.

Belayneh further said that centering at Adama, the Enterprise has imported and supplied agricultural inputs, mainly DAP and UREA fertilizers to farmers for many years. In the last fiscal year alone, the Enterprise imported 1,146,756.58 DAP and 575, 890.57 quintals of UREA and distributed them to agricultural unions, farmer cooperative unions, private investors, small scale farmers and state farms. The Adama centre is serving as a dry port.

Last year’s nationwide agricultural performance appraisal report indicated that there was agricultural inputs usage gaps among beneficiaries. Due to such gaps agricultural products failed to show increments as it was intended.

As part of the effort to help ensure farmers food security, the Enterprise has also supplied vegetables seeds. Vegetable seeds are different as they are imported from various countries. ‘We import them from Denmark and the Netherlands among others.”

Presently, the farmers have enough awareness about the importance of vegetables and they are also aware of which vegetable variety benefits them more. If farmers use irrigation scheme, they can produce more and ensure food self sufficiency. The Enterprise distributes vegetable seeds, specifically carrot, beetroot , cabbage, lettuce, salad, onion and tomato.

The Enterprise has also supplied spraying tools and chemicals which are used for pest control.

The Enterprise’s efforts which aimed at promoting those vegetable seeds among farmers have become successful. “ Since our agricultural inputs are free from any alteration, farmers prefer to buy the inputs from the Enterprise,” he said.

Although the distribution processes are going well, there are issues related to import and export that need to be addressed,” Belayneh said.

The Enterprise created many job opportunities to local people. However, the local administration needs to support the centre. Sometimes, when vehicles load and unload goods, drivers are asked about 250-300 birr of labor cost with out their will.

Besides, the Enterprise needs to have big stores. At present it has only seven small stores, which can accommodate about 90,000 quintals of fertilizers. Sometimes the Enterprise rents stores.

Given the critical role agriculture plays in its economy, Ethiopia still needs to do its homework in terms of enhancing agricultural production and productivity.

To bring sustainable agricultural development and ensure food self sufficiency various actors engaged in the agriculture sector need to act synergistically.

Personal, situational, socioeconomic, institutional and organizational factors greatly afect input demand supply positively or negatively. The existence of strong linkage among actors within the system has a vital importance to transfer knowledge and provide of agricultural inputs and services in an efficient and effective manner.

Assessing other informal types ways of enhancing the supply of inputs and services to assist farmers is another alternative that need to be carried out. Besides, filling policy related gaps, channeling efficient and effective credit service, releasing and supplying of new seed varieties, provision of appropriate quarantine services to shopped and imported crop varieties, and giving of due attention to seed biodiversity particularly to endemic and indigenous crop varieties need to be given due emphasis. Expansion of public and private seed multiplication farms, supported with irrigation facilities to be the focus area to improve agricultural productivity.

The South Korean construction company, Keangnam, and MIDROC Ethiopia, are planning to construct oil refinery plants in Ethiopia.

Written by Kaleyesus Bekele

Reliable sources told The Reporter that Keangnam’s CEO, who visited Ethiopia last week, instructed his executives to formulate a report on the possibility that the company could build an oil refinery plant. During his short visit, the president of Keangnam, Kim Ho Yeong, met senior Ethiopian government officials. Keangnam has been engaged in road construction projects in Ethiopia in the past 15 years. The company has successfully completed more than seven road construction projects in Ethiopia. Modjo-Metehara, and Addis Ababa-Ambo are some of the road projects undertaken by Kenagnam. Company officials told The Reporter that the company has yet to conduct feasibility a study and discuss the matter with Ethiopian government officials.
Keangnam Enterprises, Ltd., is a Korea-based company engaged in the construction business. The company’s business divisions include building construction division, which constructs office buildings, commercial buildings, education facilities, medical facilities, public buildings and others; housing division, which develops and constructs apartments, retail shops and residential complexes; civil works division, which constructs railways, subways, expressways and highways, as well as site development works, and plants division, which constructs electricity plants and energy and oil refinery systems, as well as water and sewage treatment facilities. It also engages in overseas construction works. In addition, through its subsidiaries, it engages in the hotel, real estate leasing, energy and other businesses.
Keangnam is showing a keen interest in building the planned Modjo-Awassa expressway. The South Korean government pledged to provide a soft loan amounting to 100 million dollars for the road construction.
The Ethiopian government has a plan to build an oil refinery in the eastern part of Ethiopia, according to reliable sources.
The Ethiopian Petroleum Enterprise (EPE) is undertaking studies on the possibility that the government could construct the oil refinery near the Ethio-Djibotui border. According to the sources, the Ethiopian government will construct an oil pipeline from the refinery up to the border while the Djiboutian government will construct the pipeline from the port to the Ethiopian border.
The sources said Djibouti is undertaking a study on the construction of the oil pipeline. Russian engineers are undertaking the study. Oil engineers say that importing crude oil reduces the cost of fuel imports adding that during the refining process products like bitumen could be obtained. Ethiopia annually imports more than 1.5 million tons of petroleum at a cost of two billion dollars. The Ethiopian government has also plan “B”- building a refinery near the South Sudan and Kenyan boarder.
The time has come for East African nations to build oil refineries. Uganda found 3.5 billion barrels of oil in Albert basin. It should be part of any pipeline project that links new fields in the region. Oil has also been found on the other side of the lake, in Congo. And across the border in Kenya, exploration looks promising; Tullow Oil, a London-listed company, has discovered commercial crude oil reserve in Northern Kenya. Ethiopia is exploring furiously, too. Tullow is prospecting for oil in the promising South Omo basin. South Sudan, which is already producing oil, hopes to find more big fields along its border with Kenya.
So an oil bonanza is in the offing. Experts say revenues could lift millions out of poverty, but only if the oil can find an efficient way to the market. “The local fields are expensive to tap. A single pipeline could serve.”
In March 2012, the heads of state of Kenya, Ethiopia and South Sudan met among mangroves in Lamu, a Kenyan town on the Indian Ocean, to launch the construction of a port and oil pipeline together costing 16 billion dollars that would serve all their countries and vastly enrich them.
Sources said MIDROC Ethiopia too plans to erect an oil refinery in Ethiopia or Uganda. “The company is planning to build a refinery. But it did not yet decide to make it either in Ethiopia or Uganda.”

By Matthew Newsome in Addis Ababa

In the first of a five-part series on railways in Africa, we visit Ethiopia, the first country in Africa to have a railway. The French-built railway connected the capital Addis Ababa to the Red Sea port of Djibouti. However, the old diesel railway is now being replaced by a Chinese-built electrified railway, a grand plan that seeks to transport the country’s commercial exports to its neighbouring countries.

A train hasn’t left Addis Ababa for six years. But this major new train line is expected to open between Addis Ababa and the port of Djibouti in 2016.

This will be the first train line that forms a major piece of the 5,000 km transportation network planned to connect the landlocked country to neighbouring countries.

26/08/2013

Africa Express Series part 1 – Ethiopia

Abebe Meheret, the head of communications for Ethiopia’s National Railway Corporation, has high hopes for the new project.

“We are looking to connect to North Sudan, Central Sudan and South Sudan. From Ethiopia to Djibouti. From Ethiopia to Kenya, the Lamu corridor will be connected and it will be one of the best routes between Ethiopia and Kenya. The main purpose of the railway is to connect Ethiopia economically to its neighbouring countries.”

Two Chinese companies are involved in the project.

“We are preparing the railway for dual purposes. It is for passengers and for freight,” Meheret explained. “Maybe after 2 years we will have it. Everybody is eager to see the result. Every Ethiopian has taken this railway as its own project.”

The first railway in Africa was built in Ethiopia. It was the brainchild of two French engineers who approached Ethiopian Emperor Menelik II in 1897 with the ambitious idea of constructing a railway to replace the six-week mule trek between Addis Ababa and the French port city of Djibouti.

Debebe Kasa has worked as station manager at the old Addis Ababa station for the past 25 years. He said the frequency of train services declined sharply during Ethiopia’s communist military rule between 1974 and 1991.

“In 1917, the first train left Addis Ababa for Djibouti; 781 Km after two days. But [Emperor] Menelik did not see it…It was good because of the relationship with France, Belgium and Swiss. There were six passenger trains per day and four or five freight trains per day. After that, in 1974, Ethiopia became communist. [Under the] communists there were three trains per week,” he said.

When the trains needed spare parts, Kasa said, the French government did not want to give them to Ethiopia.

At the railway worker’s club in Addis Ababa, retired Ethiopian railway workers spend the day speaking French and playing pétanque.

Wase Fikru has worked on the railway all his life. Although he lamented the loss of the old railway, he was also excited about the new project.

“The railway workers must be the first to travel with this new train. I will be the first if I am alive. I love Chemins de Fer [railways], I love it. Everybody loves railway transport in Ethiopia; I gave it everything. I passed all my young age in that,” he recalled.

Ethiopia’s new railway is expected to cost close to 8 billion euros with funds coming from China, India, Brazil and Turkey. It is also expected to generate 30,000 new jobs.

The promise of Ethiopia’s railway project has captured the hearts and minds of Ethiopians. It is also expected to bring kudos back to a country that started the railway revolution.

Sourced here: http://www.english.rfi.fr/africa/20130826-new-rail-project-ethiopia-evoke-memories-glory-days

By Martin Koch, 26 August 2013

Swedish clothing retailer H&M wants to set up shop in Ethiopia, since production costs there are cheaper than in the Far East. Other clothing manufacturers are hesitating. Could Ethiopia become the next Bangladesh?

Ethiopia’s economy just keeps growing – since 2007 at times with double-digit leaps and bounds. “The Economist” projects that the country will experience annual growth of 7 to 8 percent through 2016.

Ethiopia’s government is apparently placing special emphasis on the textile industry – by 2016, the country aims to export more than a billion dollars worth of apparel. Factories established by the likes of H&M are more than welcome.

According to a supplier, the Swedish chain wants to produce more than a million items of clothing per month in the East African nation. A company spokesperson confirmed that test runs have already been ordered from Ethiopian producers.

Cheaper than China

Many producers have in the past relocated production to countries that offered cheap labor, like Bangladesh or China.

But in such countries, social standards have risen along with wages – while the world seems to be examining production conditions increasingly critically. So producers have started considering new options for cheap labor.

On the African continent, Morocco and Tunisia are known as clothing production countries, mostly for discount apparel. Other African countries, like Ghana or Kenya, don’t play much of a role in the fashion industry, according to GermanFashion, a German industry association.

Ethiopia offers a number of advantages, said Thomas Ballweg, a procurement and technical consultant at GermanFashion.

“On the one hand are the lower costs – much lower than in China – with 80 million people living there. And, it’s near the sea – and quick to get to Europe via the Suez Canal,” Ballweg said.

This could shorten delivery time by a third compared with coming from the Far East. In addition, Ethiopia’s climate and that of neighboring countries is well-suited for the cultivation of cotton, Ballweg emphasized.

As long as the cotton was of high enough quality, clothing producers could save on expensive import by using local materials.

No new Bangladesh

Apart from H&M, British supermarket chain Tesco and Ireland-based discount textile company Primark also produce in Ethiopia, according to GermanFashion.

Observers warn that Ethiopia could become another Bangladesh, with textile factory workers laboring under scandalous conditions. Reports recur of Bengali factories burning down and causing numerous deaths. In April the textile factory collapsed, killing more than a thousand people.

Christoph Kannengiesser of the German-African Business Association told DW he can’t imagine such a fate for Ethiopia – even discount apparel companies like H&M or Primark are concerned about their reputation.

“For a company with a brand name that relies on its clientele’s approval, it would be a disaster for it to become known that social or environmental standards are not being kept,” Kannengiesser said.

He said standards set by the International Labor Organization and World Trade Organization are high enough, adding that that numerous non-governmental organizations and other independent groups monitor production conditions in countries with cheap labor.

Chance for society

Unlike in the electronics industry, workers in the textile industry do not need to be highly qualified, which Kannengiesser pointed out, allows members of lower social classes a working future – a benefit to all of society in the long term.

“The more people who are working – and the more people who are able to feed themselves, pay for healthcare and education for their children – the better the chances are for the educational level of society to increase,” Kannengiesser said.

He pointed to such developments in Asia, which were only made possible by investment in the textile industry.

Ethiopia’s textile industry goes back to 1939, when the first factories were established during Fascist Italy’s occupation of the country. During the Cold War, foreign communists collaborated with Ethiopia’s then communist government in the textile sector. Some of those plants are still in service.

But the country’s infrastructure is poor: Roads are bad and only 15 percent of the population has electricity.

Drop in the bucket

H&M has said that it does not intend to reduce or close production at locations in Asia. And GermanFashion doesn’t think that Ethiopia will develop into a new textile hub – the country’s production is far too small relative to global production.

Of the 13 billion euros ($17.4 billion) made each year from clothing imports to Germany, Ethiopia produces just a fraction of a percent. The value of Ethiopian textile imports to Germany in 2012 was 22 million euros ($29.4 million), Ballweg said.

“That’s just a drop in the bucket and not the huge market some make it out to be,” he said. “We haven’t seen that yet.”

BY Dapo Okubadejo | August 29, 2013

Private equity (PE) as an asset class has received reasonable prominence in Africa in recent times. New records are being set both at the levels of fund raising and sector diversity of investments. Africa is becoming increasingly investor-friendly.

The attraction of PE to Africa is driven largely by factors such as: the huge market size – Africa is home to over 1 billion people; relatively young population – about 60% are below 40 years of age; favourable demographics – rising middle class, increasing urbanisation, increasing disposable income, etc; improved democratic rule and governance, increasing public sector reforms, reducing incidences of civil unrests and wars; and the mobile technology revolution in Africa driving increased efficiencies, productivity and reducing cost of doing business. In a continent with weak infrastructure (outside of South Africa), mobile technology applications have been successfully implemented across several consumer facing sectors such as financial services, healthcare and education to drive penetration, financial inclusion, communication, logistics and process efficiency. These factors have contributed greatly to increased investor interest in Africa.

Exit options in Africa

Typical exit options include: trade sales; secondary buy-outs; IPOs – public listing on capital markets; management buy-outs or buy-backs; and sale to stock market mainly for private investments in public entity (PIPE) transactions. In addition, given downside risk issues usually associated with early-stage and owner-managed businesses, many PE houses have adopted self-liquidating quasi-equity instruments with equity kicker options.

From 2007 to 2012, Africa has recorded well over 600 successful exits. According to the KPMG and SAVCA Venture Capital & Private Equity survey released in June 2013, South Africa recorded about 536 exits during the same period. Of the total number of exits in South Africa during this period, about 65% were management buy-backs while 13% were secondaries to another private equity firm or financial institutions. Disposals through trade sales were the most popular in value terms while secondary sales were the next most popular method of disposal.

As the economies of many African countries show significant improvement evidenced by robust GDP growth due to factors noted above coupled with the economic slow-down in the developed economies, it is not surprising that many foreign companies are looking into Africa. A good opportunity for entry is PE- backed companies with relatively good corporate governance principles, clean financial records and good track records of sustainable performance.

Listed below are select examples of exits recorded in 2012:

African Capital Alliance (ACA)’s sale of its stake in MTN Nigeria to South African-based diversified holding company Shanduka
Actis and others: sale of Savcio to Alstom
Actis’ IPO of Ugandan energy distribution company Umeme
Aureos’ sale of Zambian agribusiness company Golden Lay to Phatisa
Citadel Capital’s exit from National Petroleum Company Egypt to SE Dragon Energy
ECP’s sale of Anvil Mining in DRC to MMG Malachite

Challenges of PE exits in Africa

As PE investments continue to grow in Africa, the challenge of exits has always been raised as the missing part of the jigsaw puzzle. Proponents of this view have highlighted several challenges such as: relatively weak financial markets (with the exception of South Africa) suffering largely from pricing, informational and transactional inefficiencies; relative illiquidity of most capital markets in Africa; low level representation of companies on the capital markets; and complex and inconsistent legal and regulatory frameworks in many jurisdictions. These factors have resulted in some cases to the increase in the holding periods for many PE investments in Africa.

Based on available statistics, the proportion of exits in other parts of Africa is growing steadily when compared to volume of exits in South Africa in spite of the challenges noted above. This indicates that successful exits in other African regions can be achieved with the right strategies even in spite of the limitations of the financial markets in these regions.

Key strategies for achieving successful PE exits

Buying right

Deal sourcing in Africa is driven largely by deep understanding of local markets, strong local relationships and networks. If used well, it will not only ensure exclusivity during the acquisition process but can guarantee reasonable entry valuation and lay solid foundations for a smooth relationship with the portfolio companies throughout the investment life cycle. Deals that are done through auctions tend to be competitively priced and in the process, create unnecessary distraction for management. In addition, structuring the deal to achieve a perfect alignment of interest with management and existing shareholders will provide the necessary incentive to grow the business profitably and therefore create value during exit.

Embedding strong corporate governance principles

One of the major challenges for many businesses in Africa is the prevalence of weak corporate governance principles. Many successful businesses grew from small family holdings with close family ties. As the businesses grow, proper governance principles and practices are usually not embedded. Best practice governance principles are crucial for success, especially in the areas of proper constitution of the board with experienced professionals, board committees, independent directors, regular meetings and proper documentation of minutes, and the evaluation and ratification of management decisions.

In addition, maintaining robust and clean financial reporting systems, complying with all legal, tax and regulatory requirements while operating in an environmentally sustainable and socially responsible corporate organisation are key to capturing significant portion of the value at exit. PE investors are generally recognised to add value in this area through enforcement of sound governance principles and practices in their portfolio companies.

Market timing

Business cycles and market conditions are crucial in the determination of exit timing. Firstly, given that PE firms typically have between five and seven year holding periods, it is important that the exit is timed when benefits from governance, expansion strategies and earnings growth have started to accrue to the portfolio companies.

As many sectors experience market shifts, consolidation and regulatory changes, it is important that PE firms keep abreast of these developments to understand the impact on the business and their exit plans.

PE firms can also collaborate with key operators and capital market regulators in the local markets to help improve governance and efficiency through local capacity building and implementation of best practices.

Value uplift and earnings growth

In Africa, PE investors have to look beyond capital and financial leverage to create value in portfolio companies. There is a greater need for broader value leverage in Africa due to insufficient local management capacity. Achieving alpha returns in Africa means that PE investors will have to juxtapose a myriad of value levers such as exit multiple arbitrage, operational and profit improvements, mergers and acquisitions to gain market share, hold strategic stakes in value chains and expand into new markets especially as many successful local companies look to diversify their footprints through regional expansion. As noted in the recently published KPMG and Director Bank report, Working with portfolio companies, “if value leverage is important, how many PE houses have the knowledge and contacts beyond capital, deal making and financing skills? PE firms have to engage operating partners and/or industry advisors to act as personal coaches to management. Knowing how to find solutions to problems and execute a growth plan successfully are pivotal to realising a successful exit.

Management capacity and continuity

The importance of good management that is adequately incentivised is felt both during and after the investment holding period. If management has done a good job in growing the business profitably, then there’s a better chance of achieving a successful exit once there’s an assurance of management continuity. Management incentives have to be carefully structured to prevent value leakage during exit (through unhealthy collusion with potential buyers) but also to ensure that motivation for continuity is sustained. This also includes a clear succession plan as well as a robust and stable board.

Planning and starting early

The exit process usually takes between three and six months and may be longer depending on local regulatory requirements. It is important that preparation for exits commence at the beginning of the investments. This ensures a clear understanding of the requirements and mechanisms for exits by all stakeholders. Having the exit discussions/agreement and ensuring alignment of interest at the investment stage will contribute to building trust and avoid unpleasant tension between shareholders and the PE investors before and during exit.

The exit strategy needs to be constantly evaluated along the dynamics of the market situation and opportunities for value add. Africa is now part of the growth strategies of many foreign companies as the impact of the global economy bites harder and growth slows in many OECD countries. Also, many companies in the emerging markets of Brazil, China and India are jostling for a foothold in Africa’s rich natural resources for input raw materials and huge market for infrastructure and consumer facing sectors. Consequently, opportunity for trade sales abound but it is very important that the PE firms leverage on the global network of professional services firms to achieve a much-broader and diverse potential buyer universe. These multinationals often pay premium for control and market entry cost which is sometimes not the case for IPOs. Exit through IPO has to be carefully executed to create competitive tension between local and foreign investors during the book building process as local investors understand the local market and don’t see a need for premium, except for significant market share gains and synergies.

Adequate preparation even before the formal disposal process is crucial for success. Undertaking an independent diagnostic or exit readiness review of the portfolio company one or two years before the disposal process will ensure prompt identification and resolution of potential value leakages. Key processes such as a comprehensive vendor due diligence, evaluation of the buyer universe, pricing considerations, management and efficiency of the data room process, optimal transaction structuring and adequate preparation for negotiations are all factors that will guarantee a successful and an efficient disposal process. The ultimate objective of private equity investments is to achieve a successful exit.

In spite of the challenges and contrary to popular beliefs, with proper planning, adequate preparation, strong corporate governance principles, strong management and use of experienced advisors, successful PE exits can be achieved in Africa. Well-run businesses with strong growth prospects will always find a buyer.

Dapo Okubadejo is the head of corporate finance and financial advisory services at KPMG in Nigeria.

Financing Agricultural Growth In Africa (forbes.com)
Choppy markets force PE funds to seek extension for capital use (kassafinance1.wordpress.com)
Capitalworks Buyout Fund Hunts for Acquisitions in South Africa – Bloomberg (bloomberg.com)
E&Y Study Shows Private Equity Backed Companies Crushing Public Markets (themiddlemarketcfo.com)
Better News From Private Equity LPs (pehub.com)
The PC16: Identifying China’s Successors
World Bank sees China, Ethiopia as good fit
Proprietary research and on-the-ground presence key to private equity success in Africa
Private equity and the African renaissance
Private Equity now eyes Africa’s food sector

BY Jaco Maritz | August 30, 2013

Retailers should seriously consider the opportunities in Ethiopia.

This is if two new reports by Sagaci Research are to be believed.

According to the company, Ethiopia’s capital Addis Ababa holds potential for 15 to 20 new modern supermarkets, as well as five to 10 new shopping malls.

Over the past years, sub-Saharan Africa has seen a steady rise in the construction of modern shopping centres, especially in countries such as Ghana, Nigeria and Kenya. According to Sagaci, modern retail in Addis Ababa is still in the early stages of development compared to other countries in the region.

The research revealed that Addis Ababa has eight modern retailers operating a total of 15 stores. All these retailers are mid-sized local companies trading from medium-sized stores, with no single store being larger than 1,500m².

Sagaci says there are currently no international retailers operating in Ethiopia. A recent Financial Times article, however, suggests that Walmart is interested in entering the country. The world’s largest supermarket chain got a foothold in Africa when it bought a majority stake in South Africa’s Massmart a few years ago.

Interviews with more than 1,000 households in Addis Ababa revealed that around 24% of households have monthly incomes higher than US$500. Sagaci says this threshold makes them attractive consumers in the main product categories. About 10% of households earn more than $1,000 per month.

According to Sagaci, only 0.5% of groceries bought in Addis Ababa are currently through modern outlets. This number is however, expected to increase to 1.5% by 2018 as more modern supermarkets open up.

With a population estimated to be around 85m, Ethiopia is Africa’s second most populous nation after Nigeria. Although Ethiopia is known for being a relatively closed economy, the country has seen some foreign investment in recent years.

In 2010, South African consumer goods manufacturer Tiger Brands signed an agreement with the East African Group of Ethiopia relating to the formation of a new food, and home and personal care joint venture to operate in the Ethiopian market. South Africa’s Pretoria Portland Cement Company last year also announced that it has secured a minority stake in Ethiopia’s Habesha Cement Share Company.

I’m sure I’m missing something here, guess we’ll see, but….

Looks to me like the ATA is selling out the very farmers they’re tasked to help, but I’m sure I’ve got this all wrong. Right? So IMO, short of more insights….

Chock up another capitulation to corporate agricultural interests in the form of the Maize Alliance here and their quest for GMO corn supremacy in Africa

On behalf of the Maize Alliance

ADDIS ABABA –

A consortium of partners known as the Maize Alliance committed today to continue and scale-up a program of support to drive agricultural marketing in Ethiopia.

The Alliance, which consists of the Agricultural Transformation Agency (ATA), the United Nations World Food Program (WFP), federal and regional cooperative promotion agencies, and non-governmental capacity-building partners, came together in 2012 with the mission to support farmers cooperative associations by providing a secure commercial market along with access to finance, post-harvest handling, and efficient aggregation and commercialization services.

This Alliance partners signed a Memorandum of Understanding committing to facilitating capacity-building support and financing to 29 cooperative associations, which will support the contracting of 40,000 tons of maize through WFP’s ‘Purchase for Progress’ (P4P) initiative. The agreement will provide increased income and economic security to the farmers who make up these cooperative associations’ membership.

Today’s agreement builds on the Alliance’s success over the past year, in which 16 cooperative associations with Alliance support delivered over 18,000 metric tons of maize through Purchase for Progress, which aims to source food from Ethiopian smallholders.

The Alliance includes the Agricultural Transformation Agency (ATA), the United Nations World Food Programme (WFP), the Federal Cooperative Agency, USAID AGP AMDe, Sasakawa Global 2000, TechnoServe, the Regional Cooperative Promotion Agencies of Amhara and Oromia, and the Bureau of Marketing and Cooperatives of SNNPR.

As part of the same event, WFP, ATA, and the Commercial Bank of Ethiopia (CBE) signed a Tripartite Agreement to support the provision of output loans to farmers’ organisations, under which CBE will avail output financing through loans for the participating cooperative unions at a lower interest rate and without collateral requirements. This sort of provision of financial services for agricultural development has the potential to increase farmers’ yields and income and increase food production in the country.

“The success of P4P this past year has provided a secure market for a large number of smallholder maize farmers,” said Khalid Bomba, CEO of ATA. “We appreciate the role of all partners in the Maize Alliance in helping achieve this and we are looking forward to its continued growth in the coming years.”

Abdou Dieng, Representative and Country Director of WFP, said “This is a renewal of WFP’s commitment to support development of smallholder farming in Ethiopia, in alignment with the GTP’s strategy. WFP is grateful for the generous contributions from donors like Bill & Melinda Gates, DFID and USAID that made this initiative possible. Through its food procurement and partnerships, P4P aims at strengthening the marketing capacities of cooperative unions whereby thousands of smallholder farmers can enjoy sustainable access to markets.”

_______________________________________________________________

For more information please contact:

Ashenafi Sileshi, ATA, +251 91 166 7941 (ashenafi.sileshi@ata.gov.et)

Part I - Written by GIRMACHEW GASHAW

As part of its Growth and Transformation Plan, the government of Ethiopia laid out strategies few years ago for the implementation of its ambitious grand sugar development plan. The contribution of sugar industry to the overall economic development can be explained in so many ways. Apart from saving the country’s foreign exchange which otherwise could have been spent for importation of sugar, and boosting its export revenue, the industry expected also to make significant contribution to employment creation. For the realization of the objectives set to be achieved by way of strengthening the industry, human resource development, industrial capacity building and promotion of research and technological capacity will be crucial.

The construction of new sugar industries and the expansion of existing ones is now found at various stages. The Ethiopian Sugar Corporation is an institute responsible for the implementation of the plan. Recently, The Ethiopian Herald made an exclusive interview with Shimeles Kebede, Corporation’s Plan and Project Sector Deputy Director. Shimeles discusses a range of issues pertaining to the status of individual projects, the challenges facing the implementation of the plan and the industry’s contribution to the GTP.

Excerpts:

Herald: would you briefly explain what the Corporation is presently undertaking to realize the set targets in the GTP ?

Shimeles: until the just ended Ethiopian fiscal year important tasks have been performed in relation to sugar development. Different sugar projects were launched a few years back. Over the last two and three years, major operational activities have been undertaken. One such project is expansion work at Wonji sugar factory. In Wonji, the task of replacing the two old factories with new ones has already been accomplished. Now, the factory has become modern and its production capacity has been upgraded although some finishing tasks still remain. The factory has now started production.

The Corporation has planned to make the factory start production with full capacity as of the beginning of 2006 E.C. However, the sugarcane plantation has already been late although, the task of planting sugar cane can go side by side with the construction of new factory.

In Wonji we have plans to plant 10,000 hectares of sugarcane and that will exceed the previous size by 3,000 hectares. This is not enough, and it is essential to raise the size of sugarcane plantation up to 18,000 hectares to be able to sufficiently supply the raw material demand of the new factory. Hence, currently, both the irrigation development and sugarcane plantation activities are taking now place at Wonji. We have set a plan to finish the new factory construction in the year 2006 EC.

Another expansion project has been underway at Fincha sugar factory. Fincha is one of the biggest sugar plants in the country. At Fincha the size of sugar cane plantation has been expanded in order to meet the factory’s grinding capacity that has grown from 4,000 to 12,000 tons of sugarcane per day. Presently, some finishing tasks are being undertaken to complete construction of the new factory. In the year 2006 E.C, it is expected that Fincha sugar factory will go operational with full capacity. Generally, it is possible to say that the expansion tasks in the two factories are more or less completed.

During the five year Growth and Transformation Plan implementation period, the Corporation will give due attention to the completion of expansion projects as well as the the construction of new factories.

Among the new factories, the Corporation has planned to build are included the Kesem and Tendaho factories. Currently, the construction of Tendaho sugar factory has reached 85 per cent, and sugar cane has been planted on 10, 500 hectares of land. So, it is now well in progress , and we have planned to finalize it in the next Ethiopian fiscal year. Similarly the construction of Kesem sugar factory is underway.

Herald : What do you mean by ‘an increase by three fold’?

Shimeles: If we take Fincha sugar project, in the first phase, we planned to plant sugar cane on 7,000 hectares of land. However, in order to adequately meet the raw material demand of a factory that has a capacity of grinding 4400 tons sugarcane, expansion of the sugar cane plantation was needed. Hence increasing by three fold means, rising sugar cane plantation from 7,000 to 21,000 hectare of land.

Now, Fincha sugar factory has raised its sugar cane plantation to 17,200 hectares. The grinding capacity of the factory has also grown from 4400 tons to 12000 tons of sugarcane per day. This will develop the production capacity of the plant by nearly threefold. When Fincha reaches at its full production capacity, it is expected to produce 273,000 tons of sugar per annum. That alone is equal to the current sugar production capacity in the entire nation.

The demand of sugar in Ethiopia is increasing with a high speed. The Economic development and urbanization are among the factors that contributed to the rise in demand of sugar from time to time. Hence, when Fincha sugar factory goes into production with its full capacity, it will address the accelerating local sugar demand. The expansion projects alone when all completed, will make Ethiopia number one in Africa in sugar production. Currently, South Africa and Egypt are top sugar producing countries in the continent. All the new factories which were started during this GTP period will be finalized in the next phase of the GTP. By then we assume that the nation will reach at a higher stage of sugar production.

Herald: The government has plan to build eleven sugar factories in total. Would you tell me about the current status of these projects?

Shimeles: Most of the new factories are planned to be developed in the Southern Nations, Nationalities and Peoples’ state. There are five projects in this state alone. Sugarcane plantation and irrigation development will also be carried out following the erection of the factories. Now, kuraz,1,2 and 3 projects are well underway in south Omo area. Step by step we will build Kuraz 4 and 5 projects.

The other new sugar development project is found in Amhara state. Some 75,000 hectares of land sugarcane will be developed in the long term. The pace at which some of the activities are taking place is slow at present.

So far, infrastructural problem was a big challenge we encountered. Nevertheless, the Corporation has brought satisfactory results.

In Tana-Beles project, we developed a 31 km main channel with its off take structure. This is a big engineering performance. And we have planted sugarcane on 2,300 hectares of land. And the outcome of this sugarcane development will be in use for further seed reproduction and factory use.

Regarding the new factory construction processes, there are two factories which are being erected by the Federal Metals Engineering Corporation. Up to 45 and 39 per cent of the construction work of these factories is completed. We expect that the erection task of the factories will be completed by 2006E.C.

When we come to the Wolkite sugar project, at present, some 13 per cent of the construction work of the dam is completed. The construction of the channel is also underway. We also planted sugarcane on 500 hectares of land for seed reproduction.

In Omo, construction of a sugar factory is underway. Moreover, sugarcane plantation is being developed on 6000 hectares of land.

Of the 2,000,000 tons of sugar which the country is set to produce by the end of the GTP period, 1.3 million tons is expected from the expansion projects. The rest is expected from the newly erected sugar factories which are expected to be completed in 2007E.C Expansion projects in Tendaho, Wonji and Fincha and the Kesem new sugar factory will be completed by the end of the GTP .

Herald : Some people have concerns that the new projects are delayed. What is your response to that?

Shimeles: You are right, people may raise a question of why the new projects are delayed. As I said before, infrastructure problem was one major factor for the delay. Besides, previously, the nation had no capacity to erect big hydrological structure and tunnels. Both manpower and financial shortages were also challenges. From the very beginning, the intention of the government was to carry out the sugar development projects by strengthening domestic capacity. So, we have been building the capacity of local contractors by providing financial and material assistance. In the last three and so years, much effort was put to build the capacity of local contractors, job creation, construction of tunnels, irrigation and sugarcane development as well as construction of houses for employees. In this process the participation of micro and small enterprises and development of manpower was given due attention. Now, we are working to complete some 70 per cent of the plan set in the GTP.

Herald: Most of the time, the Corporation has been heard mentioning lack of infrastructural facilities as major challenge. Was this challenge unforeseen before the start of the projects?

Shimeles: Before the Corporation began implementing the projects, infrastructural development was considered to be undertaken by the government. It is not our mandate. We are a corporation. The Corporation is mandated to carry out sugar development. Hence the task of undertaking the development of major infrastructural facilities like electricity, telephone, water, roads is not constituted in our mandate. If the sugar development was to take place in areas where basic infrastructure is available, many tasks would be done easily. So, we have been communicating with concerned institutions found at regional and federal levels to solve the problem.

When you take a trip to Omo, for example, the road can take you only up to Jinka town. After that, it was difficult to travel. Recently this road has been completed. On the other hand the road that connects the factory site with the cultivated land is still a problem. There is a 70 km stretch between project one and two of the Omo sugar project. This was a problem to the project. The GTP is ambitious. It has a vision of making the nation one of the ten top world sugar producing countries. Though the vision is good, the challenge is not easy.

Sugar development is demanding in its nature. It requires dealing with the local population where the factory belongs. We made environmental impact assessment and socio-economic feasibility studies. It is also necessary to re-settle the locals who are displaced from the project site. For example, in Wolkite Sugar Project, we built a big settlement on 45,000 hectares of land for the local people to be relocated. In line with this, it is essential to fulfill all the necessary infrastructural facilities like housing, roads, water and school etc. And such task requires you to mobilize, motivate, convince and relocate the community to new areas. That is not an easy task. The same is true in Afar region. Apart from relocating the locals to other places, we are building irrigation channels for the relocated people. Of course, the Ministry of Water shared this task. The same is also true in Kesem Sugar Factory.

In Kuraze Sugar Factory, because the area is semi pastoral, the resettled people were few. However, it requires to do some convicing before relocating the local people. Otherwise, it will be difficult to carry out the project easily. When the people are relocated from one place to another many things affect them. For example, in Omo area, before we resettled the residents, we cultivated the land for them. Therefore it needs preparation and follow up. In general, it is a complex task.

Sourced here: http://www.ethpress.gov.et/herald/index.php/herald/development/3901-journey-to-gtp-targets-a-look-at-the-sugar-projects

(pictured above) Teferra Deribew, Minister of Agriculture

Written by ABIY HAILU

Agriculture is the major driver of economic growth in Ethiopia. In fact, the country’s economy is largely based on the agricultural sector which accounts for 46.6 per cent of the Gross Domestic Product (GDP), 85 per cent of total employment. The sector is also the major earner of foreign exchange, accounting for 80 per cent of total exports.

The agricultural development strategy of the country gives much emphasis to intensification of marketable farm products -both for domestic and export markets. Such intensification can be done by small and large scale farms. Fundamentals of the strategy include the shift of production to high value crops. In relation to that a special attention is given to high-potential areas, facilitation of the commercialization of agriculture, and supporting the development of large-scale commercial agriculture where it is feasible.

During the GTP period, Ethiopia plans to transform the agriculture sector into a high growth engine in order to ensure its food security and to curb inflationary pressure as well to broaden its export base. Agriculture is also hoped to serve as a spring board to bring about structural transformation in the long run through its contribution to industrial growth.

Recently, the Ministry of Agriculture briefed members of the media on the 2005 E.C performance of the agricultural sector. According to Teferra Deribew, Minister of Agriculture, the country has produced 231.28 million quintals of major crops on 12.28 million hectares of land during the Meher season of 2004/2005 E.C. The plan was to produce 225.9 million quintals on 11.7 million hectares of land. Accordingly, the crop production has increased by 12 million quintals or 5.9 per cent from the 2003/04 E.C. The farmland covered with seeds has also surpassed the plan by 1.6 per cent.

During 2005 E.C, 1.9 million hectares of land has also been covered with various crops using irrigation and 504,107 quintals of fertilizer has also been utilized in the process, he added. The total area of irrigated crop land surpassed the plan by 200,000 hectares. This has benefited four million farmers who had a combined production volume of 201 million quintals of crop yield, according to Teferra.

“The production increment resulted from a combination of factors such as the favorability of the Meher season and intensification of irrigation activities, coupled with other policy measures. All these measures have helped drop the general inflation rate to a single digit,” Tefera stated.

During the Belg season, he said, the Ministry planned to develop 2.4 million hectares of land and some 2.2 million hectares have been covered with seeds while 2.8 million farmers have participated in the agricultural development. “The total production of the Belg season is not known yet as the production is still underway and will be announced by the Central Statistics Authority once the crops are harvested ”, Teferra added.

According to him, during the 2005/06 production year, the Ministry expects to achieve higher crop production than what is planned in the GTP. “The plan as per the best case scenario of the GTP is to produce 245 million quintals of crop. In 2005/06, it is planned to increase this amount by 20 per cent by producing 277 million quintals. The leadership at all levels is exerting maximum effort to realize this goal and 11.4 million farmers are expected to take part in the endeavor,” he said.

Teffera also noted that up untill now, 9.9 million hectares of land has been covered with various crop seeds, out of which, 2.8 million hectares was covered using the line sowing method. In addition, in order to carry out the Meher production through the mobilization of development army, various efforts have been made to equip them with the appropriate skills and attitude. Accordingly, nine million farmers have received trainings on 10 selected crops on how to sow in line, mix and prepare fertilizer, protect crops, and other new technologies.

The Ministry has also met 99 per cent of its plan in the distribution of fertilizer. During the budget year, 971,000 metric tones of fertilizer has been supplied out of which 699,176 metric tone has been distributed to farmers until the end of August. The distribution of fertilizer has shown increment by 99,182 metric tones compared with that of the previous year, according to the Minister.

Then again, as per the GTP, 2,729,000 quintals of improved seeds will be distributed to farmers. The Minister said, 2,040,863 quintals of improved seeds have been distributed to farmers. For the coming budget year, 83,782.95 quintals of basic improved seeds have been distributed to seed producing enterprises for reproduction, according to the Minister.

Regarding other agricultural inputs, he noted that 24,367 IBAR BBM ploughs have been produced and distributed to farmers in order to optimize the productivity of clay soil by draining the excess amount of water from the soil. Moreover, 42,350 Kg of gypsum have been distributed to treat acidic soils.

In nature, cereals have the capacity to absorb Nitrogen from the environment and to turn it into organic fertilizer using bacteria and fungus in their roots. Accordingly, in the budget year, 115,000 sacks of organic fertilizer have been produced and distributed by reproducing the nitrogen fixing bacteria.

Concerning export of agricultural products, the Minister noted that 264.52 million USD have been gained from the exports of horticultural products. However, this is only 58 per cent of the plan. The execution performance of the horticultural export is 72.3, 128.8 and 26.6 per cent for floriculture, vegetable and fruit products respectively, he said adding, the Ministry is working to fill the gap in horticultural exports by building the production capacity of local firms and attracting new investors.

Regarding watershed management as well as water and soil conservation Teferra underlined that since the conservation activities undertaken in the past three years of the GTP exceeded what plans under the GTP, it was necessary to revise the plan. Thus, in the budget year, while it was planned to carry out the water and soil conservation activities on additional 5.9 million hectares, the activities have been carried out on 5.2 million hectares of land. He further indicated that the majority of the active labor force in the rural areas has taken part and its monetary value is estimated to be 10.6 billion birr.

“While the plan was to cover 7.8 million hectares of land, the water and soil conservation activities have been performed on 13,7 million hectares of land during the past three years of the GTP, exceeding the total area of land planned to be covered in the entire five years of the GTP,” he said. Moreover, 6.8 million seedlings including those that can be used for the production of animal fodder have been planted, he said.

The other major plan for the budget year was the provision of land ownership certificate to farmers. According him, there are 11.2 million farmers in total in Amhara, Oromia, Southern Nations Nationalities and Peoples (SNNP) and Tigray states. In this regard 10.8 million or 96 per cent of the farmers have received first level ownership certificate. Out of this, 8.5 million are men household heads while the rest 2.3 million or 21.4 are female household head.

Regarding the second level land ownership certificate, 1.5 million farmlands have been registered using modern technology in Amhara, Benishangul-Gumuz, Oromia, SNNP and Tigaye states. In 2005, 56,388 male and 13,877 male and female household heads have received the second level land ownership certificate. This would help farmers to develop land ownership mentality and enables them to transfer their lands without difficulty by providing them with organized legal information hence properly develop their land and improve productivity, Teferra noted. The land ownership certificate also ensures the benefit of women from their land and helps improve good governance problems.

Moreover various activities have been carried out to ensure the effectiveness of food security programmes. He said various supports have been provided to 6,889,910 families who faced food security problem in 319 Woredas of eight states. In the 2005 budget year, 1,740,366,726 birr has been assigned to the execution of the community prgorammes under Safety Net, including those who are under the community development programme, children, old persons, pregnant and lactating mothers.

In the stated budget year, 204,727 household heads or 888,088 household members have graduated from the Safety Net programmes. He also added that in the past five years, 755, 539 household heads or three million people have graduated from Safety Net programmes. Further, various activities have been undertaken to improve animal husbandry, fodder supply and veterinary coverage in the country, the Minister noted.

Crop production has increased by 5.9% compared to 2003/04EC (allanapotashblog.org)
Maize Alliance Partners Renew Commitment to Support Marketing Outlets for Smallholder Farmers
Journey to GTP targets: A look at the sugar projects (allanapotashblog.org)
Improving access to agricultural inputs (allanapotashblog.org)
A little seed goes a long way (allanapotashblog.org)
Cotton Industry in a Spin
Liberalising Agricultural Input Market Vital to Reversing Productivity Decline
Leadership Gap in Agriculture Makes Disaggregation Essential

Maputo — Today, the Alliance for a Green Revolution in Africa (AGRA) launches its inaugural report on the state of African agriculture.

The Africa Agriculture Status Report takes an in-depth look at the staple crop value chain – from classroom to field to market – in 16 countries across the continent. The report brings together data and analysis from over 15 national and international organisations, including ministries of agriculture, the World Bank, the Food and Agriculture Organization and the International Fund for Agricultural Development. It presents data in an accessible and consistent format, creating a benchmark against which to monitor the development of agriculture in Africa.

The inaugural Africa Agricultural Status Report focuses on staple crops, such as cereals and root-crops, around 75% of which are produced in Africa, rather than imported.

The report reveals that:

While a number of countries are investing heavily in R&D and developing their agricultural sector, others are lagging behind, to the detriment of food security. In terms of personnel engaged in agricultural research, Africa has the world’s lowest capacity with only 70 researchers per million inhabitants (compared to USA and Japan with 2,640 and 4,380, respectively).
Declining soil fertility threatens crop yields and agricultural development in a number of countries. While the average price of fertiliser delivered to farms in the USA is US$226 per ton, it is US$414 per ton in Zambia.
Outdated national and regional laws and regulations are restricting the development of Africa’s seed markets. The average length of the seed release process is around three years in most sub-Saharan African countries.
Low cost and subsidised food imports are weakening African agricultural markets, along with poor access to credit, trade restrictions and high transportation costs. Although agriculture represents as much as 40% of GDP in some African countries, only 0.25% of bank lending goes to smallholder farmers.
Women, who represent the majority of Africa’s smallholder farmers, are heavily disadvantaged under current land rights systems. This is reducing their ability to access credit, agricultural technologies and services. Evidence shows that women in Africa are five times less likely than men to own land.

Giving the keynote speech to launch the report, Strive Masiyiwa, Vice Chair of the Board of AGRA, says: “If we are to succeed in bringing about a Green Revolution in Africa, we need to record and understand where we making progress, but also where we are lagging behind. For the first time, the Africa Agriculture Status Report shows us the big picture and allows us to make comparisons between countries. It provides much-needed and reliable data and will, we hope, lead to more informed policymaking and greater accountability.”

Speaking at the launch of the report at the sidelines of the African Green Revolution Forum in Maputo, Mozambique, Jane Karuku, President of AGRA, says: “The Africa Agriculture Status Report is being published at a critical time for the continent. Ten years on from the Maputo Declaration, we can recognise some significant progress, but we must also shine a light on areas where action and investment are urgently needed. This new resource will guide policymakers to direct resources and efforts so that they can have the greatest impact on achieving food security and alleviating poverty.”

David Ameyaw, Director of Strategy, Monitoring and Evaluation at AGRA and one of the report’s leading authors, says: “This report marks the beginning of an ambitious project to consolidate reliable and accessible data on African agriculture. There are considerable gaps in our knowledge of the agricultural sector – Governments, national research institutes, but also private sector actors, need to collect and share data openly. Our aim is to extend our analysis to include all sub-Saharan African countries within a couple of years.”

full report in *.pdf here http://www.agra.org/download/5226fe87ea799

0.25% bank loans go to small African farmers – Report (vanguardngr.com)
AGRA: Africa’s soils are in trouble, says Jane Karuku (vanguardngr.com)
AGRF opens with stakeholders taking stoke of 2003 Maputo declaration (vanguardngr.com)
Why New Approaches Will Strengthen African Nations (Op-Ed) (livescience.com)
AFSA meets in Ethiopia to oppose GM products (allanapotashblog.org)
CSO in Africa to Counter Corporatisation Agriculture (allanapotashblog.org)
Africa’s Agriculture Commodity Exchanges Take Root (allanapotashblog.org)
Africa’s Land Reform Policies Can Boost Agricultural Productivity, Create Food Security and Eradicate Poverty (allanapotashblog.org)
COMESA seed registration law to be debated (allanapotashblog.org)
African soil diversity mapped for the first time
Ethiopian Agricultural Transformation Agency and Allana Potash Corp. Sign MOU to Promote Potash Use as Soil Nutrient in Ethiopia
Ethiopian Soil Information System (EthioSIS)
How to Triple Food Production in Africa
Potash Fertilizers in Africa: Background, Assessment and Prospects

Mark Tran - theguardian.com, Thursday 5 September 2013

Concern in Africa over genetically modified crops has been dismissed as fear of the unknown by an environmental group chaired by Kofi Annan, the former UN secretary general.

A report by the Alliance for a Green Revolution in Africa (Agra), published on Wednesday, describes opposition to GM crops as “a farce”. It points out that such crops have been subjected to more testing worldwide than new non-modified varieties, citing reports from the EU, the World Health Organisation and the US national academy of sciences.

Only four African countries – Burkina Faso, Egypt, Sudan and South Africa – have fully commercialised GM crops. But Agra says most countries across the continent are at various stages of creating the environment for commercialisation.

Cameroon, Kenya, Malawi, Nigeria and Uganda are conducting field trials of biotech crops, the final step before full approval of commercialisation. Most African countries have put in place the requisite policy and regulatory frameworks, despite growing public jitters over genetically modified food.

Agra’s Africa Agricultural status report states: “There is growing public opposition to GM crops in Africa that is best described as a fear of the unknown. Unless milled, the import of GM foods is banned in Angola, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mozambique, Swaziland, Tanzania, Zambia and Zimbabwe. More important to seed-sector development, these bans signal the arbitrariness and unpredictability of public policy.”

Agra is an independent organisation based in Kenya that aims to double the income of 20 million small farmers and reduce food insecurity by 50% in 20 countries by 2020. Critics of the group accuse it of showing its true colours after initial coyness over GM foods.

“This report clearly indicates their full support for GM crops, and their intention to use their influence to open African doors for Monsanto’s and Syngenta’s patented GM crops,” said Teresa Anderson, international advocacy co-ordinator for the Gaia foundation, an advocate of food sovereignty that asserts the right of people to define their own food systems.

“Characterising the refusal of most African countries to commercialise GM crops … as ‘fear of the unknown’ is patronising and shallow. Agra has wilfully chosen to insult farmers’ concerns in their aim to expand corporate agribusiness into Africa.”

The Agra report urges African countries to further invest in agricultural research and development to ensure food security amid concern that some nations are lagging behind. “In terms of personnel engaged in agricultural research, Africa has the world’s lowest capacity, with only 70 researchers per million inhabitants (compared with the US and Japan with 2,640 and 4,380, respectively),” it says.

It notes that smallholder farm yields fall short of the estimated potential for most food crops (cereals and pulses). The average grain yields remained at about one-third to half of the world’s average (1.1-1.5 tonnes per hectare versus 3.2 tonnes per hectare) between 2000 and 2010. Sub-Saharan Africa has the greatest gaps between potential yields and realised yields for several crops, particularly maize and rice.

“Plausible explanations for the low yields include lack of access to quality resources such as water, inputs and low use of new technologies that require money – such as fertiliser, machinery and irrigation technology,” the report says. “The development and dissemination of new technologies and practices that increase yield potential for a particular area depend on a country’s ability to make needed investments, and farmers’ skills and willingness to adopt the technologies.”

Anderson said the key was quality, not quantity, of research, and questioned the approach of most agriculture research institutes. “They are usually focused on producing a few varieties that claim to address individual (not complex) issues,” she said. “Farmers are advised to grow these new varieties instead of their traditional crops. What we are clearly seeing as a result is that seed diversity is disappearing in Africa, while communities complain that the new varieties are tasteless, lack nutrition, or are more vulnerable to particular pests.”

The report coincides with a meeting in Maputo, Mozambique, of the African green revolution forum, organised by Agra. The focus of the talks – which bring together heads of state, ministers, NGOs and scientists – is “scaling up and financing inclusive agribusiness through transformative public private partnerships”.

The forum takes place 10 years after 40 African countries, convened by the African Union, signed the Maputo declaration, committing at least 10% of their national budgets to agriculture development.

Sourced here http://www.theguardian.com/global-development/2013/sep/05/africa-gm-genetically-modified-crops (recommended link for insightful comments following)

Bilateral economic cooperation and security initiatives being discussed at the highest levels between nations at the G-20 Summit

Friday, 06 September 2013

Ethiopia and Canada have reached agreement to heighten existing investment cooperation between them.

Prime Minister Hailemariam Desalegn who is attending the G20 Summit in St. Petersburg, Russia held talks with Canadian counterpart, Stephen Harper.

The talks were focused on bilateral economic cooperation as well as African issues of common concern.

On the occasion, the two sides agreed to work closely to step up the involvement of Canadian investors in infrastructure and mineral development sectors in Ethiopia.

They also settled to boost cooperation between the airlines of the two nations.

During their discussion, the two leaders underlined the need to maintain the relative peace attained in Somalia.

To this end, they urged establishing a training center for security and defence forces.

Prime Minister Stephen Harper conveyed his country’s readiness to support the initiative.

Reporter: Ashebir Getnet

Dire Dawa – Djibouti railways resumes service

Ayele Wondwosen, Head of the Ethio-Djibouti Railway Organization told members of the press that maintenance of the old railway line from Dire Dawa to Djibouti has now been completed and trial operations have started.

The trains will carry passengers from Dire Dawa to Djibouti three days a week.

According to Ayele, delay in the maintenance being carried out by an Italian company contracted to overhaul 100 kms of line out of a total of 208 kms within Ethiopia was the reason why the service had been suspended.

The company had taken six years to carry out the job rather than the three years originally expected.

The re-start of the rail service is expected to have a major role in resuscitating the economy of Dire Dawa which is home to many Djiboutians who spend the summer in Dire Dawa.

The Ethio-Djibouti Railway started service in 1890 during the reign of Emperor Menelik II.

Source: Ministry of Foreign Affairs

Corporation renovates 15,000km roads in past budget year

The Ethiopian Road Construction Corporation says it has accomplished beyond plan in road maintenance during the past Ethiopian budget year.

The corporation on Friday evaluated its performance over the past budget year and examined its work plan for the current budget year.

Speaking on the occasion, corporation manager, Abiy Gebre-Amanuel said the corporation renovated some 15 thousand kilometers of road over the past Ethiopian budget year.

He said the corporation accomplished 132 percent of its plan for the stated budget year.

On the occasion, the corporation recognized projects and professionals with outstanding performance.

Established two years back, the Ethiopian Road Construction Corporation is currently constructing 680 kilometers of road at a cost of 5.8 billion Birr.

Reporter: Natinael Tsegaye

AA-LRT project to be completed after two years

The Ethiopian Railways Corporation (ERC) said that the Addis Ababa Light Rail Transit (AA-LRT) project is being executed according to schedule despite the heavy rainy season.

According to Behailu Sintayehu, Project Manager, the project would be completed after two years.

The 34km double track electrified light rail transit project 43 percent of whose construction has already been done is expected to cross all 10 sub cities of Addis Ababa.

On completion, AA-LRT is expected to operate 18 hours a day using 41 light trains thereby transporting 60,000 commuters per hour.

Every locomotive would travel 70kms per hour pulling a three-room car with more than 300 seats. At all stations, a train is expected every three to six minutes.

Reporter: Natinael Tsegaye

Prime Minister Hailemariam Confers With the Prime Minister of Canada

Prime Minister Hailemariam Desalegn, in Russia attending the G-20 summit, has held talks with Stephen Harper, Prime Minister of Canada. Discussions covered the bilateral relations of the two countries and various African issues. The two sides agreed to make efforts to enable Canadian companies engaged in infrastructure and the mining sector in Ethiopia to become operational. They also agreed to work towards strengthening the cooperation between Ethiopian Airlines and Canadian carriers. The two Prime Ministers exchanged views regarding the current situation in Mali and on ways to consolidate the relative peace and stability in Somalia. Mr. Harper underlined Somalia’s need for a military training center to build up the capacity of its security forces and affirmed that Canada would support such an initiative.

Some 6,863 cooperatives established across nation

Some 6, 863 new cooperatives were established across the nation in the concluded fiscal year, according to the Federal Cooperative Agency (FCA).
“As a result of the efforts made to expand cooperatives in various regional states, 6, 863 new cooperatives with 245 million birr capital were established across the country,” Agency Public Relations Directorate Director, Yigzaw Dagnew, told WIC.
In addition to the cooperative, some 28 unions with over 49 million birr capital were also established in the concluded budget year, the director indicated.
The five-year Growth and Transformation Plan (GTP) envisaged the establishment of 59,000 cooperative and 511 unions. And so far 48,124 cooperatives with 6.6 million members and over 3.7 billion birr capital as well as 293 unions which have 8,431 and over 1.5 billion birr capital were established, he said.
According to Yigzaw, the results attained so far shows that the agency is on the right track to attain the projected target, he said.
He said the agency has been providing capacity building training, financial and warehouse supports to strengthen cooperatives and unions, particularly in regional states in need of special support.
As part of the efforts to strengthen agricultural cooperatives, Ardayita Agricultural Technical College will begin training in cooperative in the coming academic year.
The construction of four warehouses with a total storing capacity of 5,000 tons is underway in Amhara and Tigray Regional States at a cost of 37 million birr, he added. (WIC)

Nation planting over 6.8 bln tree seedlings

More than 6.8 billion tree seedlings are being planted across the nation this rainy season, according to the Ministry of Agriculture.
Ministry Public Relations Expert, Ermias Bayu, told WIC that the plantation is underway on more than 2 million hectares of land designated in various regional states.
Some 70 per cent of the over 4.5 million tree seedlings planted in the 2004 EC dry season has sprouted, Ermias pointed out.
According to the expert, efforts would be made to increase nation’s forest coverage from the present 11 per cent to 13 per cent by the end of the Growth and Transformation Plan (GTP) by planting billions of tree seedlings annually. (WIC)

Chamber to train metal industry workers

Addis Ababa, September 6, 2013 – International Chamber of Commerce in Czech Republic organized a two-day workshop with the support of Aid for Trade Project of the Czech government here yesterday aimed at fostering the manufacturing process of the Ethiopian metal industry sector.
The chamber plans to offer training of trainers (ToT) in Czech Republic for a team of experts drawn from the Ethiopian metal industry.
Chamber Deputy President and Development Project Director Dr. Jana Chvalkovska said that building the capacity of workers in the sector is crucial to improve the production quality and generate considerable advantage from it.
“The business cooperation we enjoy could be witnessed by the practical knowledge transfer in industrial sites as well as technical and vocational schools,” she added.
She also said that the training is intended to enable the workers acquire know-how and exposure to the complicated process in the manufacturing of standardized metal products.
“Ethiopia, a big country in Africa, is geographically situated to broadly access the African market. As there is huge market potential in the continent, producing quality metal product is feasibility profitable. We also facilitate market linkage in Europe and Russia. We are able to produce big machines efficiently. That is why we come here to transfer industrial know-how,” Chvalkovska said.
According to her, the planned training to be offered in Czech Republic next year, mainly focuses on metal welding, design and other technical metal processing techniques based on the need of the trainees.
Metal Industry Development Institute Marketing Director Girma Alemu on his part said cooperation is essential to adapt better technological application in the metal processing industry.
Much could be learned from Czech Republic for it is highly advanced in producing and supplying quality metal products to the world market, he added. (WIC)

Ministry launches industrial development study

The Ministry of Industry on Thursday held a half-day workshop on the validation of a study on Ethiopian Industrial Development that provides industrial road map, strategic plan, institutional setup and governance framework to support the industrialization and transformation of the country’s economy thereby enabling the nation to become a middle income economy by 2025.
Minister Ahmed Abtew told workshop participants held at the Ghion Hotel that Ethiopia is implementing the Growth and Transformation Plan (GTP) which aims at fostering broad based, rapid and equitable economic growth and social development.
The Minister said that micro and small enterprises as well as large and small scale industries have been given particular emphasis. As a result, the country has been able to register 11 per cent economic growth on the average for the last nine consecutive years.
“During the first two years of the GTP, the industrial sector grew by 15 per cent and 13.5 per cent respectively,” Ahmed added. But, he said, the growth and the contribution of the sector to the economy has been lower than the set target.
Ahmed also said that the Ministry, cognizant of Korean rich experience in the sector, and to improve its contribution to the economic growth of the country invited the Adama Science and Technology University to develop the appropriate Industrial Development Strategy Plan in partnership with Korean experts.
As regards the significance of the study, University Study Team Leader Dr. Ayele Abebe said the University, in collaboration with the Ministry conducted the study to advance the industrial sector to make sure that the country will be among the middle income countries by 2025.
Dr. Ayele said: “This study mainly focuses on how the industrial sector could grow over the next 13 years. The study was carried out by Adama University jointly with Korean experts. Other universities in the country also took part in the study through peer-review mechanism by commenting and enriching the outcome.”
Adama University President Prof. Jang Gyu Lee on his part said that the project was designed to establish a long-term road map for industrial development in Ethiopia which was carried out by Adama University, Ministry and Korean experts, under the leadership of the university for almost a year.
“We have also devised a strategic plan according to the road map, and identified institutions to implement the plan effectively,” he said. (WIC)

The African Green Revolution Forum (AGRF) has warned that a Green Revolution cannot materialise in Africa without a major concerted effort to secure financing for agricultural production.

The Forum, which brought together over 200 delegates from across Africa and internationally, focused on the critical role to be played by public-private partnerships and inclusive business models in the development of Africa’s agriculture.

The Forum heard that the global gap in finance for agriculture stands at US$ 450 billion, an issue which is more acute in Africa than anywhere else. Evidence shows that only 10% of African smallholder African farmers have access to the financing they need to expand their production and raise their income.

Irungu Houghton, Convenor of the AGRF, said: “Throughout the African continent, we are witnessing successful partnerships between the private and public sectors and smallholder farmers. But these partnerships are still too rare. We will only be able to transform Africa’s agriculture, and alleviate food insecurity and poverty, if smallholders have the funds to boost their crop yields and expand their business.”

http://www.vanguardngr.com/2013/09/0-25-bank-loans-go-to-small-african-farmers-report/

Dyborn Chibonga, Chief Executive Officer of the National Association of Smallholder Farmers of Malawi, said: “Some African governments have gone some way towards addressing affordability and accessibility of production inputs, but challenges still persist. Each and every year smallholder farmers are pulled into a downward spiral of taking out high-interest loans in order to buy farming inputs for the following season. Without access to credit, smallholders cannot raise productivity.”

The AGRF committed to focus over the next year on a number of priority actions, including:

Ensuring that rising revenues from extractives industries are invested into the development of agriculture

Reducing corruption in public-private partnerships and designing business ventures that are transparent, environmentally and socially responsible
Building the capacity of famers’ associations, finance institutions and agribusiness agencies to work together
Encouraging governments to offer tax incentives and make preferential procurement choices for companies that source from smallholder farmers
Developing inclusive financial models that combine incentives, reduce debt risk and promote longer-term agribusiness model
Combining incentives, reducing debt risk and promoting longer-term agribusiness models

The Honourable Antonio Limbau, Deputy Minister of Agriculture for Mozambique, who formally closed the AGRF, said: “We are honoured and pleased to have hosted this important forum in Mozambique ten years after the Maputo Declaration. This forum was a valuable opportunity to discuss practical steps to strengthen capacity and extend the use of modern technology to increase productivity.”

Jane Karuku, President of the Alliance for a Green Revolution in Africa (AGRA) – a partner in the AGRF – said: “2014 is a critical year for agriculture, when African governments will be setting investment targets and plans to develop agriculture over the coming decade. The African Union has recognised this crucial moment and designated 2014 as the Year for Food Security and Agriculture. We are delighted to announce that next year’s AGRF will be co-hosted with the African Union in Addis Ababa in September 2014.”

Source article http://allafrica.com/stories/201309061610.html

Agra Launches Africa Agriculture Status Report (allanapotashblog.org)
AGRF opens with stakeholders taking stoke of 2003 Maputo declaration (vanguardngr.com)
Africa’s Soils are in Trouble – AGRA (allanapotashblog.org)
Maize Alliance Partners Renew Commitment to Support Marketing Outlets for Smallholder Farmers
Africa’s Agriculture Commodity Exchanges Take Root
CSO in Africa to Counter Corporatisation Agriculture (allanapotashblog.org)
GM crops: African opposition is a farce, says group led by Kofi Annan (allanapotashblog.org)

By Andrew Green

JUBA, Sept 9 (Reuters) - China will help South Sudan develop a mining sector and is in talks to lend it between $1 and 2 billion for road, power and agriculture projects, oil and mining minister Stephen Dhieu Dau said on Monday

Speaking at a joint news conference with the Chinese ambassador Ma Qiang, Dao said China will provide $43 million to conduct a geological study to help South Sudan’s plans to hand out mining licenses in its search for gold and other metals

He gave no further details on the discussed loan.

In March, South Sudan signed a mining law to attract foreign investment but officials and mining companies say it will take time to develop the sector because of the lack of almost any infrastructure or geological surveys.

South Sudan separated from Sudan in 2011 following decades of civil war. Some officials in the new nation believe it has unexplored deposits of gold, diamonds, copper, uranium, chromite, manganese and iron ore.

“South Sudan will give Chinese companies the opportunity to invest in the Republic of South Sudan in the areas of petroleum and mining industries, and also in other economic circles,” Dau said.

Under the new mining law firms can apply for a five-year exploration permit, renewable for two five-year terms, with a maximum area of 2,500 sq. km and a 25-year large-scale mining .

Qiang said in a brief statement China wanted to boost economic cooperation but did not mention the loan talks or take any questions from reporters.

“We want to enhance the friendship and the very good relationship with South Sudan…to encourage a lot of Chinese companies to join the development of South Sudan,” Qiang said.

China has sought to bolster ties with South Sudan where it has significant investments in the oil industry going back to the time before the secession from Khartoum in 2011.

A Chinese official denied in March it had promised $8 billion in aid as announced by Juba last year but said more could be offered if the country achieved a lasting peace.

South Sudan’s economic development depends on good relations with long time foe Sudan through which the landlocked nation needs to export its crude. Sudan dropped last week a threat to close two export pipelines in a row over alleged support for Sudanese rebels. (Reporting by Andrew Green; Writing by Ulf Laessing, editing by William Hardy)

- All positive and Ethiopia’s upstream hydro project may finally engender funding and a reprieve from vociferous opponents such as the Oakland Institute and others by virtue of an expanded alternative water resource for the people of the Turkana -

The Turkana underground water discovery is equivalent in volume to 25 times greater than Loch Ness with an annual recharge rate 3 times the water use in New York City. Turkana will never experience famine again.

UNESCO and the Kenya Government today announce the discovery of one of the worlds largest underground water aquifers in the desert north of Turkana, an area best known for fossils, famine and poverty. The finding by Radar Technologies International (RTI) was made using space based exploration technology called WATEX system. The largest aquifer at 250 billion cubic meters of water which is equivalent in volume to Lake Turkana one of the largest lakes in the Great Rift Valley, and 25 times greater than Loch Ness. More importantly the annual recharge rate, the amount of water that can be sustainably exploited per year, is estimated to 3.4 billion cubic meters, nearly three times the water use in the New York City.

The man behind the RTI is the energetic white haired French Alain Gachet who says the worst thing he has ever seen in his life is people dying of thirst.

“This discovery will transform Turkana. In 10 years time I see no more suffering, no more dying of hunger or thirst, people will have schools, roads, farms. Life will be much better for them and famine will be a thing go the past”.

For Turkana where malnutrition rates can be as high as 37%, this discovery Is better than oil. It is an opportunity for local development.

Ikal Angelei is the Director of Friends of Lake Turkana, an organzation that champions the rights of the Lake’s communities and ensure their involvement in decision-making on issues relating to the Lake and its environment.

“This is an extremely exciting find for my community. While we celebrate however, we must be wise. The first thing we must do is confirm the recharge rate so that we do not kill the golden goose, and we must also protect against speculators and unscrupulous people who threaten to take it away from the local communities. The Kenyan leadership must plan carefully to ensure that in developing the resource we protect and respect the rights and the needs of local communities who must benefit.”

Many will celebrate that the immediate benefit of this find will be no more famine for a community that has suffered repeated droughts. Kenyans are still haunted by images of starving children in 2009/10 during the worst drought in over 60 years that affected more than 10 million people in the Horn of Africa.

Richard Leakey, Chairman of the Turkana Basin Institute is not surprised with the find.

“This discovery confirms what we have always believed. This area is an ancient lake bed, the water had to have gone somewhere. This is also the cradle of mankind and I hope that finally the importance of Turkana for Kenya and the world will finally be recognized”

and http://www.rtiexploration.com/news/2013/9/10/rti-finds-vast-water-reserves-in-drought-prone-northern-kenya-cradle-of-mankind

By Andualem Sisay

It was in 1999 the idea of engaging in the mining business first crossed Yegoraw Zewdalem’s mind when he came back from California to visit his family in Addis Ababa, 12 years after he left.
“I looked at all sectors in Ethiopia and found gemstones export more promising. Hence, I decided to take samples to the United States at the end of my visit,” Yegoraw said.

Then came venturing into the business with the initial ups and downs, which caused him to lose money in his first mining attempt in Somali region, between 2003 and 2005. That was due to lack of experience; he now sees bright future in the business. Just last year, he exported some 700 kilograms of gemstones, including high quality opal with price tag of $25,000 – 30,000 for ten grams.

He gets the stones from middlemen who collect them from traditional miners’ cooperatives. It is estimated that currently there are around 30 cooperatives engaged in gemstones mining in Ethiopia, each having 20 to 50 members.

Catching up fast on coffee The history of coffee as the leading foreign currency generating commodity of Ethiopia began to fade away over the past five years. Its share is now down to about 25 percent of the total $3 billion annual export income of the country from about 40 percent five years ago.
The diversification of export items, which brought flower and other produces to the major export commodities list; the shift of traditional miners from contraband to formal line of business; and the fluctuations of the global coffee market, among others, are the reasons for the decline of coffee’s share.
Since last year, the less known mining sector has become the source of Ethiopia’s second export commodity. It took over oil-seeds’ position earning $526 million in the past 11 months (July 2012 – May, 2013) catching up fast on coffee, which generated $654 million.
The latest geology survey shows that Ethiopia is endowed with natural resources ranging from tantalum, which is used for manufacturing of mobile phones, laptops and other electronic gadgets, to coal and potash. The list includes, platinum, nickel, copper, silica, diatomite, bentonite, soda ash, gemstones, phosphorus, salt, geothermal, other industrial and construction minerals, among others.

Gold mine The recent data from the Ministry of Mines (MoME) shows that out of the total earnings from mineral export $419 was earned from one million traditional gold miners operating in six regions of the country.
The rest of this earning is attributed to MIDROC Gold Mining Company, which the government privatized in 1997 to the Ethiopian born- Saudi tycoon, Sheikh Mohammed Hussein Ali Al-Amoudi, whose MIDROC Ethiopia Group Investment has over 40 companies and affiliates in Ethiopia.

While the promising potash is expected to take over the lead role in the coming few years, gold is Ethiopia’s top hard currency earner mineral generating an average of half a billion US Dollars annually since the previous fiscal year.
Potash is one natural resource from which the country expects huge revenue in the near future. The Canadian firm, Allana Potash and Fertilizer Company, co-founded by an Ethiopian diaspora, has invested in the Danakhil Depression of Afar Region.
It has secured financing from two significant strategic investors – the International Finance Corporation (IFC), a private sector financing arm of the World Bank Group, and Liberty Metals and Mining, a member of Liberty Mutual Group.
Anticipating to start production of one million tons a year by mid-2015, Allana has also got green light from Africa Export Import Bank (Afrexim Bank), while offering shares on the Toronto Stock Exchange, at the same time.
The new Ethiopia- Djibouti railroad, which recently secured some $300 million loan from the Indian Export Import Bank, is among the ingredients that are expected to boost performance of mining and other export businesses in Ethiopia. This is also expected to ease transportation of potash and fertilizer, indicating a promising future for the sector.

“Had it not been for the decline of gold prices globally, mining could have generated more foreign currency to the country than coffee,” says Bacha Faji, Public Relations Director at MoME.
Estimations by the Ministry indicate that the western part of Ethiopia – around Lega Dembi and Sakaro – alone has production potential of about five tons of gold per annum. In addition, gold production has recently started in Tigray, Gambella, southern parts of the country and Guji and Borena zones of Oromia.

Much Anticipated Oil & Gas For the past two decades, there has been aggressive exploration for oil and natural gas in the four major sedimentary basins of Ogaden, Gambella, Blue Nile and Southern Rift Valley. Though none of the companies prospecting for oil and gas in Ethiopia have announced the much anticipated production news so far, there have been growing interests on the sub-sector.

Most recent developments are elevating hope of the people. The discoveries of oil in neighbouring countries, Kenya and Uganda, by Tullow Oil Company (partner of Africa Oil), which Ethiopia has also welcomed to its territories, and recent news from the company are boosting hope of the country.
“The most significant well results during the period were the Etuko-1 oil discovery in Kenya and encountering an oil prone system in Ethiopia with the Sabisa-1 well,” Tullow stated in its 2013 half year report released on July 2, 2013.

Coal Production One of the natural resources the country has started utilizing is coal. Currently Ethio-Pak Coal Mining firm, which was established as a joint venture by two endowment companies (Ezana Mining with 40% share and Mesobe Cement Factory with 25% share) partnering with a Pakistani company with 35% share, seems to be on the lead. It has started producing coal since 2009 near Jimma area of Oromia Region, 300km west of Addis Ababa. The area is said to have 14 million tons coal reserve.
In addition, to further utilize the huge coal potential around Yayou area of Oromia Region, the government has decided to invest solo after its repeated attempt to attract private investors has failed.
Yayou Coal Phosphate project is one of the largest of about a dozen coal reserve sites in Ethiopia. It is estimated to have a potential of producing 300,000 tons of urea for fertilizer and 90 megawatts of electricity per year.

The Big Picture Though Ethiopia has listed over 875 mineral occurrences in SIG Afrique mineral resources database, the share of the mining sector to the country’s gross domestic Product (GDP) is currently 1.5 percent. The Ministry of Mines envisages boosting the current annual revenue earnings from minerals export tenfold ($5-6 billion/year) by 2020 while at the same time producing most of the currently imported industry inputs locally; hence, import substitute.

To encourage investment in the sector, the government has recently reduced the income tax from 35 to 25 percent. Lower royalty payment levels, exemption from customs duty and taxes on mining equipment, guarantees in respect of the right to sell minerals locally or abroad are also included in the new law.

With no investment capital limits, government also provides guarantees for opening of a local account in a foreign currency. “What we need from investors in the sector is only detailed work plan with budget breakdown,” Bacha says.
Out of the total of 135 mining companies currently operating in the country, 55 are engaged in production of various minerals ranging from gold, coal and tantalum to various gemstones such as opal. The remaining are at exploration level searching and analyzing economic viability of other natural resources including potash and crude oil.
In addition, the country has also engaged Russian Geological Survey, Zaru Bezggeologia, and its Ethiopian counterpart to analyze the major input for nuclear power development – uranium deposit – found six years back in Bale zone of Oromia Region.

Any Room for Diaspora? Recent statistics show that the engagement of the Ethiopian Diaspora in the mining sector is encouraging. Of the total 135 mining companies registered 36 are owned by Ethiopians while 33 are joint ventures between Ethiopians and foreigners. Most of these investors are Ethiopian Diasporas like Yegoraw, according to Bacha.
The government is now encouraging both foreign and Ethiopian Diaspora investors to invest on areas where technology and value addition is need the most. This includes improving traditional miners’ performance investing on upgrading their skills and equipments and engaging in cutting and polishing gemstones business before export.
“Though there are challenges, this is the sector I am pushing my fellow Diasporas into,” Yegoraw said while urging the authorities to decrease the week-long period consumed on paper works at customs just to clear duty free imported machineries.

Sourced here: http://www.theethiopianamerican.com/bannerinfo.php

Image representing IBM as depicted in CrunchBase

Image via CrunchBase

IBM‘s first Corporate Service Corps pro bono problem solving team in Ethiopia

ADDIS ABABA, Ethiopia – IBM experts have recommended strategies for strengthening Ethiopia’s livestock industry — the primary source of income for the majority of citizens there — and making government more efficient.

Making the recommendations was a 12-person IBM team hailing from 8 countries that spent 30 days in Ethiopia working with three government ministries as part of an IBM Corporate Service Corps engagement. This initiative sends IBM’s top talent to provide pro bono problem solving services to non-governmental, government and small business groups in the developing world on issues that intersect business, technology and society.

For the conclusion of the engagement, IBM developed a model to improve market access and profits for Ethiopia’s already-robust livestock industry within and outside the country. Presenting their findings to the Ministry of Trade, IBM’s team recommended that the industry more fully participate in the Ethiopia Commodity Exchange, giving more farmers access to kiosks that provide accurate and timely pricing information, trends, weather forecasts, and practical agricultural advice.

The IBM team believes that this industry could be even more competitive by standardizing and sharpening the collection and analysis of data related to livestock. Such measures would also make livestock trade more transparent and secure. The team suggested a communications and marketing plan to more clearly articulate the benefits of such a framework to stakeholders.

To put these plans into effect, the IBM team suggested that better technology and training be provided to employees at the Agriculture Transformation Agency. To that end, IBM worked with the Ministry of Agriculture to suggest stronger linkages with the country’s Information Communication Technology Management Center (ICTMC). At the same time, more aggressive training and recruitment programs would be required so that the ICTMC can better deliver technology services to the agencies that it supports.

In the same vein, the IBM team encouraged the government to define standard operating procedures and security policies for all agencies and data centers when it comes to technology that can help officials govern more effectively, efficiently and securely. Modern technologies such as cloud computing and virtualization can make vital information more readily available and protected. Over the long term, an energy efficient computer disaster recovery center outside of Addis Ababa could be useful, the IBM team said. Ethiopia’s National Data Center can also streamline and standardize the way it procures and manages support from commercial vendors.

“IBM’s Corporate Service Corps program has given us access to IBM’s vast experience,” said Dr. Abiyot Bayou, Director of e-Governance for Ethiopia’s ICT Ministry. “IBM’s team immersed itself in critical areas in which support was needed. I was impressed with the quality of the job they have delivered in this short period of time. I hope we will have a chance to host other IBM teams in the future.”

The projects were coordinated with the Ethiopian Ministry for ICT and the Digital Opportunity Trust.

“IBM is pleased to support the Ethiopian Government’s five-year Growth and Transformation Plan around enhancing livelihoods and to generate opportunities for private sector engagement in sustainable economic development,” said the IBM Middle East and Africa Public Sector Leader, Dr. Cameron Brooks.

IBM’s Corporate Service Corps deploys IBM employees from around the world with expertise in technology, scientific research, marketing, finance, human resources, law, and economic development. Issues they address range from economic development, energy and transportation, to education and health care.

By year’s end, approximately 2,400 IBM employees based in 52 countries will have been dispatched on more than 187 Corporate Service Corps engagements, and undertaken 850 team assignments in 34 countries since the founding of the program five years ago, in 2008. Over the last five years, the program has sent more than 638 employees on 56 teams to more than 11 countries in Africa, a growing market for IBM. This was the program’s first engagement in Ethiopia.

Follow IBM’s Corporate Service Corps by visiting http://www.ibm.com/ibm/responsibility/corporateservicecorps/, or on the CitizenIBM blog at www.citizenIBM.com and on Twitter, at @citizenIBM.

For more information about IBM citizenship, please visit www.ibm.com/ibm/responsibility

Can Technology Help Transform Agriculture in Ethiopia? (ibm.jobs)
Leather leads manufacturing (allanapotashblog.org)
Tomorrow is a new country (allanapotashblog.org)
Performance of agriculture; its role in driving the GTP
Trees and Meetings – #IBM_CSC Ethiopia1 (maurobellotti.wordpress.com)

Helen Clark rings the bell with Ethiopia Commodity Exchange CEO Dr. Eleni Gabre-Madhin (Photo credit: Wikipedia)

Clearly agriculture must take centre stage in African economic development because of the sheer number of people who work in the sector. It is perhaps even more important in Ethiopia, where about 85% of the working population is employed in agriculture.

At present, two main export crops are cultivated in the country: coffee and flowers. The former is a long-term staple with an excellent reputation but the big success over the past decade has been the emergence of a globally important flower sector, which in turn has been enabled by Ethiopian Airways’ cargo arm.
Coffee exports generated $840m in export revenues in 2010 out of total global coffee income of $15.4bn. Most beans are exported unroasted, leaving foreign roasters to gain the commercial benefit of this process.
Although coffee originated in Ethiopia, the country is now only the fifth-biggest producer in the world, after Brazil, Vietnam, Colombia and Indonesia. This is partly because yields are low at an average of just 0.72 tonnes per hectare. In addition, most Ethiopian production is organic but has not secured organic certification because of the way in which it is marketed. Fair trade coffee is becoming increasingly popular among consumers but many farmers are paid too little for their production. Coffee consultant Willem Boot says: “Ethiopian coffees are still too moderately priced for what they are worth. Their speciality coffees are significantly better than others and are really undersold.” The key to securing higher prices is ensuring marketing cooperation between farmers.
However, coffee farmers do appear to have benefited from the formation of the Ethiopia Commodity Exchange in 2008. The exchange was set up to enable producers to secure a better price through improved access to information and is now established as a trading platform for agricultural commodities such as coffee, maize, white pea beans and sesame seeds. The former head of the exchange, Eleni Gabre-Madhin, has now set up her own company, eleni LLC, to develop more commodity exchanges in Africa to ensure greater price transparency for African farmers.
She says: “It’s time the world looked to our markets as a reference. There’s no reason why we shouldn’t have a West African cotton index that the world refers to, or an East African coffee index or African sesame seed index. The Ethiopian experience is a scratch on the surface of what we’re going to do with Africa.” The company recently secured $5m in seed capital from 8 Miles African private equity fund, which was set up by Bob Geldof.

Bob Geldof at the Headquarters of the International Monetary Fund in Washington, DC. (Photo credit: Wikipedia)

New agriculture investments
Last year, Shultze Global Investments launched a $100m equity fund investing in Ethiopia, including in agriculture. A spokesperson for the fund said: “Ethiopia offers significant opportunities for investors. Anything grows in Ethiopia with the various climate and soil diversities that we have. That also follows through to the agricultural value-added chain with processing and exports.” There is certainly scope for much greater production. An estimated 70% of Ethiopia’s arable land is uncultivated, while just 25% of the country’s yield potential has been achieved. While farmers will benefit from reservoir water to irrigate their land, agricultural practices should also benefit from the power produced by the hydro schemes. The government hopes to achieve total national electrification by 2020. Estimates vary but the current figure currently stands at about 10-20%, so this is perhaps the most ambitious electrification programme in history. However, national distribution infrastructure already allows 58% of the population to access electricity in their homes if they can afford it. In practice, many rural families cannot afford the $75 connection charge, so EEPCo is now providing low interest loans to cover the fee. Once connected, electricity can be used to help Ethiopia’s millions of smallholders in their work

The value addition imperative in agriculture

Improving access to agricultural inputs

Companies anticipate building refineries

New rail project in Ethiopia evoke memories of glory days

Ethiopia – Next Stop for Textile Industry?

How to get private equity exits in Africa right

Addis Ababa has potential for up to 20 new supermarkets, says research firm

Maize Alliance Partners Renew Commitment to Support Marketing Outlets for Smallholder Farmers

Journey to GTP targets: A look at the sugar projects

Performance of agriculture; its role in driving the GTP

Agra Launches Africa Agriculture Status Report

GM crops: African opposition is a farce, says group led by Kofi Annan

Ethiopia, Canada agree to step up economic cooperation

06 Sept 2013 News Briefs

African Green Revolution Forum Warns of Severe Finance Gap in Agriculture

China to help S.Sudan develop mining, in talks on development loan

Massive water discovery in Kenya’s desert

Thriving Mining Sector Sees Rising Share in Ethiopia’s Economy

IBM Develops Plan To Enhance Ethiopia’s Trade And Streamline Governance

The seeds of an agricultural revolution

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Source: http://www.theguardian.com/environment/africa-wild/2013/sep/11/1

Related articles

Related articles

Related articles

Related articles