Africa is enormously rich in minerals and oil. The continent has 10 percent of known global oil reserves, and more is likely to be discovered.
In just the last six years, new major sources of oil, gas and minerals have been located in Guinea, Kenya, Mozambique, Niger, Tanzania and Uganda. African oil production is expected to grow at an average 6 percent a year for the foreseeable future.
Yet some of Africa’s biggest oil- and mineral-rich countries, with the highest per capita gross domestic product (GDP) on the continent, are also all ranked low or extremely low on the human development index. They also lie within the region most vulnerable to climate change – which significantly threatens future development.
One big problem is that as GDPs rise, reinvestment of that wealth into social improvements has not always occurred.
The 2014 Africa Progress Panel (APP) report, Grain, Fish, Money – Financing Africa’s Green and Blue Revolutions, presents the two faces of Africa. On the one hand, very robust economic growth, and on the other, poverty levels that have hardly shifted.
But the report suggests it’s not all doom and gloom as Africa could change this dual reality fairly rapidly.
For this to happen, we need to answer the question: what is the best way to utilise resources to positively impact African development?
Historically, countries with high export earnings and economic growth created by oil, gas, iron ore and other natural resources have fallen victim to the “resource curse” or the “paradox of plenty”. These terms characterise countries that have failed to channel profits from natural resources into social improvements and development.
ADVICE NEEDED
Resource-endowed African countries will need to break this cycle if they are going to achieve sustainable development and protect their often already degraded ecosystems against climate change.
The extractive industries that evolve from natural resource discoveries are not associated with large employment opportunities, but they do tend to be linked with high environmental degradation. There is also extreme pressure to reinvest newfound wealth quickly to boost lagging social conditions, with little emphasis on long-term sustainability.
With 65 percent of Africa’s workforce directly dependent on agriculture for survival, and dire food insecurity in many places, it is Africa’s soil that should be targeted for growth and development. In other words, Africa’s soil should be its next “oil” in a changing climate.
Existing fossil fuel and mineral reserves will run out, but Africa’s soil and its ecosystems, including rivers and forests, will remain.
Yet these precious resources are under severe threat from degradation – often associated with natural resource extraction – and climate change.
CLIMATE THREATS
Climate change threatens to reduce by up to 70 percent groundwater recharge, and cut rainfall by 20 percent in certain parts of Africa. It could shrink the growing area for 81-97 percent of African plant species studied. And it could cut crop yields by up to 17 percent for wheat, 5 percent for maize, 15 percent for sorghum, and 10 percent for millet, according to UNEP’s 2013 report on Africa’s Adaptation Gap.
Climate proofing the natural environment for sustained growth will – at least in part – require shifting oil revenues to agricultural investment. Across the continent, demand for food is soaring, especially in rapidly growing cities. The continent has a food import bill of over $35 billion per year and imports of food exceed exports by 30 percent.
Job creation and wealth generation to meet the needs of a growing population could correct this trajectory. As the 2014 APP report demonstrates, the conditions are ripe not just for a booming agricultural sector, but also for a big drop in poverty – crucially needed on a continent where 240 million people are chronically undernourished.
Nearly two thirds of global arable land is in Africa, yet its agricultural output is the lowest in the world. But with all this, the solution is there in plain sight: what the APP report calls a “uniquely African Green Revolution”.
Improving the local environment, and building resilient and highly productive food systems, are key to prosperity and security.
WORKING WITH NATURE
Opportunities abound for working with nature rather than against it. A recently released UNEP publication on adaptation actions in Africa details the cases of eight countries that have invested in ecosystem-based adaptation, spurred green economy opportunities and secured climate resilience.
As the African continent enters the second half of the “Year of Agriculture and Food Security”, declared by the African Union, and leaders look to draft next year’s budgets and policies, it is to be hoped that the swelling coffers of natural resource windfalls are returned to the land and people from where they came.
In the words of Nigerian Agriculture Minister Dr. Akinwumi Adesina, “nobody drinks oil, nobody smokes gas, but everybody needs food.”
The vice president of the World Bank in Africa also put it clearly: “Better education, health, nutrition, and other human development indicators, not just economic growth, should be the benchmark for smart, effective oil and mineral investments.”
One way to do this is to invest the earnings from oil back into the Earth’s ecosystems that feed us. New research should help facilitate this by focusing on the most effective ways of reinvesting natural resource revenues into agriculture, and how best to measure progress in doing so.
Richard Munang is UNEP’s Africa Regional Climate ChangeProgramme Co-ordinator, tweeting @MTingem. Jesica Andrews is the ecosystem adaptation officer with UNEP’s Regional Office for Africa: @la_peqi
New foreign policy direction has been in the works in Ethiopia during the past few years. It is a slow evolution to the so-called ‘economic diplomacy’ and by now, the focus of the Ethiopian diplomatic mission abroad is one matter and one matter alone: attracting investment.
The very concept of economic diplomacy itself made its public debut only recently. It was during a press conference that the late PM Meles Zenawi announced the change of focus of Ethiopia’s foreign policy and that his diplomatic troupe around the world would have one thing in mind from then on; that is the economy. Meles’ statement however came during the most unexpected time. A time when he was asked to explain why his administration made the unprecedented move to shutdown its embassy in Sweden, severing diplomatic ties between the nations. Contrary to rumors of political squabble between the two nations, Meles said the reason lays somewhere in the foreign policy direction of his administration.
“Gone are the days when we operate foreign diplomatic missions which make no economic in terms of attracting valuable Foreign Direct Investment (FDI) to the country,” the PM argued. He also argued saying that Sweden offers nothing by way of trade and investment to Ethiopia and that it would make more economic sense to close our diplomatic mission in Sweden in favor of opening one in Brazil.
This is economic diplomacy setting in, Meles announced, and said that his administration’s external relations would be tailored to foster economic growth from that point on. “Our embassies would have to be economic units that generate economic gains to the nation,” he stated. Well, economic units they have become. The takeoff in FDI coming to Ethiopia is partly attributable to this move to economic diplomacy, according to official statements.
The new administration seem to have taken the economic diplomacy direction and, is running with it. Since the opening of the Ethiopian economy, some 89 billion birr worth of FDI have started operations in the country. Better yet, just last year, 20.4 billion birr capital landed to Ethiopia in the form of FDI, and the highest share came from so called emerging economies such as Turkey, China, India and the like.
One thing that is for sure is that the emerging nations are on top in respect to investment in Africa. But the West is not yet ready to accept defeat, it seems. Now, companies from the advanced economies are starting to come in numbers, hoping to get a piece of the new pie. Perhaps, emerging economies interest in Africa may have helped the continent two-folds. One is in terms of physical infrastructure building, which countries of the poorest continent in the world need badly, while the other is making Africa interesting to the advanced nations and hence luring investment to the continent. In a way, some say that they helped Ethiopia and others in the continent to get on the world’s investment map. In fact, the relative success of the economic diplomacy team, which was in the US, recently speaks volumes of the intensity of the FDI flow to Ethiopia. It looks like US- based big players of the investment world have zoomed in on Ethiopia. Girma Birru, former trade minister and now Ambassador of Ethiopia to the US, told The Reporter that some of the big companies that have shown interest, and that are already starting to take steps towards coming to Ethiopia are the actual meaning of what a BIG Multinational is.
Only recently, companies like General Electric (GE), KKR & Co. L.P. (formerly known as Kohlberg Kravis Roberts & Co.), Dow Chemical co. (commonly known as Dow), and The Blackstone Group L.P. have expressed readiness to invest in Ethiopia. In fact, some of them have already made commitments with local partners thus ascertaining their presence in the Ethiopian market. Particularly, KKR and Blackstone are world-renowned financial service companies with hundreds of billions of dollars at their disposal. According to Girma, between the two, hundreds of billions can be accessible to Ethiopian companies in the form of equity. KKR has already made a two hundred million dollar equity injection to a Dutch horticultural farm in Ethiopia, Sher Ethiopia, as an eye opening investment in the country. While the other financial service companies Blackstone has shown interest in financing an oil pipeline project linking the port of Djibouti to hinterland Ethiopia.
On the other hand, Dow Chemical, also dubbed the chemical factory of chemical factories has already set foot in Africa. Dow has branch offices in Kenya and is in the process of doing the same in Ethiopia with plans to join the production sector as well. The story is also the same with GE according to Girma. Viewed as a world leader in the power and energy sector, GE is also set to enter the Ethiopian market with a considerable equity injection to the Ethio-America Doctors Group. Girma says that this is the real ball game. These and many other companies preparing to come to Ethiopia are really experienced international players. Indeed, companies from the emerging economies and those multinationals from advanced nations do have certain subtle differences in the way they do business. To begin with, the two hugely differ in their mode of entry to a destination country.
Actual FDI on the ground in Ethiopia is telling as to preference of countries when it comes to investing. For instance, 86 percent of the total Chinese FDI in Ethiopia is wholly owned subsidiaries or branches of parent companies back home while the rest, less than 14 percent, is a joint venture arrangement with Ethiopians. This is an important departure point for FDI coming from the emerging and advanced economies. As far as the FDI of the emerging economies is concerned, the most favored mode of entering the Ethiopian market, or the African market for that matter, is wholly owned subsidiaries. On the other hand, those advanced countries’ multinationals are more interested to get involved in equity terms than setting up subsidiaries that would be fully managed by parent companies. What to note here is that the two forms of entry have their own issues. As far as wholly owned subsidiaries are concerned, it is an arrangement that favors maximum control of all aspects of the business. The parent company would have the chance to keep its managerial and technical skills to itself and protect its technological edge and valuable market experience. According to experts, its in the interest of FDI companies to protect their business secret, however, it is not always up to the interest of companies. The decision of companies regarding their entry mode to FDI destinations is in fact influenced by facts on the ground. From an FDI company point of view, lack of critical business knowledge about a destination country can force the investor to seek partners. A host country’s company should be in control of valuable information or knowledge about the local market that the investor could not imagine to succeed without that partner.
The fact of matter is that what the FDI companies find advantageous is not necessarily the case for nations. At times, choice of entry mode doesn’t depend on the decision of the FDI companies alone but on the government of the destination country. That is for joint venture arrangements is superior to wholly owned subsidiaries in terms of positive spillovers. According to Gedion Gemora, researcher on Sino-Africa relations, joint ventures are far too advantageous for FDI host countries on account of a greater chance for transfer of managerial and technical skill to partners in destination countries. In addition, technological transfer and market access can also be better gained in the joint venture setting than wholly owned subsidiaries.
Hence, it is rather interesting to observe that the bulk of FDI that came to Ethiopia preferred wholly owned subsidiaries to joint ventures. Gedion argues, there are various factors that hindered the development of joint ventures in Ethiopia. “Among few, language barrier, unequal integration of Ethiopian firms and their counterparts to international market and technical difficulty to negotiate Joint Ventures (JVs) have detracting formation of JVs between Ethiopian and multinational companies,” he explains.
Nevertheless, for an investment consultant like Henok Assefa, who is also Chief of Party, USAID Agribusiness Innovation and Incubation Center at Precise Consult International, the problem is way deeper and more complicated. As far as he is concerned, it is an issue of compatibility. Although both Ethiopian and multinational companies look for partners to fill their gaps, where for the local firms it is about finance, technology and access to international market, for multinationals it is about accessing the local market and cheap labor, finding compatible partner is a problem, he says. For instance, he observes that for most western companies, Ethiopian firms are too small to partner with. “In Ethiopia there are something like 1000 companies who record revenues of 25 million birr or more. This is a mere 1.2 million dollars in revenue a year,” Henok responded to The Reporter via email. And that is way too small for big multinationals and the cost of managing such (small) partners tends to get higher. Gedion also shares the concern of meeting standards to partner with foreign multinationals. He says, with the exception of a few, most do not meet the standard to be viable partners for international companies. “It is often difficult to find firms who keep very good audited books, understand how equity investments work, and are capable of negotiating investment term sheets,” Henok says on his part. And to add to that is a lack of professionals likes lawyers, accountants and consultants who can facilitate on the intricate process of negotiating with the multinationals.
Yet again, Gedion goes as far as arguing that some of the local firms do not even have the interest to work in joint venture arrangements with foreign companies. Commentators also agree that the culture of partnering is not yet well internalized among the Ethiopian business community. Girma is also of the opinion that capacity limitation could be costly and that local firms might not be able to use the opportunity, that is, access to multinational companies and their unlimited finances and market access. He feels that this is a good opportunity for local firms to change their destiny for the better, but he fears that it is not squandered. It is Girma’s view that local companies should step up and try to work with the multinationals that are in the process of investing in Ethiopia. Gedion is stronger on this point. He argues that a government agency like the investment promotion commission should assume the task of promoting joint venture arrangements among local businesses and provide the necessary support to make them well equipped to work with foreign firms.
Almost equally, other commentators also warn that the regulatory side should also be strengthened if Ethiopia is to take advantage of the investment of these multinational companies. These companies have a lot of experience in doing business around the world and a sharp regulatory framework and staff is important, commentators continue to argue. Tedros Adhanom, foreign minister and leader of the economic diplomatic team, looks to be aware of these issues. He told The Reporter that his government is aware that some of these companies are too big to affect the Ethiopian economy and that they need to be dealt with properly and carefully. “We are working on a new structure to cater to these huge multinationals,” he said. Nevertheless, most agree that it is crunch time for Ethiopia and that the coming of the multinationals could have far reaching consequences.
The Russian foreign minister, Sergey Lavrov, is scheduled to visit Ethiopia next month, The Reporter has learnt.
According to sources, Lavrov will come to Addis Ababa for a two-day official visit at the end of September. Sources said that the foreign minister will be accompanied by a large Russian business delegation and the purpose of the official visit is to strengthen economic and political ties between Ethiopia and Russia.
Lavrov will meet with the President of the republic, Mulatu Teshome (Ph.D.), Prime Minister Hailemaraim Desalegn, Foreign Minister Tedros Adhanom (PhD) and other senior government officials and discuss bilateral issues. Bilateral agreements are expected to be signed. Sergey Lavrov’s visit to Ethiopia will be the second one. He first came to Addis Ababa in 2006.
Sources said Russian manufacturing, energy and oil and gas companies executives will be part of the large business delegation. “Russian companies have shown keen interest to engage in the manufacturing, energy, oil and gas exploration sectors,” sources said.
Last month a Russian company, GBP Global Resources, signed an oil exploration agreement with the Ministry of Mines. The company plans to prospect for oil and gas in the Afar Regional State.
Russians are not new to the Ethiopian oil exploration sector. During the socialist era, Soviet Petroleum Exploration Expedition (SPEE) was prospecting for oil and gas in the Ogaden basin in the 1980s. Russians were involved in the mining sector too. It was Russian Geological Survey that discovered the Kenticha tantalum deposit in Borena Zone, Oromia Regional State. They also discovered the Legedembi primary gold reserve, which MIDROC Gold is currently mining. Having this rich experience on the Ethiopian oil and mineral exploration sectors more Russian companies now want to come back to Ethiopia.
Russian companies want to develop hydropower projects in Ethiopia. Sources said the Russian delegation will meet the minister of Water, Irrigation and Energy, Alemayehu Tegenu, to discuss the investment opportunities in the energy sector.
There are more than 30 Russian companies involved in investments in Ethiopia. Russian companies are also interested in the Ethiopian national railway network development. The Ethiopian government anticipates to secure a loan from the Russian government for railway line construction.
Russia is also a major arms supplier to the Ethiopian army. The Ethiopian Air Force and ground forces are equipped with Russian military hardware.
Ethiopia exports agricultural products to Russia. The Ethiopian flower exporters are contemplating to start directly accessing the Russian floriculture market. So far Russians buy Ethiopian flowers from the Netherlands. Ethiopian Airlines is in the process to launch passenger and cargo flights to Moscow.
Efforts to get a comment from the Embassy of the Russian Federation in Addis Ababa was not fruitful. However, the Ministry of Foreign Affairs spokesperson Dina Mufti (Amb.) confirmed Lavrov’s visit.
According to the Ministry of Foreign Affairs, Ethiopia and Russia have longstanding historical relations going back to the period of the Russian Czar Machilovich, the father of Peter the Great, in the 17th century. It is also recorded that Alexander Pushkin, a renowned Russian writer, was a grandson of Abraham Hannibal, an Ethiopian boy who was presented to Peter the Great by Suleiman the Magnificent. He was baptized in Vilnius, Lithuania, by Peter the Great on his return from defeating the Swedes. Other early contacts between Russia and Ethiopia include the visit of an Ethiopian delegation sent by the Emperor Menelik II to Russia, and visits of several Russians to Ethiopia during Menelik’s reign, at least one of whom was given the title of Dejazmatch for his travels on behalf of the Emperor along Ethiopia’s southern boundaries. These contacts laid the foundation for close relations of the two countries, based on mutual respect and friendship between the two peoples. And it is notable that regardless of the differing political systems that existed at various times, relations between them have continued close and friendly. One demonstration of that friendship has been that Russia has always, and without fail, stood with Ethiopia whenever the sovereignty of Ethiopia was threatened. Russian solidarity with Ethiopia was first illustrated when the Russian Red Cross Society came to Ethiopia in 1896, at the time of the Battle of Adwa when Italy attempted to attack the country. It made an outstanding contribution in the provision of medical supplies at Menelik Hospital and care to the Ethiopian patriots on the battlefield and subsequently. Again, during the fascist invasion of Ethiopia in 1936, Russia was one of those countries which stood in solidarity with Ethiopia. It has done so on every occasion throughout the 20th century whenever Ethiopia faced challenges to its sovereignty and its core national security interests. In short, the bonds that exist between Ethiopia and Russia have stood the test of time and proven their strength time and again.
The most important historical landmarks of Ethio-Russia historical relations visible in Addis Ababa are the large plot of land granted for the construction of a Russian mission after the Battle of Adwa, where the Russian Embassy is still located, and the establishment of the Russian Hospital, now the Balcha Memorial Hospital. Diplomatic relations between Ethiopia and Russia were upgraded to Embassy level when both countries opened their respective embassies in Addis Ababa and Moscow in 1956. While relations between Ethiopia and Russia continued throughout the Imperial era, they were much closer during the Marxist, military regime of the Derg when both counties belonged to the same ideological camp. With the change of government in Ethiopia and the collapse of the Union of Soviet Socialist Republics (USSR), relations were placed on a different footing, but they remained warm and friendly.
In recent years, there have been increased exchanges of visits of high level officials between the two countries. Major visits have included former Prime Minister Meles Zenawi’s trip to Moscow in December 2001 and the then Foreign Minister Seyoum Mesfin in November 2007. Prime Minister Hailemariam Desalegn (the then Deputy Prime Minister and Minister of Foreign Affairs) and Alemayehu Tegenu, Minister of Water, Irrigation and Energy, visited Russia in August and October 2011 respectively.
From the Russian side former Russian Prime Minister, Mikhail Kasyanov, came to Ethiopia in September 2002; and Russian Foreign Minister Sergey Lavrov came here in September 2006.
Nigerian investment in Ethiopia has been growing from time to time, according to Ali Abdo, Ethiopia’s Ambassador to Nigeria.
In an exclusive interview with ENA, the ambassador said the desire of Nigerian companies to invest in Ethiopia is increasing.
Ali added that Nigeria has many investors and owners of giant companies.
Following the recent agreement of the two countries to work jointly, wealthy Nigerian investors have turned their eyes towards Ethiopia, he stated.
Ambassador Ali added that the number one billionaire Aliko Dangote has, for instance, invested over 480 million USD in Ethiopia.
Dangote Investment Group, which is one of the huge foreign companies in Ethiopia, has created many permanent and temporary jobs, the ambassador said.
The Dangote Company has, in addition to producing cement, requested permission to invest in other sectors, according to Ali.
Another Nigerian investor who owns Car Gel Production Company has finalized the construction of a gel factory in Bishoftu.
Many other Nigerian investors are undertaking feasibility studies to invest in various sectors, it was learned.
Ethiopia Airlines has also facilitated the flow of Nigerian tourists to Ethiopia and created a good image of the country by flying to four Nigerian cities, Ali pointed out.
The Ethio-Nigerian diplomatic relation is over half a century old.
Addis Ababa to Host African Green Revolution Forum 2014
.
Addis Ababa is going to host the African Green Revolution Forum (AGRF 2014) which will be held from Tuesday, September 2, 2014 to Thursday, September 4, 2014.
Over 1,000 African and global leaders from African countries along with farmers associations, the private sector, research and development specialists are expected to attend the forum. These delegates will participate in the Forum in order to share the central objective of eradicating food insecurity and scaling up the productivity of Africa’s smallholder farmers.
Key issues that will be raised during the forum include; global commodity markets, the future of the Comprehensive Africa Agriculture Development Programme, ecological sustainability and climate change.
In addition to other key themes, the Forum is also expected to report on actions and outcomes of previous AGRFs.
Ethiopia’s capital, Addis Ababa, is going to be presented with 20 multi-story parking garages for the purpose of addressing the increasing traffic congestion and parking problem the city is facing.
Addis Ababa’s mayor, Dirba Kuma, commented the city’s Integrated Master Plan incorporates a design that puts into consideration a method that resolves the city’s car parking difficulties.
Along with private investors, the Addis Ababa City Administration has finished preparation for the construction of 20 multi-story assembled parking lots.
Diriba commented buildings on roadsides are prompted to avail parking lots for vehicles.
Ahmet Aydeniz Construction desirous to invest in Ethiopia
.
Owner of Ahmet Aydeniz Construction Company, a Turkish-based company, Ahmet AYDENİZ expressed desire to invest in Ethiopia.
After discussing with President Mulatu Teshome, Aydeniz told reporters that his company, finalized one road project in Ethiopia, is searching for future projects.
The company engaged in road construction has finalized construction of a 108km Irba Moda – Wadera road with asphalt level.
According to him, the company has gained some experiences about the opportunities in the country.
“We are working here. This was our first project, of course, there were some difficulties but now we gained experience. We became experienced all subjects and we are going to use these gained experiences in future projects.”
Aydeniz said the company is searching for future projects to be engaged with and utilize the untapped potential of the country.
“Ethiopia has a lot of potentials in every subject. We are construction company also we have food processing factory in Turkey. So these are our interests and we are trying to find out convenient projects here which we can deal with.”
During the occasion, the President said it is Ethiopia’s desire that the company invest here in agro and food processing, agriculture and irrigation; construction of dams, buildings and roads, as well as in tourism and hotels.
The President urged the company, engaged in road construction in Ethiopia, to invest in other areas and utilize the untapped resources, according to a high level official who attended the meeting.
Ethiopia at centre of emerging economies’ interest: CNBC
.
Ethiopia which is sub-Saharan Africa’s fifth biggest economy is at the centre of emerging economies’ interest with various delegations of foreign investors from Africa and beyond visiting it for investment opportunities, CNBC Africa reports.
“If you look at it [Ethiopia] from an economic stand point, I think Ethiopia is one of the countries that has become the quint essential embodiment of the Africa rising narrative,” Julians Amboko, research analyst at Stratlink Africa, told CNBC.
The country’s economic growth is principally attributed to intense government projects aimed at achieving its Millennium Development Goals (MDGs) as the country aims at becoming a middle income status by 2025, the report noted.
“Look at the year between 2013 and 2014, the GDP growth was about 10.6 per cent, double digits. Kenya did only 4.8 per cent, Rwanda which has been a very stellar performer did only 7.9 per cent and therefore from that stunt point indeed investors must be looking at how they can tap into this market which is growing so fast,” Amboko said.
The Eastern Africa state’s economic growth is projected at 11 per cent per annum as the country seeks to maintain this rapid growth, the report said.
The country has a grand five-year Growth and Transformation Plan which ran from 2010 and is expected to end by 2015 that foresees sustainable means of economic, social and environmental development.
“Their [Ethiopia’s] grand transformational plan is to really strengthen the manufacturing sector of the country because Ethiopia is quickly emerging as a manufacturing hub in the region especially in regards to agro processing and textiles and therefore the focus on industrial parts is driven mainly by the government’s focus on manufacturing as an engine for growth going forward,” Amboko explained.
According to the report, Ethiopia has witnessed an increased contribution from the sector, particularly focused on increased production in sugar, textiles, leather products and cement.
The world’s largest blind-tasted food awards Great Taste, has just released the stars of 2014 and Union Hand Roasted Coffee is amongst the producers celebrating winning 4 awards with Organic Ethiopia, Yirgacheffe winning the prestigious 3-star award.
“We have won over 30 Great Taste Awards for our coffee and we are thrilled that this year our Organic Ethiopia, Yirgacheffe is one of only 2, 3-star award winners for Filter Coffee. We are dedicated to sourcing high quality, great tasting coffees through our unique Union Direct Trade Model,” said Steven Macatonia, founder, Union Hand Roasted Coffee.
“We are really pleased to be recognized by the Guild of Fine Foods for the quality of our coffee which gives our customers the confidence that they will get a great-tasting cup every time they purchase our coffee,” he added. Organic Ethiopia, Yirgacheffe is a truly delicious coffee.
Sourced from the Konga Co-operative in Yirgacheffe, Ethiopia (the birthplace of coffee), the coffee is distinctive with multi-layered complexity and elegance.
Brewed as filter, you will get spun sugar and sweet candy floss with bergamot and jasmine tea with blackberries and fresh autumn fruit on the aftertaste.
Its syrupy sweetness is lasting and complex toffee base notes tie all the flavors together.
Jeremy Torz and Steven Macatonia founded Union Hand-Roasted Coffee in 2001 with a mission to work with farmers who produce high quality coffee and develop equitable trading relationships.
Union is out in the field with producers for nearly 90% of the year, working direct with coffee farmers.
Union Hand-Roasted Coffee sources from the same producers, year-after-year bringing sustainable development to remote, rural communities.
The results of Union Direct Trade are two-fold: For the coffee farmer it provides aspiration to earn more by producing increasingly higher quality coffee, aided by regular practical support from Union Hand-Roasted Coffee.
For the coffee enthusiast, it produces a delicious cup, but underscored with ethics.
MODERN HEADACHES: Sub-Saharan Africa has enjoyed a remarkable turnaround, and a congested street in Lagos brings more benefits than bellyaches
Africa gets bad press. Sub-Saharan Africa gets the worst press of any region of the world, with the possible exception of the Middle East. Recent newsflow from the region has been stereotypically grim: the worst ever outbreak of the Ebola virus, civil war in the new state of South Sudan, Islamist terrorism in Kenya, and child abductions in Nigeria are just some of the bad news stories coming out of Africa.
These stories reinforce the impression shared by perhaps the majority of people in Ireland and the West that the world’s least developed continent is a basket case – condemned forever to poverty, famine, poor governance and disease. This impression is, thankfully, profoundly wrong. One of the best news stories of the 21st century so far has been sub-Saharan Africa’s remarkable turnaround from the relative and often absolute decline of the second half of the 20th century. In almost every aspect – security, democracy, health, education and wealth – things have been getting better in most countries and for most of the one billion plus people who inhabit the continent.
This is not just good for Africans, it is good for us in Ireland. Rapid growth rates create business opportunities for Irish companies. Better economic conditions in Africa reduce the “push” factors that contributes to outward migration of all kinds – resulting in brain drain losses for Africa and increased political focus on immigration in Europe. And the ongoing positive trend offers the prospect that Irish taxpayers’ money spent on official aid (currently standing at more than €600m each year) might one day no longer be necessary. Underpinning all of these improvements has been an economic lift-off. Up until the 1990s, average per capita incomes stagnated or fell in many parts of the continent as a whole, widening the already big gap with all other continents. But things have been very different in most of the continent’s 50-odd countries for well over a decade.
According to the IMF, sub-Saharan Africa has been the second fastest growing region in the world (after Asia) so far this century. With rates of economic expansion well above population growth rates for almost 20 years, standards of living have been rising at a decent clip.And this growth acceleration has been geographically broad-based, with the vast majority of economies posting significant gains in living standards. Included among the fast-growing economies, as it happens, are six of the seven countries Ireland’s official aid programme prioritises – Ethiopia, Lesotho, Mozambique, Tanzania, Uganda and Zambia (Malawi is the partial exception, enjoying less growth than the regional average).
Up until the late 1990s, growth in sub-Saharan Africa as a whole lagged far behind the global average and was considerably slower than the advanced economies – economic theory says it should be vice versa, as developing economies are supposed to benefit from “catch-up” growth by adopting the technologies more advanced economies have had to pay to develop. Until the late 1990s Africa made a mockery of that theory, but then things began to change. Growth accelerated in the late 1990s and surged past the developed world and global rates in the early years of this century. It is far from clear whether growth is causing improved political outcomes or vice versa, but regardless of the direction of causality, each passing year suggests that sub-Saharan Africa has broken out of the vicious cycle it had been in during the early decades of independence and – in the case of a majority of countries – has entered something approaching a virtuous cycle. A cornerstone of the change has been the decline of violence. Although conflict and violence remains all too prevalent in many parts of the continent, figures from Uppsala University’s Conflict Data Programme show that conflict fatalities have more than halved since the turn of the century compared to the 1990s.
This reflects greater stability in the continent’s politics over a decade and more. While in the past, news of coups and army takeovers were commonplace, they have been much less frequent, according to Pat Thaker, who heads the Africa team at the Economist Intelligence Unit. Among the biggest challenges in bedding down democracy is having political participants agree to smooth handovers of power. In the decades after European colonisers left, only a handful of leaders who lost elections accepted the result. In March 2000, Senegal’s Abdou Diouf became the fourth one to do so and since then there have been many more across the continent.With political outcomes in many African countries getting better, relations between the continent’s countries are also improving. This, in turn, is allowing more economic integration (usually, it has to be said, from a very low level) and offers the prospect of tapping into the huge existing potential.
This is particularly beneficial to many border regions which were cut off from their hinterlands when new independent states were formed as European countries dismantled their empires. The changing mindset was nicely illustrated in a co-authored article published recently by the leaders of Ethiopia, Kenya and Rwanda. In it they underlined the benefits from sub-regional trade integration in consolidating the gains made over the past decade and a half and ensuring that the developmental momentum is maintained. It is hard to imagine such an article being written 20 years ago. Ultimately, what really matters is whether all of these political and economic changes make people’s lives better. The best news of all from Africa is that they are doing so most emphatically. Almost every available indicator points to that, but perhaps the best overall measure is the UN’s Human Development Index. It aggregates health, education and income indicators to gauge how quality of life is changing across the world.
Sub-Saharan Africa recorded the smallest improvements in the index in the 1980s and 1990s of any region of the world, but since 2000, the rate of improvement has jumped – overtaking East Asia (dominated by China) and almost matching South Asia (dominated by India).While absolute levels of development are still the lowest of any region, the evidence to pointing to a broad-based turnaround in Africa is now quite overwhelming.
There is a long way to go, but the extreme pessimism that many people in the rich world have about the continent is thoroughly misplaced. Africa is on the move and in the years and decades to come will be a place of opportunity – for its own people and enterprising outsiders.
Ethiopia Coffee Export Earnings May Rise 25% on World Supply
.
By William Davison
Ethiopia’s arabica coffee export earnings are forecast to climb 25 percent to about $900 million in 2014-15 because of higher prices after a drought damaged plants in the biggest grower of the bean, Brazil, an industry group said.
Arabica prices on the Ethiopia Commodity Exchange could average $2 a pound if supplies of the crop in the world market are tight, Ethiopian Coffee Exportersâ Association General Manager Alemseged Assefa said in the capital, Addis Ababa. Ethiopia is Africa’s biggest producer of the crop and the origin of the arabica plant.
“Prices are favorable this year because of the Brazilian coffee drought,” Alemseged said in an interview on Aug. 18. “We presume that price will continue because of the drought.”
Arabica has surged 71 percent in New York since January after a drought hurt plantings in Brazil, the world’s biggest exporter of the beans, fueling speculation that consumption may outstrip supply. The Brazilian woes come as plantings in Central America, Mexico and Peru struggle to recover from a crop disease called leaf rust that has cut yields across the region over the past two years.
Arabica coffee for December delivery rose 1.5 percent to $1.89 a pound on the ICE Futures U.S. yesterday, tumbling 12 percent from a two-year high in April.
Stable Prices
Ethiopia earned $719 million from sales abroad of the beans in the 12 months through July 7, down 3.7 percent from a year earlier. The volume of exports fell 4.1 percent to 191,000 metric tons. The country may produce about 500,000 tons of the beans this year, with about half of that crop sold outside the nation, Alemseged said.
Consumption within Ethiopia, sub-Saharan Africa’s second-most populous nation, accounts for the rest of sales, with the average home drinking a cup of coffee two or three times a day and coffee ceremonies a traditional way to welcome guests, according to the U.S. agriculture department.
Prices should be in the “stable to high range” of as much as $1.80 a pound this year, said Fekade Mamo, general manager of Mochaland Import and Export, an Addis Ababa-based coffee trader. “This deficit is real,” Fekade said.
An expansion of plantings in coffee-growing areas may help boost the crop, Alemseged said.
Horizon Plantations, a company owned by Ethiopian-born Saudi billionaire Mohamed al-Amoudi, bought the 10,000-hectare (24,710-acre) Bebeka and 12,114-hectare Limmu coffee farms from the Horn of African government last year.
The exporters’ association wants to bring in new buyers and start making a bigger presence in the world market at its annual conference in Addis Ababa on Nov. 6-7, Alemseged said.
“There’s a great potential, excess supply,” he said. “We aim to increase our share in the global coffee market.”
Ethiopia is fast becoming the preferred destination for foreign investors coming into sub-Saharan Africa, according to the World Bank.
Ethiopia’s attractiveness is driven by a high rate of economic growth now standing at a 10-year average of 10.6 per cent compared to 4.6 per cent average for sub-Saharan Africa.
Ethiopia has more recently made “giant strides” to attain this status. Not too long ago in the 1980s, the country faced the worst famine in history and a civil war that did not end until 1991.
But Ethiopia has, like the proverbial phoenix, managed to rise from the ashes to become Africa’s fastest growing non-energy-driven economy.
The country’s rapid economic growth can largely be attributed to intense government plans aimed at achieving the Millennium Development Goals (MDGs).
The country’s current five year development plan, the Growth and Transformation Plan (GTP) covering the period between 2010/11-2014/15, aims to find sustainable means of economic, social and environmental development to achieve the MDGs.
Goals of the GTP include maintaining a rapid GDP growth of at least 11 per cent per year, a build-up in the country’s foreign exchange reserve which currently stands at just over two months import cover, an increase in bitumen road network from 49,000km to 64,500km, construction of 2,395km of railway line as well as an increase in the power generation capacity from 2,000 MW to 8,000MW.
To confirm the government’s commitment to the GTP, Parliament approved a $9.2 billion (Sh800.4 billion) budget for the year 2014-2015 — the final year of the GTP.
At Sh800.4 billion, the budget represents a 15 per cent rise from the previous year’s and is expected to boost spending on education, health and infrastructure development.
Besides, the Ethiopian government has ensured that the GTP is not just a policy paper as is usually the case with most government policies in developing countries.
Ethiopia’s development and transformation is clearly visible and tangible. Walking through the streets of Addis Ababa feels like a walk through a giant construction site.
Financial experts are, however, of the view that it’s time the country shifted from public spending-driven development to promoting private investment which is the surest way to realising its dream of becoming a middle income nation by 2025.
In the recent past, the government has demonstrated willingness to support private investment through measures such as establishment of Ethiopian Investment Agency (EIA) as a “one-stop-shop” where investors can obtain licences, incorporate and register companies as well as obtain work permits among other services.
Weathered opposition
Ethiopia has also established the Privatisation and Public Enterprises Supervising Agency (PPESA) to oversee the privatisation of State-owned enterprises.
Attractive tax incentives such as corporation tax and customs duty exemptions for manufacturers and exporters are now guaranteed under the recently enacted 2012 Investment Proclamation.
The country has weathered strong opposition from NGOs and local groups to offer investor-friendly land leases for those investing in the agricultural sector.
The leases are as low as $2 (Sh174) per hectare per annum and in some regions investors can easily access huge tracts of land (up to 25,000 ha), providing a sound basis for mechanised farming.
Nonetheless, difficulties remain for investors including restriction of foreign investment in sectors such as financial services, telecommunication, air transport, mass media, legal consultancy, advertisement and promotion as well as importation and retail business. These are reserved for the government and locals.
Whereas restrictions such as those on retail trade and legal consultancy are intended to protect local investors, opening up sectors such as financial services and telecommunication will inject efficiency and impetus that the economy needs to attain the next level of growth.
Take for example the financial services sector which has about 19 banks serving a population of about 94 million. The presence of international banks can play a major role in taking Ethiopia towards its aim of achieving middle income status by 2025.
With a huge part of the country’s loans going towards public expenditure, lending for private investors has been squeezed.
The presence of international banks would be a big boost for private investors, offering them access to more credit facilities as well as sophisticated financing to grow their businesses.
The other major obstacle facing investors in Ethiopia is that of the foreign exchange controls enforced by the National Bank of Ethiopia.
Obstacle to growth
The NBE regulates the inflow and remittance of foreign exchange through specific directives which are applicable to both Ethiopians and foreigners. For example, a trader seeking a foreign currency denominated loan is required to obtain approval from the NBE.
And for approval to be obtained, details of the loan facility such as the amount, interest rate, repayment terms and proof that such a facility is not available from Ethiopian banks must be presented to the NBE.
Also, the perennial shortage of foreign currency makes the process of making any foreign currency payments out of Ethiopia a nightmare.
There are cases of businesses waiting for over three months to obtain foreign exchange allocation, hugely impacting their activities.
There is no doubt that the stringent foreign exchange controls, coupled with the shortage of foreign exchange reserves and the fact that the local currency is not freely convertible, are a major obstacle to the country’s development.
Opening up the economy and liberalising foreign exchange would be a welcome move and one that could help the country sustain its phenomenal economic growth in the long term.
An irrigation system showers a sugarcane field with water at the Kuraz sugar project in southern Ethiopia
.
ADDIS ABABA, Ethiopia (Thomson Reuters Foundation) – Eating and drinking in Ethiopia involves a lot of sugar, from the quintessentially Ethiopian buna (coffee) ceremony to the fare in pastry shops. But it’s expensive to import.
Now the government has embarked on an ambitious project to grow more sugar to meet that demand – but also to boost electricity production and to create sugar-based ethanol that could help reduce car emissions and cut down on fossil fuel imports.
Ethiopia currently produces about 300,000 tonnes of sugar a year from three factories, at Wonchi, Metehera and Finchaa. The factories also generate 62 megawatts (MW) of electricity, half of which is used by the sugar plants themselves, with the rest sent to the national electric grid.
Gossaye Mengiste, an official at the Ministry of Water, Irrigation and Energy, says Ethiopia has the potential to produce 600 MW of energy from sugar when 13 additional factories now being built start production – a considerable boost to the country’s national electricity output.
QUADRUPLE THE ENERGY
Altogether, Ethiopia aims to generate up to 8,000 MW of additional energy by the end of the next year, more than quadrupling its current 2,200 MW. Most of the energy will come from hydropower and wind – but waste energy, geothermal and co-generation from sugar plants are all part of the strategy.
The government, facing a shortage of at least 200,000 tonnes of sugar a year, as well as persistent electricity cuts and rising pollution from its busy streets, sees growth in sugar as a cost-effective, environmentally friendly answer.
Ethiopia is working to build a climate-resilient green economy and aiming for a net carbon output of zero by 2025. Reducing emissions from cars, a big source of greenhouse gases, is a key part of that, Mengiste said.
Another economic goal is to become a middle-income country by 2025, which depends on the government keeping the economy growing at what it claims has been an annual growth rate of 10 percent a year over the past decade.
The government has focused on increasing use of ethanol, a byproduct of sugar, as a source of electricity because it’s relatively cheap and doesn’t require a dedicated factory, so it can act as a supplementary energy source when needed.
THREAT TO PASTORALISTS?
Sugar plantations, however, need large tracts of lands. The question of land availability in lowland areas – most of which are occupied by pastoralists who occupy 60 percent of the country’s land but account for only 11 percent of its population – may be a difficult one.
Zemdekun Tekle, corporate communications director at the Ethiopian Sugar Corporation, the state entity that handles all sugar projects, says the current projects benefit both local people and the country as a whole.
Planting sugar has created employment for local people and pushed pastoralists into settling, he said. He pointed to the Omo Valley where local people produce maize and have been provided with health clinics, schools and saw mills.
In the area, “graduates are learning practical skills with the sugar industry, becoming a skilled workforce and eventually becoming innovators themselves,” Tekle said.
Another benefit from the sugar project is that it produces high-quality cattle feed as a byproduct, helping the country’s large livestock sector which had previously been hampered by lack of good cattle feed, the Sugar Corporation noted.
But critics aren’t convinced of the merits of the scheme, saying efforts to expand sugar production are based on a condescending plan drawn up mainly by people living in highland areas but affecting the lowland population.
Groups like Survival International and other minority rights bodies have urged potential donors to shy away from such projects, which they allege destroy pastoralist populations. Tekle admitted that such lobbying has reduced the range of Ethiopia’s funding partners.
FUNDING FROM INDIA, CHINA
But emerging economies such as India and China have already opened their wallets, he said, noting that the visit of Chinese Premier Li Keqianq in May coincided with a $500 million loan funding agreement for one such project – the Welkayit sugar factory.
In highland Addis Ababa, a bustling metropolis of more than three million people, however, business people and residents alike are more concerned with finding sugar for their daily needs at an affordable price.
One such person is Tsehay Gebremeskel, who has owned and run a small café in the capital for more than 20 years.
“I use sugar for the tea, coffee, milk, pastry and juices I serve to my customers, but I’m having difficulty finding sugar regularly from the government shop for a price of 1550 birr ($78) per quintal,” she said. The cost of sugar is eating into her profits, from which she pays her employees and bills for the café and covers her home expenses.
The government plans to meet the sugar shortage by opening seven new sugar-processing plants by the end of next year, which will raise the country’s production capacity from 300,000 tonnes to 1.2 million tonnes a year. The plants will require 348,000 hectares of land, the government says.
The government estimates national sugar demand at about 650,000 tonnes a year, with current shortfalls made up by imports from Thailand and Dubai. But with added sugar-growing capacity in place by 2015, Ethiopia aims to export some 550,000 tonnes, giving it earnings projected at $300 million by the end of next year.
E.G. Woldegebriel is a journalist based in Addis Ababa with an interest in environmental issues.
Netafim in Ethiopian talks to sell $200m irrigation systems
.
By Irit Avissar and Ron Stein
A consortium of Israel financial institutions is providing financing for an Ethiopian government company.
Drip irrigation technology company Netafim Ltd. is in advanced negotiations for a $190-200 million deal to supply pumping and underground drip irrigation systems for sugar cane to an Ethiopian government company. A consortium of Israel financial institutions, headed by Bank Hapoalim (TASE: POLI), is providing financing for the Ethiopian company.
The project is complex, and its terms, including the financing question, have not yet been finally closed. Netafim, managed by CEO Ran Meidan, is carrying out the work in Ethiopia in cooperation with Global Africa Industries, owned and managed by Itai Terner. In addition to the complex deal itself, one of the interesting things about it concerns the question of financing. The bank’s customer is Netafim, but the party receiving credit from the bank is an Ethiopian company controlled by the Ethiopian local government, with the money being paid to Netafim as payment for the project. The finance transaction is a complicated scheme called buyer credit, in which the bank is actually financing the company receiving services from its customer. Credit granted to an Ethiopian company, however, is considered high-risk credit, because it involves a company operating in a country defined as an emerging market, and which does not have large foreign currency reserves. This loan is therefore designed to be secured through a credit insurance company. The parties have apparently not yet settled the question of the insurance, and it has not yet been determined whether the party providing it will be the government credit insurance company or a foreign credit insurance company.
The advantage of the deal for Bank Hapoalim is that the risk is being transferred to the credit insurance company (these companies have high debt and financial strength ratings), which means that Bank Hapoalim’s risk is determined by the credit risk of the insurance company insuring the loan, which is low, rather than by the Ethiopian company’s risk.
Quite a big deal
The negotiations for putting together a financing package have reached an advanced stage, although they have not yet been finally approved. The deal is a rather large one, and the bank is therefore expected to recruit other financial institutions to take part in it, apparently mainly foreign institutions specializing in this type of transactions. Bank Hapoalim is also providing credit to Netafim directly through a consortium that includes Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), Amitim (the older pension funds for which an arrangement has been made), Mizrahi Tefahot Bank (TASE:MZTF), Israel Discount Bank (TASE: DSCT), Union Bank of Israel (TASE: UNON), and HSBC. Some of these institutions may also participate in financing this contract.
Netafim, controlled by the Permira private equity fund, uses drip irrigation that saves water and reduces erosion and soil exhaustion. Netafim exports $800 million annually. The company has 16 plants in 11 countries, and 13 of its plants are outside of Israel. The company has 4,000 employees.
Dr. Tedros holds talks with Chairman of Ezdan Holding Group
.
Foreign Affairs Minister Dr. Tedros Adhanom held talks on Tuesday (August 26) with Dr. Khalid bin Thani Al Thani, Chairman of Ezdan Holding Group of Qatar.
He welcomed the choice of Ethiopia as an epicenter of the company’s investment and expressed the hope that the Ezdan Holding Group’s investment would create a new era for the development of Ethio-Qatar bilateral ties.
Dr. Tedros, noting that Ethiopia was a champion of macro-economic stability and socio-economic development, mentioned the country’s remarkable economic performance registered over the last ten years with an average real GDP growth of 10.9%.
This, he said, was the result of the right-mix of development policies and strategies and tremendous public investment in infrastructure, agriculture and services.
He said major international rating firms had recently appreciated Ethiopia’s impressive growth trajectory, giving a rating of “B” and “B+”.
He detailed the priority areas of investment, including manufacturing, building and the development of industrial zones, renewable energy and health.
All these, he said, would surely bring win-win outcomes and tangible benefits to Ethiopia and the Ezdan Holding Group.
He also mentioned that Ethiopia had signed agreements on investment promotion and protection and avoidance of double taxation with Qatar, and hoped these agreements would provide additional impetus to the Ezdan Group’s engagement in selected areas of investment.
Dr. Tedros added that Ethiopia had also become an important force for regional peace, security and stability, and emphasized its valued links with neighboring countries as mutually cooperative partners to consolidate an integrated, stable and prosperous region.
Dr. Khalid bin Thani Al Thani said Ethiopia’s present economic takeoff and future economic and political trajectory were the major driving forces to encouragement in investment and add value in the country’s national renaissance in the areas of health, real-estate development and hotels in which his company was ready to invest.
Dr. Tedros said the Ministry was a significant point through which to engage in Ethiopia’s investment and business opportunities, and he recommended the value of participating in the Government’s efforts to make Ethiopia a nucleus of medical tourism in Africa.
The Qatar delegation also met with President Dr. Mulatu who highlighted the government’s readiness to offer all possible support to encourage foreign investment in Ethiopia through available facilities and incentives and policies that protect investments in the country.
Sheikh Khalid said building long-lasting strategic relationships between the private sectors of the two countries should benefit the efforts and attempts to open new markets and promote new joint ventures locally and internationally, including attractive strategic projects for local and foreign investments.
He said he observed a clear interest from the Ethiopian side in the Qatari investment and serious attempts to provide suitable and attractive environment for investments that could play an influential role in moving the wheel of development in the country and finding new job opportunities.
ETHIOPIA: The first of 41 trams being built for the two-line network under construction in Addis Abeba was unveiled at CNR Changchun’s plant in China on August 26.
The trams were ordered in March 2014 and are scheduled to be delivered by January, being shipped via Tianjin and Djibouti with a journey time of about 50 days.
CNR said the arrival of the first Chinese-built trams in Africa would act as demonstrator for Chinese technology, opening the door to other African markets including proposed light rail lines in Kenya, Congo, Zimbabwe, Egypt and Nigeria.
The three-section 70% low-floor cars have an entrance height of 350 mm and a steel and aluminium body designed to combine strength with lightness. They are designed to operate in pairs at speeds up to 70 km/h.
To cope with the effects of strong sunlight at altitudes of 2 400 m, the trams have tinted windows designed to filter out 90% of the ultraviolet rays, and the rubber components and cables are specified to avoid premature ageing. The roof is designed for rapid drainage to cope with sudden heavy downpours, with roof-mounted components in weather-sealed housings. Reflecting typical year-round temperatures between 6°C and 28°C, the trams will have opening windows to save the energy and maintenance costs of air-conditioning.
Two lines are being built by China Railway Eryuan Engineering Group for completion by January 2015. One will run 16·9 km north-south from Menelik Square to Kaliti, and the other running 17·4 km east-west from Ayat to Tor Hailoch. The routes will share tracks for a 2·7 km section between Lideta and Meskel Square. Export-Import Bank of China is providing loans to cover 85% of the cost of the project.
As well as supplying the trams, CNR is to provide staff training, with 50 Ethiopian drivers and maintenance personnel to begin courses during September.
For a town seen as a key trading centre for khat, a drug that is banned in many countries, Ethiopia’s Awaday can seem pretty drowsy and laid-back.
As the sun sets on the small eastern town, farmers and brokers of the amphetamine shrub rouse from an afternoon slumber to cut deals in the bustling market, one of the busiest centres of international trade for the leaves.
Khat, a multi-million dollar business for countries across the Horn of Africa and in Yemen, consists of the succulent purple stemmed leaves and shoots of a bush whose scientific name is Catha edulis.
Chewing it for hours produces a mild buzz.
But Britain in June classified khat as an illegal drug, closing the last market in Europe in the wake of a similar ban by The Netherlands in January.
For the thousands of farmers and traders here in Awaday, 525 kilometres (325 miles) east of the Ethiopian capital, the ban has already had a severe impact.
Previously the plant was Ethiopia’s fourth largest export, earning more than $270 million (205 million euros) in 2012-13.
“All of the people, they are in big trouble, even the man who brings from the farm to the market, and the guy who buys from here to export,” said exporter Mustafa Yuye.
“For most of the people here, their living is by khat, they don’t have other jobs,” he added, speaking after an early morning shift at the manic market, where several tonnes of the herb change hands each day.
- ‘In trouble without work’ -
For first time chewers, the bitter leaves — stuffed in a squash ball sized bulge in the cheek for several hours — offer little more than a sour taste, a sore jaw and the sensation that one has drunk several pots of coffee.
The UN World Health Organization says the plant causes irritability, insomnia and lethargy.
More experienced chewers describe a meditative, almost trance-like state, where one’s sense of time slips away. The user may sit still for hours, yet remain alert to conversation or reading matter.
While debates about khat’s effects on health go on, around 20 million people across the Horn of Africa and the Arabian Peninsula chew the plant every day.
In Ethiopia, where khat is intertwined with ancient traditions — Muslim clerics chewed it to help them study the Koran — the shrub is legal.
Crops are now sold to neighbouring nations, especially Somalia and across the Red Sea to Yemen.
Khat must be chewed fresh because its potency fades within hours.
After frantic trading, drivers pile bundles into airplanes or pickup trucks, dashing along dirt tracks at breakneck speeds for wider distribution.
Before the ban, Mustafa sent more than three tonnes a month to the Horn of Africa diaspora in Britain, but he is now restricted to supplying domestic and regional markets.
Prices have tumbled. “Our money is getting less,” Mustafa said, and farmers in Kenya share similar concerns.
Brokers like Mustafa can earn up to $30 (22 euros) per kilo (2.2 pounds) in the top markets, but as little as $5 (three euros) for the same quantity of low-grade khat in regional markets, according to local traders.
Redundant khat broker Tofiq Mohammed said the whole town of Awaday will be hit by the ban. He used to sell two tonnes to Britain a month but has now stopped working.
“From the farmer to the traders, we are in trouble without work,” he said.
- ‘Social addiction’ -
Some farmers had switched to khat from crops like coffee or maize, because khat can be harvested year-round and previously fetched stable prices at the market.
Kadija Yusuf, surrounded by her chest-high bushes, says she preferred khat farming since it needs less water than coffee.
“There was not enough water, so I started growing khat,” Kadija said. “If they don’t allow us to export we will stop this and return to coffee.”
Her earnings were low — about $38 (28 euros) in a good month — and she worries that her income will now drop further.
With prices falling it is cheaper to chew, but critics say that for those hooked on the leaves, the habit squanders their cash and time.
“When you chew khat you focus, you read a lot,” said Adil Ahemmed, sitting on the floor surrounded by friends and piles of khat stalks, while coffee beans roasted over a flame.
But he calls chewing a “social addiction”, and admits it is draining his money.
He spends about six euros a day on the plant, about 90 percent of his earnings as a computer technician.
“Economically it damages us,” Adil said, his cheek packed with leaves, swollen like a hamster. “That’s the biggest problem, especially for youth.”
The Yara Prize 2014 is being awarded to Ethiopian Professor Tekalign Mamo Assefa.
Currently state minister and adviser to the Ethiopian Minister of Agriculture, Professor Mamo has long been a key contributor to the country’s food security, soil health and natural resources programs, according to a statement the Yara Prize Committee emailed to WIC today.
For 2014, the Yara Prize Committee has focused on the future of farming in Africa. Special attention has been given to food and nutrition security and the twin challenges of employment and income generation.
“As a laureate, Professor Mamo stands out for his remarkable effort across levels, but always rooted in a profound understanding of how transformation must always include the farmer. As a scientist, leader and practitioner, Professor Mamo’s innovative and inclusive efforts have been instrumental in lifting millions of farmers’ income,” says Jørgen Ole Haslestad, President and CEO of Yara and Chairman of the Yara Prize Committee.
Over the past three decades, Professor Mamo has endeavored to improve the livelihoods of Ethiopian farmers, leveraging his scientific knowledge and exhibiting leadership.
Developing targeted interventions for management of waterlogged soils, rehabilitating acidic soils and degraded landscapes, winning farmer acceptance of technologies and modernizing Ethiopia’s fertilizer advisory service are important hallmarks of his engagement.
“By awarding the Yara Prize, we salute the champions of sustainable agricultural development. I wish to extend my personal congratulations to Professor Mamo,” says Haslestad.
The laureate will be celebrated during the Yara Prize Ceremony in Addis Ababa, Ethiopia, on 2 September in connection with the African Green Revolution Forum 2014.
The Yara Prize for an African Green Revolution seeks to contribute to the transformation of African agriculture and food availability, within a sustainable context, thereby helping to reduce hunger and poverty.
The Yara Prize is based on nominations of candidates who are carefully evaluated by the Yara Prize Committee. The Yara Prize consists of USD 60,000, a crystal trophy and a diploma. The Yara Prize was handed out in Oslo from 2005 to 2009.
From 2012, the prize ceremony was moved to Africa where it is handed out as part of the African Green Revolution Forum, which took place in Arusha, Tanzania (2012) and Maputo, Mozambique (2013).
Second Wheat Consignment Arrives to Stabilise Grain Market
.
- The Ethiopian Government has been importing wheat in this manner for a number of years
.
A special consideration in Addis Abeba is that 4,520qt out of its monthly quota of 113,000qt will be distributed to people considered as lower income.
The second consignment of two million quintals of wheat the government bought from Ukraine will arrive at the Port of Djibouti by the beginning of September 2014. The first consignment of the same size has already started to arrive at the central warehouse of the Ethiopian Grain Trade Enterprise (EGTE), as of July 29, 2014.
The second consignment will leave Ukraine on August 25 loaded on five ships, each with a capacity of 420,000 quintals. The government spent 2.4 billion Br to buy the grain through an international tender floated by the Government Procurement & Property Disposal Services (GPPDS). The GPPDS selected six companies to buy the two consignments, according to Ali Siraje, state minister of Trade.
The wheat will be distributed to different parts of the country to stabilise the domestic grain market, according to Etenesh Gebremichael, public relation & trade information supportive process manager at the EGTE. The government will distribute the wheat to 281 flour factories all over Ethiopia through the EGTE at a subsidised price of 550 Br a quintal It will then sell the flour to 5,000 bakeries, which have already been identified and linked with the factories, for 796 Br a quintal.
One quintal of wheat will yield only 73kg of flour, leading to the escalated price, says Ali.
“Only the bakeries that are linked with the flour factories will get flour,” said Ali.
A special consideration in Addis Abeba is that 4,520qt out of its monthly quota of 113,000qt will be distributed to people considered as lower income. So far 740,000qt has arrived from the first consignment, of which 233,615qt is already under distribution as of Monday, August 18, 2014. A quarter of the supply will go to Addis Abeba; the least share among the regions will go to Harari, which will get just 2,500qt, according to Etenesh.
The government now subsidises 226 Br a quintal on retail prices, covering the transport cost from the place of purchase to the central warehouse in Addis Abeba. This costs the government a total of 776 Br a quintal, Ali said.
The government has been importing wheat like this for years. Its total wheat expenses for market stabilisation between 2009/10 and 2012/13 was 8.47 billion Br. The amount spent in 2013/14, in which it bought five million quintals is yet to be determined. In 2009/10, it purchased 5.3 million quintals for 1.87 billion Br; the following year, the import was down to 2.58 million quintals, which was bought for 1.3 billion Br. The 2011/12 fiscal year saw a 4.1 million quintal import for 2.2 billion Br and in 2012/13 the government spent 3.07 billion Br on 5.5 million quintals.
Agrimpex Ltd – a company registered in London, in December 1990 – has been a major supplier of commodities to the Ethiopian government, including a large portion of the one million tonnes of wheat it supplied since September 2008.
“We expect good production during the wheat harvesting period between October to December,” said Ali. “But if we feel there is a gap, we will import additional wheat.”
Montero Mining and Exploration to acquire 80% stake in Moyale Graphite Project
Deal In Brief
Aug 27, 2014 (MarketLine Financial Deals Tracker via COMTEX) –
Montero Mining and Exploration, Ltd., a Canada-based a mineral exploration and development company, has entered into a binding agreement with Hulager General Import and Export plc to acquire up to an 80% stake in its wholly-owned Moyale Graphite Project (Moyale) located in southern Ethiopia.
Under the terms of the binding agreement, Montero immediately earns a 51% interest in Moyale by committing to define and complete a report prepared in compliance with NI 43-101 within 2 years with a minimum expenditure requirement of $1.5 million. Montero may earn a further 29% interest by completing a feasibility study within 3 years to a maximum expenditure of $10 million.
Deal Type Acquisition
Sub-Category Asset Purchase
Deal Status Announced: 2014-08-26
Deal Participants
Target (Company) Hulager General Import and Export Plc - Moyale Graphite Project
Acquirer (Company) Montero Mining and Exploration, Ltd.
Vendor (Company) Hulager General Import and Export Plc
Prime Minister Hailemariam Desalegn has urged Japanese companies to invest in Ethiopia and benefit from the abundant options and incentives put in place in the country.
The Premier held talks on Tuesday with a Japanese business delegation headed by the country’s Parliamentary Vice-Minister for Foreign Affairs, Hirotaka Ishihara.
Ethio-Japan relations have been growing along all sectors, Hailemariam said, and called on Japanese financiers to engage in the country boost the relations further.
Hirotaka Ishihara on the occasion commended the favorable investment climate in Ethiopia. Members of the delegation for their part expressed keenness to invest in different development sectors in Ethiopia.
Italian Deputy Minister for Economic Development to visit Ethiopia
.
The Italian Deputy Minister for Economic Development, Carlo Calenda, will visit Addis Ababa on the 28th August accompanied by a high-level Italian business delegation.
Minister Calenda will have meetings with Ethiopian government authorities including Prime Minister Hailemariam Desalegn, Deputy Prime Minister for Finance and Economic Cluster and Minister of Communication and Information Technology Dr. Debretsion Gebremichael and with CEOs of State companies.
The purpose of the visit, which comes after a number of high-level talks on economic cooperation between Italy and Ethiopia in the last years, is to further explore trade and investment opportunities in Ethiopia.
The Italian companies included in the business delegation operate in different sectors such as engineering, renewable energies, industrial plants, metals, high-technology electronics, cement, constructions, credit-insurance, oil & gas, road management, infrastructures, foreign investment protection services, ground engineering and drilling. Some of the companies are already working in Ethiopia, like Italferr (railway transport engineering), which is currently engaged in the new Addis Ababa Light Rail and in the Addis-Djibouti Railway management systems. Also Salini, which is involved in the construction of the Grand Ethiopian Renaissance Dam, is part of the delegation.
According to a statement the embassy of Italy sent to WIC today, the Director General of the Italian Trade Agency, Roberto Luongo, will also be part of the business group, in view of the upcoming opening of a new office of the Italian Trade Agency in Addis Ababa.
Dubai Chamber discusses trade ties with Ethiopian trade mission
.
A trade mission from Addis Ababa, led by Shisema Gebresilassie, head of the trade and industry development bureau of the Addis Ababa City Administration, is in Dubai.
The delegation, which includes Elias Geneti, President of the Addis Ababa Chamber of Commerce and Sectorial Associations, met with Majid Al Shamsi, first vice chairman, Dubai Chamber of Commerce and Industry on Sunday (August 24). Mr. Al Shamsi told the delegation that trade was vital for Dubai, an ideal business hub with excellent connections to markets across the Middle East, Africa and Asia.
Ethiopia is Dubai’s 77th largest trade partner globally and the total non-oil trade with the country grew by 32 per cent, from a value of Dh1.26 billion in 2012 to Dh1.66 billion in 2013. He said there were 318 Ethiopian companies operating in the emirate and he hoped this would increase the business communities come closer together.
He added that Dubai’s relationship with Ethiopia strengthened last year with the opening of its first African international office in Addis Ababa. This he said was helping to increase two-way business and investment between the two countries.
Ato Shisema said that the trade volume between Ethiopia and the UAE had increased by over 50 per cent since 2005, pointing out that Ethiopia offers immense investment opportunities and was seriously working at enhancing business ties for the benefit of both countries.
Ato Elias also pointed out that Dubai’s close proximity to Ethiopia, especially Addis Ababa, and easy flight connectivity were the main reasons for the existing bilateral ties between the two countries and these were helping Dubai to reach out to the Common Market for Eastern and Southern Africa.
The opening of the Dubai Chamber office in Addis Ababa was directly helping the building of business relations, making fruitful contacts and exploring newer areas of co-operation. He said Ethiopia was very keen to learn from Dubai’s model of attracting big global corporations and the organization of international trade fairs and exhibitions.
President Mulatu receives Qatari business delegation
.
Dr Mulatu Teshome, President of Federal Republic of Ethiopia, received a high-profile Qatari businessmen delegation headed by Sheikh Dr Khalid bin Thani bin Abdullah Al Thani, chairman of Ezdan Holding Group, at the presidential palace in the capital Addis Ababa, yesterday.
Welcoming the Qatari delegation, President Mulatu stressed the need for further bolstering the economic cooperation between Qatar and Ethiopia. He said Ethiopian government is ready to offer all possible support to attract foreign investments and adopt a policy that protects investors and investments in the country.
For his part, Sheikh Dr Khalid expressed his happiness in meeting Ethiopian President. He described the visit as promising. Sheikh Dr Khalid hailed the efforts of the Republic of Ethiopia in encouraging investments that shall benefit both countries.
It’s glad to note that Ethiopia is really keen on attracting foreign investments from Qatar and ready to create an investment-friendly environment, he said.
Sheikh Dr Khalid said the visit was in response to the invitation of the Ethiopian government. It is an important occasion to discuss ideas, projects and investment opportunities with senior businessmen and a chance to display ways of cooperation to build mutual business and investment environment. There are broad opportunities to be explored in the banking, insurance, real estate development, health and communication sectors.
“Building long lasting strategic relationships in the private sector of both the countries will help open new markets in Qatar and Ethiopia and promote new Joint Ventures locally and internationally”, Sheikh Dr Khalid noted.
Five Hospitals to Benefit from 3.1b Br Equipment Purchase
.
3.1b Br Equipment Purchase
.
The Ethiopian Pharmaceuticals Fund & Supply Agency (PFSA) has acquired Hi Tech medical equipment for 3.1 billion Br to be distributed to five hospitals across Ethiopia.
The equipment includes – Computed Tomography (CT) scanners, Magnetic Resonance Imaging (MRI) machines, Intensive Care Unit (ICU) machines, Radiant Warmers, anesthesia machines and endoscopy machines. There is also a set to be used for kidney transplants, including operation tables, Harmonic generators, kidney refrigerators and digital X-rays. This equipment will go to the Black Lion Hospital, St Paul Hospital, Jimma University Specialised Hospital, University of Gondar Hospital and Hawassa University Hospital, as soon as the they finish preparing for installation.
Ninety-five percent of the fund was availed by the Millennium Development Goal (MDG) Achievement Fund, Global Fund and The World Bank, said Ashenafi Husine (ENG), head of provisional Directorate for Medical Device Supply & Utilisation Follow-Up. The procurement was made from the United States, China, Latin America and Europe.
“Preparation of space for the machines is completed and we are expecting delivery in the near future,” said Desalegn Tigabu (Dr), CEO of the University of Gondar Hospital.
The place for the MRI machines needs to be totally free of metal as it works with high magnetic force.
The CT scan, much like an X-ray machine, requires a room that will not allow the rays to escape.
The Gonder University Hospital is looking forward to using the machines for the treatment of its patients and training of its students, according to Desalegn, including the four to six radiology students it takes annually.
All medical supplies that are imported to Ethiopia get approval based on lists at the Ethiopian Food, Medicine & Health Care Administration & Control Authority (FMHACA) or, where the Authority does not have an items on its list, it consults the lists of the World Health Organisation (WHO) and the US Food and Drug Administration (FDA). The FMHACA controls medicines and medical equipment before and during purchase, and at the time of delivery and after delivery.
The PFSA buys, distributes and installs medicines and medical equipment to governmental hospitals and health centres. The office also requests the FMHACA for medicines to be included on the national drug list.
The government of Ethiopia has finalized preparations to join the Eastern and Southern African Common Market (COMESA) free market area, the Ministry of Trade said.
Trade Relations and Negotiation Director-General at the Ministry Geremew Ayalew told ENA that the country has been searching for markets for the increasing market demand of its industries.
The competence of Ethiopian industries has been growing and the industries are in their stage of producing items meeting international standards, he said.
The rapid and consecutive development of the country and involvement of foreign-based companies which led to technology and knowledge transfer enabled industries build their capability.
The country has been engaged in various dialogues with various countries and entities to meet this increasing demand for market, he added.
The government has been making arrangements using bilateral agreements, sub-regional free markets like COMESA, and international markets through negotiations with WTO.
The nation has so far signed bilateral trade agreements with 16 African, Asian, European and North American countries. These agreements are aimed at expanding markets, he said.
He mentioned the agreement signed with Sudan to create free market area between the two countries as an example.
Promoting expansion of trade and economic development, fostering advancement of economic activity, increasing productivity and financial stability; and providing fair conditions of competition for trade between the two countries are the main objectives of agreement.
The nation has also searching markets using sub-regional free markets like COMESA. And the country has finalized preparations to join the free market, including the ratification of the free market area arrangement by the parliament, he said.
Under this arrangement, the countries agree to eliminate tariffs, quotas and preferences on most (if not all) goods that they trade among themselves.
The consultations to accede to the WTO are also another thing the country is engaged in. Consultations have been undertaking since 2003.
Premier Calls For Extension of African Growth and Opportunity Act
.
Prime Minister Hailemariam on Thursday, August 28, 2014 called on American Senators he met here in Addis Ababa to support the extension of African Growth and Opportunity Act (AGOA).
The PM held talks on agricultural development in Ethiopia, food processing, empowerment of women and health with US Agriculture Deputy Minister Krysta Harden and other five female senators. The parties also discussed tourism, aviation, roles and benefits of women.
.
During the discussion the premier asked the support of the senators in extending AGOA, which hugely contributes to the agriculture and foreign trade of Africa.
.
The delegation leader, Senator Debbie Stabenow, appreciated the agricultural extension model introduced in the country and the effort being exerted to familiarize new technology.
.
The senator said she had visited successful female agricultural experts prior to meeting the premier.
.
She further said the delegation was pleased with the visit they made, adding that boosting the contribution of women to growth and peace through creating female leaders is essential.
.
The senator indicated that they are willing to assist the continuous growth of the country and in the provision of education for women in cooperation with Ethiopia.
.
With respect to the extension of AGOA, Senator Stabenow said support is voiced at both Congress and Senate, although decision would be reached later.
Foreign direct investment (FDI) from the US to Ethiopia has been increasing after the latest US-Africa forum earlier this month. In his latest press briefing, Redwan Hussein, minister of the Government Communication Affairs Office, stated that the interest of US based companies is growing.
Even though most of the investment interest in Ethiopia is still dominated by growing economies like China, India and Turkey, Western Europe and the US have been taking notice of Ethiopia in recent years.
Redwan said that the latest Ethio-US Business and Investment Summit in Houston and Los Angeles attracted US based multinational companies who are interested in investing in Ethiopia. Several companies involved in mining, agriculture, tourism and energy among others may now want to get involved in what has become one of the world’s fastest growing economies.
“Chevron, one of the top three companies in the world, has showed an interest to begin oil exploration in the country,” Redwan added.
.
“Previously the US companies were not that much interested in investing in Ethiopia, a country with a small economy, but now they are assessing the investment directions in the country,” he explained.
Other companies that are already engaged in investment are also interested in expanding their business. “There are also many companies that would like to construct five star hotels,” the minister added.
He said that the US-Africa Business Forum has also been a good opportunity for the country to promote itself. During the recent event held in Ethiopia between the US government and African countries, several US based energy firms stated that they are interested in engaging in the power sector and some of them have already contacted the relevant government offices to engage in the sector.
“We will strongly follow up and support the investors, who will be part of our development and interested to come into Ethiopia,” Redwan said.
He mentioned that the US-Africa event has been also very successful for the country, while it has presented its experience about development.
Top government officials including Mulatu Teshome (PhD), president of Ethiopia, and Prime Minister Hailemariam Desalegn attended the investment summit and US-Africa events.
Japan to provide loan for geothermal power, other projects: Ambassador
.
Japan has plans to provide loan for Aluto-Langano Geothermal Power Plant and other power generation projects.
According to Ambassador Markos Tekle, Ethiopia’s Ambassador to Japan, the Japanese government used to largely extend aid to Ethiopia in the forms of assistance and technical support.
This has now changed as the country has been registering rapid economic growth and its ability to refurbish loans is strengthened, he said, adding that as a result Japan has plans to extend loan to Ethiopia so that it could complete different projects.
Among the projects that would benefit from the loan are the Aluto-Langano Geothermal Power Plant and other hydro-power projects, the ambassador added.
Ambassador Markos further stated that the Japanese government is also willing to give additional loan to other projects based on the request of the Ethiopian government.
Trade and investment tie between the two countries has been growing as the relationship between the two countries has been strengthening, he noted.
Following the visit of the Japanese Prime Minister Shinzo Abe to Ethiopia, the interest of Japanese investors to engage in the Ethiopia market has grown, according to the ambassador.
Because of the increasing desire of Japanese investors to do business in Ethiopia, the Ethiopian Embassy in Tokyo has been organizing exhibitions and seminars to attract big Japanese companies, Markos stated.
Japanese, through Kaizen institute, are also providing support for the improvement of product and productivity in Ethiopia and to make the country’s industrial policy better, the ambassador added.
At present, 24 Ethiopian students have completed their education in Japanese universities and are doing internship in various companies, it was indicated.
Bilateral Cooperation Director with the Ministry of Finance and Economic Development (MoFED) Kokeb Misrak for his part said Japanese developmental assistance for
Ethiopia through Japan International Cooperation Agency (JICA) has been growing from time to time.
Infrastructural development, agriculture and rural development works as well as education are among the sectors that have been supported by JICA, he explained.
Accountability was underlined as being extremely crucial at a meeting on the Post MDG Agenda at the UNECA on Thursday August 21st.
The round table meeting had present African stakeholders, which included academicians, government representatives’, the private sector and women and youth groups.
.
According to the stake holders that participated in the in the discussions, Africa’s role in the formulation of the Millennium Development Goals (MDG’s) has been very limited which has resulted in weak ownership and slow progress by many African countries.
.
The round table discussion is part of a substantial proactive effort to ensure African ownership of the forthcoming global development agenda that will replace the current Millennium Development Goals (MDGs). The event led by the African Union High Level Committee (HLC) on the Post-2015 Development Agenda comes as a result of a request, made by the AU Heads of State Summit held in Malabo from 26-27 June 2014, to explore the “emerging issues of accountability”.
.
This includes the need for a data revolution – a central issue to monitor, evaluate and assess progress, which are, in turn, key aspects of accountability”, according to the Decision of African Union at the Malabo Summit.
.
According to Anthony Maruping, Commissioner of Economic Affairs at the ECA, statistics will be very important because timely statistics are crucial to be able to see the extents of achievements.
.
“Africa has indeed been a visible presence in the Post-2015 development agenda and as early as 2011 the continent initiated consultations to articulate its priorities for the successor global development framework” Dr Abdalla Hamdok, ECA’s Deputy Executive Secretary, stated speaking on the Common African Position (CAP), which reflects Africa specific needs and goals that need to be included in the Sustainable Development Goals (SDG).
.
“The consultations are intended to build on existing accountability frameworks, so to design and formulate an accountability framework suitable for the post 2015 development agenda”, reiterated Hamdok. Such a framework is expected to provide alignment from the global to continental to national levels,” he further said.
Political, Economic Stability Luring Multinationals Into Ethiopia
.
VENTURES AFRICA – President Mulatu Teshome of Ethiopia has expressed satisfaction at the country’s economic success, noting that a stable political environment and enabling investment atmosphere is attracting a pool of international firms into the country’s business landscape.
According to the President, the number of foreign companies coming to set up shop in Ethiopia has increased recently unlike some twenty years ago when Ethiopia was a chief recipient of aid.
“Conducive condition for investment, abundant resources, political stability and economic development are the main reasons that attract more investors to Ethiopia. Cheap labour, power and raw material supply make Ethiopia preferable for investment compared to other African countries,” the President said.
He further noted that foreign companies can easily enter into the EU and US markets once they set up in Ethiopia because of its beneficial relationship with these regions which allows it to enjoy various duty and quota free agreements.
Also, the President has disclosed the move of his government in giving priority to the manufacturing and agriculture sectors such as leather, textiles and agro‐processing. Investors in those areas are therefore welcomed.
Information from the World Bank is consistent with the President’s claims; for instance Ethiopia’s economy has grown at an average of 10.9 percent per year over the past decade while poverty has reduced by 9.1 percent over the past half-decade. Also, Ethiopia is on track for achieving most of the eight Millennium Development Goals (MDGs) and has already achieved the goal for Child Mortality.
East African Bottling SC to invest $ 250 mln on new projects
.
East African Bottling Share Company stated that it will be investing more than USD 250 million in the next five years in Ethiopia to increase the company’s capacity. “We are just finishing our strategic plan for the next five years and it has been approved, so we will spend more than 250 million dollars in Ethiopia during the next five years, which will allow us to increase our capacity and satisfy our customers across the country,” stated Xavier Selga, General Manager of East African Bottling Share Company bottler of Coca Cola.
.
According to the General Manager, the company is in the process of launching a new production line in September 2014 and by 2015 and will be investing in a new production plant as well. He also stated that the company will be investing in trucks and coolers so as to be able to transport and supply its products in different areas of the country.
.
The company is also working with Coba Impact, an Indian recycling company, to carry out recycling of plastic bottles.
.
“We are working to empower 2,000 women in the recycling industry. We want to make sure that the environment in Ethiopia is more sustainable and we can also help these women economically. Right now we are training the women and explaining the routine and giving them the tools,” Selga stated.
.
Recently, soft drink manufacturers have been facing some problems regarding the shortage of one of the most important inputs to their products; sugar. According to Misikir Mulugeta, Brand Manager, Coca-Cola Ethiopia, the shortage of sugar has not affected Coca Cola so far and the company’s products are still well supplied to the market.
.
In related development, on Friday August 22, the Coca-Cola Africa Foundation (TCCAF) and World Vision announced a new Replenish Africa Initiative (RAIN) project to extend clean, sustainable water and sanitation to communities in the Tigray region of northern Ethiopia.
.
The Tigray project, with a commitment budget of USD 1 million, is the third RAIN project in Ethiopia and expands a partnership which has been on-going since 2007.
.
“We plan to implement a range of activities including boreholes, drinking water infrastructure, building of ventilated pit latrines and formation of school clubs to promote behavior change in sanitation as well as raise awareness about the health benefits of safe water handling and hygienic practices,” said Margaret Schuler, National Director of World Vision Ethiopia.
.
Replenish Africa Initiative (RAIN) is a commitment of The Coca-Cola Company to provide access to safe drinking water for two million Africans by 2015.
Corporate Income Tax Targeted in Bid to Boost Manufacturing Sector
.
The manufacturing sector only achieved 30pc of the government’s plan during the last fiscal year
Sufian Ahmed
A government committee is finalising a draft amendment to reduce the 30pc corporate income tax levied on manufacturing industries.
The committee, drawn from the Ministry of Finance & Economic Development (MoFED) and the Ethiopian Revenue & Customs Authority (ERCA), has been at work for the past two months, according to an official close to the issue.
The corporate income tax is a flat rate of 30pc tax, which is levied on the service and manufacturing industries. The amendment, however, concerns only those in the manufacturing sector.
The draft will pass through the Council of Ministers and Parliament in less than two months’ time, says a source close to the case.
The 30pc rate was the subject of discussion during a two-day training programme for the private sector, given by Ahmed Abtew, Minister of Industry, at Millennium Hall, on June 30 and July 1, as well as the second Public Private Consultation Forum, chaired by Prime Minister Hailemariam Desalegn, on July 2, 2014 – also at Millennium Hall.
After the suggestions from the various businesspeople, officials from the ERCA, MoFED, Federal Investment Commission (FIC) and Ministry of Industry (MoI) held a meeting. At this time, they agreed that the rate must be reduced, according to an official who was part of the meeting.
The suggested rate will be somewhere between 20pc to 25pc. This could improve the private sectors’ engagement in the manufacturing sector, the official said. The sector only achieved 30pc of the government’s plan during the last fiscal year, 2013/14, according to data from the MoI.
“Tax rate reduction and investment incentives should not be confused; each has its own principle,” says an anonymous tax law expert. “Reduction in tax rate should be inclusive of all sectors, so that the tax system could be simple to understand and implement.”
In addition to the proposed tax incentive for the manufacturing sector, an overall tax review is in process by the MoFED and ERCA, including Income Tax, Excise Tax, Turn Over Tax (TOT) and Value Added Tax (VAT). This, too, could be approved by Parliament during the first quarter of the current fiscal year, according to an official from the ERCA.
The ERCA – created in 2008 as a result of the merger of the Ministry of Revenues, the Ethiopian Customs Authority and the Federal Inland Revenues – experienced a major tax revision of customs during the last quarter of the last fiscal year. The revision includes incentives on the import of semi processed products by the local manufacturing sector, in a bid to encourage manufacturers.
Ethiopian delegation to participate at Canada-Africa business summit
An Ethiopian delegation led by Tedros Adhanom (PhD), minister of Foreign Affairs, will partake at the first annual Canada-Africa Business Summit to be held next month in Toronto, Canada.
The Canadian Council on Africa (CCAfrica), in collaboration with the Government of Canada and the World Bank Group, will organize the inaugural Canada-Africa Business Summit from September 15-18, 2014, at the Fairmont Royal York Hotel in Toronto, Ontario, Canada.
A large Ethiopian business delegation comprising of manufactures and exporters will participate at the forum. Senior Ethiopian government officials drawn from the Ethiopian Ministry of Foreign Affairs, Ministry of Trade, and Investment Commission, among others, will attend the conference. Officials of the Ethiopia and Addis Ababa Chambers of Commerce and Sectoral Associations will also be in attendance.
According to the organizers, delegations from 20 African countries will participate at the forum. Heads of governments, ministers, governors, and CEOs from Africa and Canada are expected to deliberate on doing business in Africa. Renowned Canadian corporate businesses will be represented by their CEOs.
Ethiopian Airlines is a gold sponsor of the 4-day conference. Ethiopian Airlines Group CEO Tewolde Gebremariam is a key note speaker. Ethiopian is the only airline that has a direct flight between Africa and Canada.
Canadian oil and mining firms are active in Ethiopia. Africa Oil, a Vancouver based oil firm, is engaged in four oil exploration projects in Ethiopia. Allana Potash, a Canadian mining firm, is developing one of the largest potash mine in the world in the Afar Regional State. According to the Ministry of Mines of Ethiopia, 13 Canadian companies have signed contracts for the exploration of potash and precious and base metals, with a registered capital of USD 6.5 million. In January 2010, Canada concluded an Air Services Agreement with Ethiopia. Ethiopian Airlines flights from Addis Ababa to Toronto began in July 2012. According to a Memorandum of Understanding signed between Canada and Ethiopia in 2003, Ethiopian exports of textile and apparel goods have tariff-free access to the Canadian market.
Ethiopian Airlines is a reliable customer of Bombardier, a Canadian aircraft manufacturer. Bombardier is one of the sponsors of the Canada-Africa business summit.
Trade flows between Canada and Ethiopia are modest but with the potential for growth in the short- to medium-term and are subject to significant year-to-year changes due to the one-time order of high-value products like aircraft. In 2013, the two-way trade came to USD 39.2 million, with USD 21.3 million in Canadian exports to Ethiopia and USD 17.8 million of imports from Ethiopia into Canada. The year before, 2012, had seen a large boost in Canadian exports to Ethiopia, which stood at USD 123.6 million that year, due to the delivery of a number of Q400 aircraft from Bombardier to the Ethiopian Airlines. Bombardier has also set up a regional maintenance facility for the Q400 aircraft in Addis Ababa. Canada’s imports from Ethiopia consist mainly of agri-food products, such as coffee, team spices and oilseeds.
Japanese deputy FM urges ease of investment procedures
.
Neway Gebreab, Economic Advisor to the PM and Hirotaka Ishihara
.
According to recent reports of the World Bank Group, Ethiopia is acclaimed for fast economic progresses and is attracting a high volume of foreign direct investment, however, for Hirotaka Ishihara, parliamentary vice-minister of foreign affairs of Japan, Ethiopia is far from Japanese expectations.
The vice minister led a business delegation and held a trade and investment seminar on Monday in Addis Ababa. His visit was focused on more of a fact-finding mission for investment and trade for Japanese firms in Ethiopia. The three-day mission, dubbed: “The Japanese Public and Private Delegation for Promotion,” brought some 15 companies from Japan.
During a press conference, Ishihara told reporters that the mission he headed was his second one and it was destined to grasp investment opportunities in Ethiopia. Except for a few companies like Hiroki Co. Ltd, which is earmarking investments on fine leather products, and Marubeni Corporation, which is attaching itself with the geothermal sector, are the only companies that can be cited for foreign investments.
Murabe Noruyiki, liaison officer of Murabeni Corporation in Addis, told The Reporter that the corporation is studying to invest on the Aluto Langano geothermal project. Currently, Murabnei supplies essential drilling machineries and equipment for the project. Aluto Langano is a project expected to generate some 70 to 100 MW electric power in Ethiopia. Murabe anticipated that the project might be operational in the coming three years. The Marubeni Corporation is situated in Ethiopia exporting some 30 percent of Ethiopian coffee shipped from Ethiopia.
Ishihara doubted that Ethiopia, though opportune for having low labor costs for companies eying in on the manufacturing sector, still lacks favorable investment landscapes. He urged government officials to ease up regulatory and procedural requirements that he said are hindering many to remain undecided to come.
Sumitomo Corporation based in Japan. The multinational operates 140 offices worldwide, is keen in mineral resources production, automobile trades and agricultural chemicals and the likes. Sumitomo expressed concerns with regards to the shortages of hard currency and opening Letter of Credits (L/C) within local banks in relation to imports of vehicles from Japan. The multinational formally has expressed interests to meet officials of both the ministry of finance and economic development and the Central Bank.
According to some officials The Reporter approached, Japanese companies here are uncomfortable about the situation to which they are facing obstacles with remitting their profits in hard currency.
During his visit here, Ishihara met President Mulatu Teshome (PhD) and Prime Minister Hailemariam Dessalegn and other ranking officials. He then flew to Rwanda and Tanzania for similar missions.
It’s overrated? Egyptian minister downplays consequences of Ethiopia dam
.
The irrigation minister added that additional studies would determine whether the projected height of the dam – along with its storage capacity – would have any negative consequences for Egypt.
.
Egyptian Irrigation Minister Hossam al-Moghazi downplayed Friday the negative effects on Egypt’s water supply of the ongoing construction of Ethiopia’s Renaissance Dam, saying the first phase of construction would not cause any tangible harm to Egypt.
“The results of additional studies will appear in March 2015, six months before construction of the first phase of the dam is complete,” Moghazi told Anadolu Agency.
He added that the first phase of the multibillion-dollar hydroelectric dam would feature a water storage capacity of 14 billion cubic meters, which would not cause any “tangible” harm to Egypt. “This [continued construction of the dam] does not worry us,” Moghazi said.
Relations between Cairo and Addis Ababa soured last year over Ethiopia’s construction of the $6.4-billion hydroelectric dam on the Blue Nile. The project raised alarm bells in Egypt, which relies on the river for almost all of its water needs and feared its historical supply of Nile water would be reduced.
Last year, an international panel of experts recommended that two studies be conducted: a hydrological simulation model and an environmental, social and economic impact assessment.
The two countries agreed to resume tripartite talks over the dam – along with fellow riparian state Sudan – after Ethiopian Prime Minister Hailemariam Desalegn and Egyptian President Abdel-Fattah al-Sisi met in Equatorial Guinea in June.
The tripartite meetings came after an eight-month hiatus due to ongoing differences between Cairo and Addis Ababa.
Ethiopia, for its part, says the dam is necessary for its national development plans. It insists the project won’t impact Egypt’s traditional share of Nile water, which has long been governed by a colonial-era water-sharing treaty – a treaty that Addis Ababa has never recognized.
Construction of the dam should be complete in June 2017, according to Ethiopian officials.
Moghazi said Egypt was only concerned about the dam’s projected storage capacity, which, he says, could erode Egypt’s historical share of Nile water. He stressed that Egypt had made a goodwill gesture by not asking Ethiopia to halt work on the project – a request Cairo made one year ago without effect.
The irrigation minister added that additional studies would determine whether the projected height of the dam – along with its storage capacity – would have any negative consequences for Egypt.
Ethiopian Electric to rehabilitate hydro-power stations
.
The Ethiopian Electric, the sole power utility company, is contemplating to rehabilitate two hydro-power dams.
A senior official at the Ministry of Water, Irrigation and Energy told The Reporter that the Ethiopian Electric is anticipating the rehabilitation of the Melka Wakena and Koka hydro-power stations. In a bid to enhance the generation capacity of the power stations, Ethiopian Electric wants to undertake the rehabilitation work.
The official said a Russian company called Inter RAO has shown a keen interest to rehabilitate the Melka Wakena hydro-power plant found in the Bale zone, Oromia Regional State.
The Melka Wakena hydro-power station has an installed generation capacity of 153 MW. The power plant has four units each with a generation capacity of 38.5 MW. It was the largest power station in the country until Gilgel Gibe I power station (184 MW) became operational in 2004.
Melka Wakena power station was built by Russia and Yugoslav energy firms in 1989 at the behest of the Derg regime. The Russians undertook the civil work while the electro-mechanical work was carried out by a Yugoslav company called Energo Invest,” the official said.
At the moment, representatives of Inter RAO are holding talks with officials of the Ministry of Water, Irrigation and Energy and Ethiopian Electric. The work includes the maintenance, repair and overhaul of the power units. “The power plant is currently operating. However, the rehabilitation work is believed to enhance the performance of the power plant,” the official said.
The cost of the rehabilitation work is not yet determined. Inter RAO will present financial and technical proposals which will be evaluated by experts from Ethiopian Electric. Ethiopian Electric will present the proposal to the board of directors for endorsement.
Inter RAO is expected to secure a loan from the Russian government for the rehabilitation project. “This is a bilateral cooperation issue,” the official said. According to the official, the issue will be addressed when the Russian Foreign Minister, Sergey Lavrov, visits Addis Ababa next month.
Inter RAO was established in 1997 as a subsidiary of RAO Systems of Russia focused on the export-import of electricity. “Inter RAO keeps expanding its portfolio of power generation and supply assets while also actively developing other lines of business, primarily engineering for electric power industry,” the company’s official website states.
Ethiopian Electric is also contemplating the idea of rehabilitating the historic Koka hydro-power station. Koka power station, which has an installed generation capacity of 43 MW, was built in 1960 by the Italian government as compensation for the atrocities committed by fascist Italy during the 1936 – 1941 occupation of Ethiopia.
Ethiopia currently generates 2,268 MW from hydro, wind, geothermal and thermal energy. The Ethiopian government is currently building power plants with a total installed generating capacity of 8450 MW – the Grand Ethiopian Renaissance Dam (6000 MW), the Gilgel Gibe III (1870 MW), Genale Dawa (254 MW), Adama II wind power project (153 MW) and the 70 MW rift valley geothermal power project.
Ethiopia Sees Greener Energy With Advent Of New Meters
.
VENTURES AFRICA– Smart electric meters, called IT‐plus, are expected to revolutionize the electricity user experience in Ethiopia; these meters are centrally controlled and can determine the amount of power each individual client gets.
The Ethiopian Electric Utility (EEU) has received supplies of these smart meters from the Metal & Engineering Corporation (MetEC). The meters, which can also selectively turn off the power supply to specific clients on an individual level, are manufactured collaboratively by Hi‐Tech Engineering, Ethio Plastic Industries, Metal Fabrication Industries and Hibret Manufacturing Industry.
Following a successful testing by the EEU, the first batch of meters are soon to be delivered. The deal leading to the local manufacture and supply of these meters was signed in 2003 between the EEU and Hi‐Tech Engineering. The launch was formally done at the Hilton Hotel last week.
These new meters are expected to facilitate power redistribution in times of power shortage and technical problems. According to Berihu Gidey, General Manager of Hi‐Tech Industries, the system has intelligence value as power blackouts could easily be achieved at a national level if the need arises.
Plans are already underway to establish a smart grid system at a national level once the company starts manufacturing its full capacity of 1,200 meters daily. The new meters will arrive programmed to adjust to a three‐phase electric power system; this is expected to reduce the processing time for industrial applicants.
Bitweded Gebrealise, CEO of the EEU Wire Business, said; “The main advantage of the electric meter is that it saves electric power, especially for industries. The next process will be the replacement of previously installed electric meters through different phases.”
Africa Oil to pull out of oil exploration blocks in Ogaden
.
Africa Oil, the Canadian oil company, which is prospecting for oil in different parts of Ethiopia, is to pull out of two exploration blocks in the Ogaden basin, eastern Ethiopia.
In an operational update released on Thursday Africa Oil stated that it informed the Ethiopian government and its partners that it intends to withdraw from Blocks 7 and 8 in the Somali region. A well recently drilled in Block 8 (El Kuran-3) demonstrated oil and gas flow. However, the company decided to pull out of the two exploration blocks in spite of the positive exploration result.
“Although the El Kuran-3 well did demonstrate some oil and gas potential, the company does not feel it is warranted to continue efforts at this time due to concerns over reservoir quality and commerciality,” the company said.
Africa Oil has a 30 percent working interest on Block 7 and 8 found in the Ogaden basin. The British oil firm, New Age (African Global Energy), owns 40 percent while and the Dubai based East Exploration Limited (EAX), owns a 30 percent stake on the block.
Early this year, New Age, the operator in the blocks, drilled El Kuran-3 well, to a total depth of 3,528 metres. The well undergone logging and evaluation prior to taking a decision on the way forward on the well. “There have been numerous oil and gas shows in the well which is a follow up to a discovery made by Tenneco [a company which spun of its oil and gas properties in 1988] in the 1970’s. There appears to be a significant amount of oil and gas in several intervals and the primary issues are the quality of the reservoir and potential commerciality given the remote location,” the report said. The total acreage of the two blocks is 21,767 sq.km.
Africa Oil has three projects in Ethiopia consisting of blocks 7 and 8 in the Ogaden basin, the Adigala Block close to the border with Somalia and Djibouti and the South Omo Block which lies in the Omo Rift Valley of south-western Ethiopia.
The Ogaden Basin blocks are relatively underexplored with limited well and seismic data to constrain the petroleum system proved by the Calub and Hilala fields to the east. The Adigala block is a wildcat opportunity with no wells in the area. An analogue petroleum system is predicted based on nearby outcrop data and field surveys. The South Omo Block is within the Tertiary age East African Rift, just north of Lake Turkana, Kenya and within the same petroleum system as the company’s Kenya Block 10BB and Tullow’s Uganda discoveries.
Africa Oil acquired a new oil exploration block in southern Ethiopia rift system in February 2013 from the Ethiopian Ministry of Mines. The block is a large area covering 42,000 sq.km of land in the great East Africa rift valley.
In March, the company completed a farm out transaction with a US oil company, Marathon Oil, whereby Marathon acquired a 50 percent interest in the Rift Basin Area leaving the company with a 50 percent working interest. In accordance with the farm out agreement, Marathon was obligated to pay the company 3 million dollars in consideration of past exploration expenditures, and has agreed to fund the company’s working interest share of future joint venture expenditures to a maximum of 15 million dollars.
Africa Oil continues to advance plans to commence a 2D seismic program in the Rift Basin Area Block which is expected to start later this year. The company has put up a tender inviting international companies that will shoot the seismic survey.
Africa Oil has a 30 percent working interest on the South Omo Block. Tullow Oil has a 50 percent stake and Marathon Oil has 20 percent. Tullow Oil, the operator, drilled four wild cat well in the South Omo Block with no commercial oil discovery.
Africa Oil said due to the extensive drilling and seismic program, no additional work commitments will be required. “The partnership plans to evaluate the four wells drilled to date to determine if additional drilling is warranted and, if so, which portion of the block is considered most prospective.”
In the Adigala block Africa Oil has 10 percent stake while New Age and Genel Energy, a UK firm, have 50 and 40 percent respectively. According to Africa Oil, the parties to the block agreed to enter the final exploration period, which expires in July 2015 and carries a 500 kilometer 2D seismic work commitment. The company and its partner have committed to a 1,000 kilometer 2D seismic program which will commence in December this year.
Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya and Ethiopia as well as Puntland (Somalia) through its 45 percent equity interest in Horn Petroleum Corporation. Africa Oil’s East African holdings are within a world-class exploration play fairway with a total gross land package in this prolific region in excess of 215,000 sk.km.
The Ethiopian Ministry of Agriculture disclosed that a 15 year livestock development master plan has been launched to maximize the benefit earned from the sector.
State Minister of Agriculture, Dr. Gebregziabher Gebreyohannes, said that the 15 year plan incorporates detailed directives including the amount and type of investment needed to boost the productivity of the livestock sector in Ethiopia.
Accordingly, the implementation of the master plan has commenced.
The plan envisions building the sector’s capacity to supply global markets, beyond local needs, he noted.
The State Minister called on all stakeholders to contribute their level best to the fulfillment of the master plan.
Indian company’s failure with sugar plant causes in house manufacturing, repair
.
The Indian company that won the restricted overhaul bid of Metehara Sugar Factory last year has failed leading the factory for in-house manufacturing of machinery and repair, according to employees and the new management.
3 STAR, an Indian firm, which has currently left Ethiopia, had been favored by the Sugar Corporation and the management of the factory to take over after a restricted bid was announced by the Ethiopian government last year. “We have already confiscated its performance bond and equipments on a legal basis. Currently, we are conducting the overhaul ourselves,” Zenebe Yimam, general manager of Metehara Sugar Factory said.
The company was found to be incapable and inefficient in maintaining the overhaul in the time frame after it cost the factory 60 million birr, according to the management.
Now the factory has been undertaking the annual overhaul that would mark October 31 as a start of production date. “We have already undertaken major rehabilitation on the boiler along with some manufacturing activities,” Laynadis Bekele, factory manager, says.
Metehara Sugar Factory is the oldest and largest sugar factory in the country so far as the government undertakes constructions of some ten big sugar factories to raise production in the country to 300,000 tons in the five-year Growth and Transformation Plan (GTP).
Despite the fact that Indian companies have been favored to consult, restore and build sugar factories in Ethiopia, their track record has turned out to be dissatisfying as another Indian company also failed to restore the new Tendaho Sugar Factory being constructed in the Afar Regional State a few years ago, according to reports. Nevertheless the Delhi-based Uttam Succrotech recently won a USD 100 million contract for the expansion of the Wonji Sugar Factory, another old sugar factory in the country.
The Indian government has given a USD 640 million loan to three sugar factory projects. Metehara Sugar was inaugurated during the reign of Emperor Haileselassie I, in 1969 and has produced 1,149,000 quintals of sugar last year in its 45-year history. The factory has over 10,000 permanent employees and hundreds of seasonal employees who work on its vast sugarcane farm that covers 12,500 hectares of land. The country’s demand has recently jumped to almost 5 million quintals per annum from 2.8 million from the state owned factories of Wonji, Metehara and Fincha, according to the Ethiopian Sugar Corporation.
Freight’s wait at Djibouti Port reduced by new rules but private sector asks for more balanced competition
.
. Logistics and transportation have trended differently than other economic sectors in Ethiopia, despite the fact that the government has introduced several adaptations to enhance the sector. Logistics and transportation, which mainly engage in import and export services, are vital to the nation’s economic development. However, despite the attempts by the government to keep freight moving, it still lags behind other sectors in terms of results. Logistics and transportation of goods imported and exported into the country costs more than other countries. To alleviate this problem the government has attempted several strategies.
.
Because Ethiopia is landlocked, logistics and transportation have to be very efficient, especially at the ports of entry, in order to minimize costs.
.
Constructing dry ports is one of the things the government has done to alleviate some of the problems. It has also encouraged the private sector to import modern trucks and introduced the multimodal transportation scheme. A proclamation was also passed addressing the demurrage process. Additionally, private transporters are now required to adhere to associations that now have complete responsibility for transporting freight to and from the country.
.
The new system was introduce late last fiscal year and 47 associations engaged in cross border transportation and 14 that work in cross-country transportation have been established. Additionally12 companies are operating under the cross border scheme, according to Abelneh Agidew, public relations head of the Federal Transportation Authority.
.
The idea behind the new regulation is to control the activity of trucks crossing the border. By modernizing transportation and logistics, the government hopes it can improve its results and make the system more cost effective.
.
“We introduced this system with the goal of making the improvements we felt needed to be made based on the studies conducted,” Abelneh Added.
.
The public relations head and other officials close to the issue say that previously brokers and other traders who worked in the informal economy ‘gamed the system’ while truck owners had little control over how they conducted business.
.
He said, since the new way of doing business was fully introduced in May this year they have seen significant improvements. There are also several other changes that have come about in the attempt to improve cargo transportation. The first one is that truck owners that are members of associations must now pay a commission to the associations for cargo they carry from the port.
.
The transport market had been controlled by illegal market actors and brokers but now it is being completely led by the associations formed under the new scheme, explains Abelneh.
.
“If anyone sees the past year’s performance, the amount of demurrage charges on cargo is almost zero. This is the result of the new system which has accelerated cargo transportation from the port,” the public relation head explained.
.
He said that previously trucks took nine days on average to travel back and forth from the Djibouti port, but that has declined to about four days since the new scheme was fully applied.
.
He argued that the current associations are not only engaged in collecting commissions from the business, but they also bring businesses for their members.” Furthermore truck owners now are able to obtain more information about their trucks whereabouts and the business that they are undertaking, which was previously not the case,” he added.
.
“Currently around 250 cargo trucks provide transportation between Ethiopia and Djibouti; previously trucks would wait at the port for as much as three weeks which was very expensive,” the authority official said.
.
He said that stakeholders like the Ministry of Transport, Ministry of Trade and others evaluated the changes by visiting Djibouti.
.
Before the transport associations were restructured, they were considered weak and they would not take the responsibility of finding a market to support the truck owners.
.
Under the new arrangement the associations are expected to be staffed with qualified employees based on the standards set by the authority.
Even though the authority stated that the new system has registered significant changes, the private sector involved in the transportation business claims there is a problem with the new ways.
.
Although the number of days for transporting goods round trip between Djibouti and Ethiopia has been reduced to around four days, often the trucks are ‘deadheading’-returning back to the port without freight which reduces the profit they can make.
.
“There are several costs, including fuel and tyres (tires) that still exists when you return back to the port with an empty truck,” some owners of transportation companies said. “We are driving 925km to the port of Djibouti from central Ethiopia without cargo or empty containers, which is very damaging to the nation’s economy,” the same transporters said.
.
“Previously we would at least return with empty containers, even though we would have to wait for days in the country. Under the current rules we have to return to Djibouti without waiting for containers to transport back,” they complained.
.
Some transporters however agree that the new system has brought about some improvements.
.
They also want more clarification about the process of establishing associations. According to the new system trucks are classified in different levels. Every level has unique grades based on their loading capacity and manufacturing date or type of service provided.
.
For instance the associations included on level one are divided into two different grades; the manufacturing date of a truck included on level 1 (A) is from 0-10 years and has a capacity to load from 30-40 tons of cargo and level 1 (B) has a similar manufacturing date but the loading capacity is from 20-29.9 tons of cargo. An association organized under level 1 should have 125 trucks for both A and B grades. The associations included on level 1 must have four offices including the head office at the center and a branch at the port of Djibouti.
Level 2 is for trucks from the age of 10.1-20 years and is classified in two grades with a loading capacity similar to level one, but the association that is included under this category must have at least 100 trucks, and at least three offices including the head office and a branch at the port.
.
Level 3 associations are made up of trucks that have a manufacturing date of over 20 years and they have two offices and 75 trucks in each association, and level 4 is classified for only companies that have over 50 trucks. The other level included in this system is level 5 or a specialized category, which is used for transporting machines, construction materials, or very large cargo.
.
With the current status a businessperson involved in the transport sector can own trucks of different ages, because it would be difficult for the business actors to be involved in different associations based on different levels. To eliminate this challenge the authority has allowed the truck owners to be in just one association, based on the majority number of the trucks that they own. For example business people who have ten trucks, a majority of which are between the ages of 10.1-20 years and few new brands will be included in the association organized on level 2, while the businessperson who has a majority of brand new trucks and few older trucks would be a member of level 1.
.
“It is not clear what happens under the rules when trucks that are currently considered new become older. The government has to clarify the process,” the transporters said. “Even the way of organizing the associations has a problem, because one association might not have trucks with different loading capacities,” the transporter said.
.
The Transport Authority argued that it implemented the system after several discussions with stake holders and transporters.
Transporters also claimed that the multimodal system still has room for improvement. They said that Ethiopian Shipping and Logistics Services Enterprise (ESLSE) has to work efficiently. “Even though transporting cargo from the port of Djibouti to Ethiopia has been reduced to about four days now, the container demurrage issue still remains. This is because containers still remain in Ethiopia for a long time and that mean demurrage fees which are paid in hard currency,” the transporters noted.
.
They also stated that even thought they expect to sign an agreement with the enterprise to pick up cargo quickly based on the demurrage law; it is difficult to get approval or a signature from the enterprise. “For this reason it is hard to get a demurrage charge from the enterprise,” they complained.
.
But the transportation actors agree that the new system has reduced port costs and storage fees.
.
The latest World Bank report on Ethiopian international trade stated that high fixed costs are driven by a mix of factors ranging from infrastructure and trade logistics (where individual companies may need their own fleet to transport their inputs and outputs) to low regulator quality to constraints on the credit market (where new market entrants of smaller sizes have little chance of receiving finance from private banks).
.
It stated that smaller firms suffer most in a high fixed cost environment, and the few firms that are able to overcome high costs of entry are then those that are large enough to stay in business for a longer period. “It is no surprise that this produces an environment where incumbent firms have relatively high survival probabilities beyond the second year,” the report stated.
.
In fact, high rates of protection on outputs combined with high transport costs change the profit incentives for producers by influencing which sector to invest in and which markets to serve.
.
The report recognized that Ethiopia is currently undertaking some crucial investments to improve trade logistics in the medium-term.
With several new public investments in roads, a rehabilitated rail link between Addis Ababa and the rapidly modernizing container port of Djibouti, the expansion of the dry port in Mojo, expanded coverage of the multi-modal transport system and coordinated reforms between customs and shipping-related agencies, trading is expected to be improved according to the report.
.
Currently the sole Multi modal operator, Ethiopian Shipping and Logistics Services Enterprise, a public enterprise, also plays a role transporting cargo to and from sea ports. The enterprise currently operates 60 freight trucks and has ordered an additional 115 new trucks with 60 tons of hauling capacity. These Renault trucks should help the logistics service. Based on the latest government decision the enterprise will also get another public freight transporter. Comet Transport which has about 205 trucks, and has also ordered 100 Renault trucks with the logistic enterprise and will merge with the state giant shipping enterprise, which is considered to be one of the biggest shipping firms in the continent.
.
The new trucks purchase by the enterprise and Comet was signed with a Dubai based supplier Van Vliet XL. Some transporters consider this to be unfair competition. “The government needs to consider ways for private truck companies to be more involved,” they claimed.
.
“We will be forced out of business when the state enterprises boost their capacity,” the transporters, some of which are also engaged in freight forwarding and transit services, said.
.
A government official who requested anonymity stated that the government is responsible for expanding the public enterprises with the goal of improving logistics service to meet the growing demand and improve the nation’s development.
.
“The private sector does not have that much capacity to invest as the government does,” the official said.
.
“It is a monopolistic market that is fully owned by ESLSE and that is highly damaging the private sector. They can buy the trucks, but it is difficult for the private sector to get finance to purchase trucks like state enterprises,” the private actors complained. “We are expected to privatize state enterprises, but the government is actually excluding the private actors,” they added.
.
Market competition is crucial not only for efficiently transporting cargo from the port but returning back empty containers to the port, the transporters suggested. According to experts, containers have stayed at the Ethiopian dry port for less time, 71 days, whereas previously it would take several months. Still private companies say they could do even better if they were allowed to fairly compete.
As you probably know, from sucking down cans of Coke and masticating on candy, sugar — glucose, fructose, sucrose, dextrose — is an excellent source of energy. Biologically speaking, sugar molecules are energy-dense, easy to transport, and cheap to digest. There is a reason why almost every living cell on Earth generates its energy (ATP) from glucose. Now, researchers at Virginia Tech have successfully created a sugar-powered fuel cell that has an energy storage density of 596 amp-hours per kilo — or “one order of magnitude” higher than lithium-ion batteries. This fuel cell is refillable with a solution of maltodextrin, and its only by products are electricity and water. The chief researcher, Y.H. Percival Zhang, says the tech could be commercialized in as soon as three years.
Now, it’s not exactly news that sugar is an excellent energy source. As a culture we’ve probably known about it since before we were Homo sapiens. The problem is, unless you’re a living organism or some kind of incendiary device, extracting that energy is difficult. In nature, an enzymatic pathway is used — a production line of tailor-made enzymes that meddle with the glucose molecules until they become ATP. Because it’s easy enough to produce enzymes in large quantities, researchers have tried to create fuel cells that use artificial “metabolism” to break down glucose into electricity (biobatteries), but it has historically proven very hard to find the right pathway for maximum efficiency and to keep the enzymes in the right place over a long period of time.
Now, however, Zhang and friends at Virginia Tech appear to have built a high-density fuel cell that uses an enzymatic pathway to create a lot of electricity from glucose. There doesn’t seem to be much information on how stable this biobattery is over multiple refills, but if Zhang thinks it could be commercialized in three years, that’s a very good sign. Curiously, the research paper says that the enzymes are non-immobilized — meaning Zhang found a certain battery chemistry that doesn’t require the enzymes to be kept in place… or, alternatively, that it will only work for a very short time.
The Virginia Tech biobattery uses 13 enzymes, plus air (it’s an air-breathing biobattery), to produce nearly 24 electrons from a single glucose unit. This equates to a power output of 0.8 mW/cm, current density of 6 mA/cm, and energy storage density of 596 Ah/kg. This last figure is impressive, at roughly 10 times the energy density of the lithium-ion batteries in your mobile devices. [Research paper: doi:10.1038/ncomms4026 - "A high-energy-density sugar biobattery based on a synthetic enzymatic pathway"]
If Zhang’s biobatteries pan out, you might soon be recharging your smartphone by pouring in a solution of 15% maltodextrin. That battery would not only be very safe (it produces water and electricity), but very cheap to run and very green. This seems to fit in perfectly with Zhang’s homepage, which talks about how his main goals in life are replacing crude oil with sugar, and feeding the world.
The other area in which biobatteries might be useful is powering implanted devices, such as pacemakers — or, in the future, subcutaneous sensors and computers. Such a biobattery could feed on the glucose in your bloodstream, providing an endless supply of safe electricity for the myriad implants that futuristic technocrats will surely have.
“Only when the last tree has died and the last river has been poisoned and the last fish been caught will we realise that we cannot eat paper” Wolf Robe
VENTURES AFRICA – When I was a kid, my grandfather always told me, “Always know your reality”. So my question around this train of thought is, ‘by then should you grasp what this reality is’? This would be critical, because if you know your reality and as soon as you do, a person of action will act accordingly.
Africa has experienced independence from colonialism for more than 60 years now. Only South Africa, Zimbabwe and Namibia enjoy infancy democracy. Their efforts towards economic prosperity can also be regarded as being in their infancy stages. Either that or we just don’t know what we are doing. Africa has the resources, especially land with some of the lowest agricultural production intensities considering we have 60 percent (uncultivated) of the world’s arable land.
Let me take the argument further. Post the Korean War, South Korea was literally one of the world’s poorest countries – with only $64 per capita income. By the 1960s it lagged behind the Democratic Republic of the Congo (DRC). Like Africa, South Korea also received aid from the US. But the difference? In less than 30 years, South Korea is a model for economic development globally, at an unprecedented level. For this period, South Korea received the same aid – $60 billion and for the same period $68 billion for Africa – as Africa and still receives the similar inflow.
Maybe I like arguing? Let us look deeper! South Korea has a population of what stands at approximately 50 million people. South Africa, who for the last 20 years has also enjoyed the same levels of aid, also has the same population size, give or take. South Africa though has minerals and natural resource that South Korea lacks, yet South Africa after a similar period, with similar aid funding patterns at every level cannot compete with South Korea on a performance barometer.
Africa as a continent should thus outperform South Korea, not only as the benchmark but also as a continent that has more at its disposal to become a continent with the largest middle-class, for one.
Now that we have the foundation out of the way, why is it that Africa after so many years of independence and 60 percent of the world’s arable land, holds 75 percent employment in agriculture (mostly female) and yet none of these woman own the land even though they physically produce through labour, more that 80 percent of agricultural products in Africa (WEF 2013, Cape Town).
Sometimes the delicate issues need to be dealt with. Is this the result of incompetence, political positioning (because poverty and hunger are political tools or suppressive mechanisms), is it lack of education at and within the echelons of the political corridors, can it be that African leaders are more in love the idea of prosperity for their people and what has really changed across the face of Africa, that African leaders themselves have brought to the table to make Africa an economic force? For now we won’t answer.
Some things Africa is considerably rich in, is; History, Wars, Political rhetoric (Meme), and Arable land – to feed ourselves.
Yesterday we dealt with a primary structural cause of unemployment in Africa, that being education. To this extent, Africa also has the lowest levels of advanced education programmes for agriculture and associated industries. Today, if you can start tech company with solid yields for investors of VC’s and angel funders, you are more likely to get equity investment than if you wanted to start a sustainable venture in agriculture that has long term yields and “feeds” the real needs to Africa, especially bringing down the cost of food to the African consumer. But our business executives in Africa and abroad, and certainly not our politicians have even scratched the surface when it comes to dealing with the issue.
We’ll take it a notch deeper. Do you know, the United State alone grocery stores discard $10-15 billion in food close to its sell-by date or “damaged”. Significantly, sell-by dates are a myth serving merely as a guide and measure optimal quality rather than food safety.
“In July 2013 the head of the United Nations Food and Agriculture Organization (FAO), Graziano da Silva, told participants at the Global Green Growth Forum (3GF) in Copenhagen that every year an estimated one-third of all food produced for human consumption is lost or wasted – around 1.3 billion tons. This costs around $750 billion per annum”. Astronomical given that per household it costs us more to throw away food than to take it with us the next morning and give it to the little kids standing at the robot! The values we have! Here is the next fragment to this argument – should such wastage of edible food be use to feed the poor, the extent and results of donor funding would be more significant! So much so, the United Kingdom is stopping aid to South Africa in 2015.
We are going to start rounding up our argument bearing in mind some reliable solutions we have at hand. However, these solutions we will not share. It does seem this will be pointless, given the amount of money spent of drafting legislation and policies to address – still no headway.
Striking at the heart now; the number of youth in Africa will double by 2045. Between 2000 and 2008, Africa’s working age population (15-64 years) grew from 443 million to 550 million; an increase of 25 percent – Africa Economic Outlook 2012. In Africa, there are at least 700 – 800 million unemployed people in Africa. Of the 600+ million working, 65 percent are in the agriculture sector – the most undeveloped across the continent.
Here is the fundamental reason why Africa has and is failing in agriculture – The World Bank is the single largest donor for improving Sub-Saharan Africa’s agricultural sector, assistance that is key to reducing hunger, poverty, and environmental degradation. So governments are not the major investors, proving my above argument, support by our findings that investors least consider the people with the skills – woman – who are already creating most of the value in the continents agriculture sector. – Surely, these very women can also be taught the inner dealings of managing a farm.
Finally, for how long while receiving international aid have we known “our” reality? Knowledge is power – it just depends for better or worse. Zimbabwe is a prime example that even education is no guarantee of leadership success, because it succumbs to the attraction of power. More than ever, no matter the leader, Africa’s history under its own leadership continues repeating itself – and the consequences become calamitous.
The DRC boasts 75 million to 80 million hectares of arable land that could feed a billion people, according to Thomas Kembola Kejuni, a former secretary general at the ministry of agriculture – only 10 percent of this potential is tilled.
For the last ten years, foreigners have been swooping up the arable land in Africa either through ownership or leasing negotiations. The most significant consistency in Africa has not been colonialism – its hunger. History and time, do not lie!
Chinese Company Decides to Build Textile Factory with Over 500 Million USD
.
A Chinese delegation disclosed here that it has finalized pre-investment assessment to build a huge textile factory with over 500 million USD.
President Mulatu Teshome held talks on September 2, 2014 with a four-person Chinese business delegation led by Kong Xiangjun, Board Chairman of Giangsu Lianfa Textile Company Limited.
During the discussion with the President, Xiangjun said his company decided to invest in Ethiopia, specifically Addis Ababa, after making similar pre-investment assessments in Kenya, Uganda, and Tanzania.
The textile industry will create more than 20,000 jobs when it goes operational.
President Mulatu on his part said the Ethiopian Government will provide all the necessary support for the company which has decided to engage in textile industry, which is the priority of the government.
He added that cheap labor and electricity, vast arable land as well as various quota and duty free opportunities to the U.S and EU markets would make the company profitable.
H&M and Swedfund Initiate Cooperation in Ethiopia’s Textile Industry
.
H&M and Swedfund have come together in a unique cooperation in Ethiopia. The aim is to contribute to the development of a responsible Ethiopian textile industry characterized by both high social and environmental standards. The partnership will start this autumn.
The first steps of this collaboration were taken after talks between Swedfund and H&M. The plans were further developed during a joint trip to Ethiopia in May this year when they were examining factories together.
– We see the cooperation as an opportunity to get involved in Ethiopia’s growing textile industry at an early stage and to contribute to more jobs. We have for many years worked in existing manufacturing countries to improve working conditions and the environment. This experience is included with the establishment of cooperation with Ethiopian suppliers, says Karl-Johan Persson, CEO at H&M.
Building a strong domestic industry is crucial for job creation in Ethiopia. Investing in production ensures that added value from the textile industry will to a larger extent remain in the country. In this cooperation H&M will contribute with expertise and knowledge of the textile market as well as purchase of products from suppliers that Swedfund will invest in. Swedfund will provide local market expertise and expansion investments in suppliers to H&M. The cooperation will also involve both parties setting standards for sustainable production and following up indicators such as water use and wages.
– Through this unique partnership with H&M, our goal is to contribute to developing the textile industry in Ethiopia, thus creating jobs with good working conditions that lift people out of poverty, especially women, says Anna Ryott, CEO of Swedfund.
Through Swedfund’s role as investor, H&M:s purchase of products and each parties respective knowledge and expertise, a strong and viable textile industry can be developed that will be able to operate and thrive with financial strength and on a sustainable basis.
About Swedfund
Swedfund, owned by the Swedish state, provides risk capital, expertise and financial support for investments in the emerging markets of Africa, Asia, Latin America and Eastern Europe. Our mission is poverty reduction through sustainable business, contributing to economic and environmental development as well as a positive impact to society. Since 1979 Swedfund has been engaged as an active, responsible and long-term investor in more than 230 companies in our countries of operation. www.swedfund.se
AHIF places spotlight on hotel shortages in Addis Ababa, Ethiopia
.
The increasing rate of inbound tourist arrivals and planned events/conferences is widening an already huge gap between demand for international-standard hotels and supply of accommodation in Addis Ababa, Ethiopia’s capital.
A search on TripAdvisor reveals just two international-class, five star hotels in the city, the Sheraton and the Radisson Blu – and anecdotes about delegates attending meetings at the Africa Union’s headquarters having to travel up to 60 miles to find a bed for the night are not unknown.
According to research carried out by the Awash International Bank, the projected unsatisfied demand for hotel nights in Ethiopia in 2015 will be 1.3 million, rising to over three million by 2020 if new hotels are not built.
The accommodation shortage will be high on the agenda at The Africa Hotel Investment Forum, Africa’s top event for hotel investors, taking place at the end of September in Addis Ababa.
Its organiser, Matthew Weihs, managing director, Bench Events, explained: “The country’s overall growth and the continued progress in the tourism industry is forecast by the World Travel & Tourism Council to be 4.8 per cent per annum over the coming decade.
“Increasing the supply of high-quality, top-end hotel accommodation through hotel construction is necessary for improved competitiveness and the economic success of the sector.”
Currently, Ethiopia has only six internationally-branded hotels comprising 990 rooms, in the development pipeline, compared to 40 hotels (6,614 rooms) in Nigeria and 29 hotels (4,828 rooms) in Morocco.
“We’d be interested to look at more in Ethiopia,” said Alex Kyriakidis, president, Middle East & Africa, Marriott International, who recently signed an agreement to manage two properties in Addis Ababa owned by Sunshine Business.
“However, choosing the right local partner is critical, because it gives an international brand the weight of developed market experience with local know-how on the ground.
“The partnership decision is more than just market experience though.
“It has to be a fit of business cultures and values, like-minded industry leadership thinking and – in the service industry – a similar commitment to flawless service and brand standards.
“It’s been Marriott International’s business model since the brand first launched in North Africa several years ago and it’s served both the company and the countries well from a job creation, training and capital investment perspective.”
Until recently Ethiopia was not considered to be very attractive to investors due to the relatively low number of tourists and planned events and conferences.
However, this is changing as Ethiopia is growing at more than seven per cent per year and is forecast to be the third largest economy in Africa by 2015.
Addis Ababa now has the fourth largest international diplomatic community in the world, partly due to the fact that it is the seat of the Africa Union, which was launched in 2002.
Also, according to The African Development Bank, Africa’s middle class is expected to grow from 355 million to 1.1 billion in the next 50 years and these people will have an appetite to travel.
Africa Hotel Investment Forum will take place from September 29th-October 1st at the Sheraton Addis Ababa, Ethiopia.
The Lesser Of Two Goods: Ethiopian Flowers Or Food?
.
By Anna B. Wroblewska
Ethiopian flower farmer
Ethiopian flowers are likely to become a hit in the international auction market bolstered by foreign investment such as KKR & Co., an American private equity fund, maiden venture into Africa through Ethiopia’s sweetheart rose producer Afriflora.
But where does this leave the country in terms of food security? This question becomes poignant when considering that 40 percent of the nation’s 80 million people are undernourished, according to an estimate by the International Food Policy Research Institute.
The horn of Africa Nation is the second-largest producer of cut flowers in Africa after Kenya, with 2012 exports reaching $168 million in value. Total exports from Ethiopia total about $3 billion annually, and coffee is its most prominent commodity.
The country’s flower-growers could, by many measures, be considered an example of true commercial success with a major potential benefit of creating much needed jobs. For example Afriflora, a Fairtrade International certified company, employs over 8,700 people.
“Normally one hectare of land merely supports one household consisting of five members. But when this land is used for the production of flowers, it can employ as much as fifty people,” says Mulugeta Ayalew, a consultant and researcher in Addis Ababa.
Jobs are fantastic, but such deployment of land for export agriculture rather than food might give one pause.
Africa as a whole tends to be very reliant on food imports; according to Tinashe Kapuya, manager of international trade and investment intelligence for South Africa’s Agricultural Business Chamber, “Africa’s food import bill is in the excess of $40 billion, which translates to at least 47 percent of the continent’s total food consumption.”
“A major share of the food bill is basic staples, which can easily be produced in Africa.”
There are two major factors driving a lack of local food production. One is policy-related.
International trade and policy
In a broad conversation about agricultural investment, Kapuya stresses that the main drivers of underutilization include population growth, low productivity, policy distortions, weak infrastructure, and poor institutions.
Indeed, he stresses that a lack of investment in staple crops is a reflection of government interventions that make these activities less profitable.
He says, “Export bans, price controls, and input subsidies for smallholder farmers often lead to market distortions that affect farm-level profitability.”
Another factor is foreign agricultural policies, namely in the European Union and United States, which effectively reduce global food prices and make it difficult for African farmers to compete. In this regard, it’s hardly surprising that flower farmers prefer to invest in this high-value commodity, rather than cheaper staple crops.
So could the job growth stimulated by export-driven investments make food security a non-issue? The answer is not yet clear, and it surely depends on some combination of wages, job stability, and the growth of the sector.
It could also hinge on monetary policy: The World Bank recently encouraged Ethiopia to devalue its currency, the birr, in order to strengthen exports. Of course, the downside of a devaluation would be price increases on imports. With relatively little local production of foodstuffs, one has to wonder how the average Ethiopian will manage.
The other potential hazard is a lack of investment in more competitive activities, which command higher pricing from differentiation and value-added processing. Despite being the second largest country in Sub-Saharan Africa, the World Bank notes that “Ethiopia has the lowest ratio of merchandise exports to GDP in the world.”
Such investments could significantly boost Ethiopia’s economic growth, according to a World Bank report. If successful, incomes could rise further and provide some measure of insulation from volatile commodity prices. Perhaps then the issue of where Ethiopia’s food is produced would become less pressing.
Foreign Investment
Further concerns about the floriculture industry lie in the pervasiveness of foreign, rather than local, investment in Ethiopia. Indian companies are, according to the Oakland Institute, the biggest investors in Ethiopian agriculture, and China’s Export Import Bank provides financing backed by sales of sesame to China (Ethiopia is the fourth-largest producer in the world).
So there’s money on the table, but is it the right kind? And who is responsible for ensuring that it is?
Ayalew emphasizes that these investments can provide major benefits for local landholders. “If you take flower farms which are closer to established village centers and main transport lines,” he says, “The investors have acquired them… on the basis of voluntary contractual leases. In these farms, the landholders are earning not only rents but also an opportunity to be employed.”
To ensure that interests are aligned between commercial investors and domestic policy goals, Kapuya endorses the use of private public partnerships (PPPs). “The advantage of PPPs is that they allow for a balanced approach which caters for both investors, and the government which is acting in the public interest.”
However, there are a lot of commentaries to be found criticizing foreign-direct investment programs’ lack of benefits for the people — these include issues of governmental “land grabs” and the disenfranchisement of those such as pastoral farmers. In 2012, Human Right Watch issued a report on forced relocations of villages in Ethiopia that condemned the program’s abuses and lack of compensatory resources for those affected.
On this issue, Kapuya notes that the main failures in farm investment and acquisitions have arisen from a lack of governance. In other words, governments must take responsibility for protecting their citizenry.
However, ensuring that governments do just that is far from a simple matter. Especially where potentially significant revenues arise, the balance between public policy and self-enrichment can lead to some powerful conflicts of interest.
Defining success is never easy, but if Ethiopia can encourage the right stuff without falling victim to the wrong stuff, there could be a bright future ahead. The main risks — food security, commodity price exposures, and disenfranchisement — could all conceivably be avoided in the future, and the potential is certainly there.
It’s a matter of having the will and the fortitude to ensure that it does.
It is disclosed that Ethiopia has planned to launch medium research satellite within the next five years.The Entoto Observatory and Research Center (EORC) signed a Memorandum of Understanding on Sunday with Finland based Space Technology and Science Group (STSG) to this effect.
The main objective of the satellite development agreement is to develop, build and launch 20-25 Kg medium research satellite within the next five years.
Signing the agreement, Director of EORC, Dr. Solomon Belay said Ethiopia will benefit a lot by owning Satellite.
STSG headquartered in Espoo, Finland, is the first Pan-Central European, Nordic and Baltics technologically integrated industry and research group offering end to end design, manufacture, testing, launch and operation of highly capable small and medium advanced satellites.
CEO of STSG Sali Ahmed said his institution is ready to do its level best to develop space science in Ethiopia using its matured experience.
Based on the agreement, after the evolution of the first project both institutions will further upgrade the agreement into large scale satellite technology development.
According to Board Chair of EORC Tefera Walwa, Ethiopia is working hard paying attention to Space Science.
Since its establishment, the EORC has been working a lot and now Ethiopia is becoming known in the world of Space Science, he added.
American, Chinese and European Researchers are showing interest to work in the area with Ethiopia, Tefera added.
EORC has been established in 2013 by 32 Public universities, Ethiopian Space Science Society and one private University as an independent and autonomous institute, with the objective of promoting and developing earth observation and space science and Technology in Ethiopia.
In a bid to achieve its objectives, EORC works with STSG to work together in the area of space and science technology in Ethiopia.
Turkish Company to Supply Textile Factories Through Bonded Warehouse
.
The scheme enables foreign countries to test the water in Ethiopia, before deciding whether or not to invest
Established in 1999 the Textile Industry Development Institute (TIDI) is aimed the supporting the sector towards increased performance.
.
A Turkish chemicals manufacturer, Eksoy Chemical Industries Ltd, is to become the second supplier of chemicals and dyestuff to the textile factories in Ethiopia through a bonded warehouse Scheme.
This scheme is available for chemical manufacturers outside Ethiopia. They can have their products in a bonded warehouse, from where the customs clearing will take place as the products are sold. This is supposed to enable them to test the domestic market for two to five years, during which time they will be expected to open a factory in Ethiopia or leave. The manufacturer’s proposal is evaluated by the TIDI, which makes a recommendation to the Ministry of Industry (MoI). The Ministry of Industry gives approval for companies to be involved in the bonded warehouse transaction. They get their trade and investment licenses and customs certificate after that, according to Yared Mesfin, marketing director at the Ethiopian Textile Industry Development Institute (TIDI).
The first was Bezema Dyestuffs & Chemical, a Swiss based company, which has been supplying various chemical and dyestuffs to the local textile manufacturers through its warehouse in the Jemo area and its outlet in Lafto since September 2012.
Eksoy has finalised all the requirements to be licensed by the Ethiopian Revenue & Customs Authority (ERCA), which is basically the last requirement to begin the import and distribution of all sorts of chemicals and dyestuffs necessary in the production process of textiles.
It has renovated a warehouse leased around Kality, with a total area of 1,000sqm, in accordance with the specifications set by the ERCA, which has a stake in the chemicals and dyestuffs to be stored in the warehouses.
Based on the scheme, the companies that have already secured a permit from the Ethiopian Investment Commission (EIC) to undertake the trading will import and store the products in bonded warehouses under the supervision of the ERCA. The stored items will be handled by Eksoy and the customs authority, and both will follow the transaction of the products.
Eksoy had to make adjustments to its warehouse based on comments from experts at ERCA, Hadgu Araya, a representative of the Company, told Fortune.
“We are in the final stage and will secure the customs certificate within a week,” he said.
Left with the last go-ahead from the ERCA, the Company has made arrangements for the importation of the first batch of its chemicals and dyestuffs to arrive in two weeks time, according to Araya. The Company has secured its license with an initial capital of one million Birr and is set to hold a stock of chemicals worth eight to 10 million Br, depending on the demand of the market, he says. The Company could open the factory in three years’ time.
“The scheme provides the manufacturers with the opportunity to test the market and build confidence,” Yared said. “Then they are required to establish a manufacturing company within two to five years.”
Based on this obligation, Bezema has already submitted its request for land to the city administration to establish a dilution plant in Addis Abeba, according to Yared.
Bezema has supplied a total of 217tns of different chemicals and dyestuffs for 21 textile factories through the bonded warehouse arrangement in 2013/14 fiscal year, according to the annual performance report of the manufacturing industry sector.
Yabelo-Mega Road connecting Ethiopia and Kenya is open for traffic
.
The Yabelo-Mega road that connects Ethiopia and Kenya has been inaugurated and is open for traffic.
Speaking at the inauguration, Ethiopian Minister for Transport, Workneh Gebeyhu, said the road is one of several many projects underway in the country aimed at linking Ethiopia with its neighbors through infrastructure.
President of the Oromia Regional State, Muktar Kedir, on his part said the road plays a critical role in connecting different woredas of the Borena Zone, enhancing provision of health, education and other public services to the local communities.
Ethiopian Roads Authority (ERA) disclosed the construction of the road lasted for over three years consuming 740 million Birr in expenses. The project was contracted by a Chinese company.
Sub-Saharan countries annually lose up to 23 percent of their total harvest due to poor post-harvest conditions, a research conducted by Rockefeller Foundation revealed.
The report released at the African Green Revolution Forum (AGRF) on September 3, 2014 here in Addis Ababa stated that poor storage facilities and pests as the three major causes of the huge loss.
According to the experts who presented the study, Africa needs to improve its agricultural facilities, market chains and create awareness among farmers about the adverse impacts of post-harvest loss.
After the session, Dr. Dieudonne Baribusta, a researcher at the University of Purdue, told ENA that Ethiopia has gone far in achieving a New Partnership for Africa’s Development (NEPAD’s) program of Africa Agriculture Development (CAADP) to reduce post-harvest loss by half; and it would achieve this fully very soon.
Awash Bank Takes Leap Forwards with New Advanced System
.
The first of its kind in Ethiopia, the technology will enable the bank to provide numerous new services
.
Awash International Bank (AIB) will launch an advanced CORE banking system to enable it to introduce new services in September 2014.
.
The system, BankFusion Universal Banking (BFUB), is being brought to AIB by Misys International Financial Systems Ltd – a UK based software development company – for 200 million Br. Misys boasts on its website that the front-to-back integration achieved by its universal banking solution allowed “for the accelerated launch of financial products from design straight through to distribution – across any channel”, slashing time-to-market and achieving increased profitability by decreasing the cost-to-income ratio.
“Unlocking operational data from the core, FusionBanking Essence turns data into actionable intelligence – helping you identify new business opportunities,” it says.
The CORE banking currently in use by the bank, Bankmaster, is a centralised system that handles all retail banking operations, such as savings, time deposits, loans, demand deposits, subsidiary ledger and general ledger. This application was also supplied by Misys, which has branches in the United Arab Emirates (UAE), Germany, Amsterdam and India, with customers in 130 countries.
Misys has sent its own people here to install the system, which it says could remain in operation for 10 years without failing. One of the strong sides of the new system is that data can be smoothly transferred from the existing setup, according to an official of the bank, without the bank having to interrupt the services it is giving to its clients.
Misys took the responsibility for any risk that might be caused by the system during installation,” said the official, adding that most vendors did not take such measures.
The new system is being installed at a new three-room data centre in the basement of the Awash headquarters with one room each for, servers, network operation and power unite. The data centre is already housing servers for production, backup, test and disaster recovery, all newly supplied by Misys itself as part of the 200 million Br deal.
Once set up, Awash will be able to offer new services in internet banking, mobile banking, agent banking, portal transaction and point of sale, according to bank officials. The new system will minimise the cost of building new products and will also make processes easier, said another official close to the issue.
“It will increase the productivity and competiveness of the bank,” he said.
Awash expects all tests for the new system to be completed and to begin service by the end of September 2014. The system has the capacity to give services for the coming 10 years without any trouble.
AIB was established in 1991 with 486 founding shareholders and a paid-up capital of 24.2 million birr. Licensed on November 10, 1994, it started banking operations on February 13, 1995. It now has 3000 shareholders and a paid-up capital of 1.2 billion Br. The bank and its sister company, Awash Insurance, have been headquartered in Awash Towers – a twin-towered building that cost 217 million Br – since the buildings inauguration in 2010.
Awash deployed 100 ATMs and 400 Point of Sale machines in Addis Abeba during the fourth quarter of the last fiscal year. These are on top of those it jointly uses with other private banks.
Most roads that were temporarily closed for traffic are re-opening as the Addis Ababa Light Rail Project makes remarkable progress.
The Ethiopian Railways Corporations told Fana Broadcasting Corporate (FBC) that laying rails is taking place as per the schedule.
The Corporation added the roads from Abune Petros to Merkato and St. George to Afincho Ber will open for traffic once the rainy season ends.
The AALRP is 73 per cent complete, with installation of electric lines and construction of boarding stations also well underway.
Dejene Tefera, Corporate Communication Services Head, said bid will be issued to hire an able international company to manage the administrative affairs of the light rail system.
He added the first tram which was recently manufactured in China will make its maiden appearance in Addis Ababa this September.
LONDON (Alliance News) – Nyota Minerals Ltd Wednesday said it has recently submitted renewal applications for both of its Northern Block licences, and added that technical reports for the license and field work for the year just ended are being prepared.
In addition, the company said it is continuing discussions with the Ethiopian Ministry for Mines over the potential for its Towchester subsidiary to mine and treat the alluvial river gravel deposits adjacent to the Abay River, or Blue Nile, that bisects the Northern Block licenses.
According to Nyota, the gravels are known to be gold-bearing and are being hand dug and panned for gold by local people at a number of localities within the licenses.
“The areas will, within a few years, be flooded by the Grand Ethiopian Renaissance Dam; a new hydroelectric power dam being constructed on the Blue Nile. Alluvial gold deposits in Ethiopia are usually reserved for exploitation by artisanal miners. However, as the deposits will be flooded, large scale mechanized mining to maximize potential gold recovery is receiving favorable consideration,” Nyota said in a statement.
“The flooding caused by the dam will not affect the highest priority hard rock gold exploration targets in the Northern Block licenses,” the company added.
Nyota shares were Wednesday untraded at 0.27 pence.
U.S. will continue strengthened cooperation with Ethiopia
U.S. Ambassador to Ethiopia, Ambassador Patricia Haslach said efforts being made to enhance investment ties between the U.S. and Ethiopia are bearing fruit.
In an exclusive interview Ambassador Haslach gave to Fana Broadcasting Corporate (FBC), she stated that in addition to cooperation of the two countries in investment endeavors, the U.S. is providing assistance for Ethiopia’s Growth and Transformation Plan (GTP), especially in areas of health care, agriculture and education.
Trade between the U.S. and Ethiopia reached USD 1.1 billion in 2013, although the trade balance favors the U.S. Haslach said talks and lobbying are in progress in the U.S. to extend the Africa Growth Opportunities Act (AGOA) which can potentially narrow the trade imbalance.
Accordingly, various tasks aimed at finding markets for Ethiopian products in the U.S. are taking place. Haslach added major U.S. investment firms and multi-national companies are being made aware of all the investment opportunities in Ethiopia, intended at bolstering their presence here. Efforts to bring major U.S. companies to Ethiopia have been successful.
The special focus the Ethiopian government has dedicated to the sector will prove important in transforming Ethiopia into an investment hub, Haslach said. In this regard, Ethiopia’s remarkable achievements through its extensive investment on educating its young, manifested in the tens of thousands of university graduates, is crucial to attract global investors. The ambassador said, this will open a new chapter and boost investment and trade relations between the two countries.
Ambassador Haslach expressed her Government’s commitment to continue its support for the implementation of Ethiopia’s GTP. She added, Ethiopia’s successive double-digit economic growth is encouraging and the Ethiopian Government’s policies and strategies are vital to keep the growth sustainable.
Ambassador Haslach appreciated Ethiopia’s role in East Africa in maintaining peace and security and fighting extremism and terrorism, stating that peace and security is a major aspect of Ethio-U.S. cooperation. The U.S. and Ethiopia will continue to work together to fight al-Shabab in Somali, she said.
The ambassador concluded the various bilateral relations between Ethiopia and the U.S. will transcend their relationship to a higher level and the U.S. will strengthen its cooperation with Ethiopia.
Giant American Clothing Company Eyes up Ethiopia’s Industrial Zones
.
The company, Phillips-Van Heusen (PVH) Corporation, generated a revenue of 8.2 billion dollars in 2013
.
PVH has 700 outlets all over the world which sell Tommy Hilfiger, Calvin Klein and Heritage brands it sourced from factories in Bangladesh, Sri Lanka, China, Honduras, Hong Kong, Indonesia, Philippines, Malaysia, Mongolia, Singapore, Thailand and Taiwan.
.
Phillips-Van Heusen (PVH) Corporation – a giant American clothing company and owner of the Tommy Hilfiger, Calvin Klein and Heritage brands – has set 10 investment preconditions to the Government of Ethiopia (GoE).
Officials of the company made a visit to Ethiopia, along with 27 textile and garment factories from different countries, last week, for the third time in two months. The second round visit was made by 40 companies led by Mark Green, vice president of the company in May 2014.
The third stay saw a high level meeting between the representatives of PVH and government officials, including Sisay Gemechu and Tadesse Hiale, both state ministers for Industry, and Likyeleshe Abay, deputy commissioner of the Federal Investment Commission (FIC), as well as representatives from the Textile Industries Development Institute (TIDI), on Wednesday August 28, 2014, at the Radisson Blu hotel on Tito Street.
During the discussion, the officials of the Company forwarded 10 prerequisites to the government to make adjustments. The prerequisites include consideration of tax incentives, logistics issues, priorities for electricity power and getting a ready-made industrial park, according to sources.
“The officials decided to form a government committee to review questions forwarded by the Company after they submitted them in written form, because some of the issues demand a policy reform,” said same source.
PVH, which was established in 1881, generated a revenue of 8.2 billion dollars in 2013, with a 967 million dollar profit. Its products are sourced from factories in Bangladesh, Sri Lanka, China, Honduras, Hong Kong, Indonesia, the Philippines, Malaysia, Mongolia, Singapore, Thailand and Taiwan. It sells these products through 700 outlets across different countries, where it employs over 12,000 people.
The government wants this company to take its investment to Dire Dawa or Hawassa, but the company has its eyes on the Bole Lemi Industrial Zone in Bole District. Phase one of this zone has 20 shades on 156ha; five of these shades have already been taken by various companies, including George Shoe; the remaining 15 shades, under construction have already been given to 22 companies. PVH wants the government to give it a ready-to-use industrial park for all the factories that it wants to bring to Ethiopia to dwell on phase two which will be constructed on 186ha of land.
The officials of PVH also visited Dire Dawa, 515km east of the capital, and Hawassa, 273km south of the capital in the Southern Region – two areas that the government wants to promote as industrial zones.
The company says it is coming to Ethiopia seeking to benefit from low labour and input costs, as well as enough land to invest in, according to the officials from the company during the meeting, who declined to comment further. Currently, there are 17 textile factories in Ethiopia and 1,120 cotton farms, despite the textile and garment export performance being disappointing over the last four years. The government has identified the unreliable inputs supply as a reason for the poor performance of the sector and is about to establish a four billion Birr enterprise to supply inputs to the local textile and garment industries.
Another company called H&M (Hennes & Mauritz), from Sweden, with its own brand clothes has maintained an office in Ethiopia for the last two years, although it has not done much.
Gov’t Introduces 4b Br Enterprise to Supply Manufacturing Inputs
.
Enterprise will open factories in neighbouring countries to export inputs home
This will be part of the job for the four-billion Birr Ethiopian Industrial Inputs Development Enterprise (EIIDE), whose job will be supplying inputs to some parts of the manufacturing sector
.
Eager to boost manufacturing export from Ethiopia, the government is planning to open factories outside the country to export inputs that manufacturers in the country will need.
This will be part of the job for the four-billion Birr Ethiopian Industrial Inputs Development Enterprise (EIIDE), whose job will be supplying inputs to some parts of the manufacturing sector both by producing them and by procuring from local and international markets and by manufacturing them. The government expects this enterprise to undertake its manufacturing activities through factories it will establish both in Ethiopia and outside.
The bill for the establishment of this enterprise, which will come with the dissolution and take over of the resources of the Merchandise Wholesale Import & Trade Enterprise (MWITE), was approved by the Council of Ministers two weeks ago.
The new enterprise is meant to rescue the ever failing performance of the manufacturing industry, which has been largely challenged by the shortage of supply of inputs leading to continuously disappointing records, despite an ambitious Growth & Transformation Plan (GTP).
Ever since the beginning of the GTP in 2010/11, government plans have grown contrary to its actual delivery, with performance falling progressively short of targets – from 58.6pc in the first year to 54pc and 51.8pc over the following two years. It has now reached a new bottom of 25pc. During these four years, Ethiopia’s export revenue has been growing sluggishly – up from 207.9 million dollars to 255.4 million dollars, then 281.1 million dollars and finally 398 million dollars – up by nearly 117 million dollars from the previous year.
The performance of the three categories where the government had pinned its hopes and to which the new enterprise is going to supply inputs were textiles and garments, with a target of 350 million dollars; leather and leather products with 347 million dollars, and agro processing with 250 million dollars for the 2013/14 fiscal year. The performances in these areas, all below 40pc, were 111 million dollars, 133 million dollars and 76 million dollars, respectively.
Accordingly, the Enterprise will establish three leather processing factories in Sudan and one in Somali land, which will process raw leather at a pickle and wet blue level and export to Ethiopia, according a source close to the issue.
“The government has already conducted a study for the import of semi processed leather,” this source told Fortune. “Sixty million Birr budget is proposed for the establishment and operation of these factories.”
The bill, which was prepared by the Ministry of Industry (MoI), has counted on the experience of the India and China on the idea of investing abroad and importing semi processed inputs that the factory established abroad will produce, in order to match the growing demand of domestic industries, according to a source with knowledge of the drafting process.
The new enterprise will also have a 200.5 million Br budget to grow cotton in partnership with private investors, with the enterprise owning 51pc share, according to a document that Fortune has acquired.
A little more than half a billion Birr will also be allocated to the enterprise for the purchase and transportation of inputs for leather and leather products and agro-processing industries as well as cotton for textile industries that will be used for the running fiscal year of 2014/15, according to sources close to the issue.
This is a “principled approach” by the MoI, says Fasil Tadesse, president of Ethiopian Textile & Garment Manufacturers’ Association (ETGMA).
“It will make sure that inputs are delivered to the textile and garment manufacturers appropriately,” he told Fortune. “Stabilising the market, it will enhance the competitiveness of the sector in the international market.”
Out of the close to four billion authorised capital for the new enterprise 1.4 billion Br is paid up both in cash and in kind, according to the constituting law of the enterprise. Close to half of this is an amount that is transferred to the new enterprise from the dissolved MWITE, according to sources. In addition to its assets and capitals the liabilities and rights of MWITE are also transferred to the new enterprise, according to the establishment regulation, which has also repealed the law that established MWITE.
Established in 1993 by the merger of two previous trading corporations, the Ethiopian Domestic Distribution Corporation (EDDC) and the Ethiopian Import Export Corporation (EIEC), MWITE currently has 83 branch offices in Ethiopia, out of which 35 supply basic commodities. Its authorized capital is set at 90 million Br, out of which 50 million is paid-up. The products it supplies are also more varied, ranging from basic commodities like sugar and palm oil to building materials, foodstuffs, paper, stationery items, textiles and government.
On top of ensuring the availability and adequate supply of industrial inputs for the sectors that the government has pinned its hope in the transformation of the country’s economy, the new enterprise will also engage in the export of the inputs, which are found to be in excess of the domestic industries consumption.
This has to do with the experience of the country in 2011/12 when the production of cotton had by far exceeded the domestic demand of textile factories. A total of 29,710tn of cotton were found to be a surplus out of the 79,710tn produced in the year. That had led to many cotton growers shifting to other cash crops such as sesame, which in turn led factories to import cotton from India, China and Turkey. Three textile factories have imported an aggregate of 3360tn of processed cotton from these countries, according to the latest data available from the TIDI.
This is also welcome news for the cotton growers though with uncertainties.
“The existence of an entity that will make timely purchase at times of excess production will solve the marketing problem we have been facing for the last two years,” said Yusuf Umer, managing director of Amibara Business Group and a board member of the Ethiopian Cotton Producers, Ginners & Exporters Association (ECPGEA).
The price at which the Enterprise will buy from them will be an issue to worry about when the time comes, he adds.
It was in 2009/2010 that the Ethiopian Institution of Agricultural Research stared constructing a Central Biotech Laboratory in Holetta town, (above) complete with a molecular lab, plant biotech, livestock biotech, microbial biotech and genetic engineering facilities
Holetta central Biotech Laboratory
.
Ethiopia, a country still relying on just 20pc of its potential arable lands to grow food, is opting for genetically modified organisms (GMOs), with a legal amendment likely to be approved by the House sometime during this fiscal year.
Genetically modified organisms are created by the scientific intervention of man, mixing the genes of different organisms to get certain qualities in one. For example, Bt cotton, a popular GMO crop, has the genes of a bacteria added to it so that the cotton plant can produce toxins that kill pests. As with cotton, the same technology has been employed in different food crops as well. There is also the Golden Rice, which has been engineered to be rich in vitamin A.
GMOs are shrouded in controversy, however, with those in favour arguing that they could transform the food security of the world, while those against speak of the risks to the environment and biodiversity, as well as the exploitation of farmers who will be dependent on expensive seeds from companies such as Monsanto.
Ethiopia’s bio-safety proclamation of 2009 did not close the door on GMOs, but made entry very difficult. It required that the government of a GMO’s country of origin was responsible for any damage caused in Ethiopia – a guarantee that no government wanted to give, say sources. These sources declined to say how or why, but there has been a strong pressure from government to amend the law fast.
The push to change Ethiopia’s stringent proclamation and to ease the environment for access to the controversial GMOs came from the highest level in government, according to sources. Government agricultural researchers, who found it hard to partner with “sister institutions from foreign countries” under the existing law, also see the amendment as something that needed to happen.
The existing law had very strict rules for GMO transportation and storage in Ethiopia. Someone involved in the transport, storage or processing of GMOs must have adequate insurance to cover any possible harm caused by GMOs and can only transport the GMOs after special training by the Environmental Protection Authority (EPA) and with a license for drivers or pilots. After release to the environment and commercialisation, one has to monitor and present an annual report to the EPA for (Directive No.3/2009) at least 150 years for GM trees, 30-150 years for GM perennial crops and 30 years for annual crops. A researcher who recommends the use of a GMO could be imprisoned for up to 15 years if it is imported for research and study, and commercial release causes any problem to the environment or the general public. In addition, the proclamation treats low risk activities, like contained use for research and teaching, in the same way as commercial planting/environmental release. The jurisdiction to administer issues in relation to GMOs is also given to the EPA, now a Ministry, under the law.
This law did not allow Ethiopian researchers to collaborate with researchers in other countries on GMOS, said Endale Gebre (PhD), Director of Biotechnology Research at the Ethiopian Institution of Agricultural Research (EIAR).
The amendment states that any person can engage in transactions destined for the release of GMOs to the environment by obtaining an Advanced Informed Agreement from the MoFEP. Any applicant can engage in any contained use transaction with a special permit from the Ministry. This bill, which was submitted to Parliament’s Forest and Natural Resource Standing Committee at the end of July 2014, was drafted by the Ministry of Forest & Environmental Protection (MoFEP), Ministry of Agriculture (MoA), Ethiopian Institution of Agricultural Research (EIAR) and the Ministry of Science & Technology.
Allowing the use of GMOs is not a choice, but a necessity, argues Endale, stating that Ethiopia’s population is projected to reach 140 million in 2025, although he adds that only 20pc of arable land is cultivated in Ethiopia. The current law disappointed researchers, foreign exporters, investors and NGOs, says Endale.
“Enter the age of BT in Ethiopia,” says Maryam Mayet, who reviewed the amendment on behalf of a local NGO, Melka Ethiopia.
GMOs are the only solutions to mitigate food insecurity, which might occur as the population grows, says Abay Yimer (PhD), a researcher at the Institution for Science & Sustainable Development (ISSD). Abay downplays the risks, saying that 400 European researchers have undertaken studies at a cost of 200 million dollars over the past 10 years, proving that risks from GMOs were no different from the risks posed by the use of pesticides, herbicides and fertilisers.
“Currently, there is shortage of cotton production in Ethiopia and Ethiopian imports cotton from Tanzania and China every year,” says Endale. “Applying biotechnology in cotton production would minimise cost and save foreign currency.”
And the most common technology in cotton, as well as other food crops, is adding some genes of a bacteria, Bacillus thuringiensis, to produce the so-called BT crops, with the ability to produce the bacteria’s natural toxin. In cotton, the pest that is the target of the toxin is the bollworm.
It was in 2009/2010 that the Ethiopian Institution of Agricultural Research stared constructing a Central Biotech Laboratory in Holetta town, complete with a molecular lab, plant biotech, livestock biotech, microbial biotech and genetic engineering facilities. All laboratories are now working except the Genetic Engineering, which has not been able to do so because of the stringent laws. The research institute, a government body, built the genetic engineering lab, complete with most facilities except a green house which will be completed in six month, despite the government’s own law making it nearly impossible to dabble in the practice through its stringent requirements, which put the researchers at risk of harsh punishment.
Research conducted in the other labs included such crops as cassava, sweet potato, cowpea, groundnut, banana, rice, sorghum, wheat, plantain and millet, as well as fruits and vegetables, such as citrus fruit, grape, mango, plum, cucumber, tomato, eggplant and peppers. Cash crops, like sugarcane, cacao and coffee, are also included. The institutes are conducting research on GMO enset (false banana) – a source of the staple food, kocho, for many in Ethiopia’s south – in Nairobi, Kenya, in collaboration with other researchers at the International Institution of Tropical Agriculture Laboratory (IITA).
When Ethiopia drafted its stringent bio-safety law in 2009, the Ethiopian consumer association was one of those involved in the process. However, during the production of the new draft, the association was excluded, despite efforts to be part of the process, said Gebremedhin Birega, the Assocation’s director.
Consumers should be aware of what they consume and have the right to get organic and GMO free products, he says, adding that Ethiopia is making the amendment in the interest of other countries, such as the United States, China and India, who are home to the world’s largest GMO company, Monsanto, and the largest producers of BT cotton.
More in line with that argument is the interpretation of the amendment given by Maryam Mayet, who believes that the government had some foreign exporters to Ethiopia in mind when drafting the new amendment. The amendment has inserted a definition for foreign exporters, and she thinks that “a special definition for such an actor must denote some intention that such an actor – a foreign exporter – will play a key role in this shift towards an openness to GM experimentation” in Ethiopia.
Her argument is enhanced by another element in the amendment which says that the objective of the amendment is to “enhance access to and transfer technologies, including modern biotechnology, that serve for conservation and the sustainable use of biological diversity.”
“And we know that the main arguments of industry as to the benefits of GMOs on the environment especially is insect resistant GM crops. Enter the age of Bt cotton for Ethiopia.” She said
The amendment includes several articles where the definitions and requirements, as well as risks and accountabilities, have been made more lax and where licenses to operate will be easier to obtain in Ethiopia. A possible interpretation of the phrase “into the environment” could mean “cultivation”, which would eliminate the need for an Advanced Informed Agreement for “food, aid food, greenhouse experiments, aqua-culture, animal feed or other inputs for animals, and medicines for humans or animals”, according to Maryam.
“The overriding imperative of these amendments are to signify a major shift in Ethiopia’s policy on GMOs, from a precautionary approach to an openness to, at the very least, experimentation in contained use conditions,” she said.
The United States government, through the US Agency for International development (USAID), is already working to build “the leadership capacity of the Ministry of Agriculture and Regional Bureaus” to harness “biotechnology for agriculture in collaboration with the Ethiopian Academy of Sciences, the Ethiopian Institute of Agriculture Research, the USDA Mission in Ethiopia and the Institute for Science & Sustainable development”, according to a press communiqué from USAID.
Attending the meeting, which was held at the Hilton Hotel on August 21 and 22, 2014, was Diran Makinde (Prof), Director of the AU-NEPAD African Bio-safety Network of Experts (ABNE), who spoke of the success of BT cotton farming in several countries, including the neighbouring Sudan. He argued that national regulations could be harmonised with international regulations for bio-safety, adding that the full range of potential risks needed to be assessed and managed.
Ethiopia’s state minister for Science & Technology, Mohammed Ahmed, told the meeting of his government’s recognition of the role of science and technology, and that “biotechnology alone cannot solve the Ethiopian agricultural challenges.Public policy should appeal more to pragmatism and less to ideology when seeking solutions to Ethiopian agricultural challenges”.
The Ministry of Agriculture believes that “Biotechnology should be a big project, in order to improve the economic growth of the country” and that it “will be a solution for low and insufficient agricultural productivity and also for economic growth”, according to Aster Stifanos, an advisor at the Ministry, who spoke on behalf of minister Teferea Derebew.
The Ministry of Forest & Environmental Protection (MoFEP) is expected to defend the amendment before Parliament sometime in October.
It was in 2009/2010 that the Ethiopian Institution of Agricultural Research stared constructing a Central Biotech Laboratory in Holetta town, (above) complete with a molecular lab, plant biotech, livestock biotech, microbial biotech and genetic engineering facilities.
Debora Van Brenk, The London Free Press – September 3, 2014
London, Ontario, Canada — Ontario beekeepers are suing pesticide manufacturers for $450 million, alleging their chemical agents are responsible for the huge decline in bee populations in recent years.
Sun Parlor and Munro Honey intend to launch a class action lawsuit to recover losses by beekeepers dating as far back as 2006.
“From an economic standpoint it’s certainly big. From an environmental and social standpoint, it’s even bigger” said Dimitri Laskaris, a laywer with Siskinds LLP, representing the case.
The statement of claim alleges that Bayer (CropScience) and Syngenta were negligent in the manufacture, sale and distribution of neonicotinoids in Ontario that caused beekeepers to suffer significant losses and damage.
None of the allegations have been proven in court.
Officials with Bayer CropScience and Syngenta Canada weren’t immediately available for comment.
In previous interviews, the manufacturers have said a variety of factors — including parasites, management practices and weather — have played a role in the declining bee population, which has seen numbers fall by 35% annually in Ontario, and even more in other provinces.
They say neonicotinoids replaced toxic insecticides that were harmful to the broader environment and note that bee deaths aren’t an issue in Western Canada, where neonic-treated canola seed is common.
The apiarists’ lawsuit alleges the companies have made false, misleading and deceptive claims of safety and that treated corn and soybean seeds are now “ubiquitous and inescapable for bees.”
The Sierra Club of Canada, which has been a vocal supporter of the Ontario Beekeepers’ Association, on Wednesday urged Canadians to continue the anti-neonic campaign and to continue “to fuel the fire for ecological justice.”
Neonicotinoids have become a flashpoint within agricultural and environmental circles.
It’s even divided beekeepers.
The Ontario Beekeepers Association, which has come out against the use of the chemical, is not involved in the lawsuit, executive director Julie White said.
The European Union has placed a ban on neonics and the Ontario Agriculture Ministry is looking to curtail farmers’ use of the pesticide.
Ethiopia working to utilize potassium fertilizer to improve soil fertility
.
Tekalign Mamo
.
Ethiopia is working to properly utilize potassium (K) fertilizer to improve soil fertility thereby increase agricultural productivity the Ministry of Agriculture said.
Speaking at the 1st International Potash Institution Symposium held here today the State Minister Prof. Tekalign Mamo said Ethiopia has considered the need to use potassium fertilizer and boost soil fertility.
Considering the necessity of potassium for crop growth, the country started to use six new blended fertilizers including potassium.
After four decades of detachment from potassium fertilizer, researches conducted in recent years revealed the importance of potash for soil fertility, he said.
Nitrogen and phosphorus have been considered as the nutrients least present in soils; therefore, DAP and urea fertilizers have been the only fertilizer sources that have been in use in Ethiopia and in several other SSA countries.
A shift in this thinking in Ethiopia was triggered by research activities conducted during the last few years, the results from nationally launched soil fertility mapping, and ongoing new fertilizer demonstration trials being conducted in many areas.
Results from these studies proved that several nutrients including potassium are limiting crop yield. Based on these results, Ethiopia introduced six new fertilizers (including potassium) for distribution to farmers.
The IPI Director Hillel Magen on his part said sub-Saharan African countries including Ethiopia haven’t been widely used potassium fertilizers.
Studies conducted in the country displays that the country could increase productivity by using proper fertilizers including potassium.
The two-day symposium “The role of potassium in cropping system of Sub-Sahara Africa” on the current status and potential for increasing productivity is deliberating on soil fertility, quality of mineral fertilizers, and efficient use of fertilizers.
The symposium is also expected to address issues related to role and benefits of potassium fertilizers, focusing on chemical, physical and biological processes in soil and plants, farm management and economic application of fertilizers.
Seven Sugar Factories to Go Operational This Fiscal Year
.
Corporation Director-General Shiferaw Jarso
.
Ethiopian Sugar Corporation announced that it is working hard to boost its annual sugar production to more than 1.2 million tons and earn over 310 million USD foreign currency from the sector.
Corporation Director-General Shiferaw Jarso told ENA that the government has been building ten sugar factories to meet the demand of sugar in the country and to transform the sector during the Growth and Transformation Plan period.
From among the factories under construction across the country, seven would be completed this Ethiopian fiscal year, he said.
The sugar factories that would go operational in the budget year are Kesem, Arjo-Dedesa, Tendaho Numbers One and Two, Omo-Kuraz One, Beless One and Two, according to the director-general.
The factories would boost the 325,000 tons of sugar produced last fiscal year by the existing Metehara, Wonji Shoa and Fincha sugar factories to over 1.2 million tons.
According to Shiferaw, more than half a million ton of the projected sugar production would be covered by the old factories.
The shortage of sugar, which was caused by the failure of Tendaho Sugar Factory to go operational and the inability of Fincha Factory to meet its annual target due to heavy rainfall, was alleviated by importing sugar in the past fiscal, he noted.
In this budget year the corporation is working to not only meet the local demand of sugar in the country but also earn 311 million USD by exporting over 665,000 tons of sugar, Shiferaw added.
Besides, out of the 189MW electric power the factories would produce from residue they would utilize 143 MW and save the remaining 46 MW, he elaborated.
The 2013 survey released by anti-graft body, Transparency International, ranked Ethiopia the least corrupt nation in Africa.
The survey, which was carried out in 95 countries worldwide indicated that Ethiopia is the least corrupt country in Africa with corruption levels standing at 6 per cent
Rwanda ranked second at 13 per cent.
In East Africa, Uganda is the second most corrupt with 61 per cent of the people having said they bribed public officials to access services in 2013. Tanzania is at 56 per cent and Sudan stands at 17 per cent.
South Africa is at 47, Nigeria 61, Libya 62, Senegal 57, Mozambique 62, Morroco 49, Zimbabwe 62 Ghana 54 and Madagascar 28 per cent.
Sierra Leone is the most corrupt country in the world with corruption levels standing at 84 per cent.
Liberia comes second at 75 per cent, followed by Yemen at 74 and Kenya completes the list of the top four most corrupt nations at 70 per cent.
In the world, the countries with the lowest reported bribery rate are Denmark, Finland, Japan and Australia; they all have a bribery rate of one per cent.
Only 16 out of the 95 countries posted corruption levels of less than five per cent.
Ethiopia keen to share best practices in agriculture
.
Ethiopia says it is ready to share its best practices in improving agricultural production and productivity with fellow African countries.
Prime Minister Hailemariam Desalegn held talks on Tuesday with Kofi Annan, former United Nations Secretary General, who is in Addis Ababa for the 4th African Green Revolution Forum (AGRF).
PM Hailemariam told Mr. Annan that Ethiopia, 85 percent of whose population is relies on agriculture, is taking measures to improve the livelihoods of its farmers.
He said the country is willing to share its best practices in the sector with fellow Africans.
Mr. Annan for his part said Ethiopia’s effort to enhance agriculture is exemplary to other African nations.
He said young Africans should join the agriculture sector in their respective countries and support national development endeavors.
Also same day, Prime Minister Hailemariam Desalegn conferred with Mr. Strive Masiyiwa, Chair of the Alliance for a Green Revolution in Africa (AGRA).
On the occasion, Mr. Masiyiwa conveyed interest to work to extend Ethiopia’s best agricultural practices to other African countries.
The Indian based meat processing company, Allanasons Group, is finalizing a deal for the purchase of Akshakar Export Abattoir for a total of U.S $ Nine Million.
The parties have already concluded the agreement, yet they have not secured authentication for the contract at the Documents Authentication and Registration Office (DARO).
According to Fortune, the process is being delayed for the parties could not reach on consensus over the issue of getting the contract authenticated after audits of Akshakar’s performance. Nonetheless, after officials of the Leather Industry Development Institute (LIDI) mediated the two parties, they agreed to get the registration and authentication of documents on the ground Akshakar’s financial auditing is done first.
It was only a year ago the Indian company secured a 75 hectare of land in Ziway town, Oromia State, for the purpose of erecting a meat processing plant. Allanasons plans to construct a facility with a capacity of producing 70 tons a day. The company estimates to spend U.S $ 20 Million for the facility.
In addition to this, according to ILDI, the facility will have an abattoir with the capacity of handling 400 cattles and 5,000 sheep and goats a day.
In 2014 the meat processing plant’s design work was commissioned to an Ethiopian firm, ETG Designers and Consultants Plc. The design is now completed and the construction work is soon to be given to contractors.
According to Ministry of Industry (MoI), the company is set to start to production in the current fiscal year.
Allanasons has also made payments to the Ethiopian Electric Utility (EEU) for the supply of 250KVA electric power it needs for the export abattoir it will operate.
In addition to this, the Indian company is under process to secure additional land in the Somali and Oromia States.
According to the Fortune, Akshakar has the annual capacity to process 6,000tn of cattle meat and a similar amount of meat from sheep and goats. It can also process 3,710 tons of by-products of the slaughter house.
IBM Experts Help Drive Economic and Social Change in Ethiopia
.
A team of 15 IBM (NYSE: IBM) experts today presented its recommendations to Ethiopian leaders on a range of critical projects aimed at supporting Ethiopia’s national Growth and Transformation Plan.
The business and technology experts from 10 different countries spent four weeks on the ground in the country’s capital Addis Ababa, working with government ministries and NGOs to help them attract foreign investment, deliver healthcare services, and track economic growth. They explained the latest, most effective methodologies for achieving those goals, including mobile technologies, online portals and data analytics, along with the latest best practices in marketing, finance and project management.
The organizations with which IBM worked included the Ministry of Health, the Ethiopian Investment Commission, the Ministry of Labor and Social Affairs and NGO Digital Opportunity Trust. IBM also worked with Dow Chemical to provide counsel to International Medical Corps — the latest in a series of joint projects worldwide in which IBM has teamed with other companies looking to fortify their pro bono consulting programs.
The engagements come as the “Horn of Africa” country continues on its path of accelerated economic growth and works to transform the standard of living for a citizen population of over 90 million. Hailed by some as the “African Lion.” Ethiopia is one of the world’s fastest growing economies with an average annual GDP growth rate of over 10% for the past decade (World Bank) and with plans to become a middle-income country by 2025.
The pro bono consulting work that IBM performed is part its Corporate Service Corps (CSC) program – a global pro-bono initiative through which IBM deploys teams of its most talented people on projects aimed at driving social and economic development. Africa has become a strong focus for IBM’s CSC program as it expands its operations across the continent and forges new strategic relationships with government, clients and not for profits.
“Over the past decade, Ethiopia has become one of Africa’s biggest economic and social success stories,” said HE Dr. Kesetebirhan Admasu Birhane, Ethiopia’s Minister of Health. “As Ethiopia continues along its course of economic and social transformation, it is important that we work closely with experts like IBM who can bring their global expertise and leading technologies to bear to ensure that our nation’s success is sustainable and inclusive.”
This week IBM presented its recommendations and findings to 5 clients which include:
The Ministry of Health: an IBM team identified opportunities to use internet and mobile technologies to support the country’s Health Extension Program. The IBM team recommended a text-based communications system to enable the Ministry to communicate better with its 39,000 Health Extension Workers and a system to enable citizens in rural areas to send in views and comments about healthcare via mobile phones. A key part of the proposed solution is text analytics software to help identify emerging healthcare trends such as the spread of disease or public misconceptions about healthcare issues.
The Ethiopian Investment Commission (EIC): IBM developed plans for an integrated IT system to simplify and ease investment processes for foreign companies looking to set up business in Ethiopia. IBM recommended a “one-stop-shop” solution with web interfaces to enhance process automation and integration across collaborating departments and external entities.
The Ministry of Labor and Social Affairs (MoLSA): an IBM team came up with a set of recommendations to reduce the time and effort spent on the collection and analysis of key labor market data such as employment rates and job vacancies. The IBM team performed an analysis of best practices from around the world and identified opportunities and technologies to speed up processes and reduce margins of error.
International Medical Corps (IMC): an IBM team assessed IMC’s information management system and recommended a methodology to measure the effectiveness of its programs. The team proposed a roadmap that leverages mobile and analytics technologies to gather and analyze data about nutrition, water, sanitation, and hygiene, primary health and livelihood. It supports IMC’s work in helping local communities become less vulnerable to events like drought and disease outbreaks. As part of the project, the IBM team collaborated with Dow Chemical to study and promote enhanced sanitation facilities in rural areas.
Digital Opportunity Trust (DOT): IBM consultants advised global NGO DOT on its program to roll out Business Development Service Centers, which provide entrepreneurial and IT training to young people across Ethiopia. The IBM team came up with a set of recommendations to optimize offerings such as mentoring and job placement, identify new sources of funding and raise awareness of DOT’s services.
“As we continue to forge relationships across the African continent, the Corporate Service Corps Program is a powerful way for IBM to provide national, municipal, civic and social institutions here with the same expertise that we provide our commercial clients,” said Solomon Mengesha, IBM Business Development Manager East Africa. “We see great potential in Ethiopia and strong interest in developing innovative solutions that can drive further economic and social transformation.”
IBM has an active commercial presence in Ethiopia, supporting clients across a range of sectors including banking, government and telecommunications. For example, IBM is supporting the Commercial Bank of Ethiopia (CBE) in its modernization and business expansion program as it rolls out core banking services across the country and launches new mobile and internet banking services.
About IBM Corporate Service Corps IBM’s Corporate Service Corps is a global pro-bono initiative through which IBM deploys teams of top achieving employees to emerging market countries. These global and multicultural teams spend one month on the ground working with local government, non profit civic groups, and small business to develop blueprints that touch issues ranging from economic development, energy and transportation, to education and healthcare. Participating IBM employees offer skills that include technology, scientific research, marketing, finance, human resources, law and economic development.
By the end of 2014, IBM Corporate Service Corps will have dispatched approximately 2,600 IBM employees originating from 56 countries on engagements to 37 countries — making this pro bono problem solving program one of the world’s largest. Africa, a growing market for IBM, is one of the focal points of the program. By the end of 2014, the CSC will have deployed 800 IBM employees for projects in South Africa, Ethiopia, Angola, Senegal, Tanzania, Nigeria, Ghana, Kenya, Morocco and Egypt.
AFRICA INVESTMENT-Garment-making finds new low-cost home in Ethiopia
.
By Aaron Maasho – ADDIS ABABA, Sept 5 / 2014
(Reuters) – As basic wages soar in China, low-end manufacturing is starting to shift to cheaper locations around the world, and frontier African nations such as Ethiopia are positioning themselves to reap the benefits.
With rock-bottom wages, cheap and stable electricity and improving transport infrastructure, the continent’s most populous nation after Nigeria is building a reputation for producing clothes, shoes and other basic goods.
The sector is still in its infancy in what was for decades a Communist-run economic backwater. Bureaucracy and poor transport links mean business costs aren’t quite as low as they might be.
But state investment in factory zones and the arrival of firms from Turkey, India, the Gulf and China suggest industrialisation is finally taking root in the east African giant, where many still rely on subsistence agriculture.
“We have to move because of manufacturing’s development in China, due to the high increase in wages and in raw materials,” said Nara Zhou, spokeswoman for Huajian, a Chinese company that makes over 300,000 pairs of boots and sandals a month for retailers such as Guess from a factory near the capital.
“Ethiopia enjoys stability, the government is eager to industrialise and there is also the low labour cost here – a tenth compared to China,” she added.
HIGH GROWTH RATES
For years, investors gave Ethiopia a wide berth, wary of the heavy role played in the economy by a government that shuns the liberalisation seen in other African nations and which has retained its monopoly on telecommunications and bar on foreigners in the financial sector.
However, in the last few years the commercial logic of factory production has started to outweigh those concerns, and the wider effects are dramatic.
The government is projecting gross domestic product (GDP) growth at 11 percent a year, and even though the International Monetary Fund is more sober its 8.5 percent forecast for this year indicates Ethiopia is one of Africa’s – and the world’s – fastest-growing economies.
Despite the government’s socialist roots, there is no minimum wage, letting firms such as Huajian pay salaries of $50-$70 a month – still higher than the average per capita income.
“Almost every young person in this locality now works here,” said Desta, one of 7,500 employees at Ayka Addis Textile and Investment Group, a Turkish-owned factory 20 km (13 miles) west of the capital.
“We all struggled to make ends meet beforehand. We can now afford proper healthcare or sending a child to school,” Desta, who did not give his surname, added.
CHEAP POWER
With 90 million people already and annual population growth forecast to exceed 2 percent until 2030, the government is desperate to attract labour-intensive investment and jobs.
To this end, it says it has introduced incentives such as tax holidays and subsidised loans to investors with interest rates as low as 8 percent – below even the 9.75 percent benchmark rate in South Africa, the continent’s most developed economy.
Ethiopia is also investing heavily in hydropower to boost the scope of a grid that offers electricity at 5 U.S. cents per kilowatt hour, compared with 24 cents in neighbouring Kenya.
“The availability of power and the cost is cheaper than any other country in the world. We are providing power, land and labour all very cheaply,” said trade and industry minister Tadesse Haile, who wants Ethiopia to export $1.5 billion of textiles a year in five years, from just $100 million now.
Other east African nations such as Kenya and Uganda are also chasing textiles investment but cannot compete on input costs against Ethiopia, where wages are 60 percent lower than the regional average, said Jaswinder Bedi, Kenya-based chairman of the 27-nation African Cotton and Textile Industries Federation.
“Ethiopia is a new player,” Bedi said. “They are growing and they are growing rapidly.”
BOTTLENECKS
Even so, bureaucracy and transport impose a major cost on companies, leaving Ethiopia languishing at 141 in a World Bank global trade logistics index published last year.
Importing or exporting a container takes on average 44 days, compared to 26 for Rwanda, another landlocked East African nation.
“Our logistics costs are second to input,” Ayka Addis chief executive Amare Teklemariam told Reuters. “It affects the competitiveness of the company.”
To this end, the government says it is pouring funds equivalent to two thirds of GDP into new infrastructure every year, expanding the road network to 136,000 km by next year, from just 50,000 km in 2010.
It also has grand plans to build 5,000 km of railway lines by 2020 from less than 800 km at the moment.
“Infrastructure development is something Ethiopia is working seriously on,” Tadesse said.
Yara Plans $2.5 Billion Gas-Based Fertilizer Plant in Africa
By William Davison
Yara International ASA (YAR), the largest publicly traded nitrogen-fertilizer seller, said it plans to build a $2.5 billion plant in west or east Africa once gas projects come on-stream toward the end of the decade.
Yara has held initial talks with governments in countries such as Tanzania, Angola, Ghana, Nigeria and Mozambique about building a “considerable and world-class” urea factory to produce for African and foreign markets, Chief Executive Officer Joergen Ole Haslestad said in an interview yesterday in Ethiopia’s capital, Addis Ababa.
“We would very much like to participate in greenfield fertilizer production developments,” he said. “This is probably three to four years down the road before it will materialize.”
Mozambique may become the world’s third-largest gas producer in 2018 after companies such as Eni SpA of Italy and Woodlands, Texas-based Anadarko Petroleum Corp. begin output from reserves estimated at 250 trillion cubic feet. Tanzania, which has the biggest reserves in east Africa after Mozambique with 46.5 trillion cubic feet, expects that figure to exceed 100 trillion cubic feet within the next two to three years, Energy Minister Sospeter Muhongo said in February.
.
Joergen Ole Haslestad, Chief Executive Officer of Yara International ASA.
.
Latin America
Yara acquired Brazil’s Galvani Industria Comercio e Servicos SA for $318 million last month to expand further in South America. It bought Bunge Ltd.’s operations in Brazil for $750 million in December 2012 and OFD Holding Inc. from Omimex Resources Inc. for $425 million in November last year.
“Obviously the west part of Africa is good for Latin America where have big operations,” Haslestad said about the export possibilities from the planned fertilizer plant. “So we can take advantage of that.”
Yara, based in Oslo, plans to add to its existing seven African bagging and warehousing facilities by opening a $20 million unit close to the harbor in Dar es Salaam, Tanzania’s commercial capital, in October. It plans a similar venture in Ghana once the economic situation improves in that country, Haslestad said.
The West African nation has turned to the International Monetary Fund for help in rescuing its currency, which has lost 37 percent against the dollar this year.
A decision on whether to proceed with potash extraction at Yara’s majority-owned project in northeast Ethiopia will probably be made early next year, he said. Production of sulphate of potash for export could then begin three years later from what would be a $1 billion project, according to Haslestad.
“There will be resources enough for having mining operations there for the next 30 to 40 years,” he said.
The company expects to see sales grow “gradually” in Africa, which is the world’s fastest-growing fertilizer market, he said.
Yara rose 0.2 percent to 309.60 kroner at 3:49 p.m. in Oslo, extending the gain this year to 19 percent.
More than 1200 local Ugandans and about 100 Chinese workers will be employed at Uganda’s first phosphate factory, under construction by a Chinese company, the Ugandan president promises.
President Yoweri Museveni launched construction in August of Sukuru Phosphate Project in Eastern Uganda Tororo district, promising jobs. He appealed to area residents to produce more food that they can sell to a large population of employees working in the factory.
Siraj Sinde lives near the site where the factory is to be established. “We welcome the project,” Sinde told AFKInsider. “It is going to get us jobs. Many youths here are unemployed and therefore such a project is appreciated.”
Until now, Uganda and neighboring countries have had to import fertilizer from other countries at exorbitant prices, according to a statement from the Ugandan government. With the $620-million factory, the country plans to change that.
Although phosphates were discovered in Eastern Uganda in 1960, the resource wasn’t exploited because the government said it had no capital to establish a factory to make fertilizers.
Ministry of Energy official Micheal Kizza blames Idi Amin’s dictatorship and subsequent regimes for making it difficult to get investors interested in exploiting phosphates. During Amin’s brutal rule from 1972 to 1979, Asians and other foreign investors were expelled from the country.
Museveni helped restore sanity and foreign investors started coming back, Kizza said.
“The Chinese expressed interest in exploiting the phosphate by making fertilizers and the government made an agreement with them,” Kizza said.
It is the only phosphate project in Uganda. Apart from making fertilizers, other byproducts of the mineral will also be manufactured at the site.
“I am glad to come here to start the construction of this project,” Museveni said on Ugandan national TV. “You people of Tororo will get jobs. You can grow more food and sell some to the workers. If I was here, I would get rich because I would sell my milk to the workers and earn money.”
The $620-million plant will include a complex of factories with an annual production of 300,000 tons from the phosphates plant, 300,000 tons from a steel plant, 200,000 tons from the sulphuric acid plant, 100,000 tons from a rare Earth factory, 300,000 tons of gypsum from a gypsum plant and 12-megawatts of electricity from the waste heat power-generation plant, according to a government statement.
The plant is expected to start production in December 2016 and to employ more than 1,200 Ugandans. The mineral deposits at Sukuru Phosphate Project are expected to last more than 100 years and generate $350 million annually, the Ugandan government says.
Museveni performed a groundbreaking ceremony with Lv Weidong, president of Guangzhou Dongsong Energy Group Co. Ltd.
In his speech, Museveni said the government spent more than $40 million to explore minerals in the country in a geological survey. He said the minerals belong to the state and proceeds will be used for strengthening infrastructure and education.
Museveni congratulated the Chinese company for overcoming hurdles that threatened the start of the construction, including corrupt government officials who wanted to bribes.
“I would like to congratulate these investors. They did what they told me within a short time. They will bring us other investors. These people have built a lot of capacity. They can help us also build our capacity,” Museveni said in a statement.
Prime Minister Amama Mbabazi said phosphates offer Ugandans opportunities, especially
in the agricultural sector which accounts for 30 percent of total economic output.
American And Canadian Investors Meet Ethiopian Government To Explore Phase 2 Of Power Sector Transformation
.
Powering Africa: Ethiopia will take place from 20-21st November 2014 in Addis Ababa
The Powering Africa Ethiopia Executive Meeting connects Ethiopia’s government and energy ministries with international and local power and infrastructure developers and financiers seeking new investment opportunities within the region.
The 3rd Annual Powering Africa: Ethiopia is a concentrated two-day meeting set to bring together senior level executives in the power value chain to drive forward investment into Ethiopia’s energy sector. Ethiopia is leading the way for a green economy with resourceful emerging markets. Powering Africa: Ethiopia is proud to shine the light on this region, providing an intimate and interactive learning environment to unravel solutions for key strategic issues faced by public and private sectors.Download the 2014 Agenda At A Glance
Now in its 3rd year, the meeting connects Ethiopia’s government and energy ministries with international power-infrastructure developers and financiers seeking new investment opportunities within the region. With exclusive case studies, lively discussions and networking, meet East Africa’s key stakeholders to discover how to put Ethiopia on your investment horizon.
What to expect at the 2014 meeting
With the rise of European and Chinese investments in the region, the meeting will explore different financing models to support power projects, as well case studies of live projects led by leaders and their partners.
Finance is critical to the sector, where an estimated $2.5 billion a year will be required to develop critical generation projects and achieve energy demands in Ethiopia. Although the engagement of the private sector is paramount, regulatory frameworks have been a recurring issue that has proved limiting. With developed regulatory enforcements in place since January 2014, the meeting will discuss legal frameworks, PPAs, structure financing and more to solve the uncertainty around laws and regulations in Ethiopia.
With other focuses such as power interconnections and alternative energy developments, the content-led programme of Powering Africa: Ethiopia aims to support the economic development of the region bringing the industry’s key players in one place to invest and grow this potential land.
Government Finalizes Preparations to Support Commercial Farmers
.
Ministry of Agriculture announced that it has been making preparations to solve the challenges investors in commercial farming face.
The ministry is striving to engage more investors in farming cotton, wheat and the likes, it was also indicated.
Agricultural Extension Director- General with the ministry, Tesfaye Mangiste, said the government encourages investors that fill the demand and supply gap of agricultural produces.
Preparations are this Ethiopian fiscal year finalized to address well ahead the problems commercial farmers raise and provide inputs, experts and training to further motivate farmers, he added.
More than 183 investors are currently engaged in cultivating wheat and efforts are underway to increase the number of investors in the sector by expanding on their experiences, the director-general pointed out.
The ministry called on investors to effectively make use of the policy and benefit themselves and the country.
Even if many investors are engaged in the agricultural sector, the government would give special support to investors cultivating cotton and wheat in the present budget year, it was pointed out.
A consultative forum that brings together investors, associations and unions would be created to solve the problem of market raised by wheat producing farmers.
Relations between Ethiopia, European Union Register Significant Growth
.
The relations between Ethiopia and the European Union (EU) have been showing significant growth as their friendship is based on mutual benefits and is strategic, Ethiopia’s Permanent Envoy and Plenipotentiary to EU said.
The envoy, Ambassador Teshome Toga, told ENA that Ethio-EU relationship is based on mutual benefits and on strategic principles.
Ambassador Teshome, who pointed out the close working relationship Ethiopia, has developed with the European Union Commission and the EU Parliament, said the country has been receiving huge support from the union for its development activities.
He also said the trade relationship is strong and 40 percent of Ethiopia’s export goes to EU member countries while foreign direct investment flowing from the union to Ethiopia has been increasing.
Ethiopia is benefiting from the development aid extended to 79 African, Caribbean and Pacific countries, the envoy said, adding that the union would further give 200 million Euros to Ethiopia for human rights and related issues through its development fund.
The support of the union to Ethiopia is strong and comprehensive as the EU appreciates the role Ethiopia has been playing in bringing about sustainable peace and stability to Africa, and East Africa in particular, Ambassador Teshome elaborated.
The peace keeping role of Ethiopia in Somalia and South Sudan has for instance been winning support in various ways, he added.
According to the envoy, the European Union has allotted 745 million Euros that would be used for agriculture, food security, infrastructure building, education and health from 2014 to 2020.
Out of the 28 EU member countries 20 have embassies in Addis Ababa.
Ethiopia’s Trade Relations with Middle Eastern Countries Growing
Ethiopia’s trade relation with Middle Eastern countries is growing, according to Ambassador Abdulkadir Rizku.
In an exclusive interview with ENA, Ethiopia’s Special Envoy and Plenipotentiary for United Arab Emirates Abdulkadir stated that demand for the agricultural products of Ethiopia in the Middle East market has been growing.
He also said investors in the region are making Ethiopia their investment destination.
The ambassador said Ethiopia decided to open its embassy in Abu Dhabi in January considering the fact that the city has a good market for any trade and investment.
Investors have channeled their capital into the country as the embassy carried out promotional works that explained the investment opportunities in Ethiopia to big businesspersons in Abu Dhabi and the surroundings, Ambassador Abdulkadir explained.
The ambassador recalled that a 35-person business delegation led by the country’s Economy Minister, Sultan bin Saeed Al Mansoori, visited Ethiopia in March to discuss about the investment opportunities in Ethiopia.
As a result, Emirati investors are currently engaged in exporting agricultural, horticultural and floricultural products as well meat and fattening animals.
The embassy is also working to protect the rights of Ethiopians living in the area, according to Ambassador Abdulkadir who added that associations of communities and coordinating office for mobilizing support for the Grand Renaissance Dam have been established.
In these regard, the embassy has facilitated the effort of the Ethiopian Diaspora to pledge 216,000 USD and deposit over 80,000 USD, he concluded.
Some 87 % of Gibe III hydropower project has been completed, according to the Ethiopian Electric Power (EEP).
Once completed, the Gibe III project under construction on Omo River in Ethiopia will generate about 1,870 megawatt (MW).
Work on the project is being expedited,’ external relations head at EEP, Miskir Negash, told WIC. “Electrical and mechanical works are nearing completion,” he said.
Upon completion, the project housing 10 turbine units with a power of 187 MW each will increase the electric energy coverage in the country by 94 percent, he said.
According to him, two of the ten turbine units will begin generating electric power this Ethiopian budget year.
Installation of electric transmission line is also underway in conjunction with the construction of the project, he said.
In addition to improving their socio-economic benefits, the project protected residents of the area from frequent flooding, he said.
According to Misiker, over 7,500 Ethiopians and 120 foreigners are taking part at the project.
Gibe III hydropower project was commenced in 1999 EC, it was learnt.
Ethiopia in Category 1 in Aviation Safety Assessment of FAA
.
Following months of examination, the US Federal Aviation Administration (FAA) has reportedly confirmed that the Ethiopian Civil Aviation Authority (ECAA) is in category 1 in the aviation industry.
The Ethiopian Civil Aviation Authority told ENA that FAA’s official letter has reaffirmed that Ethiopia has maintained its status of belonging to category 1 in the aviation industry.
The Ethiopian Civil Aviation Authority is in the stated category for its operational organization, air space licensing and supervision as well as flight safety, it was indicated.
According to State Minister of Transport Getachew Mengiste, the certification by FAA has enabled the Ethiopian Airlines to secure flying permits to the US, Europe and other continents without difficulty.
He added that the air traffic of the country has registered over 20 percent growth on average during the previous years.
Authority Director-General Colonel Wesenyeleh Hunegnaw on his part said Bole International Airport alone has been accommodating over 200 airplanes in a day. Duration of landing and takeoff have also fallen under three minutes, he added.
Potassium to be the first chemical fertilizer for teff
.
.
While kicking off the first international potassium symposium on the role of potassium in cropping systems of sub-Saharan Africa, Ethiopia looks to be ready to start using the compound as a chemical fertilizer on teff farms for the first time.
In an occasion scheduled to take place in Addis Ababa between September 4 and 5, organized jointly by the International Potash Institute (IPI) and the Ministry of Agriculture (MoA) and Agricultural Transformation Agency (ATA) is the first of its kind in Africa since 1973.
IPI has been inactive for decades in Africa following the first potash symposium it held in Abidjan, Cote d’Ivoire, and the upcoming event aims at unlocking the potash potentials of sub-Saharan African countries, according to the organizers. “We have long been forced not to use potassium as a fertilizer but DAP and UREA; and this is the time to turn our face to it,” Tekalign Mamo (Prof.), minister’s advisor and state minister of agriculture, said. He also noted that the ministry has finalized its studies in 275 woredas (districts) to identify the types of soils suitable for potassium fertilizer.
Agriculture in Ethiopia claims in excess of 15 percent of the total national budget. And, according to Tesfaye Mengiste, representative of the minister, the country is yet to utilize its potash resources. “In the future, we will export potash products to the international market, however, we should also make potassium one of the major fertilizers in farms in Ethiopia,” he said. IPI advocates that potash has been a widely applied fertilizer in Eastern and Southern Asian to increase productivity by up to 30 percent. “Potash is six times cheaper than nitrogen and Israeli farmers appear to be the most benefited from it,” Hillel Magen, director of IPI said on occasion. He further advises Ethiopia to apply more potassium on its most important cereal crop—teff. “We have seen a significant increase in maize, rice and wheat production across the globe. And this is the time for teff” he suggests.
Chief Executive Officer (CEO) of ATA Khalid Bomba said that investing in fertilizer helps to realize the key mandate of the agency, which is achieving food security, since fertilizers improve productivity by 50 percent. The ministry of mine has already identified the potential of potash mining in the Danakil (Dallol) Depression where the Canadian firm Allana Potash is set to start production of potash by 2015.
According to the ministry, Yara International is also on its way to finalize case studies to invest in the large scale potash mining project in the country, apart from the 3.2 billion tons under Allana’s concession. Although IPI is yet to fully recognize the quality and deposit of Ethiopia’s Potash, the ministry has already conducted studies revealing the high-grade, shallow and world-class quality of potash in the Danakil Depression.
Ethiopia working to utilize potassium fertilizer to improve soil fertility
.
Prof. Tekalign Mamo
.
Ethiopia is working to properly utilize potassium (K) fertilizer to improve soil fertility thereby increase agricultural productivity the Ministry of Agriculture said.
Speaking at the 1st International Potash Institution Symposium held here today the State Minister Prof. Tekalign Mamo said Ethiopia has considered the need to use potassium fertilizer and boost soil fertility.
Considering the necessity of potassium for crop growth, the country started to use six new blended fertilizers including potassium.
After four decades of detachment from potassium fertilizer, researches conducted in recent years revealed the importance of potash for soil fertility, he said.
Nitrogen and phosphorus have been considered as the nutrients least present in soils; therefore, DAP and urea fertilizers have been the only fertilizer sources that have been in use in Ethiopia and in several other SSA countries.
A shift in this thinking in Ethiopia was triggered by research activities conducted during the last few years, the results from nationally launched soil fertility mapping, and ongoing new fertilizer demonstration trials being conducted in many areas.
Results from these studies proved that several nutrients including potassium are limiting crop yield. Based on these results, Ethiopia introduced six new fertilizers (including potassium) for distribution to farmers.
The IPI Director Hillel Magen on his part said sub-Saharan African countries including Ethiopia haven’t been widely used potassium fertilizers.
Studies conducted in the country displays that the country could increase productivity by using proper fertilizers including potassium.
The two-day symposium “The role of potassium in cropping system of Sub-Sahara Africa” on the current status and potential for increasing productivity is deliberating on soil fertility, quality of mineral fertilizers, and efficient use of fertilizers.
The symposium is also expected to address issues related to role and benefits of potassium fertilizers, focusing on chemical, physical and biological processes in soil and plants, farm management and economic application of fertilizers.
WAFA Marketing and Promotion is organizing the Ethio-Canada Business and Investment Summit 2014 to be held on September 15 at the Fairmont Royal York Toronto Hotel, Canada.
In a statement sent to The Reporter, WAFA said the Ethio-Canada Business and Investment Summit is organized under the auspices of the larger Canada-Africa Business Summit, 2014 scheduled to be held from 15 to 18 September in the same venue.
The summit is organized by Wafa Marketing and Promotion PLC and the Ethiopian Embassy in Canada while the Ethiopian Ministry of Foreign Affairs and the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) are co-organizers of the summit. According to WAFA, the Canadian Embassy to Ethiopia, Trade Facilitation Office-Canada (TFO-Canada) and Canadian Council on Africa (CCAfrcia) have been providing technical support for the success of the summit from the Canadian side.
WAFA said the event, which is the first of its kind to be held in Canada, aims to be the largest gathering of the Canadian and African economic movers and stakeholders. The summit will bring together prominent experts, government officials and business people who will discuss strategic topics for Africa’s economic development including construction, infrastructure and transport, agriculture and agri-business, education, natural resources and financing.
WAFA said as part of the larger Canada-Africa Business Summit, Ethiopia has already been provided with the opportunity of taking part as a Country of Focus , which entitles Ethiopia to have its own half-day “Doing Business in Ethiopia Forum” session on 15 September. According to WAFA the forum will enable Ethiopia to showcase the existing business opportunities to the wider Canadian market and African businesspersons through networking, and business to business meetings.
WAFA said the half-day session will be held in a premium location at the summit hall in the presence of more than 300 participants, including senior Ethiopian government officials as guest speakers and panelists of both the Doing Business Forum in Ethiopia as well as the greater Canada-Africa Business Summit sessions. More than 65 local businesses comprising petroleum, mining, textile/garment, leather and leather products, coffee, construction and machinery, oilseeds, tour and travel, representatives of business associations as well as Canadian, African and other international investors will participate in the summit.
The Ethiopian delegation will be led by Minister of Foreign Affairs Tedros Adhanom (Ph.D.), – one of the keynote speakers in the greater Canada-Africa Business Summit on September 16. Tedros will be accompanied by the Minister of Mines, Minister of Water, Irrigation and Energy, the director of the Investment Commission and other pertinent institutions.
An Ethiopian Airlines Dreamliner makes its maiden flight to Uganda’s Entebbe International Airport. Ethiopia’s national carrier is in pole position to dominate the African aviation market.
.
In the 1940s, the American aviation market witnessed a major breakthrough when Trans World Airlines (TWA), then controlled by the famous American maverick film producer Howard Hughes, emerged as the pre-eminent competitor to Pan American World Airways’ monopoly of the country’s air travel.
During the Second World War, TWA also produced aircraft and spying equipment for the US government, according to documentaries on the secret life of the business magnate. Following the end of the war, the government was left with a surplus of aircraft.
These airplanes are now behind the success stories of some modern-day airlines, after the US decided to use them to cement partnerships with other countries while also looking to counter the expansion of the Soviet-led communist bloc.
The US government also used TWA to train pilots from across the world, while helping to establishing national airlines for countries in Europe, Middle East and Africa where it set up its air bases during the Cold War.
These include Germany’s Lufthansa, Saudi Arabian Airlines, and today’s Ethiopian Airlines (known simply as Ethiopian).
Ethiopian’s international flight story begins in April 8, 1946 when it flew to Cairo using one of the five surplus C-47 aircraft acquired from TWA with whom it established the joint venture, the Ethiopian Airlines INC.
The national carrier, which is now fully owned by the Ethiopian government, has since become one of Africa’s top airlines, with a total of 59 aircraft and 7,300 full time employees.
It has over the years braved a number of important challenges to remain in the skies, including pressure from the country’s former communist regime to dump the US and buy Soviet planes instead.
Big deliveries
Over the past seven years Ethiopian’s revenue has grown by an average of 25 per cent. The airline recently announced $107 million in annual net profit for 2012/13, a 178 per cent leap from the previous year.
The profit comes as a result of transporting 5.5 million people and 174,000 tonnes of cargo, with 190 daily flights and 1,330 weekly.
It also received a record number of 14 new airplanes and set up nine new stations across the world last year.
“We’ve got new airplanes [such] as the B787, B777 which were fuel efficient so our fuel cost is managed, although our fuel cost has gone up,” said Mr Tewolde Gebremariam, the chief executive officer of Ethiopian.
.
Mr Tewolde Gebremariam, CEO of Ethiopian Airlines
.
“Also the fact that we’ve got the airplanes, and are able to open nine new stations, that enabled us to grow the revenue, but the management was prudent in managing costs, so the cost hasn’t grown as much as the revenue, allowing us to register very good profit,” he said.
The revenue boost followed its membership to the Star Alliance last year and the arrivals of Boeing Dreamliners that are said to save up to 20 per cent in fuel consumption.
Of its total 13 orders, Ethiopian–the first airline outside Japan to own the model–has already received five Dreamliners so far. Next year it expects to bring in an additional four of these planes which are also said to cut carbon emission by 20 per cent.
In addition to US airplanes, by 2016 Ethiopian also expects to get some 14 Airbuses from Europe.
Fair share
As Africa’s trade and investment within itself and the rest of the world is on the rise, Ethiopian is eying this opportunity to expand its business and contribute to the continent’s growth of the continent. Currently, about 80 per cent of flights to and from Africa are operated by non-African airlines.
“We have to develop African aviation, it is our continental obligation. We (African airlines) should at least get our fair market share, which is 50 per cent,” Mr Tewolde said.
Today, 46 out of Ethiopian’s 76 international destinations are in Africa.
By opening different hubs in Africa, Ethiopian is now working to increase the market share of African airlines, including by snapping up smaller rivals.
In 2010 the Addis Ababa-based carrier acquired 40 per cent of ASKY Airlines of Togo, followed by a 49 per cent stake in Malawi Air.
.
Passenger numbers are up.
.
ASKY, currently plying 12 destinations in its region and transporting 500,000 people yearly is expected to turn in a profit next year, while Malawi Air is under formation.
In addition, Ethiopian is also negotiating the opening of another hub in central Africa, according to Mr Tewolde, who noted that the airline is also currently supporting Cameroonian and Cape Verde airlines.
Following TWA’s model, Ethiopian is also training pilots and technicians from different African countries. Its aviation academy now accepts 1,000 students annually, with plans to expand this to 4,000 every year.
The airline is also set to open a four-star hotel in the capital, a walking distance from its Bole International Airport hub.
Its revising its Vision 2015 to introduce seven profit centres, it hopes to increase its current $1.9 billion annual revenue to $10 billion by 2025.
These centres are Ethiopian cargo, Ethiopian aviation academy, Ethiopian maintenance and overhaul, Ethiopian international passenger, Ethiopian domestic and regional passenger, Ethiopian In-Flight Catering and Ethiopian Ground Services.
In today’s globalisation era, Ethiopian Airlines, a child of the Cold War, now flies to 194 countries, picking up several aviation awards, while its parent TWA airline was sold and merged with American Airlines a decade ago.
Germany to assist universities in science, technology, engineering
Germany signed a new grant commitment worth 123.8 million Euros to support Ethiopia in three priority areas for the coming three years, until 2017.
Ahmed Shide State Minister of Finance and Economic Development of Ethiopia (MoFED) and Thomas Silberhorn Deputy Minister of Economic Cooperation and Development of Germany identified three priority areas during their triennial negotiation concluded on September 4.
Education, agriculture and conservation of natural resources and biodiversity are the three priority cooperation areas identified for the coming three years from 2015.
“Ethiopia values very much the cooperation it has with Germany, it is a unique one,” Ahmed Shide told his German counterpart on the signing ceremony held at the MoFED head office located off King George VI Street.
Ethiopia will benefit from all three cooperation areas, for instance the accord to reform university programs will bring Germany’s expertise on science, technology and engineering fields, according to the state minister.
The program will be mainly carried out by two German implementing agencies, GIZ and KfW Development Bank. With this new commitment Germany’s total volume of bilateral technical and financial cooperation since its formal inception 50 years ago amounts to one billion Euros, according to information obtained from the embassy.
Germany’s cooperation during the last few years contributed mainly to education and sustainable land management.
According to the embassy’s information, more than 50 vocational schools and universities are now offering new training courses and better practical training, and more than 180,000 hectares of degraded land were taken back into productive use through farming methods, benefiting 194,000 households.
Sufian Ahmed, Minister of Finance and Economic Development
.
The Ministry of Finance and Economic Development (MoFED) is said to have halted the revision of Ethiopia’s income tax structure following advice
from Prime Minister Hailemariam Desalegn’s macroeconomic team on the inflationary implication of rolling out the tax amendment so close to when the government gave its employees a pay bump.
According to The Reporter’s sources, the PM’s macro-economy advisory team recommended exercising some precaution when thinking of introducing the revision made on the income tax structure mainly for the inflationary pressure it might have when coupled with the salary increment. As per the suggestion of the advisory team, MoFED delayed the tax revision proposal submitted to it by the Ethiopian Revenues and Customs Authority (ERCA) two years ago.
After conducting a thorough assessment of the country’s tax schedule, ERCA proposed a general tax reform affecting many of the tax proclamations including the Customs Proclamation, which had caught the attention of the authority much earlier. Both the proposal and the revision gained acceptance quickly, which culminated in the ratification of revised customs proclamation by the parliament a few months ago.
Among other tax categories that need revising, payroll and corporate taxes from the income tax category and those indirect tax types such as turnover taxes and value add taxes levied on the end user of products or a services are the main ones, according to sources.
However, the advice of the macro-economy team to MoFED focused more on the two stands of taxes from the income tax category; payroll and corporate taxes. According to the same sources, the team focused more on payroll taxes and corporate taxes due to their potential to start inflationary pressure on consumer prices in the local market. They further explained that a reform on income tax categories would directly affect the disposable income left in the consumers’ pockets after paying their taxes, and that would directly affect the price of the commodities that they buy from the market.
“It is mandatory for us to delay the revision on employment and corporate taxes categories at least for one year,” the source said.
The proposed revision on the payroll tax for instance is anticipated to have a significant effect on the existing minimum taxable income bracket or the threshold beyond which income will not be taxed, the 150 birr mark, and the 35 percent flat rate levied on salary bracket exceeding 5,000 birr. In fact, the two have always been identified to be the most controversial areas of the payroll tax structure in Ethiopia. For the 150 birr minimum threshold, the basic idea behind leaving income below that of the tax system seems to have been the main driving factor for its long time revision. According to experts, the basics of exempting income brackets below 150 birr is that if a person is perceived as an enterprise that is producing but getting the reward in the form of a salary as opposed to corporate income of businesses, then 150 birr is supposed to be the minimum amount of money that a person needs to ensure its survival. Just as costs in the case of businesses, which is deductible from the income of businesses before taxes are paid, 150 birr is assumed not to eligible to be taxed, hence deducted from the whole of the income of individuals before taxes. But, revision was long overdue since the value of 150 in market has long lost its value to achieve what it is assumed to achieve, pundits argue.
Hence, with this revision forthcoming together with the recent move of salary increment to government employees means that employees could have received much more money in the form of disposable income which could in turn be inflationary.
It is to be remembered that aiming to adjust the existing cost of living, the government of Ethiopia has decided to make adjustments to the pay of its employees by as high as 46 percent, incurring a total 10 billion birr additional cost per annum.
A recent report by Bench Events, a London-based event organizer, said that Ethiopia is well among the ten top African nations experiencing an unprecedented rise in development of hotel chains in the region.
According to the report, Ethiopia currently has some six international standard hotels in the pipeline, which upon completion would add 990 rooms to the existing capacity of the hospitality industry. Still, the report indicated that Ethiopia remained one of the bottom ranked countries compared to Nigeria and Morocco, which have 6,614 and 4,828 rooms in the pipeline respectively.
However, a research by Awash International Bank suggested that Ethiopia might fail to accommodate tourists expected to come to the country both in 2015 and 2020. By 2015, Ethiopia plans to attract some one million tourists and sees to amass USD 3 billion. The country also envisages being one of the top five tourist destinations in Africa by 2020. Assuming a tourist would want to stay at least for a night, the demand for hotel rooms is projected to be some 1.3 million a day by 2015. The bank’s projection also shows that the single night demand will swell further to 3.1 million by 2020.
The current state of the tourism sector reveals that a little over half-a-million visitors come to Ethiopia every year, from whom the nation gets close to USD 300 million. For critics, such poor performance is way behind the targets set for the years to come and manifests the nature of the unrealistic targets set by the government for the tourism sector. However, in his recent interview with The Reporter, Solomon Tadesse, chief of the newly established Ethiopian Tourism Organization (ETO), said that the government has realized this and is taking measures to transform the sector. The establishment of ETO along with the Ethiopian Tourism Council, chaired by Prime Minister Hailemariam Desalegn, Solomon says reflects the commitments of the government.
In his statements, Matthew Weihs, managing director of Bench Events, said that Ethiopia should increase the supply of good quality, high-end hotel accommodations to grasp the opportunities in the catering industry. Bench Events is scheduled to organize the Africa Hotel Investment Forum (AHIF), which will be hosted here for three days starting September 29th. High-level international players, African officials and experts are planned to attend the forum.
Currently, the most high-end star rated hotels in Ethiopia include Sheraton Addis, Hilton and the recently opened Radisson Blu.
Next month, Eritrea is holding an Asmara Mining Conference (October 1-5). Eritrea has a variety of mineral deposits: the Canadian company, Nevsun, has produced gold for two years at its Bisha mine, switching to copper production at the end of last year; and the Colluli Potash Deposit is currently undergoing a feasibility study by South Boulder Mines of Australia. The Conference is being hosted by the Eritrean Ministry of Mines and the Eritrean National Mining Corporation (ENAMCO), and it is billed as providing a number of presentations on Eritrea’s mining prospects as well as providing a forum for discussion.
One subject that is unlikely to be raised is the use of forced labor in the mining industry, the subject of another report last week by Human Rights Concern – Eritrea. Eritrea has no human rights organizations and HRC-Eritrea is forced to operate in exile. This report deals with the use of forced labor at the Colluli Potash Project, a joint project between Australia’s South Boulder Mines, based in Perth, and ENAMCO. Human Rights Concern – Eritrea says ENAMCO, the mining investment arm of the Eritrean government negotiates all the terms and conditions with foreign investors. It provides “no transparency or accountability and neither the Eritrean Ministry of Energy and Mines, nor the Commercial Bank of Eritrea are aware of the management of the mining resources and revenue in Eritrea. They do not know what is going on and they are not allowed to ask.”
South Boulder Mines are currently carrying out a feasibility study of the substantial Potassium Sulfate deposits at Colluli. This is now due to be published in February next year, but South Boulder has already been highly optimistic about the prospects for the project. Colluli is about 350kms from Asmara and some 180 kms south of the port of Massawa in the south east of Eritrea. It lies in the area of the Danakil Depression, the hottest place on earth. Colluli potash deposit site is about 400 sq. km, within the Danakil depression, and its estimated expected production amounts to two million tonnes of potash per year, producing an estimated annual revenue is around up to 2 billion dollars.
The HRC-Eritrea report says that while the feasibility studies are being carried out, part of the preparation for future development is already under way, including the construction of a road from Colluli to the nearest part of the coast, which is about 70kms away. Other planned developments include the construction of a port and storage facilities as well as local infrastructure. The road, currently under construction, is being “rebuilt using the forced labour of underfed and overworked Eritreans in terrible living and working conditions.”
The report notes that the road construction is being done by Mereb Construction, a military construction company, set up by the Ministry of Defense, and run under the overall authority of the Segen Construction Company, which is owned by the country’s only political party, the Peoples Front for Democracy and Justice (PFDJ). The report claims all the workers for Mereb Construction are conscripts who are forced to work for six days per week and up to 12 hours per day, and are paid 500 Nakfa (equivalent to 10 US dollars) a month. This is the standard wage paid to all national conscripts. “They are citizens who have been held in the military against their will for many years, and treated like slaves.” Eritrea’s National Service, now the Warsai-Yikaalo Development Campaign, originally required 18 months from its members when started in 1994: six months military training and a year’s development activity. However, since 1998 when Eritrea attacked Ethiopia leading to a two year war, the Eritrea Government has never demobilized more than a handful of conscripts. The original conscripts have now been in service now for well over a decade, and more are recruited every year. This, the report underlines, is why some 4,000 Eritreans are fleeing across the borders into Sudan and Ethiopia every month.
The report underlines that Mereb Construction will also be responsible for building the accommodation at the mine and for other infrastructure, all being similarly built with its conscript labor force, in other words by forced labor. Mereb and Segen are two companies which have been frequently named as being responsible for the use of forced labor in other mining sites, notably Nevsun’s Bisha mine.
In 2009, an article by noted Eritrean academic, Gaim Kibreab, on the basis of fieldwork in Eritrea going back a decade or more earlier, concluded that the national service and the Warsai-Yikaalo Development did qualify as forced or compulsory labour as defined by relevant international conventions. The author noted that whatever the original ideas and benefits of the National Service program, the Warsai-Yikaalo Development in May 2002 turned the program into an indefinite and open-ended obligation, and concludes that “the Eritrean government ….uses forced labour as a means of political education and mobilisation, and for purposes of economic and infrastructural development, as well as for instilling work-ethic and discipline under a rigorously enforced punishment regime. It has also failed to suppress the use of forced labour by the ruling party’s firms and high-ranking officers of the armed forces… [and] in addition, the government also hires out conscripts to the private sector” All this is contrary to the international conventions to which Eritrea is a party.
He also noted that the major beneficiaries of the national service and the Warsai-Yikaalo Development were the government, the ruling party and senior army officers. He visited “construction sites where the large majority of the workers in the PFDJ construction firms were agelglot (conscripts).” In 1997–8, “Segen, the PFDJ’s construction company, built fifty-eight villas behind the Cagnew Station in Asmara. The villas were subsequently allocated to generals, high-ranking security and party officials, and selected ambassadors. Soon afterwards, about fifty additional houses were built by the same firm in the same area using conscripts’ unpaid labour, and given to high-ranking members of the armed forces…. When the asphalt road between Agordat and Tessenei was built, I was undertaking fieldwork in the area and most of the workers were conscripts. I also saw conscripts working in different ministries, departments, regional governments, agricultural schemes, digging wells, etc. The party’s firms, such as Segen, Bidho and Horn Construction, are the main property developers throughout the country, and the large majority of the manual workers, engineers, consultants, guards, cleaners, etc. are agelglot”.
More than a decade ago, former Eritrean Attorney-General, Adhanon Gebremariam, described the use of national service conscripts to provide workers for party, military and government companies, and even for individuals from these organizations, as a system of “slave labor”. He described it as a process defying “all standard international laws”. The services exacted from the conscripts, he said, had only been used for the benefit of the government, the ruling party and senior military officers, not for the benefit of the people. He noted that “the most productive section of the workforce in the country is tied up to the army and is forcibly engaged in road construction or toiling in farms belonging to army officers and the ruling party while the rest of the population are dependent upon international handouts. When such handouts [do] not arrive in time, the people [are] left with no alternative but to flee to neighboring countries.” In fact, he said, the main reason for the displacement of labor from life-sustaining economic activities to other areas was to provide for “the enrichment of the ruling party and high-ranking military officers.”
Other reports have detailed the use of conscripts in government agricultural and construction projects. A report in 2011 noted that all the big farms were owned by the PFDJ as were all the main construction companies, among whom it mentioned the major national companies, “Asbeco, Bidho, Ghedem, Rodaab and Segen and smaller ones such as Badme, Haben, Mereb, Musa Ali and Sawa.” Several reports on Nevsun’s Bisha mine identified Segen and Mereb as the major contractors, with both employing largely conscript labor. They said the overwhelming majority of Segen’s employees and labor force come from “the slave labor pool of youngsters brought from the national service and army.” Interviews of former workers provided detailed evidence of the poor treatment of Mereb’s workers and of the fact that the national service con scripts were paid no more than the then national service “salary’ of 400 Nakfa a month.
The second report of the UN Special Rapporteur for Human Rights in Eritrea, submitted to the UN Human Rights Council on May 13, focused on the country’s indefinite national service and on arbitrary arrests and detention. In its conclusion the report says firmly: “violations of human rights in Eritrea included indefinite national service; arbitrary arrests and detention, including incommunicado detention; extrajudicial killings; torture; inhumane prison conditions; infringement to freedoms of movement, expression and opinion, assembly, association and religious belief; sexual and gender-based violence; and violations of children’s rights.” The Special Rapporteur specifically labelled the endless compulsory national service as “forced labor” under the laws and norms of international law. The report says: “since the length of national service in Eritrea is of an indefinite nature, it effectively constitutes forced labor as provided for in article 8, paragraph 3 (a) of the Covenant on forced labor. The ILO Committee of Experts has also declared the practice of the National Service as incompatible with ILO Abolition of Forced Labour Convention No. 105.”
*******
Source: Ethiopian Ministry of Foreign Affairs’ weekly bulletin, Sept. 05, 2014.
Allana Potash Initiates Preliminary Economic Assessment on Production of Sulphate of Potash (SOP)
.
TORONTO, ONTARIO–(Marketwired – Sep 8, 2014) – Allana Potash Corp. (AAA.TO) (“Allana” or the “Company”) announces that it has engaged ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau (“ERCOSPLAN”) to complete a Preliminary Economic Assessment (“PEA”) on Kainitite resources that may be amenable to SOP production on its Danakhil Project in Ethiopia. SOP is commonly used on chloride sensitive crops such as tobacco, fruits and vegetables and vineyards and typically commands a premium price to Muriate of Potash (MOP). The price differential between MOP and SOP is substantial, and has averaged approximately US$ 125-150/tonne above the MOP price over the past several years. However, recently the differential has increased to over US$350/tonne.
Farhad Abasov, President and CEO of Allana, commented, “We are pleased to have engaged ERCOSPLAN to complete a PEA evaluating the potential of the vast Kainitite resources on the Danakhil Project. As we move to completion on the development of our MOP operations, it makes sense to start to plan for the development of SOP as an Allana product line, particularly given the extent of our estimated SOP-based resource. The SOP PEA will proceed independently but in parallel with our development and optimization work on our MOP production facility as outlined in the MOP project’s Feasibility Study completed in 2013. The Kainitite is ubiquitous on our project license and management believes a positive PEA may allow Allana to add significant value for our shareholders. If the results of the SOP PEA are positive Allana may consider establishing a special purpose company dedicated to developing the SOP resources for sale in the global market.”
The Kainitite mineral resources on Allana’s Danakhil Project are extensive (see table below) and dominated by the mineral kainite (4KMg(SO4)Cl x 11H2O). For details on the Kainitite mineral resources see Technical Report entitled “Resource Update for the Danakhil Potash Deposit, Danakhil Depression, Afar State, Ethiopia” dated effective April 17, 2013 filed under the Company’s SEDAR profile at www.sedar.com on August 7, 2013.
RESOURCE ESTIMATE
TONNAGE (MT)
GRADE (% KCL)
MEASURED
552.3
19.2
INDICATED
598.2
19.5
INFERRED
481.8
19.8
Notes
1. MT=Million Tonnes, tonnage is for in-situ resource with no discount for recovery as mining method is to be determined.
2. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimates of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
3. The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.
The PEA will outline the potential to produce SOP (K2SO4) from kainite derived from the Kainitite Horizon in the project area. The Kainitite Horizon is interpreted as a primary evaporite unit in the basin and has been intersected in diamond drilling in most of the mining license area. The PEA will examine the use of solution mining to mine the Kainitite Horizon and produce 1,000,000 tonnes per year of SOP product from the brine as a separate operation from the current development program which will produce 1,000,000 tonnes per year of MOP.
The PEA will focus on six main areas covering the following:
Preliminary Brine Field Design
Preliminary Evaporation Ponds Design
Preliminary Process Development
Preliminary Definition of Additional Infrastructure
Preliminary Cost Estimates (CAPEX and OPEX)
Preliminary Market Study and Financial Model
ERCOSPLAN has extensive experience with potassium sulphate minerals and processing through its work in the potash industry in Germany where SOP is and has been produced from different combinations of potassium chloride and/or magnesium sulfate bearing minerals. The PEA is expected to be completed by Q1, 2015
GIZ plans major off-grid electricity project in Ethiopia
.
The project falls under the Energizing Development Program – a joint global initiative by Germany, the Netherlands, Norway, Australia, United Kingdom and Switzerland
.
As Ethiopia is constructing a multi-billion dollar dam project on the Nile among several power-generation projects, European partners are chipping in with an off-grid electrification project that aims to bring electricity to the country’s rural areas.
“In the next three years, the German Agency for International Cooperation (GIZ) plans to facilitate electricity access for further 1.3 million people in rural areas of Ethiopia,” Hannes Utescher, head of GIZ Corporate Communications in Ethiopia, told Anadolu Agency.
The project, he said, falls under the Energizing Development Program – a joint global initiative by Germany, the Netherlands, Norway, Australia, United Kingdom and Switzerland.
The venture aims to help low-income households in off-grid areas gain sustainable access to modern energy services, which would also enable them to access education, communication and refrigeration among others, the GIZ official added.
The program is being implemented in the rural areas of the Amhara, Tigray, Oromia and Southern Ethiopian Peoples regions.
“To date, photovoltaic solar systems have been installed in more than 120 public-sector health centers and eight community centers which had no connection to the electricity grid,” Utescher said.
“They now provide access to modern energy services for more than three million people.”
Moreover, GIZ coordinated and trained more than 600 producers of energy-efficient cook stoves on marketing and production techniques. They have sold almost 750,000 stoves and more than 1.8 million people have benefited from these stoves.
“Using the [energy-efficient] stoves, an average household saves around 575 kilograms of firewood every year,” he said. “Also, four pilot micro-hydropower plants have been constructed in three villages in southern Ethiopia, which can provide up to 23,000 residents with electricity.”
The total budget expenditure of the German agency for off-grid electricity projects has amounted to 11.7 million euro since 2010, Utescher said.
All activities are implemented in collaboration with the Ethiopian Ministry of Water, Irrigation and Energy, he added.
Ethiopia has managed to save 38.9 million USD, used to spend on gasoline imports, over the past six years by supplying ethanol blended benzene, the Ministry of Water, Irrigation and Energy said.
The nation has blended 50.3 million liters of ethanol with 46.8 million liters of benzene during those years, according to Bizuneh Tolcha, public relations and communication head at the Ministry.
Since 2009, the country has been supplying a five percent ethanol and 95 percent benzene blend (technically known as E5) to the market.
A Sudanese owned oil company, Nile Petrol, was a sole agent for the blending process and distribution for the product.
Ethanol content in the gasoline has increased to 10 percent since 2011 and now three oil companies, Nile Petroleum, Oil Libya and National Oil Ethiopia are responsible for the blending process and distribution, it was noted.
Up on completion of the ongoing 10 sugar factories, the country’s annual ethanol production will reach 181 million liters, Bizuneh said.
Premier urges farmers to utilize improved technologies
.
.
Prime Minister Hailemariam Dessalegn urged farmers in Gamo Gofa Zone of South Ethiopia Peoples’ State to use modern agricultural technologies and inputs to increase production and productivity.
While discussing with farmers, the Premier said farmers need to utilize improved technologies to fully exploit the untapped potential for agriculture.
The area has a potential to produce high amount of wheat and sesame if they utilize improved technologies, select seed and fertilizers.
He promised that the government could establish a commodity exchange next year, if they managed to harvest one million quintals output.
Arbaminch-Humbo road first phase construction completes
.
.
The first phase of the Arbaminch-Humbo road construction has been completed.
Out of 106 km of Arbaminch-Humbo road 75km was completed in this phase and inaugurated on Friday with the presence of Prime Minister Hailemariam Desalegn.
This once poor gravel road had been a source of discomfort for the community over the last 45 years, it was stated.
‘We were not able to pass the bridge unless we kept a long line. Many cars got broke down here,’ said a driver,expressing his happiness over the completion the first phase construction.
Premier Hailemariam said on top of easing the suffering of the people, the road will play a crucial role in improving the region’s tourist flow.
‘The Arbaminch environ is known for its natural wealth. There are two lakes. The tourist potential is enormous. In addition, the area has been selected as horticultural site at the Federal level. In the future the area will be a hub for agro-processing products as well as fruits and vegetable production. Generally the road will contribute its share in developmental endeavors,’ he said.
The construction of the Arbaminch-Humbo road will shorten the time that used to take on the road, from 6 to 1 and half hours, it was learned.
According to Ethiopian Road Authority, the first phase of the road cost 826 Million Birr.
The second phase that covers the remaining 31 km long is underway and expected to be completed by next year.
The Arbaminich-Humbo road connects Welayita and Gamogofa zones in the Southern Nations, Nationalities and people’s state.
Ethiopia, Germany sign 123.8 mln Euro dev’t cooperation
.
.
Ethiopia and Germany yesterday signed 123.8 million eruro development cooperation aimed at supporting the implementation of projects in three main focal areas–agriculture, education and biodiversity in the coming three years (2014- 2017).
Signing the agreement, Ministry of Finance and Economic Development (MoFED) State Minister Ahmed Shide said that Ethiopia enjoys good relations with Germany which supported it in realizing the MDGs. He also acknowledged the commitment of Germany in working with Ethiopian development issues.
He also reaffirmed that Germany continues cooperating with Ethiopian.
Addis Ababa Water and Sewerage Authority (AAWSA) said five water projects under construction with 5 billion birr will go operational this Ethiopian budget year.
Authority Water Supply and Distribution Deputy General Manager, Fekadu Zeleke, told WIC today that the water project will go operation between late this month and May.
Once completed the projects would raise the potable water supply in the country to 599,000 cubic meters from 350,000 cubic meters now, thereby alleviating the shortage the city is currently facing, he said.
Two underground water projects at Akakai each with a capacity to produce 70,000 cubic meters of water per day will begin rendering service late this month and by the coming February, he said.
Expansion at Legedadi and Dire dam water projects as well as construction of Akaki phase II will be finalized this Ethiopian budget year, hence enabling the authority to supply additional 88,000 cubic meters of water into the system, he added
According to Fekadu, the authority is also sinking 20 water wells that can produce 21,000 cubic meters of water per day in areas which are currently facing water problem.
According to him, some 4 of the water wells have already begun rendering service, according to Fekadu.
Ethiopian, Chinese joint venture sign deal to build 391MW hydropower plant
.
.
Addis Ababa, 9 September 2014 (WIC) –SUR Construction PLC teamed up with two giant Chinese companies to build a new hydroelectric dam in Illu Aba Bora and Jimma zones of Oromia region.
Representatives of the contractors on Monday signed a 583 million USD agreement with Ethiopian Electric Power (EEP) to build the Geba Dam, which will have 391 MW installed power generating capacity.
In the past, SUR teamed up with the same Chinese companies – Sinohydro Corporation and China Gezhouba Group Company (CGGC) – to build the Tekeze dam, a 300 MW hydroelectric dam in Tigray region.
CGGC was also the contractor for Fincha Amerti Neshe (97 MW) and is currently building the Genale Dawa III hydropower project, a 254 MW hydroelectric dam on the border of Oromia and Somali regional states.
Based on the contractual arrangement, SUR will have 25 percent share of the project while Sinohydro and CGGC take a 40 and 35 percent share, respectively.
“Depending upon our performance, our share in the project could rise up to 40 percent, making us the lead partner,” Tadesse Yemane, general manager of SUR, told WIC.
The local company is expected to undertake the construction of two rock-fill dams, spillways and roads with its experts also participating in tunneling and foundation treatment.
“The project will, undoubtedly, contribute for knowledge and technology transfer to our local companies,” Alemayehu Tegenue, minister of Water, Irrigation and Energy, said.
‘Low cost’
Pending a loan approval process, 80 percent of the Geba Dam project will be financed by the EXIM bank of China with preferential credit modality.
“Compared to other similar hydropower projects, Geba is found to be reasonably low cost power plant,” Azeb Asnake, CEO of EEP, said during the signing ceremony.
Located some 540 km south west of Addis Ababa, the Geba Dam is a priority project planned for completion during the second phase of the Growth and Transformation Plan (GTP II).
The hydropower plant, which constitutes Geba I (226 MW) and Geba II (165 MW), is expected to be completed in four and a half years.
“The [joint venture] will pre-finance the project construction works and commence immediately without waiting for the approval of the loan,” Azeb expressed her hope.
The dam is also expected to create a possibility for the irrigation development of some 480,000 hectares in the lower Geba plane.
The launch of the project takes the number of hydroelectric dams under construction to four including Genale III, Gibe III (1,870 MW) and the Grand Ethiopian Renaissance Dam (6,000 MW).
The government of Ethiopia is on the move of joining the Common Market for Eastern and Southern Africa (COMESA) Free Trade Area (FTA) which enables the country to have preferential trade interaction between member countries.
The FTA covers core issues of tariff liberalization, rules of origin, customs procedures and simplification of customs documentation, transit procedures among other issues.
This decision came from following findings and recommendations of a research titled “Ethiopian Industrial Competitiveness” conducted by the COMESA and the Ministry of Finance & Economic Development (MoFED). The research recommended that the country is ready to join the free trade area because the county’s competitiveness in terms of quality and price improved from the previous times, according to Geremew Ayalew director general of trade relations & negotiations at the Ministry of Trade (MoT).
Two researches conducted 10 years ago had identified two main negative outcomes of joining the FTA at that time – that Ethiopia industries would be no match for cheaper imported products from the regional economic community and would be closed, and that 72,000 individuals would lose their jobs as a result of the closure of the industries.
The COMESA was established in the mid 1960s with the idea of regional economic cooperation. COMESA’s FTA was launched on October 2000 with nine Member States with the aim of trading on a full duty free and quota free basis, with the remaining countries at various stages of joining the FTA, which now has 13 members. The FTA has boosted intra COMESA trade, increasing it by nearly six-fold from 3.1 billion dollar in 2000 to 18 billion dollar in 2013.
Ethiopia was not able to join the membership because of incompetency in both the quality and quantity of its industrial products, according to Germew.
To be beneficiary of the preferential treatment goods should be in conformity with the rules of origin of COMESA’s FTA. The criteria generally require the goods should be wholly obtained or have undergone sufficient transformation in the production processes in the FTA..
The Ethiopian Industrial Competitiveness research was conducted by the support of the COMESA and the MoFED. The research was started a year ago and handed over to the MoFED recently after finalization. As a stakeholder the MoT was invited to give comments on the results and recommendations.
“The country will not join the FTA once but in five phases gradually to liberalize and cope up with the trade competition expected from industries of member states,” says to a source who wants to be anonymous.
The arrangement has already been prepared for joining the FTA and submitted to the parliament for parliamentary oversight and reflection before the parliament session was close on July, 2014.
“The parliament has a positive response for the arrangement,” said Germew.
Same like the COMESA’s FTA membership Ethiopia is also in the preparation of joining World Trade Organization (WTO) which was established in 1995 at Marrakech, Morocco, replacing its predecessor, the GATT formed at the end of WWII. Ethiopia is one of 23 countries with observer status to be an additional member to join the current 159 member countries at the WTO.
The World Bank Managing Director and Chief Operating Officer is set to visit Ethiopia. DireTube has learnt that the visit by Sri Mulyani Indrawati is part of the World Bank Groups’ effort to further strengthen the partnership with Ethiopia.
The Director is expected to arrive in Ethiopia on September 14 for a three day visit. Indrawati is scheduled to meet Prime Minister Hailemariam Deslegn and members of his cabinet to discuss opportunities and challenges the country is currently facing. Indrawati will also meet with representatives of the donor community, the private sector, civil society and the media.
According to the schedule, several site visits are planned to assess firsthand how World Bank supported projects are benefiting the poor and are contributing to Ethiopia’s economic transformation.
The Director will also meet implementers and beneficiaries of projects promoting productive safety nets and improving urban local government development.
She will see firsthand how initiatives that increase competitiveness and create jobs play significant roles in reducing poverty.
US $91.10 million for Ethiopia’s One Water, Sanitation and Hygiene National Programme (OWNP)
The Board approved a loan of UA 60 million (US $91.10 million) and a technical support grant of €7.63 million (US $10.06 million) from the Rural Water Supply and Sanitation Initiative (RWSSI) Trust Fund to finance the country’s mega water, sanitation and hygiene program, one of the biggest of such projects in the world.
The One Water, Sanitation and Hygiene National Programme (OWNP) is expected to deliver improved and sustainable water supply facilities in rural and pastoral areas, institutions and urban areas; improved sanitation facilities and better hygiene; improved WASH sector capacity for planning, budgeting, monitoring, reporting and sustaining services at decentralized and federal levels.
The direct beneficiaries are people based in rural and pastoral areas, who will benefit from improved and more inclusive provision of WASH services at household and institutional levels, and who will benefit from the attendant well-being, time-saving, and productivity gains.
The program will lay emphasis on the least served majority of Ethiopians (about 83% of the population who live in rural areas). The youth and women will especially benefit from the establishment of sector-related employment opportunities.
Ultimately, the OWNP is estimated to cost US $2.4 billion. Other institutions funding the project include the UK Department for International Development (DFID), UNICEF the World Bank and the Government of Ethiopia.
The Board meeting followed a flag-raising ceremony formalizing the Bank’s return to its headquarters after more than 11 years in its temporary relocation agency in Tunis.
InterContinental Hotel Group Unveils Ethiopian Branch
.
VENTURES AFRICA – British multinational hotel company, InterContinental Hotels Group (IHG) is expanding its business in Africa with the launch of a 210-key hotel in Addis Ababa, Ethiopia, bringing its African total to 13 countries.
The hotelier said it has signed a management deal with Tsemex Hotels and Business Plc to develop its “Crowne Plaza” brand of hotel in the Ethiopian capital city.
It will be strategically located close to the headquarters of the United Nations Economic Commission for Africa, the African Union headquarters and the United Nations Convention Centre. And will also have seven large meeting rooms, a ballroom, a boardroom and other facilities like the health club and spas.
Pascal Gauvin, IHG CEO for India, Middle East and Africa, said the hotel is currently developed to exploit the growing inflow of tourists and foreigners, particularly with the Bole International Airport now serving almost 20 million passengers yearly.
“Addis Ababa has great potential for tourism but is currently under-supplied in catering to business travellers and meetings and events,” he said.
With presence across 12 African countries, IHG currently has 29 hotels, under five popular brands. These brands include Holiday Inn Express, Crowne Plaza, Holiday Inn, InterContinental, and Staybridge Suites.
Lack of competition affects mobile data markets of Congo and Ethiopia
.
.
Mobile communications markets in the Democratic Republic of the Congo (DRC) and Ethiopia face challenges due to lack of competition, poor economic conditions and limited infrastructure availability, says a new report from Frost & Sullivan.
Additionally, mobile operators in these markets are largely focusing on subscriber acquisition and network expansion for voice services. This causes delay in the rollout of advanced networks such as Long Term Evolution (LTE) compared to other developed market, the report said.
The two markets earned revenues of $1.78 billion in 2013 which is expected to reach $3.27 billion by 2018, says a new report from Frost & Sullivan.
While population densities of both countries are among the highest in Sub-Saharan Africa, their active mobile penetration rates in 2013 were 36.4 percent and 24.1 percent respectively, well below Sub-Saharan Africa’s average of 61 percent, the research said.
The markets will see substantial growth in the next three to five years, mainly driven by the growing infrastructure investment in the region.
Data services and mobile money solutions are the key drivers of the market. Data revenue will be driven by the proliferation of low-cost mobile devices and the growing popularity of social media platforms. Mobile money will gain prominence as the number of Ethiopia and DRC’s unbanked populations have prompted their respective governments to place financial inclusion at the forefront of their socio-economic plans.
“While voice is still by far the dominant contributor to service revenue, data services and mobile money solutions are expected to fuel growth in the long term,” said Frost & Sullivan Information & Communication Technologies Research Analyst Lehlohonolo Mokenela.
Frost & Sullivan also finds that the growth of Ethiopia’s mobile communications market has been mostly been limited by a lack of competition; state-owned Ethio Telecoms is still the only provider in the market owing to tight regulatory protection.
Upon the completion of the country’s Growth and Transformation Plan (GTP), it is expected that the regulator will gradually open the market to competitors, Mokenela added.
In order to grow customer base in rural areas, mobile operators need to consider cost-effective network expansion strategies in the DRC, added Mokenela. “Leveraging infrastructure-sharing models and using hybrid base stations can help operators lower their operational site costs and mitigate the country’s intermittent electricity supply.”
Ireland Pledges to Consolidate Dev’t Assistance to Ethiopia
.
.
Foreign Affairs State Minister Ambassador Birhane Gebrekristos held talks on Tuesday, September 9, 2014 with Niall Burgess, Secretary-General of the Department of Foreign Affairs and Trade of Ireland, on ways of improving the bilateral relations of the two countries.
During the occasion, Ambassador Birhane called on Irish investors to seize the investment opportunities created in Ethiopia and invest in agriculture, health, hotel and tourism as well as industry sectors.
He further urged Ireland to consolidate its development assistance in the spheres of agriculture, food security, potable water and other infrastructural activities.
Stating the importance Ethiopia attaches to the development support it get from Ireland, Ambassador Birhane finally asked the government of Ireland to uphold its contributions to the peace keeping effort underway in East Africa.
Niall Burgess on his part said Ireland would consolidate the development assistance it extends to Ethiopia.
He pointed out that Ireland would continue providing support for Ethiopia in its endeavors to meet the Millennium Development Goals; poverty, maternal and infant mortality reduction, and in development activities in general.
According to the Secretary-General, his country will strengthen its support to the effort underway to bring peace to East Africa and Africa in general.
Ireland has also the desire to jointly work with Ethiopia in climate change, peace and stability as well as African and other international issues, he added.
Ministry of Foreign Affairs Spokesperson, Ambassador Dina Mufti, stated that the relationship between Ireland and Ethiopia has registered tremendous growth within a short period.
The President of Ireland is expected to visit Ethiopia after two months, it was learned.
The Globe and Mail reports in its Tuesday, Sept. 9, edition that Allana Potash (31 Canadian cents) has hired a German company Ercosplan to complete a preliminary economic assessment on kainitite resources for sulphate of potash (SOP) production at its Danakhil project in Ethiopia.
The Globe’s Darcy Keith and Sonali Verma write that SOP is commonly used on chloride-sensitive crops such as tobacco, fruits, vegetables and vineyards. SOP typically commands a premium price to muriate of potash.
The price differential between the two has averaged approximately $125-$150 (U.S.) per tonne over the past several years and has increased to over $350 (U.S.) per tonne recently.
Allana Potash says the kainitite mineral resources at its Danakhil project are extensive.
Cantor Fitzgerald analyst Peter Prattas says, “In our opinion, this is a prudent move requiring only modest investment toward proving the economic validity of this resource with the potential to create value for shareholders.”
Mr. Prattas has a “buy” rating and $1.15 (Canadian) price target on the company’s shares. Mr. Prattas maintained his “buy” call on Allana in The Globe on Oct. 10, 2013. The shares were then worth 47 Canadian cents.
Turkey outdoes China in terms of Ethiopia investment
.
.
While Turkish investors had arrived later, they had since poured some $1.2 billion worth of investment into Ethiopia, Habte said.
Despite China’s outstanding record of development assistance to Ethiopia, the Asian giant’s investments in the African state lack volume, a senior Ethiopian Investment Agency official has said.
China has invested $836 million in Ethiopia over the past ten years, Debela Habte, a senior public relations expert at the agency told Anadolu Agency on Thursday.
He added that, while Turkish investors had arrived later, they had since poured some $1.2 billion worth of investment into Ethiopia.
“Turks invest their money in large-scale projects, while the Chinese are more involved in both small- and large-scale projects,” Habte said
He said Turkish investors were largely engaged in the textile industry, which, he said, required significant capital.
This, Habte added, could explain why Turkey’s investment capital in Ethiopia had surpassed that of China.
Nevertheless, Habte said, China had managed to retain its leading position in terms of investment-related job creation.
“Chinese companies have managed to generate over 75,500 jobs [in Ethiopia] while Turkish companies have generated only 20,900 jobs,” he said.
He added that both the Turks and Chinese tended to focus their respective investment projects in capital Addis Ababa.
Habte said that 296 Chinese projects – out of a total of 437 Chinese projects in the country – were located in the capital, while 55 out of 100 Turkish projects were located in Addis Ababa.
Turkish investment projects, he noted, were mainly in the fields of manufacturing, real-estate, construction and hospitality.
He added that 69 Turkish projects were in the manufacturing sector.
VENTURES AFRICA – World’s biggest liquor maker, Diageo Plc says Africa remains one of its most lucrative markets outside its home market in Dublin, Ireland, labeling it an “engine of growth.”
According to Diageo CEO, Ivan Menezes, Africa is a “tremendous engine of growth” for the brewer, especially for its beer business and the Guinness brand.
Diageo, which owns various leading alcoholic beverage brands like Guinness, Harp and Smirnoff, sees Africa as a major source of larger revenue in the future.
Compared to other developing nations, Africa has a large beer-consuming market and this has attracted leading beer markers like Diageo, SABMiller and Heineken to launch their products in different countries on the continent.
In Nigeria, for instance, the value of the beer market has grown from 21.8 percent in 2009 to about 23.45 percent as at 2013.
A Rabobank International report released earlier this year also confirmed that Africa provides the most interesting opportunities in terms of demographics and economics.
In the future, Menezes said the brewer will continue to increase its investments substantially while banking on quality, authenticity and heritage as its key discipline to successfully exploit the continent’s growing beer market.
Ethiopia, Ireland to consolidate bilateral cooperation
.
.
Foreign Affairs State Minister of Ethiopia, Ambassador Birhane Gebrekristos held talks on Tuesday with Niall Burgess, Secretary-General of the Department of Foreign Affairs and Trade of Ireland, on ways of improving the bilateral relations of the two countries.
Ambassador Birhane called on Irish investors to seize the investment opportunities created in Ethiopia and invest in agriculture, health, hotel and tourism as well as industry sectors.
He further urged Ireland to consolidate its development assistance in the spheres of agriculture, food security, potable water and other infrastructural activities.
Stating the importance Ethiopia attaches to the development support it get from Ireland, Ambassador Birhane finally asked the government of Ireland to uphold its contributions to the peace keeping efforts underway in East Africa.
Niall Burgess on his part said Ireland would consolidate the development assistance it extends to Ethiopia.
He pointed out that Ireland would continue providing support for Ethiopia in its endeavors to meet the Millennium Development Goals; poverty, maternal and infant mortality reduction, and in development activities in general.
According to the Secretary-General, his country will strengthen its support to the effort underway to bring peace to East Africa and Africa in general.
Ireland has also the desire to jointly work with Ethiopia in climate change, peace and stability as well as African and other international issues, he added.
Ministry of Foreign Affairs Spokesperson, Ambassador Dina Mufti, stated that the relationship between Ireland and Ethiopia has registered tremendous growth within a short period.
The President of Ireland is expected to visit Ethiopia after two months, it was learned.
NAIROBI, Kenya, Sep 10 – Kenya has signed a Memorandum of Understanding with Toyota Tsusho Corporation for the construction of the much anticipated fertiliser plant that will see 150,000 metric tons of NPK fertilizer manufactured by July 2016.
Speaking during the signing of the MoU, Agriculture, Livestock and Fisheries Cabinet Secretary Felix Kosgei said lack of proper use of fertiliser by the farmers has led to low yields, which is attributed to the purchase price.
“Fertiliser use per hectare has been very low and therefore productivity has been down, and that is why instead of the standard application of about 100-200 kilograms per hector Kenya is still applying only 31 kilos and it is because of the cost.”
“The farms they have now can even double or triple their production if proper application of fertiliser is used,” he said.
Kosgei says upon completion of the plant, there will be a significant drop in the cost of production in agriculture.
Transport and insurance when importing fertilisers have also been pin-pointed as the reasons why the cost is high.
He added that employment opportunities, potential for expansion of plants by TTC to different parts of Kenya, high yield, better profits, as well as creating a healthy competitive environment for fertiliser prices are just some of the benefits of the partnership.
Eldoret has been earmarked as the location for the construction of the plant. The Director and Senior Advisor Toyota Tsusho East Africa Dennis Awori says this is because it is at the centre of the biggest market for fertiliser.
“Transport is a big cost so if we can produce it as close to where the bulk is going to be used as possible, then we will reduce on the transport cost,” he said.
Due to high fertiliser prices, the government has been importing fertiliser and selling it at a subsidized price to the farmers most recently having procured 160,000 metric tons at a cost of Sh4 billion.
Awori says construction will begin by the end of 2014, adding the biggest drop in price will be actualised in phase two but they will need a stable source of natural gas at the right price.
“If Kenya’s natural gas deposits are found to be commercially viable, then it should be possible I’m sure with the assistance of the ministry to get that natural gas we need at the right price, that is when there will be a substantial drop,” he said.
Other areas earmarked for plant construction in the future include Mt Kenya, Western Kenya and the coastal region.
Construction of these other blending plants is so production of fertiliser can be soil and region specific as opposed to generic.
Like Rwanda, the east African nation is not a classic commodities country. So it owes its success to the positive development mainly of agricultural productivity, political reforms, and the downsizing of bureaucracy. The average per capita income of $500 a year is significantly lower than the regional average, a fact that the government uses when plugging Ethiopia to potential investors. In the capital Addis Ababa, ever more risk capital partners are looking for entrepreneurs.
Within a few years, Ethiopia went from being one of the world’s poorest countries to joining the group of “middle-income countries,” as the UN calls countries with a minimum per capita income of $1,026. Some of the most ambitious projects on the continent are taking place in Ethiopia, among them Africa’s largest hydroelectric power station due to be constructed here, as well as a rail system nearly 5,000 kilometers long that will help the country industrialize.
The government was recently criticized for electoral irregularities and suppressing the opposition, but it invested heavily in education and health. The number of Ethiopians living in extreme poverty is shrinking by 2% per year.
The development of these countries seems all the more spectacular because of where they started. Yet all African countries together accounted for only 3% of worldwide gross domestic product. So Africa urgently needs more model states, and then headlines from the continent of crises will start to report more good news.
An Ecuadorian investor said he has begun introducing state-of-the-art technology to the Ethiopian floriculture sector which is suitable to the European flower market.
Owner and General Manager of the Ecuador-based cut flower group Bellaflor, Mauricio Castillo, told ENA that besides its proximity to the European market, the lower transportation cost for flowers has made Ethiopia a preferred market.
Castillo said the Bellaflor group, which has gained international recognition, has 32 years experience in producing cut flowers.
Although the company supplies 75 percent of its produces to the US, it has also many customers in Europe and Asia, according to the general manager.
The investor, who came to Ethiopia last year to engage in floricultural sector, was granted 73 hectares of land in Welmera Woreda of Oromia Regional State.
Half of the total land would be used for developing cut flower, Castillo said, adding that the project launched in May will create jobs to 1,000 citizens when it goes fully operational.
The investor further said he would allocate 18 million USD in the coming three to four years to develop 32 types of roses and summer flower.
In terms of providing social services for the localities, Castillo said the company has built 3.2 kilometers long gravel road at a cost of 50,000 USD and would build a health center that particularly cares for the new born to 6 year old children.
Ethiopian Horticulture Development Agency Director-General, Alem Weldegerima, on his part said two Ecuadorian investors have invested in floriculture development in this current year alone.
Besides, investors from Middle East, Far East and South America have entered the Ethiopian market this year to engage in horticulture and floriculture, he added.
http://in2eastafrica.net/tororo-fertilizer-plant-set-to-be-launched/” width=”620″ height=”350″ />
.
