The head of Ethiopia’s exporters association says the East African country expects coffee exports for its 2014/15 crop to hit a record high because of drought and disease stifling crops in Latin America.
An unprecedented drought early this year reduced the 2014/15 crop in the world’s biggest coffee producer Brazil.
we are expecting the international market to go up
The International Coffee Organization forecast in September that global coffee production will fall short of demand.
In the four months from July this year, Ethiopia – Africa’s biggest producer of the bean – exported 54,000 tonnes of coffee worth $231.9 million, compared with the $172.5 million it earned from 51,000 tonnes over the same period last year.
Hussein Agraw, chairperson of the Ethiopian Coffee Exporters’ Association, said he expected the amount of coffee exported to rise to 235,000 tonnes by the end of 2014/2015, generating $862 million in revenue.
Ethiopia exported around 190,000 tonnes in 2013/14, earning $841 million, he said.
Exports hit a previous record high of 193,000 tonnes the year before, he said.
“We are making these expectations because of the fall in production in Brazil,” he told Reuters.
“Because of this, we are expecting the international market to go up,” Hussein added, referring to demand.
Total coffee production in Ethiopia amounted to 450,000 tonnes over the 2013/14 period, according to official figures.
Officials expect a similar output by the end of 2014/15.
Ethiopia prides itself on being the birthplace of coffee. Some 15 million people are involved in its production, mostly in smallholder farms in the misty forested highlands in the country’s west and southwest.
VENTURES AFRICA –Ethiopia says it expects coffee exports for its 2014/15 crop to hit a record high because of drought and disease stifling crops in Latin America, Hussein Agraw, the Chairperson of the Ethiopian Coffee Exporters’ Association said on Wednesday.
Brazil, the world’s biggest coffee producer, suffered an unprecedented drought early this year which reduced the 2014/15 harvest and led the International Coffee Organization to forecast in September that global coffee production will fall short of demand.Hussein told Reuters that Brazil’s coffee struggles meant more success for Ethiopia as he expected the international coffee market to go up in demand.
The birthplace of coffee, Ethiopia’s total production of the highly lucrative cash crop over the 2013/14 period amounted to 450,000 tonnes , according to official figures. Officials expect a similar output by the end of 2014/15.Ethiopia exported around 190,000 tonnes in 2013/14, earning $841 million; the year before it hit a record high of 193,000 tonnes. But Hussein said he expects the amount of coffee exported to rise to 235,000 tonnes by the end of 2014/2015, generating $862 million in revenue.
Ethiopia Starts Marketing Debut Eurobond for Projects
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By Robert Brand, Paul Wallace and Lyubov Pronina
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Ethiopia raised $1 billion in a debut international bond issue today, taking advantage of record demand for high-yielding African debt to fund electricity, railway and sugar-industry projects.
The 10-year bonds priced to yield 6.625 percent, at the lower end of the 6.625 to 6.75 percent price guidance, according to a person familiar with the matter, who isn’t authorized to speak publicly and asked not to be identified. Kenya’s $2 billion of bonds due June 2024 yielded 5.89 percent at 5:21 p.m. in London.
Africa’s fastest-growing economy and biggest coffee producer is joining issuers, including Ghana, Kenya, Senegal and Ivory Coast, who sold what Standard Bank Group Ltd. says is a record $15 billion of Eurobonds this year. Government and corporate issuers are seeking to benefit from investor appetite for higher returns before the Federal Reserve raises interest rates as soon as next year.
Ethiopia’s bond yield is “decent value for the deal given the limited knowledge and different nature of the Ethiopian economy and the challenges it faces compared to peers in the region,” Kevin Daly, a senior portfolio manager at Aberdeen Asset Management Plc, said by e-mail.
The country made a strong case for infrastructure development and financing needs at investor meetings, “which suggests they will be looking to come back to the market in near term,” Daly said.
Ethiopia will probably need to invest about $50 billion over the next five years, of which $10 billion to $15 billion may come from foreign investors, Finance Minister Sufian Ahmed said on Oct. 7. Most of the capital raised will be used to develop sugarcane plantations, a 6,000-megawatt hydropower dam on a tributary of the Nile River and the country’s railway network, he said.
“It is certainly a good time for them, market wise,” David Cowan, an Africa economist at Citigroup Inc., said at a conference in London. “Ethiopia is still one of the most closed economies, although it has a very strong developmental vision. They have to think about how they use that money to drive that development.”
Band Aid
Almost 30 years after pictures of Ethiopian children with distended stomachs were used to raise money by Bob Geldof and Band Aid, the country is growing faster than any other African economy, at an average rate of 10.9 percent over the past decade, International Monetary Fund data shows.
African government and corporate Eurobonds sales this year beat 2013’s record $14 billion, Standard Bank said on Nov. 13. Sovereigns accounted for about 71 percent of issuance, according to the Johannesburg-based lender.
Ethiopia was assigned its first credit ratings in May. Moody’s Investors Service rates it a non-investment grade B1 with a stable outlook, while Standard & Poor’s and Fitch Ratings awarded the East African country B, one grade lower.
Moody’s said the nation’s economic prospects, while favorable in the long term, were constrained by political risks and dependence on volatile agricultural commodities. Deutsche Bank AG and JPMorgan Chase & Co. managed Ethiopia’s sale.
LG-KOICA Hope TVET College has finished its preparation to provide trainings in the areas of IT (Hardware and Network Servicing) and Electronics which contains two streams of Home and office Equipment servicing and Electronic and multimedia communication servicing.
In each training stream the departments only accepted 25 qualified trainees so recently the college has a total of 75 students based on the criteria set by Addis Ababa TVET Agency and the entrance exam set by the college.
Initially a total 221 trainees has applied for the college and only 75 trainees are selected for the three training streams by way of various requirements set by the college including entrance exam. In the application and selection process descendants of Korean War Veterans has been given special consideration. During this project students will not be requested to pay anything so the training is provided is for free. In addition LG also provides lunch service for all 75 students during their stay in the training years.
Even though the college uses the curriculum designed by the TVET agency, LG has inserted some important courses that can facilitate the transfer of LG’s core technologies and competencies. Beyond the technological transfer the college will also provide innovative course so that the young generation will craft income generation initiations and Skills of entrepreneurship.
As part of its CSR program, LG currently runs five major projects in Ethiopia which are pertinent and supportive of the country’s development routes. These projects are: LG Hope Village, LG Hope TVET College, LG Hope Descendants, Vaccination Program and Elementary school supporting Program. The corner stone for all these projects has been and it will always be self-reliance and sustainability.
Among these programs the one that focuses on fostering young middle level technician that can positively contribute for the Ethiopian Industry is the LG-KOICA Hope TVET College.
Currently the Ethiopia Educational system has given ample attention in creating skilled human power that can fill the gap in the labor market. The TVET project has the principle concept of establishment, operation and transfer. Since April, 2014 LG has been constructing the building, drafting the legislation and the manuals, reviewing the Occupational Standards and hiring qualified trainers and trainees.
Each of LG Hope Projects focuses on specific needs of the local population in Ethiopia and attempt to address the causes, not just their effects, with creative, multifaceted solutions. The College also fills the gap in the labor market in securing skilled human power which is the basis for the industry of any country. LG Electronics; hence, will further strengthen its support and be fully committed to the Ethiopia’s development objectives.
The college is located in Summit condominium of Bole sub city and the training provided in both fields runs from Level I to Level IV.
BRCK, a portable Wi-Fi router and a backup power generator for the internet, is expected to alleviate problems that African Internet users face daily such as high communication costs and unreliable electricity.
Ushahidi, a not-for-profit technology company based in Kenya, has invented a cloud-managed, portable Wi-Fi router that consists of a mobile modem, which can also be used as a backup power generator for the Internet during electricity blackouts or in situations of limited network coverage.
Out of adversity can come innovation
Called BRCK (pronounced as “brick”), experts are already recognising it as an ingenious solution to Africa’s intractable power problems.
The BRCK is rugged and water-proof and compatible with any device that requires between 3 and 17 volts power supply.
It weighs 510 grammes and it is ideal for use in particularly rural areas. It can be charged on readily available power sources such as a car battery or a solar panel. When the electricity goes off, BRCK automatically switches to battery mode, which can then last for eight hours.
In addition, currently available modems in Africa don’t meet local needs.
They are designed primarily for use in more developed regions, particularly the West and Asia, where there is mostly uninterrupted access to electricity and Internet.
The gadget can switch between Ethernet, Wi-Fi and mobile broadband connections, and deliver connectivity for up to 20 devices at the same time through multiple sim cards, thereby allowing users to stay connected at a relatively low cost.
Ushahidi is optimistic about the device’s potential to help small business owners in Kenya and other parts of Africa.
“Out of adversity can come innovation,” said Juliana Rotich, Ushahidi’s executive director, at a presentation at the TED Global Conference in Scotland last year.
Rotich emphasized the importance of connectivity and entrepreneurship for Africa’s digital economy, and highlighted the BRCK’s role in keeping Africans connected.
Last July, BRCK’s creators were invited by eLimu, a Kenyan tech company, to consider delivering an e-learning to schools in remote locations.
The BRCK has also been stress-tested successfully in rural Kenya and during the Rhino Charge, an annual off-road motorsport competition.
Launched last July in Nairobi, each BRCK sells for $199. Africa’s ongoing information and communication technology (ICT) transformation makes BRCK a potentially popular device.
Ushahidi (meaning “testimony” or “witness” in Swahili) was originally founded in 2008 as a website to map reports of violence in Kenya in the aftermath of the disputed 2007 presidential election.
Since then, the company has evolved into a leader of the technology community in East Africa.
European oil trader Vitol is likely to clinch a term deal to supply nearly 1.2 million tonnes of oil products into Ethiopia for next year, industry sources said.
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Vitol placed the lowest offer out of seven into a tender by Ethiopian Petroleum Supply Enterprise (EPSE) to buy 1 million tonnes of gasoil, 45,000 tonnes of gasoline and 120,000 tonnes of jet fuel for 2015.“Vitol had the lowest offer in terms of weighted average price so they came out in favour, but the tender is still under validity,” one of the sources said.If awarded the tender, it will charge a premium of $3.85 a barrel above Middle East quotes for the gasoil cargoes, a $6 a barrel premium for the gasoline cargoes and a $14.20 a barrel premium for the jet fuel cargoes, the source added.
The other companies who participated in the company include Glencore, Independent Petroleum Group (IPG), Lukoil, Trafigura, Bakri, BB Energy and Socar Trading, the source said.
The credit period will be for 150 days, the source said.
Calzedonia, Italian Garment Company is to invest in textile industry in Ethiopia.
The nation’s population size, huge potential resource, investment incentives, among others, attracted the company to engage in textile industry in the country.
The Company is expected to open its first Ethiopian branch in Mekelle town next year, the Ministry of Foreign Affairs said.
In his meeting with the company delegates at the Ministry yesterday, State Minister Dawano Kedir said that Ethiopia has ample investment opportunities and huge potential for textile industry and others.
Given the country’s strategic location at the crossroads of three continents, the peaceful investment climate and incentives, among others, have attracted investors to come and take advantage of the business opportunities in Ethiopia, he added.
Dawano also invited the delegates to explore new avenues of engagement in the manufacturing sector, in agro-processing and tannery.
Briefing journalists on their discussion with the State Minister, Company President Sandro Veronesi said that this is his second visit to Ethiopia.
Our meeting with the State Minister was fruitful as we have been able to identify the advantages and conditions prevailing in the country. We want to establish a factory for the production of night wear capable of employing some two to three thousand people. But we are still assessing the appropriate location and suitable conditions for the establishment of the factory. We are hopeful to start with the investment by next year,” he said.
ERC inks contracts with Chinese companies for AA-LRT management
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Ethiopian Railways Corporation (ERC) yesterday concluded an agreement with China Railways Group and Shengen Meter Group for the maintenance and management of Addis Ababa Light Rail Transit (AA-LRT).
The contract sets out three to five year periods for the Chinese companies to maintain and manage the AA-LRT.
ERC Board Chairperson and Adviser to the Prime Minister with the Rank of Minister Dr. Arkebe Equbay said at the signing ceremony that there is no local company with the desired knowhow and experience to shoulder the administrative and maintenance of the rails.
He added the Chinese companies will conduct the testing of the tram and commence full operation.
Dr. Arkebe said the contract sets out a mechanism where technological transfer takes place and Ethiopian staff gain experience in the three to five year period.
After the five year, administering and maintaining the rails will be conducted by Ethiopians, it was noted. As such, the contract involves training Ethiopians in China.
The performance of the companies will be measured, among others, with the number of Ethiopian experts they have trained and by indicators of facilitating the city’s tram service.
Chief Executive Officer (CEO) of ERC Dr Getachew Betru (Eng) disclosed the 106 million US dollars deal will pave the way for international experience in managing trams to enter Ethiopia.
Intra-regional trade in COMESA has steadily risen from US $3 billion to US $20.9 billion since the establishment of a Free Trade Area in 2000.
This however, excludes the informal trade across the borders that currently goes largely unrecorded but which has been estimated at over 30% of formal trade.
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According to the 2013 status report presented to the COMESA Intergovernmental Committee (IC) in Lusaka, Zambia (4-6 December 2014) intra-COMESA trade is still low partly due to the similar products that compete for the same market within the Member States and the existence of Non- Tariff Barriers (NTBs).. For example in 2013, intra-COMESA trade was recorded at 7% as compared to other regions such as the ASEAN that have recorded 25% intra-regional trade.
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In his address while opening the IC meeting, Zambia Minister for Commerce and Industry Hon. Bob Sichinga said that focus should now be place on addressing the bottlenecks to intra-regional trade, such as NTBs, supply side constraints, border measures that affect and impact on volumes and values of intra-trade.
“It is incumbent upon all the stakeholders to address these bottlenecks to sustain the momentum thus far achieved, deepen COMESA’s integration agenda beyond the FTA, and attain a fully functional common market by 2018,” the Minister told the IC meeting which is comprised of Permanent Secretaries from Member States.
He appreciated that COMESA’s had developed draft NTB Regulations that would enable the region to address barriers related to intra-regional trade under a legal framework such as the arbitrary imposition of NTBs.
“The Annex on NTBs that also includes enforceability through the invocation of Article 171 of the Treaty is before this Committee, and the expectation is that pursuant to past Council decisions, you will now recommend the same for adoption by the Council of Ministers to facilitate its implementation,” the Minister urged the PSs.
COMESA has focused on industrialisation to address part of the supply side constraints and has subsequently put in place the Clusters Programme initiatives in the cassava, textiles and leather sectors. These clusters aim at establishing linkages between the SMEs to the particular cluster value chain; for instance, the cassava cluster links the small scale farmer to the market, through the making of industrial starch.
“Such initiatives go a long way in addressing the supply side constraints, but more importantly, increased value addition, leading to diversification of intra-regional exports,” the Minister said.
UNCTAD and Luxembourg join forces to strengthen competition policy and consumer protection in Ethiopia
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09 December 2014
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The UNCTAD Secretary-General and Luxembourg’s Ambassador signed an agreement to reinforce the capacities of Ethiopian enforcement authority on 5 December 2014 in Geneva.
H.E. Mr Jean-Marc Hoscheit and Dr. Mukhisa Kituyi
In response to a technical assistance request from Ethiopia and in consultation with its government, UNCTAD developed a project proposal based on the needs of the Ethiopian Trade Competition and Consumer Protection Authority.
The Grand Duchy of Luxembourg provided financial support for the three-year project, set out in an agreement signed in Geneva on 5 December between UNCTAD Secretary-General Mukhisa Kituyi and Ambassador and Permanent Representative of Luxembourg to United Nations at Geneva Jean-Marc Hoscheit.
The project aims to reinforce the capacities of the authority in implementing competition and consumer protection laws.
During the signing ceremony, Dr. Kituyi expressed his appreciation to Luxembourg in supporting this project, and said that UNCTAD looked forward to its work in Ethiopia.
Mr. Hoscheit said that his country was happy to support the project in partnership with UNCTAD, an organization with which Luxembourg has had a long-term relationship.
The project, which starts in December 2014, will cover four broad areas; the policy and legal framework, the institutional framework, enforcement capacity building, and advocacy for competition and consumer protection.
A Paradigm Shift: Entrepreneurship Taking Precedence Over Public Jobs In Ethiopia
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VENTURES AFRICA –In Ethiopia, a country of 90 million the main and almost the only source of employment was the government. Previously many young graduates dreamed of joining a government offices and becoming a public servant. But these days this attitude has been replaced by the idea of becoming an entrepreneur or self-employed.
Getahun Ekyawu is one of these new thinkers. He graduated six years ago from Hawassa University in Hawassa City, 268km south of Addis Ababa. He began thinking about starting his own business even when he was student at the university. After graduating, he started his first business, establishing a mushroom farm with an initial capital of $450.This business has blossomed into a $10,000 entity and employs over 15 people. Gethaun’s learnt about entrepreneurship from a course he took at the university. However, there are now a number of private training institutes for young or prospective entrepreneurs. These institutes offer short and long term courses ranging from three to nine months. The average cost of such trainings is between $45 and $110.
Dr. Werotaw Bezabeh owns a training centre. He established Genius Entrepreneurs Training Center 10 years ago with an initial capitalization of $2250. It currently generates more than $25,000 in revenue annually. “We have trained students for 413 rounds and our plan is to train one million entrepreneurs,” said Werotaw. Identifying business opportunities, how to prepare business plans and business ethics are some of the courses offered at Genius.
Ethiopia has declared that its debut on the Eurobond market was a success after its $1 billion bond was oversubscribed by 260 percent last Thursday.
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The East African country debuted with a 10-year- $1 billion Eurobond at a coupon rate of 6.625 percent.
According to the Finance and Economic Development ministry, the success of the bond “affirms widespread positive receptivity to Ethiopia’s track record of significant economic growth, prudent fiscal management and targeted reform agenda”.
Investors remained engaged throughout the process
“The transaction successfully crystallised the positive momentum generated from Ethiopia’s international roadshow, during which over 80 institutional investors were visited in the United States and Europe,” the ministry added in a statement.
Ethiopia attracted high quality investor interest despite a challenging environment in the market.
“Investors remained engaged throughout the process and reflected sizeable appetite to participate in the deal,” the Finance ministry said.
Initial price projections for the bond were put at a yield level of around 6.750. The government eventually settled for 6.625 percent for the $1 billion bond.
Ethiopia focused on a 10-year maturity rate to create a strong benchmark, which matched its preference for duration given its infrastructure-driven use of proceeds.
The transaction was distributed primarily to United State investors who accounted for 50 percent of the subscribers, followed by those in the United King (35 percent), Europe (14 percent) and others (1percent).
Fund managers dominated allocations (receiving 96 percent), underscoring the high calibre of demand.
A company from France acted as a financial advisor to the Finance and Economic Development ministry.
Deutsche Bank and J.P. Morgan acted as joint lead managers for the transaction.
Ethiopia has said the funds would be used to finance new infrastructure for the Horn of Africa nation, which battled against famine three decades ago and now boasts some of the fastest economic growth rates in Africa.
Ethiopia’s success follows that of Kenya whose $2 billion Eurobond in June was heavily oversubscribed.
With developed market bonds yielding record low returns, fund managers are venturing into frontier and emerging markets – notably in Africa, the fashionable destination for intrepid investors.
Ethiopia, for instance, is seeking to raise up to $1bn (£630m) with a 10-year bond, following a recent roadshow to European and US investors. The aim is to build roads, railways and hydroelectric dams.
Rated B1 by Standard & Poor’s and B by Moody’s and Fitch Ratings, Ethiopian sovereign debt is well into junk bond territory. Yet this has not deterred pension funds, insurers and sovereign wealth funds from subscribing to the issue.
The bonds are expected to generate a yield of approximately 6-7 per cent a year, compared to consensus forecasts for emerging market debt of 4 per cent (down from 9 per cent), according to Amin Rajan, chief executive of Create Research.
Meanwhile, former Barclays chief Bob Diamond is targeting Africa’s banking sector through his Atlas Mara vehicle, and private equity group KKR recently took a $200m stake in a Kenyan flower farm.
Retail fund managers are also eyeing esoteric plays. One is Mary-Therese Barton, an emerging market debt manager at Pictet Asset Management, who plans to take advantage of higher-yielding markets such as Lebanon and Vietnam. Unlike the debts of China, Malaysia and Mexico – which move with US Treasuries due to their dollar peg – these countries’ debts move in relation to domestic issues, she says.
Martin Harvey, deputy manager on the Threadneedle Global Opportunities Bond fund, says he has increased exposure to “quality markets” such as Mexico and Columbia. At the same time Zsolt Papp, who works on the emerging market debt team at JPMorgan Asset Management, says it has taken tactical trading positions in Brazilian debt after the price fell and the yield rose correspondingly.
The team is also reviewing the Ethiopian bond issue. “Like with any emerging market debt investment, if it carries a strong growth story and good valuations, then it is something we would consider gaining exposure to,” Mr Papp says.
Anthony Gillham, who co-manages multi-asset funds at Old Mutual Global Investors, thinks emerging market government bonds issued in local currencies are currently among the best value assets across the entire fixed income spectrum.
“Yields are above 6 per cent, which compares very favourably with developed market government bonds, particularly when you risk-adjust these yields,” he says.
“A 10-year gilt offers just 25 basis points in yield per year of duration, whereas Brazilian 10-year government bonds offer approximately 2 per cent yield per year of duration.”
He thinks many of the factors that have held back emerging market currencies since 2013 are abating, which will boost bonds denominated in those currencies. Indonesia has stabilised its balance sheet in terms of imports versus exports, he says, while weaker commodity prices have been a tailwind for nations such as Turkey.
“Given such reasonable valuations in the more mainstream parts of the asset class at the moment, I question whether it is necessary to move into frontier markets such as Ethiopia, particularly at a time when market makers are structurally pulling back from providing secondary market liquidity,” adds Mr Gillham.
Mr Papp argues esoteric corporate bonds are not necessarily less safe than esoteric government bonds, since their issuers recognise they could be shunned by the capital markets if they fail to meet their debt service obligations.
This pressure is perhaps more potent where companies are concerned, he says, because governments can rely on financial support from supranational lenders such as the International Monetary Fund.
He adds that investors should differentiate between fundamentally sound sovereign issuers and those facing a deteriorating or vulnerable macro backdrop.
“One of the main factors is the ability to absorb potential contagion from global financial market events, such as higher bond or foreign exchange market volatilities or a hike in US Treasury rates,” he says.
Mr Papp favours countries with strong solvency and foreign currency reserves, low debt ratios and no problems refinancing their budget or current account deficits.
“As commodity and energy prices look likely to stay under pressure, we believe commodity importers are better positioned than exporters, including central-eastern European issuers such as Hungary or Slovenia, but also South Africa, India and Panama,” he predicts.
Mr Papp says average emerging market debt yield and spread levels look attractive, with the company’s index of emerging market government bonds trading at approximately 350bps, implying an average yield of roughly 5.7 per cent.
Even with the recent rises in Russian, Brazilian and Venezuelan yields, he thinks emerging market debt offers attractive relative value, but cautions that risk-averse investors should maintain a broadly diversified portfolio.
This does not necessarily mean developed market debt should be substituted for emerging market debt, he says, but that it might suffice to add some emerging market debt to an existing portfolio to improve its Sharpe ratio.
“If investors decide to replace developed with emerging market debt, we would suggest maintaining a similar rating and duration distribution in the new portfolio, in order not to radically change underlying portfolio risks and interest rate sensitivities,” Mr Papp says.
Unlocking East African businesses’ access to Indian markets
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by ITC News
Pranav Kumar of the Confederation of Indian Industry shares information about the Duty-Free Trade Preference Scheme with participants of SITA’s second Partnership Platform meeting
East African businesses are set to trade more with India by learning to take advantage of the country’s duty-free market access scheme, facilitated by theSupporting India’s Trade Preferences for Africa (SITA) project of the International Trade Centre (ITC).
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Following an amendment two years ago to India’s Duty-Free Trade Preference Scheme, least developed countries will receive preferential zero-duty access on 98% of Indian tariff lines. This means goods exported from least developed countries should have a competitive edge when entering the Indian market.
However, the five SITA countries – Ethiopia, Rwanda, Uganda, the United Republic of Tanzania, and Kenya, the only non-least developed country – have not seen trade with India increase to the expected levels since the scheme went into full effect in October 2012.
‘For beneficiary countries to reap the most benefits from the scheme, they just have to send letters of intent and meet the rules of origin requirement as specified in the scheme,’ said Pranav Kumar, Head of International Policy and Trade, Confederation of Indian Industry. ‘Much needs to be done to raise awareness of the scheme among members of the Indian private sector, as they have yet to fully understand how to source products from less familiar trading partners, and also invest in least developed countries to export products to India.’
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Representatives of business, government and international organizations gather at SITA’s second Partnership Platform meeting in Kigali, Rwanda, to discuss priority sectors for development in East Africa
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Tackling trade obstacles
To promote such awareness and understanding, African and Indian entrepreneurs, policymakers and members of international organizations will discuss ways to make better use of the scheme at SITA’s third Partnership Platform meeting in Addis Ababa, Ethiopia, on 4-5 December, following previous meetings in Nairobi, Kenya, and Kigali, Rwanda.
‘Further investments from India would certainly help Tanzania make better use of the scheme,’ said Adam Zuku, Director of Industry Development, Tanzanian Chamber of Commerce, Industry and Agriculture. ‘It would help address the country’s limited capacity to meet export demands, and Indian investors would be better placed to source the right products and access the right buyers.’
‘Building productive capacities, market linkages and enhancing investment attractiveness in the selected sectors will be a key way to ensure that SITA delivers impact and provides a sustainable template for similar South-South trade and investment projects,’ said Govind Venuprasad, SITA Coordinator. ‘It will also allow companies working in these sectors to become export ready to supply other markets.’
At the meeting, members of the East African public and private sectors will learn about the Duty-Free Trade Preference Scheme’s compliance and market requirements, particularly in sectors with high untapped export potential. Representatives of the Indian private sector will learn to make better use of the scheme to source products from Africa. The discussions will also focus on addressing procedural and regulatory obstacles to trade, in part through governments creating a more business-friendly environment through effective policies.
The stakeholders, representing business, government and civil society, will work together to finalize SITA’s intervention plan, focusing on specific activities in the selected sectors in each of the five East African countries. The sectors, selected through a series of consultative meetings, reflect demands in international markets as well as the capacity of African suppliers, and are selected in line with national and regional trade development goals.
The goal of SITA (2014-2020) is to enable East African enterprises to enhance their competitiveness to produce high-quality goods that match overseas market requirements. Indian businesses will partner by providing technology, skills know-how and investment to build capacities in SITA African countries for value-added production in sectors such as cotton, coffee, pulses and beans, oilseeds, and information and communications technology. SITA is funded by the United Kingdom of Great Britain and Northern Ireland’s Department for International Development.
Non-Tariff Barriers in Focus at COMESA Ministers Meeting
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COMESA Council of Ministers held their 33rd meeting in Lusaka yesterday with a call to address the Non-Tariff barriers inhibiting intra-COMESA Trade.
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The most frequently reported NTBs, reported through the online system are customs and administrative procedures, transport, clearing and forwarding issues. Currently intra COMESA trade stands at only 7% and has slowly been rising since the establishment of a Free Trade Area in 2000.
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Acting President of Zambia Dr Guy Scott who opened the Ministers meeting cited the Sanitary and Phytosanitary measures imposed by regional states on agriculture and tourism as major bottlenecks to trade.
“I have received complaints from the industry all the time on the non-tariff barriers that they can’t move their products because of Sanitary and Phytosanitary requirements by importing countries”, Dr Scott said.
He added; “It was disappointing to note that some countries had continued to request for the certification of Yellow Fever despite the low prevalence levels of the disease in our countries. This has made the tourism industry to suffer because it restricts movement of people.”
Dr Scott cited Zambia as one of those faced with tremendous difficulties in exporting or importing their products as a result of the NTBs. He called on the secretariat to come up with harmonized rules and regulations that will allow member states to trade freely a scenario, which will result in, reduced cost of doing business.
In their last meeting held in February this year, the Council of Ministers had directed that the COMESA Secretariat undertake an audit and impact assessment of existing NTBS in order to come up with a schedule of their removal.
Article 49 of the COMESA Treaty provides for the elimination of NTBs and prohibits Member States from introducing new ones.
The report presented to the Ministers showed that NTBS have a negative impact on trade flows and were mainly responsible for the high cost of doing business in the region.
The meeting of the Council which was held under the theme of “Consolidating intra-COMESA trade through Micro, Small and Medium Enterprises development” ends Tuesday 9 December 2014. It is expected to come up with a raft of policy decision to be implemented by the Secretariat and Member States including those aimed at eliminating non-tariff barriers.
Ethiopia’s development throws in to regional economic integration: Djibouti emphasizes
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Djibouti, 9 December 2014 (WIC) -
The past ten years witness that the overall development in Ethiopia has brought a huge possibility to regional economic integration of the Horn of Africa, Djibouti Ports & Free Zone Authority said.
The Chairman of the Djibouti Ports & Free Zone Authority, Aboubaker Omar Hadi, told journalists the double economic growth in Ethiopia has played greater roles in economically integrating the countries in the region.
The chairman said that Djibouti is at a point where Africa, Europe and Asia are intersected that about 50 per cent of world shipping passes in part of the country’s maritime routs.
Due to the boosting infrastructure in Ethiopia, Djibouti is connected to Ethiopia by road and rail via which Djibouti will reach to the heart of Africa.
Ethiopia has now a huge and fast growing economy with a large market and population, 80 per cent of the goods handled by Port of Djibouti belongs to it, the chairman said.
Ethiopia has also been transporting 95 per cent of its oil through Port of Djibouti, the chairman said, adding that Djibouti has modernized and developed Horizon Djibouti Petroleum Terminal with storage capacity of 371, 000 cubic meters, he added.
Djibouti had made an additional 20 ha of dry yard area available so as to particularly accommodate the growing demand of Ethiopia, WIC learnt.
According to the chairman, the fast economic development and boosting of road infrastructure in Ethiopia has come with a bright future, which is mutual development and economic integration of countries in the region.
The sustainable development of Ethiopian market has paved ways for the expansion of port of Djibouti and the development of new ports like the Lac Assal and Tadjourah.
The newly under construction Export Terminal Project at Lake Assal with a coast of about 64 million USD is expected to load 6 million tones of salt per year extracted from the Assal lake, Engineers at the site pinpointed.
According to Djibouti Officials, the plan is to export salt extracted from Lake Assal to china and Japan and European countries.
The Tadjourah Port is also under construction with a cost of about 70 million USD and is designed for the export of potash. 25 percent of the construction has already completed, according to the site Engineer.
Ethiopia said on Friday it had completed raising $1 billion with its debut Eurobond with a term of 10 years and coupon of 6.625 per cent, adding that the offer had been oversubscribed.
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Ethiopia is the latest African sovereign to receive a strong response on its first foray into the international debt markets. Investors have been eyeing Africa’s sturdy growth rates and Ethiopia’s economy is now expanding by about 9 per cent a year.
“Ethiopia attracted high quality investor interest despite a challenging market environment,” the Finance Ministry said in a statement, adding the 10-year maturity aimed to create a benchmark and proceeds would be invested in infrastructure.
Deutsche Bank and JP Morgan were the lead managers. The ministry said a French firm had acted as financial adviser but did not name the company.
Despite strong growth rates, analysts said Ethiopia had limited hard currency earnings, making its debt-servicing capacity weaker than some African states. It will also be more difficult for Ethiopia to build foreign reserves, which now cover little more than two months of imports, they said.
Kenya, Ethiopia’s southern neighbour which issued its debut Eurobond earlier this year, has reserves to cover around four months of imports
Expansion of Ashegoda Wind Farm to help Ethiopia add 40MW of power
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Adama wind farm in Ethiopia
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Vergnet Group SA is conducting a feasibility study in Tirgay Regional State for expansion of the Ashegoda Wind Farm, a project that will help the country add to the grid a total of 40MW in Tirgay Regional State. Lodovic Dehondt, Ashegoda’s project director for the first phase has said the project is expected to end in 2015.
Ashegoda is considered to be one of the windiest places in Ethiopia and its one of the 11 sites that had been identified by experts with the potential to generate power from wind. Feasibility studies in the area commenced in October this year. The wind farm has capacity to produce 10 – 40 MW of electricity once it becomes operational.
German-based company Lahmeyer International GmbH has been hired by the government to provide project consultancy services and contract supervision and administration works. The funds for the project will be sourced from European banks and the French Development Agency (AFD).
The Minister of water, Irrigation and Energy (MoWIE) Alemayehu Tegenu, and the Minister of Communication and Information Technology, Debretsion Gebremichel have also entered into another agreement to expand power generation.
Ethiopia aims at generating 10,000Mw electric power from water, wind and geothermal sources through the Ashegoda wind farm and Adama wind farm during the conclusion of the government’s five-year growth plan.
Ethiopia’s mega hydroelectric power project being built on the Blue Nile River, known by the Great Ethiopian Renaissance Dam (GERD), is progressing well, Ethiopian officials have said.
The project in the East African country will generate 6000-MW of electric power upon completion.
The dam is being constructed in Benishangul Gumuz Regional State of Ethiopia, western part of the country, about 40 km east of the border with Sudan.
Engineer Simegnew Bekele, Project Manager of the GERD, told Xinhua on Saturday that the project is progressing well in all its activities.
All the activities on the project “are progressing healthily in order to realize the project.
“We are mobilizing all the people, nations and nationalities of Ethiopia, including the Ethiopian Diaspora,” said Simegnew.
Ethiopia is now harnessing its potential for renewable energy to fight against poverty and improve the lives and livelihoods of its people, said Simegnew.
“This is a green energy; and this supports other renewable energy; and Ethiopia is the power hub; we have tremendous natural resources.
“So, we are now exploiting; we are now harnessing this potential to improve lives and livelihoods of individuals,” he noted.
“This is our primary agenda, number one agenda for our country; this is a project which is equipping us to fight poverty, our common enemy.
“The government has devised a strategy to improve the lives and livelihoods of individuals, the citizens.
“And we have already started developing such kind of infrastructures that allow us to fight poverty,” he said.
He said, “On Nov. 28, 2014 we already booked world record with a daily average of 16,949 m3 roller compacted concrete.
“At the Great Ethiopian Renaissance Dam hydroelectric project on the Nov. 28, 2014 we have already placed 16,949 m3 of concrete, which is roller compacted concrete.”
Bereket Simon, Policy Study and Research Advisor Minister to the Prime Minister, told Xinhua on Sunday that the project is progressing on the schedule.
“It is amazing; right now it has reached around 40 per cent.
“We are right on the schedule in all fronts; the clearing of the bushes, the forest has been done well; construction, filling of the Dam have been done also according to plan,” Simon said.
Ethiopia celebrates Nations, Nationalities and Peoples Day on December 8 annually to commemorate the Day on which the country’s constitution was adopted about 20 years ago.
This year the Day is marked under the theme, “Constitutionally Embellished Ethiopianess for our Renaissance,” in Asosa, capital of Benishangul Gumuz Regional State. (Xinhua)
Medtech is going to be the second ceramic manufacturer to join the sector
Medtech Ceramics Manufacturing Plc (MCM), a ceramic and sanitary ware manufacturer, is expecting the delivery of two ceramic manufacturing machines in three months, for the factory which could begin operation in 10 months. MCM was established jointly by Medtech Ethiopia Plc and Sheikh Faisal bin Al Qasimi, chairman of Julphar Gulf Pharmaceutical Industries, and Star Group Holdings.
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The Company, established six months ago with a capital of 450 million Br, has finished construction of its factory building on a 20ha land. It is situated in Butajira, Southern Regional State, 132Km south of Addis Abeba, according to Mohammed Nuri (MD) general manger of the ceramic factory.
Medtech Ethiopia, a local pharmaceutical products manufacturer, has a 30pc share. The two United Arab Emirates (UAE) based shareholders, Sheikh Faisal and Star have 30pc and 40pc shares in the ceramics and sanitary products company, respectively.
“The main aim of the factory is to substitute imported ceramics,’’ said Mohammed.
Ethiopia imported ceramic products worth four billion Birr during the 2012/13 fiscal year; imports mainly come from China and the United Kingdom (UK), according to ceramic importers in Merkato.
Medtech says its goal is to produce 30,000sqm of floor and wall tiles on a daily basis when production begins in September 2015. It could employ 500 people, some of them coming from India and Arab countries.
The company and the Ministry of Mines (MoM) have identified an area adjacent to the factory site, where the company will mine red ash. It will only receive a mining license from the Ministry when it has finished the factory, according to a Ministry source.
The Company will get 98pc of input locally and the remaining two percent will be imported, including dices, mixers and colouring materials, according to Mohammed.
“We decided to establish the Company because thanks to the recent construction boom there is high demand for ceramic products which cannot be met by current production,’’ says Mohammed.
The only local ceramic manufacturer currently is Tabor Ceramic Products S.C, which was founded in 1989 on a 206,259sqm plot of land in Hawassa, in the Southern Regional State. It manufactures ceramic electrical insulators, table ware products, sanitary products and tiles.
Medtech made the order for the two machines three months ago from Caravan & Marine Equipment Company (CAMEC), a machinery equipment manufacturer, for 10 million dollars, according to Mohammed.
“The Medtech that is already planted in Butajira is at phase one. We are in phase two, getting land for the project in Addis Abeba,’’ Mohammed told Fortune.
Medtech-Ethiopia and Julphar Gulf Pharmaceutical Industries were inaugurated in February, 2013. It is a 170 million Br pharmaceutical manufacturing factory in Bole District, Addis Abeba, and has a production capacity of 25 million bottles of suspensions and syrups, 500 million tablets and 200 million capsules annually.
Ethiopia seeks Indian help to revitalise higher education
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As the Ethiopian government works towards revitalising higher education to meet growing demand by boosting investment in education under the country’s Growth and Transformation Plan (GTP), India, with its long experience in the education sector, could help invest in Ethiopia, officials state.
This was stated at a three-day international seminar on “India and Africa: Developmental Experiences and Bilateral Cooperation”, and the Sixth Doctoral Scholar International Conference in African Studies that started here Monday.
The three-day seminar is being organized by the Wolkite University of Ethiopia in collaboration with the Policy Research Institute of African Studies Association (PRI-ASA) of India and the Centre for African Studies, Jawaharlal Nehru University (JNU).
“This seminar can contribute ideas or innovations in this field so that we can incorporate this officially to the second phase of the GTP that we are now preparing”, Admasu Shibru, president of Wolkite University, told IANS.
“It is very important for us to realise the educational vision and transform the socio-economic situation of this country even as we are trying to benchmark all possible innovations in terms of developing each sector.”
The seminar under the theme of “Development, Diaspora and International Relations of African Countries” is being attended by academicians from India as well as the business community, civil society organisations and NGOs from Ethiopia.
“The very important thing that we are doing today is establishing the collaboration so we are just starting and once it is established we have to continue strengthening by shaping the partnership strategies that we are going to have,” Shibru further stated.
“This conference that has brought experts from across the world will explore the various faces of their bilateral cooperation from different paradigms,” said Aparajita Biswas, president of ASA, Mumbai.
“It is not only contributing to the global discourse on India and Africa but it will hopefully alter the existing narratives of this complex relation,” she said.
“This initiative is certainly the beginning of a fruitful relationship between ASA India and Wolkite University as we can work together for an enriching partnership to promote the exchange of the knowledge and people across the Indian ocean.”
India is known for its knowledge economy, it is known for its contribution to the world economy in areas of knowledge in modern science and technology and in social science and literary writing, says Dubey, director of Centre for African Studies, University of Mumbai.
“Exposing them to African countries and establishing interaction with them will enrich their own experience as well as give access to African academics and help postgraduate students link up and see developing countries’ academics how they are seeing the world and how the situations are in similar paradigms,” he said.
“Different countries were confronting almost similar issues of development, proper action in healthcare and negotiating globalisation from a developing country’s perspective”.
According to Dubey, India’s policy on Africa needs to first look at the basic educational sectors. “As a knowledge-based economy, our scientists, our academicians, and our literary writers are making a difference all over the world. Therefore, it gives an opportunity to share this experience with Africa and the world”, he asserted.
This seminar that has so far been organized every two years was previously held in Kenya along with the University of Nairobi and in Durban, South Africa.
“Seminars like this have the power to fill the serious lack of academic interaction amongst academicians and scholars of India and Africa,” a participant of the seminar told IANS.
“This seminar is expected to come up with long term and sustainable partnership with India and Ethiopia and Africa in general. Then this will bring about sharing of all sorts of technologies, skills, innovations of all kinds which could help us improve our education quality.”
Meta Abo Brewery to source all cereal raw materials in Ethiopia locally
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Meta Abo Brewery S.C., a Diageo company, announced last week that it will source 100% of all cereal raw material needs in Ethiopia locally in time for Meta’s 50th Anniversary, by the end of 2017. This local sourcing strategy will serve as a commitment across the entire Meta business and will not be limited to specific products or brands.
According to a statement from the company, currently, more than half of the brewery’s raw materials are sourced locally. It also said that for the past three years, Meta has pioneered local sourcing in the Ethiopian beer industry, being the first multinational brewery to engage in the contract farming of barley through its “Partnership for Agricultural Growth in Ethiopia.”
“Together with partners such as the Ethiopian Agricultural Transformation Agency, the Oromia Bureau of Agriculture, Technoserve, Syngenta, BASF, Nyala Insurance, and local distributors, Meta has contracted 6,113 farmers across Arsi, West Arsi and South West Shewa Zones of Ethiopia and works with 5 farmer unions and 39 farmer cooperatives as part of this contract farming agreement.”
By 2016, the brewery plans to engage 10,000 smallholder farmers, increasing this number to 20,000 by 2017.
Francis Agbonlahor, Meta Abo Brewery’s Managing Director, stated that, “’Diageo continues to demonstrate its long term commitment to the socio-economic development of Ethiopia. Locally sourcing 100% of our raw material needs is a major milestone on this journey and I am deeply proud about the phenomenal progress we have made thus far.” I am looking forward to continuing to partner and collaborate with the Government of Ethiopia, our numerous farmers, and our key partners to deliver even greater successes in the years to come.”
The scope of Meta’s work in local sourcing addresses many aspects of the supply chain, including barley varieties, seed availability, input sourcing and mechanization. All farmers that Meta contracts receive a comprehensive “Meta Package” that includes seeds, DAP and Urea fertilizers, herbicides, fungicides, training and crop insurance which is pre-financed by Meta and repaid by farmers after they sell their harvested barley. In addition to these inputs, capability building is carried out for farmer groups, cooperatives and unions in the areas in which farmers are contracted.
Meta’s local sourcing work is part of Diageo Africa’s strategy to source at least 70% of raw materials locally by 2015 and an even greater percentage by 2017.
“The brewery’s pledge to sourcing locally is a key piece of Meta’s overarching strategy of growth and sustainability in Ethiopia. One pillar of this strategy is investment in the communities in which it operates,” the company said. The business is also committed to promoting responsible drinking, most recently launching the first fully-fledged Don’t Drink & Drive campaign in Ethiopia, Shoom Shufair. On a global level, Diageo was one of the 13 leading global producers of beer, wine and spirits to sign the “CEO Commitments” to implement the World Health Organization’s global strategy to reduce the harmful use of alcohol.
Diageo is the world’s leading premium drinks business with a collection of beverage alcohol brands across spirits, wines and beer categories. These brands include Johnnie Walker, Crown Royal, JεB, Buchanan’s, Windsor and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Baileys, Captain Morgan, Tanqueray, Meta Beer, and Guinness. Diageo is a global company, with its products sold in more than 180 countries around the world. The company is listed on both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE).
Ethiopia to invest US$1.4bn in petroleum pipeline project
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Ethiopia would spend US$1.4bn to build a petroleum pipeline from the Port of Djibouti to a storage facility in order to reduce the cost of transportation in the country
The petroleum pipeline project is expected to take two years to construct.
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According to the government of Ethiopia, the 550 km of pipeline would carry oil directly from the vessels at the port to a storage facility in Awash. The trucks would then distribute fuel from Awash to the rest of the country including Addis Ababa.
The Ethiopian Ministry of Water, Irrigation and Energy (MoWIE) confirmed that the proposal had been submitted and they would look into it before discussing it further with the Ministry of Finance and Economic Development (MoFED), Ministry of Foreign Affairs (MoFA) and Ministry of Transport (MoT).
Demelash Alamaw, assistant CEO at Ethiopian Petroleum Supply Enterprise, said, “In 2013 Ethiopian Petroleum Supply Enterprise imported 2.6mn tonnes of fuel. In 2014 it has plans to import 2.9mn tonnes.”
The Djibouti government noted that the current port infrastructure is not big enough to meet Ethiopia’s long-term needs. Currently, the demand for refined fuels in Ethiopia is growing at 10 per cent per year.
Not like that…. Three million Ethiopian farmers have dialled 8028 to learn how to do it better
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ADDIS ABABA, 3 December 2014 (IRIN) -
One reason farmers in Africa mostly produce so much less than those in other parts of the world is that they have limited access to the technical knowledge and practical tips that can significantly increase yields. But as the continent becomes increasingly wired, this information deficit is narrowing.
While there are other factors, such as poor infrastructure and low access to credit and markets, that have helped keep average yields in Africa largely unchanged since the 1960s, detailed and speedily-delivered information is now increasingly recognized as an essential part of bringing agricultural production levels closer to their full potential.
In Ethiopia, which already has one of the most extensive systems in the world for educating the 85 percent of the population who work the land for a living, this recognition has driven the development of a multilingual mobile phone-based resource centre.
The hotline, operated by the Ministry of Agriculture, the Ethiopian Institute of Agricultural Research, and Ethio Telecom, and created by the Ethiopian Agricultural Transformation Agency (ATA), has proved a huge hit. Since its July launch and still in its pilot phase, more than three million farmers in the regions of Amhara, Oromia, Tigray and the Southern Nations, Nationalities, and Peoples’ Region (SNNPR) have punched 8028 on their mobiles to access the system, which uses both interactive voice response (IVR) and SMS technology.
“On average we get approximately 226 new calls and 1,375 return calls per hour into the system,” Elias Nure, the information communication technology project leader at ATA, told IRIN. When the number of lines doubles from the current 90, he said, “these numbers should significantly increase.”
More than 70 percent of users are smallholder farmers, he said.
Timely, accurate information
Ethiopia has the largest agricultural extension system in sub-Saharan Africa, the third largest in the world after China and India, according to the UN Development Programme.
This system has led to the establishment of about 10,000 Farmer Training Centres, and trained at least 63,000 field extension workers, also known as development agents. It facilitates information exchange between researchers, extension workers and farmers.
However, the reliance on development agents means that sometimes agronomic information reaches farmers too late or is distorted.
Push and pull factors
The agriculture hotline was proving popular due to its “pull” and “push” factors, according to ATA’s chief executive officer, Khalid Bomba.
Farmers could pull out practical advice, while customized content could be pushed out, such as during pest and disease outbreaks, to different callers based on the crop, or geographic or demographic data captured when farmers first registered with the system.
Recently, it warned registered farmers about the threat posed by wheat stem rust.
“These alerts and notifications were not available to smallholder farmers in the past and could greatly benefit users of the system by getting access to warnings in real-time,” said ATA’s Elias.
According to Tefera Derbew, Ethiopia’s minister of agriculture, ATA should boost its content to meet more needs.
“The IVR system offers users information relevant to the key cereals and high value crops, but I envisage that in the near future there will be the opportunity to upscale the service to include content relevant to all of the major agricultural commodities in the country, including livestock,” said Tefera.
The hotline currently focuses on cereal crops such as barley, maize, teff, sorghum and wheat, but plans are under way to provide agricultural advice on other crops, such as sesame, chickpea, haricot beans and cotton, while incorporating farmers’ feedback on needs.
For Ayele Worku, a teff farmer in Gurage zone of Ethiopia’s SNNPR State, the system’s benefits outweigh the frustrations of a patchy mobile network.
“The way of farming, especially for row-planting for teff is kind of new for me although I heard rumours about its advantage a while ago,” he told IRIN.
An agricultural extension and rural development expert working at Addis Ababa University, Seyoum Ayalew, said: “The new service could build a synergy with the previous approaches of the public extension system, which is largely based on trickle down approach of communication.”
Seyoum noted that within the traditional extension system, “where information passes through different channels before reaching the farmers, [it] is subjected to distortion through filtering and translation errors.”
Ethiopia issued a dollar based bond to fund its development goals focused on increasing agricultural production, power generation and transportation infrastructure including the 6,000 megawatt Millennium Dam hydroelectricity project on a Nile river tributary. Deutsche Bank and JP Morgan will be handling the sale of the ten year bond (yielding 6.75%).
Ethiopia has been Africa’s fastest growing economy for the past few years; it follows in the lead of other African countries that have issue similar bonds (Eurobonds) recently, including Kenya, Ivory Coast, Senegal and Ghana. Ethiopia’s bond issue reflects both the scope of its development ambitions – needing to raise at least USD$ 50 billion before the end of the decade to complete its development targets – and foreign investors’ growing interest in the country and Africa in particular. The Millennium Dam is seen as crucial to boosting agriculture in Ethiopia as well as some of its neighbors such as South Sudan, Kenya and Uganda. Indeed, Ethiopia has taken full responsibility for funding the Millennium Dam in order to establish greater control over the flow of the Nile waters and its power will allow Ethiopia to become a regional hydro-electricity hub.
It was exactly 30 years ago when the world learned of a terrible famine in Ethiopia, which also included present day Eritrea at the time prompting worldwide relief campaigns punctuated by songs like ‘Do they know it’s Christmas’ and ‘We are the World’. Much has changed today: Ethiopia is home to the third largest agricultural industry on the African continent and it is on track to achieve food security. Despite the huge challenge of expanding agriculture in a country that was not long ago on the brink of famine to ‘Africa’s bread basket’ is a huge challenge but thanks to farming method innovations and research, the country will, in the very near future, achieve food security. But Ethiopia’s ambitions reflect the wider agricultural growth phenomenon that has been occurring throughout Africa, which have been fueling the enthusiasm of local populations and private investors alike. With increasing urbanization and an exponential growth of the middle class, the African food market just waiting to grow and is expected to triple by 2030 according to a study by the World Bank in 2013. There is also a growing food deficit between demand and regional supply, which has contributed to interest in agriculture. Ethiopia and Africa will gains benefits in development and wealth creation along with agricultural best practices, better yield per hectare, and more intense trade links to developed countries. Recently a US private equity fund (KKR & Co) has made its first investment in Ethiopia.
The international investment and financing such as today’s aforementioned bond issue will help to address the technical challenges to agriculture throughout Africa as multiple land expansion projects are being planned all over the continent. Thus, the enthusiasm of the private equity companies for Sub-Saharan Africa is accelerating, agriculture appears as a natural investment sector. An international law firm, Freshfields, has pointed out that agriculture investments in Africa have increased by 137% in the first half 2014 compared to the same period in 2013, facilitated by improving political risk and easier transactions. It should be reminded that Africa is huge, covering the second largest area after Asia, holing the second largest population. Moreover, the UN has noted that Africa has 17% of the world’s arable land and agriculture accounts for more than 20% of the Continent’s GDP. Farming now occupies 60% of the workforce in Africa.
African agriculture has tremendous growth potential because the continent still has many reserves of uncultivated land, counting 226 million arable land but being able to reach almost 500 million. Much of Africa is well irrigated and the climate is favorable to the production of maize, soya and sugar cane. The Chinese are well aware of this potential and have signed leases in the long term, using already 2-3% of the resources and Ethiopia is one of their leading targets. Africans will need more arable land and implement agriculture to increase food production yields. Production costs are low and the workforce is young and plentiful. If over the past 15 years, it has been Brazilian agriculture’s turn to shine, now is the time of Africa and it is estimated that the continent will become a net exporter of corn and soybeans in the next ten years. Other cereals include barley, sorghum, cotton, sugar cane, groundnut, millet and cassava. However, investment in infrastructure is not enough. African agricultures needs the right soil and productivity to flourish.
Potash and other mineral fertilizers are one of the keys to the Continent’s agricultural growth strategy. To this effect, Allana Potash (TSX: AAA | OTCQX: ALLRF) could become one of the largest potash producers in Africa thanks to a promising project in Ethiopia, addressing domestic, African and Asian potash demand. The Horn of Africa, from where Allana’s potash will be shipped, is strategically located to serve India, China and more importantly, all of the markets where potash demand is rising fastest such as Indonesia, Malaysia and Laos – all countries featuring potash intensive palm oil production. But it is Africa, where potash consumption, now among the lowest in the world, is slated to increase the most. Ethiopia alone will guarantee significant sales for Allana. Indeed, Ethiopia, which is home to some 90 million inhabitants, has ambitious economic growth plans and agriculture is its highest priority given that some 85 percent of the people work in that sector.
There is room for growth because most agricultural production revolves around a vast number of small rural areas with operations smaller than one hectare. Now, there are 12.5 million hectares of arable land in Ethiopia but the potential is 50 million hectares. The country has already sought international cooperation to help improve land productivity and make fallow land available for farmers. There is no more effective way to achieve this process than through a greater use of potash, which is essential to increasing yields and providing the kind of nutrients that African soils are known to lack. In the 1960’s-70’s, the use of mineral fertilizers grew considerably in Latin America while dropping in Africa. Not surprisingly, those decades (and until now) saw various famines in Africa, while food production increased in Latin America. Now, the International Fertilizer Industry Association suggests that African potash use could reach five million tons over the next few years. It is now not even close to a million tons. Allana is edging ever closer to production phase having been granted all relevant mining permits from the Ministry of Mines of Ethiopia; its strategy is to help develop and expand the mineral fertilizer market in Ethiopia and Africa in general – even if the initial focus will be East Africa. The African continent presents tremendous market potential for mineral fertilizers and potash in particular, given that it has the potential to attract 880 billion dollars of investment in agriculture by 2030, which will drive demand for products such as fertilizers, seeds, pesticides and machinery as Africa develops its own production of biofuel, grain refinement and food.
Deutsche Bank and JP Morgan will handle the sale of a 10-year, dollar-based Ethiopian bond yielding 6.75 percent to fund increased agricultural production, power generation and transportation infrastructure, InvestorIntel reports.
Agriculture investments in Africa increased by 137 percent in the first half of 2014 compared to the same period in 2013, thanks in part to improved political risk and easier transactions, according to international law firm, Freshfields,
Ethiopia has been Africa’s fastest growing economy for the past few years, according to InvestorIntel. It follows the lead of other African countries that issued similar bonds (Eurobonds) recently, including Kenya, Ivory Coast, Senegal and Ghana.
Ethiopia’s bond issue reflects both growing interest of foreign investors in the country and Africa, and the scope of its development ambitions, according to the report. The country needs to raise at least $50 billion USD before the end of the decade to complete its development targets.
Ethiopia has taken full responsibility for funding the Millennium Dam, considered crucial for boosting agriculture in Ethiopia as well as some of its neighbors such as South Sudan, Kenya and Uganda. This will give Ethiopia greater control over the flow of the Nile. Its power will allow Ethiopia to become a regional hydro-electricity hub.
Ethiopia is home to the third largest agricultural industry on the African continent, according to InvestorIntel. Not long ago the country was plagued by famine. Now it’s on track to achieve food security thanks to farming method research and innovation.
But Ethiopia’s ambitions reflect the wider agricultural growth occurring throughout Africa, which has been fueling private investors. The African food market is expected to triple by 2030 with exponential growth of the middle class and increasing urbanization, according to a 2013 World Bank study.
U.S. private equity fund KKR & Co recently made its first investment in Ethiopia.
International investment and financing such as the bond issue will help address the technical challenges to agriculture throughout Africa, according to InvestorIntel. Enthusiasm is growing among private equity companies for Sub-Saharan Africa. Agriculture appears to be a natural investment sector.
Insurance for Ethiopian herders aims to combat drought, conflict – TRFN
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By E.G. Woldegebriel
YABELO, Ethiopia -Nomadic livestock herders in Ethiopia have received their first payout from an insurance scheme that tracks poor pasture conditions with satellite technology.
Ethiopia has difficulty drawing full advantage from its livestock resources – the largest in Africa – because of the unreliability of pasture and water caused by persistent drought.
The new insurance scheme, known as index-based livestock insurance, aims to reduce losses, support pastoral communities, and lower the risk of conflict sparked by pastoralists migrating into agricultural areas in search of forage or water.
Coverage has been sold since July 2012 in southern Ethiopia’s Borena zone by Oromia Insurance Company (OIC), with technical assistance from the International Livestock Research Institute (ILRI), U.S.-based Cornell University, and Mercy Corps, an international development organisation. Just over 500 pastoralists took up coverage initially.
The scheme was based on an earlier insurance effort rolled out in 2010 in neighbouring Marsabit region in northern Kenya, said Andrew Mude, principal economist at ILRI in Nairobi.
There, payouts were based on livestock deaths. But “the (experience) we had with the Kenyan programme was that some animals are more hardy than others, and so (with) differential mortality rates … (it) was a bit complex,” Mude said.
The insurance offered by OIC in Ethiopia instead offers coverage based on the actual scarcity of the herders’ forage, rather than the mortality rate of their livestock.
HOW IT WORKS
The insurance uses NASA satellite data to look at forage availability in the Borena zone. Experts from ILRI and Cornell University compare current images with historical data from the past 30 years.
“We provide the technical expertise to understand how to use the information from satellites on the state of forage on the ground,” Mude said.
The timing and amount of insurance payouts are then calculated based on the severity of the lack of forage.
OIC’s insurance will pay out up to 6,000 Ethiopian birr ($300) for a cow, 10,000 birr ($500) for a camel, and 800 birr ($40) for a sheep or goat annually. Pastoralists pay premiums averaging about 7.5 percent of the value of the maximum payout.
If forage levels become scarce compared to the index based on the historical satellite data, the herder receives compensation, even if no livestock have been lost.
In response to poor forage conditions, OIC made its first payout to all the insured holders, totalling 570,000 birr ($28,300), at the beginning of November this year at a ceremony in Yabelo, a town 565 km (353 miles) south of the capital, Addis Ababa.
Mude said that although livestock is the key productive asset and source of income for pastoralists, the novelty of insurance in this remote region initially made it difficult to sell.
ILRI spent two years researching the needs of the Borena zone herders before formally launching the insurance.
A further challenge is how to assess the damage suffered by policyholders when dealing with a mobile population.
Mude explained that an important feature of the insurance is that pastoralists remain covered even if they migrate out of the woredas (districts) where they are insured, since migration itself implies that there is a severe lack of forage. Compensation is therefore calculated based on the area where they were initially insured.
Wondimu Beteyo, a pastoralist who received a payout for his cattle and goats, says that until recently he had to trek several days for pasture and water. Now, he says, the money he has received will allow him to replenish the cattle he lost during the recent drought.
Dono Kotelo, from Teltale woreda, insured his two goats and two cattle for a total of 1,048 birr ($50) after learning about the insurance scheme. Although none of his animals died, because he migrated to find pasture, he received a payout of 192 birr ($10) for costs associated with the dry season and said he plans to buy insurance again for the coming year.
LOWERING CONFLICT RISK?
Getaneh Eerena, a livestock insurance officer at the micro-insurance department of OIC, said that in the long run the programme is not just about financial payments but about avoiding conflicts.
“The area tends to have high conflict incidence, both within (the) pastoralist community and against agricultural communities,” Eerena said.
Kotelo, the herder, said his Borena community used to cross into the land of agricultural communities when their own pastures were exhausted, often leading to deadly clashes.
Mude and Eerena said their organisations planned to extend the insurance scheme eventually across the country.
Dereje Digaffe (above, pictured) was winnowing the raw wheat to separate the grain from the chaff, winnowing is part of crop processing during the port harvest season, and it is locally called mabearyet.
By FASIKA TADESSE Fortune staff writer
Post-harvest crop loss starts from harvesting, handling, storing, processing, packing and transporting the crop until the crop reaches to the final point either to the market or the farmers’ house.
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The once green farms in rural areas between Addis Abeba and Modjo, along the busy Ethio-Djibouti road, have given way to a hay colour in the post-harvest season, which began about weeks ago.
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Depending heavily on annual rainfall, the farming community of Ada’a Woreda have grown teff, wheat, lentils and beans, for both commercial and home consumption purposes for generations.
The scene marks the start of the post-harvest season, which happens once a year in these parts of Ada’a Woreda, which extends from Dukem to Bishoftu (Debre Zeit).
Farmers had already started threshing their crops when Fortune visited parts of the woreda on Tuesday December 2, 2014. Threshing, locally known as wukia, takes place on the wudema, a piece of land cleaned and coated with cow dung.
That Tuesday many farmers had gone to attend the funeral of a village elder. But the two brothers, Dereje and Asnake Digaffe, 26 and 28 years old, were busy with the wukia of their wheat crop, which they had grown on one qert, a quarter of a hectare of land. They expected to get five to seven quintals of wheat.
“Our main challenge is wastage during the threshing, as the wudma is too small,” said Dereje, the younger brother, who started farming with his father six years ago, after failing the eighth grade national exam.
Post-harvest steps include harvesting, handling, storage, processing, packing and transportation of the grain. Of the crops, teff suffers the most wastage during the process. Up to 26pc is lost, with maize following losing 23.3pc. Barley and bean lose 18.9pc and 19.6pc, respectively, according to Central Statistics Agency (CSA) data. The loss of wheat is 13.8pc and sorghum loses just 10.9pc.
The production of cereals and pulses has increased from 211 million quintal in 2010/11 to 222 million quintals the following year. Last year 240 million quintals was produced.
During the current fiscal year, 14.1 million hectares of land was cultivated with cereal and pulses, with an expectation of 280 million quintals of crop being produced. Teff has the major share, with 3.2 million hectares and an expected yield of 44.2 million quintals, while maize follows with two million hectares and an expected yield of 65 million quintals. Wheat comes next, with 1.6 million hectares and an expected yield of 39.3 million quintals.
“Beyond the small plot used for processing, high wind and the animals are major reasons for the waste,’’ said Dereje. “The oxen used in the process eat the crop and they push the crop out from the Wudema.”
“The major problem is that post-harvest technology has been given little emphasis, both by farmers and the government,’’ says research by Shemels Admasu, a food technologist with the Ethiopian Institute of Agricultural Research (EIAR).
A sense of disappointment at the post-harvest losses is also felt by Worku Mekonen, 74, a father of 10 who had been farming a 1.5ha land in Hude Kebele, located approximately two kilometres off the main Addis Abeba-Djibouti road.
Worku is one of the farmers in Hude Kebele of Ada’a Woreda, in the East Shoa zone of Oromia Regional State. The kebele has an estimated population of 4,412, according to the Kebele’s administration. The farming community makes up 865 households, of which 182 are female-led. Farmers in Hude have as much as a couple of hectares of land. Many have one or two qert, and rent additional plots to produce ada’a magna teff, a type of teff that the community claims is better.
“The regional agricultural bureau is doing nothing for us to control crop waste during the post-harvest. They are supporting during the pre-harvest and harvest seasons by providing us improved seeds, fertilisers and assistance,’’ said Worku.“As I am too old, I would like to have simple machines to process crops to take less time and power.’’
“We advise the farmers to avoid losses,’’ said Belay Chala, a Development Agent (DA) in the Hude Kebelle, admitting that there was little support for reducing the losses.
During the current fiscal year the government made supports for the farmers in the pre harvest and harvest season. It distributed 8.5 million quintals of fertiliser, 841,000ql of improved seeds and 33,000 pieces of equipment that help the farmers sow seeds and 2,000 other pieces of equipment that help farmers put fertilisers in the farm. However, the Ministry only provides farmers with training in the post-harvest season.
“The main solution to avoid losses during the post-harvest is to motivate farmers to use modernised equipment, such as a harvesting combiner,’’ said Tesfaye Mengste, director general for Agriculture Extension Services at the Ministry of Agriculture (MoA).
Tesfaye mentioned that the 500 combiners owned by private investors could be used by farmers. These owners charge farmers 45 Br to 69 Br per quintal for processing. The price varies depending on the areas and the owners of the combiners.
According to the MoA, in the current harvest season 13.1 million hectares of land has been cultivated by 13 million farmers. From the total crop, 60pc has already been harvested; the remaining 40pc is expected to be harvested by the end of December, 2014.
The current harvest season is expected to show an increase in yield of 20pc from the last fiscal year, according to both the MoA and the CSA. This forecast is a source of hope for some farmers in the Hude Kebelle who are frustrated by crop loss during the post-harvest season. The Ministry is expecting 300 million quintals of major crops, exceeding last year’s total yield of 254 million quintals.
On the same day on December 2, 2014 in Mendello Kebele Alemnesh Girma, another farmer with two children, was assisting her teenage relative. She showed her relative, Habtamu Asalefe, how he should let the oxen walk on the wheat, one way used by the farmers to separate the crop and the waste. They were processing wheat they had collected from one qert, which takes three days. On average, the traditional process takes four days for wheat and seven days for teff that is collected from one qert.
Alemnesh has been farming with her husband for the last 13 years on the two qert plot of land which her husband inherited from his family. In addition to the two qerts, they rented eight additional qerts and harvested teff and wheat. She was assisting Habtamu because her husband, Addisu Worqu, was sowing teff on their farm early, as the National Meteorology Agency warns farmers to collect their crops early because weather forecasts had shown there will be rain by the end of December.
“The loss occurs during the transportation of the crop from the farm land to the storage area where it is processed,’’ she said. “Past experience has shown us between 30Kg and 50Kg of crop collected from one qert is wasted during processing.’’
The MoA deployed Farmer Training Centres (FTC) at all kebeles with three agents specialised in natural resource, crop and livestock to assist and train the farmers individually, and in groups, before, during and after the harvest season.
“A great effort is needed to generate technology that minimises losses,’’ suggests Shemels.
An expert from, the Food & Agricultural Organization (FAO) shared Shemels’s view that “the Agricultural Transformation Agency (ATA), the autonomous body of the government under the MoA, should work on the development of small equipment that can help the farmers process crops in a shorter time while avoiding loss,’’ he said.
An artist’s impression of the Grand Ethiopian Renaissance Dam.
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It is an audacious $4.8 billion project undertaken by one of the world’s poorest countries. At the construction site in the Benishangul region of Ethiopia near the Sudanese border, some 8,500 workers are labouring tirelessly every day to build the gigantic Grand Ethiopian Renaissance Dam. When completed in 2017, the dam will generate 6,000 megawatts of electricity for domestic consumption and export.
On the surface, the 558 ft tall dam — Africa’s biggest hydropower project — belies Ethiopia’s financial muscle. The GDP per capita in Ethiopia is only $475. The late Prime Minister Meles Zenawi, who laid the foundation stone in 2011, said the dam would be built without begging for money from donors. Since then, construction has progressed steadily using money from local taxes, donations and government bonds. Ethiopians abroad and at home contributed the first $350 million, with government workers contributing amounts equivalent to a month of their salaries.
Semegnew Bekele, an Ethiopian construction engineer working on the dam, told The Guardian, a British newspaper: “Ordinary people are building an extraordinary project.” Development experts now showcase the dam as proof of an innovative approach to project financing. “Approximately $450 million has been raised from Ethiopians to help build the dam and I think the target is probably a billion dollars,” says Zemedeneh Negatu, managing partner at Ernst & Young Ethiopia, a financial consulting firm.
Ethiopians, private companies and even other countries such as Djibouti are buying bonds. In addition, the Ethiopian Electric Power Corporation, a state-owned utility, is investing its own revenue and the money it is borrowing from state-owned banks. Economists warn that using private sector finance to pay for the dam could slow Ethiopia’s economic growth in the future. But the government counters that this will be offset by selling electricity to countries in East Africa, a region with improving economic growth.
Ethiopia’s recipe for financing the dam from bonds and taxes is being touted as a model for other African countries. This East African country uses a computerised system to track and collect taxes, making evasion difficult. The government regularly carries out awareness campaigns to explain taxation and publicize what collected taxes are funding such as the dam.
Dismantling tax havens
Ethiopia’s financing approach, including taxes, is just one of the emerging ways of funding projects in Africa. Other countries on the continent are working towards similar initiatives. Africa currently collects about 27% of its GDP in taxes, which is insufficient to fund infrastructure such as roads, bridges, schools and hospitals.
At the Ninth African Development Forum in Marrakesh, Morocco, last October, Prime Minister José Maria Pereira Neve of Cape Verde explained that Africa could receive more tax revenues with “good governance and transparency in the management of public finances.” Many of the 700 delegates at the conference, which was organized by the UN Economic Commission for Africa (ECA), including some African heads of state, private sector and civil society representatives, discussed innovative ways of financing Africa’s projects. They urged African governments to laser-focus on tax havens where some multinational companies keep their money.
Tax havens, which are places where taxes are markedly low, are a part of the broader problem of illicit financial flows (IFFs) from Africa, an issue that has lately drawn scrutiny. In 2013, for instance, ActionAid, an international non-government organization focusing on poverty, launched a global campaign to stop Barclays, a British bank, from promoting tax havens in Africa. By “helping your clients set up operations in tax havens like Mauritius, you are part of a system that is draining vital public funds out of the continent each year,” ActionAid warned the bank. Barclays denied it encourages business set-ups in tax havens.
Magnets for investors
Africa loses between $50 billion and $148 billion annually to IFFs, according to a 2013 ECA report titled: The State of Governance in Africa: The Dimension of Illicit Financial Flows as a Governance Challenge. Tracking and stopping “illicit financial flows is not just a moral imperative, it is a good input for transformative policies,” said Carlos Lopes, ECA’s executive secretary, in an interview with Africa Renewal held at the conference. IFFs include under-invoicing, over-pricing, double duties, disguised profits and the use of tax havens.
In tones that were at times urgent and angry, some speakers at the Marrakesh conference maintained that while Africa could still accept aid and encourage foreign direct investments, these should not be the main sources of finance. Africa’s vast natural resources such as gold, platinum, diamonds, chromite, copper, coal, cobalt, iron ore and uranium — 12% of the world’s oil reserves and arable land and forests — will continue to be magnets for investors. The rate of return on investment in Africa today, even adjusting for real and perceived risks, is higher than in any other developing region, according to an ECA report.
Private equity firms forage
Mr. Lopes is optimistic about Africa’s private sector investment prospects. “Africa might have finally found a way to whet the appetite of private equity investors,” he says, adding: “The reality is that Africa cannot rely on development aid for its transformation agenda, so its appetite is moving towards private investment and domestic resource mobilization.” The message sounds good except that, again, tax loopholes are spanners in the works. In response, Mr. Lopes is arguing for an African common market to harmonize disparate regulatory systems and discourage companies from exploiting both the loopholes and the tax havens.
Private equity funding, which is when rich individuals or institutions inject capital into a company and acquire equity ownership, can be lifelines for companies gasping for cash. Yet, ten years ago, it wasn’t even well known in Africa, according to the ECA. But in the second quarter of 2013 alone, 164 firms secured $124 billion private equity capital, according to Preqin, a firm that tracks private equity trends.
The African Development Bank (AfDB) states that between 2010 and 2011, investment deals in Africa increased from $890 million to $3 billion. In 2012, institutional investors injected $1.14 billion in Africa-focused private equity funds, according to African Private Equity and Venture Capital Association, an organization that promotes private investments in Africa. For example, Ethos Private Equity, a South African firm, alone received $900 million from equity funds.
The AfDB has also jumped on the private equity bandwagon, launching a pan-African facility to support the development of women fund managers. Geraldine Fraser-Moleketi, the bank’s special envoy on gender, told Africa Renewal that the idea is about looking at “innovative policies because current models are not inclusive.” Africa’s approximately one billion population and a combined consumer spending power that will rise to over $1.3 trillion by 2020, according to McKinsey, a global management consulting firm, makes the continent a tantalizing prospect for private equity funders.
Pension funds pool money from workers to be paid upon retirement and are particularly useful for long-term investments. During tough financial times, pension funds can be handy to augment infrastructure expenditure, financial experts believe. David Ashiagbor, a consultant with the AfDB’s “Making Finance Work for Africa” project, says Africa’s pension funds currently hold $380 billion in assets, thanks to a decade of economic growth. Even then, only very few countries, including South Africa, have pension systems that are broad-based, relatively transparent and protect beneficiary rights. Another problem is that many pension funds lack credibility due to poor services to beneficiaries and mismanagement of funds, according to 27four, a South African firm that consults on managing retirement funds. Consequently, not every African country can rely on pension funds for projects.
Growing investments at home
Despite Africa’s socioeconomic challenges, Mr. Lopes remains optimistic. “I am also a realist,” he says, identifying three megatrends in Africa’s favour. “The first is the demographic one. It is true the rest of the world is aging and Africa is getting younger. The second is the hard commodities in Africa once you take out oil and gas. The third is Africa’s reservoir of productivity through unused arable land.”
Cristina Duarte, Cape Verde’s finance and planning minister, who has announced her candidacy for the AfDB’s presidency, says Africa must keep trying to grow investment at home, adding: “How can we convince others to invest in our continent and in our development if we are not doing the same to the full extent of our ability?” Still, the current project financing picture in Africa is mixed: Ethiopia’s fast-moving dam construction is a success story compared with a trans-West African highway that is yet to be completed 40 years after it was conceived. At the Marrakesh Development Forum, however, the palpable feeling was that Africa is entering a new dawn of innovative financing.
Almeda Textiles benefits from low overhead costs, but is limited by challenging logistics.
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Low costs attract investors, but there are many obstacles to the country’s industrialisation.The Ethiopian government is pouring resources into industrialisation in an effort to break into global markets.
In the near future, everybody will produce the right products to fit the international market
But, in a country where manufacturing accounts for only 4.2% of gross domestic product, challenges loom large.
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Ethiopia’s largest garment producer, Almeda Textiles, imports machinery from Asia and chemicals from Europe, says general manager Libelo Gebreslassie.
It then exports finished garments to retailers like H&M of Sweden, KiK Textilien of Germany and Steve Horne Enterprise of the US.
“The very important thing is support from the government,” Libelo says.
“Even though there are a lot of problems, this is the reason why international investors are coming.”
He adds that Almeda faces obstacles including low-quality domestic cotton, the high cost of imported chemicals and low managerial capacity.
Ethiopia’s ability to break into global value chains is inhibited by difficult trade logistics, power shortages, red tape and a lack of access to credit.
The country’s advantages include low costs – labour, land leases and electricity are relatively cheap – and duty-free machinery imports and duty-free access to Western markets, according to Lars Moller, the World Bank’s lead economist in Ethiopia.
“Ethiopia’s image as an investment destination has improved tremendously in recent years, which is positive and is supporting the trend of an increased number of companies investing here,” Moller explains.
“But it will take a while before this will transform the economy.”
Foreign-owned firms, including Chinese leather producers and Turkish textile factories, are indispensable to Ethiopia’s industrial sector.
Locally owned businesses hope to gain more market share.
“Everybody is aware that we have a good opportunity, and in order to utilise this opportunity, we have to change internally,” Libelo says.
“In the near future, everybody will produce the right products to fit the international market.”
- Yara ESIA provides details that may well apply to pending Allana Potash PEA and subsequent SOP production
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Yara International (Yara) is a chemical company that specialises in the manufacture of agricultural products and environmental agents including fertiliser products (such as potash). To support this Yara has started a subsidiary company called Yara Dallol BV, which is involved in the exploration and development of potash minerals in the Danakil Depression of Ethiopia. Yara Dallol BV is also working together with Novopro Projects Inc. (Novopro), a Canadian Project Development and Management Company, to develop a potash mine and production unit.
The proposed Project is located in the Danakil Depression in the Afar region, Zone 2 of the Dallol Woreda.
Before proceeding Yara Dallol BV must conduct an Environmental and Social Impact Assessment (ESIA) to assess how the proposed Project is likely to affect the local natural environment and surrounding communities either positively or negatively. The ESIA process will also work to identify ways of minimizing any negative impacts and maximizing benefits (positive impacts) related to the proposed Project. In addition the ESIA report will, further advise if and how the proposed Project can be developed in a sustainable manner, as well as assist the Ethiopian officials with the permitting process.
Ethiopia expects to complete the Chinese-backed construction of a $475 million metro rail system in the capital Addis Ababa next month, the head of the project said.
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The project, built by China Railway Engineering Corporation (CREC) and mostly financed through a loan from China’s Exim Bank, is a rarity on a continent plagued by poor transport links.
Beijing is a major partner in Ethiopia’s bid to expand its infrastructure, with cumulative investments by Chinese firms reaching well over $1 billion, official figures show.
The Horn of Africa country is building a new rail link to neighbouring Djibouti and wants to complete 5,000 km of railway lines by 2020.
It will also aims to almost treble the size of the road network by next year, from less than 50,000 km in 2010.
Ethiopia is one of Africa’s fastest growing economies, expanding by about 9 percent a year and attracting overseas investment with its with rock-bottom wages, cheap and stable electricity and transport projects such as the metro.
A country where many still rely on subsistence agriculture, Ethiopia is nonetheless developing a reputation for producing clothes, shoes and other basic goods that have attracted firms from China, as well as India and the Gulf.
The metro system will transform the lives of the more than 5 million people in the capital, where commuters currently wait in long queues before they are crammed onto buses and minivans.
Project manager Behailu Sintayehu told Reuters nearly 80 percent of the tracks had been laid and he expected it to be completed by the end of January 2015, three years after the plan was launched in January 2012.
“We believe that it will have a great impact in alleviating the problem of transportation in the city,” Behailu said.
Stretching for a combined 32 km, two lines dividing Addis Ababa north-south and east-west will serve 39 stations, in underground and overground sections.
The state-run Ethiopian Railways Corporation signed an agreement this month that will see Shenzhen Metro – the enterprise managing the Chinese city’s subway system – operate the lines for a period of 41 months alongside CREC.
CREC will carry out a trial phase of up to three months and then the teams will decide when to start operating the system, Ethiopian Railway Corporation’s spokesman Dereje Tefera said.
Other African capitals with either subway systems or light rail networks are Cairo, Algiers and Tunis. South Africa has an extensive system linking several cities.
Djibouti has announced embarking on several mega infrastructure projects with a total investment of $9.8 billion.
The cost of the projects is six times more than the tiny eastern Africa country’s Gross Domestic Products (GDP).
Djibouti is currently constructing $804 million multi-purpose and three specialized ports to be dedicated for export of livestock, and 4 million tons of potash export per year from Ethiopia and 6 million tons of industrial salt annually from Djibouti.
“Out of the $9 billion total investments for the 14 mega projects, we have already secured 58 per cent funding,” Mr Abubaker Mohamed Hadi, the Chairman of the Djibouti Ports and Free Trade Zone Authority (DPFTZA), told visiting journalists from Ethiopia.
The funds, he explained, are from China Exim Bank and the 23.5 shareholder of DPFTZA, China Merchants and other financers.
New airports
Currently, most of Ethiopia’s $13 billion import and $3 billion export goods come and exit through Djibouti port.
In addition to Ethiopia, which has become a major client of the Djibouti port following the 1998 Ethiopia-Eritrea War, Djibouti also plans to expand its services to South Sudan.
“…Of the 17 landlocked countries in Africa, 10 are in our region,” Mr Hadi said, explaining the prudence of investing in the mega infrastructure projects.
The other mega projects in the country with less than one million people, include new airports, national shipping company and an airline, crude oil terminal, development of business districts and $3 billion natural gas refinery.
The $525 million Doraleh Multipurpose Port is expected to be completed in the two years.
When complete, the old Port of Djibouti will be converted to a business district, according to Mr Hadi.
Mr Hadi further noted that the investment also took into considerations the connectivity plan of Africa and integration of the continent.
He indicated that Ethiopia’s fast economic growth in recent years had helped Djibouti to grow by 5 per cent on average annually for the past five years.
In sub-Saharan Africa, an estimated 65 per cent of soils are degraded, and unable to nourish the crops the chronically food insecure continent requires. Poverty, climate change, population pressures and inadequate farming techniques are leading to a continuous decline in the health of African soils, whilst the economic loss is estimated at USD 68 billion per year. Conversely, better land management practices could deliver up to USD 1.4 trillion globally in increased crop production – 35 times the losses.
This report from the Montpellier Panel argues that if left unaddressed, the cycle of poor land management will result in higher barriers to food security, agricultural development for smallholder farmers and wider economic growth for Africa.
The report is a comprehensive analysis of land management in Africa today, and answers a series of critical questions:
Are donors and governments neglecting soil health in Africa?
What are the key approaches to restoring Africa’s soils?
How can improved land management tackle climate change in Africa?
Agriculture’s ability to catalyse rural development and eradicate poverty has been widely cited, with the World Bank claiming GDP growth from agriculture in Africa approximately 11 times more effective for reducing poverty than growth coming from any other sector. In 2006, the African Union’s Abuja declaration called for fertiliser use in sub-Saharan Africa to increase from today’s average of 8 kg/ha — the world’s lowest — to at least 50 kg/ha by 2015. However, agriculture must be implemented sustainably in order for food security to be possible for future generations, therefore the panel calls for ‘Integrated Soil Management’; combining targeted and selected use of fertilisers alongside traditional methods such as application of livestock manure, intercropping with nitrogen-fixing legumes or covering farmland with crop residues.
The launch was opened by Kanayo Nwanze, President of the International Fund for Agricultural Development at the United Nations in Rome.
Director of Agriculture for Impact, Professor Sir Gordon Conway chaired the panel discussion – comprising David Radcliffe Senior Advsior for Development and Cooperation DG at the European Commission, Camilla Toulmin, Director of the IIED, and Henri Carsalade, Agropolis Foundation – before opening up the conversation to questions from the audience.
Arup South Africa to Prepare Transit Oriented Development Master Plan for Addis Abeba Light Rail
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Arup South Africa has won the contract to prepare a Transit Oriented Development (TOD) master plan for ten of the key stations that are part of the Light Rail Transit (LRT) system being built in Addis Abeba.
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The 34.24 km network, based on two initial lines, one running north-south from Menelik Square to Kaliti and the other running east-west from Ayat to Tor Hailoch is set for completion in January 2015, with 41 stations in all.
The network is designed to carry 15,000 passengers per hour per direction.
“We have been retained by the Ethiopian Railway Corporation (ERC) to illustrate what activities, uses and yield can be created around the new stations within a 400 meter radius,” says Nico Venter, leader of Integrated Urbanism at Arup SA.
In a statement sent to Addis Standard, Arup further said that within this walkable node it needs to assess if each place and loci can accommodate appropriate use and bulk development. This forms part of the regeneration of a 125-year-old city with over 3 million people. Arup will visualize these nodes and illustrate potential future development, culminating in a broad based bankable approach, cognizant of costs and the catalytic potential these nodes could have on the city.
“This is a typical African city and each precinct has its own unique requirements and sense of place,” the statement said, adding the framework must therefore look to short, medium and long-term approaches that allow for flexibility and that can change over time as the node develops and matures.
“We have been requested to provide an independent view, using a multi-disciplinary approach, within a tight schedule of five months. We look forward to this task, as an exciting step forward in the future of city making,” said Venter.
Arup is an independent firm of designers, planners, engineers and technical specialists that makes up the heart of the creative force of many of the world’s most prominent projects in the built environment and industry.
Ethiopia is set to expand its airport reach with construction of three airport runways in three major regional cites, with a capacity to host big jets like B737.
The Ethiopian Airports Enterprise (EAE) the state company tasked with expanding and supervising Ethiopia’s increasing airports signed a $68.5 million (1.37 billion Ethiopian Birr) with three local firms who won tenders for the construction of three airport runways, on December 11, 2014.
The Runways which will each have 2,500 meters length and 60 meters width, are part of the government’s drive to boost trade and tourism ties across the country for it’s next ambitious economic goal named Growth and Transformation Plan II (GTP) set to start in end of 2015.
The most anticipated contract was the one for the southern city Hawassa, Ethiopia’s premier resort and tourism Hotspot as well as an industrial hub with a total cost $ 22.9 million. The contracting company is named Yotek Construction private Limited Company (PLC) with the supervisory form being Saba Engineering (Plc).
The second contract pertains to runway construction for another southern city Robe Goba, won by Akir Construction PlC for $ 24.7 million and to be supervised by Transport Construction Design Plc.
Robe is better known for its proximity to the UNESCO listed natural wonder the Sof Omer Cave system, and for being an agricultural belt of Ethiopia.
With The third project being in the Far North of the country near the city of Shire, to be constructed by Ethiopian Roads Construction Corporation (ERCC) and supervised by Transport Construction Design Plc at a cost $ 20.9 million.
The Third project hopes to utilize the mineral resources of the area especially gold which in that part of the country is heavily dominated by Artisanal mining.
Ericsson to take part of telecom deal after ZTE row
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Swedish telecom group Ericsson is set to sign a contract with Ethiopia to expand telecom infrastructure, taking a slice of an USD 800 million contract from Chinese firm ZTE Corp because of a row over terms, a senior official told Reuters on Thursday, Dec. 11.
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ZTE Corp’s deal with state-run operator Ethio Telecom was signed in 2013. The other half of the overall a USD 1.6 billion package to help double mobile subscribers was shared with another Chinese firm, Huawei Technologies Co Ltd.
But Ethiopian and ZTE differed over the cost of upgrading an existing network. Ethiopian officials said the firms were expected to carry out the upgrade at no extra charge, while ZTE said it would cost an additional USD 150 million to USD 200 million.
Ethiopian officials had said Nokia and Ericsson could take some work if agreement was not reached.
Ethio Telecom Chief Executive Officer, Andualem Admassie, told Reuters that discussions with Ericsson were nearing completion.
“Ericsson will start working on that share of expansion work,” he said, without giving a value for the deal. “We are only waiting for confirmation from the (Ethio Telecom) board.”
“Huawei is continuing its role,” he said, adding that ZTE would continue with some work. “ZTE have lost parts of their share but have made it clear they are willing to resume work, no matter what the current circumstances.”
Ericsson could not immediately be reached for comment.
The overall project aims to help the nation of more than 90 million people double mobile subscribers to 50 million in the next year and expand its 3G service.
The overall contract also includes a plan for Huawei to roll out a high-speed 4G network in Addis Ababa.
China has extended its economic influence in Africa in recent years, with state-owned firms winning road tenders in Kenya, signing deals for construction of energy projects in Uganda and running mining projects in various countries.
The USD 1.6 billion contract signed with the Chinese firms in Ethiopia had a long-term loan package to be paid over a 13-year period with interest of less than 1 percent, officials said.
Israel Chemicals to invest $452m in Chinese phosphate company
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- Israel Chemicals will set up a joint venture with Yunnan Yuntianhua and hold a 15% stake in the Chinese company.
Israel Chemicals Ltd. (NYSE: ICL; TASE: ICL) is to invest $452 million for 50% ownership of a joint venture that will operate a fully integrated, phosphate business in China. Israel Chemicals will also take a 15% strategic holding in Yunnan Yuntianhua, one of Asia’s leading producers of phosphate rock, which is traded on the Shanghai stock exchange with a market cap of $1.8 billion.
The joint venture will include a mine that produces 2.5 million tons of phosphate rock annually for the next 30 years, a downstream phosphate operation and a marketing and sales organization that primarily serves the Chinese and the Asian markets.
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Israel Chemicals says that the strategic alliance will leverage its and Yunnan Yuntianhua’s technical, marketing and production expertise and will include a joint phosphate R&D platform in the Yunnan province to develop process improvement and new products for both partners.
Israel Chemicals says that it has identified significant expansion and synergy potential and the major thrust of the joint venture’s strategy will be its transformation from a commodity fertilizer company to a specialty player in agriculture, food Ingredients and engineered materials.
Opening the second Ethio-Turkish Business Council Forum, Prime Minister Hailemariam Desalegn called on more Turkish investment in the areas of development and finance, investment and bilateral trade with between the two countries.
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The Turkish delegation, numbering some 200, led by the country’s Minister of Economy, Nihat Zeybekci, discussed with its Ethiopian counterpart on means of bolstering investment relations between the two countries.
Prime Minister Hailemariam said that his government has started negotiation with Turkey on the basis of financial freedom to attract more investment from the country.
“Turkey is one of the most reliable development partners the Government of Ethiopia has in its endeavors to extricate itself from poverty,” Hailemariam said during the opening of the forum at the United Nations Economic Commission for Africa (UNECA). The Prime Minister also urged the Turkish EX-IM Bank to finance projects in Ethiopia.
“There is still ample room for further expansion, in terms of volume and quality, of the development financing that the government of Turkey has been putting at our disposal [which nevertheless] has been increasing,” Hailemariam added.
On the occasion, the Turkish Minister of Economy, Zeybekci, made official the USD 300 million loan his country extended for the Awash-Woldiya Railway Project.
According to Yusuf Aydeniz, chairman of Ethio-Turkish Business Council, the ever growing investment and trade volume between the two countries has weighted over the last few years.
When the investment reached USD 1.6 billion, the largest Turkish investment in Africa, the trade volume jumped from USD 70 million to USD 450 million, Aydeniz said.
Solomon Afework, President of Ethiopian Chamber of the Commerce and Sectoral Associations, vowed to take the partnership with Turkish Confederation of Businessmen and Industries (TUSKON) forward by participating in the 9th International Turkish-African Congress which will be held next year in Istanbul, Turkey in April next year.
Back in August, the Ethiopian Investment Commission announced that Turkish Foreign Direct Investment (FDI) to Ethiopia is leading the group of emerging economies that have shown interest in investment opportunities in Ethiopia.
Although the Chinese lead in terms of number of companies that have invested in the country, the Turks lead others in combined capital outlay, the commission said.
The governments of Kenya and Ethiopia have signed an agreement that aims at creating opportunities for communities at the borders of the two countries, President Uhuru Kenyatta said on Wednesday adding that the agreement will create stability and security.
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Speaking at a farewell ceremony for Ethiopia’s Ambassador to Kenya, Shemsedin Ahmed, President Kenyatta assured the outgoing envoy that his government is determined to implement the special status agreement signed between the two countries.
On the recent terror attacks that took place in Kenya, the president said that his country is committed to winning the war and that his government will continue working with and borrow best practices from Ethiopia, which also neighbors Somalia.
“A busy person will have no time thinking of taking a gun to commit crime, rather he would be so committed to their businesses which he/she knows will ensure they get their daily livelihoods,” the president said.
The Ethiopian envoy condoled with the president and the people of Kenya following the recent terror massacre in Mandera saying the Ethiopian government will work closely with Kenya to ensure they root out the Al-Shabaab menace in the region.
He assured the president that his government is committed to the implementation of the agreement saying it will ensure security and stability within the region.
Ambassador Shemsedin said conflict between border communities has also contributed to border insecurity.
He said that the ongoing construction of Isiolo-Moyale road onwards to Ethiopia will facilitate economic growth and that the Ethiopian government is committed to enhancing border trade without much bureaucracy.
“Issues of currency will not matter when it comes to border trade. We will allow our people to trade freely with their neighbors with no restrictions,” Shemsedin said.
President Kenyatta said the agreement will not only accelerate the implementation of the infrastructural projects but also enhance relations between the peoples of the two countries.
“Everybody will gain; no one will lose in this agreement. This agreement will help our people move freely and develop together. It will help us move from government-to-government engagement to people-to-people relations,” Kenyatta said.
Voucher, a system tested in a pliot project since 2012, is replacing cash-credit to farmers in some woredas
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Left to right TeshomeWalle (PhD), head of Amhara regional bureau of Agriculture, Mekonen Yelewumwosen, CEO of ACSI and TekebaTebabal deputy head of Amhara Corporative Promotion Agency.
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The government is replacing cash credit to farmers in some woredas with vouchers for them to access fertiliser and improved seeds.
This system was tested in a pilot project, which began in 2012 in the Amhara Regional State, in Baso Liben, Gozamin, Debere Elias, South Achefer and Metecha woredas. It lead to the expected implementation within the coming three months in 73 woredas, half the woredas in the region, involving 2.2 million farming households. The intention is to improve smallholder farmers’ access to credit for agricultural inputs including fertilisers and improved seeds.
Formerly, the Commercial Bank of Ethiopia (CBE) provided the fund to the bureaus of finance and economic development, which passed the money to unions. The unions passed it to cooperatives, which in turn gave loans to farmers with a full guarantee provided by the bureaus of agriculture. The problem was that the cooperatives distributed the money without any measures to make sure that the farmers would pay it back, says Teshome Walle (PhD), head of Amhara Regional Bureau of Agriculture. This lead to defaults of 143 million Br, 471 million Br, and 447 million Br, in the three years from 2011/12, in Amhara region alone. The defaulted amount was “recovered” by cutting the budgets to the woredas, according to the amount of default within each jurisdiction.
Now the Amhara Credit and Savings Association (ACSI) will issue vouchers to the Micro Finance Institutions (MFIs) under it. Farmers will only be able to get these vouchers – not cash-in order to get the inputs they need from cooperatives. The agriculture bureau will no longer provide guarantee, as that has now been replaced with a credit fund established at the ACSI. The farmers, too, will no longer have to start paying immediately, but get a grace period of a year, so that they can repay from the sale of their produce.
The MFI’s will issue the vouchers based on an assessment of the farmers seeking the loan, said Mekonen Yelewumwosen, CEO of ACSI. In 2013/14, the pilot woredas benefited from a credit supply of 196,000qt of fertilisers and seeds, worth 230 million Br, provided to them through the Agricultural Inputs Supply Corporation (AISCO), which is under the Minister of Agriculture(MTA). From total inputs distributed, 48pc was Urea, 42pc DAP, six percent NPS and three percent improved seeds, including teff, wheat, sorgum and maize.
Farmers in the pilot project paid back 99pc of the credit they had taken, said Mekonnen.
The existing practice gave cooperatives and unions five Br to 12 Br commission for every quintal of fertiliser. That has now been increased to 20Br in order to encourage them, said Tekeba Tebabal, deputy head of Amhara Corporative Promotion Agency.
The full project, to now be launched in the 73 woredas expects to extend loans amounting to 2.4 billion Br. ACSI will hire 4,280 workers to implement the project.
This project is supported by financial contributions from the Netherlands Embassy and Department of Foreign Affairs, Trade & Development Canada.
Following a sharp decline in international oil prices, Ethiopia’s oil import bill for the current fiscal year is expected to go down by 600 million dollars, an estimated 21 percent of the overall import bill.
According to information obtained from the Ethiopian Petroleum Supply Enterprise, this year’s projected oil import bill is an overwhelming 2.9 billion dollars which accounts for 1/5 of an overall import bill. However, owing to the downward trend in the international oil market starting from June this year, the Enterprise has managed to gain some 400 million dollars after decrease in the costs of oil imports which it expects to grow even larger by the end of the year.
According to Demelash Alemu, an advisor to the Chief Executive Officer (CEO) of the Enterprise, this is a trend which has never been observed in Ethiopia in the past. Ethiopia’s oil import demand has shown a successive growth over the years where the bill increased by ten or twelve percent year after year. In light of the new trend in the international oil market, this year’s import bill is expected to be much lower than last year’s — 2.494 billion dollars — declining to 2.3 billion dollars.
In fact, the gain accrued due to the decline in the international oil market is equivalent or even greater than some of the biggest export commodities of the country. Some of the major export earners in Ethiopia do not have the capacity to fetch as much foreign currency that is saved by the enterprise.
However, critics of the government have been saying that the changes in the retail price of oil do not take into account the dynamics in the international market. Especially, in light of the recent decline the adjustment in the local retail price was said to be way below the decline in the international market indicating unwarranted profit from the oil sector.
Last week after the Ministry of Trade announced a new retail price for fuel, the country witnessed a severe fuel shortage which evidently led to long queues that lasted for hours in different parts of the country.
The quandary resulted in nullifying some eleven fuel stations in the capital by the Addis Ababa City Administration Trade Bureau accused of creating artificial shortage.
This week saw a relative ease in fuel supply shortage. However, the crisis has not been fully curbed.
Global oil price has fallen by more than 40 percent since June, when it was USD 115 a barrel. It is now below USD 70. This comes after nearly five years of stability. At a meeting in Vienna on November 27 the Organization of Petroleum Exporting Countries (OPEC), which controls nearly 40 percent of the world market, failed to reach agreement on production curbs, sending the price tumbling. Also hard hit are oil-exporting countries such as Russia, Nigeria, Iran and Venezuela.
According to Demelash, what should be considered is the price of refined oil. Unlike the decline in crude oil prices ,the price of refined oil decreased only by 22 percent which is around 50 percent than the global decline in oil prices. Demelash also said that back in June the price of one metric ton of refined oil was 945.89 dollars while now it has gone down to 737.37 dollars.
Falling global oil prices, Ethiopia’s bond yield up from 6.625pc
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Ministry of Economy and Finance Development, (MoFED), led by Sufian Ahmed, only sold one billion Br bond, where the parliament approval and the subscription for the bond were a fold of the sold one.
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Following the global fall in the price of oil, the percentage yield of Ethiopia, a return that investors will receive on holding a bond to maturity, increased from 6.625pc to 7.82pc.
According to Bloomberg data, reported on December 12, 2014, among sub-Saharan dollar bond issuers, only debt from South Africa and Namibia are rated as above ‘junk’. Ghana was reduced one level in October, to B-, six steps below the investment grade. Nigeria is three levels higher, at BB-, while Rwanda stands at B and Kenya at B+.
Ethiopia, which sold debut Eurobonds at a 6.6 pc yield, and which now trades at 7.82 pc, is rated B, while Ivory Coast is rated B1, one level below Nigeria, according to Bloomberg.
It was three weeks ago that the government of Ethiopia joined the international capital market by getting a one billion dollar oversubscribed debut Eurobond from Europe and the United States (US), with 6.625pc interest rate. The government is planning to utilise the money for the establishment of two new sugar factories, the installation of an electric power system and the development of two industrial zones.
“This bond has a probability of being a junk bond for the economy if the oil price goes down at this pace,’’ said a macroeconomist.
Junk bonds are bonds that are known by their higher default risk and rated below investment grade.
The bond, on the market for three weeks in Europe and America, got a subscription of 2.6 billion dollars, but the government only sold a one billion-dollar bond as of December 5, 2014: half the amount that has been approved by parliament.
“We considered our paying capacity and decided to only sell a one billion dollar bond,’’ said Sufian Ahmed, minister of Finance and Economic Development, during the press briefing he gave at his office in Sidest Kilo, located on the King George VI Street, on Tuesday, December 16, 2014.
All subscribers are institutions, such as insurance firms, and 70pc of them are from the US, with the remaining being from Europe, said Sufian. He added that Ethiopia has got a good deal, because it does not have to pay commitment fees and insurance fees, despite these two fees being the norm in the securities market. In addition, it has a lesser interest rate, compared to other conventional loans, especially project loans, he said.
Even before joining the capital market, Ethiopia took project loans that pledge for a single project after assessment, and the government receives sector loans from international financial institutions, including the World Bank (WB), African Development Bank (AfDB), and EXIM banks.
In the market, the minister mentioned the upcoming election, a probability of war between Ethiopia and Eritrea, drought and logistics problems due to the country being land-locked. The aforementioned were listed as the risks in the market, but we were rated lower by the international buyers, said Sufian.
Ethiopia has a very safe debt rating, says Sufian, mentioning the five standards to level one country’s debt rate. Net Present Value (NPV) for Ethiopia, which draws a comparison between the cash outflows and inflows, 12.6pc, according to Sufian, who says that it is safe for a country to score up to 40pc, but not more.
Ethiopia’s NPV ratio to the export also stands at 100pc, he added, while it is safe to go as far as 150pc. The ratio of NPV for domestic revenue is 108pc, where the bottom line is over 250pc. Debt service ratio per export also stands at 6.8pc, far below the standard of 20pc. Ethiopia’s status in the last measurement, in terms of debt service ratio to domestic ratio, is 7.3pc, where the alarm is over 20pc.
“We do not have a plan to go back to the capital market for the coming two Growth the Transformation Plan (GTP) periods, said Sufian. “But if things force us to go back to the international market, we will definitely do so.”
The two sugar factories are located in the Southern region and the Eastern part, according to Sufian, who declined to further disclose the exact locations of the factories. The two industrial zones are designated to be constructed at Dire Dawa, 515Km east of the capital and Hawassa, 273km south of the capital in the Southern Region. The industrial zones are part of the government plan to establish industrial zones in four towns, including in Kombolcha, 376km to the north of the capital in the Amhara region and in Shillabo, 1,140km from the capital in Somalia Region, on a total of 5,130ha of land.
The minister mentioned that electric power transmission systems will be funded from this loan, the transmission line will be extended from Ethiopia to Kenya, and Kenya’s part is funded by the WB, according to sources.
The use of this loan for the projects will help the country earn foreign currency by exporting, but these are the areas where the GTP failed, so they all need special handling and follow-up, including determining what part of the government is the contract administrator and project manager, cash flow for the projects, and detailed feasibility studies, said a macroeconomist.
The government should give special emphasis, as the carry-on cost increases until the projects are finalised and start earning foreign currency, suggests this expert.
German Company to Produce Ethanol, Fertilizer from Waste Products of Sugar
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Schmitt Distillation Plant Engineering announced on Wednesday its plan to build a factory that produces ethanol, electricity, fertilizer and animal food from waste products of sugar.
Company General Manager Reiner Schmitt held talks with President Dr. Mulatu Teshome at the National Palace. Schmitt told journalists that the factory would help in the transfer of knowledge and technology in addition to consolidating the investment ties of Ethiopia and Germany.
Although activities were underway to launch the plant, the decision to quickly start building the factory followed the visit of Prime Minister Hailemariam Dessalegn, he said.
The general manager added that the technology, finance and other necessary things will be brought from Germany.
President Mulatu has reportedly told the delegation led by Schmitt that German investors will benefit a lot if they engage in particularly in meat, milk, leather and other agriculture investment areas.
The human resource, animal resources and the ever increasing purchasing power of the public
The human resource, animal resources and the ever increasing purchasing power of the public will enable investors engaged in the sector to become successful, the president said.
The 10 sugar factories expected to be completed by next year will contribute to the factory to be constructed, Dr. Mulatu also said.
The German factory has 50 year experience in the field, it was learnt.
Ericsson Grabs Torch to begin Telecommunications Expansion
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Following the abrogation of the deal with ZTE, the state monopoly has signed a deal with Ericsson.
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Officials overseeing the telecom sector, including Debretsion G. Michael, coordinator of the economic cluster with the rank of deputy prime minister and minister for Communications & Information Technology (MoCIT), Mekuria Haile, minister of Construction, Housing & Urban Development (MoCHUD), Andualem Admassie, CEO of ethio telecom, and Abdurahim Ahmed, corporate communications director, ethio telecom, seemed happy to find a solution to the gridlock of the project. For executives of Ericsson, Isil Yakin, president, Ericsson North East Africa, and Rafia Ibrahim, president, Ericsson, Middle East & North Africa, the week marked resurgence in an important market with about 90 million people.
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An eight-month negotiation was finalised this week by awarding Swedish based telecommunications firm, Ericsson, the 500 million dollars – 550 million dollars telecom project. The contract is part of the project that was taken away from ZTE.
The Ethiopian telecom monopoly initially launched a project for the transformation and expansion of telecom services with a total project cost of 1.6 billion dollars in 2013. The framework and financing agreement had been signed with the two Chinese competing network solution providers ZTE and Huawei Technologies, by splitting the project into 13 circles. The two companies were awarded the multi-vendor financing project of 800 million dollars each after they secured the financing from the Export-Import Bank of China (EX-IM) with a maturity period of 13 years at a three percent interest rate.
Huawei took seven circles, one in the capital and the remaining in regional states of the Country. ZTE took the remaining six circles. Following the multi-vendor financing agreement, Huawei started the optimisation in Addis Abeba but ZTE did not because of a disagreement with the state monopoly, after it has declined to work on the swapping of the old network, according to Debretsion Gebremichael (PhD), in the rank of Deputy Prime Minister, coordinator of the finance and economic cluster and minister at the Communication and Information Technology.
ZTE’s refusal to work on the swapping of the old networks, and asking for an additional 150 million dollars for the service, led ethio telecom’s board, chaired by Mekuria Haile, minister of Urban Development and Housing Construction, to terminate the framework agreement signed with ZTE on April 2014, Fortune confirmed.
After the termination of the deal with ZTE, the state monopoly approached Nokia and Ericsson, with an offer to work on the projects together, taking three circles each. This ended with a fruitful deal with Ericsson.
“We approached the two companies because they have been interested in working in Ethiopia, as they have approached us at different times in the past,’’ says Debretsion. “Nokia did not respond to our offer, so we continued negotiations with Ericsson.’’
Ericsson proposed 550 million dollars for the four lots, by coming up with a financing structure that has a maturity period of 10 years, with a 7.5pc interest rate, according to sources. But the interest rate and the maturity period were adjusted after negotiation between the two parties, although both remain higher than the figures in the deal with ZTE.
“The difference is not that significant,’’ Debretsion told Fortune.
After the officials of ZTE knew that the government of Ethiopia was negotiating with Ericsson, they requested to work on the project again, by agreeing to include the swapping with the first project cost, but ZTE officials declined to give further details on the issue.
“We were going to shift the whole project from ZTE, but the time framework scheduled for the finalisation of the project is June 2015, and Ericsson said that it could finalise all four circles within the remaining six months,” said Debretsion.
The agreement with Ericsson was signed last Tuesday, December 16, 2014 at Hilton Hotel, between Andulem Admassie, chief executive officer (CEO) of ethio telecom, and Rafiah Ibrahim, president of Ericsson for the Middle East and North East Africa region. The event was attended by Mekuria, Debretsion and Jan Sadek, Swedish ambassador to Ethiopia. The new project that is designed with Ericsson includes expansion, overhauling, swapping and provision of technologies for four circles, including south, south west, south east and south south circles, while ZTE retains the east and middle east circles.
Hours before this deal, we signed a contract with ZTE for the remaining two circles, Andulem told Fortune. In addition to the circles, ZTE will work on transmission, power deployment, business and security, according to Andualem.
Part of the contract that was given to Huawei, with a three-phase project, was finalised four months ago. The first phase involved replacing the old Nokia network, set up in 75 areas, including Bisrate Gabriel, Mekanisa, Ayer Tena, Alem Bank, and Alem Gena, with a new Huawei network. The second phase involved 239 further areas.
In the third phase, ethio-telecom built the capacity for providing the fourth generation (4G) service for 400,000 customers, by completing civil works, erecting antennas and installing service equipment in an additional 410 sites. In these sites, there will be 210 antennas supporting 4G. A total of 722 antennas were installed bringing the city’s service coverage reach to 100pc.
The expansion project, which is to be completed by the end of the Growth and Transformation Plan (GTP) period, in 2014/15, is supposed to increase the mobile service capacity from 23 million to 50 million, with 40 million subscribers, but ethio telecom data shows that they have revised the number of target subscribers to 59 million.
Ericsson, a multinational mobile phone manufacturing company headquartered in Tokyo, Japan, and Lund, Sweden, sold the first telephone to Ethiopia during Emperor Menelik II‘s reign. It was also the first overseas firm to install mobile networks in Addis Abeba for 19,000 subscribers.
“We will commence the project within the coming few weeks, as we have already ordered equipment for the project from Sweden,” said Rafiah. The company has already brought 50 people to Ethiopia for the project, with more local forces soon be recruited, she told Fortune.
The Ministry of Mines recently revoked 56 minerals exploration licenses of foreign and local mining companies on the ground that the companies did not undertake exploration activities. The companies were licensed to prospect for gold and base metals, iron ore and gemstones.
Reliable sources at the ministry told The Reporter that the companies did not fulfill their commitments in accordance with the agreement they entered into with the ministry. According to sources, the mining coming companies failed to execute the mineral exploration work according to schedule. “The mining companies were unable to undertake exploration activities due to their own problems. The companies kept the exploration areas idle for year,” sources said.
The communication directorate confirmed the measure taken against the mining companies but did not reveal further information.
The Ministry of Mines has granted 200 mineral exploration licenses since 1992. In 2011-2012 the mining sector earned 618 million dollars from mineral exports- 2/3 coming from artisanal mining. The mining sector is expected to generate 2 billion dollars by 2024 employing 8000 citizens.
The Ethiopian government aims at building and developing an essentially new economic sector – the large scale mineral sector. The current policy framework envisions the mineral sector to be the back bone of the industry by 2020-2023.
In a related news companies are complaining about the new mineral exploration licensing procedures the ministry introduced last year. The companies claim that the ministry is not issuing exploration licenses to mining companies. Some of them claim that they are waiting for three years after they submitted their application for exploration licenses. “The ministry issued only six mineral exploration licenses in the past six or seven months,” representatives of companies said.
The new mineral exploration directive requires companies to have a minimum of three years working experience in the mining sector. The mineral licensing and administration directorate evaluates the proposals submitted by companies and should get 75 percent grade to secure the license. Previous experience holds 35 percent of the grading.
A senior official at the Ministry of Mines told The Reporter that the Ministry of Mines put in place a new licensing procedure with the view of avoiding companies who trade exploration areas. “Most companies are brokers. They acquire exploration areas from the ministry. They do not have the experience and the required financial resource to execute the exploration projects. Some take the land and transfer it to other companies without adding any value on the concession. Others keep the exploration areas idle for years. So we took the measure after we made a thorough statement. We introduced the new licensing procedure to avoid companies who keep exploration areas idle for a long time. We grant licenses for companies that are committed to undertake exploration work. We need companies who have the expertise and adequate financial resource,” the official said.
The Ministry issued 209 exploration licenses and 63 mining licenses. Sixty of the licenses were owned by local companies, 68 by foreign companies and 36 by joint ventures.
A recent study undertaken by the World Bank on the Ethiopian mining sector identified hindrances in the licensing procedures of the Ministry of Mines. The strategic assessment of the Ethiopian mining sector issued last October says that there is currently a considerable back log in the assessment of exploration license applications, while the intention is to asses these on monthly basis. “This may in part be due to efforts to discourage speculative applications and \or companies that do not have the necessary know how or resources. It is however also clear that there exist some critical capacity constraints that prevent the licensing authority to assess applications on time,” the report says. The report stated that ministry’s computerized mining cadastre system commissioned in 2011 has fallen into disuse.
Authority launches upgrading Dire Dawa-Dewele road
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The Ethiopia Roads Authority (ERA) said upgrading the 220 km Dire Dawa-Dewele road to asphalt paving has been launched at a cost of over 3.9 billion birr.
Dire Dawa-Dewele road, which is part of the Ethiopian road development program, will be built by a Chinese construction company, CGC Overseas, Dereje Hailu, ERA Communication Directorate Team Leader told WIC.
Some 85 per cent of the cost for the road will be covered by a loan secured from China EximBank, while the remaining 15 per cent will be earmarked by the government of Ethiopia, he said.
According to Dereje, the construction of the Dire Dawa-Dewele road will reduce the time and the traffic congestion being witnessed at the Awash-Mile-Djibouti road.
Upon completion within the coming three years, the road will have a width of 19 meters in urban and 10 meters in rural areas, he said.
Discussion opens on 10-year cement dev’t strategy in Ethiopia
Stakeholders are discussing on a draft 10 year cement development strategy in Ethiopia.
State Minister of Industry Mebrat Meles (Ph.D) said the strategy will boos factory’s productivity and ensure affordable availability of cement for people with low incomes.
Factory representatives shared this view and vowed to the realization of the strategy.
The strategy will play a crucial role in bridging the gap in cement demand and supply in Ethiopia.
Problems of limited capacity with the factories and the scarcity of coal as the main power source for the factories had been identified as factors driving cement prices up.
It was noted that the country was working to exploit its coal reserves in order to save foreign currency.
Long queues are usually associated with sugar shortage
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By Mikias Sebsibe
Responding to an anonymous tip via the toll-free 8478, the investigation team at the Trade Competition and Consumer Protection Authority sprang into action earlier this month.
The informant relayed a tip that a truck carrying 180 quintals of sugar has been smuggled in to Addis Ababa from Dire Dawa.
Subsequently, the general manager and board members of the company (name withheld as the case is still under investigation), were brought in for questioning.
At a time when a constraint in supply of sugar is gripping the nation, such trade practices become more frequent. The practice ranges from price hikes, hoarding and transporting the commodity outside the authorized distribution route to the impossible task of making “honey” out of sugar, which is later sold as genuine honey.
Sugar is one of the essential commodities whose price and distribution is closely regulated by the government. Although businesses are often singled out as the prime culprits and held accountable for the unlawful trade practice, their profit maximization effort is often in response to a problem from the supply line. The recent shortage of sugar is also a result of a miscalculation by the Ethiopian Sugar Corporation (ESC) which resulted in the delay of import of sugar into the country.
“We expected Tendaho Sugar Factory to start production last year,” Zemedkun Tekle, corporate communication director at ESC, told The Reporter. Tendaho, whose project launch predates ESC’s establishment, was expected to enter production during the first half of the 2013/14 budget year.
“When we made the projection [at the end of the 2012/13 budget year], the project was over 99 percent complete. We did not expect the 0.0 something would cause this much delay in production,” Zemedkun added.
The factory, whose construction began in 2007, was enabled by a USD 400 million line of credit from the EX-IM Bank of India with India’s Overseas Infrastructure Alliance (OIA), which is largely blamed for the delay, awarded to undertake the project in a turnkey contract.
With Tendaho in mind, ESC boldly announced that Ethiopia is edging closer to becoming sugar self-sufficient and claimed that the country will seize to import sugar as of the 2013/14 budget year.
However, delays at Tendaho coupled with ceasing of production at Fincha Sugar Factory, the largest sugar producing factory at present with daily output of over 10,000 tcd (tons of cane per day), resulted in an unexpected shortage in the supply of sugar causing panic in the market.
Currently, Ethiopia produces sugar from three sugar factories – Fincha, Wonji and Metehara. But these factories stop operations and conduct maintenance during the rainy season particularly from July to September with imports filling the gap in supply.
However, Fincha Sugar Factory ceased production two months prior the timetable due to untimely rain with mud making it difficult for vehicles to transport sugarcane from the plantation to the crushing plant.
“There was no sugar from Fincha – a factory which was producing nine thousand tons of sugar per day at the time – until October this year,” Zemedkun told The Reporter. The other two factories also resumed production as of mid-October.
Had it gone according to plan, ESC would have filled the gap in supply during the rainy season from the Tendaho Sugar Factory. As the factory is located in the arid Assayita town of the Afar Regional State, productions can be carried out all year round.
The constraint in supply led to a depletion of the country’s sugar stock, which at one point was as low as 80,000 quintals, according to a city government official. This stock was not even enough to meet the monthly quota of Addis Ababa which stands at 102,000 quintals.
“Addis Ababa was accorded a special attention and the stockpile was almost entirely supplied to the market in the capital,” Gemechis Melaku, head of the Addis Ababa Trade and Industrial Development Bureau, told The Reporter.
Whereas industries and regions were forced to remain without supply of sugar for some time, the constraint in the capital led to all sorts of unlawful trade practices including smuggling sugar out of the city.
In a frantic attempt to adjust the supply of sugar, the country, initially, ordered the import of one 100 thousand tons of sugar which arrived in July this year.
“The market was starved, so the import was quickly sucked up,” Zemedkun said. A further 60 thousand tons of sugar arrived in the country in September and November. But the market is yet to stabilize with Trade Competition and Consumer Protection Authority still grabbling with cases of unlawful trade practice in the retail of sugar.
“It is the hangover effect of the shortage. It should stabilize soon,” Zemedkun forecasts.
Distribution gap
Before the infamous move of introducing “price cap” by the government, in June 2010, the Ministry of Trade devised a scheme to regulate the price and distribution of sugar and other essential commodities such as wheat and edible oil. The scheme also introduced a quota system on the basis of population size, which is continuously revised.
Based on the designated quota, Addis Ababa Trade and Industrial Development Bureau can receive up to 102,000 quintals of sugar every month while industries get 124,000 quintals.
Regional states including the City Council of Dire Dawa are allocated a total of 402,153 quintals every 45 days and the purchase and distribution is handled by the Merchandise Wholesale and Import Trade Enterprise (MEWIT). Oromia Special Zones get some 10,700 quintals every month and a half.
“The sugar we import is highly subsidized by the Ethiopian Sugar Corporation. That eats up the investment capital we would otherwise have used on sugar development projects,” Taitu Ali, acting director-general of ESC’s Marketing Division, told The Reporter justifying quota system and the need to closely regulate the distribution and price of the commodity.
The purchase is done by submitting a request letter and effecting payment to ESC’s Marketing Division, whose headquarters is located off Chad Street on Philips Building around Mexico.
The Addis Ababa Trade and Industrial Development Bureau said it has distributed a little over 259,000 quintals in the first quarter of the budget year. Latest figures from the MoT also reveal that the bureau effected purchase of some 77,000 and 101,800 quintals of sugar for the month of October and November.
The distribution channel to the level of end-users in regions is largely carried out by regional trade bureaus. In Addis Ababa, the trade bureau relies on consumer cooperatives set up in all 116 weredas and Et-fruit. The cooperatives directly sale to end-users and retailers in a 20/80 ratio with 80 percent of the sugar supplied to retailers while the remaining amount sold directly to consumers. VAT-registered service providers get their sugar from Et-Fruit.
However, the distribution channel is not without its problems. According to Yosef Getachew, investigation and prosecution director at Trade Competition and Consumer Protection Authority, large number of unlawful trade cases indicates malpractice by consumer cooperatives.
“A number of cases show conspiracy between traders and cooperatives,” Yosef told The Reporter.
The Addis Ababa Trade and Industrial Development Bureau, which oversees the activities of the cooperatives, largely blame traders for gaps in distribution. However, it also admits loose controlling and supervision mechanisms as another contributing factor.
“However, we cannot be at every retail shop. We expect the consumer to be a watchdog but that has not been to our satisfaction,” Gemechis, head of the city trade bureau, said.
In a bid to motivate informants, a directive entitles tipsters a fee amounting to 30 percent of the property which is a subject of the unlawful trade practice.
Prolonged procedures to purchase the sugar and the 20/80 ratio which favors retailers are considered as contributing factors for the distribution gaps which may need a revision, according to Zemedkun.
GTP vs reality
Ethiopia’s ambitious goal set under the Growth and Transformation Plan as one of major sugar producing countries in the world by 2015 now appears unrealistic. The government had planned to raise the annual production of sugar to 2.25 million tons by the end of the GTP period (June 2015). Besides satisfying the domestic demand, some 1.24 million tons were expected to be exported generating 661.7 million dollars annually.
However, ESC’s projection for the current budget year is more conservative. The corporation projects the annual production to reach 1.2 million tons. The sugar production can expect a boost when Tendaho Sugar Factory, which will crush 13,000 tcd at full capacity, and Kessem Sugar Factory, with an initial capacity of 6,000 tcd, begin operation this year. According to ESC, both factories have entered testing phase.
Prime Minister Hailemariam Dessalegn, while presenting his government’s quarterly report to parliament, said the country will be able to finish seven of the ten sugar projects currently underway. Besides Tendaho and Kessem, the projects include Tendaho II (13,000 tcd), Arjo Dediessa (8,000 tcd), Kuraz I (12,000 tcd) and two factories at Tana Beles , with a combined capacity of 24,000 tcd.
“We will soon evaluate where exactly the progress of each of these projects are to determine whether we can achieve them all,” Zemedkun told The Reporter.
With a boost in domestic production expected this year, ESC’s plan for the budget year earmarked 600,000 tons of sugar for export. If not the export, ESC is confident that the 60,000 tons of sugar imported during the current budget year will be the last.
Meanwhile, without adequate supply of sugar, investigators and prosecutors at the Trade Competition and Consumer Protection Authority, tasked with a broader responsibility of ensuring market transparency, continue to be inundated with cases where unlawful trade involving sugar as little as 50 kg being reported to the authority.
This budget year alone, nearly 500 quintals of sugar has been confiscated with traders punished with fines and imprisonments.
African fund backs plans to manufacture and use of smart meters in Ethiopia
The African Development Bank (AfDB), which hosts the Sefa fund, said the grant would support the “corporate expansion” of Addis Ababa-based dVentus in the energy efficiency equipment sector.
“Specifically, the grant will finance a market and bankability study as well as product validation and certification with the aim of mitigating part of the technical development risks and catalysing the financing required for the transition and expansion plan,” the AfDB said.
In addition, the AfDB said the project “will help demonstrate the viability of indigenous high-tech suppliers for the growing clean energy sector in Africa”. The grant will also help boost private funding “in an industry of key importance for enabling investments in renewable energy and energy efficiency”.
Once operational, the manufacturing facility “will provide products that will lead to an improvement in power distribution and generation and help address Ethiopia’s current and projected energy shortfall”, the AfDB said.
The AfDB said: “Smart electric meters will have a direct impact in efficient billing, load management, tariff management, and theft control resulting in smaller power losses, fewer power outages and better customer service. It is estimated that savings up to $66 million per year and a 50% reduction in distribution losses could be achieved if the two million connected clients in Ethiopia were to use this technology.”
“The project is also expected to contribute to technology transfer of high-tech engineering and to the creation of up to 150 jobs during construction of the manufacturing facility and another 150 jobs during operations, out of which 80% are expected to be highly-skilled jobs,” the AfDB said.
The AfDB said the support to dVentus is in line with the bank’s “broader cooperation” with the US-backed Power Africa initiative, launched by President Barack Obama in 2013, aimed at supporting economic growth and development by increasing access to reliable, affordable, and sustainable power in all of sub-Saharan Africa, including in Ethiopia.
Sefa is a multi-donor facility designed to unlock private investments in small to medium-sized clean energy projects in Africa. The fund is endowed with $60 million from the governments of Denmark and the US.
International Monetary Fund managing director Christine Lagarde said earlier this year that the “scaling up” of energy infrastructure investments in Ethiopia and other African nations were “critical for growth to be sustained”.
Defunct Fertilizer to Re-emerge in a Policy Reversal
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Draft policy will introduce new fertilizer use in the country
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Tekalign Mamo (Prof.) state minister and advisor to the minister and Selechi Getahun,the state minister for Agriculture chatting during the forum at the Harmony Hotel.
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The National Fertilizer Industry Agency, which was dissolved as redundant in 2006 with the implementation of the business process reengineering (BPR), is now to be re-established by a new proclamation, which the Ministry of Agriculture (MOA) and the Agricultural Transformation Agency (ATA) have drafted.
This is part of the revision of the fertilizer policy which the government has been following since 1993. A draft policy prepared jointly by the ATA and the MoA was the subject of stakeholder deliberation on December 23 and 24, 2014, at a meeting held at Harmony Hotel. The Agency will be brought back as an implementer of the new policy, when approved.
The Agency was dissolved with the belief that its job could be undertaken by a regulatory system within the MoA. Its re-establishment will endow it with different powers and responsibilities than it used to have.
Before the dissolving of the agency in 2006, there were 67 registered fertilizer suppliers in the country, all of which would disappear following the annexation of the Agency into the Agricultural Input Supply Enterprise (AISE) as a regulatory body.
“Now the agency is to be established in order to administer the consumption of fertilizers depending on the assessment that we made in 365 Woredas of the country and to test the conformity of the fertilizers to the Ethiopian standards,” Sileshi Getahun, state minister for Agriculture told Fortune.
The agency will have responsibilities related to fertilizer production, import and export, fertilizer demand development, pricing, marketing and distribution, fertilizer quality control, fertilizer registration, fertilizer competence assurance, fertilizer sub-sector governance, and coordination with other bodies.
To carry out the above responsibilities, the Agency will engage in advocacy, encouraging the involvement of the private sector, unions and primary unions in the fertilizer manufacturing industry, decide the type of fertilizers to be imported or locally manufactured, develop guidelines to permit fertilizer production for regional enforcing bodies to facilitate manufacturing permit, facilitate the development of fertilizer quality standard and follow-up execution and decide upon suspension of fertilizers from sale pursuant to the laboratory test result, states the presentation by the Ministry addressed to the gathered stakeholders.
The draft proclamation to Provide for the Establishment of the National Fertilizer Industry Agency, was one of three documents discussed at a meeting held at Harmony Hotel on the aforementioned date. The other documents were the Revised Fertilizer Policy and the Fertilizer Manufacturing and Trade proclamation.
“The major role that is added to the functioning of the Agency is registration of the fertilizers used in the country, which was not implemented because of the existence of only two kinds of fertilizers in the country – DAP and UREA,” Noah Alemu, soil team associate at the ATA told Fortune.
Based on the findings of a research that the ATA conducted in the 365 woredas of the country, it was found that because of the continued use of the two types of fertilizers for 60 years, the soil has lost important nutrients like sulfur, potassium, boron and zinc.
Now the Agency has totally suspended the importation of DAP as of this fiscal year, according to Noah.
“It is like using the same kind of medicine for different diseases,” he said.
The Agency has now began the importation of a new kind of fertilizer called NPS in place of the DAP that the country has been using.
“There are different kinds of fertilizers to be used, such as liquid, solid, and spray and these need to be identified and registered by a regulatory body that could administer the issues related to fertilizers,” paid Noah.
The establishment of the Agency will also embark the participation of the private sector in the fertilizer marketing- both in the production, distribution and importation of the fertilizers that the country requires.
There are 17 soil test laboratories in the country, which will help the Agency import what is needed for the soil in the farming areas.
“There are different formulas of fertilizer that are needed in the country. As seen, even from the experience of Tigray, out of the sampled 160 soil, we need to have 21 formulas. So the Agency will be responsible for the control of quality in the blending of different fertilizers to make the needed formulas,” Noah says.
Now four blending industries owned by farmers’ cooperatives, each costing from one million to two million dollars, are in the pipeline in four regional states, Southern Nations Nationalities and Peoples Region, the Amhara Regional State, the Tigray Regional State and the Oromia Regional State. One in the Oromia Region, Becho, Woliso has become operational. But the country requires at least 18 blending industries to the current findings of ATA. The soil test and study of the remaining 365 Woredas will be completed. The total project is expected to be finalized and publicized in three years.
Voucher, a system tested in a pliot project since 2012, is replacing cash-credit to farmers in some woredas
Left to right TeshomeWalle (PhD), head of Amhara regional bureau of Agriculture, Mekonen Yelewumwosen, CEO of ACSI and TekebaTebabal deputy head of Amhara Corporative Promotion Agency.
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The government is replacing cash credit to farmers in some woredas with vouchers for them to access fertiliser and improved seeds.
This system was tested in a pilot project, which began in 2012 in the Amhara Regional State, in Baso Liben, Gozamin, Debere Elias, South Achefer and Metecha woredas. It lead to the expected implementation within the coming three months in 73 woredas, half the woredas in the region, involving 2.2 million farming households. The intention is to improve smallholder farmers’ access to credit for agricultural inputs including fertilisers and improved seeds.
Formerly, the Commercial Bank of Ethiopia (CBE) provided the fund to the bureaus of finance and economic development, which passed the money to unions. The unions passed it to cooperatives, which in turn gave loans to farmers with a full guarantee provided by the bureaus of agriculture. The problem was that the cooperatives distributed the money without any measures to make sure that the farmers would pay it back, says Teshome Walle (PhD), head of Amhara Regional Bureau of Agriculture. This lead to defaults of 143 million Br, 471 million Br, and 447 million Br, in the three years from 2011/12, in Amhara region alone. The defaulted amount was “recovered” by cutting the budgets to the woredas, according to the amount of default within each jurisdiction.
Now the Amhara Credit and Savings Association (ACSI) will issue vouchers to the Micro Finance Institutions (MFIs) under it. Farmers will only be able to get these vouchers – not cash-in order to get the inputs they need from cooperatives. The agriculture bureau will no longer provide guarantee, as that has now been replaced with a credit fund established at the ACSI. The farmers, too, will no longer have to start paying immediately, but get a grace period of a year, so that they can repay from the sale of their produce.
The MFI’s will issue the vouchers based on an assessment of the farmers seeking the loan, said Mekonen Yelewumwosen, CEO of ACSI. In 2013/14, the pilot woredas benefited from a credit supply of 196,000qt of fertilisers and seeds, worth 230 million Br, provided to them through the Agricultural Inputs Supply Corporation (AISCO), which is under the Minister of Agriculture(MTA). From total inputs distributed, 48pc was Urea, 42pc DAP, six percent NPS and three percent improved seeds, including teff, wheat, sorgum and maize.
Farmers in the pilot project paid back 99pc of the credit they had taken, said Mekonnen.
The existing practice gave cooperatives and unions five Br to 12 Br commission for every quintal of fertiliser. That has now been increased to 20Br in order to encourage them, said Tekeba Tebabal, deputy head of Amhara Corporative Promotion Agency.
The full project, to now be launched in the 73 woredas expects to extend loans amounting to 2.4 billion Br. ACSI will hire 4,280 workers to implement the project.
This project is supported by financial contributions from the Netherlands Embassy and Department of Foreign Affairs, Trade & Development Canada.
Ethiopia to start using Sudanese port to import goods
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Ethiopian state minister of transport and communication Ato Getachew Mengestie has said that Ethiopia is to start using Sudanese port for importing goods.
Till now Ethiopia was using Sudanese port for exporting items overseas. The move is said to be triggered by an expanding demand from Ethiopia’s growing economy.
To this end the Ethiopian government has signed a deal with its Sudanese counterpart to import 50 000 tones of fertilizers through the Sudanese port.
Apart from this port, efforts are being made by the Ethiopian government to use other ports like Zeyela, Berbera and others as an alternative choice.
To solve the problem of storage space, a new 5 000 meter square storage facility has been opened a week ago around Mojjo.
Musevini and Hailemariam exchanging gestures after the press release at the National Palace.
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The first official visit of the Ugandan government delegation after the death of the former Ethiopian Prime minister Meles Zenawi, led by the President Yoweri Kaguta Museveni, saw the two countries signing four agreements that focused on infrastructure development like electricity and road development.
The agreements that the ministers of the two countries signed were said to formalise and cement the two countries’ cooperation and strengthen their mutual interests until the next joint ministerial meetings of the two countries, according to PM Hailemariam Dessalegn.
The first agreement of the two countries was made between the Ethiopian Foreign Affairs Minister Tewodros Adhanom and his Ugandan counterpart Henry Okello Oryem to cooperate in the health sector. The two countries are among the better performers in achieving the Millennium Development Goal (MDG), especially in terms of the reduction of child mortality and improving maternal health.
In the wider range, Africa has halted and reversed the spread of HIV/AIDS, with a drop in prevalence rates from 5.9pc in 2001 to 4.9pc in 2011, according to the 2014 MDG report. The top rows of these performers are graced by the presence of Uganda in place of them.
And as the MDG report of Ethiopia for the year 2010 indicates, the under-five mortality rate has decreased from 167 out of 1,000 in 2001/02 to 123 out of 1,000 in 2005/06 and the infant mortality rate has declined to 77 per 1,000 live births in 2004/05 from 97 per 1,000 live births in 2001/02. In 2009/10 the under-five mortality rates and infant mortality rates decreased to 101 per 1,000 and to 45 per 1,000 live births, respectively. This number is even expected to decline to 31 per 1,000 live births by 2014/15.
The other agreement that the two countries signed was on the sector of transportation. The Ethiopian Minister of Transportation, Workineh Gebeyehu and the Ugandan Minister of State for International Affairs Okelo Oryem signed the agreement on cooperating in the development of transportation infrastructure. The PM, making a point on this, said that his government wished that the Ethiopia-Juba railway construction could extend to Kampala, Uganda.
This time, believing that economic integration should come first from the political integration that the continent is planning to achieve by 2063, the Ethiopian government is constructing a 1,500 Km railway on the Ethiopia-Kenya and Ethiopia-Djibouti corridors, Hailemariam said. Both countries’ stand regarding the economic integrity is a shared belief, which Musevini has been reflecting since the time of the late Meles Zenawi.
“Infrastructure remains critical to enhance our development endeavors. Lack of adequate infrastructure has been the main bottleneck for the development of trade and investment in our sub-region,” stated Hailemariam, who stressed that this has to change.
The PM also expressed his belief in the participation of Uganda in the power interconnection extending from Ethiopia, citing that the already connected Kenya and Uganda line will be used for the transmission of the electricity that Kenya is going to have when the transmission line from Ethiopia is completed.
This idea was also backed up by the Memorandum of Understanding (MoU) that the two countries signed to cooperate in the energy sector. This was signed between the Ethiopian Minister for Water, Irrigation & Energy Alemayehu Tegenu and his counterpart from Uganda, Simon D’ujang. The MoU signing was finalized by the signing of the sisterly relationship agreement between Addis Abeba and Kampala by the Mayor of Addis Diriba Kuma and by the Executive Director of Kampala Capital City Authority Jennifer Musisi.
The visit of the delegation atmosphere seems to be mixed up by the concern over the peace and stability problems in the sub-region and delight with the consensus that the two reached at on the cooperation.
“Our sub region is one of the most complex and turbulent regions in the world.… most of the countries in the sub region suffer from protracted political strife, arising from local and national grievance and from regional inter-state rivalries,” Hailemariam expressed.
The creation of sustainable peace and security in the region can be ensured only if the region fully cooperates to end these problems, the PM said.
The Ethiopian government was not happy with the deployment of Ugandan troops to the war torn, or the “dead lock” as Hailemariam puts it, region of South Sudan claiming to protect the Ugandan citizens working there.
“I must thank your Excellency and your government for the important role you have played to bring about peace and stability to South Sudan,” said Hailemariam. This seems a change in stance.
Musevini, when asked of the evacuation time of the troops he has in South Sudan, he, somewhat relaxed and unconcerned about the issue, said that it has not yet been decided.
“We are not there to seek jobs and we will stay there until the city of Juba and its citizens are safe to live their normal lives,” he said.
The President, referring to the time that the two countries are currently in, said that they are in the time of resurrection and they “don’t want this to be interrupted by the woregna (talkatives)”.
Stakeholders discuss Ethiopia’s extractive industry
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Adama –Ethiopia’s Extractive Industries Transparency Initiative (EEITI) national secretariat brought together national stakeholders for a conference on 24-25 December 2014, on the contribution of the mining sector to Ethiopia’s economy as well as familiarizing them on the EITI process.
The national secretariat is hosted by the Ministry of Mines and Ethiopia has also set up an EEITI multi-stakeholder national steering committee, comprising the government, private sector, and CSOs.
The meeting raised awareness among federal and regional relevant personnel of the key implementing partners with regards to federal and regional mining, environmental protection, audit, finance and economic development and Inland Revenue bureau on EITI process. The conference also examined licensing and administration of minerals and petroleum; revenue management; environmental protection; supporting and coordinating artisanal mining; natural resource management and CSO concerns; as well as value chains and marketing.
Nigeria, which has been compliant (meeting all requirements in the EITI standard) since 2011, was represented by the national EITI executive manager who shared experience on the EITI process and also that country’s challenges and success in implementing the EITI.
Countries meeting the EITI Standard disclose taxes and all payments made to the government by gas, oil and mining companies allowing for an effective multi-stakeholder oversight of the use of the country’s natural resource; with the minorities and indigenous recognized as stakeholders in the extractive industry and their rights of safeguarded.
Ethiopia’s candidacy was accepted by the EITI in 2014 and the country says it is working on the compliance process to meet the EITI Standard and become a member by 2017.
Ethiopia earned USD 540.5 million in 2014 from the export of gold, tantalum and gemstones; however, the contribution of the mining industry to the GDP remains below 2%. The sector’s contribution to job creation is growing. In 2010, 2000 jobs were created in the sector and this figure has shot up to 50,000 in 2013. In 1991, Ethiopia legalized the artisanal mining sector, which now provides livelihood for more than five million people.
“The EITI is helping to improve governance by creating a platform for open discussion about the management of the natural resource among important government organizations and local communities,” said Mining Minister and EEITI National Steering Committee Chair Tolessa Shagi.
Underlining the importance of good governance and strong long-term development planning, UNDP Ethiopia Resident Representative Eugene Owusu said “Countries can avoid the pitfalls of the resource curse, and provide quality services, such as water, sanitation, education and healthcare to their citizens
UNDP is working with the Government of Ethiopia on two-year program costing over half a million US dollars that promotes inclusive growth through strengthening accountability and transparency in the extractive sector. This initiative, which falls under UNDP Ethiopia’s Democratic Governance & Capacity Development intervention, complements UNDP’s global work around the extractive sector, which focuses on sustainable and equitable management of the sector to promote human development.
The second University Ethics and Good Governance Movement summit has kicked off yesterday in Jimma University. Federal Ethics and Anti-Corruption Commission Head Ali Sulieman said universities should pay equal attention to producing ethical graduates as much as training competent ones.
He added major construction projects at universities, bids on purchases, student canteen services, etc. should be based on accountability and transparency.
FDRE Education Minister Shiferaw Shigute on his part said universities should work with other stakeholders to produce ethical graduates.
The summit will end today after a report by the commission is discussed, identifying weaknesses and strengths and setting future steps to take.
Newaman Metal Packaging Manufacturing Plc to start manufacturing by July 2015
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A new Ethio-Italian company is to join the print and packaging industry in Ethiopia. The company is owned by the Italian NewBox S.P.A and Ethiopian investor Alemayehu Negussie.
The company, named Newaman Metal Packaging Manufacturing Plc was showcasing its sample products to potential customers at the Fifth Afri Print and Packaging Expo between December 11 and 13, 2014. Afri Print and Packaging Expo is an international trade fair for services, equipment and technologies for printing and packaging that is held in Ethiopia every year.
Newaman Metal Packaging Manufacturing Plc was established with a capital of 73 million Br. Alemayehu owns 55pc of the company while the rest of the shares go to NewBox. The company has been building its factory for the past year on a 6000sqm plot of land leased in Alem Gena town, 24Km from Addis Abeba, says the general manager.
The company will go through the commissioning process by March and start manufacturing in June or July, 2015, said the manager, who declined to be named. It will start with crown caps manufacturing and printing, according to Ottaviano Lucatello, NewBox S.A.P president. The company will have the capacity of manufacturing one billion crown caps a year, stated Ottaviano. After two years it will commence production of ornamented and regular cans, he added. The principal raw materials required for the production is sheet metal, which will be imported from abroad, according to the manager.
The local demand for crown cork is met through both local production and import. Ethiopian Crown Cork and Can Manufacturing S.C., CGF-crown Cork and Aluminum Cap Manufacturing Factory, Daylight Applied Technologies Pvt. Ltd Co. and Metal Crown are the four local factories in Ethiopia. Based on the existing production trend, it is estimated that 1.3 billion pieces of crown caps has been produced locally in 2013, showing 12.6pc production growth compared to the 2012 fiscal year, according to Central Statistics Agency (CSA).
At present, the major source of supply to the local market for crown cork is mainly import. During the period between 2011 and 2013, on average, about 93.24% of the total imports of crown corks were supplied by five countries, namely, India (42.39%), Spain (14.34%), Egypt (14.2%), Italy (12.97%) and France (9.35%), according to Ethiopian Revenue & Custom Authority (ERCA). Other countries supply the remaining.
There is a disproportional supply of crown corks when compared to the high demand, stated Fitsum Getu, One Cent Management & Marketing S.C. (OCM), chief investment and research director. The demand for crown cork depends mainly on the performance of its end-users such as beverage, mineral water and cosmetics industry, explains Fitsum. The current demand for the crown caps in Ethiopia from these industries, which is 3.3 billion pieces, is expected to grow to 5.5 billion pieces in 2015, according to a research by OCM, May, 2014. OCM is an Ethiopian private equity and assessment management share company established on December 3 2010. Newaman engagement will have greater significant to meet the increased demand, stated Ottaviano.
The fifth Afri Print and Packaging Expo was organised by Prana Promotion, Expo team and the Ethiopian Publishers and Printers Association. Prana promotion was established in 2008 with a mission to promote and fill the gap in potential sectors and industries in Africa. This exhibition is held in order to promote the print and packaging industry as well as to identify and fill gaps in the industry, said Nebyou Lemma, Prana Promotion’s managing director. Around 41 companies from all over the world had participated in the exhibition. This is a great way to keep ourselves up-to-date with the latest technology and share experiences, stated Mekdes Nega, a visitor from Akoatet Printing Plc. Though there is a great potential for the industry, it is characterised by a lack of educated human resource in the sector, according to Mekdes. Next year the exhibition will be held in Addis Abeba in a much bigger arena, stated Nebyou.
Euro Foods, a French-based meat processing firm, is considering setting up meat processing plants in Ethiopia as more and more foreign companies are drawn into the sector.
In his recent interview with The Reporter, Hailesilassie Weres, director of Ethiopian Diary and Meat Industry Development Institute, said that Euro Foods is on the verge of acquiring land to set up a processing plant in Ethiopia.
The company would invest USD 32 million if all goes according to plan, Hailesellaise told The Reporter.
The company is expected to raise whole fund through equity financing abroad to finance their project in Ethiopia.
Abebaw Mekonen, secretary general of Ethiopian Meat Producers-Exporters Association also confirmed that the French-based company is on the process to join Ethiopian meat industry.
Euro Foods represents the surge of growing interest for the meat processing industry in a nation with the largest cattle population in Africa.
According to Abebaw, a local firm called Kegna is well underway setting up a processing plant in south eastern Ethiopia- namely Awash Melkassa area. Companies like Jigjiga Export Slaughter House PLC are also successful new entrants in the business.
The government plans to amass quarter of a billion dollars this year from the export of honey, dairy and meat products by the end of this fiscal year. Hailesellaise said that some 49 thousand MT of meat products are expected to reach the international market mainly the Middle East.
It is to be remembered that the Indian based Allana Sons had joined the meat export business with a USD 20 million investment to set up a new plant in the Oromia Regional State at the town of Ziway some 159 km from the capital. Allana Sons was registered as Frigorifico Boran Foods PLC in Ethiopia and was able to acquire 75 hectare of land. Hailesellaise said the Indian food giant is also associated with yet another investment buying out a Turkish meat exporting company stationed in Ethiopia.
According to Hailessellasie, Organic Abattoir Slaughter, Abyssinia Export Abattoirs, Luna Export Slaughter House and Modjo Modern Export Abattoir PLC are among the fairly performing firms in the industry, while Elfora Agro Industries PLC, which belongs to the Midroc Technology Group, is among the poor performing export slaughter houses in the meat industry.
The value chain and animal feed shortages are hampering the growth of the industry according to an industry analysis by the International Livestock Research Institute (ILRI). On the other hand, quality and meat hygiene are some of the critical barriers for Ethiopian meat exporters in the international markets competence.
Capital market helps to sustain Ethiopia’s economic growth: Scholars
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Economic scholars said Ethiopia’s debut exercise at the capital market by issuing a 1 billion USD sovereign bond will help it to sustain the economic growth.
The scholars whom ENA has interviewed asserted that it will have positive influence on the economy by strengthening the financial system, attract more foreign direct investment, increase role of the private sector and get additional hard currency.
Dr Tasew Woldehana, an economic lecturer at Addis Ababa University, a state-owned institution, told ENA that the economic growth witnessed over the past 10 years has resulted in huge demand for capital, energy, communication facilities and other infrastructures among the public.
Underlining the fact that meeting this growth driven demand requires huge sum of money, the capital market could be an alternative source of finance.
“Failing to meet this demand will create a difficulty in keeping the momentum of the economic growth” Dr Tasew said.
According to him, injecting huge amount of money to the infrastructure development will have good returns, since infrastructure is a backbone to the whole economic activity.
As the government decided to utilize the money on infrastructural programs, he pointed the importance of the decision by indicating that the county needs to improve its infrastructure facilities as it is at the initial stage in this regard and doing that will better off the economic performance.
According to Dr. Demelash Habte, an economics lecturer at Unity University, a private institution, capital market provides good opportunity to create efficient, effective and organized financial system and sustain economic growth.
In the long run, the capital market will create an opportunity to the private sector to secure funds for their projects thereby become an impetus for the growth.
The finance secured from the capital market will add energy to the consecutive economic growth of the country, noting that growth came so far using limited resources.
Noting that lack of resources were the major reasons for development projects to lag behind the plans, Dr Demelash said this new financial resource will help the government address challenges related to finance.
Joining the capital market, the government can now enhance the economic growth by establishing an investment bank and introduce an organized stock market, he suggested.
For his part, Senior Macroeconomic Expert Dr Eyob Tesfaye said the capital market will help to change the country’s economic dependence on import-export trade, bilateral and multilateral grant or loan.
He said it will also provide a good opportunity for Ethiopia to attract more foreign direct investment, in which the country is working at to strengthen its economy.
Ethiopia’s Prime Minister Hailemariam Desalegn has disclosed last week that the finance secured from the capital market will be used to fund construction of new sugar factories and industrial zone.
The British mining firm prospecting for gold in Ethiopia, Nyota Minerals, announced that the Ethiopian Ministry of Mines slashed its gold exploration concession in western Ethiopia near the Grand Ethiopian Renaissance Dam (GERD).
Following submissions to renew the exploration licenses called Towcester and Brantham projects, in western Ethiopia, the Ministry of Mines has taken the decision not to renew any license areas or to issue new exploration licenses that would be affected by the development, along the Nile river.
A press release issued by Nyota last week, the company said the ministry’s decision affected the Towcester license, where the rationale for the renewal of the Gombo block was to conduct exploration and prospecting in support of the proposed mechanized mining of the alluvial deposits that would be inundated by the rising water level.
As a result, while the exploration license for the Towcester project had been renewed, the exploration area had now been reduced from 1 002 sqkm to 48 sqkm.
Similarly, the exploration license for the Brantham project was also renewed, but had narrowed the exploration area from 1 346 sqkm to 717 sqkm.
Nyota noted that the new licenses kept intact the North West-South East lineament of anomalies within the Brantham area and preserved for Nyota the extension of that lineament in the Towcester license; which was particularly important as this was immediately adjacent to the Boka West target.
“However, the remainder of the Towcester license has either been relinquished or was not renewed,” it stated.
Nyota added that the application for a mining license, submitted in the name of Towcester for the conversion of a portion of the exploration license as it was in April 2014, remained unaffected by the decision not to renew or to issue exploration licenses for any areas that would be affected by the rising water of the dam.
“Indeed, the intent of this application and its timeliness was precisely because the river gravels will be submerged and their value otherwise lost.
“The application is still being considered by the Ministry of Mines and, as is necessary, by other government departments. Those deliberations are internal and Nyota cannot, therefore, report progress with the application,” it reported.
Nyota, meanwhile, continued to review new opportunities as they arose.
The Minister of Mines , Tolossa Shagi Moti, told The Reporter that the ministry is evaluating Nyota’s proposal to mine the alluvial gold deposit along the Abay river, near the GERD. “A decision has not been made. We are assessing their proposals,” Tolossa said.
Nyota Minerals Limited is a gold exploration and development company dual listed on the London Stock Exchange and Australian Stock Exchange. Nyota has discovered a large amount of primary gold deposit in Tulu Kapi locality in western Wellega. The gold deposit at Tulu Kapi is estimated at 24 .9 tone. Nyota recently sold its working interest on the Tulu Kapi mine to a company called KEFI Minerals, a London-based mining firm.
Official: Ethiopia dam project could start power generation by June
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A much-delayed $1.8 billion dam project under construction along Ethiopia’s Omo river could begin generating power by June and be fully operational by early 2016, an official said on Thursday.
Gilgel Gibe 3 will nearly double the country’s energy output, helping to resolve chronic power outages and sustain a booming economy. Work started in 2008 and was due to be completed around three years later, but the project has faced funding shortages over concerns about its environmental impact.
“88 percent of the work for the Gibe 3 hydropower project has already been completed,” Azeb Asnake, chief executive officer of the Ethiopian Electric Power Corporation, told Reuters.
Two of ten units would be ready by June, Azeb said, while one additional unit would come on line each month after that. Upon completion the project will generate 1,870 MW of power.
Ethiopia plans to spend a total of $12 billion to tap the rivers that cascade down its craggy highlands over the next two decades in a bid to beat energy shortages and become Africa’s biggest power exporter.
The country’s economy is expanding by 9 percent a year, and the dam is part of an infrastructure plan aimed at sustaining that growth. A bigger project, the 6,000 MW Grand Renaissance Dam, is being developed along the Nile.
Power outages are common in this country of over 90 million, where a majority still rely on subsistence agriculture. Addis Ababa’s nascent manufacturing sector is also attracting firms from China, Turkey and India to produce clothes, shoes and other basic goods, but frequent blackouts hamper economic activity.
Ethiopia already exports power to neighbouring Kenya, Sudan and Djibouti, and it has signed agreements with Tanzania, Rwanda and South Sudan, as well as Yemen.
Critics of Gilgel Gibe 3 say it will reduce water flow and devastate the fisheries of Lake Turkana, which is fed by the Omo. Ethiopian officials admit criticism led the European Investment Bank and the African Development Bank to turn down a request to disburse funds.
The Industrial and Commercial Bank of China stepped in four years ago with a loan of $500 million to pay for turbines.
Azeb dismissed the concerns, saying Ethiopia’s research suggests regulating river flow will stabilise fluctuating water levels. “If they read these studies, they would not continue with their arguments,” she said.
President says Ethiopia keen for more Nigerian investment
The government of Ethiopia is keen to extend support for Nigerian investors who are interested to engage in Ethiopia, President Mulatu Teshome said.
While talking to the departing Nigerian Ambassador to Ethiopia Bulus Paul Lolo in his office, Dr Mulatu said there are many business and investment opportunity that could make Nigerian companies profitable.
The President explained to the Ambassador about the various investment and business opportunities existing in the country.
There is a desire from the Ethiopian government to further boost the strong cooperation, according to a high level official who attended the meeting.
After discussing with the President, Ambassador Lolo told reporters that the Nigerian government is keen to enhance ties with Ethiopia and it is working to that end.
Activities are being carried out in both sides to improve investment ties, he added.
“Certainly we have many good ideas to bring private sector together to exchange trade mission so that Nigerian trade mission will visit Ethiopia and then Ethiopian trade mission will also visit Nigeria.”
Bilateral ties between the two countries started after Nigeria got its independence in 1960. Ethiopia opened its Embassy in Lagos a year after Nigeria’s independence in 1961.
The Ethiopian capital (pictured) presently has 5 million people but no urban rail system.
Ethiopia expects to complete the construction of Addis Ababa’s metro next month, the first urban light rail scheme to be built in a sub-Saharan country outside of South Africa.
Behailu Sintayehu, the project manager for the scheme, told the Reuters news agency that 80% of the track had been laid and that the system would be completed by the end of January 2015, three years after work began.
The commissioning period is expected to take another three months, before the first passengers board in May.
“We believe that it will have a great impact in alleviating the problem of transportation in the city,” he said. The capital’s 5 million inhabitants presently rely on crowded buses and vans to get around.
The metro will consist of two lines running for a total distance of 32km. It will have underground and overground sections, 39 stations, and two operators: the Ethiopian Railways Corporation and Shenzhen Metro.
The $475m cost of the scheme is mostly being met by a loan from China’s Exim Bank, and the construction work has been undertaken by the China Railway Engineering Corporation (CREC).
Beijing has become a major partner in Ethiopia’s efforts to expand its infrastructure, with cumulative investments by Chinese firms reaching well over $1bn.
As well as the Metro, Chinese firms are constructing a rail link to neighbouring Djibouti.
Ethiopia also aims to treble the size of the road network by next year, from less than 50,000 km in 2010.
Ethiopia is one of Africa’s fastest growing economies, expanding by about 9% a year and attracting overseas investment with its with rock-bottom wages, cheap and stable electricity and transport projects such as the metro.
Ethiopian delegation of members of House of Peoples representative in Saudi Arabia
An Ethiopia delegation of members of the House of Peoples Representative’s led by Abadulla Gemeda went to Saudi Arabia over the week end
The delegation left for Saudi Arabia for a working visit upon invitation of Shura Council. In a meeting with the members of the Shura Council, Speaker of the House Abadulla Gemeda stated to that the bilateral relations between Ethiopia and Saudi Arabia is historic stresessing that the two countries are enjoying strong partnership currently.
The Speaker noted that considering the fact that Saudi Arabia needs large number of labor force the Ethiopian government is working to finalize labor agreements and so as export of labor is conducted in legal manner that avails protection to workers. He also noted that the government is working to address issues related to lack of skill in workers travelling to Middle East.
Speaking about investment, Abadula urged Saudi investors to take advantage of the investment climate in Ethiopia and opportunities in Ethiopia in manufacturing and agriculture sectors.
Representatives of the Shura Council extended their appreciation to Ethiopia’s development efforts. They also noted that the Shura Council is encouraged by the relation between Egypt and Ethiopia .The delegation is expected to sign bilateral agreements between the Ethiopian House of People’s Representatives and the Shura council to further strengthen relations between the two legislative bodies.
The Ethiopian delegation is also expected to discuss with Ethiopian citizens in Riyadh.
Mekelle University undertaking expansion with close to 3 bln birr
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The Mekelle University in Tigray Regional State said it is undertaking expansion project in its all campuses with close to 3 billion birr.
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University President Kindeya Gebrehiwot, told WIC the expansion project includes construction of dormitories, cafeterias, classrooms, research and community service centers, laboratories, libraries, workshops, offices, sport academies, social centers, model community schools, among others.
He said the expansion project would enable the university to increase its enrollment capacity. The university enrolled 32, 000 students this academic year, of which 24,000 are regular students.
According to Kindeya, the university is training 2, 400 students in masters and 24 students in PhD program.
In order to ensure education quality, the university is undertaking special and continuous activities, including a modular system which enhances learning by providing students with intensive and focused time on each topic, he said.
Kindeya further said the university is building teachers’ capacities to maximize the quality of education. Out of the total 1,637 teachers in the university, 1,245 teachers are second and above degree holders.
He added that some 125 instructors were also hired from foreign countries to maintain the quality of the master’s programs being offered by the university.
The university is applying 1-to-5 network in all departments, where one student responsible for tutoring five slow learners, so that students can contribute their share to ensure education quality, he said.
Mekelle University aspires to become one of the top 25 universities in Africa by 2025, it was learnt.
Germany extends 35 million Euros for TVET excellence program
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The government of Germany donated 35 million Euro to support technical and vocational education and training (TVET) excellence centres in Ethiopia.
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Germany has extended a total of 20 million Euro previously during the first and second phase of the program, which aimed to strengthen selected TVET institutions.
German Development Bank (KfW) Deputy Director Saskia Birling said 11 institutions are eligible to this support.
Six of the 11 institutions have got priority and they will be furnished with the necessary equipment next month, she added.
Deputy Director-General of Ethiopia’s TVET Agency, Nguse Gebre for his part said the program is aimed at making selected institutions center of excellence for TVET.
The program will help to train and upgrade of the skills and competency of technical teaching staff thereby provide standard trainings for students, he added.
Ethiopia is building a station at the northern part of the country to launch rockets up to 30km distance in to the space, project manager Eng. Mulualem HileMarian said.
According to him, construction of a station, Alpha Meles named after the late Prime Minister Meles Zenawi, is being built at the Tigray regional state.
Constructions of two underground stations, in which preparation activities and testing will be carried out are also being built.
Testing for the system and capacity of the rocket to be launched will be finalized in these underground stations until the end of the month of July, he added.
Sixty engineers drawn from various fields are working day and night for the success of the project.
Parts of the station are fabricated locally by Mesfin Industrial Engineering and Mesebo Cement, local private companies and the Metals and Engineering Corporation (METEC), the stated owned military industry.
A new customs proclamation is promulgated and is in effect as of Wednesday December 24, 2014. The new bill has fully replaced the former customs bill, Proclamation Number 622/2009.
The new proclamation is dubbed Proclamation 859/2014 which aims at promoting and supporting the manufacturing industry and economic development has eight parts.
The newly passed bill introduces structural changes in the authority and its human resources management. In addition to this it has included provision that ensures free movement of goods for those organizations identified as Authorized Economic Operators (AEO), eases Post Clearance Audits (PCA), and decentralizes the activity of the authority.
According to Capital, the proclamation will fill gaps that were witnessed because of the customs proclamation that has been in effect for the past five years. The newspaper furthered it is the need for a more modern customs legal framework to support development of industries and investment has made the introduction of the new proclamation necessary.
Commenting on the promulgation of the new proclamation Girma Tafesse, Federal Inland Revenue Branches Coordination Office Directorate Director of ERCA, said; “The new proclamation will accelerate the international and local business in collaboration with the upcoming new proclamation for income tax”.
Draft proclamation which will amend the income tax legal regime governing is also on the making and is now at the Ministry of Finance and Economic Development (MoFED) for final revision before it is delivered to the Councils of Ministers.
The United Nations has named 2015 the International Year of Soils. You will be forgiven for not having it marked on your calendar already – but the truth is, the ground under our feet, particularly in Africa, should be getting much more attention than it currently does.
Africa is showing great promise, home to seven of the world’s fastest growing economies, with foreign domestic investment tripling in the last decade. But the continent is still haunted by unacceptably high rates of hunger and malnutrition that are hindering development processes. When we factor in that Africa’s millions of smallholder farmers, most of them women, are trying to grow their crops on famished soil, we may well be getting to the root of the problem.
It is estimated that 65 percent of Africa’s agricultural land is degraded, and that land degradation is costing sub-Saharan Africa approximately $68bn per year. Halting and reversing this will be fundamental to fostering Africa’s economic growth. We know that growth from agriculture is up to eleven times more effective at reducing poverty than growth in any other sector in Africa. Investing in restoring, conserving and enhancing Africa’s soils will certainly have a knock on effect on the overall development of the region through sustainable productivity increases.
With some 60 percent of the world’s unused agricultural land in Africa, the world and Africa stand to gain from investments to restore, conserve and enhance the fertility of Africa’s soils. That is why the Montpellier Panel is launching a new report this week that outlines concrete recommendations for donors and governments on what needs to be done to improve Africa’s soils.
This new report shows that the uptake of appropriate land management practices that would lead to healthier soils in Africa remains low. Too often, the choice is made to forego better practices in favour of more affordable, less labour intensive or alternative uses of resources. Traditional approaches to restoring and conserving soil health have been steadily abandoned by smallholder farmers as population increases have shortened or eliminated fallow systems, climate change takes hold on weather and rainfall patterns, and farm labour remains in short supply. Yet more modern approaches – involving herbicides, improved seeds and synthetic fertilizers for example – remain prohibitively expensive and unavailable in remote areas, leaving African soils in limbo.
Farmers must be equipped with the tools they need to adopt an integrated approach that combines traditional approaches such as water harvesting, erosion control, intercropping and the use of organic fertilizers with the appropriate use of necessary inputs like mineral fertilisers. Donors and governments must focus on investing in the training farmers need, as well as making the inputs they need more readily available and affordable.
The Soil Health Programme run by the Alliance for a Green Revolution in Africa (AGRA) has been working towards these goals since 2009. AGRA has trained almost two million farmers in 13 countries in “Integrated Soil Fertility Management” (ISFM) and has reached out to another 3.5 million farmers through radio and other communication channels to promote for ISFM practices, such as fertiliser micro-dosing combined with the use of improved seed. In Tanzania, Malawi and Ghana, farmers participating in AGRA’s soil health initiatives are doubling and even tripling yields of maize, sorghum, pigeon pea and soybean.
Currently, donor and government strategies do not pay sufficient attention to land restoration and management. Where commitments have been made by donors to combat degradation of Africa’s soils, these are not aligned with investment plans already put in place by African governments in their Comprehensive Africa Agriculture Development Programme Compacts, nor are these commitments easily quantified, monitored or evaluated.
Recommendations for action outlined in the report also advocate creating incentives for Africa’s smallholder farmers to invest in their land. Here, secure land rights through titling would be an important tool. This would encourage farmers to make long term investment decisions to enhance the fertility of their soils.
Encouraging political leaders to commit to a Zero Net Land Degradation target for halting land degradation will also be key. The Sustainable Development Goals – which will succeed to Millenium Development Goals as a framework for guiding global development policy in 2015 – are currently being formed. These debates present an ideal opportunity to bring the issue of land degradation to the fore at a high level.
Bridging gaps in data available on African soils through the use of advanced remote sensing systems, dense networks of local weather information and “citizens’ science” networks is critical. Soil mapping schemes are already underway in Ethiopia – such initiatives must be supported and replicated across the continent.
To similar effect, a new generation of African soil scientists must be nurtured so that they will have the capacity to carry out this continued analysis and implement soil health restoration programmes. Africa’s soils are as varied as the farmers who work them. Appropriate solutions for each region will only be found when local scientists and farmers work together.
Africa cannot afford to leave its land in limbo. A vibrant, agriculture-driven rural economy is the continent’s most promising exit route from poverty. This cannot be achieved with degraded soils.
Namanga Ngongi is a member of the Montpellier Panel and former president of the Alliance for a Green Revolution in Africa.
Efforts underway to supply cooking oil demand with local products
Several efforts geared towards addressing the growing demand for cooking oil with locally produced oil is well underway.
As such, 11 types of pulses and oilseeds with potentials to enable the country produce affordable cooking oil in large quantities have been identified. In particular, soya beans have been selected as the most viable oilseed for this purpose. Plans to mass produce soya beans and supply it to cooking oil factories will be activated shortly. The Ministry of Industry and The Ministry of Agriculture are working in collaboration to link farmers with the raw materials and factories that need the pulses and oilseeds.
State Minister of Industry Mebrahtu Meles (Ph.D.) said farmers producing oilseeds in Bahirdar and Adama have established working relations with cooking oil producing factories.
Ethiopia exports a large amount of oilseeds but imports cooking oil at a much expensive price tag. The latest effort to produce cooking oil locally is aimed at resolving this irony.
Efforts to promote the mass production of soya beans also include arrangements with Sugar Corporation to plant soya beans on farm fields not hosting sugar cane. Wonji and Metehara Sugar factories have already tried this scheme.
Somalia has the reputation of being a mysterious and conflict-ridden land. Who hasn’t heard of the infamous “Black Hawk down” episode, the militant group al-Shabaab or the pirates off the Somali coast?
But in the northwest corridor of war-ravaged Somalia lies Somaliland, a self-declared independent state that claims to be open for business. Really?
It’s easy to dismiss the “open for business” claim by Somaliland’s Ministry of Planning as mere fantasy or wishful thinking. Flying from Nairobi on a painfully slow UN-chartered plane, being greeted at the hotel by Kalashnikov-armed guards, or travelling to your meeting in an armoured car is enough to discourage even the most adventurous entrepreneur.
At first sight, Somaliland has all the characteristics of a fragile and conflict-affected situation (FCS). However, you never want to judge a book by its cover. In Somaliland, I’d argue that the conventional narrative of fragility needs to be revisited.
The Republic of Somaliland has been an internationally recognised autonomous region but has not been recognised as an independent state since it broke away from Somalia in 1991 after the fall of Somali dictator Siad Barre. Somaliland’s GDP per capita is estimated at US$347, one of the lowest in the world, according to the World Bank.
However, like many FCS economies in sub-Saharan Africa, Somaliland has embarked on a path to reform its business environment. This has partly been possible thanks to the relative peace and stability that prevails and thanks to the existence of a functioning democratic government. The 2012-2016 National Development Plan sets out an ambitious capital investment proposal of $1.19bn. But the regulatory framework will need to be improved to foster investments.
According to the Doing Business in Hargeisa 2012 report, many crucial reforms need to be considered in order to improve the investment climate. If one compares Hargeisa to the 183 economies measured by Doing Business 2012, it would rank 174th on ease of doing business – ahead of economies like Eritrea (180th) or Chad (183rd), but behind Djibouti (170th).
To complement the regulatory reform process, a team from the World Bank Group’s Trade & Competitiveness Global Practice is working with the government and private sector to lay the groundwork for the Somaliland Business Development Forum (SBDF), the state’s first public-private dialogue (PPD) platform. The World Bank Group held a workshop in November to raise awareness and discuss the Doing Business indicators. More than 85 representatives from the government and the private sector, including heavyweights like Dahabshiil and Telesom, participated and showed their support for PPD and a better business environment.
Leading this workshop was one of the toughest jobs I’ve ever had as facilitator – not due to any resistance from the participants, but rather due to the overwhelming passion and appetite for PPD and for the opportunities that it offers. Somaliland is a country of traders who use dialogue as a traditional way to deal with conflicts and find sustainable solutions. Public-private dialogue seems to be a natural fit. The private sector has had the upper hand for many years, substituting for the government in areas like public service provision, taxation, licensing, and law and order.
In Somaliland, and in Somalia in general, it’s crucial to redefine the fundamentals of development: Instead of trying to reduce the role of the state in the economy, one has to bring the state on board. This has to be done by engaging the private sector and providing reassurance that the rehabilitation of the state will not come at the expense of business. Companies want to operate on a level playing field, and they require a more solid regulatory environment. The public and private sectors need to engage in a structured policy dialogue in order to identify the bottlenecks impeding the investment climate and, together, find solutions.
Joint commitment from the government, the Chamber of Commerce, and business entrepreneurs at large can help Somaliland move past the seemingly inalterable fragile-states narrative.
As I was about to board my UN plane to return to Nairobi, I realised that there was an Ethiopian Airlines jet on the tarmac. I learned, to my surprise, that it flies daily to Addis Ababa. It may just be a sign, but it seems as if Somaliland is indeed slowly opening up for business.
Steve Utterwulghe is a senior private sector development specialist. This article was first published on the World Bank’s blog network.
Agency Importing Over 8.6 Billion Birr Worth Agricultural Inputs
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Addis Ababa: January 7, 2015 (FBC) - The Ethiopian Agricultural Development Supplier Agency disclosed that it is importing over 8.6 billion birr worth agricultural inputs that would be distributed across the country.
Among the inputs include fertilizer, vegetable seeds, pesticides and herbicides as well as vet medicines and spraying machines.
The agency said 400,000 metric ton urea and over 521,000 metric ton N.P.S fertilizer bought with 8.5 billion birr is being transported inland.
Out of this, more than 144,000 metric ton has reached port, and the balance will be fully transported by the end of May, 2015, it was indicated.
The agency said the imported inputs would be distributed to cooperative unions in all the regional states in line with the amount allotted by the Ministry of Agriculture.
The agency has also been providing logistics support by purchasing 40 vehicles, it was learned.
Government to allow the private sector in multimodal scheme
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The Ministry of Transport is considering sharing the multimodal (land, sea, or road) transportation services with the private sector.
Since the government introduced the multimodal scheme about three years ago it has been decided to control the system on monopoly basis. The private sector engaged on logistics service has been complaining about the monopoly for the last couple of months.
They have also pointed out the issue to the Prime Minister to get the opportunity to be involved.
Aiming to boost the multimodal system, the government has formed an enterprise with the amalgamation of three public logistics enterprises, Ethiopian Shipping Lines, Dry Port Services and Maritime Enterprise.
A week ago the government stated that it has interest to include the private sector in the scheme.
Getachew Mengiste, State Minister of Transport, told Capital that the aim of involving the private sector is to speed up logistics facilities.
“We are considering how the private sector will take part in the multimodal scheme,” the state minister explained.
“We will not decide by our self but we will involve other stake holders and we will discuss it thoroughly,” Getachew said.
He declined to give the exact time when the government will allow the private sector to engage on the scheme.
Frequent private requests to deliver import containers, quickly has forced the Ministry to consider allowing the private sector in the multimodal service. “The multi modal service that we have been doing for the last three years has been deliveringproducts in around seven days but we would like to see that number reduced to five days,” he said on the discussion with representatives of major import/export actors and logistics companies, held on Saturday December 27, at Elilly International Hotel.
Freight forwarders and shipping agents have been stated their concern that the multimodal scheme has significantly damaging their business.
‘‘We are drafting the documents that will allow the private sector to get involved in the multimodal scheme, then we will conduct a meeting to have a feedback from stakeholders,” said the state minister added.
The private sector representatives told Capital that in several occasions the government stated that it will allow the private sector to be involve in the multimodal scheme. “But it is very delayed,” they said.
Multimodal Transportation Implementation Directive enforce all shipments that belong to the government to use multimodal transport through Ethiopian Shipping and Logistics Services Enterprise (ESLSE). In addition the directive also instructs all vehicles of three tonnes or less to be under the new scheme and goods being shipped through the ESLSE, which was formed with the conglomeration of the three enterprises, are responsible to use a multimodal transportation service.
The multimodal arrangement is a scheme whereby the transportation of goods is under a single contract but performed with two or more different means of transportation. The transporter is accountable for the entire journey, including the shipment’s delivery at the final destination. The transportation can be carried out by rail, sea, and road.
Détente Group LLC with its Pan African Partner Tristar Group LLC (TSG) last week signed a contract with the Ethiopian Electric Power (EEP) for the construction of four wind farms – IteyaI, Iteya II, Weldiya, and one among micro-scale sites and for the construction of 36 future bankable sites “the Microscale Project” worth USD 3.6 billion.
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According to Paul Delkaso, President and CEO of Tristar & Tritente Global Energy Group, the four sites combined will generate 1200MW and the project will be program based not project based. Most importantly Delkaso added, the advantages of the Government of Ethiopia adopting wind power, power generation diversification and continuation of the government’s zero carbon footprint, as well as green power revolution is well thought, admirable and should be commended as a pilot program for most countries in the world.
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Ethiopia’s power generation mix is predominately hydro power based, for the obvious reason that hydro has the lowest renewable power generation cost. Given the undo risk associated with periodic droughts on a predominately hydro based power supply, the government’s decisive steps toward taking a very long-term planning view and definitive steps towards introducing alternative renewable energy power generation should be commended, said Delkaso. An example of a country that failed to diversify its power generation base is Pakistan. The extended drought that they have experienced has much of their hydro plants operating at run-of-the-river water levels, resulting in frequent brownouts which have crippled the economy.
. Financing
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According to Brien Morgan, Managing Partner Détente Group, all project contracts are fully funded by US Ex-Im Bank’s Loan Guarantee Program or GOV– GOV program. Morgan also added that the bulk of the financing associated with the contractor’s PMO (Project Management Office) Contract shall be obtained through the US Ex-Im Bank’s Loan Guarantee Program or GOV-GOV program. At the direction of the Ministry of Finance and Economic Development (MoFED), the contract price and quarterly invoice payment schedule will be modified downward in order to arrive at the maximum Ex-Im Bank loan guarantee amount of 85% for all projects.
. Wind Farm and Power Evacuation Contract Financing
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In addition to financing the Contractor’s PMO Contract, the contractor is also proffering to arrange the financing of the four Wind Farm and Power Evacuation system irrespective of the vendor’s country of origin. If EEP decides to select a US Vendor, the US Ex-Im bank would be the export credit agency with whom the contractor would work with to finance the purchase and construction of the four Wind Farms. Although the contractor’s services are financed by the US Ex-Im Bank, in no way is the contractor or EEP obligated to select US Vendors.
. Education, training programs and knowledge transfer
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An effective partnership among U.S. and Ethiopian universities, governments, and the private sector can play a key role in energy sector technical capacity-building. According to Morgan and Delkaso, this project will include and build a successful technical exchange program needed to successfully develop energy resources and best practices technology transfer.
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Education and training programs for wind energy will be developed through collaboration between George Mason University (GMU) and Addis Ababa University (AAU), and Symposia and workshops will be organized to support sustainable wind energy development in Ethiopia.
Demitu Hambisa, Minister of Science and Technology in a letter to the Prime Minister office credited the project saying that it will help the Universities in their scientific advancement.
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The GMU/AAU capacity building educational services will provide comprehensive educational support for next generation scientists and engineers in wind energy technology and applications, said Morgan.
Educational, certificate and programs will complement ongoing vocational training with a synergistic approach to sustainable wind energy development (SWED), focusing on collaborative, multi-disciplinary education, training and best-practices knowledge transfer for practical applications, he said.
. The Joint Center of Excellence for Energy Sustainability (J-CEES)
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J-CESS, a collaborative effort between GMU’s Global Environment and Natural Resources Institute (GENRI) and AAU’s Ethiopia Wind Energy Center of Excellence will offer a comprehensive blend of technology and appropriate indigenous knowledge to ensure success for sustainable and adaptive management solutions to AAU as well as two other Ethiopian Technical Universities. J-CEES will develop and implement a holistic academic program that offers certificates of training for specialization, and computer-based training programs. This collaborative effort will ensure a holistic approach to implement best-practices knowledge transfer through the specialized center, he explained.
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This program will also support, the Ethiopia Wind Energy Information Service (EWEIS) and will provide a web portal information technology and communication (ITC) hub for all educational training and outreach resources to ensure effective communication and transfer of knowledge-based technology, tools and resources between J-CEES. EWEIS will provide a mechanism for exchange of instructional design strategy, methods to assess training effectiveness, and online Computer-Based Training (CBT) Modules and Best Practices Training Manuals (BPTM). The comprehensive academic training program will focus on improving skills to strengthen long-term sustainability of EWEP.
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The ultimate goal of J-CEES is to build a center of excellence that offers cutting-edge information technology in sustainable wind energy development.
Academic Wind Energy Demonstration Project (AWEDP)
AWEDP, a continued collaborative effort between GMU’s Global Environment and Natural Resources Institute (GENRI) and AAU and two other Ethiopian Technical Universities, will entail the installation on Ethiopian university provided research sites a dedicated 80 meter Met Mast in order to provide a full range of environmental data for research and operational applications.
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Through AWEDP, the Met Masts and LiDAR systems will be sufficient to prove out the wind resources at each of the Ethiopian Universities’ research site allowing AWEDP to implement, as an integral part of the Iteya I, Iteya II and Weldiya PMO Projects, one full size wind turbine demonstration units, and requisite power evacuation system during their respective implementation schedules. To facilitate AWEDP achieving its wind turbine operational goal, EEP allowed the Contractor to include the provision of demonstration unit wind turbine and sundry equipment and services within the Iteya I, Iteya II and Weldiya PMO Project wind farm procurement as a weighted and graded, immediately due, trade offset credit requirement. The opportunity also exists for the AWEDP to both self-fund and fund J-CEES by way of potentially creating a revenue stream through the sale of power to EEP.
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The company also signed an agreement with the Ministry of Water, Irrigation and Energy (MoWIE) for developing an atlas of Ethiopia’s national wind energy resources. The two year project which will determine the potential of the country’s wind energy will cost about USD 5.8 million. The study was presented to MoWIE free of charge as part of the company’s corporate social responsibility funded by the company and the World Bank.
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The DÉTENTE GROUP, LLC incorporated in the United States of America, provides investment banking and strategic consulting services to governments and corporations ranging from middle market companies to Fortune 500 corporations.
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Tristar Group LLC (TSG), Tritenet global energy group (TGEG) is specialized in managing and developing urban communities, developing green energy projects (EPC CO.) and bridge transfer of technology specifically generation of power from alternative sources such as wind, solar, and geothermal between companies and investors in the United States with government entities and private companies in Africa.
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Recently other two companies based in the US state of Maryland; Global Trade and Development Consulting and Energy Ventures, agreed with the ministry to develop solar energy in the eastern part of the country with a capacity of 300mw.
Another US and Icelandic joint venture, Reykjavík Geothermal (RG), also has plans to generate electricity from geothermal energy. These are not the first US based companies that have proposed investing in renewable energy in the country.
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Terra Global Energy Developers, LLC (Terra), a San Francisco based firm is working to generate 400 mw of electric power from a wind farm that it plans to build near Debre Birhan town, 130 km north east of Addis Ababa in Amhara national regional state.
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Wind Farm Project
Project #1:
Atlas Of Ethiopia’s National Wind Energy Resources (the “Mesoscale Project”);
. Project #2:
Microscale Wind Farm Bankable Resource Assessments, Power Evacuation Studies and Sale of Related Meteorological Masts, separated into an initial Phase I of twelve (12) Client-provided sites and options for a follow-on Phase II of twelve (12) sites and Phase III of an additional twelve (12) sites (the “Microscale Project”); Which will create 36 future bankable sites (program based) if more power needed.
. Project #3:
PMO Services for the Iteya 300MW, Rated Capacity Wind Farm constriction , Power Collector System and Power Evacuation to the National Power Grid Point of Interconnection (the “Iteya I PMO Project”);
. Project #4:
PMO Services for the Iteya II 300MW, Rated Capacity Wind Farm constriction, Power Collector System and Power Evacuation to the National Power Grid Point of Interconnection (the “Iteya II PMO Project”).
. Project #5:
PMO Services for the Weldiya 300MW, Rated Capacity Wind Farm, constriction Power Collector System and Power Evacuation to the National Power Grid Point of Interconnection (the “Weldiya PMO Project”); and
. Project #6:
PMO Services for one (1) Candidate 300MW, Rated Capacity Wind Farm, Power Collector System and Power Evacuation to the National Power Grid Point of Interconnection, to be developed from among the Microscale Sites (the “PMO Project IV”
Ethiopia: There is a big need for infrastructure – Jemal Ahmed
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By Jacey Fortin in Addis Ababa
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Jemal Ahmed Chief executive, Saudi Star Agricultural Development, Ethiopia.
Reap what you sow
Sept. 23, 1970 – Born in Addis Ababa
1993 – Left Ethiopia for the US to pursue higher education
1994 – Returned to Ethiopia
1994 – Founded Ahfa, a company that imported cooking oil
2004 – Switched businesses from auto parts to fast-moving consumer goods
2008 – Opened Horizon Plantations
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From his office on the 15th floor, Jemal Ahmed has a bird’s-eye view of the pitch where players face off against international contenders. But he does not have much time for watching matches these days – indeed, most of the time he is not even in his office, a bright space with sparkling white floors and expansive windows.
“I work 24 hours a day, whether it’s from home or in the field,” he says.
When it comes to private enterprises in Ethiopia, the conglomerate MIDROC is a behemoth. It is owned by Sheikh Mohammed Al Amoudi, a Saudi-Ethiopian businessman who is the country’s largest private investor and the 75th richest man in the world, according to Forbes magazine.
The company’s assets include Ethiopia’s only commercial gold mine, its biggest cement factory and the world’s largest contiguous coffee plantation.
Agriculture, which employs more than 80% of the Ethiopian population, is a focus for three of the enterprises under MIDROC’s vast umbrella, and Jemal has a supervisory role in all of them. He is the new chief executive of Saudi Star, the managing director of Horizon Plantations and Al Amoudi’s representative for Ethio Agri-CEFT.
Processing pioneer
According to Jemal’s estimates, Ethio Agri-CEFT produces coffee, tea and cereals across an area of about 25,000ha, while Horizon is currently cultivating about 32,000ha and plans to invest another 500m birr ($25m) in coffee and oranges, two of its “bread- and-butter” products.
Saudi Star controls 14,000ha of land in the western region of Gambela, where it plans to grow rice and cotton.
Though Ethiopia depends heavily on agriculture, crops alone will not be enough to sustain this fast-developing country, where gross domestic product (GDP) grew 10.3% in the last fiscal year according to official figures.
The government wants Ethiopia to diversify away from commodity sales by investing in value-added exports and supporting industrial development.
In that arena, MIDROC is a pioneer in Ethiopia. Its processing plants roast coffee, turn oranges into marmalade and reduce tomatoes to a paste.
“When agriculture is integrated with industry, it boosts economic growth,” Jemal says. “In Ethiopia, with the population we have and the labour we have, I think we could compete in medium-scale industries.”
Despite the government’s ongoing efforts to restructure the economy, Ethiopia’s manufacturing sector represents just 4.2% of GDP.
Jemal pins the blame on poor trade logistics and a lack of infrastructure. He says that he looks forward to the completion of government projects, including dams and railways, that will make it easier for exporters to operate efficiently.
“There has been a big need for infrastructure, which we didn’t have, but the government has been investing heavily in that,” he says.
MIDROC, too, has been making investments in support of Ethiopia’s economic goals. It purchased bonds worth 500m birr – more than any other private enterprise – to support the Grand Ethiopian Renaissance Dam, a flagship project that will raise electricity generation to more than three times its current level.
Right place, right time
Addis is Jemal’s home town. He went to the US to pursue an education but this was cut short when his father died and he returned to Ethiopia to support his family.
He learnt his trade on the shop floor.
“I started as a trader at my father’s shop, importing auto spare parts and then moved into commodities by importing cooking oil,” he says.
The company he founded, Ahfa, became one of Ethiopia’s largest cooking oil importers. Jemal met Al Amoudi through mutual friends, and the two became business partners in 2007.
“I learned a great deal about Ethiopia’s economic growth through cooking oil. The consumption was just skyrocketing year after year. Sheikh Mohammed and I got together and wanted to develop a cooking oil project in Ethiopia, so with that we established Horizon,” he explains.
The government took over all palm oil imports in 2008, but by then Jemal was well on his way to a position of power within Al Amoudi’s diversified agricultural empire.
MIDROC rose to prominence as a key player in Ethiopia’s long-term privatisation drive.
The current ruling party overthrew the Soviet-allied Derg government in 1991, and although the government has retained strong control over sectors like telecommunications and electricity, it has spent two decades selling various state enterprises to the highest bidders.
“We have bought a lot of companies from the government,” says Jemal, though these purchases often come with stringent conditions: “They will put clauses in the contracts that will bind you, like you cannot lay off employees or you have to invest the amount that you put on your business plan or else face penalties.”
MIDROC is especially adept at navigating the business environment, says Jemal. “In the last 20 years, we have faced different challenges, so we have earned a lot of experience.”
But the company is not without controversy. With its collection of diverse assets and tight ownership structure, MIDROC’s inner workings are shrouded in secrecy.
Saudi Star is a subject of particular scrutiny, and human rights groups have lambasted it for participating in ‘land grabs’ in which the government leases huge tracts of land to companies while ignoring the rights of locals.
Jemal says the criticism is unfounded: “There was nobody there,” he says, referring to Saudi Star’s land in the Gambela region. “It was a virgin land. It is bush that we are clearing. There is no one displaced because of Saudi Star – not a single person.”
Saudi Star has also failed to produce crops according to schedule.
Aside from a 4,000ha plot recently acquired from the government, the land leased for rice has not reached commercial production.
The company cleared its plot but it is now overgrown. It will have to be cleared again before the scheme can take root.
The farm also requires irrigation from the nearby Alwero Dam, and Saudi Star is completing a 21km canal.
Construction of the conduit has slowed, sparking claims that MIDROC is facing financial troubles – a charge Jemal denies. He admits the project is “very behind schedule” but insists the firm’s ambitions will be realised: “We are hoping that by the end of 2015 we will develop the whole 10,000ha.”
Jemal does not seem worried about the prospects of Saudi Star or any of the enterprises under his watch.
But there is one thing he has yet to accomplish, and it has to do with the very thing that attracted him to agriculture in the first place: cooking oil.
All these years later, MIDROC has yet to secure the land Jemal and Al Amoudi want for the cultivation of ground nuts and oil palm.
“Cooking oil is still the best project I would love to get into!” he says. Available land has so far been hard to come by – mostly because Jemal and Al Amoudi do not want to start small.
“It’s just that we want to do it in a very big way,” he says. “I think both of us are very ambitious, and if we think there is potential, we try to grab it and develop it.”●
Investment Projects with 5.3 Billon Birr Capital Go Operational
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Some 94 investment projects with a registered capital of 5.3 billon birr have become operational during the past five months, according to the Ethiopian Investment Commission
EIC Public Relations Director, Getahun Negash, said the projects have created over 3,000 permanent jobs.
The projects engaged in manufacturing, service and agricultural sectors will create additional jobs on becoming fully operational, he added.
In addition to those, 228 projects have received licenses during the same period, according to the director.
The licensed projects had deposited the 200,000 USD minimum capital required before they were allowed to start to work, it was learned.
The director also indicted that the Commission has been working together with the Ministry of Foreign Affairs and other partner organizations to attract more investment to the country.
According to Getahun, the plan to issue 2,633 licenses during the first four years of the GTP period has been exceeded.
The projects have created 61,000 permanent and temporary jobs in the stated period, he pointed out.
Turkey proposes first foreign owned bank in Ethiopia
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Ziraat Bank, a Turkish agricultural bank, tabled its proposal to the Ethiopian government to open its branch in Ethiopia, Capital learnt.
The bank has sent its proposal for the government to operate in the country, but the nation’s law and the ruling party’s policy strictly prohibits operation of any foreign financial institutions in Ethiopia.
A delegation from the bank, which is known as one of the top two banks in Turkey, is expected to visit relevant offices in the near future to talk about forming the bank in Ethiopia.
Turkey is one of the three major FDI promoters in the country along with China and India. Within almost a decade Turkish investment in Ethiopia has reached USD three billion, which is expected become even higher this year.
Representatives from several companies accompanied the Turkish Economic Minister, Nihat Zeybekci, in December. During this visit the minister mentioned opening a bank for top government officials.
Osman R. Yavuzalp, Turkish Ambassador to Ethiopia, confirmed that the bank submitted a proposal to the government.
He told Capital that officials of the bank will come to Ethiopia to talk about the formation of Ziraat, which is state owned, here.
“We will negotiate this from our side but it will depend on the talks with Ethiopian officials,” he said. “Ethiopia has the final say because the establishment will be based on the rules and regulations of the country,”Osman explained.
After Christmas, a Turkish delegation will come here to talk about technical issues first and details will follow.
Addis Ababa Water and Sewerage Authority announced that it is going to launch a ground water project that would avail 86,000 cubic meters of water in a day to inhabitants of the capital city.
The authority has concluded a 47-million birr contract with the Federal Water Works Design and Supervision Enterprise which would provide designing and consultancy services.
In another development, the Omo Rift Valley Private Limited Company has started work after it concluded over five million birr agreement with a Turkish company to provide study, design and consultancy services for irrigation development.
The project is undertaking the study on 6,000 hectares of land in South Omo, it was indicated.
The company is reportedly expected to finalize the work within four months.
Chinese Solar Home Systems to Light up Rural Ethiopia
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The 11,488 solar systems from China were bought for 2.8 million dollars
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The Ministry of Water, Irrigation & Energy (MoWIE), through its Rural Electrification Fund (REF), has procured 11,488 solar home systems (SHS) from the Chinese Company Cecep Oasis New Energy Company, which are expected to be delivered within three weeks.
The IDA provided the financing, a total of 2.8 million dollars, for the purchase of the systems which will be distributed to 11, 488 households that are members of the 207 cooperatives in the regions.
At different times previously the Ministry had procured and distributed institutional solar systems, says Yisehak Seboka, the Rural Electrification Fund (REF) Coordinator at the Ministry. The first was in 2006 when 200 health posts received these systems.
Out of these systems, Afar received seven, Somali 14, Benishangul-Gumuz four, Southern Nations, Nationalities and Peoples Region (SNNPR) 37, Harari two, Amhara 49, Tigray 14 and Oromia 69. Then the Ministry distributed 100 institutional solar systems to 100 schools around the country. Then the Ministry used 918,388 dollars of GEF grant to buy 270 institutional Solar Systems from Zhejiang Holly International Co., Ltd; these were distributed to as many schools. After that the Ministry bought 345 institutional solar systems from the Indian M/S Lucky Export using 1.6 million dollars of GEF grant; these were distributed to 345 health institutions.
The IDA, too, had supported the home system in a much larger scale, providing 10.4 million dollars, with which 25,000 units were bought from the Chinese Poly Technologies; these were distributed to 25,000 households. A second purchase after that availed 3,735units.
The current solar home systems procurement was shipped from China on December 29, 2014.
Oromia,Amhara and the Southern regional state will be the biggest beneficiaries from the latest purchase, each getting 2,861SHSs, 2,654, and 2,346, respectively. Tigray will get 1,217, Gambella 694, Benshangul-Gumuz 494, Harari 487, Diredawa 385, Somali 250, and Afar 100.
The generation capacity of the newly shipped SHSs will be 480.7kw, which will be additional to the existing generation power of 145,149.98kw of the SHSs.
The REF, which was established in 2003, is intended for the creation of access to electricity for off-grid rural residents.
The five-year’s Growth and Transformation plan for the SHSs is to reach 150,000 SHSs, and electrifying 3,000 rural institutions.
The REF, with 40 million dollars loan from the World Bank, plans to distribute 37,000 SHSs, 176,000 solar lanterns, 100 fuel saving stoves, and construct 10,000 biogas plants until September 2017.
Big Brands Compete for Market Share of Key Household Item
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Average prices for manual LG brand washing machines with 11 and 14 kilo capacities are 9,500 and 11,300 Br respectively. Whereas the automatic LG brands with 13 and 17 kilos are sold at 35,000 and 37,000 Br, respectively.
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Aggravated by his mother’s fatigue and the stress of having to wash the household clothes every week, Mesfin Tefera, 24, a resident at a Kebele house and an employee at a bank with a monthly salary of 3,000 Br decided to buy a washing machine a few days ago.
He had heard his neighbors, who had bought a washing machine recently, saying that the LG brand grants a two-year warranty. Thus, he was searching for a similar brand at three LG branches, though he could not find the type of washing machine he wanted to buy. The LG brand is imported and distributed by Metro Plc.
There are two types of washing machines, automatic and manual. The automatic is a type that is directly linked with the pipeline and can be adjusted based on wash, rinse and spin degrees. The manual one is not however linked with the pipe line and works upon the control of the user.
The price of the washing machines is also different based on their type, brand and the weight of clothes they can wash at a time. A manual washing machine of LG brand with a washing capacity of 11 kilograms and 14 kilograms at a time are sold at 9,500 Br and 11,300 Br respectively. Whereas the automatic LG brands with 13 kilograms and 17 kilograms are sold at 35,000 Br and 37,000 Br, respectively. Similarly, the manual washing machine of Samsung brand, which is exclusively imported and distributed by Garad Plc, is sold at 8,700 per 13 kilograms and 13,000 Br per 16 kilograms, whereas the automatic Samsung brand is sold at 10,800 Br and 11,250 Br for six kilograms and eight kilograms, respectively.
The type Mesfin wanted to buy, a manual machine whose brand is LG and has a washing capacity of 12 kilograms was not available at the two branches of LG found at Merkato and Piazza, he told Fortune.
A washing machine user, Semaynesh Eshetye, 45, a house wife who resides in one of the condominium houses found around Gotera, purchased a washing machine three months ago of Hisence brand, which is imported and distributed by Glorious Plc. The machine she bought at 8,450 Br, which is a manual washing machine with a capacity of washing 10 kilograms, is making her burdens easier and saving her from additional expenses. Three months ago, she used to wash all by herself, occasionally paying to an irregular servant who comes around just to wash clothes. She said with great delight that the machine has made her burdens easier and minimizes the costs she used to spend for a washing servant, which was 600 Br per month. The machine averts drain and makes convenience to wash at one hand and to do other household staffs on the other hand at the same time.
Selamawit Kassa, 24 sales agents at Omedad, which is an importer and distributer of Panasonic, Ocean and Ignis brands, stated that there is more demand of washing machine, especially on the manual type of washing machine that has a washing capacity of 11 kilograms and 13 kilograms. This is because the manual type is convenient to use at any time despite water interruptions and is cheaper in terms of price when compared to the automatic one, Selamwit added.
With the difficulty of washing at condominium houses, most residents are demanding washing machines and the brand of Panasonic, which has a washing capacity of 10 kilograms is preferred by our customers, she added.
The average order for washing machines per one week is three times. Each time they order five machines. That means that they receive 15 washing machines, which are sold within three days in the LG branch of Churchill Street. Similarly, a Konka branch in Piazza orders six washing machines per week; the manual type and these washing machines are sold within one week. Most of the time, the buyers are newly married couples, new house owners with middle and higher living standard, Abdela Kerem salesman at Konka’s Piazza branch, told Fortune. The demand for a washing machine has been increasing since the mid of 2012, he added.
There has been high demand for washing machines since 2014, especially for the manual ones, according to Rahel Getachew, a sales manager of LG at the Churchill street branch. The reasons she mentioned for the increase in the demand of manual washing machine is simplicity of usage and water managing. Unlike its automatic counterpart, the manual one can be used with less water and if and when the water goes out, it can still be used, as it is not directly linked to pipeline. In addition, the manual can be easily used without program adjustment, which is convenient for household servants. The price rate is another factor that makes the manual type more appealing.
Manual washing machines of the Samsung brand, which is imported and distributed by Garad Plc exclusively, are sold at 13, 000 Br and 8,700 Br for machines with the capacity of 16 kilograms and 13 kilograms respectively. Whereas the automatic Samsung washing machine is sold at 10,800 Br whose washing capacity is six kilograms. Eight kilograms is sold at 11,250 Br and 12 kilograms is sold at 38, 000 Br, manager of the branch Meseret Assefa states. Though she does not want to disclose the number of machines the branch orders and sells per day or per week, she said the demand for washing machine has been increasing since the beginning of this year.
Despite this, the manger of Ariston branch of Churchill Street, who did not want his name to be disclosed, said that though there is a boost in the demand of washing machines, the increase is not significant in number. He noted as an example that during the Ethiopian New Year F&M Trading had announced under advertisement made at Radio that it had arranged a six-month payment term for private and public servants. However, there was no one who could afford it in spite of the facilitation, he said. Ariston is a brand that is imported and distributed by F&M Trading.
However, many retailers of electronic goods have confirmed that there is a trend in the increase for the demand of washing machines and that the orders the branch retailers made to head retailers is increasing both in terms of rate of order and number of machines per one order .
Imported stoves at ETHOF which are sold for 2,700 Br.
The home made stoves at the local shops which sell for 1,700 Br
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Bread is the staple of most Ethiopian holidays, with most families preferring to make their own large round breads. And the business of supplying those households with special baking ovens, with heaters on both sides, as this thick mass of dough needs to be heated on either end is mushrooming in the city.
The business of supplying this stove is making an impact on the daily bread and livelihood of those that make them so much so that Aynu Abdella expresses amazement how his life has changed for the better over the years. Aynu, 26, has been making injera and bread baking stoves for the past six years. That was when he stopped working as a taxi assistant (woyala) and became an apprentice at a friend’s shop.
“Even when I was an assistant on a taxi, I used to earn a good deal of money; but I did not think of tomorrow and had no vision for my future,” remembers Aynu.
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Aynu Abdella in his shops in which four of the readymade Injera oven steels being seen at his back.
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That was over when his friend invited him to join him as an apprentice. Within six months after that he had opened his own business renting a small workshop around Semien Mazegaja, off Dejazmach Belay Zeleke St. In those early days he was making small stoves with one heater, gradually transitioning to stoves with double heater. Then he started making the injera ovens and more recently the bread ovens with heater on the top and bottom. The top cover of the bread stove is also transparent.
When Aynu started the business for himself, he sells three stoves a day and later one oven a month. The stoves are sold better than the ovens as the ovens require special times like holidays to be sold.
“The market for the ovens is seasonal and many come to me when the holidays approach and when they leave their placed buying a condominium house,” Aynu explains.
Aynu uses steel plate bodies for the making of the Injera ovens and the stoves that he makes. But the bread baking ovens need to be made of aluminum to avoid rust. He buys the readymade steel and aluminum plates from Merkato, the largest market place in the country for 600 Br and 1,100 Br, respectively.
In addition to these materials he has to buy sockets for 30 Br, and the switches for 1100 Br each. And the making of one Injera oven costs him 900 Br and the bread oven up to 1,500 Br.
Having started the business with just 700 Br in his pocket, he now proudly speaks as he owns a taxi cab as well as pays, rent for his house and workshop.
Another person in the business Yohannes Engidawork who started the business five years ago, leaving his mother’s home in search of job holding only 50 Br and an old Injera oven, now has one automobile and four shops with his central shop located around Arat Kilo. He started by maintaining old and broken ovens and stoves going door to door. Before he went to the making of the stoves and the ovens, he took short term training in technical schools in electronics and began working with the stoves.
“Now I want to specialize in bread baking stoves which I found interesting in its complication and satisfaction I find from working on it,” he said.
Being in the business for the past five years, Yohannes has managed to buy an automobile for himself and employs 10 workers.
“One bread baking oven takes up to 1,100 Br and is sold for 1,700 Br but they do not have market except for the holidays; the stoves have better market than the ovens,” he said.
Yohannes spends three days to make one bread baking oven and most of his customers are people that come hearing his reputation.
“The market for the bread oven is still to grow and I am spending more time on it to upgrade the quality, especially to improve its electric consumption,” he says.
One young man of 18 whom Fortune met at one such workshop was employed in order to get the experience. A friend who had for a while worked in such workshop is now working in a different area waiting for him to get enough experience so that the two could open a shop together.
The stoves that are displayed at Yohannes’ shops sell for 650 Br if they are double. The single stoves with switches and without switches sell for 250 Br and 350 Br respectively. Injera ovens sell for 1,900 Br if they are with a box for the flour mix to put in and if it has no box, it is sold for 1,400 Br. The bread ovens sell for 1,600 Br.
Although these persons remain to seem happy by the current market they have, they also have a major problem in the market linkage and getting sustainable markets.
“People say that this holiday [the Ethiopian Christmas] is bread holiday; so many buy bread ovens on this holiday than any other time,” says Aynu. “But this market is not sustainable and we might not find market for the following two or three months as there is no place to display our products.”
Aynu has been ordered to make two bread ovens for the holiday and Yohannes three ovens although the latter has already gotten the ovens in hand.
“I have at least three bread ovens in each of my four shops and they will wait for customers until the holiday approaches as our market is seasonal,” says Yohannes.
The same purpose oven that comes from Turkey that the Ethiopian Household and Office Furniture Enterprise (ETHOF) sales is priced 2,700 Br and it can bake from 2.5kg to three kilograms of dough at a time. The oven has two trays, one for the three kilograms dough and the other for the 2.5kg dough which can be exchanged depending on the size of the bread that the baker wants to make.
“The ovens and the stoves that we make are cheaper compared to the imported ones and they are easy to maintain as they are home made,” says Yohannes.
Now he plans to have one big display and selling place for the products he makes especially for the promotion of the bread ovens.
Although the culture of using these machines is yet to grow, the implication seems that the customary way of baking bread being drowned by the smoke of the woods for the fueling of traditional baking steel plates or potteries is changing.
A bakery of bread that sells bread around the Addis Abeba University on the way to Yekatit 12 Preparatory School says that except for the electric consumption, the use of electric equipment is better than the customary way.
“I make at least three breads a day that I supply to the market cutting into pieces. Using the electric ovens saved my time and I have got rid of the smoke that would happen by the wood fuel,” she says.
She sells pieces of breads that she cuts for five Br and she makes at least 30 cuts from one circle bread. She pays 100 Br to 150 Br a month for electricity.
The ‘container village’ in Kampala is Uganda’s main agricultural trading centre.
The bunches of bananas that Teo Kataratambi and her husband, Silver, grow on their land fetch the equivalent of only £1.40 each. The larger bunches that they used to grow sold for double that amount.
A few years ago, though, the Kataratambis noticed a drop in the size and quality of the fruit they produce on their small third-generation farm in Nyamiyada village, south-west Uganda.
“In the first years, the soil was good but then it changed,” says Silver. Teo adds: “We don’t make much money. We can’t break even.”
The change was caused by years of farming without using sufficient fertilisers to replenish the soil’s nutrients. The result, as the Kataratambis now see, is poor crop yields.
In contrast with their counterparts in the global north and Asia, many farmers in sub-Saharan Africa rely on manure rather than chemical fertilisers. But the organic alternative cannot meet the demand.
Fallen leaves help fertilise the soil on a banana plantation in south-west Uganda
In Europe, organic farming makes up only 5.4% of all agricultural land, according to Eurostat. Food and Agriculture Organisation data shows that, globally, less than 1% of agricultural land is farmed using organic methods.
Organic fertiliser can help freshen up Africa’s ailing, rusty-red soils, but there is not enough land available to produce manure in sufficient quantities, says Professor Ken Giller, a soil scientist at Wageningen University in the Netherlands. One cow can produce about 15kg of nitrogen in manure annually. But a healthy maize crop needs up to 100kg of nitrogen a hectare, Giller says.
Manure doesn’t contain all the nutrients that plants need to grow, adds Giller, leader of the N2Africa programme, which encourages African farmers to grow legumes to help fertilise their soil. Harvests have stagnated on the continent since the 1960s, according to data from the World Bank. On average, farmers in Africa harvest about one ton of maize (corn) a hectare, whereas their American counterparts reap up to 12 tons.
“Sub-Saharan Africa has by far the lowest rate of improved seed and fertiliser use of any region … [leading to] increased hunger and food insecurity,” says Sarwat Hussain, a World Bank spokesperson. Ugandan farmers are among those that use fertiliser the least.
The changing climate and booming populations will add further demands on Africa’s overworked soils. At the UN climate change conference in Lima, Peru, in December, politicians and scientists will discuss the impact on agriculture and the role of fertiliser.
African farmers are sometimes put off chemical fertiliser because of cost. The Kataratambis say they can’t afford to buy chemical fertilisers – consistently.
Simon Weteka is a fertiliser dealer in Kapchorwa, east Uganda.
A bag of fertiliser could cost Ugandan farmers the equivalent of £40 – double the sum paid by their American or European counterparts. Much of the extra expense comes from import and transport fees, since chemical fertiliser is often manufactured abroad. Some economists claim international fertiliser companies are manipulating the market by charging certain African nations more than richer countries.
Martin Byamukama, sales manager of a fertiliser dealership, sits in a quiet alcove off the main drag of Kampala’s bustling Container Village – the country’s main trading area for agricultural products. Byamukama and his colleagues travel by road to Kenya to buy fertiliser (Uganda is land-locked). This travel ramps up the cost. Byamukama calculates that it costs him about £4.60 in fuel, import and loading fees to transport a 50kg bag of phosphate fertiliser from Mombassa in Kenya back to Kampala. Byamukama’s customers – farmers and smaller fertiliser dealers, many of whom work in villages around 200km away – can add another £14 to the bill.
About 1,800 meters up Mount Elgon in eastern Uganda, Betty Liaibich’s one acre plot of rocky land feeds her 10 children and pays for their school fees. Her success is down to her tenacity and the chemical fertiliser she uses each season on her maize, beans and cabbages.
Roughly 20 years ago, Uganda’s publicly funded National Agricultural Research Organisation showed Liaibich and her neigbours how fertiliser works. They have been using it ever since.
“Once you have introduced fertiliser, you won’t go back,” says Liaibich.
Fertiliser is slightly cheaper here. The area is close to Kenya, and local dealers cross the border to Kitale to import the fertiliser themselves, rather than buying from Ugandan middle men. But still, Liaibich and her neighbours cannot afford to buy the recommended amounts to get the best out of their crops.
Subsidising the cost of fertiliser could encourage farmers to use more. National subsidy schemes in Malawi and Rwanda are showing some success. But they are controversial; the World Bank warns that subsidies often benefit the wealthiest farmers rather the poorest, and that they can stifle the private sector and economic development.
Organisations such as the FAO are pushing for greener solutions, including encouraging farmers to grow trees and legumes to fertilise the soil. But most experts agree Africa’s green revolution can’t blossom (pdf) without chemical fertiliser.
“Using legumes is a great way to help fertilise the soil, but we recognise that, on its own, it is not enough,” says Giller. “The bottom line is there is not enough in the system to keep it going organically.”
The process of revitalising African farming must be based on both conventional and alternative approaches, agrees Dr Bashir Jama, who runs a programme on soil health for the Alliance for the Green Revolution in Africa (Agra), an NGO working to improve food security.
There is more to improving soil health than chemical fertilisers, says Jama, but they are essential to increasing production and meeting the goal to end hunger in Africa by 2025, which was agreed by African leaders in June.
Nana Prossie owns a small stall in Kampala’s container village selling fertiliser and other agricultural products.
Without fertilisers, Jama warns, farmers will increasingly struggle to feed their families as the drain of nutrients from African soils becomes a major threat to food security on the continent over the next 20 years.
“It is a misconception to say Africa can grow crops using just organics. The rest of the world is fed using fertiliser,” says Jama.
Chemical fertiliser can help kickstart Africa’s farms and, as crop yields rise over time, farmers can use the extra crop residues as organic manure, and so reduce their dependence on chemical fertiliser, suggests Jama.
Organic approaches are more sustainable in the long run, he says, but chemical fertiliser use is unlikely to grow in Africa to the levels seen in the West and Asia that cause environmental problems, he says. Without fertilisers, Jama warns, some vulnerable countries, including Niger, will struggle to feed their growing populations in as little as three years.
Amidst a continent experiencing unprecedented levels of economic growth, a growing middle class, more stable political conditions, and favorable tariff terms from mature markets, there has been no better time to build manufacturing sites on the African continent. But this continent is vast – geographically, culturally, and politically. Mr. Davis’s piece identifies three of the most promising markets in Sub-Saharan Africa for firms and individuals to explore manufacturing-related development and investment opportunities.
Sub-Saharan Africa is ‘on the rise’. There are growing GDPs and an emerging middle class. Sub-Saharan Africans are buying more and exciting investors in the consumer good space from all corners of the globe.
Manufacturing accordingly is a ‘buzz’ word as investors imagine local producing machines that could satisfy a growing market at home and an always consuming market abroad. The African Growth and Opportunity Act (AGOA), which ensures that several products produced in over 45 African countries…
ICL, a global manufacturer of products based on minerals in the agriculture, processed food and engineered materials markets, announced that it launched a Potash for Growth program in Ethiopia. The program is designed to unlock the potential of agriculture in Ethiopia by promoting balanced fertilization among its small and private farmers in order to increase their agricultural productivity and economic benefits from farming.
The Potash for Growth program launched by ICL, in collaboration with its Ethiopian partners, includes a range of activities to increase awareness by Ethiopian farmers of the benefits of potassium fertilizers.
The program’s activities include:
Potash demonstration plots and outreach to farmers:
During 2014, over 600 potash demonstration plots were developed on farms in the states of Tigray, Amhara, Oromiya and Southern regions to demonstrate that potassium fertilizers increase yields of major Ethiopian crops, such as teff, wheat, barley and sorghum. Several hundred additional plots will be established on farmers’ fields and farmer training centers during 2015. Field days for farmers will also be organized at these demonstration plots.
Soil fertility mapping:
Potash for Growth also supports a nation-wide soil fertility mapping program that is being conducted by the Ethiopian Agriculture Transformation Agency in collaboration with the country’s Ministry of Agriculture and its regional partners. The mapping will enable Potash for Growth to recommend the most appropriate fertilizer applications at the district and PA (Peasant Association or Kebele) levels.
Research and validation:
In collaboration with Ethiopia’s national universities, ICL’s Potash for Growth program supports research by graduate students in the areas of potassium in soil and plants in Ethiopia in order to increase knowledge of balanced fertilization on various crops and to assist in developing specialists in plant nutrition.
Commenting on the Potash for Growth program, Stefan Borgas, President & CEO of ICL, said, “We are honored to play a role in Ethiopia’s rapidly growing agricultural sector by contributing our broad expertise in helping farmers to optimize their agricultural output, as well as our financial support, to enable Ethiopian government agencies to boost the country’s agricultural productivity. We believe that the Potash for Growth program will yield substantial benefits for the Ethiopian farming community, and, in the long-run, for food security in Ethiopia. By partnering with Ethiopia’s Ministry of Agriculture, Regional Bureaus of Agriculture and the ATA, we hope to demonstrate the vital role of balanced fertilization in creating sustainable food production in Ethiopia.”
Ethiopia’s Fertilizer to Arrive in Batches Every Month
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And, in what should be no longer be a surprise to anyone, Yara is the big winner again.
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The government is expecting to receive three consignments of fertilizers, each carrying 50,000 quintal this January, which is part of the 900,000ql the government purchased with 431.9 million dollars from five companies.
The five supplier companies are Yara Switzerland Ltd, Agri Commodities Group, Witraco, Helm AG and India Agro. The fertilizer started entering the country by the beginning of November 2014 and seven consignments close to 350,000 quintal have reached the port of Djibouti and have started entering the country, according to Shiberu Demisse, director of agricultural input marketing at the Agricultural Input Supply Enterprise (AISE).
The Enterprise announced a tender in August 2014 for the purchase of 521,000tn of NPS and 373,000tn of Urea. For the tender, a total of 11 companies have responded but only one of them, Yara, made an offer for each of the two kinds of fertilizers, while the remaining made an offer only for one type of fertilizer. This is the second year in a row that the Enterprise has bought NPS, a replacement for DAP, which it dropped two years ago. NPS has become favored over DAP because it has everything DAP has and Sulfur, according to Amarech Bekele, director of communication at the Enterprise.
Yara will supply 571,000ql of fertilizers, of which 371,500ql is NPS with a total cost of 286.4 million dollars, Agri Commodities won for the supply of 100,000ql of Urea with 30 million dollars, Witraco will supply 150,000ql of NPS with 78.5 million dollars, Helm Ag is to supply 50,000ql Urea with 19.1 million dollars and India Agro will deliver 22,539ql of Urea with 9.8 million dollars.
Yara, a Swiss based international grain and fertilizer trader with a history of financial awards to Ethiopian officials through Yara International, has been prominent in Ethiopia’s fertilizer market for many years and is now going to supply over half of the current round of government fertilizer purchase.
The tender was floated in 19 lots, eight for Urea and the remaining 11 lots for NPS. Yara won 11 lots while the remaining eight went to the other four companies. The expected delivery time for all the fertilizers is May 2015. The auction was divided into 19 different lots to avoid overlaps in the delivery to the Enterprises and at the Djibouti port, said Shiberu.
Many products are imported through the port of Djibouti, so to avoid the overlap we scheduled to transport only three consignments every month, he added.
While the price of fertilizers per ton was 321 dollars in October 2014, the time when the government purchased the fertilizers, by the next month, it had declined to 311 dollars per ton. But it increased to 312 in December 2014, according to YCharts, a provider of financial information based in Chicago and New York (US).
The Agricultural Inputs Supply Enterprise (AISE) is a public enterprise established in 1985 and accountable to the Ministry of Agriculture (MoA). The Enterprise has 31 million Br in assets, including 22 warehouses, seven distribution and sales outlets and 36 vehicles. It managed to achieve a net profit of 35.4 million Br during the 2011/12 fiscal year and 35.6 million Br during the following year.
The AISE buys and distributes agricultural inputs, including fertilizers, farming chemicals, different kinds of seeds, plants and animal medicines and vaccines, and laboratory equipment. The Enterprise imported 552,000tns of fertilizer in 2010/11 and 560,000tn the following year. Its imports in 2012/13 were down to 477,000tns.
The government is constructing four fertilizer factories in the Tigray, Amhara, Oromia and Southern regional states, with annual capacities of 25,000tns of fertilizer.
Currently, the Country cultivated 14.1 million hectares of land with cereal and pulses and the use of fertilizer per hectare reached 63Kg, according to a data from the MoA.
The government is constructing four fertilizer factories with annual capacities of 25,000tns
Export said essential to develop foreign currency, create jobs
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The Commercial Bank of Ethiopia (CBE) honored exporters and money transfer agents who promoted the bank’s portfolio in terms of earning huge foreign exchange here Thursday at Sheraton Addis.
The award is aimed at recognizing them and strengthening the export sector. The Bank has been giving its services for the last 70 years uninterruptedly regardless of changes of government.
The exporters are those engaged in money transfer, coffee, leather, textile and mineral sectors. MIDROC Ethiopia, Western Union and Dehabshiil Money Transfer agents earned over 150 million USD while Belayneh Kindie, an exporter earned around 140 million USD receiving the highest awards and Certificates of Appreciation.
CBE President Bekalu Zeleke said that the Bank was successful in expanding export trade, introducing local products for foreign market, making local products get recognition, and in building its capacity to be competitive in the international markets thanks to its investors’ continuous hard work.
Bekalu also said that as export trade is essential to develop foreign currency and to create employment, CBE has been working on how to support and encourage customers to work on export trade.
“We believe that our Bank has a problem on the export trade sector, even if our government has taken measures to boost export trade and recognize our investors efforts in their role to improve the growth of the national economy,” Bekalu said. “But it is undeniable that CBE is showing faster growth in the last few years. It has 9.4 million customers in its 909 branches in the country. The Bank’s total asset has reached over 250 billion Birr.”
Bereket Simon, Adviser to the Prime Minister with the Rank of Minister and Chairman of the Board of Governors of the CBE, said that the government and its people have long been working hard to eradicate poverty and to make the country join the level of middle income countries through the implementation of various strategies.
The Minister said: “The country’s continuous registration of fast economic growth has been going on for the last seven years. To increase the pace of such growth to even higher levels the government’s role in leading the people is significant.”
According to Bereket, due to the fall in the price of coffee in the global market in 2012/13 the country’s income was forced to decline. However, despite this the export trade of the 2013/14 year has shown a marked improvement. Compared with the previous year, coffee has shown an increase of 41.5 per cent, oil seeds 17.1 per cent, meat and meat products 12.6 per cent while fruits and vegetables have shown an increment of 8.7 per cent.
Bereket said that government creates conducive environment for the export of manufactured products for local investors. Development partners and exporters should focus on working jointly by sustaining export trade to help the country sell its products and get more benefits from the sector.
Country Representative to Dahabshiil Money Transfer Limited, AL. Jama Guush said on his part that Dahabshiil is the only African company working in Ethiopia, employing 5,000 people across 126 countries. It works with 17 banks in Ethiopia. Dahabshiil has more than 40 years experience in the provision of valuable lifeline in the Horn of Africa and it remains committed to its original values of trust, reliability, integrity and customer-focus.
Dahabshiil plans to strengthen its position in the market and to further expand its network of agents throughout the world by building strong partnerships and adding new products and services to meet the growing expectations of its valued customers worldwide.
Belayneh Kindie Importer – Exporter, the leading exporters of oilseeds and other cereals to different countries in the world especially to China started six years ago and has brought 60 million USD through CBE and 15 million USD through other banks. This success is a result of the hard and continuous efforts of its employees and managers in addition to the policy and strategy that are undertaken by the government.
FOREX Africa: Is 2015 Ethiopian Birr’s Time To Shine?
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By Jeffrey Cavanaugh
As a frontier market, the countries of Africa represent both tremendous opportunities and tremendous risks. On the risk side of the ledger are all the usual complications of international trade and investment compounded by the problems inherent in a developing, emergent continental market consisting of 54 countries and 1.1 billion people – it’s a lot to keep track of.
Luckily, the ups and downs of the African currency markets aren’t one of them if you know where to look. To help with that, AFK Insider has compiled all the news you need to know now in order to slim down your currency risk in the week ahead. Let’s see what’s happening out there.
From Band Aid to Investor Darling
Early last month Ethiopia marked a remarkable milestone in its history. Thirty years ago the country was in the grip of a deadly, mostly man-made famine caused by civil war and government mismanagement.
As the Marxist regime fought for control of the countryside in a war that it was ultimately going to lose, media reports from the stricken country showed hordes of refuges and children with stricken bellies scratching out a bare existence in overwhelmed aid camps. Such was the country’s plight that it became the subject of the original Band Aid song Do They Know It’s Christmas?
How things have changed. On December 4th Ethiopia’s inaugural Eurobond issue raised $1.0 billion from investors, paying in the process the relatively low yield of 6.625.
By way of comparison, Ethiopia is paying what copper-rich Zambia is paying for its notes and less than a full percentage point higher than what neighboring Kenya, which has a much larger economy, is paying for the $2.0 billion in debt it issued earlier in 2014.
Indeed, as the venerable Financial Times pointed out at the time of the sale, the remarkably low rate was similar to what developed countries were paying as recently as 2000.
This success for Ethiopia is sourced from two places. First, Ethiopia has been the fastest growing economy in Africa for the past ten years, averaging according to the IMF’s numbers an average rate of growth of 10.9 percent over the past decade.
This is quite a record and means Ethiopia has now been growing faster than China, which last saw growth in excess of 10 percent way back in 2010, for several years now.
Of course, much of this is due to Ethiopia starting from such a low starting point – it is one of the poorest countries in Africa and poorer countries tend to grow very quickly when growth begins – but it is also due to conditions generally getting better within Ethiopia itself.
As with Africa’s other commodity producers, it has benefited greatly from demand growth elsewhere—especially the Middle East and China, which have increasingly snapped up Ethiopian coffee, vegetables, cattle and sheep as they have grown richer.
Luckily, this increase in demand for Ethiopia’s products has coincided with better, more stable government so its economy, compared to the war torn days of the 1980s, is better able to react to the market and take advantage therein.
What’s even more fortunate, this growth in trade hasn’t been based on oil, either, but on agriculture, which employs a lot more people, spreads wealth around more evenly, and, most important, has a fairly steady demand and price given the growing number of mouths to feed worldwide.
An oil windfall in reverse
This lack of oil in the Ethiopian growth equation is especially important now that the price of that commodity has collapsed. That’s because it will immediately help Ethiopia’s economic growth rather directly.
According to the latest data available, Ethiopia spends about $2.2 billion importing refined petroleum for its fuel needs, or about 19.25 percent of its total import bill. With oil about 40 percent less costly and assuming it imports the same amount as it has in previous years, that number should shrink to about $1.32 billion if prices stay this low going forward: a hefty savings considering the country just borrowed $122 million more than that on the bond market.
When looking at the Ethiopian economy as a whole, then, oil’s price collapse effectively just paid for nearly all of what the country borrowed—and that windfall will be spent on investment and additional consumption in the coming year, boosting growth further.
What’s more, what applies to Ethiopia applies to most of its trading partners, too, meaning they will also have all that additional spending power to buy what Ethiopia is selling. That means more cut flowers going to Europe, more coffee to China, and so on.
It’ll even be cheaper to ship since the cost of transportation will, again, decrease because of the massive decline in oil.
So, looking ahead to 2015, barring any disasters—and Ethiopia was quick to remind investors that it was still subject to terrible things happening to it—the coming year should be a good one.
Not only will it have $1.0 billion in additional capital to spend on roads, bridges and all the other vitally important infrastructure it needs, but will also have nearly that much again in additional consumption power to spend on whatever else it needs, too. That’s a huge gain, meaning that if these predictions are borne out the birr could do well indeed.
Jeffrey Cavanaugh holds a Ph.D. in political science with a specialization in international relations from the University of Illinois at Urbana-Champaign. Formerly an assistant professor of political science and public administration at Mississippi State University, he writes on global affairs and international economics for AFK Insider and Mint Press News.
Most developing countries will benefit from oil price slump, says World Bank Group
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The decline in oil prices reflects a confluence of factors, including several years of upward surprises in oil supply and downward surprises in demand, receding geopolitical risks in some areas of the world, a significant change in policy objectives of the Organisation of the Petroleum Exporting Countries (OPEC), and appreciation of the US dollar. Although the relative strength of the forces driving the recent plunge in prices remains uncertain, supply-related factors appear to have played a dominant role.
Soft oil prices are expected to persist in 2015 and will be accompanied by significant real income shifts from oil-exporting to oil-importing countries. For many oil-importing countries, lower prices contribute to growth and reduce inflationary, external, and fiscal pressures.
However, weak oil prices present significant challenges for major oil-exporting countries, which will be adversely impacted by weakening growth prospects, and fiscal and external positions. If lower oil prices persist, they could also undermine investment in new exploration or development. This would especially put at risk investment in some low-income countries, or in unconventional sources such as shale oil, tar sands, and deep sea oil fields.
“For policymakers in oil-importing developing countries, the fall in oil prices provides a window of opportunity to undertake fiscal policy and structural reforms as well as fund social programmes. In oil-exporting countries, the sharp decline in oil prices is a reminder of significant vulnerabilities inherent in highly concentrated economic activity and the necessity to reinvigorate efforts to diversify over the medium and long term,” said Ayhan Kose, director of development prospects at the World Bank.
The analysis on oil prices in Global Economic Prospects is complemented by two special features on how trends in global trade and remittance flows are impacting developing countries.
Global trade weak on cyclical and long-term factors
Global trade expanded by less than 3.5% in 2012 and 2013, well below the pre-crisis average annual rate of 7%, holding back developing country growth in recent years.
Weak demand, mainly in investment but also in consumer demand, is one of the main causes of the deceleration in trade growth. With high-income countries accounting for some 65% of global imports, the lingering weakness of their economies five years after the crisis suggests that weak demand continues to adversely impact the recovery in global trade. However, long-term trends have also slowed trade growth, including the changing relationship between trade and income. Specifically, world trade has become less responsive to changes in global income because of slower expansions of global supply chains and a shift in demand from trade-intensive investment to less trade-intensive private and public consumption.
The analysis finds that these long-term factors affecting trade will also shape the behaviour of trade flows in the years ahead — in particular, that the expected recovery in global growth is not likely to be accompanied by the rapid growth in trade flows observed in the pre-crisis years.
Remittances have potential to smooth consumption
A second special feature reports that remittance flows to many low- and middle-income countries are not only significant relative to GDP but also comparable in value to foreign direct investment (FDI) and foreign aid. Since 2000, remittances to developing countries have averaged about 60% of the volume of total foreign direct investment flows. For many developing countries, remittances are the single largest source of foreign exchange.
The study finds that, in addition to their considerable volume, remittances are more stable than other types of capital flows, even during episodes of financial stress. For example, during past sudden stops, when capital flows fell on average by 14.8%, remittances increased by 6.6%. The stable nature of remittance flows, the analysis concludes, means that they can help smooth consumption in developing countries, which often experience macroeconomic volatility.
A consortium that includes General Electric, a US based company, is going to undertake the wind farm project at Aysha, Somali regional state.
The consortium that delivered its study for the development of 310mw of electric power from wind is expected to bring a detailed proposal.
According to sources, Ethiopian Electric Power (EEP) has approved the consortium’s feasibility study to generate electricity in the area.
“EEP is now waiting for the technical and financial proposal of the consortium for final negotiation,” sources said.
Lafto Turbine Technologies plc, a German based company, plans to develop 120mw of electric power from wind on a similar location at Aysah.
The new design undertaken by GE shows that the area has the potential of generating 310mw of electric power at the location expected to be developed by Lafto, according to experts.
According to studies, Aysah is a major wind power source in the country, although it has yet to be developed.
The area has a potential of generating 10,000mw electric power from wind. The country also has a capacity to generate over one million megawatts of electricity from wind power.
GE is currently working with EEP on capacity building trainings for local staff, according to sources.
The private sector interest is now growing to get involved in the power sector. This will expand the opportunity to select the perfect and genuine private sector company.
The interest of the government has also grown to include the private sector as they seek to export power regionally.
In the coming quarter of a century the power sector (generation, substation and transmission) investment demands USD 177 billion or USD four billion every year. The distribution investment is not included in this figure.
The private sector is expected to foot the bill for most of these endeavors.
In the next 25 years, 27,000mw power generators, 19,000km transmission lines, and more than 300 new substations are slated for construction.
In the coming five year plan (GTP II) the power sector target would be 15,000mw and the investment demand will be USD four billion per year.
In the GTP II several investments will be expected. Experts said the EEP has targeted to shrink the hard currency demand from the current amount. “In the coming GTP the local currency investment would be at least 40 percent of the total investment in the power sector,” Mekuria Lemma, head of Strategy and Investment Division at the Ethiopian Electric Power (EEP) explained during his presentation on the Powering Africa event held in November last year.
Sudan, Ethiopia agree to remove obstacles facing trade exchange
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Wagdy Mirghani
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Khartoum -Sudan and Ethiopia on Saturday agreed to remove all obstacles hindering trade between the two countries.
Chairman of the Sudanese Exporters Chamber Wagdy Mirghani said a meeting was held with an Ethiopian high-level economic delegation to discuss all problems hindering trade exchange.
The two parts agreed to do their best to enable the flow of goods between Sudan and Ethiopia, he added.
Ethiopian goods face no problems in entering Sudan, while Sudanese goods face several problems to enter Ethiopia, causing an imbalance in the balance of trade, he added.
Japan to support Ethiopia’s industry through Kaizen
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Phase three Kaizen project is expected to be launched with the support of Japan International Cooperation Agency (JICA) by the beginning of 2015.
The project expected be last until 2020, will contribute to strengthening industrial competitiveness to the country, according to Jim Kimiaki, chief representative of JICA Ethiopia Office during a press conference held on January 8, 2015 at its office off of Ethio-China Avenue.
JICA provides bilateral aid in the form of Technical Cooperation, according to the chief representative.
It has been providing monetary and technical support to Ethiopia since the Hailesilasie regime. Currently, JICA is engaged in agricultural and rural, private sector & industrial and infrastructure development.
JICA has been providing technical assistance on Kaizen promotion in Ethiopia since October 2009. Ministry of Industry was the counterpart in Phase one and Ethiopian Kaizen Institute (EKI) was established for Phase two.
During the last fiscal year, the agency trained 20,957 trainees rising from 11,996 are trainees in 2012/13 fiscal year.
The Turkish textile manufacturer, Etur Textile has announced on Monday that it would start exporting its products to markets in Europe and America having conducted successful trial exports to Algeria and Morocco.
According to Adil Basoglu, board member and executive director of Etur, the factory has fully embarked on production and it will soon start export into the larger overseas markets.
Etur Textile, one of the largest textile factories operating in Ethiopia, is located in Wonji road, six km. from Adama town in the south east of the capital Addis Ababa.
According to the executive director, the textile factory aims at becoming the biggest exporter in the country.
“We have moved here to become more productive and help out the countries vision in the sector,” Basoglu said.
Hiring more than 800 employees, the factory has stepped up its production to start export in full capacity. However, employees complain of meager wages, a portion of which is deducted for the recruiting agency but the company denies.
“We have no clear response for that since we know we are paying them relatively higher salary,” Basoglu said.
Basoglu said high turnover of employees is forcing the company to bring in untrained labor which is only aggravating work-related accidents inside the main production units. “We have no clear response for that since we know we are paying them relatively higher salary,” Basoglu says. In addition to this Basoglu also told journalists visiting the company that dust blowing up from the gravel road by adjacent to the factory is set up has also been affecting business in the production unit. “We have told the city administration so many times but no quick response yet,” Basoglu said.
Currently there are 110 textile companies in Ethiopia of which Turkish, Chinese and Indians are major contributors for the textile and garment export which has reportedly grown by 28 percent year on year during the previous fiscal year (2012-2013). Under the five years Growth and Transformation Plan, currently on its final year, Ethiopia aims to earn USD one billion from the textile industry But the country is still far from achieving the target mainly plagued by shortage of raw material such as cotton.
In the last five months of 2014, Ethiopia imported more than 3,000 tons of cotton to meet the demand of domestic textile industry as a short-term measure, Textiles Industry Development Institute (TIDI) said this week.
Maaza partners with Petram to open Ethiopian bottling plant
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Maaza International, the UAE company behind a popular mango beverage brand, has partnered with Petram, one of Ethiopia’s largest and most successful companies, to open a bottling plant with an installed capacity of 3.5 million cases a year.
“It’s a bottling and distribution arrangement we have with Petram and similar to arrangements we have for Saudi Arabia or Kuwait,” said commercial director Samer Salah, noting that it was Maaza first bottling partnership in Africa since a previous arrangement in Sudan 11 years ago.
“Ideally, we would like to go further into Africa, markets like Tanzania or Kenya. These are markets ripe for higher growth rates.”
“They had been importing our products earlier and there was merit in upgrading the relationship to a franchise. Apart from within Ethiopia itself, the bottler can distribute to some outside territories as well.
“This is the second Maaza bottling arrangement we have in Africa after we introduced it in Sudan 11 years ago. Ideally, we would like to go further into Africa, markets like Tanzania or Kenya. These are markets ripe for higher growth rates.”
The deal shortly follows UAE pharmaceutical giant Julphar’s plans to build a $49.5m insulin factory in Ethiopia through its local subsidiary Julphar Ethiopia Pharmaceutical Industry.
In another recent Gulf-Ethiopia deal, Bahrain’s Ibdar Bank concluding a $100m deal with Ethiopian Airlines for the bank’s acquisition of four aircraft back for lease back to the airline.
Ethiopia also inaugurated its long-anticipated embassy in the Al Bateen area of Abu Dhabi, in a diplomatic reflection of the ever growing economic connection between the two countries.
China to further increase presence in manufacturing, infrastructure
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Ethiopia is asking for China’s support in three areas of the second Growth and Transformation Plan (GTP II), Capital learnt.
China who is a major partner of Ethiopia has also played a vital role in helping the government to realize its development strategies in the first GTP which was endorsed in 2010.
Most of the mega infrastructure projects are eitherbeing financed or constructed by China and companies from the second largest economy in the world.
Diplomatic sources at the Chinese Embassy in Ethiopia recently told Capital that in the coming GTP II the Ethiopian government requested the support of China on establishing and enhancing the transportation sector in regional states.
China has been one of the major allies in the construction of road infrastructure in the country and they have provided money and human resources in large numbers.
According to diplomatic sources, the Ethiopian government officially expressed its desire to work with China in manufacturing during the GTP II, which will be endorsed this July.
In the current GTP that will end this budget year China’s investment in manufacturing dramatically increased.
For instance the major footwear manufacturer Huajian, one of the top three shoe companies in the world, established its factory during the current GTP.
Even though in the beginning of the GTP the government disclosed that manufacturing would be the leading economic sector by the end of the five year plan, the number of local and foreign investments and developments in the sector are below expectations.
Poverty reduction, which has been a priority for the Ethiopian government and the ruling party since it became the leader of the country about two decades ago, is the third major area that China has been asked to assist in.
On several dimensions the government has been attempting to eradicate poverty from the country. According to the information from Ministry of Finance and Economic Development, the country has registered significant achievement on poverty eradication in the past year.
The per capita GDP (USD nominal) has increased to USD 632 in the 2013/14 fiscal year, which was USD 558 a year ago. By the end of the GTP the government planned to raise the per capita income to USD 700.
Wonji-Shoa Sugar Factory boosts production to ease shortage
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Wonji-Shoa Sugar Factory has started producing with full capacity making 7221 quintals of sugar per day to curb shortage of the sweetener that recently gripped the nation.
The factory has been undertaking an expansion with an outlay of three billion birr since 2011 in Wonji area; 110 km south east of the capital, in the Oromia Regional State. The expansion work was carried out by Uttam Group of India after the Indian government extended a USD 640 million loan for three sugar factory projects including two expansion projects at Fincha and Wonji and a new factory in Tendaho, in the Afar Regional State.
The Wonji/Shoa crushes 6250 tons of sugarcane per day to produce the much needed sugar which was in a critical supply a few months back. The Ethiopian Sugar Corporation (ESC) attributed the shortage to suspension of sugar production during the rainy season in the three existing sugar factories – Wonji/Shoa, Metehara and Fincha – as well as delay in Tendaho Sugar project which was expected to enter production in May last year.
While briefing journalists who were on a field visit to the project site, Wonji Shoa Factory officials said part of the problem in sugar supply lies with the distribution channel in place. They blamed the state owned Merchandize Wholesale and Import Trade Enterprise (MEWIT), which is responsible for the distribution of sugar to institutions and regional states outside Addis Ababa.
“We have plenty amount of sugar in store but the transportation is below the production level,” Dadi Bekele, property unit head of the factory, told The Reporter.
According to him 85,574 quintals of sugar is already stored in the warehouse waiting to be picked up for distribution.
A similar scenario was witnessed at Metehara Sugar Factory. Zenebe Yimam, general manager of the factory, said there is a stockpile of 72,000 quintals of sugar waiting for distribution.
However, MEWIT insists it has been distributing sugar according to the time table it has set out.
“Out of the 395,000 quintals we are expected to distribute in four months we have distributed more than 70 percent so far. We still have a month to go at which time we will transport the rest,” Gemeda Alemi, general manager of MEWIT, told The Reporter.
Despite the government ambition to realize competitive sugar industry, sugar is still one of the commodities that majority of the people hardly find in the market. According to factory managers, the three fully functional sugar factories found in Wonji, Metahara and Finhca are inadequate to meet the domestic demand. But the domestic market can expect a boost when Tendaho, whose construction has been completed, enters production.
Established in 1951 in the reign of Emperor Haileselassie after a lease agreement was signed with H.V.A, Dutch company, Wonji had been the only sugar factory that supplied sugar for the entire nation until Metahara Sugar was founded a decade later in the central Rift Valley South-East Shoa.
Ras Al Khaimah-based Julphar Gulf Pharmaceutical Industries has plans to establish a $49.5m insulin factory in Ethiopia through local subsidiary Julphar Ethiopia Pharmaceutical Industry.
“We are hoping that the land for construction will be handed over to us in the next two weeks,” said Mukemil Abdella, Julphar’s country director for Ethiopia, adding that the company intends to make Ethiopia the insulin hub of Africa.
Trade between the Ethiopia and the UAE has soared over the last decade, rising from $123m in 2002 to $934.5m in 2011.
Julphar first entered the Ethiopian market in February 2013, when it inaugurated its existing $9.6m factory under Julphar Ethiopia Pharmaceutical Industry — an Ethiopian arm that is 55% owned by Julphar and 45% owned by local firm Med-tech Ethiopia.
The existing Julphar Ethiopia factory has an annual production capacity for 25 million bottles of suspensions and syrups, 500 million tablets and 170 million capsules.
According to reports, the new insulin factory is going to be constructed on an 11,051m2 plot of land and is expected to begin production within two years.
The deal comes at a time of a soaring trade between the Ethiopia and the UAE — growing from $123m in 2002 to $934.5m in 2011, while in Dubai alone, the emirate’s chamber of commerce has registering 318 Ethiopian companies.
The investment is in all types of project, but particularly in manufacturing (38%), real estate (27%) and agriculture (23%), with 12% split across fields such as education and construction.
In 2013, the Abu Dhabi Fund for Development (ADFD) also signed a $10m loan for a road-building project in Ethiopia, where huge projects are also currently underway to expand the countries 70,000km road network, including 400km of road plans for the Benishangul region.
Ministry suspends issuing exploration licenses in mineral rich areas
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The Ministry of Mines announced that it has stopped issuing mineral exploration licenses in the South Western part of the country, a region known for different mineral deposits.
In a public notice issued last week, the Ministry of Mines, Mineral Licensing and Administration Directorate, announced that it has suspended issuing mineral exploration licenses in South West part of the country as this area is reserved for a joint geological study being undertaken by the Ethiopian and Chinese geological survey institutes. The directorate revealed that it will not accept applications from companies requesting exploration areas in this part of the country for unspecific period of time.
Local and foreign mining companies expressed their discontent over the large concession held by the Chinese and Ethiopian geological survey institutes for the joint geological study.
Based on a bilateral agreement signed by the governments of China and Ethiopia the Ethiopian and China geological survey institutes are undertaking a joint geological study in the South Western part of Ethiopia since 2012. The South Western part of Ethiopia is known for different mineral resources including gold. The concession includes tens of thousands of sq. km. of land in South Western parts of Ethiopia. The geological surveys are trying to identify the mineral resources of the concession area. Chinese and Ethiopian geologists are jointly working to learn about the types of the existing minerals. The cost of the exploration project is covered by the Chinese government. However, Ethiopian and foreign mining companies are not happy about this project. They are wary of the Chinese move saying that this gives comparative advantage for Chinese mining firms.
The Ministry of Mines, Public Relations and Communication Directorate director, Bacha Fuji, told The Reporter that the Ethiopian and Chinese geological survey institutes are assessing the mineral potential of the area for the past two years. “They are collecting useful geological data. They are adding value to the concession. Hence, the Mineral Licensing and Administration Directorate will not process exploration license applications until the joint study is finalized,” Bacha said. However, he said the Ministry will avail the crucial geological data for all local and foreign mining firms once the joint study is finalized.
“Apart from the concession area held by the joint study other concessions are open for interested local and foreign investors,” Bacha said.
The Ministry of Mines recently introduced a stringent mineral exploration licensing procedures. It has also evaluated the performance of companies engaged in mineral exploration activities and revoked 56 companies licenses who failed to execute exploration work according to their commitments.
Vitol Bahrain to supply diesel, benzene to Ethiopia
Vitol Bahrain, part of the Vitol Group a multinational energy trading company, will supply 30 percent of Ethiopia’s import of diesel and benzene starting from this month, the Ethiopian Petroleum Supply Enterprise (EPSE) announced.
The contract has given to the company that won the bid for the importation of the products for the coming year, Demelash Alemu, Adviser to the CEO of the Enterprise, said.
The fall in the price of oil globally benefited Ethiopia. The nation has managed to save more than 103 USD because of the price decline over the past six months, Demelash said.
The nation saved this amount of money in spite of the increase in the consumption of oil nationally by 8 percent compared to the previous year, the adviser added.
Ethiopia could still stand to gain from the continued tumble in the price of oil with the nation expecting to save another USD 600 million.
Ethiopia imports 70 percent of diesel, kerosene for airplanes and benzene from Kuwait, while light and heavy diesel oil for industries are imported from Saudi Arabia.
Ethiopia marks 365 days without reported cases of Polio
Since 5 January 2014 no new cases of wild polio virus have been reported from the Somali region of Ethiopia, where the last case of polio in the country was reported, according to the World Health Organization (WHO).
Pierre M’Pele-Kilebou (PhD), WHO Representative to Ethiopia, and Dr Omar Mohammed Farah, head of Somali Regional State Health Bureau, visited Wardher town in Doollo Zone, Somali region, on 5 January 2015 to congratulate the Zonal Administration and WHO/UNICEF Operations Base staff for their persistent efforts to ensure that every last child gets vaccinated against this paralyzing disease.
The high level delegation acknowledged the excellent collaboration with the Polio Partners Group in Ethiopia to kick polio out of the country and the Horn of Africa. Until August 2013, when the first case of wild polio virus was confirmed from the Somali region, Ethiopia had been polio-free since 2008. Ethiopia’s fast and aggressive response together with immunization partners helped to halt the spread of the disease, but intensified efforts must continue as the virus continues to circulate in neighboring Somalia.
Al-Shabaab lost 80% of the areas under their control – AU
The Al-Qaeda linked terrorist group Al-Shabaab has lost ground in 80 percent of the areas it used to control in Somalia, African Union (AU) envoy said.
AU Special Representative to Somalia and head of AMISOM, Ambassador Maman Sidikou said this at a press conference held in Addis Ababa, Ethiopia.
Shedding light on the security situation of Somalia and the achievements of African Union peacekeeping troops, the ambassador said Al-Shabaab lost control of over 80 percent of the areas under their control through joint military operations by AU troops and government forces.
The ambassador stated that Al-Shabaab shifted their strength and capability to the rich agricultural areas of Lower Juba region controlled by the Interim Juba Administration.
Sidikou has not specified the exact date when the military operations against Al-Shabaab will be launched, but said there are ongoing negotiations and consultations on the issue.
The ambassador has been in Addis Ababa the last few days to discuss issues with the regional leaders related to the operations against Al-Shabaab that are expected to begin in few weeks time.
Turkish president to visit Ethiopia in Africa tour this month
Turkish President Reep Tayyip Erdogan will go on his first overseas trip of 2015 to the African continent. World Bulletin reported citing information from the Presidency sources that Erdogans’ first round trip, which will be in January, will include Ethiopia, Tanzania and Somalia.
Turkish investors with over 3 billion USD capital are engaged in various sectors in Ethiopia, the country’s Ambassador to Ethiopia, Osman R. Yavuzalp, disclosed.
This makes Turkish business persons the leading foreign investor in Ethiopia in terms of capital volume. According to the ambassador, the trade exchange between the two countries had jumped over 400 million USD.
Ethiopia imports machinery, metals, plastic products, drugs and factory products while exporting oilseeds, fruits and vegetables, cereals and textile.
The two countries would work together in climate change, fighting terrorism and other international issues, Ambassador Yavuzalp said.
Erdogan will go to four separate tours and will visit a total of 12 countries in Africa. As the prime minister, Erdogan visited Somalia in 2011 and he will go there as the president this time.
China’s Poly Technologies to produce potash in Ethiopia
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The Chinese Poly Technologies, already engaged in natural gas and petroleum exploration projects in Ethiopia, announced its desire to produce potash in the country.
Vice President of the Company, Li met President Mulatu Teshome (PhD) and discussed the company’s activities in the country. President Mulatu on the occasion noted that the company is performing very well and expressed his encouragement for the company to conduct its projects with efficiency.
“Poly Technologies will play a crucial role in the industrial transformation of the country with its production of petroleum and potash,” Mulatu added.
Li on his part said the company will strive for quality and efficiency and aims to create job opportunities for more than 700 Ethiopians before the year 2016.
Poly Technologies Inc. is a subsidiary of China Poly Group. Poly GCL claims that China Poly is one of the most influential state-owned enterprises in China engaged in natural resources investment and development, real estate development, culture and art business, and international trade.
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China hands over Tirunesh-Beijing Hospital to Ethiopia
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The Chinese government on Wednesday handed over the Tirunesh-Beijing Ethio-China Friendship Hospital to Ethiopia in a ceremony held in the presence of Jiang Yaoping, vice-minister of commerce.
The state-of-the-art hospital named after Tirunesh Dibaba, the Ethiopian female athlete who won two gold medals at the 2008 Beijing Olympics, was built by the Chinese government at a cost of USD 12.7 million to promote Sino-Ethiopian friendship.
Jiang and Kebede Worku, state minister of health, signed the certificate marking the handover of the project in the presence of diplomats and government officials from the two countries.
Kebede said the hospital is a symbol of the strong, dynamic and blossoming partnership between the two countries adding that the friendship between the two countries has gone from strength to strength in the last decade.
“I wish to take this opportunity to express our profound appreciation of the huge investments being made by the Chinese people and government in support of our accelerated development efforts in so many areas,” he said.
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Pan African Parliament to observe Ethiopian election
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Pan African Parliament announced that it is preparing to observe the upcoming general election in Ethiopia which will take place in May.
The Parliament will deploy its observers to witness and make sure that the election is fair and democratic, Ashebir Woldegiorgis (MD), Deputy President of the Parliament, said.
According to him, half of the observers who are going to be deployed under the African Union will be drawn from the Parliament.
The Parliament will organize meetings to build knowledge of voters regarding the constitution and election guidelines so as to enable voters exercise their rights, Ashebr said.
Deploying observers to African countries was not a priority in the continent previously, but consecutive activities carried out by the African Union and United Nations regarding this changed the situation, he said.
Cognizing the importance of observing elections, the Pan African Parliament has started to deploy its observers to African countries to monitor the democratization of electoral process, he added.
Ethiopian Airlines Aviation Group made a record high profit of 3.15 billion birr in the 2013-2014 fiscal year that ended in June 2014.
The net profit is the highest the airline made in its 69 year history and surpassed the net profit it bagged last year by 53 percent. Last fiscal year the airline made a net profit of 2.3 billion birr. According to information obtained from the airline, the national flag carrier generated 46.5 billion birr operating revenue, up by 21 percent. The airline transported six million passengers and 187,000 tons of cargo in the budget year, a surge of 13 and seven percent respectively. In the 2013-2014 fiscal year the airline phased in 13 new jetliners and opened nine new destinations.
A senior official at Ethiopian told The Reporter that the airline managed to make a record high profit at a turbulent time. The economic recession in Europe, fuel price hike, and the Ebola Virus outbreak in West Africa are some of the critical challenges Ethiopian Airlines and other international airlines faced. The flag carrier recently announced that it was losing eight million dollars in sales every month due to the Ebola pandemic that scared away passengers from traveling to Africa.
The official attributed the remarkable performance of the airline to the implementation of a right business strategy stipulated in the Vision 2025, the airlines 15 growth plan, and the hard work of the management and employees of the airline. “It was a very successful year for the airline,” the official said.
Ethiopian Airlines amassed ten international awards in the fiscal year. The African Airlines Association crowned Ethiopian as best airline of the year last November in Algiers, Algeria while the International Air Transport Association (IATA) ranked it the largest carrier in Africa in terms of revenue and profit. Ethiopian Airlines has also won prestigious awards from the American aircraft manufacturer, Boeing, and the Canadian air framer, Bombardier.
Ethiopian registered the historic performance at a time when most prominent African carriers reported spiral loses. The neighboring and arch-rival of Ethiopian Airlines, Kenya Airways, reported a net loss of 139 million dollars in six months (from April to September 2014), South African Airways registered a net loss of 223 million dollars in the fiscal year ending March 2014 and Africa’s oldest airline, Egypt Air, incurred a net loss of 350 million dollars in the fiscal year that ended June 2014.
The prominent aviation analyst CAPA last week revealed that Ethiopian Airlines is planning further fleet and network expansion in 2015, enabling the flag carrier to widen the gap with other leading African carriers. Ethiopian has already become the largest airline in Africa based on fleet size and could overtake South African Airlines in 2015 as the largest based on passengers carried.
The report issued by CAPA last week stated that Ethiopian has doubled in size since the beginning of the decade while most other major African carriers have grown only slightly or not at all. “Asia and Africa have been, and will continue to be, the primary drivers as Ethiopian taps the booming Asia-Africa market,” the report said.
Ethiopian plans to launch services to Tokyo in Apr-2015, which will become its 11th destination in Asia. The carrier will also add its second US destination in June 2015 as service to Los Angeles is launched.
Ethiopian is one of only four airlines in Africa with over 5 million annual passengers. It is also one of only four airline groups with a fleet of more than 50 aircraft, according to CAPA.
Currently, Ethiopian Airlines serves 84 international destinations with 67 modern aircraft with an average age of seven years. The fleet includes state of the art jetliners including the B787 Dreamliner and B777. By 2025 the airline plans to carry 18 million passengers to 92 destinations by 120 modern aircraft. It also plans to generate an operating revenue of 10 billion dollars.
Ethiopian Airlines Group CEO, Tewolde Gebremariam, told The Reporter that the airline is already accomplishing the Vision 2025 targets. Ethiopian is investing on start up airlines in Africa. The state-owned flag carrier owns a stake on the Lome-based Pan African airline, ASKY. Recently, it invested on another start up airline in Malawi, Malawi Airlines Ltd. The management of Ethiopian recently signed a memorandum of understanding with the South Sudanese government that enables the young nation establish a national airline. Ethiopian is also eyeing Rwanda and DRC Congo for the establishment of another regional hub. Tewolde said having a multi hub is one of the business strategies stipulated in the Vision 2025 growth plan.
In a related news, Ethiopian acquired the first Boeing B787 Dreamliner full flight simulator in Africa at a cost of 20 million dollars. In a statement to The Reporter Ethiopian said the installation and build of the full flight simulator is in the process at Ethiopian main hub in Addis Ababa adding that the first pilot training in the B787 flight simulator will start in March this year. Ethiopian provides full flight simulator for pilots on the Q-400, B737, B757 and B767.
The French consulting firm, ADPI, will submit its preliminary report on the development of the new mega international airport project that the Ethiopian Airports Enterprise (EAE) is planning to build outside Addis Ababa.
ADPI launched the study on site location last September. A senior official at the Ethiopian Airports Enterprise told The Reporter that ADPI is finalizing the preliminary report adding that it will submit the report to the enterprise next month.
EAE is planning to build a new mega international airport outside Addis Ababa. Dukem, Modjo and Teji towns are proposed for the building of the new international airport. A decision has not yet been made. The enterprise is also expanding the Addis Ababa Bole International Airport passenger terminal at a cost of 250 million dollars.
Last July the enterprise hired ADPI which is tasked to supervise the construction of the Addis Ababa Bole International Airport passenger terminal and undertake a study on the new international airport. The second task includes conducting a study on the site location for the new international airport. The consultant will also undertake feasibility, technical, and financial studies as well as drafts airport master plan. The consultant is also tasked to study the integration of the new airport with the Addis Ababa Bole International Airport.
The Ethiopian Airports Enterprise has embarked on the construction of the Addis Ababa Bole International Airport passenger terminal expansion work. ADPI deployed two groups in Ethiopia. The first group is supervising the Bole expansion project while the second group is undertaking a study on the planned international airport.
The official said, based on ADPI’s recommendation, a decision will be made on the site for the construction of the mega hub. Sources close to the project told The Reporter that it is the Mojo site that will be selected for the construction of the mega hub because of the well developed infrastructure and the low altitude of the location compared to Addis Ababa.
“The only problem with the Mojo site its proximity to the Ethiopian Airforce main base,” the source said. A joint committee drawn from the EAE and Ethiopian Air force is working on the site location, the source added.
Though the Ethiopian Airports Enterprise is building new airports and upgrading the existing ones the airports with hundreds of millions of birr, they are not generating revenue. It is only the Addis Ababa Bole International Airport that operates with a breakeven. The other airports in the regional states generate little or no income at all. Most of the airports in the regions accommodate only one aircraft per day.
EAE has hired an international consulting firm to examine the possibilities that all the airports could generate better revenues. The global consultancy firm, Grant Thornton, is currently working on the study. EAE has also hired Ernst & Young to implement a new computerized system at a cost of 46 million birr.
Officials fretful on loan repayment, land lease and country’s image
CEO says will settle local debts this month
It has been over a year since the Ethiopian government expressed discontent with the performance of the Indian giant, Karuturi Global Limited, a company engaged in the business of commercial farming.
Karuturi Global, which earlier agreed with the Ministry of Agriculture (MoA) to grow wheat on 300 thousand hectares of fertile land has fell to deliver its promises of becoming a leading agricultural company.
Karuturi was almost foreclosed after failing to repay a 65 million birr (a little over USD three million) loan extended via overdraft facility from the state-owned Commercial Bank of Ethiopia (CBE). However, the company immediately settled the minimum, 25 percent of the debt. But government officials told The Reporter that Karuturi is no longer reputed in Ethiopia.
Abera Mulat, director of agricultural investment and land administration agency, at the MoA told The Reporter that Karuturi no longer a reputable company in Ethiopia. According to Abera, the Indian giant has failed to deliver. The official went on to say that Karuturi is on the verge of collapsing in Ethiopia. “Karuturi has gone bankrupt following internal management crisis,” Abera said.
In a telephone interview from Bangalore, India, Ram Karuturi, CEO of the company, told The Reporter that he will continue investing in Ethiopia. Currently, he is selling out machineries and equipment worth some 15 million birr to repay debts the company has incurred here. Karuturi is known for borrowing from CBE, Dashen and Zemen banks. The loan extended to the company exceeds 170 million birr and the CEO said that his company is set to settle the debts by the end of this month.
The multimillion dollar company has been flouting stock shares at the international market intending to raise capital. Officials reason out that the rift among the 19 figures of the Karuturi Group at global level is the result for Karuturi to go down. But Karuturi pointed at government officials for some of the challenges his company is facing. The recent announcement of Karuturi’s selling out of machineries and equipment and other accessories prompted the concerns of local officials. However, Ram Karuturi denied that selling out those machineries is based on the intention of settling debts. Furthermore, he said that the company is selling out the surplus equipment it had in the farms. According to the CEO, the company has a USD 70 million worth of machineries in Ethiopia.
Abera recalled that the company was privileged to acquire massive farm land with the lowest level of lease agreements. The lease price was way below one dollar, according to Abera. In addition to that the government has provided huge duty free incentives, he mentioned.
In its 2011 annual report to the shareholders, Karuturi claimed that its operation in Ethiopia was causing delays due to logistics and local clearances. But its investment was probed right from the beginning when it has flouted shares at stock markets for the sale of the massive farm land, in the Gambella Regional State.
Ambitious Karuturi again was in under the spotlight following its debt with Zemen Bank. Officials of the privately run bank confirmed to The Reporter some months ago that there were disagreement between the two regarding loans repayment. Though Karuturi is said to retain its international presence of floriculture business, back home its performance is at stake. According to the information The Reporter has obtained from the Ethiopian Horticulture Development Agency, Karuturi has been requested to report on its activities. Officials at the agency said that the request is still pending. Karuturi operates two flower farms called Surya Blossoms and Ethiopian Meadows in addition to the Karuturi Agro Products PLC and Shiva Packs PLC.
The 2012-13 annual report of the company indicated that Karuturi has developed some 14 thousand hectares of land. The report also indicated that some 21 thousand tons of maize has been harvested on four thousand hectares. However, that has been scrutinized by the government which the officials downplay that Karuturi has been unable to harvest in such scale. Most of all they want Karuturi to export more. The company was bullish to produce one million tons of maize and other produces in Ethiopia.
Few months ago, Tefera Deribew, minister of agriculture took a trip to India. In his statement to Indian media, the minister said that Karuturi and the like performed way below the expectation of the government. Minister of state Wondyrad Mandefro was also obliged to answer questions raised from MPs regarding the poor achievements of commercial farms.
Julphar to build Africa’s largest injectable medicine plant
The United Arab Emirate (UAE) -based Gulf Pharmaceutical Industries a.k.a. Julphar announced that it would build the continent’s largest injectable medicine producing facility in Ethiopia with an investment outlay of USD 50 million.
Hassan Jibreel (Eng.), senior director of corporate development for the company, told The Reporter last Wednesday that Julphar has found Ethiopia to be the hub of Africa and a center for many other international organizations. Actually, what the company is thinking of doing is an expansion project. In fact, Julphar started operations in Ethiopia in 2012 after building a pharmaceutical plant in Addis Ababa around Jackross area with a capital outlay of USD 9.17 million. The factory became operation in 2013 producing assortments of pharmaceuticals.
“At the beginning, it was like coming into a black box for us to move on such a big investment in Ethiopia. But, it turned out to be very different,” he explained.
Back then, it was the first manufacturing plant that Julphar opened outside of the UAE.
According to him, the second phase of this expansion project mainly consists of injectable medicine producing plants and warehouse facilities which can be considered to be the largest for the company outside of the UAE and the biggest of its kind in Africa. “We have already secured 11,000 sqm plot of land in Addis Ababa to start manufacturing by the end of 2015,” he said.
The injectable plant is expected to fill the demand for insulin for patients with diabetes across the country and the African continent in the process promoting the country and the company altogether. On the other hand, the company has expressed its desire to carry out a number of conferences and workshop in order to assist local pharmaceutical manufacturers.
“We feel the local manufacturers really lack up-to-date knowledge in the area; so we want to focus on building up capacity through Good Manufacturing Practice (GMP) and that is why we want to organize workshops to share our experience in that regard,” he said.
Collaborating with the Ethiopian Pharmaceutical Associations (EPA) and other partners, Julphar organized a two-day workshop to impart standard manufacturing practices to the local industries at Elilly International Hotel this week (Wednesday and Thursday) . The workshop emphasized on basic pharmaceutical manufacturing practices and equipment specialized in granulation process and tablet coating. “To realize its vision and mission, EPA is proactively forging strategic partnerships with key stakeholders and EPA is happy to have Julphar Ethiopia as one of its strategic partners,” Teferi Gedif (MPH, PhD), president of EPA, said on the occasion. The implementation of GMP is an investment in good quality medicine that will improve the health of individual patients and the community, while at the same time benefiting the pharmaceutical industry and the health professionals, he states.
Julphar first got a taste of the Ethiopian market in 2002 as it joined the market as a supplier partnering with Medtech Ethiopia, a local distributor.
EIC mull over rural insurance via cooperatives, micro finances
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Private institutions welcome the plan
The Ethiopian Insurance Company (EIC), the biggest and oldest insurer in Ethiopia, announced that it is considering launching a new rural insurance policy to insure farmers against loss of their agricultural products due to natural and man-made risks.
According to the plan, EIC will open doors to rural financial institutions like microfinances and cooperatives to reach grassroots rural communities.
During a discussion forum that organized on Tuesday at the Hilton Hotel, EIC tabled the findings of a new study that was carried out to gather the necessary input for the planned policy formulation. Although various question remained to be answered, the invited discussants which comprised of various insurance companies, microfinance institutions, cooperative unions and governmental and non-governmental institutions whose project activities are linked to the rural communities in one way or the other, have welcomed the EIC’s study findings and its plan to devise the policy.
In addition, both EIC and rural financial institutions like microfinance institutions and cooperatives share that implementation of the plan will not be an easy task. Fear of serious resistance from the rural community as the farmers presumably find purchasing insurance policy as an expenses item rather than seeing it as a benefit guarantying their livelihood is one of the issues raised by the participants.
However, both believe that it can be realized through a chain of awareness raising campaigns.
CEO of EIC, Yewondwossen Eteffa, said that the study tried to assess wider issues and cover various countries’ experiences regarding rural insurance.
Explaining the rationale behind formulating this policy, he said that agriculture is a crucial sector in the Ethiopian economy whose contribution to the economic development of the country is immense.
Yohannes Gebremeskel, representative of Dedebit Microfinance, hailed the initiative proposed by the state-owned insurance giant, EIC, and said that he shares the challenges. Yonannes remembers that back when the microfinance institutions were starting some 20 years ago, they too faced challenges to gain acceptance from the rural community. But, that it was later reversed and that now rural community is very receptive of the MFIs. At the end of the day, he thinks that he challenges facing the rural insurance can not be different from that; it is about awareness creation and campaigning.
Similarly, Hailu Reta, representative of Agar Microfinance, said that it is possible to change the mindset of the rural communities. But, he advised that such is possible if aggressive campaigning and awareness creation is done.
“If the cooperative unions and financial institution like us were allowed participate, we can go door to door to raise the required awareness,” he said.
He further indicated that the insurance sector has not been progressing well though it has over a century of experience. But, he further said that still the number of people who access the insurance service does not exceed from 500,000.
“If we still proceed at this pace, it will take more than 250 years to have full insurance coverage for a country of 90 million,” he said, stressing the need to implement the rural policy.
One of the leading petroleum companies in Ethiopia, National Oil Ethiopia (NOC), unveiled a new tanker tracking system on Thursday. The new system will enable the company to locate tanker trucks, protect fuel adultery and monitor the behavior of drivers.
NOC procured the technology from a US-based company, Global Tracking Technology PLC. The contractual agreement was signed by Tadesse Tilahun, CEO of NOC, and Zelalem Dagne, managing director of Global Tracking Technology at the Dashen Salon of the Sheraton Addis. The cost to install the tanker tracking system on each truck is 82,000 birr and a monthly fee of 1000 birr will be paid for Global Tracking to cover telephone, internet, GPS satellite and data management services.
NOC has 800 fuel tanker trucks and the total cost of adopting the tracking system will cost 300 million birr. According to Tadesse, NOC will pay Global Tracking 300 million birr and owners of the oil tanker trucks will repay the amount in two years’ time. Each truck owner will pay 82,000 birr in two years’ time and 1000 monthly payment for the after sales services that include GPS and data management services.
In his presentation Zelalem said that the Electronic Cargo Tracking System components (ECTS) include tracking reader, electronic seal, GPS\GPRS modem (fleet management device) and ETCS software platform. The tanker tracking system enables the company to monitor the location of the truck, the behavior of the driver and the dispensing valves of the tanker. Zelalem said the tanker tracking system reports an unauthorized opening of the fuel tanker. “Once the fuel is loaded at the port it will automatically shut down the valve and if some one tries to open it along the way it will report it to the headquarters of both NOC and Global Tracking,” Zelalem told journalists.
The contractor and client can monitor how the driver of each tanker truck is driving. “We can learn about his speeding and reckless driving and we can instantly make him stop the truck,” Zelalem said.
According to him, the tanker tracking system enables them to reduce fuel cost by 10-15 percent, accident rate by 50 percent and maintenance cost by 40 percent. Global Tracking has been working on this project since April 2014 and run a pilot project on two trucks. The company will soon start installing the system on 200 jet fuel tankers and eventually on 800 tankers that transports fuel for NOC.
Zelalem said that Ethiopian insurance companies pay a huge amount of compensation for motor accidents adding that this could be reduced significantly by applying the new technology. Fuel theft and waste could also be controlled while transport cost would be significantly reduced. “According to my estimate an insurance company in Ethiopia pays 20-30 million dollars unnecessary compensation payments for motor accidents.”
Global Tracking Technology is based in Falls Church, Virginia, with operation office in Addis Ababa. Established in 2008 it provides ICT based tracking technology solutions. It began operating in Ethiopia seven years ago. The company so far deployed 3000 fleet management modems in Ethiopia. Its customers include DH Geda, East Africa Bottling, National Cement, MOHA Soft Drinks and Tracon Trading.
Tadesse said that fuel theft and adultery is a major problem in the industry. “NOC wants to deliver the exact amount of fuel it received to customers. Fuel mixed with other materials are damaging cars and machines. We are criticized for the wrong doings that we are not involved in. Now this new technology will enable us to protect all these mishaps,” Tadesse told government officials.
The Minister of Transport, Workneh Gebeyehu, State Minister of the Ministry of Trade, Ali Siraj, and Kassahun Hailemariam, general manager of Ethiopian Transport Authority, lauded NOC’s effort to modernize and ensure the security of fuel tankers. The officials called upon other petroleum companies to follow suit.
The Ethiopian Revenues and Customs Authority (ERCA) is installing ECTS on cargo trucks. Kassahun said that the authority installed the modems on 100 trucks as a pilot project and it is to try it on another 500 trucks. The country introduced cargo tracking proclamation in 2011.
NOC is one of the seven private petroleum companies operating in Ethiopia. It has so far invested one billion birr and runs 145 fuel stations across the country. According to Tadesse, the company will build additional 30 fuel stations this year. NOC has built an aviation fuel depot at the Addis Ababa Bole International Airport. It has a plan to an build aviation fuel depot at the new airports in Semera and Kombolcha.
President Mulatu Teshome stated that the government will consolidate its support to investors who are keen to invest in Ethiopia.
During his talks with a Qatari business group led by Sheikh Fahad Ahmed M.T Al Thani here Friday, the President said Qatari investors would benefit a lot by engaging in the Ethiopian market due to the countries’ geographic proximity.
Sheikh Fahad Al Thani on his part told the president that he had visited various investment sites in Ethiopia and has plans to launch 4 investment projects with 500 million US dollars.
The plan is to open a cement factory in Dire Dawa, a sugar factory in Bahir Dar town and animal fatting plant in Harar as well as anti-malaria and cosmetics factory.
According to ENA, the delegation leader has requested the government to provide the necessary support for the realization of the projects.
Italian engineering firm ELC Electro consult SpA recently won a USD-499,000 (EUR 429,300) contract, through a tender, for surface exploration in the Aluto Langano geothermal field in Ethiopia.
The company sealed the deal with the Icelandic International Development Agency (ICEIDA) on January 7, the latter said in a statement Thursday. Aluto Langano is a water-dominated gas-rich geothermal field in the Lakes District region of the Ethiopian Rift Valley.
ICEIDA and the Nordic Development Fund (NDF) are co-funding a bigger project whose aim is to encourage and support geothermal exploration and capacity building in East Africa. The aim is to help countries in the region boost their geothermal knowledge and capacity.
ICEIDA and the Government of Ethiopia are partnering on the geothermal initiative.
HEINEKEN has officially inaugurated its new brewery at a greenfield site in Kilinto on the outskirts of Addis Ababa.
In a ceremony attended by 300 guests including Prime Minister Hailemariam Desalegn, Charlene de Carvalho – Heineken and hosted by Jean-François van Boxmeer, Chairman of the Executive Board and CEO of HEINEKEN, the state of the art brewery was unveiled.
Guests were invited to tour the site and to hear opening addresses from the Prime Minister, Van Boxmeer and Johan Doyer, Managing Director of HEINEKEN Ethiopia.
With a total capacity of 1.5m hectolitres, the Kilinto brewery is already producing the recently launched Walia® beer together with Bedele® and Harar® beer brands. It is planned that the site will also brew other brands including the flagship Heineken® beer.
Employing around 280 people, drawn from the local workforce, the new facility complements the already established Bedele and Harar breweries; which were acquired from the Ethiopian government in 2011. The EUR110mln new brewery is part of a total EUR310mln investment in the country by HEINEKEN since 2011.
With this enhanced production footprint, HEINEKEN Ethiopia will be well placed to further develop its portfolio of high quality beers that will meet growing demand in the country.
Speaking at the opening, Jean-François van Boxmeer commented: “Our inauguration marks the latest chapter in our Africa story which began over 100 years ago. Today, we are a proud partner for growth in the region, investing ahead of the curve, and with a long-term ambition to create sustainable businesses. This is certainly the case in Ethiopia, which is progressively unlocking its natural potential for its people, and bringing prosperity to both the cities and agricultural regions. Through our local barley sourcing project, we can be certain that the positive effects of our investment here spread well beyond the brewery gates. The CREATE project that we announced in 2013, where the partners share the goals of improving the income of smallholder barley farmers and improving access to markets, will help us to increase our local sourcing of malt barley.”
Prime Minister Hailemariam Desalegn commented “HEINEKEN’s investment underscores the belief and confidence that the foreign investment community has in our country as a credible and safe investment destination. I also want to acknowledge HEINEKEN’s commitment to address key social issues such responsible consumption messages, clean water availability and sustainable local sourcing; as well as health and safety issues in and around its breweries.”
Johan Doyer, Managing Director of HEINEKEN Ethiopia, added: “This new facility, which more than doubles our potential output, will enable us to satisfy rising demand for local and international brands. In 2014, we launched our Walia® beer brand and its success has shown that the beer category in Ethiopia has huge potential. This modern, flexible and efficient brewery will help us meet that demand and to bring new and exciting products to market. Importantly, we have recruited local talent and will build the skills and capability of a committed workforce. With the opening of this brewery, HEINEKEN Ethiopia has now reached a key milestone. Our next challenge is to prepare for the production of our flagship Heineken® beer which will provide a super-premium choice for our consumers and trade customers.”
Global Conference opportunity for Ethiopia’s green endeavors
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The 3rd International Conference on Financing for Development to be held in Ethiopia in July 2015 will be an opportunity for the nation’s voice to be heard on green economy development endeavors, Foreign Affairs Minister Dr. Tedros Adhanom said.
After the discussion he had with a 12-member US delegation led by Counselor to the President John Podesta, the Minister told reporters that Ethiopia has been working to be the voice of Africa regarding climate change.
The Conference will gather high-level political representatives, including Heads of State and Government, and Ministers of Finance, Foreign Affairs and Development Cooperation, as well as all relevant institutional stakeholders, non-governmental organizations and business sector entities.
It will result in an inter-governmentally negotiated and agreed outcome, which should constitute an important contribution to and support the implementation of the post-2015 development agenda.
Africa has similar stand on the post 2015 development agenda, which is expected to replace the Millennium Development Goals expiring this year, he said, adding the discussion with the delegation is focused on ways of work with developing countries out of the continent in this regard.
He appreciated the US government for its commitment to support Ethiopia to successfully host the conference, saying US has pledged to support Ethiopia through the delegation.
Head of the delegation, John Podesta said on his part that Ethiopia is the proper country to host this conference because of its rapid economic growth and is exerting maximum effort to realize the target to end poverty by 2030.
The US government will continue to work with Ethiopia to make the conference a success, he added.
Israeli company to construct solar-hybrid power plants in Ethiopia
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The hybrid plant adjusts itself to a variety of weather conditions, utilizing both solar energy and biofuels
The Ethiopian Ministry of Water, Irrigation and Energy had entered an agreement with an Israeli solar-hybrid power company to provide “power solutions” in rural Ethiopia.
The Israeli developers, AORA, promise “significant social and economic impact on off-grid communities, helping to provide power to schools and medical facilities, refrigeration for food processing and post-harvest storage, groundwater pumping, and much more,” according to Tazpit News Agency.
Ethiopia often suffers from blackouts; two-thirds of the country’s citizens do not have electricity.
Ethiopian Minister of Water, Irrigation and Energy, Alemayehu Tegenu, said the deal transforms “the Green Economy Strategy into action”, referring to a 2011 initiative that aims to turn Ethiopia into a middle-income, green economy nation by 2025. “AORA’s unique solar-hybrid technology is… well suited to provide both energy and heat to support local economic development in Ethiopia,” Tegenu added.
AORA’s technology combines solar radiation, gaseous and liquid fuels including biodiesel and natural gas, enabling a flexible variety of operational modes which adjust themselves to all weather conditions, 24 hours a day.
Construction of the first plant is expected to begin by mid-2015.
A crane stands at a construction site in a neighbourhood undergoing a facelift in Addis Ababa on June 19, 2013. Ethiopia’s burgeoning diaspora community is returning home to invest in its booming economy.
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ADDIS ABABA, ETHIOPIA –
When Tadiwos Belete moved to Ethiopia from the United States a decade ago to open a luxury spa, his relatives thought he was crazy.
He built an office block on a crumbling congested thoroughfare in the centre of Addis Ababa, where there were few other businesses and seemingly few opportunities for a successful entrepreneur.
Now from his fourth floor office overlooking the newly-refurbished, six-lane Bole Road, today crammed with cafes, hotels and shopping centres — a sign of Ethiopia’s thriving economy — Tadiwos recalls almost despairing of finding other businesses to rent space in his office block.
“I remember, we were almost praying whether we could get someone to rent this building,” Tadiwos said.
“It’s amazing, I never believed it would grow this much, but it’s happened,” he added, looking down at the busy street below.
Tadiwos is part of a burgeoning diaspora community returning to Ethiopia to invest in its booming economy.
Tadiwos’ business has blossomed, along with his Boston Day Spa, he has opened a restaurant and a wine bar in Addis Ababa, along with two luxury resorts outside the capital.
He employs 1,500 people, and goes out of his way to use Ethiopian materials and products throughout his business empire.
For him, Ethiopia offered opportunities that did not exist in Boston, where he already owned a successful spa business.
He said he was drawn back not only because he thought he could make a living here, but also because he wanted to take part in Ethiopia’s development.
“The profitability is here, you can see it, you can feel it, you can touch it. But as well … as a human being you can make a difference here,” he said.
With an estimated four million diaspora living overseas, almost one in every 20 Ethiopians either lives outside the country or has returned home recently.
Most of them fled Ethiopia’s military regime in the 1970s to settle in the United States. Today, many are leaving flailing economies in the West to take advantage of Ethiopia’s rapid growth.
The economy here is growing at an annual rate of 8.5 percent, and was ranked the twelfth fastest growing economy in the world in 2012 by the World Bank.
Like Tadiwos, most returnees are involved in the service sector, though investments in agriculture and real estate are also growing fast.
Returning diaspora offer hard cash investments, but also invaluable skills, education and experience acquired in the West.
But their influence is not only economic, according to Shanta Devarajan, head of the Africa region at the World Bank.
“The diaspora might bring strengthened governance to African societies. These are people who have been outside the system and are able to observe it from afar, and that might actually strengthen government that we need so badly,” he said.
Ethiopia’s main pull seems to be the drying up economic possibilities in recession-hit Western countries.
– Skills learnt abroad applied back home –
“It’s the opportunities here, in many respects it’s beyond low hanging fruit, it’s so obvious,” said Zemedeneh Negatu, a managing partner at Ernst and Young.
Zemedeneh, who returned to Ethiopia after 14 years abroad, said the payback is enormous.
“It’s a combination of the financial reward, but also these touchy-feely, fuzzy kind of things. You can quantify the contribution you make here, definitely it’s measurable,” he said.
Though statistics are not available, Zemedeneh said the number of successful businesses established by returnees has grown in recent years, which builds confidence among other diaspora Ethiopians contemplating a move back.
But although returning Ethiopians have an advantage over foreign investors — such as the Indian or Chinese who have limited local knowledge and language skills — the transition after years away is not always easy.
Unreliable telecommunications, underdeveloped infrastructure and crippling bureaucracy are major challenges. Access to finance and foreign currency remains limited.
Ethiopia ranks 127 out of 185 countries in World Bank’s Doing Business report, an index on the ease of conducting business.
“Ethiopia’s business environment, especially in the area of trade logistics, is deteriorating compared to other countries,” said Lars Moller, lead economist at the World Bank in Ethiopia.
“If policymakers could focus on removing the red tape of doing business that would be important to make sure that they reap the full benefits of returning diaspora,” Moller added.
For Addis Alemeyahou, returning diaspora like him have help replace reliance on foreign aid, a key pillar in Ethiopia’s national economic plan.
“Real sustainable development, the essence of it is basically private sector development, it’s investment,” he said, sitting in an upmarket cupcake shop, a popular hangout among returnees located in a fast developing neighbourhood in Addis Ababa.
He said the vast majority of diaspora who have come back are starting businesses and creating jobs.
“They’re creating industries that are growing, and I think that’s fuelling everything else,” he said.
Addis returned to his mother country after 12 years in North America to start his own consulting firm. He said when he left Washington DC, people were wary about his move, but now the majority of Ethiopians he knew there have moved back home.
Many, Zemedeneh among them, see the trend continuing.
“I am very positive that the diaspora will be a very significant player in the Ethiopian economy, I don’t think there’s any question about it,” Zemedeneh said.
New Rural Insurance Policy for Small-Holder Farmers on the Way
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A new policy of rural insurance is to be drafted in the near future as officials from Ministry of Agriculture (MoA), Ethiopian Insurance Corporation (EIC) and Federal Public Financial Enterprises Agency (PPEFA) have discussed a policy framework study made by the latter two.
The discussion at the stakeholders’ forum held at Hilton Hotel in order to use ideas rose as an input for the policy framework on January 13, 2015.
The study focused on designing a new policy framework for rural insurance; and it took more than a year to finalize, says Fikru Tsegaye, Marketing & Strategic Management director at the Ethiopian Insurance Corporation. It is mainly focused on providing insurance solutions for agriculture and rural based risks targeting smallholder farmers. It emphasizes that lack of a single framework has left the service fragmented.
As the majority of farmers are smallholders, the study gives more emphasis on how to use a holistic approach that would help to provide the insurance. The study has indicated that such fragmented practice of providing agriculture insurance was only implemented as a pilot project by EIC but failed to deliver significant changes due to several drawbacks such as infrastructural limitation, telecommunications, and financial limitations.
As the nature of agricultural insurance needs a well-developed communication infrastructure that would facilitate the way data, such as weather forecast, is acquired, such limitations were considered as challenges. Moreover, financial incapability of smallholders is also another challenge as most Ethiopian farmers depend on subsistence farming. To overcome this, the sector needs subsidy from government, said Fikru Tsegaye, director of marketing & strategic management at EIC.
Solomon Zegeye, general insurance manager at Nyala Insurance S.C. shares this view. This policy, in order to materialize, needs the support of government, especially on subsidizing the farmers, as many of them cannot afford to buy insurance policy, he told Fortune.
Nyala is among the few insurance companies that have worked on agricultural insurance since 2009 but it mainly focused on providing insurance for commercial farms and livestock production at a larger scale. The company provides three kinds of agricultural insurance, namely multi-period crop insurance, livestock insurance and weather index insurance.
Three main suggestions were given by Solomon; one is that this policy framework, prior to its drafting process has to be backed by subsidy of farmers, a regulatory framework by National Bank of Ethiopia and founding national reinsurance company.
As risks associated with agriculture are high and occur at a larger level, the establishment of national reinsurance companies is a must, noted Solomon. The policy framework will attempt to design a rural insurance that considers the financial capacity of poor farmers, added Fikru.
The state-owned EIC as well as Nyala, Africa and Oromia insurance companies are currently engaged in providing rural insurance. The EIC has gained 8.2 million Br of gross premium and at the same time incurring 5.6 million Br of gross claim, in 2013/14.
According to the 2014 report by NBE, total capital of insurance has reached two billion Br and private insurance companies accounted 78.6pc of the total capital.
Successful training to develop soil and site specific fertilizer recommendations
From January 12-14 CASCAPE gave a training on developing soil and site specific fertilizer recommendations using the QUEFTS toolbox. QUEFTS is a software tool to derive fertilizer recommendations using commonly available soil properties and different target scenarios.
For application under Ethiopian conditions the tool was extended with micro-nutrients.
QUEFTS applies a semi-mechanistic approach and considers interactions between nutrients, which makes it a very practical, yet science based tool.
The training was attended by 27 participants from different organizations including ministries, research institutes and CASCAPE innovators.
At the end of the training a Community of Practice was establish to foster joint learning.
An experience sharing workshop is scheduled for autumn 2015.
Smallholder Agricultural Carbon Projects in Eastern Africa
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Trainers Manual
Moses Masiga, Pauline Nantongo Kalunda, Lillian Kiguli, Annet Ssempala, Seth Shames, Krista Heiner, Margie Miller – ENR Africa Associates, Environmental Conservation Trust of Uganda, EcoAgriculture Partners, Environmental Conservation Trust of Uganda
Abstract
This manual has been developed to help build the capacities of farmers, farmers groups, extension staff and project managers who are implementing agricultural carbon projects in Eastern Africa. The manual describes the steps for implementing an afforestation/reforestation voluntary carbon project based on the Plan Vivo Standard. It builds on experience gained by the Environmental Conservation Trust of Uganda (ECOTRUST), ENR Africa Associates, and EcoAgriculture Partners while undertaking a participatory action research project focusing on the institutional arrangements of smallholder agricultural carbon projects in Sub-Saharan Africa. This work was supported by the CGIAR Research Program on Climate Change, Agriculture, and Food Security (CCAFS).
The manual was created specifically for use by trainers as part of the Trees for Global Benefits project in Uganda, managed by ECOTRUST, in order to facilitate capacity building among local actors in the project. It was piloted in the Mt. Elgon Region of eastern Uganda, and has benefited from the input of farmers and extension staff.
The manual is divided into four modules: Getting Started; Carbon Project Development and Implementation Cycle; Implementing the Carbon Project; and, Stakeholders and their Roles. These modules are further subdivided into sessions, which are an indication of progress from one stage of the training to another within a module. Not all modules will be appropriate for all learners. Within each session the training activities listed may have to change based on the expertise of the trainers, the experience of the learners, and materials at hand.
The first module, “Getting Started,” introduces learners to the key concepts of the training, such as climate change, climate change mitigation, and the need to undertake climate change mitigation actions commonly referred to as carbon projects. The first module is intended for three target audiences: farmers, extension workers, and carbon project managers.
The second module, “Carbon Project Development and Implementation Cycle,” is more technically oriented, and it seeks to provide hands-on experience to learners on the modalities of designing and implementing a carbon project. The specific approach that is described in the module is for a Plan Vivo afforestation/reforestation project, although the information provided in the manual can be used for training on other carbon projects in agricultural landscapes. This module is targeted at project developers and, to a limited extent, extension staff.
The third module, “Implementing the Carbon Project,” focuses on afforestation/reforestation activities and the implementation plan for farmers. This module is targeted toward farmers and extension staff who will conduct farmer trainings. Even though the steps of the training process have been provided in the manual, the farmer groups and extension staff can subdivide the steps based on the resources, time, and level of knowledge in order to better target these training materials to their specific outcomes. Project managers can also benefit from this module by increasing their understanding of how the farmers and other carbon project implementers carry out their tasks. A field demonstration and a land use planning session are among the many activities planned during this module.
The fourth module, ”Stakeholders and their Roles,” is beneficial for farmers, extension workers and carbon project managers. However, the level of detail required in describing the key stakeholders and their roles will change based on the audience. For farmers, the most important stakeholders to consider are those clearly linked to farmer activities. In a similar way, extension staff may be interested in the project stakeholders or partners that help farmers supply inputs and manage benefits. For the project developers, the main focus should be on the carbon value chain, from farmer activities to the carbon market.
When Dr Mitslal Kifleyesus-Matschie returned to her country Ethiopia in 2007, she went with the aim to contribute to poverty eradication in rural areas by creating a company that allowed farmers to enter the 21st century market.
By Annika Burgess on January 19, 2015
However, bridging the centuries-long knowledge gap wasn’t going to be easy. “The requirements of the 21st century are impossible to apply if you’ve been working a certain way for 300 years,” Dr Kifleyesus-Matschie said of her initial concerns. But, she had a plan: “I said, ‘I’ll do it with technology.’ We needed an instrument and the best instrument was ICT.”
Since then, her company Ecopia has been embracing developments in ICT to provide over 11,000 farmers with the knowledge and skills required to process and market organically certified products that can be sold locally and abroad. Today, 54 products from Ethiopia’s organic farmers are under the Ecopia label, which has impacted local economies and made traditional ecological farming methods more profitable.
“When you are producing things like jam and juice on your farm, at Ethiopian and European level, you need to fulfil certain quality control documentation to get the permission to sell products in the supermarket. Ethiopian farmers weren’t allowed to do that. The reason they weren’t allowed until recently to participate in the value chain was because they could not provide the data, the information that is needed for the inspections to be fulfilled,” Dr Kifleyesus-Matschie says.
“What the information technology did is give us an instrument, a very easy way to fill a gap of around 300 years within five- to-ten years. The farmers are now able to fulfil the requirements that are asked from the standards office.”
Due to advancements and increased uptake of technology, Ecopia has been able to build an extensive database that contains detailed information about ingredients, regions and processing techniques; serving as an electronic marketplace. Farmers initially provided this data to a call centre but soon moved to using computers and mobile devices.
The company also developed an online and mobile traceability system that provides consumers with product codes so they can trace the components right back to the farmers and find information on raw materials, time of harvesting, transportation, specific manufacturing conditions and delivery status of the products.
Furthermore, training has become a major factor in the growth of the company. “The training has become very easy because we have a beamer and pictures, and they understand it easily,” Dr Kifleyesus-Matschie says.
Ecopia trains farmers, students and local stakeholders not only in how to produce organic products in a way that fulfils international quality standards, but also in skills such as leadership and entrepreneurship. The aim is to empower rural farmers at the ‘base of the pyramid’ with the necessary skills and know-how. The company has also adopted a train the trainer approach, thus contributing to the sustainability of the programme.
“The most fascinating part of the development of Ecopia is not only that we transmitted this information to the farmers, but those farmers then provided information to the well-educated Ethiopians on how to conduct inspections,” Dr Kifleyesus-Matschie says.
“We needed an inspector to test the standard and certify that the food is clean, so it was our farmers who needed to train the Ethiopian government and authorities and show them that it is possible to create products that are fulfilling international rules and regulations.”
Due to the visual nature of the training programmes Dr Kifleyesus-Matschie says teaching positions are often given to the region’s deaf community.
“When one of the deaf women goes to train, all she needs is a beamer and a mobile. She may use a translator at times, but when it comes to answering questions she needs only to type the answer and show it on a mobile. This is huge for the self-confidence of a person, especially a deaf person who is outside the system and doesn’t have a lot of opportunities to earn a living.”
Ecopia’s goal is to provide opportunities for two million Ethiopian farmers, and it’s the company’s next steps Dr Kifleyesus-Matschie thinks will have the most significant impact. She is planning to develop an open source enterprise resource planning system (ERP) – a platform where farmers can easily communicate and access market information.
Farmers previously had to rely on Dr Kifleyesus-Matschie to inform them if supermarkets had increased their profit margins, but this is the kind of information that will now be readily available. Most importantly, free of charge.
“My intention now is to have everything open source. Ecopia will be willing to give the data for this system and farmers will have the right to verify – it’s the first of its kind in Africa.”
Dr Kifleyesus-Matschie is also in discussions with Airbus to use their satellite technology to track deliveries. “As an environmental company we want to be part of the Ethiopian green economy 2023 – complete green economy. So, we want to minimise our carbon footprint. As transportation contributes dramatically to carbon emissions, you need an efficient tracking system to measure your footprint, and for this you need to use satellites,” she says.
“Airbus is saying they have access and a database for this information that makes the application possible for the farmers. If we do this then we are really complete – the circle is finished. The ICT revolution has been done.”
As per April 22, Remko Vonk joined the CASCAPE team as its new Project Manager. Remko holds a MSc. in tropical crop science and tropical forestry (1984) from Wageningen University and has extensive project management experience working for international organisations such as IFDC (International Fertilizer Development Center), ICRAF (International Center for Research in Agroforestry), UNEP (United Nations Environment Programme), the private sector and governments. Remko has done long term assignments working in the agriculture and natural resource sector in Kenya, Madagascar, Haiti, USA, The Netherlands, Rwanda and Sudan. Below you can read the first blog from Remko;
Blog #1: The dung cake
Drying dung cakes on the wall in Ethiopia anno 2014During my first visit to the field in Ethiopia, while visiting a Mekele University research site, I met a farmer who was drying animal dung on the wall in the form of cakes. This was the first time for me to see animal dung used as fuel.
At home I found out that this is a widespread practice, being practiced on all continents.
Drying dung cakes in the 1900s.I even found a picture from around 1900 of two French women doing the same as the Ethiopian woman I met was doing: drying dung cakes using a wall. .
Dung cakes can be heralded as “green” energy, but the smoke they generate is seen as a disadvantage. From an energy perspective, dung cakes make sense, from a health perspective a little less. Yet, there is another disadvantage to dung cakes. Soils in Ethiopia are low in organic matter and nutrients. Dung is a high quality organic fertilizer. Combining dung and mineral fertilizer in what is known as “Integrated Soil Fertility Management” can give a sustainable and significant boost to crop production. In the densely populated Ethiopian highlands, this boost is badly needed to feed a growing population. Applying mineral fertilizer at the recommended rate will only address N and P depletion of the soils, but will not address the extraction of all the other nutrients. And this extraction will only be accelerated by the initial yield boost resulting from the NP fertilization. The North Ethiopian countryside I visited does not have many trees. I saw hilltop Eucalyptus plantations, but only very few trees were integrated in the crop lands. Firewood is obviously scarce. In all the decisions that farmers have to make about land use, be it on private or common land, apparently the integration of trees is loses out in the considerations. Land tenure insecurity is often cited as a reason.
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Collecting branches and crop residues for fuel.On that same day, I saw many women collecting just about any organic material for fuel: a mix of branches and crop residues. I had seen the use of maize cobs for fuel, but the use of straw for fuel rather than for animal feed or compost was new to me. Farmers told me that they even uprooted the maize stubble for fuel. Between the stubble, straw, and dung cakes being used for fuel, the organic matter on the farm literally goes up in smoke. The CASCAPE project’s efforts to encourage farmers to combine organic and mineral fertilizer indeed have positive results. Yields are doubled or even tripled. But what to do if the organic fertilizer is not there? The soils are already depleted of many minerals, and just adding N and P will not suffice to secure a sustainable increase in production. Actually, it only accelerates the mining of the soil of the other nutrients. Adding organic manure secures the presence of elements like S, Mg, Zn and K.
I was left with a complicated puzzle. How to increase production in a sustainable way in a situation where there is hardly any organic manure. Growing legumes won’t help, as they also need their nutrients! Maybe the starting point is with the energy supply on the farms. A difficult option, as it takes time for trees to grow. Yet, N-fixing trees can provide a useful source of energy, N, and can recycle washed out fertilizer. At the same time they can provide necessary organic matter to the top soil. Sounds easy, but currently it does not make it to the list of solutions the project is validating and as long as the underlying tenure problems are not solved, little enthusiasm can be expected from the farmers.
Erdoğan’s Africa tour to kick off with Ethiopia visit
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President Recep Tayyip Erdoğan is to go to Addis Ababa on Jan. 22 as part of his scheduled visits to several African countries, including Ethiopia and Djibouti, with a large group of ministers, bureaucrats and businessmen.
During his visit to Addis Ababa, Erdoğan will meet with Ethiopian President Mulatu Teshome Wirtu and Prime Minister Hailemariam Desalegn, according to a recent statement issued by the Office of the President.
He is scheduled to visit Djibouti the following day, and there meet with Djiboutian President İsmail Omar Guelleh. The visits will help businessmen from Turkey and these African nations to establish close ties, the statement said.
Erdoğan’s office also pointed out that Turkey has close historical and cultural ties with the countries of the Horn of Africa and that these countries are the strategic gateways to Middle Eastern and world markets.
The visit will also be an opportunity to discuss regional developments in Africa, the statement said. Erdoğan is expected to return to Turkey on Jan. 24.
The president plans to travel to 12 African countries this year, according to reports by the Office of the President.
The Djiboutian ambassador to Turkey, Aden Hossein Abdillahi, told Today’s Zaman that the current trade volume between his country and Turkey is only $550 million, but that this can be doubled within a couple of years if Turkish businessmen are ready to make the most of the opportunities Djibouti offers as a gateway to the entire African market.
In an interview with Today’s Zaman in November 2014, Abdillahi said his country aims to be a trade center, the “Dubai” of the region.
Economists Predict Africa’s Growth to Go Beyond Oil, Commodities in 2015
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Anita Powell – January 19, 2015
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Economic experts from across the African continent say this may be an exciting year for African economies, which could be ready to move out of their traditional roles and into new sectors.
African nations have struggled for decades to go beyond their role as providers of basic raw materials, like oil, gas, minerals and agricultural products.
Their efforts have had mixed success. While nations like South Africa and Kenya have managed to diversify their economies, others, like Angola and Nigeria, are largely known to investors as energy sources.
But then oil prices fell. And fell. And continue to fall. And while that trend is clearly alarming to those energy producers, economists say this might represent an opportunity for resource-poor African nations, which have struggled to be heard in the resource-packed African market.
Experts gathered in this month in Johannesburg — still the continent’s economic hub, home to Africa’s strongest banking sector, and the headquarters of many international mining giants — to discuss this new trend.
Analyst Martyn Davies said change is afoot.
“Africa has predominantly been this commodity-driven economy where growth is allied to commodity prices. We now see the headwinds of rapidly declining oil prices. What future does that hold out for continental growth? What implications does that have for business? And I think arguably, is Africa then rebalancing away from traditional commodity-driven growth to one that is more balanced, more consumer-driven and new wealth, new value being created, beyond the simplistic business model of non-beneficiated raw materials?” asked Davies.
That move away from the simple export of raw materials, said analyst Gareth Newham, could also prompt wider improvements in governance and in society. After all, diversified economies spread wealth in more ways than one, and also add much-needed jobs to the economy.
Newham is the head of the Governance, Crime and Justice Division at the Pretoria-based Institute of Security Studies.
“In commodity-driven economic growth, where a very small portion of the population benefits, while very high levels of inequality and poverty do lead to higher levels of instability, making it more difficult to pull together a stable environment for business. And so there’s a very close connection between good governance and the possibility and opportunities for business going forward — and the opposite when there’s not stability,” said Newham.
Davies predicts a geographic move as well, from the traditional West African powerhouses to their East African competitors.
“So I think we’re going to start to see the interests of business, the interest of capital, move away from what has traditionally been oil-propelled economies in West Africa, think Nigeria, think Angola, amongst others, to more sort of East Africa, Ethiopia, Kenya, Tanzania. Yes, Tanzania, is going to be a natural gas story going forward as well. And also Mozambique. So I think the center of interest will shift from West Africa increasingly to East,” said Davies.
Gas prices are expected to stay low for much of the year, and will be closely watched by investors — and consumers — around the world. For many consumers, the low prices present a welcome opportunity to save money.
But for African economies, low commodities prices might be a chance to grow in new directions.
BGI’s Hawassa Plant to Boost Beer Capital Production to 1.44m hl
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BGI Ethiopia, Ethiopia’s giant brewery, received eight large fermentation tanks for the expansion of its Hawassa plant on Thursday January 15, 2014 with an investment of 30 million euros.
The eight large fermentation tanks will increase the production capacity of the Hawassa plant by nearly double, said Essayas Hadera, marketing manager of BGI Ethiopia. Each having a capacity of 2,200hl, two of the tanks are Bright Beer Tank (BBT), used for fermentation process and the remaining six tod tanks used for processing the beer.
Ziemann International GmbH, a Germany based Company supplied beer tanks for many countries, including Russia, Mexico, and Belgium, manufactures the fermentation tanks. The tanks were purchased two months ago, all of which arrived at the Hawassa plant last Thursday.
St George beer entered the Ethiopia market in 1922 by Belgian owners. Later it had German owners, before it was nationalized by the military regime. It is currently owned by BGI, which also has a winery at Zeway. BGI has three plants at Hawassa, Addis Abeba and Kombolcha, with a total of 2,687 permanent and temporary workers.
BGI Brewery has three brands – St. George, Amber and Castel– with an annual production capacity of 2.65 million hectoliters. It has paid a total of 1.5 billion Br in taxes during the last fiscal year, having a total investment of 2.8 billion Br.
The Hawassa plant was inaugurated on June 7, 2011, as the company’s third plant in Hawassa town, located 273km south of Addis Abeba.
“Installation of the tankers will start by this week,” Essayas told Fortune.
The installation of the tankers will be completed in process between April and September 2015, he added. When all have been installed, the Hawassa plant will have the capacity to produce 1.44 million hectoliters a year, raising the total of the three plants to 3.6 million hectoliters. A quarter of the installation will be finalized by April 2015 and will increase the production capacity by quarter, according to Essayas.
Ethiopia’s beer industry consists of five major breweries: Meta Abo Brewery, Harar Brewery, Bedele Brewery, Dashen Brewery, and BGI. Combined, they have an annual production capacity of close to 5.62 million hectolitres. Raya is expected to be inaugurated by mid-February 2015, having a total capacity of 5.62 million hectoliters annually and BGI has a 42pc share in Raya. Habesha Brewery another new company is currently under formation.
BGI sources 50pc of its malt input from the Assela Malt Factory, supplier of malt for the existing breweries except Dashen, who sources from Gonder Malt Factory. Currently, Assela meets only 52pc of the annual malt barley demanded by the breweries. Production amounts to 36,000tn to 40,000tn a year.
The demand for beer is projected to grow by 15pc annually, much higher than the African average of five percent recorded in 2014 and the current production stands at 5.6 million hectoliters. On the same day BGI received the tanks, Heineken inaugurated its plant located at Kilinto, which it built for 110 million euros, with 10 tanks and a production capacity of 1.5 million hectoliters, pushing the total production capacity of the factory to three million hectoliters. By the next Ethiopian fiscal year, the country will have a total production capacity of 12.2 million hectoliters annually from the six breweries.
- Plant will produce Harar and Bedele products, as well as the Heineken brand
Prime Minister Hailemariam Desalegn visiting the beer factory of Heineken in Kality
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Heineken Brewery, the world-renowned brewery with a presence in 84 countries, operating over 165 breweries producing 254 brands, inaugurated its largest factory in Ethiopia with an investment of 110 million euros.
The factory, which rests on a 343 sq. metre plot of land in the outskirts of Addis Abeba in a place called Kilinto, on the way to Debre Zeit, has a capacity of producing 1.5 million hectoliters a year. Heineken opened its first African plant in 1923 in the Congo; it now has a presence in more than a dozen African countries, where it employed around 15,000 people in 2010.
The new investment, which comes following the acquisition of Harar and Bedele breweries in 2011, raises the total investment of the company in the country to 310 million euros. Heineken employs 280 people at the new plant, out of which 180 are permanent.
Heineken, which reported revenue of 3.07 billion euros in Africa and the Middle East that led to an operating profit of 665 million euros in 2013, needs a total of 20,000tns of malt a year for the new factory, out of which 50pc is sourced from the local market.
“We are planning to source our malt barley from local farmers through the integration of smallholder farmers in the CREATE project that the company launched in 2013,” said Jean-François van Boxmeer, Chairman of the executive board and the CEO of Heineken NV.
CREATE is a program by Heineken aimed at improving both quality and quantity of barley grown in Ethiopia as well as improved access to markets for the small-holder farmers. By 2017, the company plans to support 20,000 farmers in the production process.The company has now integrated 6,000 smallholder farmers in the supply of the malt barley. And by 2020, the factory plans to source 60pc of its production ingredients from the local market.
Diageo, owner of Meta Brewery, had also designed and piloted barley contract farming project with the aim to source 1,000 metric tons of barley from a substantial number of local smallholder farmers with a potential to source up to 20,000 metric tons of barley within Ethiopia for local use and/or export a year.
The factory gets the water needed for the brewing process from the two water wells 1.5km from the factory each having the capacity of generating 141 cubic meters of water per hour. The wells have a 400m and 500m depth with a temperature of 32 degree Celsius.
The new factory at Kilinto is now producing the seven brands of the company’s beers through its two brewing lines, each having a capacity of producing 42,000lt an hour. The seven brands produced are Bedele Regular, Bedele Special, Walia Beer, Harar Beer, Hakim Stout, Harar Sofi, and Sofi Lemon. It is also planning to commence producing Heineken beer in April.
While this happens in Addis Abeba, Heineken plans to reach the eastern Ethiopia market through Harar Brewery and the western market through Bedele Brewery.
In a country with a per capita consumption of beer at about five litres, Heineken produced 101 hectoliters only in December.
The civil construction of the brewery, done by Rama Construction Plc, took two years to complete.
The inauguration ceremony on the 15th of January, 2015 was attended by Prime Minister Hailemariam Desalegn and the state minister of Industry Mulatu Meles (PhD).
Heineken, which has invested 310 million euros in the country, plans to expand the factory within the same compound.
Together with the 600,000 hectoliters and 900,000 hectoliters production capacity of Bedele and Harar beer factories respectively, the factory’s production will make the country’s production capacity of six million hectoliters increase by three million hectoliters.
“The major strategic purpose of opening this factory is the need to address the 1,000km distance between the Bedele and Harar factories, which is difficult for logistics,” stated Johan Doyer, the managing director of Heineken Ethiopia.
Heineken plans to export products from Ethiopia to African and the Middle Eastern markets.
A new crown cork factory is prepping to begin production by mid-February 2015, bringing the total of such factories in Ethiopia to six, including one which plans to go into production around July this year.
The factory, to become operational by February, Peniel Industry Plc, is established by Birtukan Abeba with a capital of 120 million Br. The crown cork company rests on 2,000sqm of land in Nifas Silk Lafto District at Lebu Industrial Village. The land as well as the building was property of its sister company Alba Aluminum Plc. A two-year feasibility study was done, after which it took the company around a year to modify the interior of the building to a cork factory, which meets the ISO standard, says Birtukan, adding that the machinery have all been imported and ready for installation, at the plant which will employ 83 people.
The company will begin manufacturing three billion crown corks a year; it could also begin producing cans after conducting market evaluation, according to Birtukan. The principal raw materials required for the production are sheet metal and polyvinyl chloride (pvc), which will be imported from Germany, according to the manager.
The local demand for crown cork is met through both local production and import. At present, the major source of supply to the local market for crown cork is mainly import. During the period between 2011 and 2013, on average, about 93.25pc of the total imports of crown corks were supplied by five countries, India (42.39pc), Spain (14.34pc), Egypt (14.2pc), Italy (12.97pc) and France (9.35pc), according to the Ethiopian Revenue & Custom Authority (ERCA). Others supply the remaining.
Ethiopian Crown Cork & Can Manufacturing S.C.,CGF-crown Cork and Aluminum Cap Manufacturing Factory, Daylight Applied Technologies Pvt. Ltd Co. and Metal Crown are the four local factories in Ethiopia. Based on the existing production trend, it is estimated that 1.3 billion pieces of crown corks have been produced locally in 2013, showing 12.6pc production growth compare to the 2012 fiscal year, according to Central Statistics Agency (CSA).
Besides Peniel Industry Plc, a new Ethio-Italian company is also set to join the four local factories. The Italian New Box S.P.A and Alemayehu Negussie, who is an Ethiopian Investor, own the company. The company will go through the commissioning process by March and start manufacturing by June or July, 2015. It will have the capacity of manufacturing one billion crown cork a year. Therefore, these two companies are expected to raise the total local crown corks production to 4.3 billion pieces, which will still fail to meet the growing demand.
The demand for the crown cork in 2014 was 3.3 billion pieces. This figure is estimated to reach 5.5 billion pieces in 2015, according to research by One Cent Management and Marketing S.C.(OCM), May 2014. One Cent Management is an Ethiopian private equity and assessment management share company established on December 3, 2010. The demand for crown cork depends mainly on the performance of its end-users such as beverage, mineral water and cosmetics industry, explains Fitsum Getu, chief investment and research director at OCM. It has seen a higher demand compared to the market supply of crown corks.
Millennium Goals – A Journey of Partial Success for Ethiopia
Helen Wolde, an eight months pregnant woman while holding a session with her nurse on antenatal care at Kirkos Sub-city Health Office Gotera Massalech Health Centre.
Helen Taye, 23, has been married for six years and is expecting her first child, Fortune met with her while she was in Kirkos Sub-city Health Office Gotera Massalecha Health Centre to get antenatal care services (ANC). This marked her second visit since she found out she was pregnant two months ago.
“Since this is my first child I have no idea what to expect during my pregnancy but the service has shed light for me in this aspect as well as taking care of me and my baby’s health,” stated Helen.
The centre gives care for 45 days after the birth of the child starting from post pregnancy period including child delivery services. All these services are given free of charge.
Since the centre was established in 2012, it has given 613 antenatal care services, 93 delivery services starting from last year and had transferred 34 cases that is beyond its provision to hospitals. The centre has a yearly plan to give 355 antenatal care and 337 deliveries. Through the years it never recorded either a child or maternal mortality.
This story is also reflected at the national level as Ethiopia is among the six countries in Africa, including Egypt, Liberia, Malawi, Tanzania and Tunisia that achieved one of the Millennium Development Goals (MDGs)-reducing child mortality by two-thirds in 2012, according to “Assessing progress in Africa toward the Millennium Development Goals, 2014” report by UN Economic Commission for Africa, the African Union, the African Development Bank, and UNDP.
In 1990, the under-five mortality rate in Ethiopia was one of the highest in the world at 204/1,000 live births; by 2012, this rate had been slashed to 68/1,000 live births. The expansion of health infrastructure and the successful implementation of Health Extension Package (HEP) are believed to have contributed to the achievement of the goal, according to UNDP Ethiopia. This includes focus on delivering an essential package of care that is most related to the diseases affecting children and the poor; a push to improve coverage and delivery of health services in rural areas; and a major effort on vaccination, which has been particularly successful.
However, challenges remain in reducing the maternal mortality ratio to three-quarters in 2015 (Goal 5). This is considered to be one of the goals that the country might not be able to achieve. Progress on reducing maternal mortality has been slow since 2005 when the country managed to reduce maternal mortality rate (MMR) to 510 per 100,000 births from 700 per 100,000 births in 2000. Achieving Goal 5 requires the country to reduce MMR to 175 per 100,000 births by 2015 from 420 per 100, 000 births in 2014, which seems to be an insurmountable task, explained UNDP Ethiopia. Early pregnancy and childbirth, low level of deliveries attended by skilled health personnel, and low nutritional status are some of the major challenges to reach this goal, according to UNDP Ethiopia.
In an effort to give a kick to the maternal mortality reduction program the UN Country Team, in collaboration with the Ethiopian government has developed a joint programme, stated UNDP Ethiopia. After an extensive consultation between the government and the UN Country Team a MDG Acceleration framework for achievement of Goal 5 in pastoral areas was designed as well as Accelerated Action Plan for reducing maternal mortality, which is already under implementation, according to UNDP Ethiopia.
A nurse explaining about the physical as well as biological changes pregnant women might experience, what they mean and which sings warrant a visit to the centre.
The Ethiopian government had also allocated around 5.5 million Br for the health sector starting from 2012 to 2014 which helps pregnant mothers like Helen to get antenatal care in a nearby location. Pregnant women pass trough physical examinations such as blood pressure, weight measurements, etc to track the mother’s health record and to keep it at a medically advisable level as well as HIV counselling and test, according to Tigist Fantaye, a nurse at Kirkos Sub-city Health Office Gotera Massalecha Health Center.
Additionally, necessary medication based on the physical diagnosis, training on sanitation, childcare and nutrition are given at the centre. The antenatal care goes in fixed four schedules at 0-16 weeks, 24-28 weeks, 30-32 weeks and 36-40 weeks, according to Tigist. But if there is a “danger sign”, which the mothers are taught on their first visit that can be a symptom of health disturbance of the mother or the child, the centre is open 24/7. But it is still shocking to see mothers in the city who come to the centre injured and bleeding, while they try to give birth without the attendance of skilled health personnel, stated Tigist. This calls for a better awareness creation in the community, she suggested.
Beside these two goals, substantial progress was observed in Ethiopia in terms of achievement of MDGs. Ethiopia is on course to achieve eradicating extreme poverty, which targets to halve the proportion of people whose income is less than one dollar a day in 2015, achieving universal primary education, promoting gender equality and empowering women with a target to eliminate gender disparity in primary and secondary education, by 2005 and in all levels of education no later than 2015, combating HIV/AIDS and Malaria, ensuring environmental sustainability and developing a global partnership for development. UNDP Ethiopia attributes the success achieved in Ethiopia to political will and government commitment and close collaboration between government and development partners. The remarkable economic growth that the country has achieved is also credited with the progress that the country made in achieving MDGs. However, achieving gender equality and women empowerment is lagging behind along with the reduction of maternal mortality.
As a result of the massive investment in basic education, most countries have achieved universal primary enrolment (Goal 2) in Africa and the continent as a whole is expected to achieve Goal 2 , according to Assessing progress in Africa toward the Millennium Development Goals, 2014 report. The Ethiopian government had allocated around five million Birr, which is out of the total of 50 million Br allocated for the execution of MDGs project in order to carry out new schools construction and expansion projects between 2012 and 2014.
The government had the goal of building 929 primary, secondary, preparatory and vocational schools but only 473 schools have been built. It achieved 60pc of its goal regarding school expansion projects. The projects have faced problems such as delay of imported equipment for furnishing the school, especially to the vocational school construction, as well as lack of road access, explained Samuel. But as a whole, Ethiopia is on track to achieve universal primary education, he added. The Net Enrolment Ratio (NER) for primary education (Grade 1–8) increased from 40.4pc in 2000 to 91pc in 2014.
By 2025, Ethiopia has set out to be one of the middle income countries in the world taking eradication of poverty as its core objective of development plan. Ethiopia is among six countries such as Swaziland and Uganda, which are less than five percentage points away from reaching the target. While countries like Ghana, Angola, Malawi and Rwanda have already achieved the target in 2013.
Ethiopia targets to reduce people whose income is less than one dollar a day to 27.8pc in 2015 from 55.61pc in 2000. The Ethiopian government takes the construction of roads as a core element in the mission to eradicate poverty as roads are believed to play a major role in strengthening the economic network in the country as well as assisting the business sector to flourish, explained Samuel.
Even though the end of the MDG-2015 may not achieve some of the goals, we cannot deny how far we have come considering where we started, stated Haji Ibsa, PR at the MoFED. One criticism of the MDG plan is that its extra emphasis on the gap between current levels of performance and actual, neglecting the effort exerted to reach the current level of performance in the first place, according to Assessing Progress in Africa toward the Millennium Development Goal, 2014 report.
“By the end, some goals might be achieved while others might not be achieved. Whatever the outcome is, it does not mean that the Goals become less relevant. Even goals that will be achieved by the 2015 deadline will still be important. Achieving Goal 1 (halving the number of people living in poverty, for example) does not make the poverty reduction goal any less relevant. Given this, there is a global consensus that successor Goals be designed to succeed the MDGs,” says a statement from the UNDP Ethiopia.
The MDGs, which intend to improve the lives of the world’s poorest people, have faced different criticism over the years. General criticisms include a perceived lack of analytical power and justification behind the chosen objectives. Also, lack of national government commitment, which drives from the mechanism used to introduce local change through external innovations supported by external financing are among many.
Despite the aforementioned criticisms, the 2010 MDG review summit called for thinking about the successor to the MDGs. The UN Secretary General established an intergovernmental Open Working Group to design Sustainable Development Goals (SDGs), which are successors to the MDGs. The Open Working Group recommended 17 Goals and 169 targets. The Ethiopian government will also work on strengthening the achievement made focusing further not only on the quantity but also on the quality of the goals, stated Haji. The MDGs are expected to be endorsed at the September 2015 session of the UN General Assembly.
Villagers discuss the impact of Farm Africa’s goat-rearing, beekeeping and irrigation programmes a year on from the 2013 Guardian Christmas appeal donations to the Tigray Food Security project
Letay Gebre-Michael and her son received three goats from Farm Africa, enabling them to buy food, clothes and school materials.
By 2013, widowed Letay Gebre-Michael could feed her children only two meals a day. Now she serves three meals daily with an afternoon snack, thanks to three goats she received from international NGO Farm Africa.
Each goat gave birth to two more giving Gebre-Michael a herd of nine. She donated three goats to another qualifying individual – a requirement of beneficiaries of Farm Africa’s goat-rearing programme – and sold two at market.
With the proceeds she bought school materials and clothes for her children, clothes for herself and food. And the goats keep reproducing: she’s back up to seven goats.
“Before, the children would get depressed because of their hunger, and physically they were thin,” says Gebre-Michael, sitting on a stone wall enclosing her small homestead in the sun-drenched hills of Laelaymegariatsemri, an area of 1,500 households in northern Ethiopia’s Tigray region. “Now they have gained weight and are happier.”
Farm Africa’s Tigray Food Security project uses simple but innovative initiatives such as goat rearing to enable poverty-stricken individuals to forge livelihoods in the rugged Tigray highlands, where many inhabitants remain untouched by Ethiopia’s growing economy.
Before Gebre-Michael joined Farm Africa in mid-2013 she worked as a day labourer farming crops, paid only in kind. Now she has a means of income – earning 1,300 Ethiopian birr (£40) through the goats – and plenty of goat milk for her children, she says. She hopes to save enough to buy an ox to work a small plot of land to grow additional crops.
Don’t underestimate the power of a goat, would appear to be the moral of the story. When one of 32-year-old Abrehet Gebrekidan’s five children developed an eye infection, she sold a Farm Africa-supplied goat to pay for medical treatment, retaining her five other goats.
“Now they are small but come Easter they can be sold for a good amount,” Abrehet says.
More than 700km south, the Ethiopian capital, Addis Ababa, offers stark reminders of Tigrayan women who came searching for work but found homelessness and sexual exploitation.
To help stem that tide Farm Africa has invested £685,000 in this project, initially funded by Irish Aid. Building on this success, DfID’s UK Aid Match fund has generated over half of the additional cash that allowed the programme to reach more women and landless youth.
Gizat Wellu with his family in front of his three beehives.
“My children were jealous of school friends who had a change of clothes,” says 40-year old Gizat Wellu, received two beehives from Farm Africa, plus training and equipment. “Now I can afford to buy them clothes.”
He produced 30kg of honey for which he earned about 140 birr (£4.50) a kilo. He paid off debts, installed a third beehive and bought enough food materials so his family eats three meals a day. After encouragement by Farm Africa he deposited money in the government-run savings and credit association.
It is left to village communities to decide who participates in the project, focusing on assisting landless youth and women.
“I’m very happy with the new experience,” says 22-year-old beekeeper Fana Fesseha, cradling her three-year-old daughter Samhal. “My family and I are excited because it should be successful – already we are getting advantages.”
She carried out a blue bucket full to the brim with 20kg of honey from her two beehives. She hopes to sell this for 120 birr (£3.90) a kilo at the market, 20 minutes’ walk away in the small town of Dibidibo.
She’s already sold 10kg to pay back loans and buy food. She’s keeping 300 birr (£9.50) as an emergency fund.
Fana Fesseha, a beneficiary of Farm Africa’s beekeeping programme, and her three-year-old daughter, Samhal.
“Early on the biggest challenge was the bees’ behaviour – I was a bit afraid of their stings. Since I’ve got used to them I can manage the beehives properly.”
Atsede Teku, 45, and her family used to sleep on traditional beds of stone and mud. Income and food was scarce and her marriage suffered and ended in separation.
The local community nominated her for Farm Africa’s irrigation programme, and she received irrigation training and equipment for a half hectare plot of land she already owned.
“I never expected this change,” says Atsede, whose harvest of garlic, onions and peppers has netted about 10,000 birr (£325). “Now my friends consider me a role model and visit to discuss farming.”
Her husband returned and the family built a new house and compound, and bought new beds.
But success varies individually. No programme is a guaranteed fix.
“Last year I was unlucky,” 33-year-old widow Nechi Aregawi says of one of her goats dying. Currently she has two goats and little extra income until they breed.
Nechi and two sons eat meat only three times a year to mark holidays. I ask if remarrying is an option. She laughs. “It’s not common around here,” she says.
“I have seen how my neighbours’ lives have changed much [through goat rearing],” Nechi says. “I hope my situation will change like theirs.”
Thanks to funding, the project is helping to support more than 12,000 people. The work is being extended until 2017 meaning it will reach even more people to help them to move closer to self-sustainability.
Haregeweyni Belay: ‘We’ll work hard until we defeat poverty.’
Haregeweyni Belay, 40, is another irrigation programme beneficiary.
“I’m optimistic about the future because we have started to fight poverty,” Haregeweyni says, one of her six children at her breast. “We’ll work hard until we defeat poverty.”
Her land’s output has improved through the programme and hand-operated irrigation equipment provided, she says, though a motorised pump would further boost the crop. What if Farm Africa can’t provide the pump?
“I’ll try and work the land to buy it myself,” she says.
Hussein Abdullah, the chairman of the Meti WaBub stands in front of the crowd explaining how his WaBuB came into reality and the system of ensuring the protection of the forest
In the evergreen area of Shebe-Belete Gera in the Jimma Zone of the Oromia Region, which is located 394km from the capital Addis Abeba, live 19,618 households whose life is unthinkable in separation with the forest they reside in. These people used to live there inheriting their gere, to mean boundary, from their ancestors. In the 122,611ha forest, live households that are members of the 124 WaBuBs, the Oromiffa abbreviation for the forest management association established in the Belete Gera area.
Through these WaBuBs, the forest dwellers commit themselves to protecting the forest environment. So, to remember their commitment, they always recite their seven pledges whenever they start and finish their regular meetings. The seven pledges are being a WaBub member and complying to its laws, protecting the forest and producing forest coffee, respecting wild animals and their respective habitat, conserving river banks and not cutting grasses along rivers, protecting water bodies and not disposing waste into the rivers and streams, not using agrochemicals in and around forest coffee and not mixing garden or plantation coffee with forest coffee.
Living in this forest and complying with the seven pledges of their associations, these forest dwellers produce forest coffee, which is certified by the Rain Forest Alliance and sell to the Zone’s Oromia Forest and Wildlife Enterprise (OFWE) at better than the market price, which in turn brings a premium value after export revenues are collected.
“The Ethiopian forest proclamation forbids people from living inside forests,” says Mohammed Said, Jimma Zone OFWE forest administration head. “But in reality, many live in forests, making their homes there and farming the land.”
The dense 122,611ha forest in the Shebe area, Belete Gera 50km away from the Zone’s capital Jimma
So in order to create harmony between the two, the implementation of the Participatory Forest Management (PFM) came into effect which resulted in the involvement of the Japan International Cooperation Agency (JICA) as a nongovernmental organization.
“The customary way of protecting forests like fencing, keeping guards and putting checkpoints did not protect the forest from destruction but the new PFM did,” says Mohammed.
The forest in the Belete Gera area is also endowed with the area’s precious gift to the world that the residents do not want to perish – coffee. Therefore, they get into the forest to collect the naturally grown forest coffee, also depleting the dense forest of 122,611ha.
In October 2003, the project called Certified Forest Coffee Production and Promotion Project or Forest Coffee Certification Project (FCCP) started with the help of JICA, which began by forming the first WaBub in a local place, Meti, with a membership of only 46 households, which slowly grew to 56 and reached 140, according to the Chairman of the Meti WaBuB, Hussein Abdullah. The farmers in the WaBub collect the coffee it yields and sell it to their respective cooperatives, which are seven in the target place.
The coffee produced from the forests is sold at a premium price as it is produced resilient to the environment and its quality is maintained through trainings.
The cooperatives buy the coffee from the farmers with an addition of two Birr or three Birr from the market price. One of the farmers and a member of the Meti WaBuB is Mustafa Abajihad, a father of five. He owns a land of one-hectare forest, out of which one third is coffee.
“As the coffee is in the forest, the yield is not as significant – I get three quintals to five quintals of coffee from my place,” he says.
The coffee produced from this forest used to be of low quality and was only used for home consumption and nearby local markets before the coming of the project in 2003, according to Kituma Jaleta, PFM-FCCP coordinator of JICA at Belete Gera.
“They used to dry the coffee cherries on land mixed with dust and other impurities, the picking was not even with the mixed collection of the ripe and unripe cherries, and they used to keep the beans with cow dung, which significantly affects the quality of the coffee they produce,” added Kituma.
Then after taking trainings through their WaBuBs, they improved their coffee quality and they promised to keep the forest they live in untouched, getting a premium value to the coffee they produce after it is sold in the foreign markets. Since then, they have been reciting their seven pledges.
With the operation of the WaBuBs, a system called Internal Control System (ICS) was put into effect with each WaBuB evaluating its members’ performance in protecting the forest under their control. The ICS, with 3,662 member households makes sure that the members complied with the seven pledges they always recite whenever they meet and report to the OFWE.
As the maintenance of the seven pledges is the source of their premium income, the dwellers there strive in keeping an eye on the forest and its animals and biodiversity. This is why the buyers in the West and the Far East look at the mark of certificate by Rainforest Alliance and pay the premium values.
“The coffee we produced was sold for no more than 50 Br and 60 Br for a bag of 17kg (of dried berries) before the coming of the project. Now, with the project, we are earning 400 Br for each,” says Mustafa.
Last year Mustafa sold six quintals of premium coffee, for which he was paid 1,890 Br on top of the original selling price. The chairman of the Meti WaBuB, Hussein, has got a hectare and half forest coffee under his mentorship from which he produces 15qt to 20qt a year. Last year, he sold 15,000 Br worth of premium coffee, for which he was later paid additional 2,000 Br as a premium payment.
The premium payment, according to Mustafa, is used for the cleaning of the land where the coffee grows, the preparation of drying beds and for some homestead expenses. He complains that the money was not enough, and that he would be getting double that amount if he could cut the trees in the forest and sell the wood.
“They have promised us to create opportunities to use older trees in the forest and make some money out of it to support our living,” says Mustafa.
The farmers there protect the forest from destruction and no one can expand their possession in the forest from what they already have in hand.
“Now the problem is that we have married children and they could not acquire new possessions in the forest except living in their families’ places,” he says. “This is a burden for the residents.”
Now only in the Meti WaBuB, there are 40 new households that have been created through marriage; they have erected their own cottages in the same compound as their parents, according to the Chairman.
The market chain for the forest coffee in the area is different from the other market structures of coffee marketing in the country. The coffee that the WaBuB farmers collect is directly sold to their respective cooperatives or the unions and then the coffee is sold to the OFWE, which in turn sells the coffee to the international coffee and brings back the premiums paid.
The farmers in the area started getting premium payment five years ago following certification by the Rainforest Alliance. The Alliance inspects the area every year to renew the certification.
“The farmers know the benefits of the forest better than any other person and they are also aware of the effects it will have when they cut the trees,” says Mohammed. “But they cut the trees in order to sustain their lives.”
This is why the premium value is paid for the coffee they produce so as to be compensation for the income they could have gained through the sale of forest products according to Mohammed.
The first JICA project that was finalised in March 2012 paid 2.8 million Br of premium to the members of the seven cooperatives. In the first round, the farmers were paid 1.1 million Br. Then they were paid 788,938 Br and 970,005 Br, respectively, in the second and the third rounds. But the fourth and the fifth rounds have yet to be paid which came to the disappointment of the farmers.
“The money that comes through the premium takes much time and we have to wait a year to get the payment of the coffee we sold,” says Mustafa.
The time taken for the disbursement of the coffee premium is because of the process in the exportation of the coffee and the return of the premium, according to Mohammed.
“But the fourth round payment was delayed because of the low quality of the coffee exported,” says Mohammed. “But now we have received the payment and it will be disbursed with the fifth round payment.”
When the first JICA project in the area was completed in March 2012, the second round began in July 2014 and it will last until December 2019- for five and half years.
A mobile solar wagon, developed by students of Arba Minch University
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Electric-power supply must improve in most developing countries, including Ethiopia. Typically, national grids do not cover rural areas appropriately – and it does not make sense to wait for that to finally change. The standard of life can improve and new additional income opportunities can be created without fixed power lines, for instance thanks to photovoltaics (PV), as Engidaw Abel Hailu of Ehtiopia’s Arba Minch University told Hans-Christoph Neidlein in an interview.
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What role does solar energy play in providing electricity to rural people in Ethiopia?
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Most of Ethiopia is rural, and most people do not have access to the national power grid. Only a small minority can afford diesel-generators, which are expensive. Moreover, diesel is not always available. Accordingly, stand-alone photovoltaic systems that need no connection to the national grid are very useful. At the moment, more than 13,200 stand-alone PV systems are installed in the country.
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Does such off-grid technology help to create jobs?
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I see a huge potential. These applications serve small-scale enterprises. For example, farmers can run small flour mills with solar power. They become able to sell flour in local markets and not only grain, which is less valuable. Moreover, they can operate off-grid water pumps. They can also use appliances like this to serve other farmers and charge money for such services. Some villagers have solar kiosks and recharge mobile phones and other devices. They also sell cooled beverages. PV systems allow rural people to offer and enjoy options that used to be available only in urban areas. In a village near Arba Minch, we introduced a solar-powered hair saloon, and it was full of customers right from the start. PV definitely improves opportunities for earning money – as well as the standard of life in general.
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Are PV systems and components manufactured locally?
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Well, in the long term, as the market grows, I think there will be scope for local production of at least some components, so additional jobs will be created that way. At the moment, most components and systems are imported from Europe and China.
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In advanced countries, prices for PV systems have dropped dramatically in recent years. Has the technology become affordable in Ethiopia?
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Yes, prices have been coming down fast. Today, you can get a 60 Watt system for 12,000 Birr or so, that is the equivalent of € 450. One year ago, the price was around 20,000 Birr. Per kilowatt hour, off-grid solar power now costs not quite 10 Birr. That is much cheaper than diesel-generated power, which costs more than 30 Birr per kilowatt hour. A small enterprise that invests in a stand-alone system can break even in one to two years.
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That sounds good, but can rural people afford such investments?
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Well, in some places people have access to micro-finance institutions (MFIs), and the interest rates they pay are 10 % to 15 %. However, the micro-finance system needs to be expanded to the entire country. Moreover, many small businesses struggle to meet MFI conditions. For instance, some MFIs expect entrepreneurs to already have at least 20 % of the capital needed. On the other hand, many rural people do not have a registered address, which is another thing MFIs require. Lots of poor people do not even have documents that would prove that they own their homes.
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Could the government do something to make funding more easily available?
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In view of people’s poverty, it would be great if the government would grant direct funding. But it has been helping in other ways. Solar systems are exempted from taxes and import duties. That really matters.
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How important are education and advanced training?
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Education is crucial. So far, many people simply do not know much about off-grid power supply. Ethiopia’s Ministry of Energy has started to support advanced training for solar electricians. Foreign agencies are also contributing to raising awareness in rural schools or health centres. It is vitally important to reach out to the rural population. Solar systems are easy to operate, but one must command some basic skills and understand the technology.
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What is Arba Minch University doing in this field?
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Four years ago, we set up a solar competence centre in cooperation with Sahay Solar Africa, a German non-governmental organisation. We are training engineers and electricians. So far, we have trained over 300 students. We also go out to the rural areas and teach local people. In cooperation with Neu-Ulm University of Applied Sciences, we are running an applied entrepreneurship education programme (AEEP). The goal is to develop new business ideas based on off-grid applications. The German Academic Exchange Service (DAAD) and private companies are involved in the programme too. We want to incubate new businesses in cooperation with German partners. The focus is on business and management aspects, whereas our competence centre is promoting technological skills. Seven of our tutors spent eight weeks in Neu- Ulm this year and were taught there. Afterwards, we held courses in and near Arba Minch this summer with around 50 students.
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Are there any tangible results?
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Yes, there are. Our students have developed several products and business ideas like mobile solar wagons with charging stations, mobile solar photo studios with a laptop and printer or a mobile ice cream machine. They developed a system for franchising those products to local people. We are currently testing the scheme in the area around Arba Minch as well as in Laka, a mountain village some 60 kilometres away from the town. We are getting along pretty well, although we do face challenges such as heavy rainfalls and flooded streets in the mountain areas.
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Is the involvement of private-sector companies important?
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Yes, it is a crucial issue. It helps us that we can build on practical experience of companies like Phaesun from Germany. Phaesun specialises in off-grid systems and has been active in Ethiopia for some time. It inspires our students to see that PV is indeed commercially viable, even at an international level.
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Engidaw Abel Hailuheads the Solar Competence Center at Arba Minch University in Ethiopia.
Speaking at the Turkey-Ethiopia Business Forum, President Recep Tayyip Erdoğan said that Turkey is trying to build not only commercial and economic ties with Africa, but also, as a country aware of Africa’s problems and its potential, wants to support African countries “in all platforms.” He underlined that they want to improve relations with Ethiopia in order to compensate for the 10-year gap in relations, when the government’s latest Africa initiative program was implemented. Erdoğan said that the program was successful and now the ties that have been established need to be strengthened by taking mutual steps. Erdoğan said that with its potential and human-resources, and as the host of the Organization of African Unity, Ethiopia is the center of the continent.
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Claiming that the trade volume between Turkey and Ethiopia has reached $421 million as of the end of 2013, Erdoğan said that while there would be a decline in figures in 2014, as the data collected in the first 11 months of 2014 indicated, the trade volume will remain around the $400 million mark.
“Our target is to increase the trade volume to $500 million since both countries together have a population of around 173 million, which means there is a very high potential for trade. We have to start working towards signing an Economic Partnership Agreement to establish a free trade zone as the leading economic actors in the region,” said the President. He said that such matters were discussed during the meeting and Ethiopia is among the African countries that Turkey invests the most in, with investment figures reaching around $3 billion. Erdoğan further said that he is happy about the situation for Turkish investors, whose reputations have gone up after their work in Ethiopia.
He further said that 14 projects, working out to about $2.5 billion worth of invest, has been assumed by Turkish firms and the most important one of these projects was the Avas-Veldia Railway Project, which when completed will be one of the most important achievements of the Turkish construction sector.
President Erdoğan also called on Turkish businessmen to invest in Ethiopia and said “There is a country that invites you sincerely and is ready to make things easier for you. I want you to do business here in harmony with the Ethiopian people, while taking into consideration the circumstances of the country. I believe our cooperation will be developed strongly.” He further gave examples from the areas available to invest, like building hydroelectric power station, potable water installation, solar power, geothermal and agriculture, which Ethiopian Prime Minister Hailemariam Desalegn promised to assist Turkish businessmen with and provide land for.
African DCM becoming more sophisticated; Debt sustainability a concern.
Africa’s Eurobond market closed 2014 on a high, following soaring investor demand for Ethiopia’s debut offering. The $1 billion 10-year debut Eurobond, which was priced at 6.625% over 10 years, boasted $2.6 billion in orders.
“The order book was of the highest quality, with fund managers taking up 96% of the bond. It was a tremendous inaugural transaction to end the year with,” says Maryam Khosrowshahi, head of public sector coverage CEEMEA at Deutsche Bank who worked on the deal.
Some 50% of the bond was taken up by fund managers in the US, 35% from the UK and 14% from the rest of Europe. Deutsche Bank and JPMorgan were the lead managers and Lazard advised the Ethiopian government.
The money raised from Ethiopia’s deal will finance a variety of programmes in the country, including projects in the health, education, sugar and energy sectors, as well as the development of economic zones in the country, says Khosrowshahi.
Ethiopia’s successful debut follows Kenya’s debut Eurobond in June, Côte d’Ivoire’s return to the debt capital markets in July – three years after the sovereign defaulted on its 2032 Eurobond – and returns to the market by Ghana and Zambia, among others.
According to Dealogic, there have been nine sovereign Eurobonds from Africa this year worth $8.5 billion. This was marginally less than 2013 which saw 10 deals completed at $10.7 billion.
“We should continue to see issuance from the continent next year,” says Khosrowshahi. “African sovereigns with strong economic performance and prospects should be able to garner investor interest and support once the backdrop is more constructive in the New Year.”
Nicholas Samara, vice-president of CEEMEA DCM at Citi says: “I’m not sure we will see such high volumes in 2015 because large chunks of debt were issued from Africa in 2014. But what we should note is that sub-Saharan Africa is becoming more sophisticated in terms of the development of the capital markets.”
Samara adds: “ Kenya’s issue earlier this year is a great example. The $2 billion Eurobond was spread over two tranches and six months later, the government re-opened the sovereign bond to raise an additional $750 million. This is something that has never happened in sub-Saharan Africa outside of South Africa before.”
Ethiopia’s success comes despite a challenging backdrop. Plummeting oil prices this year have put pressure on commodity exporters in Africa such as Nigeria, Gabon and Angola and pushed up rates for some African securities in the secondary market. Nigerian borrowing costs are now higher than Kenya, Rwanda, Senegal and Ivory Coast, despite the fact that they all have lower credit ratings than Nigeria.
The falling oil price may actually be beneficial for Ethiopia as 20% of the country’s imports of goods is purely spent on fuel – quite a substantial amount. Lower global oil prices may help to plug the current account deficitAmelie Roux, Fitch Ratings
“The falling oil price may actually be beneficial for Ethiopia as 20% of the country’s imports of goods is purely spent on fuel – quite a substantial amount. Lower global oil prices may help to plug the current account deficit,” says Amelie Roux, analyst at Fitch Ratings based in Paris.
Ethiopia’s current account deficit widened to 8.6% of GDP in 2014 from 5.9% a year earlier.
Investors were drawn to Ethiopia’s debut as a diversification play away from oil, says Khosrowshahi, as Ethiopia’s economy is driven by the agriculture, industry and service sectors.
“What is also important to note, however, is that the plummeting oil price has affected secondary bond trading for all countries with links to oil,” she says. “While Africa is the last frontier, the last emerging market region which investors can expect to benefit from real growth, the region is also becoming more and more integrated into the global capital markets landscape. It’s a good sign.”
Debt sustainability, however, may be an issue, with FX reserves in Ethiopia covering less than two months of exports. “This is low in absolute terms and low in comparison to Ethiopia’s peers. To manage this will be difficult and the government will need to make structural changes to the economy to change this,” says Roux.
But as Khosrowshahi says: “Debt to GDP levels in Ethiopia are low. Central government debt to GDP is 22%. Public sector debt to GDP is 46%. The country has had strong GDP growth over a number of years, and significant focused investment in social, infrastructure, and industrial development should contribute to maintaining similar economic expansion in the years to come.”
“While FX reserves are low, investing in tertiary sectors will help with debt sustainability. Debt to GDP levels in Ethiopia are lower today than they were in the last decade following the debt relief package by the IMF. There aren’t that many countries in Africa with such good metrics,” says Samara.
GDP growth for Ethiopia has averaged 10.9% between 2004 and 2013 compared to a regional average of 5.3%, according to the World Bank.
But Ethiopia has long been closed off to foreign investment, with the banking and telecoms sectors kept exclusively for locals, and the public investment effort has been financed by domestic credit, bilateral loans – usually from Chinese lenders – or concessional loans from the World Bank.
“Ethiopia has exhausted these avenues. For instance, domestic credit is not enough to fuel the country’s huge infrastructure needs: The country’s stock of domestic credit is around 30% of GDP, not that low, but not enough for what the country needs,” says Roux.
“The Eurobond issue is an indicator that the country is looking for alternative sources of funding and highlights the country’s need for dollar funding in particular. It may also be an indication that the country is starting to open up to international investors more generally,” she says.
Indonesian investors to set up factories in Ethiopia
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Addis Ababa – Two Indonesian investors will start noodle and soap production in July 2015.
In a meeting with the Ethiopian Minister of Foreign Affairs Dr. Tedros Adhanom, the newly appointed Indonesian Ambassador to Ethiopia, Ambassador Imam Santos, pledged to focus on boosting trade and investment recognizing that there is a great potential for growth.
Dr. Tedros welcomed the ambassador to Ethiopia and expressed his wishes for a successful tenure.
Indonesia first opened its embassy in Addis Ababa in 1964 and various Indonesian investors have established several businesses in electronics and detergent production.
The Ethiopian Road Construction Corporation (ERCC) presented its 6 month report for stakeholders yesterday here at the Global Hotel.
Presenting the report, Planning and Business Development Department Manager Yared Lema said that as the Corporation has 60 years of experience on road and bridge construction and maintenance, it was able to construct 130.6 km and repair 6,981-kms road, a performance well above the half year plan: 101 and 142 per cent respectively.
Among the projects, the Zarema-Mayitsebri and the Mayitsebri-Shire are completed while the Chancho-Derba-Becho, Kong-Bogundi-Wonbera and the Sugar Development Linkage Roads are under construction, he added.
ERCC General Manager Eng. Habtamu Tegegne noted that the Corporation has exerted due efforts for the last six months in conducting construction works with standards, providing the necessary components for road construction projects on a timely and balanced basis, pursuing and evaluating the completion of the projects.
Before ERCC separated from the Ethiopian Road Authority, it had been an operational wing and has acquired the experience of road construction for 60 years.
The Corporation has also given capacity building training to 5,275 permanent and 9,790 contract employees besides improving the nine road construction project offices and the ten road maintenance offices throughout the country.
The office will provide a foothold for the South African bank to build relationships with local businesses.
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NAIROBI -South Africa’s Standard Bank aims to open a representative office in Ethiopia by the end of March, joining others eyeing a fast growing African economy although foreigners are barred from offering commercial banking services there.
The office will provide a foothold for the South African bank to build relationships with local businesses and develop market intelligence to help advise clients interested in investing in Africa’s second most populous country.
It will not offer commercial banking services, such as taking deposits or lending, as only Ethiopian state-owned or private institutions are allowed to run such operations.
“We are looking to open up a representative office, hopefully by the end of March this year,” Taitu Wondwosen, a senior vice president at Standard Bank who will become the representative, told Reuters.
“We go where our clients are. More and more of our clients are starting to ask about Ethiopia,” said Wondwosen, whose bank has operations across the continent. “It just makes sense to for us to start to get to know Ethiopia.”
Ethiopia, a market of about 96 million people whose agriculture-dependent economy has been growing at eight percent or more a year, has been heavily investing in new roads, railways and power plants to attract manufacturers and other investors.
Foreigners are restricted from areas such as banking and telecoms, but Ethiopia offers attractions because of its new infrastructure and as labour and other costs in Asia and elsewhere rise.
Wondwosen said clients and potential investors had shown interest in manufacturing, such as the textile industry, construction and infrastructure work, as well as other areas
Addis Ababa -A textile technology park, aiming to assist the sector in skilled manpower and technology will be set up in Ethiopia. The Ethiopia-South Korea Textile Industry Linkage summit is being held in Ethiopia.
State Minister of Industry Mebrahtu Meles (PhD) said the meeting will enable Ethiopia to share from South Korea’s vast experience in the sector. The textile technology park will be established learning from the experiences of South Korea, he added.
The park will will be piloting operations at the Bole Lemi Industrial Zone and will be replicated in other industry zones.
Qatari investors plan new cement plant in Ethiopia
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A Qatari business group plans to invest US$500 million in Ethiopia, according to reports.
The group met with Ethiopia’s president to discuss their investment plans, which include a cement plant in Dire Dawa, a sugar factory and other industrial facilities.
No specifics have been announced as to the capacity of the cement plant.
Ethiopia’s Ministry of Industry has released a draft Cement Industry Development Strategy with the aim of increasing cement consumption to 20 million tonnes within 10 years from its current level of 6 million tonnes.
Greenfield and expansion projects are underway in the country, which earned almost US$10 million from cement exports in the last full budget year.
Current capacity is at around 15.7 million tonnes.
Close to Half of ERC Trains Being Assembled in Addis Ababa
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Some nine additional trains that have arrived here are being assembled by Ethiopian professionals, according to the Ethiopian Railway Corporation (ERC).
ERC Public Relations Head Dereje Tefera told ENA that out of the 41 trains that are being produced in China, 19 are being assembled in Addis Ababa.
The remaining 22 trains are expected to reach the country by the end of this Ethiopian fiscal year, he said.The trains are being assembled at Kaliti Depot by professional compatriots, it was learned.
Upon completion, each train will transport over 200 passengers. The light railway system, which is scheduled to begin road-test next month, will have 39 stations.
The total cost of the project is 475 million USD, it was indicated.
Meles Referral Hospital to go operational next month
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Meles Zenawi Memorial Referral Hospital built at a cost of 200 million birr in Somali Regional State will go operational next month, according to the regional state health bureau.
The hospital, named after the late Prime Minister Meles Zenawi, remained idle for more than a year after completion due to lack of the necessary facilities and skilled manpower, Dr. Umer Mohammed, head of the bureau told WIC.
The hospital will begin rendering service at the 2nd week of February as it was furnished with the necessary water and electricity facilities, including hiring of 100 health professionals and the purchase of 270 beds.
According to Dr Umer, internal diagnosis, emergency, child and maternal care are among the health services that the hospital will provide initially. But it will provide all variety of health care services in the future.
The hospital will serve 5 million people from the Somali and neighbouring regions.
Addis Ababa – The Chinese company Poly Technologies, already engaged in natural gas and petroleum exploration projects in Ethiopia, announced its desire to produce potash in the country.
Vice President of the Company Mr. Li met President Mulatu Teshome and discussed the company’s activities in the country. President Mulatu on the occasion noted that the company is performing very well and expressed his encouragement for the company to conduct its projects with efficiency.
The President added, Poly Technologies will play a crucial role in the industrial transformation of the country with its production of petroleum and potash.
Mr. Li on his part said the company will strive for quality and efficiency and aims to create job opportunities for more than 700 Ethiopians before the year 2016.
Yayu Fertilizer Factory (as conceived above) lies on 54,000sqm and will be a multi complex factory consisting two Urea manufacturing plants, one DAP manufacturing plant, a coal mining and chemical manufacturing.
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Tekleberhan Ambaye Construction Plc (TACON) resumed the construction of Yayu Fertilizer Factory building after settling the problem it had with the Metal & Engineering Corporation (MetEC) three weeks ago.
TACON was subcontracted by the MetEC for two billion Birr in 2012 for the construction of the civil work of Yayu Fertilizer Factory. MetEC was awarded the project the same year from the Ministry of Industry (MoI) after revising the cost of the project to 540 million dollars from the initial price of 730 million dollars that was given by the a Chinese firm called China National Complete Plant Import & Export Corporation (COMPLANT).
Yayu is a multi-complex of industries that will have two Urea and one DAP fertilizer manufacturing plants, a coal mining plant and a chemical manufacturing plant that will manufacture chemical inputs for the fertilizer factories.
The subcontractor finalized the site clearing for the power plant terminal, gas disposal plant and ammonia and Urea units and a place for the installation of six machineries. It made a 20pc progress on the construction of the basement and column for the structure of the factory, which is located at Yayu Wereda, Illubabor zone in Oromia Regional State, 600Km West of Addis Ababa.
But 10 months prior, the construction was quit by TACON following the disagreement with MetEC because MetEC did not pay the total down payment for TACON, which is 30pc of the two billion Br, according to sources. But Michael Desta, head of public and foreign relations at MetEC said the construction was halted because of heavy rain at the area.
“MetEC did not make the down payment to TACON not because of financial problem but rather due to bureaucracy at the financial department of the corporation,’’ a source close to the case told to Fortune.
The negotiation for the resumption of the contract started two months ago following the initiation that came from the director general of MetEC, Kinfe Dagnew (B. Gen) and Siefu Ambaye chief executive officer (CEO) of TACON. They had a discussion on the issue, which was finalized with the agreement that TACON would resume construction with a promise from the officials of MetEC it will get the payment in shorter period of time, according to sources.
About 14 years ago, the government set up a Coal Phosphate Fertilizer Complex Project Office to study the potential of a fertilizer factory at Yayu and the office conducted feasibility studies including socioeconomic impacts, geological and environmental studies with Chinese companies such as Ging Sion Explorer and China National Complete Plant Import and Export Corporation (COMPLANT), which resulted with finding of 100 million tons of coal is saturated at Yayu area.
The coal mine has the potential to produce 300,000tns of Urea, 250,000tns of DAP fertilizer, 20,000tns of ethanol and 90MW of electric power annually with 730 million dollar project cost. But MetEC revised the study and offered 540 million dollars for the project, which led it to sign a deal with the Ministry of Industry (MoI) in 2012.
Yayu will lie on 54,000sqm plot and its Part One of the project of Urea manufacturing plant will have a production capacity of 300,000tns of Urea annually using 9.2 million tonnes of coal with 35,000 workers. The factory will have 75,000tn of solid waste product that can be used as an input for the production of construction input materials such as brick and cement.
The civil works to be constructed by TACON includes the structure of the building and MetEC will work on the mechanical part including the machineries that will be made by Hibret Manufacturing & Machine Building Industry (HMMBI), one of the MetEC companies engaged with manufacturing industrial machinery and spare parts. Some parts of the machineries will be imported from South Korea as the design of mechanical parts was conducted with the collaboration of the Korean government. Addis Abeba Institute of Technology (AAiT) is a consultant of the project.
The factory that was expected to be completed by the end of the current fiscal year of 2014/15 only has a 20pc progress and it was set out to minimize the import of fertilizer to the country as one of the five companies the government plans to construct with 2.8 billion dollars. Three of them are at Yayu, and two at Bale Melka Arba one single phosphate fertilizer factory and one triple super phosphate manufacturing factories.
In Ethiopia, an agrarian country, a total of 16 million hectares of land are used for agricultural purposes. An estimated 12 million hectares of the total area are used for growing food grains. The government imported 552,000tns of fertilizer in 2010/11 and 560,000tn the following year. Its imports in 2012/13 were down to 477,000tns. For the current fiscal year, the government is importing 900,000ql of fertilizer with a total cost of 431.9 million dollars from five companies.
President Mulatu Teshome (PhD) and his entourage had paid a visit to the western part of Ethiopia two weeks ago. The visit signifies the government’s realisation of the urgency to exert every possible effort to optimise the amount of foreign currency reserve the country should have, either by way of improving the country’s export earnings or by way of import substitution. The presidential tour had focused on both the optimisation aspect and the import substitution.
Export of processed coffee and the plan to establish a fertilizer producing company at Yayu, 581Km west of the capital, satisfy both aspects. This is not to speak about the much more important ethno-geopolitical impact the tour might have.
Whether one likes it or not, it is a national truth today that Oromia is not only the most populated, but also the most endowed with natural resources, including precious stones that make some indents in the world market. Critics add that most of the prisons and their occupants are also found in the same region.
Some wonder why the Ethiopian military structural hierarchy does not reflect either the number of the population or the economic contribution of the region to the national treasury. By all accounts, the region had remained the lactating cow of the aristocracy for years on end.
That takes me back over four decades when I had to make an economic survey for the installation of telephone network in the region. I remember there was not much recorded material to suggest who came there to settle first and why the land tillers had to be subservient to the land lords and what rights did they have to own some property there.
On a national level, Western Oromia Zone had very little share of the budget for any kind of modernisation except for the transitory link of asphalt road up to Bonga. About three decades ago, Bedele Brewery was established. I had visited the factory and I remember having resentment in regards to why a brewery was given priority instead of dairy production or something else productive.
The planned fertilizer factory at Yayu, in the proximity of Mettu, if it is realized in earnest, shall be the first productive investment in the area. The brewery has only been a consumable producer.
The Yayu Fertilizer Factory, on the other hand, is going to be productive. The basic economic implication will be import substitution. The foreign exchange required to pay for the import of fertilizers would be saved.
Backward and forward linkages would have significant socio-economic implications around the factory. President Mulatu has also said that Yayu shall soon grow into a planned small town where town planners and architects shall use their knowledge to plan an ideal town for settlement by both farmers of the surrounding villages and the factory workers.
Packaging firms making use of the farming products and transiting infrastructure as well as the construction of massive warehouses to be used as stores can be established at strategic spots. Small delivery vans or even horse-driven carts could be used to deliver house-to-house services. The cost of the fertilizers shall be reduced to an affordable minimum, which shall be reflected on the price of food in the country.
The residual by-products of the factory may induce the establishment of other factories, which eventually reduce the cost of import.
By virtue of it being very large, the regional state has also benefited from the government’s distributive growth policy. Many universities have been opened in many zones of the region.
There is no denying the fact that a few high profile political positions are filled by Oromo individuals. But that does not entail equitable power distribution commensurate with the population number and the economic contributions made by the region.
Oromia is not represented proportionally down the line of governance in all the offices of the bureaucracy. It is hoped that the recent visit of the president and the socio-economic implication of the focus on their processing of coffee production and the Yayu fertilizer manufacturing plant could be streamlined into the right track.
Could the oncoming political election make any indent?
Some people may argue that the industries established in the country so far are located in the region. But this is mainly because of the proximity of the capital and the advantages drawn from the existing infrastructure conducive to the industries and their ability to dispose them to the nearest market or outlet for export.
But the Yayu project is hoped to be a game changer in the transformation process of changing the subsistence farming into productive commercial farming with better yields and more employment opportunities for the youth who could be graduates from these institutes of higher learning.
Ethiopia raised $1 billion in a debut international bond issue today, taking advantage of record demand for high-yielding African debt to fund electricity, railway and sugar-industry projects.
European oil trader Vitol is likely to clinch a term deal to supply nearly 1.2 million tonnes of oil products into Ethiopia for next year, industry sources said.
Calzedonia, Italian Garment Company is to invest in textile industry in Ethiopia.
Ethiopian Railways Corporation (ERC) yesterday concluded an agreement with China Railways Group and Shengen Meter Group for the maintenance and management of Addis Ababa Light Rail Transit (AA-LRT).
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