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Ethiopia Plans Manufacturing Hub With $10 Billion Factory Parks
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Growth in Ethiopia has surpassed every other sub-Saharan country over the past decade and is forecast by the International Monetary Fund to exceed 8 percent over the next two years. The state-planned economy is opening up to foreign investors following its sale of $1 billion of Eurobonds last year and plans to start an equities and secondary debt market, London-based Exotix, which has a buy rating on the Eurobonds, said May 7.
American clothing company Phillips-Van Heusen Corp., which owns the Tommy Hilfiger and Calvin Klein brands, is considering using suppliers at an industrial park in Hawassa, south of Addis Ababa, the government said last month. Hennes & Mauritz AB, Europe’s second-largest clothing retailer, already sources from three factories in Ethiopia, where wages can be as little as a tenth of China’s and access to the U.S. market is duty free under the African Growth and Opportunity Act.
‘Major Solution’
Ethiopia’s manufacturing industry is valued at about $1.35 billion, compared with $48.1 billion in South Africa, according to World Bank data.
Ethiopia had targeted a 15-fold increase in textile and leather exports to $1.5 billion in a five-year plan that finishes in July, the end of the country’s fiscal year. That surge didn’t take place because of a lack of specialized parks with services including utilities, banks, customs and transport links, said Arkebe, who is chairman of the state-run Industrial Parks Development Corp.
Total manufacturing shipments earned $262 million in the first eight months of this fiscal year, up 10 percent from the previous year. Investing in industrial parks will be “a major solution to the problems,” Arkebe said.
200,000 Jobs
The government will use about half of the funds from the Eurobond to develop parks in the financial year that begins July 8, he said. The government’s so-called Vision 2025 sees manufacturing expanding 25 percent a year and creating employment for 200,000 Ethiopians annually, Arkebe said.
The World Bank is spending $250 million on a second industrial zone at Bole Lemi, on the edge of Addis Ababa. In October, Shin Textile Solutions Co. of South Korea moved into the existing factory park at Bole Lemi, employing 3,000 people, Arkebe said.
A textile park opened in Hawassa in April and construction begins this month on zones in Dire Dawa and Adama, which are both on Ethiopia’s main trade route to a port in neighboring Djibouti, according to Arkebe. Kombolcha and Mekele will also be manufacturing centers.
Electric railways costing $4 million per kilometer will serve the environmentally friendly parks, which will be “almost” rent free for private developers and will include tax incentives, said Arkebe.
Chinese Funding
One project connecting Addis Ababa with the cities of Jimma, Bedele and Ambo began last week. Chinese banks will “mainly” finance the 491-kilometer (305-mile) rail link, he said. Another railway from a port in the Djiboutian town of Tadjourah port to Bahir Dar city and from the capital south to the cities of Awassa and Arba Minch will be completed by July 2020, Arkebe said.
Separately, the government says a Chinese-funded track from Addis Ababa to Djibouti will be completed this year. Work is also continuing on a $1.7 billion line that goes through Kombolcha, funded by the Export Credit Bank of Turkey and Credit Suisse Group AG.
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Repi Wilmar Alleges Seven Billion Birr Investment on 14 Factories
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This significant investment will contribute to diversification of the manufacturing sector and boost exports.
Sabir Argaw, chair of Alsam Group, Muktar Kedir, President of Oromia Region Head, Hailemariam Dessalegn, Prime Minister of the republic, Tadesse Haile, state Minister of the Ministry of Industry and Kuok Koon Hong, chair of Wilmar International unveiling the cornerstone at the 100ha of land in Sebetta.
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Establishing a Grade-1 construction firm or negotiating a deal with a Chinese construction firm – both in four weeks – are the options for the businessman who had Prime Minister Hailemariam Desalegn laying a foundation stone last week for what is claimed to be a seven billion Birr investment on 14 new factories.
Construction will begin on June 15, 2015, said Kamil Sabir, the managing director of the Repi Wilmar Manufacturing Complex on May 10, 2015, when the Prime Minister graced the huge tract of land, 100ha, which the company leased in Sebeta, 25kms south of Addis in the Oromia regional state. But as of now the company is yet to decide who will undertake the construction work.
Repi Wilmar is a company established by Repi Soap & Detergent Factory and Wilmar International Ltd, a Singapore company, with 50pc share each.
Repi, a company in the Alsam Group, is one of the major importers of edible oil in the country. It formed Repi Wilmar in August 2014 after eight of its executives visited the different factories of Wilmar.
The first phase of the construction, which will be conducted with an investment of 3.5 billion Birr, will build 10 of the total 14 factories. The factories to be constructed in the first phase include a palm oil refinery, soap detergent factory, and a sodium silicate melting and packaging plant. These are planned to be completed within 18 months, according to Kamil.
The second phase of the factories will see the construction of a wheat milling factory, fertiliser factory, pasta factory and a soybean oil refinery.
“The products to be produced by the complex are intended to supply the Ethiopian consumer market as well as for export to surrounding countries,” said Kamil.
The planned export destinations are Sudan, Somalia, Yemen and Kenya, with the anticipated operation of Ethiopia’s railway projects to facilitate transportation.
The transformation of traders to manufacturers in their particular fields, is one of the major considerations of the coming Growth and Transformation Plan (GTP II), said Hailemariam who was with Muktar Kedir, president of Oromia as well as other officials.
The first of the 14 factories, which will be the palm oil refinery, will come in two year’s time and will have the capacity of producing 420,000tn a year, which is intended to cover 80pc of the total market share. This factory will use crude oil imported from Singapore and Malaysia, which will be transported on Wilmar’s ships.
Wilmar, which currently processes and merchandises palm oil, is the owner of oil palm plantations in Asia, an oilseed crusher in China and manufacturer of the oil brand named Viking for the Ethiopian market.
“We are not strangers to the Ethiopian market,” said Kuok Koon Hong, chairman of Wilmar International. “We intend to duplicate many of our manufacturing plants in Ethiopia.”
For the simplification of transporting crude oil, Repi Wilmar will also construct a depot in Djibouti on a 60,000sqm plot of land.
According to Kamil, soil testing will begin this week, for the coming construction. Kamil did not say, however, how Repi Wilmar could establish a Grade-1 construction company and be ready to begin construction in four weeks. However, he said that if the construction company is not established, then they will talk with CREC, the Chinese company undertaking the construction of the light rail transit in Addis Abeba.
http://addisfortune.net/articles/repi-wilmar-alleges-seven-billion-birr-investment-on-14-factories/
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Addis Ababa – Mieso Railway commences test ride
Addis Ababa: May 18, 2015 – Part of the Ethio-Djibouti railway, the Addis-Sebeta-Mieso rail had been successfully laid over the past few weeks.
The Corporation’s Communication Services Head Dereje Tefera told fanabc.com that the commencement of the test will be attended by several high ranking officials.
The project is expected to be completed by October, boosting the country’s import-export fright moving capabilities.
http://www.fanabc.com/english/index.php/component/k2/item/2948?Itemid=674
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Awash Melkasa to Begin Hydrogen Peroxide Production at 234m Birr Plant
Admassu Kabeto, the company’s CEO
Awash Melkasa Aluminum Sulphate & Sulfuric Acid S.C. will begin production of hydrogen peroxide, a major input in the textile industry, by the end of June, 2015 at a plant it established at a cost of 234 million Br.
The factory is located on 9,000sqm at Awash Melkasa, around 107Km from Addis Abeba. The state-owned company currently produces around 13,000tn of aluminum sulphate and 17,000tn of sulfuric acid annually, which are used in the production of leather, car batteries, cotton, and for water treatment.
In the 2013/14 fiscal year, the company generated revenue of around 80 million Br, which was followed with a plan for 100 million Br for 2014/15.
The company signed a turnkey contract with Nuberg Engineering Limited for the construction of the hydrogen peroxide manufacturing plant, which will have a production capacity of 4,500tn annually. The project is based on findings of a feasibility study conducted by Industrial Project Services, which is under the Privatization & Public Enterprises Supervising Agency (PPESA). Construction started in August 2013.
Nuberg Engineering Limited, established in 1996, is an Indian maker of manufacturing equipment for various chemical plants, according to its website.
Currently, Awash Melkasa’s plant is going through a pre-commissioning process, said Admassu Kabeto, the company’s CEO. On the first of June, it will start the commissioning process, which will take about one month, followed by the completion of the project, he added.
Awash Melkasa Alumunium Sulphate & Sulphuric Acid S.C factory, which produces sulphuric acid and alumunum sulphate, is located 107Km from Addis Abeba at Awash Melkasa.
The demand for hydrogen peroxide in Ethiopia can reach up to 900tn annually on average, according to the study by Industrial Project Service. In the 2014 fiscal year, around 678tn of hydrogen peroxide, worth 908,258 dollars, was imported into the country, according to the Ethiopian Revenues & Customs Authority.
Awassa Textile, which is owned by Dukem Textile Plc, uses imported hydrogen peroxide for bleaching cotton. The textile factory, established in 1989, had been under state ownership but in 2011, the ownership was transferred to Dukem Textile Plc at a cost of 37 million Br. The company uses 400Kg of hydrogen peroxide monthly at a cost of 7,600Br to produce four tonnes of textile on a daily basis, said Tariku Assefa, purchasing head of Awassa Textile S.C.
There are 130 medium and large scale textile factories in Ethiopia, of which 37 are owned by foreign investors. For the first Growth & Transformation Plan (GTP) period, the government has earned around 427 million dollars from the textile export trade, less than half the one billion dollars it had planned.
In addition to use in the textile industry, hydrogen peroxide can also be used in the production of pulp, paper, milk treatment and cosmetics.
In the international market hydrogen peroxide is sold for around 20 Br per kilogram. Admassu says their company will break into the market with a price of 14Br a kilogram.
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Adama II wind farm inaugurated
Addis Ababa: May 18, 2015 – The project, an extension of the Adama I wind farm, generating 51mw power, have 102 turbines each with an installed capacity of 1.5mw.
The government has planned and engaged in developing energy from renewable sources, including hydro, wind, solar and geothermal.
The Adama II project will raise the country’s power generating capacity from wind to 324mw combined with Adama I and the 120mw, 84-turbine wind farm in Ashegoda, which is Africa’s biggest.
The country plans to boost electricity generating capacity from 2,000mw to 10,000mw within the coming few years, much of it coming from the 6,000mw Renaissance Dam under construction on the Nile.
Experts put Ethiopia’s hydropower potential at around 45,000mw and geothermal at 5,000mw, while its wind power potential is believed to be Africa’s third-largest behind Egypt and Morocco.
http://www.fanabc.com/english/index.php/component/k2/item/2947?Itemid=674
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Ethiopia expanding road link with neighboring countries
Addis Ababa: May 18, 2015 –More than 750km roads are being undertaken to link the nation with neighboring countries.
The road projects will provide Ethiopia additional access to ports and increase trade ties with the countries, said Sisay Bekele, acting Director-General of the Ethiopian Roads Authority.
Some of the roads are part of the Trans-Africa Highway system, a continental initiative aimed at linking the continent with road.
The 499km Addis Ababa-Nirobi-Mombasa road is among them. This project is part of the 10,228km Cairo–Gaborone–(Pretoria/Cape Town) highway.
The road linking the country with South Sudan and Djibouti are also being underway, he said.
Construction of the ongoing roads will increase the total length of roads that connect the nation with neighboring countries to more than 2,000km
http://www.fanabc.com/english/index.php/component/k2/item/2946?Itemid=674
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Yara applies for large-scale mining license
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Yara Dallol BV, a subsidiary of Yara International, which has been prospecting for potash mineral deposit in the Dallol depression in the Afar Regional State, two weeks ago submitted its application for a large-scale mining license to the Ministry of Mines.
Yara has finalized its exploration project that costs USD 100 million. The company completed the definitive feasibility study and submitted it to the Ministry of Mines.
The company, which discovered a vast potash deposit in its concession in the Dallol depression, proposed to produce 0.6 million tons of potash annually by applying solution mining.
Tolossa Shagi, the Minister of Mines, told The Reporter that Yara presented the application for a large-scale potash mining license to the ministry two weeks ago. “We are evaluating the proposal. Once we finalize the evaluation we will grant them a large-scale mining license,” Tolossa said.
After finalizing the evaluation, the ministry will remand the draft mining license to the Council of Ministers for endorsement. Once endorsed by the council, the ministry and Yara will sign the mining agreement.
The board of directors of Yara has approved the project proposal. According to the company, the estimated capacity for the Dallol project is 1-1.5 million tons potash per year, with resources of more than 30 years’ mining. Yara hopes to supply ten percent of the current global potash market.
Yara plans to build a potash mine in the Dallol depression. It will also construct a potash fertilizer factory. The total cost of the project is estimated at USD one billion.
Yara started drilling activity at the site in 2010, and most drilling and drilling related activities were completed in 2012.
Yara International is an agricultural chemicals giant that has been supplying fertilizers to Ethiopia.
Yara, Circum Resources and Allana Potash are the three international mining companies engaged in potash exploration and development projects in the Dallol depression.
Though potash is not yet mined in Ethiopia, studies indicate that there are huge potash mineral deposits in the Dalol depression. Allan Potash has confirmed a proven reserve of 3.2 billion tons. The UK company, Circum Resources, last week announced that it proved a potash reserve of 4.2 billion tons. Potash is primarily used to produce fertilizer.
The Ethiopian government annually spends more than USD 150 million on fertilizer imports. If these projects come to fruition, the country could save a substantial amount of foreign currency. Potash export could also be a major foreign currency earner.
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First Herbicide Factory to Begin Production with 27m Br Investment
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Ethiopia will reduce herbicide imports when Ethio 24-D supplies a larger share of current demand
The factory, which cost 27 million Br for construction and machinery acqusition and installation, has been under construction in Butajira town, around 110Km from Addis Abeba on 3.4ht of land. Its operation is dependent on the Chinese company, Tianjin Bohai Chemical Industry Group Corporation, which will supply it with the chemicals and chemical processing recipe for the production of the herbicide called 2,4-D (2,4-Dichlorophenoxy acetic acid).
Adame Tulu agreed to buy the chemicals as well as machinery from this company alone in exchange for the process and will distribute the herbicide in Ethiopia with the brand name Ethio 24-D.
Tianjin has also provided Adame Tulu with the machinery, worth six million Birr. The two have signed a 10-year agreement.
Adame Tulu presently produces insecticide to prevent the spread of yellow fever at another plant it has in Ziway, obtaining the inputs it needs from the same Chinese company, which has been in the chemical industry since 1986.
The 24-D is used for weed control on various crops, including teff, sugar cane and wheat, said Simeneh Altaye, CEO of Adame Tulu Pesticide Processing S.C. The herbicide is effective in broadleaf weed control in the agricultural industry and is one of the most widely used herbicides in the world, according to Fikremariam Abebe, pesticide inspector at the Ministry of Agriculture. The product is available at a lower cost than other herbicides, at 80 Br a litre.
Adame Tulu, which has been being administered under the Privitization & Public Enterprises Service Agency (PPESA) since 1990, is the sole producer of various insecticide and fungicide chemicals in Ethiopia.
The new factory will have the capacity to produce 500,000lt of 2,4-D, reaching 1.5 million litres in two years.
Currently, in Ethiopia, around 200,000lt of 2,4-D are imported from abroad while the demand for the chemical is estimated to reach two million litres.
This is expected to increase as the quantity of land used for crop production increases, said Simeneh. In 2013/14 Meher season, the Post-harvest Crop Production Survey by the Central Statistical Agency indicated that a total land area of about 12.4 million hectares of land was covered by grain crops – cereals, pulses and oilseeds, slightly up from 12.3 million hectares the previous year.
http://addisfortune.net/articles/first-herbicide-factory-to-begin-production-with-27m-br-investment/
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Transporters to import 500 buses with 70 percent bank loan
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Transporters to import 500 buses with 70 percent bank loan. In a bid to curb the longstanding transport woes in Addis Ababa, the government pledges to provide financial requirements for private commuters to enable them to import 500 buses for public transport.
Kassahun Hailemariam, the Director General of Federal Transport Authority (FTA), said at a press conference on Thursday that the government has reached a decision to help transport associations to solicit 70 percent of bank loans so that they can import buses once they form share companies.
They will then set up a committee that will facilitate the import of modern buses.
The director also indicated that the decision is aimed at easing the longstanding transport shortage in the capital and will pave a new way to introduce a modern transportation service.
He also noted that the introduction of the new buses would not affect the existing taxi service, which employs thousands of taxi drivers and co-drivers.
Kassahun explained that apart from the infrastructure, the government also strives to facilitate the loan service for the association.
He further indicated that the government will also provide tax-free incentives for when the vehicles are imported and will provide spaces for parking as well.
According to the authorities, some fifteen taxi associations, three Higer Bus associations and Alliance Transport Service have been identified as the first to take the latest advantage and import the first 500 buses in six months, in keeping with the proper procedure set by the government.
Yabibal Addis, Head of Addis Ababa City Transport Bureau, indicated that for the 2.3 million daily commuters in the city, the introduction of the new buses would contribute its share of easing the sour transport burden that affects the social and economic activities of the capital.
According to him, 800 city buses and 8,000 taxis are currently in service across Addis Ababa’s roads. He expressed his belief that the new buses will never affect the existing taxis and buses.
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Arjo Didesa Sugar factory inaugurated
Addis Ababa: May 16, 2015 – Federal and regional higher officials, along with factory workers were present at the inauguration ceremony.
The factory had recently started production on trial basis. During the first stage of factory’s construction, it will produce 8,000 quintals of sugar per day. When fully operational, the factory will have a daily output of 12,000 quintals.
The sugar development project was transferred from a Pakistani company to the government, according to Sugar Corporation.
http://www.fanabc.com/english/index.php/component/k2/item/2943?Itemid=674
Filed under: Ag Related, Economy, ethiopia, Infrastructure Developments, News Round-up Tagged: Agriculture, Business, East Africa, Economic growth, Ethiopia, Fertilizer, Investment, Millennium Development Goals, Potash, tag1
