24 February 2014 News Round Up


Whipping up Expectations



The leather industry is sure to gain the USD 500 million targeted by the Growth and Transformation Plan (GTP) despite its current lag, said Abdissa Adugna, secretary general of the Ethiopian Leather Industries Association(ELIA) at the opening of the seventh annual all African leather fair on February 20 at the Millennium Hall. Started in 2008, the all-African leather fair is one of the highlights of the world’s leather industry calendar, according to Abdissa. There were 200 exhibitors, 46 of whom came from 22 countries in this year’s event.

Finished leather products, like shoes, belts, and clothes were put on display along with different types of leather that can be used by producers. There were also exhibits of accessories related to leather production, like soles. There are currently investors from seven countries in the leather industry, according to Abdissa. They came from the United Kingdom, Italy, Turkey, German, China, Sudan and Thailand.

Many giant leather companies are coming to invest in Ethiopia in a very short time and the country will close the gap in the GTP and come up on top, he reaffirmed.   President Mulatu Teshome (Ph.D.) who opened the event doesn’t share Abdissa’s optimism, however, citing that many things have to change in the sector in order to meet the GTP target. “The growth in the sector is slow,” the president said. “Private producers have to start manufacturing their products using a higher standard of  quality and producing a  much larger quantity.” The president further went on to say that salaries have to be adjusted for leather sector employees. Many other factors besides human resource problems affect leather production, however, including animal disease and careless extraction of hides.

According to research conducted by the Ethiopian Leather Industry Development Institute (LIDI) in April 2013, Ethiopia’s livestock population is estimated to be at 44.3 million cattle, 23 million sheep, and 23.3 million goats. Cockle (or Ekek as it is locally known), is one of the prominent diseases degrading the quality of 47.1% of sheep skins, 24% of goat skins and 48.6% of cattle hides produced in 8 Addis Ababa and Modjo tanneries. Ethiopia exports finished leather to 40 countries, according to Abdissa. The largest importers of Ethiopian leather are China, Hong Kong, Italy, the United Kingdom, and America. In 2012/13, the leather industry earned USD 123.4 million. During the 6th fair 202 exhibitors from 44 countries including Ethiopia participated and 13,400 visitors came. The Ethiopian Leather Industries Association was established in 1994 as the Ethiopian Tanners Association. It changed its name to Ethiopian Tanners, Footwear, and Leather Products Manufacturing in 2004.

It finally ended up becoming the Ethiopian Leather Industries Association in 2007.  It counts 28 tanneries, 7 leather product manufacturers, 16 shoe manufacturers and 11 leather production companies as its members.



Nyota Minerals Develops New Strategy In Ethiopia


LONDON (Alliance News) – Nyota Minerals Ltd Monday developed a renewed strategy to focus on exploration, following the sale of a majority stake in its Tulu Kapi project in Ethiopia during December.

The gold exploration and development company said its initial focus is exploration at its 100% owned Northern Block exploration tenements, which were unaffected by its recent sale.

The company said fieldwork has re-commenced at the blocks to advance existing target areas and delineate new areas for subsequent drilling.

Nyota said that SRK Exploration Services Ltd has been engaged to prepare a Competent Person’s Report regarding work to date in the Northern Block licence areas and to review fieldwork currently underway. The company said it expects receipt of the CPR in the first quarter 2014.

Nyota ran into trouble in 2013 regarding its Tulu Kapi project when, despite announcing its first ore reserve of 16.9 million tonnes at 1.82 grams per tonne for 1 million ounces of gold earlier in the year, the gold price decline and the company’s balance sheet meant that it struggled to find a joint venture partner to develop the site further.

In December, the company completed its sale of a 75% stake in the Tulu Kapi site to KEFI Minerals PLC for cash and the issue of KEFI shares to Nyota, leaving the company with a 25% direct interest and roughly a 34% beneficial interest in the project, taking into account its holding in KEFI shares.

The company said on Monday that it continues to believe that Tulu Kapi will be fast-track developed by KEFI.

Nyota Minerals shares were up 15.8% to 0.550 pence, putting it in the top five AIM risers Monday.

By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1



Coffee Extends Rally as Brazil Crop May Tip Market Into Shortage


Coffee extended a rally in New York as dry weather may cut output in Brazil, the world’s largest producer, potentially tipping the global market into the first shortage in four years. Sugar advanced and cocoa retreated.

Arabica coffee, the kind favored for specialty drinks such as those made by Starbucks Corp., gained 19 percent last week, the biggest weekly gain since 2001. Growers in Brazil probably will harvest 53 million bags of coffee this year, compared with production potential of 56 million to 58 million bags, Kona Haque, an analyst at Macquarie Group Ltd., said in a report e-mailed today. The crop may fall below 50 million bags if rains fail to return, causing the first shortage since 2010-11.

“The coffee trees are under critical stress,” Judy Ganes-Chase, president of researcher J. Ganes Consulting in Panama City, said by e-mail on Feb. 22, commenting on Brazil. “Both the 2014-15 and 2015-16 harvests are at risk.”

Arabica for May delivery climbed 3.1 percent to $1.7475 a pound by 7:06 a.m. on ICE Futures U.S. in New York, after rising as much as 4.4 percent. Trading volumes were about 36 percent higher than the average for the last 100 days for this time of day, according to data compiled by Bloomberg. Robusta coffee for the same month rose 2.1 percent to $1,997 a ton on NYSE Liffe in London.

Global coffee supplies will be 400,000 bags higher than consumption in the 2014-15 season that starts in October in most countries, Macquarie estimates. That follows a surplus of 4 million bags this season. A bag of coffee usually weighs 132 pounds. Arabica prices rallied 58 percent this year, the best performer in the Standard & Poor’s GSCI gauge of 24 commodities.

Remaining Dry

Rainfall in coffee areas of Brazil will be below normal in six to 10 days, MDA Weather Services in Gaithersburg, Maryland, said in a report e-mailed Feb. 21. The central part of Minas Gerais, the country’s main arabica-producing state, and the state of Espirito Santo, the top robusta grower, will remain dry this week, Sao Paulo-based weather forecaster Somar Meteorologia said in a separate report e-mailed today.

“Forecasts for rain last week are already proving themselves to have been overzealous and actual rainfall potential seems to be diminishing based on the latest satellite images and models,” Ganes-Chase said. Dryness “will continue to impact the development of the fruit and the bean within as well as weaken the tree itself.”

The premium arabica coffee commands over the robusta variety, used in instant drinks, climbed to about 85 cents a pound today, the highest since 2012, exchange data compiled by Bloomberg showed. That’s enough to attract buyers to the cheaper kind, according to Volcafe, the Winterthur, Switzerland-based unit of trader ED&F Man Holdings Ltd.

Arabica Arbitrage

“The robusta-arabica arbitrage is now wide enough to encourage more robusta demand,” Volcafe said in a Feb. 21 report. “But unlike 2011-2012, the huge extra robusta supply is not there,” the trader said, referring to a season when roasters shifted use to robusta from arabica.

Raw sugar for May delivery rose 1.9 percent to 17.39 cents a pound on ICE. White, or refined, sugar for the same month gained 1.4 percent to $472.20 a ton on NYSE Liffe.



Enat Bank to Provide Loans to Female Entrepreneurs


–  Much of the finance will be achieved through crowd funding, with international organisations also approached 

Enat Bank S.C. is planning to provide loans without collateral, in two months time, to women wishing to become entrepreneurs

The project, which the Bank will start in collaboration with other stakeholders, like the Ethiopian Entrepreneurship Development Centre (EDC), the Centre for African Women Economic Empowerment (CAWEE) and the Prime Minister’s Office, involves financing and training.

The women will receive the loans after training for six days on document preparation, business recording and basic accounting, for literate women, and saving money, business planning and balancing incomes and expenses, for those who are not able to read and write. The training for the latter group will take around two to three days. The training will be conducted by the EDC.

The women are expected to decide what businesses they want to engage in. The Bank will then provide them with loans depending on their proposal. The minimum amount of money to be given out as loan will be 20,000 Br, Fortune learnt.

The program aims to provide loans to women with little or no income, aged between 18 and 65, by way of assisting them to become entrepreneurs, said Birtukan G.Ezgi, vice president of the Bank.


Birtukan G.Ezgi, vice president of Enat Bank


Discussions to launch the program started between the EDC – a quasi-government entity, established in February 2013 with the aim of training entrepreneurs – and the Bank about a month ago. The discussions were initiated by the CAWEE and the Prime Minister’s Office. The Bank expects to sign a Memorandum of Understanding (MOU) with the EDC before the end of February.

Around 1,050 people have acquired entrepreneurial skills and knowledge through training organised by the EDC. The Centre also says it has helped approximately 412 micro & small enterprises, as well as medium-level businesses to improve their business operations.

The financing program is phase-based, as it aims to embrace women throughout the country. The Bank plans to finance 50 women during the first phase. The number of beneficiaries will increase as the program progresses to the next level, says Birtukan.

Crowd funding – a financing system whereby blocked accounts will be prepared and customers who support the idea will make payments, has been selected by the Bank for the program. The beneficiaries will sign an undertaking with the Bank to share the risk.

“The interest rate of the loan is still undecided,” Birtukan told Fortune. “But it will certainly be much less than the normal market interest rate.”

The rate will be announced upon the commencement of the program, according to the vice president.

“The programme helps to promote social responsibility among financial institutions and the people”, said Etalem Engida, CEO of the EDC. “We decided to prioritise women because their loan repayment rate is higher than men.”

The Centre will assign one advisor for ten women in the program. The advisors, according to Etalem, will be conducting overall supervision on the progress and health of the businesses.

Etalem Engida, CEO of the EDC


The Bank, which is working on awareness creation about the program, has already found two customers willing to be included in the program.

The United Nations Development Programme (UNDP), and other international organisations known for providing grants for similar initiatives, are being contacted by the Bank, Fortune learnt. The Bank has also sent a document to the Department for International Development (DFID) to support the program. The Bank also sent a letter to Madam Graca Machel, Nelson Mandela’s wife, to solicit her support in persuading international organisations to provide grants to the program.



USAID Beefs Up Livestock Industry With Provision of Grants


–  Despite having the largest population of livestock on the continent, Ethiopia’s profits from the sector are poor  –


Mark Steen (Chief of Party AGP-LMD) and Dennis Weller (Mission Director, USAID Ethiopia) 


The United States Agency for International Development (USAID) has granted a total of 660,621 dollars to seven enterprises operating in Ethiopia’s livestock industry.

The award – part of USAID’s bid to encourage investment and innovation in the industry –  was given to companies selected from 78 businesses through a technical evaluation of their concept notes and proposals, according to Tracy Mitchel, senior Value Chain advisor at USAID. The seven companies were also selected due to their potential for sustainability, without needing to seek additional grants, and their potential to benefit small-holder farmers. Each one of the companies should also either have invested or be willing to invest its own funds amounting to twice the grant it receives.

“For every one dollar of grant fund they [the companies] will be receiving, they have already invested or will be investing two dollars of their own funds,” Mitchel said.

Denis Weller, Mission Director of USAID Ethiopia, contends that the financial contribution of the enterprises will help supplement the grants for the expansion of the businesses and create a sense of ownership.

“What we usually see is hand-outs and grants alone, which, while they may be helpful to some, are wasted by many others,” Weller says.

Addis Livestock Production & Productivity Improvement Service (ALPPIS), an artificial insemination company; Omo Finance S.C, a microfinance company which provides savings and loans to farmer cooperatives in southern Ethiopia, and Kifiya Financial Technology Plc, a company specialising in mobile financial services, received 100,000 dollars each at an event held on Wednesday, February 19, 2014, at the Hilton Addis, on Marshall Tito street.

Kifya, which was established with the purpose of making financial transactions, simple, affordable and within reach for all Ethiopians, was selected for the grant because they have been willing to develop a mobile banking program in the Southern Region in cooperation with a partner microfinance institution. This will enable livestock producers to access banking services in rural areas, where there are no branches.

Project Mercy Inc, a non-profit organisation based in Addis Abeba, received 99,732 dollars, while Emebet & Children Dairy, a dairy processing company based in Bahir Dar town – the capital of Amhara Region, located 563 km from Addis Abeba – was awarded 99,458 dollars. Ethio-Feed Plc, a livestock feed producer, received a grant of 95,000 dollars to enable it to produce innovative livestock feed from agricultural waste product. The smallest grant, amounting to 66,431 dollars, went to Harame Milk & Milk Products Plc, which intends to open a milk testing laboratory, which will be the first such private venture in Ethiopia.

USAID’s Agricultural Growth Program-Livestock Market Development (AGP-LMD) is a five-year project funded by the US government’s Feed the Future (FTF) initiative, as part of the Agency’s contribution to Ethiopia’s agricultural development program.

Despite Ethiopia’s position in leading the continent in its livestock population, with 52.1 million cattle, 24.2 million sheep, 22.6 million goats and 987,006 camels, according to the Agricultural sample survey of 2011/12, livestock’s contribution to the economy is low. The regional distribution of these resources is also hugely uneven. Oromia tops the list in cattle, sheep and goats. Afar leads in camels. While coffee fetched the highest revenue in 2012/13, livestock ranked sixth, registering a decline of around 40 million dollars, when compared with the preceding year.

For Emebet & Children Dairy, a company that processes cheese, table butter and cream, USAID’s grant means a major boost for the business, says its owner, Emebet Mekonnen.

“I plan to use the money to increase the amount of milk my company processes in a day from the current 500lt to as much as 5,000lt,” she told Fortune. “Such an expansion would double up to 500 the number of dairy farmers supplying raw milk to the company.”

Desalegn Demeke, director of Project Mercy, another of the grantees, says the award will help them develop irrigation systems and buy equipment to provide hay and fodder to neighbouring dairy farmers.

A non-profit organisation based in Addis Abeba, Project Mercy was founded in 1977 and gradually expanded to include community development and self-help programs.

The enterprises have won the first batch of grants. Eighteen more businesses will receive grants in a month’s time, according to Mitchel. USAID intends to award up to five million dollars to enterprises in the livestock sector over the next three years.



Funding approved for major new road


First of its kind to include maintenance in the plan


The World Bank’s Board of Executive Directors approved USD $320 million on February 19 in Washington DC to construct a new type of asphalt road in Ethiopia. The bank has been a major player in the nation’s road development.  It approved the amount to construct the 258km Nekempte – Bure road to connect northwest Oromia with south-western Amhara regional state.

Samson Wondimu, public relations head of the Ethiopian Roads Authority (ERA), told Capital that the road will be constructed with a new feature that bucks the usual construction trend. The contractor that will manage the project is responsible to undertake the design, construction and maintenance (design, build and maintain) the road. Previously, design and construction by a single contractor was implemented in the country, but maintenance has not been applied. According the ERA public relations head, the contractor who will win the project is responsible for maintaining the road for five years after it finishes the construction.

He said that the total cost of the road project will be USD $385 million out of this, USD $65 million  will be covered from government treasury. According to Samson, based on the plan the bid will be issued during the current fiscal year. “That is why it appears to cost more,” he explained. The WB said that the project also aims to enhance Ethiopia’s road asset management practices by supporting the maintenance of selected roads covering about 200 km; the government will fund a further 200 km of roads under a parallel financing. “The funds will also be used to provide technical assistance to strengthen road asset management capabilities, and prepare a road asset management strategy,” the WB statement added.

At the center of the new operation is the adoption of an Output and Performance Based Road Contracting (OPRC). The road asset management system is expected to reduce the whole-life cost of road infrastructure, provide increased budget certainty for investment and recurrent expenditures, and improve the quality and sustainability of the network for road users.

The 258km Nekempte – Bure road project will consist of three different phases. The new asphalt inter regional corridor will be very advantageous in terms of reducing travel time to connect the two towns. Currently, the road is on a gravel level. The Government of Ethiopia formulated the first phase of the Road Sector Development Program (RSDP) in 1997. Since then, the size of the road network has increased from 26,550 kilometers to 85,966 km, and the roads operating in good condition has risen from 20 percent to 70 percent.

“Today’s project will benefit women and children by providing them with improved access to much needed education and medical facilities, including pre and post-natal care,” Tesfamichael Nahusenay Mitiku, World Bank task team leader, said. “Improved road conditions will also reduce the time that women spend transporting products to market, and will bring new opportunities for employment within small-scale, road-side commercial operations”.



Ethiopia negotiating with Tanzania to sell Electric power


The Ethiopian Electric Power Corporation’s public relation officer Mesikir Negash announced that, Ethiopia and Tanzania will have a negotiation on the coming March, 2014 for the sell of the Electric power to Tanzania.

The PR officer added that the negotiation will enable for Ethiopia to sell 250 megawatt electric power to Tanzania in 2018. Ethiopia is already having an agreement with the Sudan to provide 100 megawatt of electric power.

According to the Public officer of the corporation, Ethiopia is earning $ 2.5 million dollars per month by selling 50 megawatt of power to Djibouti.



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