26 February 2014 News Round Up


Unilever, IKEA to set up factories in Ethiopia

Unilever a multi-national consumer goods company and IKEA the world’s largest furniture retailer are going to set up factories in Ethiopia, Capital learned from sources.

Unilever that is headquartered in London, England is said to be the world’s second largest consumer goods company measured by revenue with its products available in 190 countries worldwide.

According to a spokesperson Capital interviewed, Unilever Manufacturing PLC was incorporated in Ethiopia as of this January.

“ This is the starting point in our journey to invest in the manufacturing of consumer goods and establish a genuinely inclusive and sustainable business model by supporting the development of Ethiopian trading and distribution networks while building up local suppliers and training Ethiopian staff to world class standards,” the spokesperson told Capital.

IKEA is also said to already secure a plot for a production line of its wide range of furniture products. However Capital’s attempt to get a confirmation from IKEA office failed.

Unilever is organized into four main divisions; Food, Refreshment (beverages and ice cream), Home Care, and Personal Care. It owns over 400 brands, but focuses on 14 brands with sales of over 1 billion Euros. Among the top 14 brands are Dove, Omo, Knorr, Lipton and Lux.

The consumer goods giant has been around a long time. Unilever reportedly makes more than 3 billion euros a year in Africa and it is working on doubling that.

“Using our brands to improve the lives of ordinary Ethiopians and contribute to a bright future for the country will be at the center of our business model,” the spokesperson also said.

Currently Unilever operates factories throughout Africa including Kenya.

Unilever was founded in 1929 by the merger of the British soap maker Lever Brothers (founded in 1885 by William Hesketh Lever) and the Dutch margarine producer Margarine Unie. The company had a turnover of 49.8 billion Euros according it its financial report for 2013.

IKEA is a Swedish company registered in the Netherlands that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. As of January 2008, the company became the world’s largest furniture retailer. Founded in Sweden in 1943 by 17-year-old, Ingvar Kamprad, the company’s name is an acronym that consists of the initials of, Ingvar Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Småland, south Sweden). The company is known for its modern architectural designs for various types of appliances and furniture, and its interior design work is often associated with an eco-friendly simplicity. In addition, the firm is known for its attention to cost control, operational details, and continuous product development, corporate attributes that allowed IKEA to lower its prices by an average of two to three percent over the decade to 2010 during a period of global expansion.

As of January 2014, IKEA owns and operates 345 stores in 42 countries. In 2013 IKEA announced a total sales turnover of 29.2 billion Euros.



Ethiopia, Poland sign $50m loan agreement


The governments of Ethiopia and Poland signed on Tuesday a loan agreement amounting to $50 million USD to promote agricultural modernization in Ethiopia.

The money will be used to finance delivery of agricultural goods to be imported from Poland.

Finance and Economic Development Minister, Sufian Ahmed on the occasion said the support will augment agricultural modernization activities.

Polish Ambassador to Ethiopia, Jacek Jankowski on his part said the agreement is part of his government’s scheme to strengthen cooperation with Ethiopia.



Ethiopian chief warns, African airlines could be ‘swallowed’ by the Gulf


The CEO of Ethiopian Airlines Tewolde Gebremariam has warned that Gulf carriers could “eat us for lunch” unless there is a concerted effort by African airlines to increase market share from the fast-growing continent.
Speaking at the Aviation Club in London, Tewolde said “We have tremendous competition coming from the Gulf carriers. Dubai is only three and half hours away from Addis, Abu Dhabi and Doha are the same. They have been doing very well and now Africa is also a strategic focus.
“We see the centre of gravity moving from Europe to the Middle East and especially the Gulf.”
He said that Europe’s failure to respond to the threat by the Gulf carriers had led to this change.
“Europe has been the oldest and most successful for hub and spoke operations with airports like Heathrow, Frankfurt, Amsterdam and Paris. For passengers travelling from south and north America to Europe, Africa and Middle East and Asia the only way was through Europe, but now that hub and spoke is moving to the Middle East and unfortunately and inadvertently European governments and politicians are helping them move the centre of gravity to the hubs in the Middle East by making it very difficult for airlines to operate in Europe.
“Taxation is one factor, airport congestion is another,” Tewolde said. “As a result airlines are finding it very difficult to fly to Europe. Heathrow is one of the most congested airports. Ethiopian wants to fly to Heathrow twice a day, but we are only able to fly six flights a week. We can’t even get a daily service.
A third runway at Heathrow has been discussed for years yet Dubai was able to build Dubai World Central Airport with six runways in short order.
“Frankfurt Airport has put a policeman in the ATC tower to ensure no flight leaves after 10 or 11 o’clock at night, emission trading is another problem for all of us. Labour unions are very difficult for European carriers and they also have to compete with the Gulf carriers and small African carriers like us also. The tax regime in the Gulf is different – no tax at all – but knowing this again, there is no remedy for small carriers in Africa and also Europe, so inadvertently Europe is helping the Middle East carriers.
Tewolde said that the Gulf countries are treating aviation as a strategic national asset.
“The contribution of aviation to social economic development is recognized and it is the pride of governments, but other governments and even the continent of Africa is not recognizing this unfortunately.



Ethiopian: daily London-Addis Ababa flights from July


Ethiopian Airlines is to increase its Heathrow-Addis Ababa flights to a daily service, from July 8 this year. The new Tuesday service will increase frequency from its current six flights a week.

The airline, a Star Alliance member, is also set to move to the new Heathrow Terminal 2 in September. The rebuilt terminal, also known as the Queen’s Terminal, will operate exclusively for Star Alliance members from June.

CEO Tewolde Gebremariam said the airline, which has operated to London from 1973, has grown seven-fold in the last seven years, and currently flies 5.6 million passengers annually.

Speaking at a recent Aviation Club event in London, Gebremariam outlined Ethiopian’s strategy of building a four-hub network in Africa. “Our main hub is in Addis, our second in Togo in west Africa, and a third in Malawi where we are starting a new airline – we have just started a new partnership with the Malawi government. The fourth hub, for the central African region, will be in the DRC [‪Democratic Republic of the Congo‬], with 8,000 employees.”

He said a 10-hour flight radius from Ethiopian capital Addis Ababa encompassed “5.8 billion people in a high-growth region. That catchment area is a huge market.”

Gebremariam said Africa’s natural resources are attracting foreign direct investment, particularly from China and India, contributing to a dynamic economy in Ethiopia – double digit GDP growth in the last decade and the third fasted-growing economy in the world.

The airline boss emphasized the importance of connectivity with the world’s emerging economies, pointing out that the combined GDP of the “E7” countries – China, India, Brazil, Russia, Indonesia, Mexico and Turkey – is poised to overtake that of the G7 (US, Japan, Germany, UK, France, Italy and Canada): he cited a forecast for 2050 of US$138.2 trillion GDP for the E7, compared to US$69.3 trillion for the G7 countries.

He said one of his airline’s greatest challenges was competition from the Gulf carriers. Of Europe’s long-successful hub-and-spoke airport operations, he said that “unfortunately and inadvertently, European governments and politicians are helping move the centre of gravity to the hubs in the Middle East, by making it very difficult for airlines to operate in Europe.”



Nile Basin cooperation is a mandatory, not an option: Ministry


Water, Irrigation and Energy State Minister Kebede Gerba said: “Fifteen years of Nile Basin cooperation has yielded results. But we still have a long way to go to completely relieve the community from the burden of poverty. It is therefore self-evident that Nile Basin cooperation is mandatory, not an option.”
The 8th National Nile Day was celebrated with a theme: “Access to Water and Energy National Challenges, Trans-boundary Solution,” here yesterday.
He also said that future generations will benefit only from win-win outcome achievable through sustaining engagement and working together. “Building enduring regional cooperation and availing all the necessary technical, institutional, organizational, financial requirements takes time. Building trans-boundary cooperation and institution requires patience and working through disagreements.”
In an exclusive interview with The Ethiopian Herald, Egypt Ambassador Mohamed Edrees said: “The significance of this cooperation is not something new or impossible. All the countries cooperated and Egypt was also instrumental in this process. We have to always remember to continue this path of cooperation. Cooperation is our common path. And win-win is our shared goal.”
The Nile Day also regionally celebrated in Uganda, Entebbe in the presence of Ministers in charge of Water Affairs in the 11 Nile Basin countries, diplomats, development partners, and government officials.
It is an annual celebration of the establishment of the Nile Basin Initiative (NBI) on 22nd February 1999, by Ministers in charge of Water Affairs in the Nile Basin countries.
South Sudan Ambassador Arop Deng at the occasion said: “History reveals that civilization and socioeconomic activities of our people is track back to changes in the levels of Nile waters, giving them opportunity to migrate and move across territories beyond the current borders.”
As to him, it becomes a moral duty and responsibility as governments of the Nile Riparian States to facilitate this socioeconomic development and cooperation of people.
Water, Irrigation and Energy Minister Geo Information and Information Technology Director Wubeshet Demeke also said that if properly planned in a cooperative manner the resource base of the basin can adequately support the well-being of the entire people of the basin and enables meeting the growing demands.
Despite this fact the basin is known to have six of the ten poorest nations of the world. Obviously this needs to change and the responsibility falls in our shoulder: we the people of the Nile Basin, he said.
He also said that Ethiopia’s move towards fulfilling the national energy demand and stretching to offer power trade opportunities for regional economic integration in the Nile Basin countries and beyond need to be appreciated and deserves the support of all.
“In order to take advantage of cooperation there is a need to leverage on existing efforts. Through cooperation the benefits that can be tapped from the Nile will be much larger,” Wubeshet added.
The Nile Basin remains the only region on the African continent without a functional regional power grid with very insignificant volumes of power traded among the countries. Nile Basin Initiative is the first and only all-inclusive regional platform for the Nile Riparian countries to discuss with trust and confidence the joint management and development of the common Nile Basin water and related resources.
According to the Ethiopian Herald, the Nile Day was attended by government officials, diplomats, members of parliament, researchers, development partners, civil society and school children.



Ethiopian physicians to establish a center of excellence hospital in Ethiopia


The Ethio-American Doctors Group and the Global Ethiopian Medical Enterprise have agreed to merge their efforts to pursue their common goal of building and establishing a Center of Excellence Hospital in Addis Ababa.

Collectively, the memberships of both organizations include over 250 physicians of Ethiopian origin and this development is expected to encourage other Ethiopian physicians to join. By uniting their intellectual and membership resources, the joint mission to establish a center of excellence hospital should have a tremendous impact on the lives of the people of Ethiopia.

The Ethiopian government, various US agencies, and people and firms in the business community throughout the world, have supported and encouraged both organizations to combine their efforts under a single body to establish a world class hospital in Addis Ababa.

The two companies say they are now looking forward to continuing to recruit and encourage physicians to join the project aimed to lift the healthcare of Ethiopians and people in the region through provision of excellent quality clinical care, high standard medical education and relevant research.

The Ethio-American Doctors Group is a US-based corporation and has members covering 31 different specialties and subspecialties from across the world.

The Global Ethiopian Medical Enterprise is a healthcare management company founded by a coalition of multi-specialty Ethiopian Diaspora physicians who practice in the US, Canada, Europe, Ethiopia and other African nations.



Millennium Hall Hosts Seventh All African Leather Fair


Ahmed  Abtew, minister of Industry (left), Mulatu Teshome (PhD), Ethiopian President and Bruk Debebe, (Amb.), general  director of ELICO.


About 200 exhibitors from 41 countries took part in the Leather Fair


At a time when the government expect to earn 67.6 million dollars from the export of leather, around 100 leather producers and exporters took part in the All African Leather Fair, at Millennium Hall on Bole Road.

The fair, which opened on February 20, 2014, occupies a total area of 4,000sqm and has exhibitors representing 200 companies from 41 countries. Products were displayed for three consecutive days, from February 20 to February 22, 2014.

It was Ahmed Abtew, minister of Industry, who opened the event – the seventh since it was first envisioned and implemented by the late Prime Minister Meles Zenawi in 2008.

There was much jostling and chatter as huge crowds of visitors, invited guests, exhibitors and organisers gathered at Millennium Hall for the event, organised by the Ethiopian Leather Industries Association (ELIA). Visitors were met by bags of various colours and sizes, shoes with different brands, wallets, clothes and gloves of varying types, all on display in small partitioned shops.

Local companies, approached by Fortune, say that a shortage of raw materials is a major bottleneck in their line of business. Tanneries, they say, are producing below their capacity due to this supply gap.

Wossen Hailemariam is one of the exhibitors expressing this view. He represents Habesha Tanning Plc, which currently uses only 43pc of its capacity.  The three-year-old company was displaying finished leather of various sizes. The Company paid 37,000 Br for the 18sqm display booth it occupied in the Hall. The cost includes advertisements. Habesha has the capacity to produce one million pieces a year, but its 2012/13 output was only 450,000.

Local companies complain not only of a shortage of raw materials, but also tough competition from bigger companies from China and India investing in Ethiopia.  The companies also express concern about the deteriorating quality of hides and skin.

Jones Stamalevi came from Lilongwe, Malawi, representing Mandoda Investments, which mostly produces leather shoes and wallets with hides and skins imported from Kenya and South Africa. This is the first time that the Company has taken part in the All African Leather Fair.

“I am expecting new ideas, new markets and new business friends,” he said. “My company wishes to import hides and skins from Ethiopia.”

The ELIA believes that the event helps to promote Ethiopian leather products and increase their competitiveness. Ethiopia’s leather is exported to 40 major destinations, including China, India, Turkey, Sudan, Germany, Italy and the UK.

The Association is pinning its hopes on visitors that it has invited from 41 countries to enable Ethiopian manufacturers to gain access to markets, says Abdissa Adugna, the ELIA’s Secretary General.

Local companies paid 1,500 Br for a square metre space inside the Hall, whereas foreign companies were all sponsored as part of the government’s plan to attract investment into the industry.

This is contrary to what happened during the sixth Fair, where foreign participants paid 120 dollars for a square metre and local participants just half of this sum.

A year ago, the association spent 2.5 million Br organising the fair – 1.2 million going on three days rent at Millennium Hall. There were 48 companies from abroad on that occasion. The latest event has cost six million Birr, the ELIA says.

As one of the priority areas in the government’s Growth & Transformation Plan (GTP), leather is expected to fetch no less than 500 million dollars by the end of 2015, when the GTP comes to an end.

Leather and leather products earned 32.1 million dollars in the first quarter of the current fiscal year. Although this figure has increased by 7.3 million dollars compared to the same period the previous year, it still falls short of meeting the target. Its revenue for the first six months of the fiscal year has totalled 67.1 million dollars, which is 16.9pc higher than the figure for the same period in the previous year.



Deloitte to Focus on Mining in Ethiopia


Deloitte Consulting Plc,  a global professional services firm, which officially opened its office in Ethiopia two years ago, is eying to consolidate artisanal mining.

The Company aims to offer consultation services for artisanal miners through four service lines: strategic and innovation, technology, human capital and business process. Strategy and innovation on mining, advisory services and service mining technology will help to increase the productivity of artisanal mining service and panel discussion, representatives of the Company said during consultations with representatives of the Ministry of Mines (MoM) and artisanal miners on Tuesday, February 18, 2014, at Harmony Hotel located between Namibia Street and Africa Avenue in the Bole area.

Deloitte’s intervention is said to be crucial in rectifying problems related to effective management problem, volatile price change, global demand shift, policy, climate change, access to capital and infrastructure and meeting the growth agenda and changing reserved portfolio.

During the occasion artisanal miners and miming bureau representatives from regional states raised issues related to policy, registration process, and the facilitation of infrastructure for the artisans.



Mozilla To Launch $25 Smartphone


Smartphone with cloud of application icons

VENTURES AFRICA – Mozilla has announced that it will offer a new category of $25 smartphones for developing countries, adding that despite the close to  pricing, the device still holds advance mobile capabilities.

California-based nonprofit Mozilla Foundation disclosed this on Sunday, ahead of the four-day Mobile World Congress in Barcelona, Spain, which opens on Monday.

“We are also enabling a whole new category of smartphone, priced around $25 (18 euros), that will bring even more people around the world online,” said Jay Sullivan, Mozilla chief operating officer.

The company also announced the launch of new devices operating with Firefox OS, including ZTE’s smartphones Open C and Open II.

The aim is to challenge the dominance of Apple’s iOS and Google’s android in the smartphone market, as it provides a cheaper alternative for smartphone users.

It has therefore signed a deal for a chipset which it said will pave way for the cheap phones. The deal which will see it partner with China-based fabless semiconductor company, Spreadtrum will herald the emergence of the low-cost Firefox OS-powered smartphones.

Since it launched in 2013, Firefox OS has expanded to 15 markets and is available on three devices. Mozilla however wants to expands its reach, and is now set to enter into the Latin American markets.

“Sales have far exceeded our targets. But 2013 was just the beginning. In 2014, we are differentiating our user experience and our partners are growing the portfolio of devices,” Sullivan said.

Mozilla claims global operators such as Telenor, Telkomsel and Indosat, and ecosystem partners such as Polytron, T2Mobile and Thundersoft are expressing interest.

Asides Latin America, Mozilla is expected to seek entry into the African mobile space and will leverage its low pricing model to secure a comfortable market share.



Nation water resource utilization shows marked increase


 Minister Alemayehu Tegenu


 • Ministry says involvement of stakeholders helps improve performance

The Ministry of Water, Irrigation and Energy said that efforts made in enhancing the participation of all stakeholders and creating sense of accountability has enabled it register remarkable achievement. The ministry also announced that Ethiopia’s benefit from its water resource has shown marked increase.

The Ministry Sunday discussed sector six-month performance with various stakeholders including sector institutions, state water and irrigation bureaus as well as different agencies.

Minister Alemayehu Tegenu told participants that the performance of the sector is encouraging. Achievements in the renewable energy, basin development, water and sanitation service both in the rural and urban areas are laudable. He attributed the achievement to the concerted efforts of all stakeholders and the ministry.

Indicating that various projects are being undertaken as per the GTP goal, the Minister said the completion of these projects would have enormous role in realizing other development plans.

The Minister also noted development projects such as Kesem and Tendaho which were lagging behind are now in a better condition and the latter expected to be completed this year.

According to Alemayehu, irrigation development plan was so ambitious developing around 300 thousand hectares of land so far. Noting that the achievement is not insignificant, the Minister said the task should not be left to the government alone but requires the coordinated effort of all stakeholders .

Ministry Planning and Foreign Relations Directorate Director Daniel Dangiso also said compared to other projects, those in water resource administration, basin development and conservation, renewable energy, preventing deforestation, hydro-power and irrigation have registered impressive performance during the last six months. Indicating that problems in irrigation sector are still persisting, the Director said that the Ministry is undertaking 15 irrigation projects of which 75 per cent is completed.

Daniel also said the Metal Engeenering and Construction Corporation is engaged in the production of transformers to address problems faced following the completion of irrigation and clean water projects.

Meanwhile, Oromia State Water, Mineral and Energy Bureau Head Motuma Mekasa said access to clean water that stood at 57 per cent has now increased to 75 per cent in the state. The state is set to increase access to 85 per cent this year, he added.

“The reason behind this encouraging achievement result is the active participation of the public. As the way forward community-based packages has been prepared to increase the participation of the public in the sector,” Motuma added.



Enterprise earns 15.5 mln. USD from foreign trade


More than 15.5 million USD was secured from grains and coffee export during the first half of this budget year, the Ethiopian Grain Trade Enterprise said.

Enterprise Director-General Birhane Hailu told ENA that the Enterprise has exported more than 97,200 quintals grain, oil seeds and coffee during the reported period.

The Enterprise has achieved 78 per cent and 63 per cent of the target in terms of supply and revenue respectively.

The target was to export more than 124,100 quintals thereby earn over 24.7 million USD.

Some 50.7 per cent of the stated revenue was earned from export of coffee. The Enterprise has exported more than 27,000 quintals coffee during the reported period.

The revenue earned from sale of coffee during the reported period has decreased by 48 per cent compared to the previous year same time.

The decrease in the price of coffee at the international market contributed for the reduction, he said.



Industry zones: Yeasts of industrial transformation


Foreign Direct Investment (FDI) is one of the major drivers of economy. Particularly, for most of African countries, apart from providing job opportunities for citizens, it plays a key role in technology transfer. It also promotes competition in the domestic input market and is a means to gain tax revenues for host countries.

In view of this most of the developing countries in Africa have been designing a variety of investment-friendly policies and strategies in order to attract potential investors. As a result, a large number of investors have been seeing Africa as a potential investment zone and as a result been investing a huge amount of capital within the continent. As a consequence, host countries have been able to enjoy the benefits of FDI.

Ethiopia, like other African countries, has since the past two decades been making greater efforts to attract potential investors and gaining the advantages of FDI. To this effect, it has formulated favorable investment policies and strategies.

With the introduction of incentives such as tax reliefs to manufacturers engaged in production of goods mainly for export, it has made considerable efforts towards promoting investment and industrialization.

During the past two decades thousands of foreigner investors have come to Ethiopia and engaged in a various investment areas. As a result new facilities have been built, considerable job opportunities have been created, and new technologies introduced. In these investment activities being carried out in the country and jobs created for citizens, industrial zones have had significant contribution. The ‘Eastern Industry Zone’ (EIZ) is one of these industrial zones which has created jobs for many citizens.

This industry zone, which is located in Dukem area of Oromia State around 35 km South East of Addis Ababa is considered to be one of the big industrial zones in Africa . The industry zone is being run by Chinese investors.

According to the Assistant Director of the Zone, Jiao Yongshun, 500 hectares of land is used for investment by investors with combined initial capital of 480 million USD. These investors include 19 enterprises, of which 10 are fully operational while nine other are under construction.

The enterprises which are currently operational include the automobile assembler Lifan Group, the footwear maker Huajian Shoe Company, Zhongshan Cement Manufacturing and Eastern Steel producer. Other manufacturers are engaged in the production of items for both local and global market, he said.

Noting that the ten enterprises in the industry zone has created substantial job opportunities for local people, Yongshun said when the construction activity of the nine other enterprises is completed and becomes fully operational, the industry Zone will create up to 50,000 job opportunities, and introduce more technologies. It also promotes the country’s economic development and contributes a lot to the realization of the country’s growth plan, he further said.

Nara Zhou, Public Relations Manager of the Huajian Shoe Factory, said the factory which was established with an investment capital of 13 million USD produces ladies’ shoes and exports 7,000 pairs of shoes to US market per day .

“Presently, around 2,000 Ethiopians have got work opportunity within the shoe factory. In the coming seven years, by allocating additional USD 40 million capital, the company is planning to create employment opportunities for 30,000 people,” she remarked.

The other industrial zone which is hoped to speed up the country’s economic growth and to support the country’s industrialization process is the Bole Lemi Industrial Zone. The Industry Zone which lies on about 156 hectares of land is constructed by the Ethiopian Government.

“The Ethiopian Government has set a plan to develop at least four industrial cluster zones at the GTP period and expedite the progresses towards industrialization according to Melaku Taye, Communication Directorate Director with Ministry of Industry. Accordingly it is now constructing industry zones in various parts of the country, he added.

“The Industry Zone is particularly designed to help investors who are engaged in the manufacturing industries: industries which are strategic focus areas and prioritized by the government to create vast job opportunities for citizens, produce value added goods, substitute imported products and generate hard currency through production of export oriented goods,” Melaku said.

Accordingly, among others, manufacturers who are engaged in the production of textile, leather and leather products, agro-processing, pharmaceutical and those whose goods substitute imported items would benefit from the Zones, as he stated.

Melaku also noted that as industry zones are complex, construction activities take longer time than expected. Thus, it is always challenging for investors to construct buildings so soon and be fully operational in a short period of time. Shortening the time for the completion and transfer of industry zones to investors, apart from avoiding all the problems associated with construction saves their time and helps them engage in business soon.

Most importantly investors in industry zones, as they are provided with the needed infrastructural facilities and enjoy tax incentives, they can concentrate on their competitiveness of their businesses.

Melaku also noted that feasibility studies were being carried out for the construction of additional industry zones in various parts of the country, including Akaki and Kilinto areas of Addis Ababa, as well as in Dire Dawa, and Kombolcha. The realization of the zones would have significant contribution to promote sound economic growth and maintain national industry development.



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