(Updated) 25 March 2014 Business News Briefs



As BRICS economies grow up, 10 upstarts emerge: Report


As BRICS economies grow up, 10 upstarts emerge: Report

Paris: Indonesia, Bangladesh and Ethiopia are among 10 countries set to take over as emerging economies from the powerful BRICS nations as they struggle with growing pains, a French credit body said on Tuesday.

“After 10 years of frenetic growth” the big five emerging economies of Brazil, Russia, India, China and South Africa — the BRICS — “are slowing down sharply,” the French trade credit and insurance group Coface said.

In a report entitled “Coface identifies 10 emerging countries hot on the heels of the BRICS,” the organisation said that average economic growth by the BRICS this year would be 3.2 percentage points less than the average in the last 10 years.

But “at the same time, other emerging countries are accelerating their development,” it said.

The growth of emerging economies and the effect this has on world trade flows is closely analysed by economists because of the huge impact on every aspect of the global economy and power balances.

Coface broke the 10 new emerging economies it has identified into two groups.

The first comprises Peru, the Philippines, Indonesia, Colombia and Sri Lanka, which it named the PPICS.

They had “strong potential confirmed by a sound business environment,” Coface said.

The second group comprises Kenya, Tanzania, Zambia, Bangladesh and Ethiopia.

But these countries are marked by “very difficult or extremely difficult business environments which could hamper their growth prospects,” Coface said.

However, the head of country risk at Coface, Julien Marcilly, said that in 2001 “the quality of governance in Brazil, China, India and Russia was comparable to that of Kenya, Tanzania, Zambia, Bangladesh and Ethiopia today.”

But the 10 “new emerging countries” currently accounted for only 11.0 percent of the world population whereas the BRICS had accounted for 43 percent of the population in 2001.

The total gross domestic product of the new 10 was only 70 percent of the output of the BRICS in 2001, and they had a current account deficit of about 6.0 percent of GDP whereas the BRICS had run a surplus on average.On a positive note, the new 10 had inflation which was about 2.8 percentage points lower than BRIC inflation in 2001, and their public debt was about 40 percent of output compared with 54 percent for the BRICS at that time.

Coface said that growth in the BRICS was slowing down, despite favourable trends for consumption, because of an adjustment in supply and “a marked slow-down in investment.”

Local businesses could no longer satisfy strong demand, it said.

Marcilly said that the BRICS were moving into a new phase since their exports were becoming less competitive, and because they were not yet competitive in offering products with very high added value.

This was why Coface had set out to identify the next wave of driving emerging markets, looking for potential annual growth exceeding 4.0 percent, a diversified economy without undue dependence on the sale of raw materials, and some capacity to absorb economic shocks.

These conditions had to be matched by a financial system capable of supporting investment, but without raising risks of overheating.

The chief economist at Coface, Yves Zlotowski, said that the organisation had tried to combine measures of growth potential and risk potential.

This method had excluded Vietnam from the list of new emergers because although it had strong economic potential, its financial system was out of control, he said.

Coface said that its list of so-called neo-emerging markets could not be compared with the BRICS in terms of size and population.

The use of the word PPICS as an acronym comes in a line of attempts by economists to group various types of new emerging economies.

Among these are MINT for Mexico, Indonesia, Nigeria and Turkey, or CIVETS for Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. 



Ethiopia’s Renaissance Dam To Start Generating 700MW By 2015




VENTURES AFRICA – Ethiopia’s National Council has announced that the Grand Ethiopian Renaissance Dam (GERD), currently being constructed over the Blue Nile, would start generating 700 megawatts of electricity from 2015.

“By next year, two of the turbines among the 16 will start to generate 375 MW electric power each,” Zading Abreha, the National Council’s Deputy Director General, said.

Construction of the project, which started in 2011 and estimated to cost $4.7 billion, was awarded to Salini Costruttori SPA, an Italian company that has constructed over 20 dams spread across Africa, Asia and Europe.

Although Ethiopia’s Metal and Engineering Corporation (METEC) was awarded hydro and electro mechanical work, installation of all electro-mechanical equipment and supply of generators and turbines was given to Alstom, a French engineering company..

Currently 30 percent complete, $1.3 billion has been invested in the dam which is also expected to ensure and regulate the steady flow of water downstream, preventing flood occurrence in countries like Sudan and Egypt.

Egypt has however raised concerns about the construction of the dam, saying it will restrict the flow of water into the country, thus affecting its citizens, farmlands and livestock. The country asked that construction be put on hold until further studies are conducted, despite an initial study by the International Panel of Experts (IPoE) on Ethiopia’s request.

Ethiopia refused on the basis that it is a ‘flagship project’, but was willing to consider Egypt’s proposals on the implementation of the recommendation made by the IPoE report. It said it will not stop the construction of what is considered to be one of the largest dams in the world.

On completion, the GERD is expected to produce 6, 000 megawatts, supplying the electricity needs of the country as well as serving as a green energy hub to other East African countries, delivering clean and renewable energy.



ZTE Demonstrates New ICT Solutions to Ethiopian Market


On a three-day ICT workshop held at the Intercontinental Hotel Addis Ababa, from March 18 to 20, ZTE has properly introduced its new ICT solutions to the participants of the different ministries as well as related companies.


ZTE company logos are seen at an international software and information services exhibition in Nanjing


The theme of the workshop was mainly focused on three solutions addressed as : Power Grid, E – Learning and the Smart City solutions that encompassed the e – health and e – transport that are highly suitable to Ethiopian market.

During the three days workshop, Chinese Ambassador to Ethiopia Xie Xiao Yan, Economic and Commercial Counselor of Chinese Embassy to Ethiopia Qian Zhao Gang, Higher officers of Ministry of Communication and Information, Ministry of Education and the World Bank, Delegates from the Ministry of Health and Ministry of Transport, Addis Ababa City Administration, ICTDA of Addis Ababa, attended the workshop in such a way that, they have clearly acknowledged its importance as well as manifested /showed their deep interest to deploy to the Ethiopian market.

On this historical workshop ZTE also aspired and proofed its unwavering stand to work in the Ethiopian Market, realize its commitment so as to strengthen its collaboration for the better of Ethiopia in the future.

Jia Chen, CEO of ZTE said on the workshop, “Addis Ababa, being the center of Africa Union, nowadays getting a very fast development in Economic and Social Protection. On the other side, this development is facing various problems in such a way that , city crime, food safety, traffic jam, accidents, education and medical resource distort. We provide our latest solutions here to the country to bring a change in citizens daily life, in particular as well as to foster and promote harmonious and sustainable development of the country’s growth at large.”



Flower firm now sets it sights on Ethiopia


By Moses Michira

Kenya: Kenya’s flower industry is a lucrative one, worth over Sh80 billion in revenues a year, but the recent collapse of Karuturi with billions in unpaid obligations could be the clearest indicator yet that the ground is shifting.

There is consensus among flower producers that Ethiopia has an edge over Kenya in tax incentives and better access to new markets to the US owing to the direct flights it operates through its national airline.

And now the European Union has made a new demand that could further hurt flower exports, especially after Parliament declined to enter an economic partnership with the bloc. Starting October 1, flower exports to the EU will attract an import duty of 8.5 per cent, which will push up prices of Kenyan flowers and reduce their competitiveness in the market. The same taxes will not affect the other Eastern African countries, including Ethiopia, Rwanda and Tanzania, which are classified as least developed while Kenya is not.

Kenya sells more than 70 per cent of its flowers to the EU, mostly through auctions in the Netherlands and direct sales to resellers such as supermarkets.

It is these emerging challenges that could have informed Karuturi’s collapse, say insiders.

“The focus has been Ethiopia — that is where the money has been going,” a manager told Business Beat.

Kenya currently supplies around 38 per cent of the fresh flower imports into the EU, but there are fears that market share could be chopped. Columbia and Ethiopia are the other key source markets.

The concerns could be valid given that Sher Agencies, which was once the world’s largest roses producer, moved to Ethiopia after selling its Kenyan business to Karuturi seven years ago. Several other companies with operations in Kenya are said to be looking north, taking the cue from Sher.

Naivasha MP John Kihagi says Kenya “has a situation to handle” in its flower sector, which is estimated to employ 500,000. President Uhuru Kenyatta is expected to make a case for Kenya in the latest round of negotiations starting today, regarding the economic partnership.

Under the Economic Partnership Agreement, Kenya and its neighbours would be expected to cut taxes levied on imports from the EU, which is the point of contention.

Karuturi has acquired long leases on about 350,000 hectares in Ethiopia where it is in different stages of producing grains and flowers. Despite the multi-billion dollar investment, Karuturi’s Kenyan subsidiary has been struggling to the point of failing to pay salaries while supplies to its farms, such as fertilisers and pesticides, have run dry.

Its workers have staged violent protests owing to delayed wages and deteriorating living conditions, compounding problems for a company that has been accused of tax evasion by the government.

Karuturi’s senior staff say the local subsidiary has been under-billing its sister companies registered in tax havens for flowers produced in Kenya.

Tax experts argue that the losses reported could be artificial to enable the firm utilise a trading mechanism called transfer pricing. In Karuturi’s case, a subsidiary domiciled in Dubai handles the export and selling of flowers to report huge profits for the mother company that is listed on the Mumbai Stock Exchange.

The Kenyan business produces between 350 million and 400 million flowers annually, and is the flagship operation for Karuturi Global, which made Sh1.5 billion in profits in 2013 while the local subsidiary reported a Sh208 million loss.

Receiver managers appointed by CFC Bank, whose loan Karuturi defaulted on, think the business should be very profitable. Its latest exports are fetching prices upwards of 0.25 euros (Sh29.8), which is higher than the 0.04 euros (Sh4.8) Karuturi was selling its stems at.



Germany keen to further strengthen relations with Ethiopia


Addis Ababa, 25 March 2014 –  Germany’s Foreign Minister, Doctor Frank-Walter Steinmeier, said his country is keen to further bolster its relation with Ethiopia.

Doctor Frank-Walter Steinmeie arrived in Addis Ababa yesterday for a day long official visit.

In a joint statement he gave with his Ethiopian counterpart after the visit on the same day, the Minister said that Germany is keen to further strengthen its relation in all sectors.

Dr Steinmeier described the relationship between the two countries as traditional and important, noting that more should be done to extend this as there was common ground for closer cooperation.

He further appreciated Ethiopia’s contribution to the peace and stability of Africa and the Horn region in particular.

Dr. Tedros on his part thanked Germany for its commitment to help the Hon of Africa and expressed his hope that this close cooperation would continue.
At the same time he urged Germany to continue assisting the Somali Federal government in training its own security forces.

Dr. Tedros said the South Sudanese leaders needed to look at the bigger picture to solve the crisis in their country, and he explained that external forces, including Eritrea, were playing a role in aggravating the situation there.

Dr. Tedros explained to Dr Steinmeier that the Nile Basin countries had taken ten years to negotiate their Comprehensive Framework Agreement and this had now been signed by six of the nine riparian countries.

In addition, Sudan now supported the Great Ethiopian Renaissance Dam project after the report of the International Panel of Experts had made it clear that the Dam would not cause any appreciable harm to either Sudan or Egypt.

Ethiopia had repeatedly assured Egypt that this was the case and stressed that only solution to the issue of Nile water was a win-win approach. It continued to try to discuss the issue with Egypt, and Dr. Tedros said Egypt should develop the necessary confidence to proceed with such dialogue. Referring to the role of the European Union role in Africa, Dr. Tedros noted that Africa has now developed its own way security structure and was working to establish an Africa Stand-by Force.

Dr Steinmeier’s visit to Addis Ababa is the start of a three-nation African tour which also includes Tanzania and Angola.



Japan brings kaizen philosophy to Ethiopia


textile workers in Ethiopia
Ethiopia’s economy faces massive challenges

“Sorting, setting in order, shining, standardising, sustaining,” proclaims a handwritten poster stuck to the wall of a shed where women gather twice a week to make craft items in the village of Faniekir.

Kaizen, the workplace philosophy that helped guide Japan’s recovery from the ruins of defeat in World War Two, has reached the rural uplands of southern Ethiopia.

Simple principles of tidiness and self-discipline are among the foundations of an approach that so impressed the late prime minister Meles Zenawi that he adopted it as national strategy.

Now it is helping women in southern highland villages develop businesses to supplement their farming work.

“We’ve got social recognition. Since we organised this, farmers come and sell to us and local government administrators respect us,” says Amelewerk Haile, who chairs the Faniekir women’s craft group.

“As women we cover many domestic expenses, plus we get more recognition from our husbands because we have got more skills.”

Mr Zenawi learned of kaizen at a 2008 Tokyo conference on African development – and its themes now feature in numerous Ethiopian projects supported by Japanese aid.

Experts from a government institute spread the message. Listening to their upbeat enthusiasm it would be easy to dismiss this as a passing management gimmick.

But behind the campaign lies a seriousness of purpose that reflects the massive challenges facing the country.

Population challenges

With a population of 92 million, which is growing by 2.6% a year, Ethiopia is Africa’s second most-populous country.

Poster on wall of women’s craft group in Faniekir village
Kaizen is being used by groups across Ethiopia

The government has set a goal of reaching middle-income status by 2025.

But it will be impossible to achieve this on the back of traditional farming.

Already rural population growth imposes huge environmental strains, evident in widespread soil erosion and deforestation.

So Ethiopia is pursuing a “growth and transformation plan”, to expand manufacturing employment and help rural communities diversify their livelihoods.

Motivation and competitiveness will be key. That’s where kaizen comes in.

For Ethiopia’s challenge is comparable to the task that faced Japan in the 1950s as it began to build a modern industrial economy in a largely rural society.

Evolving mainly in the countryside but soon taken up by industrial groups such as the car-maker Toyota, kaizen – which means “livelihood improvement” – came to encompass a range of development ideas.

But at its heart are simple principles:

  • Keep the workplace tidy
  • Encourage workers to suggest innovations, rather than wait for instructions
  • Work with local resources

Japan later promoted the philosophy in emerging economies such as Egypt and Tunisia. Their experience impressed Meles Zenawi.

“What we hope to achieve through the introduction of the kaizen system is improvement in the productivity of all our enterprises, public and private,” Mr Zenawi once said, explaining why he had sought Japan’s help.

“It’s based on the creativity of all employees; it involves all employees in the improvement of quality and productivity of a company.”

women in Ethiopia
Japan is also supporting villagers’ craft industries

‘We are very much interested’

Teams from the Ethiopian Kaizen Institute visit factories and offices to help them adopt the philosophy.

The early months of a company programme concentrate on organising the workplace and building a team ethic, explains institute general director Getahun Tadesse.

Motivation, productivity and creating a mood of change come next, while the long term theme is on innovation and management.

On a recent visit to Addis Ababa, Japanese Prime Minister Shinzo Abe said the institute should become a centre of excellence for human resource development across Africa.

Tadesse says kaizen is being applied in 160 companies so far, and last year his staff trained around 11,000 people.

The designer Sara Abera, founder of hand-woven textiles maker Muya Ethiopia – whose products are now sold in London and New York department stores – is keen to take up the philosophy.

“We have not yet started kaizen, but we are trying to get someone to come and train us,” she says.

“We are very much interested. We have heard a lot about it. Meles used to talk about it.”

Development of a new industrial estate on the fringes of Addis Ababa
Ethiopia’s challenge is in building an industrial economy in a largely rural society

‘Workers have to be involved’

Some themes are uncontroversial, such as reorganising a factory shop floor to save space.

But persuading bosses to listen to their staff – and giving workers the self-confidence to make their own suggestions – is a bigger task.

“Workers have to be involved,” says Bonsa Regassa, one of the advisory team.

“We are seeing a cultural change in Ethiopian workers.”

And the application of kaizen is not confined to factories in the capital, Addis Ababa.

Across Ethiopia the Japan International Co-operation Agency (Jica) spends around $100m a year, and sometimes more. Much is focused on supporting rural activity such as village craft-making.

That’s how kaizen thinking even finds its way to communities such as Faniekir, 125 miles (200km) south-west of Addis.

“We are trying to apply kaizen principles not only in our workshop but in our homes,” says craft group leader Amelewerk Haile.



Transport: Riding the rails in Ethiopia and Kenya


By Elissa Jobson in Addis Ababa and Marshall Van Valen

Addis Ababa’s light rail transit system takes giant steps across the cityscape. Photo©Carl de Souza/AFP

Ethiopia and Kenya are in a race to complete ambitious railway projects, but while Addis Ababa is in a frenzy of construction its East African neighbour may have hit the buffers.

At Meskel Square, in the heart of Addis Ababa, traffic is even more chaotic than usual as cars, buses and pedestrians weave around the 5.5m-high pillars now straddling an eight-lane highway.

Confusion reigns too at Mexico Square to the west and Megenagna round-about to the east – evidence that work on the city’s light rail transit (LRT) system is progressing at a phenomenal pace.

Bringing in the resources from the rural areas for processing is a problem. Part of that is transportation costs being high

East Africa is home to a series of promising rail projects, from Kenya’s standard gauge line to the railroad linking the Ethiopian capital to the port of Djibouti.

Ethiopia’s projects are far more advanced – they benefit from the wholesale support of the government – while Kenya’s are lagging behind.

The railway to link South Sudan to the port at Lamu lacks investment, and the development of the new standard gauge line is bogged down in debates about how the contract was awarded.

In Ethiopia, two twin-track lines will bisect Addis Ababa north to south and east to west, diving underground along certain sections and, as in Meskel Square, rising up high on elevated tracks.

Trains will run for up to 18 hours per day at intervals of three to six minutes at peak times and will be able to carry a maximum of 60,000 passengers per hour.

With journey times from the periphery slashed by up to two-thirds, the LRT has the potential to revolutionise transportation in this fast-growing city.

“Ground was broken on 31 January 2012 and the first trains are expected to start running on 1 January 2015,” says project manager Behailu Sintayehu, adding that 52% of the construction has been completed so far.

More than 3,000 Ethiopian labourers and engineers, overseen by the main contractor China Railway Engineering Corporation (CREC), are working in shifts around the clock to meet the ambitious deadline.


Networking the country

This first phase of the LRT scheme is expected to cost $475m, with 85% of the financing in the form of a loan from China Export-Import Bank.

The Ethiopian government is funding the remainder. A second phase, which will double the length of the track and reach further into the city’s suburbs, is also planned.

Aside from the Addis Ababa mass transit system, the Ethiopian Railways Corporation (ERC) – the body charged with realising the government’s bold rail strategy – has also begun construction of a 5,000km network that will criss-cross the country, stretching into almost every area of Ethiopia.

“The main purpose of the national network is to connect Ethiopia economically and increase access for imports and exports,” explains Abebe Miheretu, head of information and public relations at the ERC.

The routes will link the country’s main productive centres, allowing for the swifter transport of commodities such as sugar, charcoal, potash and coffee, he continues. They will also extend to the borders with Djibouti, Sudan, South Sudan and Kenya.

Henok Assefa, managing partner of Precise Consult International in Addis Ababa, is convinced of the economic benefits of the rail network.

“Part of the poverty that we have in Ethiopia is a direct consequence of the unintegrated nature of the country,” he says. “Bringing in the resources from the rural areas for processing is a problem. Part of that is transportation costs being high.”

The majority of goods entering and leaving this landlocked country travel by road to and from Djibouti. It is an expensive and time-consuming journey that, according to some manufacturers, can cost up to $4,000 per container.

“For a country that is looking to grow richer by light manufacturing, where margins are very low, you need to be doing volumes and railways become a very handy instrument,” says Henok.

Ethiopia thinks ahead

As a result, the ERC’s priority is the line from Addis Ababa to the port of Djibouti. The government awarded this contract to CREC and China Civil Engineering Construction Company, and so far around 25% of the project has been completed.

The government is using the first phase of construction of both the LRT and the national rail network to build capacity for domestic industries.

Contractors conduct training for local staff and the Institute of Technology has opened at Addis Ababa University specialising in engineering. The government is sending promising undergraduates to Russia, India and China to continue their education.

The government hopes that the second phases of the LRT and rail network projects will be carried out entirely by Ethiopian enterprises, says Abebe.

Amid two parliamentary investigations and a court case against the contract for the standard gauge line that will link Nairobi and Mombasa, Kenya’s rail projects have been slow to develop.

In November 2013, President Uhuru Kenyatta laid the first stone for the new line, which will compete with the colonial-era narrow gauge line managed by Rift Valley Railways.

The company is doubling its number of locomotives this year, but the long-term viability of its concession is now in doubt.

China Export-Import Bank has agreed in principle to provide 85% of the finance for the standard gauge line, which estimates put at a cost of $5.3bn.

However, transport principal secretary Nduva Muli told the Public Investments Committee in early February that the cost of the project had not been agreed and the finance deal had not been signed.

The first phase will cover 500km, while the second phase would link the line to the Ugandan capital of Kampala. Work is expected to begin in July of this year and last four years.

The government started the process of buying up land along the railway’s proposed path in February.

The Nairobi government says that the project will be beneficial because it will reduce freight costs from $0.20 per tn/km to $0.08 per tn/km.

In late January, Kenyatta said “the standard-gauge railway must and will go ahead for us to achieve our development agenda,” and said that critics are sore losers who lost out on the contract.

China controversy

The Chinese and Kenyan governments signed a state-to-state contract that includes a provision that China Road and Bridge Corporation (CRBC) will carry out the work.

Groups opposed to the deal say that there are no provisions in the constitution for single-sourced deals like this one and point to the fact that the World Bank banned the company from participating in its bids due to corruption involved with a contract in the Philippines.

Critics also argue that the deal allows CRBC to conduct the feasibility studies, so there is no independent oversight on costs, which they say are inflated and more expensive per kilometre than its Ethiopian counterpart.

The authorities say the deal is structured like this because the previous government under President Mwai Kibaki had shopped around for financiers and found Beijing to be the only party interested.

With China Merchants Holdings having signed a deal with the Tanzanian government in May 2013 to build a port, special economic zone and railroad network at Bagamoyo, competition in East Africa’s transportation and other sectors is heating up.

The Ugandan government has now agreed to build a pipeline through Kenya that could terminate at the new port under construction at Lamu, in northern Kenya.

Both the Kenyan and Ethiopian governments would like to serve as South Sudan’s access route to the coast, so being the first across the finishing line is crucial for wooing the Juba government.

The ports at Bagamoyo and Mombasa can both attract trade from Rwanda and the Democratic Republic of Congo, providing East Africa with some of the continent’s densest rail networks.



Train build aiming to pass over costs Ethiopia 6 billion more



March 25, 2014

Ethiopia has allocated 34 billion birr to construct the Mekele – Woldiya/Hara Gebeya – Semera – Tadjourah Port Railway Project; the railway line will cost Ethiopia 6 billion more birr ($300,000) in order to pass over the Asseb region which is located on the borders of Ethiopia and Eritrea.

The Railway Corporation has been forced to do so not to touch the Asseb area which the railway line is supposed to pass through. This railway project is mainly aimed at exporting the Potash mineral found in the Dallol area, Northern Ethiopia. Yapi Merkezi, a Turkish company, has signed an engineering, procurement and construction contract, with the Ethiopian Railway Corporation to complete the construction of the new line within 42 months.

Although Ethiopia is still searching funds for the project, so far a Chinese and a Swiss Bank have promised to offer a loan.



Ethiopian trade delegation due in Kenya today


Addis Ababa, 25 March 2014  A delegation of 35 Ethiopian entrepreneurs is expected in Kenya on a reciprocal visit to one made by Kenyan manufacturers last August.
The tour also comes against the backdrop of a four-day visit by President Uhuru Kenyatta to Addis Ababa.
Kenya Association of Manufactures (KAM) Chief Executive Officer Betty Maina says the businessmen will arrive on Tuesday for a three day visit that will include tours to key value addition facilities in the country, business-to-business meetings with local industrialists and talks with key government officials.
Maina says Ethiopia has made great strides to open up its market and is expected to sign the Free Trade Agreement and become a fully fledged member of the Common Market for Eastern and Southern Africa (COMESA) by the end of this year.
“Ethiopians have shown themselves very willing to work with us and we are happy to see Inter-Africa Trade flourish through these joint trade visits,” added Maina.
Jointly, Kenya and Ethiopia provide a market of 125 million people with a joint Gross Domestic Product of Sh5.8 trillion (US$ 67 billion) and this visit is expected to provide an opportunity to create new business ties within the two countries.
Key areas where Ethiopians can learn from Kenya include agro processing and dairy processing sectors as well as Kenya’s mobile sector.
Ethio Telkom, Ethiopia’s sole telecommunication service provider is still under State ownership and getting a mobile phone line takes ages. In comparison, a robust ICT sector has contributed to an innovation ranking of 49 in the latest global competitiveness report and mobile banking services have improved Kenya’s financial penetrability from 20 percent to 60 percent.
Ethiopia on the other hand exports cereals, vegetables, copper, ores, tyres and concentrates, textile yarns, spices to Kenya.
The country also boasts of the Ethiopian Commodity Exchange, a one of kind trading platform for agricultural commodities that Kenya could borrow a leaf from.
Long term Joint projects in energy and infrastructure development such as LAPSSET are currently underway and both countries have already signed an agreement that will see the building of 800 Km railway line from Lamu to Addis Ababa.
These projects will pave the way for joint private sector investments in the two countries.
Joint promotional activities are envisioned in the Special Status Agreement (SSA) signed in 2012 by former President Mwai Kibaki and Ethiopia Prime Minister Hailemariam Desalegn to promote trade between the two countries.
“The SSA stipulates the setting up of a Private Sector Council for which we do not need the SSA to sign and a step towards the setting up of such a council is if we organise trade visits which give businessmen from both countries the opportunity to test the waters and explore trade possibilities” Maina said.



Ethiopia, Finland to Implement Acid Soil Treatment Project


Posted by Tesfaye Abera

Addis Ababa March 25/2014

The government of Ethiopia, in collaboration with the government of Finland, has designed a project for acid soil treatment and its implementation would begin soon, the Ethiopian Geological Survey disclosed.

Chief Geologist with Ethiopian Geological Survey Hunde Meleka said the project will be implemented by the Ethiopian Geological Survey and the Ministry of Agriculture on the Ethiopian side, and the Foreign Ministry as well as the Geological Survey and the Agriculture and Nutrition Study Program of Finland.

The government of Finland will provide USD 500,000 assistance for the project, Ato Hunde added.

According to the chief geologist, the aim of the project is to treat acid soil which is prevalent in our country. Finn soil scientists are known for treating acidic soil, he further noted.

Soil and Plant Nutrition Scientist, Professor Marti said the experts will work to treat acid soil and study what kind of fertilizer they need.

The professor added that testing would begin soon in sample sites identified at various parts of the country.



Turkey’s TIKA provides Ethiopia’s Harar with ambulances


Turkey's TIKA provides Ethiopia's Harar with ambulances

“When receiving the ambulances, I recalled those who lost their lives before they reached health institutions due to the shortage of ambulances,” Harari Regional State Deputy Chief Regasa Kefale said at a formal delivery ceremony.

World Bulletin / News Desk

The Turkish Cooperation and Coordination Agency (TIKA) has donated two fully-equipped ambulances to the Ethiopian town of Harar, 523km east of Addis Ababa.

“When receiving the ambulances, I recalled those who lost their lives before they reached health institutions due to the shortage of ambulances,” Harari Regional State Deputy Chief Regasa Kefale said at a formal delivery ceremony.

Kefale told Anadolu Agency that “as the ambulances are well equipped to provide medical care to patients, they will help save the lives of many people, in particular women.”

“The Turkish government has carried out commendable activities in the social sector, in particular in safe water provision and the education sectors,” the Ethiopian official said.

For his part, Mohamed Ahmed, head of the ancient town’s health bureau, lauded the Turkish government for its contributions.

“The Turkish act was so fast to support those who are in need… They lived up to their word,” Ahmed said.

Enver Arpa, head of TIKA’s Middle East and Africa department, said Ankara would do its utmost to enhance existing relations with Ethiopia.

“The Turkish government is fully engaged in supporting the needy. The [Turkish] government covered the full cost of the ambulances,” he said.

Earlier, the Turkish government had assisted in improving the town’s water services, renovating cultural and tourism sites, repairing health institutions, and helping professionals exchange their experiences, among other things.

“It [the Turkish government] will also renovate the [historic] Al-Nejashi Mosque in the northern part of Ethiopia and maintain the Jugol Hospital in Harar,” Arpa asserted.

Maintenance work on the home of Mustafa Ali, a Turk who had lived in Harar decades ago, is already underway. Ali’s home is now one of the town’s heritage sites.

The ancient, walled city was built between the 13th and 16th centuries. It was included on UNESCO’s World Heritage List in 2006 in recognition of its cultural importance.

Harar’s Old City (Harar Jugol), said to be Islam’s fourth holiest city, boasts 82 mosques – three of which date from the 10th century – and 102 Muslim shrines.



Misrepresenting the CSO legislation and Tarnishing Ethiopia’s image


Hassan Adem 03/24/14

The Extractive Industries Transparency Initiative is a global initiative launched by the then PM of U.K. Mr. Tony Blair in 2002. It is an International multi-stakeholders initiative of governments, companies and civil society working to strengthen governance by improving transparency and accountability in the extractive sector.  EITI  involves  a  process  by  which  the  payments  made  by  companies  and  revenues  received by governments are published in independently verified reports. The process is overseen and governed by a multi-stakeholders working group represented from government, civil society organizations and extractive companies.

Implementing EITI will help countries to efficiently collect the revenue generated from the extractive industry, supports anti-corruption and good governance agendas of countries and establish citizen trust in public institutions and extractive companies. Citizens would be able to hold government accountable  in  the  use  of  revenues  collected  from  the  extractive  companies.  A transparent system will bring conducive investment climate and attract more direct foreign investment.

To the chagrin of the neo-liberal forces, EITI decided to admit Ethiopia on March 19. The decision infuriated Human Rights Watch, which have been lobbing against the admission, that it issued a statement claiming: “With this move, the EITI may have added a member, but it lost its credibility as a good governance initiative”.

Ethiopia’s application for membership was accepted because Ethiopia met the criterion for membership in the group. One of those criterions is that: A member shall commit to meaningful participation for civil society on issues related to natural resources. EITI’s Standard instructs that, “government must ensure there are no obstacles to civil society and company participation in the process,” including with regard to “relevant laws, regulations, and administrative rules as well as actual practice in implementation of the EITI.”

However, Human Rights Watch has a different view. It position is based on none but the CSO legislation. Human Rights Watch’s dep. director argued that Ethiopia’s law “prohibits nongovernmental organizations from working in human rights and good governance if they receive more than 10 percent of their funds from abroad. As a result, today there are few organizations working on these issues and those that do, self-censor and straddle a knife-edge, always concerned about a potential crackdown.”

However, this is a gross misrepresentation of the reality. To begin with the 2009 Proclamation of Charities and Societies of Ethiopia was not intended to stifle rather to encourage and broader civil society activities.

Charities and Societies, and national and international Non-Governmental Organizations (NGOs) have been operating in Ethiopia for a long time. The laws governing their registration and operations were first drawn up in the early 1950s and were based on the 1952 Ethiopian Civil Code and Regulation 321/1959.  However, those legal frameworks have become outdated that they reached to a point where they can no longer provide a workable environment, not least due to the many legislative and other changes that had taken place in Ethiopia and elsewhere. They were certainly incapable of ensuring the maximum benefits for the country from NGO activities.

Indeed, some Charities and Societies repeatedly requested the Government for more up-to-date regulations to enable them to carry out their operations smoothly, and put an end to unclear procedures and bureaucratic hindrances. Another significant factor that needed to be taken into account was that, after the demise of the former military regime and the introduction of a democratic federal government allowing for full freedom of association in the country, the number of Non-Governmental Organizations (NGOs) dramatically increased and their areas of activity multiplied.

The government therefore issued a new Proclamation of Charities and Societies in 2009 in order to facilitate and strengthen the effective contributions of NGOs to the socio-economic development of the country. The Proclamation made the necessary amendments to reflect new realities and incorporate the best practices from the similar regulations of other nations. There were also extensive public discussions during the drafting process with all NGOs operating in the country and with other stakeholders.

The newly enacted Proclamation No.621/2009 for the registration of Charities and Societies came into force on February 13th 2009, and on November 9th 2009, the Council of Ministers also issued Regulation No.168/2009 to ensure its implementation in a transparent manner.

The Proclamation had two main objectives. One of these was to ensure the realization of citizens’ rights to association as enshrined in the Constitution of the Federal Democratic Republic of Ethiopia, and secondly to support and facilitate the role of Charities and Societies, and of NGOs, in the overall development of Ethiopian peoples.

In sum, the legislation is designed to create an enabling environment for citizens to exercise their right to organize, engender the prevalence of accountability and transparency, and enable the civil society community to become government partners in enhancing development and democratization processes. It is indubitable that these rationales and policy objectives are valid, and for the same reasons, the existing old legislations need to be changed.

Besides the good intentions, the drafting process was highly participatory. It involved the civil society community thorough discussions of the draft proclamation. There had been a series of discussions held among the civil society community and between civil society and the government concerning the draft legislations prepared by the FDRE’s Ministry of Justice. Moreover, there were forums in which CSOs and NGOs had an opportunity to make thorough discussions among themselves as well as with government representatives and other stakeholders. Before and after the draft proclamation was referred to the Council of Ministers, the civil society had been given sufficient time to launch a series of discussions among themselves and forward recommendations. Last but not least, the Prime Minister himself invited all CSOs and NGOs to his office for a discussion on the draft legislation.

As a result, the final legislation delivered several important developments that brought positive developments to CSO activities.

Among those:

a) The drafting of a separate legislation focusing on NGOs/CSOs by itself was an important development: As indicated earlier, despite general provisions for charities and associations, the previous legislation does not create an enabling environment for their operations because it was not formulated in such a way as to accommodate the diversity of civil society institutions, their operations, and unique characteristics. The government’s initiative to address these gaps was both timely and eagerly anticipated.

b) The incorporation of specific provisions for different types of NGOs/CSOs: The legislation has specific provisions about charities and societies, which didn’t exist in the old legislation. Moreover, the charitable purposes enumerated under sub-Article 16(3) fairly reflect the current status of the organizations and cover to a large extent the spheres of engagement of the NGOs and CSOs in Ethiopia.

c) The provision for the establishment of consortium of charities or societies: One of the difficulties encountered under the previous legislation is the lack of a provision for the legal status of CSO/NGO consortia. In this regard, the draft legislation’s provision in sub-Article 6(1) for the establishment of such a consortium is one of its main strengths.

d) Allowing charities and societies to engage in income generating activities: This is an important component of the legislation because it helps charities and societies to strengthen their internal capacity and ensure the sustainability of their activities.

e) Exemption from income tax for charities: This is another important step that was not available under the old legislation and that strengthens the civil society’s capacity to provide service to the public and enhances their financial capacity.

f) The establishment of the Charities and Societies Agency: Another positive feature of the new legislation is the establishment of an Agency to undertake the registration and supervision of civil society organizations and a council to handle issues related to charities and societies. The Charities and Societies Agency was established under the Proclamation as an autonomous administrative body to handle the registration of Charities, Societies and NGOs properly and assist them to achieve their goals with transparency and accountability.

The Charities and Societies Agency has been given the powers and functions to: To license, register, and supervise Charities and Societies; To encourage Charities and Societies to have better administration; To collect, analyze and disseminate information relevant to its powers and functions; To publish and distribute information about the registration of Charities and Societies in the newspapers; To organize consultative fora for governmental organs and Charities and Societies; To make proposals to Ministers on matters relating to meeting its objectives; To take decisions, in cooperation with the concerned sector administrator, on the application of Charities and Societies for registration and license; To exercise the powers of registration and authentication of documents with regard to Charitable Endowments and Charitable Trusts; To collect fees for the service it renders in accordance with rates to be approved by Government; To own property and enter into contracts in its own name; To delegate, when necessary, the powers and functions given to it by this Proclamation; and To carry out any such other activities necessary for the attainment of its objectives.

However, some choose to ignore all these developments and are hell-bent on tarnishing this important legal document based on one of its aspects. That is; the provisions of the legislation regarding the nationality of NGO/CSO institutions.

Indeed, the legislation specifies the limitations to the operations of Foreign Charities and Societies. These foreign charities and societies are not allowed to engage in domestic Ethiopian political activities as of right. This is normal practice in most countries, as political activities, by their very nature, are reserved for citizens. It is a sovereign state’s right to limit the influence of foreigners through any financing of political activities. Aside from politics, foreign charities and societies are free to operate and assist in any much-needed development activities and humanitarian needs of the country. It might be underlined that the Proclamation does not exclude the possibility of foreign Non-governmental organizations operating in Ethiopia to contribute constructively in activities otherwise totally reserved for local NGOs in accordance with Article 3 Sub-article 2(b) However this must be done through agreement with the Government of Ethiopia and also include regular evaluations.

In this regard, it might help to take a look at the distinctions set by the legislation with regard to Ethiopian associations and the Foreigners.

Sectors open for Foreign Charities and Societies and NGOs include, among others: a) The prevention, alleviation or relief of poverty or disaster; b) The advancement of the economy and social development and environmental protection or improvement;  c) The advancement of animal welfare; d) The advancement of education; e) The advancement of health or the saving of lives; f) The advancement of art, culture, heritage or science;  g) The advancement of amateur sport and the welfare of youth; h) The relief for those in need by reason of age, disability, financial hardship, i) The advancement of capacity building on the basis of the country’s long term development directions.

Whereas, Activities reserved to Ethiopian Charities and Societies and NGOs, are: The advancement of human and democratic rights; The promotion of equality of nations, nationalities and peoples, as well as the promotion of equality of gender and religion; The promotion of the right of the disabled and of children; The promotion of conflict resolution or reconciliation; and The promotion of improving the efficiency of the justice and law enforcement services.

Therefore, for any objective observer it is nothing but appropriate that political related matters are reserved for Ethiopian CSOs and NGOs, while there is plenty room left for any genuine foreign or foreign-funded organization to contribute in developmental areas.

In Conclusion:

Overall there’s no doubt this legislation have helped to advance clarity and predictability in the operations of all charities and societies and NGOs in Ethiopia. It has also significantly improved arrangements for the licensing, registration and operations of these organizations in the country.

During the more than half a century from the 1950s to 2009; the total number of registered Non-Governmental Organizations registered to operate in Ethiopia in various areas were less than 3800.  However, since the enactment of the new legislation and the establishment the new Charities and Societies Agency in 2009, more than 2000 national and international Non-governmental organizations have been registered. The difference is very easy to observe. It is also worth mentioning that the average registration rate for NGOs was 76 per year for the period from 1950s to 2009. However, only in the first three years since the Proclamation, the average annual figure has tripled. If the future rate of registration follows the same trend in the future, the number of NGOs operating in Ethiopia will certainly show a substantial increase.

It is indeed quite clear that the new Proclamation, in addition to its impact on speeding up the processes of registration and encouraging new NGOs to register is also providing a legal and conducive working environment for Non-governmental organizations encouraging and allowing them to discharge their duties in a responsible and transparent manner.



Accuracy, Not Transparency, to Blame for Mining Sector Gaps


–  Ethiopia now has three years to comply with EITI standards, which help to ensure the transparency of resource management


The first published report by the Ethiopian Extractive Industries Transparency Initiative (EEITI), for the period between July 2009 to July 2010, reveals seven cases where differences in excess of five million Birr between amounts reported by the government and by each company remained without being reconciled.

The report, named the Ethiopia Revenue Transparency Reconciliation, was produced by a London-based auditing firm called Hart Nurse Chartered Accountants.

The report reveals that in the stated period the government managed to collect 549.3 million Br from companies engaged in the mining industry through different types of payments. Out of this, the Ethiopian Revenues & Customs Authority (ERCA) received 322.8 million Br in the form of mining income tax, while the Ministry of Mines (MoM) collected 65.5 million Br in royalties.

“We may have some problems relating to the accuracy of data in the report, but not with the wider subject of transparency,” Tolessa Shagi, minister of Mines said about the report released at an event held on Tuesday, March 18, 2014, at Desalegn Hotel, on Ghana Street.

Tolesa said the report, though not on par with international standards, still helps to describe the gaps in the industry.

“We will work to present more recent data in the future,” the minister said.

He, nevertheless, admitted that there is a four year lag time in the report.  The Extractive Industries Transparency Initiative (EITI) stipulates that financial information reports should not be older than two years.

The EEITI, which is organised by delegates from the Ministry, mining companies and members of the Civil Society (CSOs), authored the report with the aim of examining the transparency and credibility of certain mining sector payments and recipients in Ethiopia.

Midroc Gold S.C leads the pack with a 287.8 million Br payment to the government during the fiscal year under, while the Ethiopian Minerals Development S.C trails behind, paying 240.7 million Br.

The auditing service has been financed by the Multi-Donor fund administered by the World Bank (WB). The WB has also been giving other technical and financial support and  has promised to continue to do so, even if the international body did not accept the country’s bid for membership.

The report was released two days before the Oslo-based (EITI) approved Ethiopia’s application for membership.

“The timing of this launch is not accidental,” Tolessa said at Tuesday’s event. “In a couple of days the international EITI board will discuss Ethiopia’s application to become a candidate country and the launch of this report is an additional argument to demonstrate our commitment.”

On March 19, 2014, the EITI accepted the application by the Ethiopian government to be a member, along with the US and Papua New Guinea.

The EITI, which was established in 2003, promotes and supports improved governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas and mining.

An earlier effort by Ethiopia to join the EITI was rebuffed in 2010.

“We were rejected then because they thought the role of the CSO was limited,” Tolessa told Fortune. “But after seeing what the realityis, the EITI have asked us to apply again.”

Ethiopia now has three years to comply with EITI standards.

The EITI’s decision to accept Ethiopia is drawing swift criticism from human rights campaigners. Yet the initiative seems defiant.

“In its discussions, the EITI Board stressed the importance of ensuring civil society engagement in Ethiopia’s efforts to comply with the EITI Standard,” the group said on its website.

This is a big promotion for the sector and the country, officials at the MoM told Fortune. This clearly shows the transparency in the sector and provesto  international companies that there is a rule of law in place that fulfils international standards.

“We will work to collect more information at the grass roots level,” the minister said. “But first we will work on capacity building to see when and how we will prepare the next report.”

The EITI maintains a standard. Member countries are expected to implement EITI standards, which ensure the full disclosure of taxes and other payments made by mining companies to governments.

Benefits of implementing countries include an improved investment climate by providing a clear signal to investors and financial institutions that the government is committed to greater transparency.

The EITI, which has 25 compliant countries and 19 candidate countries, also gives technical and financial support to member countries.










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