26 March 2014 Ethiopian News Round-Up



ERC to train 252 railway operators abroad


Addis Ababa, 26 March 2014 – The Ethiopian Railway Corporation (ERC) announced that it has finalized preparations to send 252 communication, computer network, rail traffic engineers, train masters and other light railway transport operators to China for training this week.

At a farewell ceremony yesterday, Corporation Board Chairperson and Adviser to the Prime Minister with the Rank of Minister Dr. Arkebe Equbay said that like other transport sectors railway transportation needs a proper care. “Thus, trainees have moral obligation to grasp all the necessary knowledge concerning to railway transportation.”
According to him, the railway transportation has key role for future economic transformation and integration. In this regard, having skilled manpower is significant.
Dr. Arkebe also said that as pioneer in light railway transportation, trainees must be responsible, committed and morally obliged to their mission. Besides safeguarding the safety of passengers in the future, trainees are expected to be image builders outshining in their training, he added.
Corporation General Manager Dr. Engineer Getachew Betru said: “Since the life of passengers would be in the hands of the future train masters, technicians, engineers; you have to be committed learners.”
Corporation Operation and Service Division Deputy CEO Tilahun Serka said that the recruited trainees will have different duties in the light railway.
According to him, the trainees would engage in driving, controlling, maintaining the locomotive and other activities.
Depending on the area of their engagement the trainees will take practical and theoretical courses for four – 11 months at the Tianjin Railway Technical and Vocational College.



Ethiopian Investment Forum


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Nedbank and the NEPAD Business Foundation held the first quarterly networking event for the year on Tuesday, 18 March 2014 in Sandton. The event, which was themed ‘The Ethiopian Investment Forum’, intended to encourage South African private sector to invest in Ethiopia. Mr Fitsum Arega the Director General of the Ethiopian Investment Agency gave the keynote address and together with the Ethiopian Ambassador to South Africa, His Excellency Mulugeta Kelil Beshir shared valuable insight into the mechanisms available for successful business ventures in Ethiopia.
Ethiopia a quintessential stable Africa investment destination
Ethiopia was the only country that successfully resisted the European colonialism of Africa in the 19th century, the Ethiopians have proven to be a resilient people in the face of adversity and this trait has survived to this day. During the height of the global economic downturn between 2008 and 2011, the Ethiopian economy was one of the few to match China by reaching a double-digit annual growth rate of 11%. This economic growth stemmed from the government’s commitment to poverty reduction through the implementation strong economic policies that support business development in Ethiopia.
Ethiopia has a population of over 95 million, with a 49% current labour force plus a 44% child population, which will feed into the labour force over the next 20 years. With such population figures, Ethiopia has been able to reduce unemployment to below 18% over the last 10 years and hopes to reduce the rate further down by 2024 to less than 10%. This success is has been achieved through the lowering of the minimum wage in order to encourage labour intensive businesses to operate in the country. Currently, the cost of labour in China and other parts of Asia has begun to slowly but steadily rise, this shift in prices of labour is slowly cutting the profit margins that production businesses, which relocated to the region between the 1960s to the 2000s, have been enjoying. As such, new locations for textile industries are opening up in countries with much cheaper labour costs, and Ethiopia is setting itself to compete with Asian countries on this front.
Major incentives have been provided to foreign investors in selected sectors and one of the most exciting incentive has been the regulation allowing full repatriation of profits and dividends. The government has also allowed the repatriation of principal and interest payments on external loans out of the country in convertible currency. Other regulatory incentives have been the guarantees against expropriation and the signing of bilateral Investment Promotion and Protection treaties with 30 countries coupled with the Double Taxation Avoidance treaties signed with 18 African countries. Ethiopia has gone further to provide huge fiscal incentives by exemption the payment of income tax for a period between two to nine years without discriminating domestic and foreign investors. There is also duty and tax benefits supported by regulation through the exemption of up to 15% on imported capital goods and the allowance to carry losses forward for half of the income tax exemption period.
The Ethiopian economy of USD$118.2 billion is now growing at 8% per annum with projections into the next 3 years holding that average. The availability of labour and its cost is among the chief competencies of Ethiopia. The last survey on labour supply divided according to sectors showed the following statistics: Agriculture employed 47% of the labour force, Services employed 42.2% and Industry employed 10.8%. These figures support the government’s agenda to promote labour intensive industries and reduce the unemployment rate of the nation.
To encourage foreign participation, the government has also created the Land Bank system. This is a government programme that distributes land to foreigners on a tenure basis and gives ownership of agricultural land to Ethiopians. The Land Bank has set aside large pieces of land to lease to foreign investors for agriculture use or developing for businesses purposes. This system has also allowed small-scale Ethiopian farmers to access microfinance to mechanise farming and increase production. The Land Bank system was designed for promoting infrastructure development through DFIs without tying investors’ profits in Ethiopia.
Though the countries bordering Ethiopia have suffered political and civil unrest for the past few decades, Ethiopia has consistently maintained a stable business and social environment. With countries such as Somalia starting to enjoy relative peace, the region is poised to adopt a very aggressive pro-business agenda in order ramp up infrastructure development. Ethiopia has a huge potential to sustain a high return on foreign investment and the government is opening its doors to Africa and the rest of the world.
Outward Trade Mission to Ethiopia in May 2014
The NEPAD Business Foundation in corporation with the Ethiopian Embassy in South Africa, The Ethiopian Investment Agency and the Ethiopian Chamber of Commerce are planning a trade mission to Ethiopia in the month of May 2014. We invite South African businesses with an interest in Ethiopian to join the delegation.



Ethio-South Africa Joint Commission emphasizes more dynamic, fruitful cooperation


Addis Ababa, 26 March 2014  – The 4th Ethio-South Africa Senior Officials’ Joint Commission Meeting aimed at reviewing and evaluating all areas of mutual cooperation to further strengthen the existing cordial relations in all sectors was opened yesterday at Ellily Hotel here yesterday.

Opening at the two-day meeting, Foreign Affairs Ministry African Affairs Director General Ambassador Solomon Abebe said: “Our two countries have witnessed development in all areas of cooperation and relations in light of the aspiration of our peoples for secure, stable prosperous present and future. Our bilateral political relations have been strengthened by mutual consultation and numerous high-level exchange visits have been further enhanced with the signing of numerous memorandums of understanding as well as protocols and agreements”.
Ethiopia and South Africa have signed various agreements in most sectors of mutual cooperation and already established broad -based bilateral cooperation. But much remains to be done, Ambassador Solomon said.
He further indicated that the two counties have great potential for economic cooperation and in forgoing strong economic ties in terms of trade and investment. “However, we have not yet fully utilized the existing potential. The level of economic cooperation is not yet commensurate with close political cooperation. Greater emphasis should be given to persuade our business sectors to work closely and strengthen their relation to make the cooperation more dynamic and fruitful,” he added.
South African International Relations and Cooperation Department East Africa Chief Director Tselane Mokuena on her part said: “Our gathering today presents us with a means to ensure that Ethiopia and South Africa stand together as partners as we traverse the route to development and prosperity in Africa.”
The meeting and discussions today need to take place within the context of the vision for Africa set by Africa’s leaders at the Africa Union ( AU) through agenda 2063. There is a need to ensure that the partnership remains geared towards not only the prosperity of sisterly countries but also of their respective regions and the rest of the continent, she added.
The meeting signals the realization that unity of purpose will lead to success. “As we begin to engage, it becomes imperative for us to closely, critically and thoroughly interrogate the status of our bilateral relations at various levels,” Mokuena said
The meeting will pave the way for the forthcoming ministerial meeting.



Ethiopia gets business academy


Dubbed the “Chamber Academy”, the business center was launched in cooperation with the Center for International Private Enterprises (CIPE), an affiliate organization of the US Chamber of Commerce.


The Ethiopian Chamber of Commerce and Sectorial Associations on Tuesday launched a business center of excellence, the first of its kind in the Horn of Africa country.

Dubbed the “Chamber Academy”, the business center was launched in cooperation with the Center for International Private Enterprises (CIPE), an affiliate organization of the US Chamber of Commerce.

“The opening of the Academy would stimulate the Ethiopian private sector,” ECCSA President Mulu Solomon told the opening session.

“It would be vital to bolster the capacity of the private sector through training for business people and staff of relevant organizations,” she said.

“The private sector in Ethiopia should extricate itself from traditional ways of thinking and practices and should be led by modern theories and practice of doing business,” Mulu said.

Professor Mohammed Habib, a senior legal professional and instructor at the Addis Ababa University, said international partnership would be vital to disseminate up-to-date business knowledge.

“The center of excellence just launched would stimulate the activities of the private sector and ensures its steady growth,” Habib told Anadolu Agency.

“The Academy is topical in the Ethiopian context where the private sector has been growing as a major driving force of economic development and growth.”

The academy aims to strengthen leadership and management skills of the ECCSA and member organizations and building institution capacity, according to a press release issued on the launch.

It also aims to enhance communication, cooperation and networking among business institutions.

Tuesday’s opening ceremony was attended by a host of foreign ambassadors, representatives of government and international development organizations, ECCSA partners and other stakeholders.

ECCSA has been operating and helping the Ethiopian business community for more than 60 years.



Large land deals reportedly fruitless


A new report by the International Institute for Environment and Development entitled “Large-scale land deals In Ethiopia: scale, trends, features and outcomes to date,” states that allocating land to investors has not shown a lot of benefits.

“Ethiopian government representatives at both regional and federal level acknowledge that, while considerable amounts of land have been allocated to investors, performance to date in terms of production, employment, and development of land has been disappointing for the most part,” the report reads.
The report states that according to the Ministry of Agriculture, of 2.2 million hectares of land allocated only 17.6 percent has been developed.
There are several reasons why land is not developed as expected. According to the report these include: high costs and difficulty of developing land, security issues, poor capacity of investors, misuse of investment licenses and limited monitoring and evaluation capacity.
The report states that the Ethiopian Government has leased at least one million hectares of land for agricultural investments over the period from 01 January 2005 to 31 August 2012. This includes around 380,000 ha from the federal land bank, managed by the Ministry of Agriculture; 335,000 ha by regional governments; and 335,000 ha for state-run sugar plantations.
Land deals promise to contribute to improved food security, but the report suggests that in some cases that may not be the case.
“If people directly lose their land without compensation or adequate resettlement, including access to productive resources, they will likely be worse off and more food insecure. Where there is a loss of access to resources that are important parts of livelihood systems and coping mechanisms, such as forests, rangelands, and water resources, there are clear risks of pockets of greater food insecurity at the local level,” the report reads.
When it comes to the responsibility of allocating land, the report underlines that there is a lot of confusion with the exact boundary between regional and federal responsibilities. This is because a land deal previously agreed by a regional government was again revised by the federal government.
One case in point is an Indian agribusiness firm that was allocated 300,000 ha by the Gambella regional government in 2008 was subsequently reduced to 100,000 ha by the federal government.
The report also states that there needs to be a better information sharing system between the central government and the regional governments.
“There did appear to be some joint monitoring between federal and regional governments but federal officials seemed to go directly to the woreda government on occasion, bypassing the regional government. This lack of awareness in the region is problematic in terms of good development planning or strong regional ownership of agricultural development activities,” the report reads.
The report also says that there isn’t a lot of information regarding what is being produced on the massive lands that are being allocated for investors.
It states that much of the data only indicates the land use is a crop production, as opposed to livestock, without specifying categories of crops or particular crops. Sometimes data indicates that several crops are grown and the relative amounts are unclear.



Ethiopian Scientist wins UNESCO award


Dr. segenet kelemu
Ethiopian Scientist Doctor Segenet Kelemu has been named the 2014 African Laureate in the 16th annual L’Oréal-UNESCO For Women in Science Awards. Currently Director General of the International Center for Insect Physiology and Ecology based in Nairobi, Dr. Segenet is the first Ethiopian to win the prestigious award. She joins five exceptional women scientists from around the world, one from each continent, who were recognized for their contribution to science at an awards ceremony, held at the Sorbonne in Paris last week (March 19) before an audience of personalities from the worlds of science, economics, academia and culture.


The $100,000 award celebrates the outstanding achievements of women in science and is recognized as one of the premier international science awards. Dr. Segenet was honored for her research on how microorganisms living in symbiosis with forage grasses can improve their capacity to resist disease and adapt to environmental and climate change. Her work is providing new solutions for ecologically responsible food crop production especially by local, small-scale farmers.
Born in Fenote Selam, Gojam, Segent did her high school studies in Debre Markos and begun her college education in Alemaya university and later did her master studies in Addis University. She excelled in her chosen field, plant sciences, and after obtaining her PhD in the United States, she went to Cornell University as a post-doctoral fellow. After having worked in Colombia, she returned to Africa and is now at the heart of an impressive international scientific research network.
Dr. Segent said she was “absolutely delighted” to receive the award, and paid tribute to the “exceptionally talented” people she has collaborated with during her career.
Previously, Dr. Segenet has held position as senior scientist in the International Center for Tropical Agriculture in Cali, Colombia and was eventually appointed Leader of Crop and Agroecosystem Management of the Center.
She said it gives her a pleasure to win various awards because her country’s name is also mentioned.



Castel Introduces its new wine


Now a leading French wine maker has put Ethiopia on the international wine map, with its new products from its vineyard in southern Ethiopia.
After a deal was struck between the late PM Meles Zenawi and Pierre Castel, founder and President of the Castel Group and BGI International to establish Castel Winery in Ethiopia that faithful day in 2007, the company immediately assigned the best experts and consultants in the business from France to select the most suitable area for a vineyard which can meet Castel Family’s strict three generations old quality wine making standards and criteria. After a thorough investigation by the panel of experts, the town of Battu (Zeway), 163 kilometers south of Addis Ababa was selected.
And the birth of Castel Winery was officially endorsed on May 2007 with the ceremony of the first vine plantation.
This FDI that became fruitful after almost seven years officially introduced its international taste with a big celebration in the presence of officials including PM Hailemariam Desalegn on Saturday March 22 at Battu.
Through hard work, resilience and innovation, and under the guiding hand of founding President Pierre Castel, today the Group has become the largest wine producer in France and Europe and the third largest wine producer worldwide, and became the owner of the second largest beer and soft drink businesses in Africa.
Beer business
Castel Group, one of the first very few foreign based companies that has come to defy the Ethiopian market after the downfall of the Derg regime and its command economy, joined the Ethiopia beverage industry after it decided to erect a brewery at Kombolcha Amhara Regional State with a USD 25 million dollar investment in 1997 and then it bought the long established brewery, St George, in 1998 at a cost of USD 10 million.
Since then the French based giant, that is demonstrating the benefits of doing business in Ethiopia for other global investors, has played a big role to heat the beverage industry in the country and to be a specimen for other dominant foreign firms to be part of the country’s development by establishing their business in Ethiopia.
The St. George Brewery, established state of the art infrastructure, since Castel Group/BGI Ethiopia owned it with a big market share has been introducing new local and international brands for the beer industry and now it can easily change the market with international standards.
BGI, that leads the beer market in Ethiopia with over half of the market share has also invested a huge amount to expand the Addis Ababa brewery plant, with branches in north eastern and southern part of the country at Kombolcha and Hawassa (Awassa) towns respectively.
Castel Group was established in Bordeaux, France in 1949 by founder Pierre Castel and his 8 brothers and sisters. It is a good example of foreign direct investment (FDI) in Ethiopia. The family growing up in the vineyards of Bordeaux meant that wine was already an integral part of their daily lives. “Theirs truly is a family affair. Their driving principle was to share their love of wine and other high-quality products in a way, which fulfills every customer’s expectations. With this ethos firmly in mind, not even rapid expansions have been able to undermine the core values, which shape Castle’s businesses spirit and identity,” the company profile reads.
In the 50’s and the 60’s, the Group embarked upon an internal expansion by setting up bottling plants. Keeping intact their special attachment to the internationally acclaimed wine making region of Bordeaux, the Group expanded to other known wine making regions of France like the Loire, the Rhône, Burgundy, Provence, the Languedoc and the South West, and within few years it spread  all over the world with its dominant brands.
Meanwhile, Castel Group was also busy establishing a reputation in the beer and soft drink sector in many parts of Africa. The Group became one of the key players in the continent when they acquired BGI (Brasseries et Glacières Internationales) in 1990.
The company that joined the Ethiopian market 17 years ago is still a major market actor in the Ethiopian beer industry.
Officials of BGI Ethiopia told Capital that currently the brewery is investing millions of dollars every year to meet the growing demand of its brands in the country. Not only is the company expanding its business, but the biggest brewery in Ethiopia has also bought significant share on the under construction brewery, Raya.
Currently, BGI Ethiopia bottles St George, Castel, Bati and Amber (St George), which is the first amber beer product for the country, though it has a plan to introduce other new brands to the beer market.

Facts about the new winery

  • Out of the 450 hectares given to Castel, the vineyard is planted on 162 hectares with an investment of 520 million birr.
  • The plantation of all the grape varieties lasted until the beginning of 2009.
  • At the start of 2011, while the grapes are maturing in the vineyard, construction of the state of the art winery went underway and was completed in less than a year.
  • Castel Winery has two product lines; Rift Valley and Acacia.
  • The four types of grapes Castel Winery currently grows to produce red and white wines are Syrah, Merlot, Cabernet Sauvignon and Chardonnay.
  • Acacia Dry Red, Acacia Medium Sweet White, Acacia Medium Sweet Red, Rift Valley Syrah, Rift Valley Merlot, Rift Valley Cabernet Sauvignon and Rift Valley Chardonnay are the brands introduced from its farm located at Zeway, part of the great rift valley.
  • The winery has a production capacity of 1.4 million bottles.
  • Half of the product will be exported to major markets in China, USA and Europe
  • Castel Group will continue to make expansion.





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