29 March 2014 Ethiopia Development News Round-Up

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Ethiopia closer to sign FTA to join other COMESA members

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As part of the required deals in the regional integration, Ethiopia is closer to signing the Common Market for East and Southern Africa (COMESA’s)

Free Trade Area (FTA) agreement that forces nations to open their doors to foreign trade for the first time.

The news came after the recent visit of the business delegation headed by Kenyan President Uhuru Kenyatta who made his first state visit as president to an African country since he assumed power.

Though Ethiopian officials kept silent on the details of the discussions of their agenda, they have consulted with their Kenyan counterparts. The Kenyan Manufacturers Association CEO, Betty Maina told Kenyan media that Ethiopia would join COMESA as a full-fledged member once it signs the FTA in a short period of time. Maina however, did not indicate the exact time Ethiopia will ink the FTA to open its doors to COMESA member countries.

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 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 while welcoming a delegation of 35 Ethiopian entrepreneurs who visited Kenya on a reciprocal visit to one made by Kenyan manufacturers last August.

A Free Trade Area (FTA) is a regional trade arrangement where a group of countries agree that goods produced by themselves can be traded without payment of customs, duties or imposition of quotas.

Ethiopia has of late found itself at loggerheads with other partner countries over trade controls and restrictions to its markets. Only recently has it introduced price curbs to tame runaway inflation, triggering protests among COMESA partners like Kenya who favor free market policy.

Two years ago, Kenya also raised a red flag on Ethiopia’s restrictive trade practices and urged the COMESA secretariat to arbitrate a dispute over a list of products eligible under a special cross-border trading scheme.

In fact, experts suggest that the cost of Ethiopia joining FTA then, was risky, as far as losing the fragile industrial sector of the country.

Ethiopia was one of the countries that recommended the setting up of a sub-regional Preferential Trade Area (PTA) at a meeting of the Ministers of Trade, Finance, and Planning in Lusaka in 1978.

The treaty for a Common Market for East and Southern Africa (COMESA) was signed in 1993 by 16 founding member states of which Ethiopia was one. It was established “as an organization of free independent sovereign states which have agreed to co-operate in developing their natural and human resources for the good of all their people.” COMESA now has 19 members.

Ethiopia was also chairman of the organization when it was transformed from a PTA to the COMESA. The late Prime Minister Meles Zenawi was elected chairman at the seventh COMESA Summit in Addis Ababa in May 2002.

Similarly, Ethiopia is one of the six countries chosen for the COMESA oil seeds development project; the Debre Zeit National Livestock Vaccination Medicines Production Company is COMESA’s center for livestock medicine production; the COMESA Leather Institute was established in Ethiopia; and the Akaki hand tools and spare parts factory is COMESA’s spare parts manufacturing center.

http://www.thereporterethiopia.com/index.php/news-headlines/item/1796-ethiopia-closer-to-sign-fta-to-join-other-comesa-members

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Lebu to be hub of nationwide rail network

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The Lebu area, located in the south western end of the capital has been selected to serve as the hub of the up and coming nationwide railway network ultimately extending 5060kms and currently under construction.

The plan to site the network hub for railway routs originating from Addis Ababa and running to different parts of country is part of a nationwide railway architecture, which will be implemented in phases. All in all, the nationwide rail-network consists of eight railway routs connecting the capital city to the main export/import gateway, Djibouti, and other parts such as Northern and Southern Ethiopia, which have not had a link until now. 

The railway architecture shows that the following will be the major routs that will crisscross the country: Addis Ababa-Modjo-Awash-Dire Dawa-Dewanle; Modjo-Shashemene-Arbaminch-Konso-Moyale Including Shashemene-Hawasa and Konso-Weyto; Addis Ababa-Ijaji-Jimma-Guraferda-Dima including Jimma-Bedele (direct to Boma with further extension to South Sudan); Addis Ababa-Ijaji-Jimma-Guraferda-Dima including Jimma-Bedele; Ijaji-Nekemet-Assosa-Kumruk; Awash-Kombolcha-Mekele-Shire; Fenoteselam-Bahirdar-Wereta-Weldia-Semera-Elidar and Wereta-Azezo-Metema. Situated at the center of the nation, Addis Ababa and the planned hub at Lebu would service routs running north to south, north to east and south to east.

The Ethiopian Railway Corporation (ERC) further divides the eight routs into 11, where five of these were scheduled to be completed in phase I, which is the period covered by the Growth and Transformation Plan (GTP.) For phase I, a total of 2395kms was assigned although the implementation is nowhere at the expected level. For this phase, five projects were slotted, namely Addis Ababa –Djibouti Railway Project; Mekele – Weldya/Hara Gebeya – Semera-Tadjourah Port Railway Project; Addis Ababa –Ijaji-Jimma-Dima including Jimma – Bedele Railway Project; Awash- Kombolcha-Hara Gebeya Railway Project and Mojo-Shashemene-Arbaminich-Weyto Railway Project.

The planned hub will also host the first train simulator of the country which will be used to train train masters and railway engineers locally. Recently, some 254 Ethiopians were sent to China to train for jobs in relation to railway operations, of which 136 of them are training to be Train Masters. With regard to operation of railway systems, the cooperation has commissioned an Italian company, Italian Railway Corporation, to study and outline the detail structure of the nationwide and the Addis Ababa Light Rail Transit with a special focus on the operational side of the job. According to Tilahun Sarka, Chief Operations Officer of ERC, the company’s immediate task would be to study the details of how the Addis Ababa Light Rail Transit system would operate.

Transportation fares and a railway transport legal framework would be some of the issues that the study would attempt to shed light on, Tilahun told The Reporter. We need to know not only how many operational staff the railway system requires, but also how to decide what to pay them without deviating so much from the international standards, he said. “For instance, a regular Train Master (train driver) earns 5,000 dollars per month globally, but this does not mean that we will match it here, rather a study will reveal how to compensate them according to Ethiopia’s reality,” Tilahun elucidated.

In related news, he also noted that both city and national railway projects are progressing at the desired speed; and in the case of the former, 53 percent of the work has already been completed.

http://www.thereporterethiopia.com/index.php/news-headlines/item/1807-lebu-to-be-hub-of-nationwide-rail-network

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Largest Indian meat processor starts to import machineries

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The Allana Group, the 44-year-old Indian-based largest food processor, in the capital since January this year, is to establish a meat processing factory and is currently importing machineries, The Reporter has  learnt. 

Aman R. Khan, head of the company, told The Reporter that Allana has managed to bring in machineries required for the new factory to be erected in Ziway town, some 160 km south-east of the capital. Khan said that slaughtering machineries, refrigerators, temperature controlling systems and machines that work to measure environmental friendliness of activities are among the various equipment in the list to come. 

The head of Allana says that it is difficult to tell how much of the entire job has been done so far. The company has, however, secured 72 hectares of land for the first phase of operations. The other progressing job according to Khan is the design of the factory, for which ETG – a local architects and engineers firm has been awarded to undertake the job. A team of architects visited India to learn about and explore the best slaughtering plants the latter has.

With USD 20 million total investment ventures, Allana is looking to recruit some 600 permanent employees. However, Khan and his team have certain doubts about the capacity of these workers. Moreover, lack of coordination among the public offices is one of the challenges the company has tabled for consideration.

Khan hopes that the ‘integrated meat processing plant’ will start production by September 2014, aiming to slaughter around 200 cattle and 5000 sheep/goats a day. Initially the plant expects to produce 75 tons of meat daily.

Allana Group, known as Allana Sons in India, exports frozen halal buffalo meat, coffee, fruit and other commodities from India to some 70 countries. It was established in 1865 and has come to Ethiopia with its own capital and market know-how.

The Ministry of Industry (MoI) has budgeted some USD 250 million for export earnings in the 2006 Ethiopian fiscal year. Yet its task is not being met with only five slaughterhouses targeting exports. The meat-processing sector of Ethiopia is the most untapped but also the most treacherous, with perennial issues, including illegal smuggling to foreign countries and supply side constraints.

The arrival of Allana is hoped to add more value to the Ethiopian economy, following the existing USD five billion investments by Indian companies.

http://www.thereporterethiopia.com/index.php/news-headlines/item/1803-largest-indian-meat-processor-starts-to-import-machineries

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Tullow to start drilling third exploration well

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The British oil company  in Ethiopia, Tullow Oil, is to start drilling its third exploration well in Southern Ethiopia.

Previously, Tullow has drilled the Sabisa-1 and Tultule-1 in the South Omo Block. Oil and gas shows were noted in the first well while the second well was abandoned as a dry hole. The third well will be drilled in the Chew Bahir basin, in the Shimela locality. 

Reliable sources told The Reporter that the drilling crew has finalized mobilization to the drilling site. The drilling rig owned and operated by the Polish company, Oil and Gas Exploration Company (OGEC,) has been erected at the drilling site. Tullow is finalizing preparations to start drilling. According to sources, the drilling crew will start drilling next month.

A recent report prepared by Tullow indicated that the company and its partners have completed a 1,174 kilometer 2D seismic program in the Chew Bahir Basin in the eastern portion of the South Omo Block. According to the report, the survey identified a number of prospects and leads. The report said the Shimela prospect had been identified as the first well in the area and is expected to spud in 2014. A second well location is also being considered for 2014.

The South Omo Block is located in the northern portion of the Tertiary East African Rift Valley trend where Tullow Oil and its partners have made five significant oil discoveries in Northern Kenya. The company and its partners on the South Omo Block spudded the Sabisa-1 well in January 2013 and the well was drilled to a preliminary total depth of 1,810 meters. Hydrocarbon indications in sands beneath a thick clay stone top seal have been recorded while drilling, but hole instability issues required the drilling of a sidetrack to comprehensively log and sample these zones of interest.

The sidetrack was drilled to a total depth of 2,082 meters. The well encountered reservoir quality sands, oil shows and heavy gas shows indicating an oil prone source rock and thick shell section, which should provide a good seal for the numerous fault bounded traps identified in the basin. Only the lowermost sands appeared to be in trapping configuration at Sabisa-1. Based on the encouragement of the results of this well, the company decided to drill the nearby Tultule prospect, four kilometers to the east of Sabisa-1. The Tultule-1 well was drilled and well testing results show that it was a dry well.

Tullow Oil has a successful exploration history in neighboring Kenya and Uganda as well as Ghana. Currently, there are 12 international petroleum companies engaged in oil and gas exploration activities in Ethiopia under six licenses. Responding to a question about the results of the ongoing exploration projects in a press conference held last week, the Ethiopian Minister of Mines, Tolossa Shagi Moti said that oil exploration has been intensified in the country. “We expect positive results,” he commented.

http://www.thereporterethiopia.com/index.php/news-headlines/item/1801-tullow-to-start-drilling-third-exploration-well

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Alert issued over outbreak of wheat disease in Southern Ethiopia

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Wheat farmers in Ethiopia along with East Africa and the Middle East are on alert after a damaging strain of a plant disease called stem rust decimated more than 10,000 hectares of wheat in southern Ethiopia, the largest wheat producer in Sub-Saharan Africa (SSA) according to a report discussed at an international gathering of the world’s top wheat experts.

The detail of the stem rust outbreak in Ethiopia’s Bale zone, in the Oromia Regional State is a prominent topic at the Borlaug Global Rust Initiative (BGRI) 2014 Technical Workshop. Together with the Borlaug Summit on Wheat for Food Security from March 25 to 28, the BGRI is celebrating the 100th anniversary of the birth of Dr. Norman Borlaug, a legendary scientist who developed high- yielding, semi-dwarf wheat that is credited with sparking the Green Revolution and saving over one billion people from starvation.

An official at the Ministry of Agriculture (MoA) who declined to be named confirmed to The Reporter that the symptom has been detected but is currently controlled. Despite declining to give details, the senior official specified that the disease occurred after most of the harvested wheat was collected. “So no damage has been recorded,” he told The Reporter.

Another agricultural economics expert told The Reporter on condition of anonymity that yellow rust has already devastated some farmlands recently. He is also aware that it is under process to implement possible mechanisms to control the spreading of the disease fully.

He further explained that the rust disease is “dispersed by wind and possibly affects wide areas of wheat farms.”

“Dr. Borlaug taught us that rust never sleeps, which is why we now have the capabilities to detect an outbreak like the one that has occurred in Ethiopia, and to quickly mobilize a global response,” Ronnie Coffman, professor of plant breeding and genetics at Cornell University, and director of the Durable Rust Resistance in Wheat (DRRW) project said.

He noted that global consortiums together with Borlaug helped organize late in his life – what is now known as the Borlaug Global Rust Initiative and the DRRW project. These have been key to working on an aggressive rust intervention in Ethiopia.

Work conducted by the International Maize and Wheat Improvement Center (CIMMYT,) DRRW, the Ethiopian Institute of Agricultural Research (EIAR,) the USDA-ARS Cereals Disease Laboratory in Minnesota and the Global Rust Reference Center (GRRC) in Denmark have revealed that the strain of the stem rust damaging wheat in Ethiopia is possibly similar to a strain found in Turkey since 2007 and in Egypt and Germany in 2013.

However, the pathogen did not have a noticeable impact on production in these areas.

According to David Hodson, a senior scientist with CIMMYT’s Global Cereal Rust Monitoring Program, the previous lack of damage could mean that wheat varieties under cultivation there are resistant to infection, there were slight differences in the strains, or that environmental conditions have not been conducive to a stem rust outbreak.

During the 2013 harvest season in Ethiopia, the strain was lethal to a popular variety of bread wheat called Digalu. Like other stem rusts, the disease produced brick-red blisters on the plant and caused grains to shrivel. Ironically, Digalu gained popularity in Ethiopia because it carries resistance to other strains of stem rust and to another wheat disease known as yellow or stripe rust. And these qualities have helped wheat farmers in the country produce record high harvests.

“With such widespread planting of Digalu, we have not seen the major yellow rust outbreaks that were a problem in recent years and most farmers in Ethiopia have enjoyed bumper crops this season,” said Bekele Abeyo, a senior scientist and wheat breeder at CIMMYT. “But the widespread planting of Digalu may have opened the door for the incursion of a new and destructive strain of stem rust.”

Abeyo said that at the time of the stem rust outbreak in late 2013 the wheat crop was at a vulnerable stage only in the southern part of Ethiopia.

Concern now turns, he said, to regions where farmers may already have begun planting for the short rainy season that runs from February/March to June/July, and are probably still using the now vulnerable Digalu variety.

Wind models indicate the disease could also spread in a southwesterly direction toward Kenya, Uganda, Tanzania, Rwanda and – less probably – to countries in the Middle East.

http://www.thereporterethiopia.com/index.php/news-headlines/item/1804-alert-issued-over-outbreak-of-wheat-disease-in-southern-ethiopia

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