(Updated) 09 April 2014 News Round-Up


Ethiopia and Kenya to Speed up Special Status Agreement to Boost Business Ties


Ethiopia and Kenya plan to speed up the implementation of a Special Status Agreement (SSA) to improve trade and investment between one another.

This decision was reached when a 60-member delegation from the Ethiopian private and government sector met with their Kenyan counterparts, reports indicate.

The delegation from Ethiopia were reportedly visiting Kenya to explore potential business partnerships between the two allies.

Speaking during an interview, Ms. Phyllis Kandie, the Cabinet Secretary for the East African Community, stated that Kenya seeks to venture into mutual tourism marketing with Ethiopia.

She further stated that the move would help both nations complement what each has to offer, while exploiting tourist visits between the two states. Ms. Kandie added that Kenya would explore the possibility of training Ethiopian hospitality and tourism professionals as Kenya plans to establish hotels in Ethiopia.

The signing of the bilateral agreement occurred in 2012 after the Ethiopian government lifted restriction on Kenyan investors. Observers say the agreement will enable Kenyan businesses access the Ethiopian market besides boosting trade volumes between the two states.

During a recent state visit to Ethiopia, Kenya’s President, Uhuru Kenyatta and Ethiopia’s Prime Minister, Hailemariam Desalegn held a joint conference during which they commented on the imperativeness of reinforcing the long-standing relations between both countries.

Meanwhile, Kenya Association of Manufacturers (KAM) has appealed to the Kenyan parliament to ratify the agreement, which Ethiopia reportedly approved two weeks ago. KAM’s CEO, Betty Maina said that the ratification of the agreement would stimulate financial growth between both nations as Kenyan manufacturers can establish themselves in the neighboring market.

On a similar note, Mr. Sisay Gemenchu, Ethiopia’s Industry Minister, stated that business-to-business partnerships between the two nations would enhance regional trade. In 2011, the two states are reported to have signed an accord that created more favorable conditions for trade.

Mr. Gemenchu added that development of the road network between Ethiopia and Kenya would guarantee unhindered movement of goods. According to various sources, the special status agreement details numerous areas of collaboration in trade, infrastructure, and energy.

Analysts expect the agreement to grant Kenyan companies the freedom to commence operations in Ethiopia once the government approves the agreement. Observers say that Ethiopia’s growth has stimulated the desire of local companies seeking to set up regional subsidiaries.

Although Ethiopia ranks among the fastest growing non-oil African economies, the East African country reportedly poses numerous risks to investors such as weak purchasing consumer power and inflation stimulated by government spending.



RES Textile Scouts for Polyester Uniforms in East Africa


During the last week of March, the Trade Hub hosted a visit to Ethiopia and Kenya for RES Textile, the sourcing company of the large US Fast Food brands Taco Bell, Pizza Hut, and KFC.

The purpose of the trip was to scout out potential business partners in East Africa to make the polyester uniforms of these three brands.

The Trade Hub took RES Textile to seven different factories in Kenya and Ethiopia which can make hats, tops, pants, tee-shirts and other parts of the uniforms.

In addition to linking RES Textile with potential partners, the Trade Hub helped change the perception of these big brands of doing business in Africa as well as promoted the benefits of AGOA in exporting textiles to the US. Benefits from AGOA equal up to 32% in savings on duties.

The Trade Hub will receive technical briefs from RES Textile to help factories get started in making the uniforms.




Ethiopian oil marketer says Africa needs to refine its oil


Workers are seen at an oil exploration site in Bulisa district approximately 244km (152 miles) North-West of Kampala January 20, 2012. REUTERS/Stringer

Workers are seen at an oil exploration site in Bulisa district approximately 244km (152 miles) North-West of Kampala

January 20, 2012. Credit: Reuters/Stringer


ADDIS ABABA Wed Apr 9, 2014

ADDIS ABABA (Reuters) – Ethiopia’s leading private oil marketer plans to expand into neighboring east African economies and is interested in part financing a refinery after commercial discoveries in the region.

Tadesse Tilahun, CEO of National Oil Ethiopia, said untapped crude deposits in Kenya and Uganda handed governments and investors the opportunity to construct a refinery able to compete with cheap imports from India, the Gulf and beyond.

Doing so would help African countries extract more value from their resources and cut their import bills, Tadesse said.

“Africa’s demand for refined products is growing hugely because of its economic growth. The crude findings are also increasing. That is the opportunity,” Tadesse said in Addis Ababa as part of the Reuters Africa Summit.

“We want to (build) a refinery. We have already discussed this in principle with our shareholders, who are very much committed.”

National Oil’s (NOC) shareholders include Saudi billionaire Mohammed Hussein Al Amoudi, whose investment portfolio in construction, gold, hotels and energy has helped amass an estimated fortune of over $15 billion, according to Forbes.

Tadesse said other private and public investors would need to come on board.

Eastern Uganda has become the latest frontier in the global hydrocarbon hunt after gas finds off Tanzania and Mozambique and oil discoveries in Uganda and Kenya.

Even so, Sub-Saharan Africa faces headwinds supplying more of its own refined petroleum products. Regional cooperation and funding for oil-related infrastructure are proving slow, while foreign oil refiners and traders are flooding the $80 billion market with imports.

Existing pipelines also tended to run to the coast, Tadesse said, either for the export of crude or the import of refined products from small-scale refineries found near ports.

“That has to change,” Tadesse said. “Refineries are now needed inland so that Africa can supply itself.”


Tadesse acknowledged the price tag was problematic for many African countries. Oil production in Uganda has been delayed in part due to a row between the government and investors over the size – and thus cost – of a refinery in the country.

“It would be in our own interest, for all countries in this area, to have a common refinery, a joint facility, where we can take our own product,” Tadesse said.

Kenya plans – but has made little progress towards – a new $2.8 billion refinery on its northern coast. Industry experts say Ugandan and Kenyan oil exports could reach 500,000 barrels per day – oil Tadesse would rather see stay in the region.

Founded in 2004, NOC now claims a 35 percent share of a market tightly controlled by the Ethiopian state. So too are other key sectors including banking, retail and telecoms, which the government says need shielding from foreign investors while the economy diversifies away from its agricultural base.

Tadesse said NOC had secured a license for fuel stations in neighboring Djibouti and targeted expanding its downstream operations into Kenya within five years. Plans to enter South Sudan have been shelved due to the four-month conflict there.

“We want to be a regional player,” Tadesse said.

Oil consumption has doubled in 10 years in Ethiopia, one of Sub-Saharan Africa’s fastest-growing economies and now the region’s fifth-largest after leap-frogging Kenya.

Demand for oil in Ethiopia is seen tripling by 2025, indicative of the economic transformation under way in Africa’s second-most populous nation which is still better known abroad for the famine of 1984 and communist-era purges.

But the pace of NOC’s expansion at home hinges on the government relaxing its grip on the industry.

Tadesse said the government imported all fuel products and set the market price, allowing fuel stations a margin of just 4 U.S. cents per liter. Land rights issues also hindered growth.

“In no way can that be attractive to investors,” he said.

(Writing by Richard Lough; Editing by Susan Fenton)



IMF recommends sugar, logistics be open to foreign investors


.By Muluken Yewondwossen 

The International Monetary Fund (IMF) recommends that Ethiopia expand its private sector.  Jan Mikkelsen, the IMF resident representative to Ethiopia, who met with selected journalists on Wednesday April 2, said that the government should support  the private sector financially and promote domestic savings by activating a securities market with flexible interest rates.
He said that while there is general recognition that supporting the private sector is important, it is constrained by a lack of financial resources. “The large GTP financing requirement crowds out credit for the private sector. As a result, in real terms, the allocation of credit from the banking system to the private sector has remained roughly unchanged over the last four years while credit allocation to the public sector has risen steadily,” the IMF representative said.
On several other occasions IMF officials have called for carefully considering the balance between public and private sectors in the economy.
Ethiopia is one of the global leaders in public investment. According to the World Bank data, Ethiopia’s public investment is the third highest in the world, but its private investment rate is the six lowest.
The international financial institution has said the private sector is suffering from lack of finance.
In the past couple of years even though the country has registered economic growth and inflation remains in single digits export competitiveness and performance remains disappointing.
For instance the country’s export performance during the previous fiscal year was lower than the exceeding trend. In the past few year’s excluding the 2008 financial crisis, Ethiopia experienced significant growth in exports, but the past year saw lower results compared with a similar period of the previous year and was very far from targets.
During the first six months of this fiscal year Ethiopia’s exports also did not meet expectations. Price decreases of the nation’s major commodities in the international market and a disappointing performance in the manufacturing sector has contributed to the decline.
In his report Jan Mikkelsen wrote that lowering the cost of trade, by making logistics more efficient and the exchange rate more flexible would increase competition and strengthen exports. He also recommended allowing more foreign direct investment.
He stated that standardizing the way the foreign exchange market operates would make hard currency more available and eliminate harmful waiting time for businesses to purchase foreign exchange.
The IMF resident representative also mentioned several structural policy challenges. He agreed that the state should continue to play a vital role in economic development but argued that more sectors should be opened up for private investment.  “This alleviates the capacity problem both in terms of performance and accessing financing,” he said.
“In particular, gradually opening up key sectors like telecom, trade logistics, and finance, and withdrawing from sugar production could attract new investments and improve efficiency and delivery of services,” he added.
On many occasions international organizations have called for the government to privatize telecom and open the banking sector for foreigners  and just as often the government has reaffirmed its strong disagreement. This latest IMF recommendation added trade logistics to that list.  A recent law gave the sole multimodal scheme to the state owned Ethiopian Shipping and Logistics Services Enterprise.
This issue has created disagreement between the government and Ethiopian logistics companies who with the monopoly would be broken. The government has said that eventually it will ease the law and allow other private firms to provide logistical service. However, over the past two years the Enterprise has had no competition in the multimodal transportation scheme.
The IMF representative also wants the government to withdraw from sugar production. Currently, the government is undertaking several sugar factories and plantations throughout the country with the goal of ending sugar imports and eventually exporting sugar to other countries.
Ten sugar factories are scheduled for inauguration in the coming fiscal year, by the time the GTP ends.  Sources claim there has been some revision in some of those targets and not all the projects will be finished by that time.
The IMF representative also lauded the focus on infrastructural growth.
“I would like to commend the government’s continued efforts to improve infrastructure around the country-undoubtedly, the public investments in power, roads, and the Djibouti railway are key to sustaining economic growth in Ethiopia,” he said.
But he said that withdrawing from sugar production could attract new investments and improve efficiency and delivery of the service.
He pointed out that the planned USD 5.5 billion investment in sugar is more than the USD four billion spent on the Grand Ethiopian Renaissance Dam.
“Why not let for foreign and domestic investors spend their money on sugar, it is very attractive to them,” he said.
The government disagrees saying the needed investors do not exist.
“The sector requires huge capital, so the private sector is not very interested in investing in sugar,” the government argued.
Like previous IMF recommendations the representative also mentioned that the financial sector should be strengthened by promoting a well functioning securities market with flexible nominal interest rates and by phasing out the 27 percent National Bank of Ethiopia (NBE) bill holding requirement on private commercial banks. In the past few years the government has imposed the 27 percent NBE bill on private banks to buy bonds from the amount they lend. On several occasions the local financial intuitions have asked that the government to lift the requirement.



Amibara Rotates Crop Focus From Cotton to Cane


The farm will supply cane to Kessem – one of six new government-led Sugar Factories to start production next year

The Amibara Business Group has halted cotton production on its 6,000ha Middle Awash Agricultural Development farm, in favour of supplying sugarcane to the Kessem Sugar Factory, which is currently under construction.

The Factory could be completed sometime in 2014/15. It is one of a total of six sugar factories the government plans to make operational next year. These six factories could increase sugar production from 500,000tn to 1.85 million tonnes, according to the plan.

The Middle Awash farm is located 33 kilometres from the factory site, in an area where there are no other commercial farms, according to Kaba Mergia, general manager of kesem Sugar Factory. Once a state farm, Amibara purchased the business from the Privatisation & Public Enterprises Supervising Agency (PPESA) for 351 million Br in 2010/11.

The offer for the supply of sugarcane came from the Factory, which already has a 20,000ha farm of its own. According to the agreement Amibara signed with the factory, the business group will supply a total of 840,000tns of sugar at a price of 50 Br a quintal. Yusuf Omar, managing director of Amibara and Kaba Mergia, signed the agreement on March 27, 2014, at the office of the Ethiopian Sugar Corporation (ESC), located next to the Ministry of Trade (MoT) on Marshal Tito Street.

This rate is the same as what the Wonji Sugar Factory is paying to local farmers, who have switched from other crops to sugarcane production, in order to supply the factory. Amibara’s agreement will give it three years of guaranteed sales, which could be more lucrative than the more unreliable cotton market.

Cotton enjoyed prices of 1,930 dollars a metric tonne in the international market, in 2011, only to go down to 1,694 dollars in 2013. Latest figures for 2014, according to Index Mundi, indicate an international price of 2,073 dollars a tonne. With cotton yields varying between 19qt and 30qt a hectare, Amibara’s farm could yield on average around the same revenue as it does from its latest sugar cane deal, if not more. It could make 540 million Br from the sale of sugarcane, if production goes ahead as planned.

Amibara, which owns a portfolio of 11 companies, including Gelista Agricultural Development, Amibara General Aviation Service, Addis Modjo Edible Oil Complex and Amibara AgroChemicals, with a combined capital of 700 million Br, opted for the deal with the Sugar Corporation because of its desire to move into the sugar production business, says Yusuf, explaining his company’s decision to turn this particular farm away from cotton just two years after acquiring it. The Business Group, which employs over 3,000 permanent and 10,000 temporary workers, cultivates mainly cotton from around 13,000ha of farms in different parts of the country.

The Company began planting sugarcane a month ahead of the agreement, covering 60ha a day, says Yusuf, expecting its harvest in 14 months.

The construction of Kessem, located in the Awash Fentalle and Dulecha woredas of Afar Region, started in the 2012/13 fiscal year and is planned to be finalised next year, according to Zemedkun Tekle, corporate communications head of the Corporation.

Kessem is cultivating sugar cane on 20,000ha of land it owns, encircling areas known as Kessem and Bolhomon. The plantation field gets its water supply from the Kessem-Kebena Dam, built on the Kebena River. This has a capacity to hold 500 million cubic metres of water.

The factory is expected to start production in the next fiscal year, with a capacity of 153,000tns, gradually pushing towards its potential of 260,000tns. It could also produce up to 30,000 cubic metres of ethanol.. The overall project cost is around 4.2 billion Br.

The other state sugar factories in the making include – Kuraz One (in South Omo Zone of the Southern Region), Tana Beles One and Two (in Amhara), Tendaho One and Two (in Afar) and Arjo Dedessa (in Oromia). These are all expected to begin production during the coming fiscal year. The sugar corporation says that “Wolkait, Beles 3, as well as the Kuraz 2 and 3 sugar factories, are expected to enter production in the first year of the second chapter of the GTP – 2008, in the Ethiopian calender.”

Ethiopia’s production will jump up from 232,000tns a year, in the 2012/13 fiscal year, to nearly 1.6 million tonnes by 2014/15, the Corporation says on its website.



Intensifying national sugar projects


As part of its Growth and Transformation Plan, the government of Ethiopia laid out strategies few years ago for the implementation of its ambitious grand sugar development plan. The contribution of sugar industry to the overall economic development can be explained in so many ways. Apart from saving the country’s foreign exchange which otherwise could have been spent for importation of sugar, and boosting its export revenue, the industry expected also to make significant contribution to employment creation. For the realization of the objectives set to be achieved by way of strengthening the industry, human resource development, industrial capacity building and promotion of research and technological capacity are all crucial.

The construction of new sugar industries and the expansion of existing ones is now found at various stages.

In fact, the government has given focus to sugar development, today the existing sugar factories are producing sugar with doubled capacity while some extra factories are under construction. Ethiopia is doing this with a view of becoming one of the top 10 exporters. The reason for this target is that Ethiopia has big potential in terms of climate and in terms of soil and water resources, which is very favourable for sugar production, according to available sources.

Needless to mention, sugar is consumed by households as well as different industries such as confectioneries, food processing and beverage industries, institution like colleges and universities, military, hotels, restaurants and bars. Due to its wide application in different sectors the demand for sugar is very huge in the domestic as well as international markets.

Ethiopia has been meeting most of its sugar requirement through local production. However, due to the shortages created in the past few years nearly 20 per cent of sugar requirement is met through import. But since recently the domestic demand is fully met with domestic production.

On the other hand, be it newly built or the expanded sugar factory has got manifold advantages beyond meeting sugar demand. Previously impoverished communities, for instance, will be far better off as they will benefit from irrigated land, improved social services, support from agricultural experts and job opportunities.

The Wonji Shoa Sugar Factory is a good example for such facilities for the local people. People get involved in and benefit in many ways. They are engaged in sugar-cane production which they supply to the factory that can maximize their earnings.

In some places local people get organized as sugar-cane out grower associations so that they will benefit more from the sugar development project by providing cane for the factories. Similar trend need to be expanded to other areas where sugar factories are and are to be built. It should also be underlined that the need to hold successive discussions with local communities to create awareness on the benefit of the project as a whole and their advantages in engaging in cane out grower associations.

In addition to sugar yield, sugar factories are also so important in producing fuel energy such as ethanol. Wonji Shoa, for instance, has a daily 30MW generating capacity out of which two-third would be sold to Ethiopian Electric Power consuming the rest in sugar production. Basically, sugar plant utilizes its own electrical power generated within the plant at the power generation station. This is done by producing steam in the steam generating plant, utilizing the by-product from sugar-cane as a main fuel and furnace oil as an auxiliary fuel. The generated steam is let to the power steam turbines and generators to produce the required electrical power.

In sum, though exporting sugar is vital to the country’s export earnings, the government need to prioritize the domestic demand as it is rising year-in-year-out. The misconduct among the retailers must also be corrected since they deliberately create shortages in the market. Stiff measures should be taken against such irresponsible and greedy individuals in order to safeguard the public interest towards this end.



Ethiopia aims to boost food reserves


By Abebech Tamene, Wednesday, April 09, 2014

ADDIS ABABA – Ethiopia is working to increase its national food reserves six times over, from a current 460,000 metric tons to three million metric tons, the Ethiopian Strategic National Food Security Reserve Agency said.

Agency PR Officer Gizaw Abute told Anadolu Agency that the U.N. World Food Program (WFP), Sudan, Turkey, Germany and the U.K. were all involved in the agency’s efforts to achieve this objective within the next three years.

“Through a program organized by the WFP, our experts have managed to draw experience from Sudan and Turkey on ways to increase [food] reserves,” said Abute.

“Consultants from Germany and Britain have also been working during the last three years for the same purpose,” Abute added.

“A budget of 13 billion birr [roughly $670 million] has been allocated for construction and the expansion of silos as part of the plan to increase reserves,” the official asserted.

Ethiopia’s current food reserves are sufficient to feed seven million people for a six-month period, Abute pointed out.

“When reserves reach 3 million metric tons as planned, they will be enough to feed 40 million people for six months,” Abute added.

Ethiopia’s food reserves include maize, sorghum and wheat, he said, pointing to a short-term plan to add edible oils, oil seeds and legumes to the reserve stocks.

Copyright © 2014 Anadolu Agency



Brazilian Drought Brewing Ethiopian Coffee Resurgence


Lema Edito & Sons Coffee Producer & Exporter S.C owns a 128.5ha plot of land in Limu Genet in the Jima zone of Oromia, on which it cultivates coffee. The company has been in the coffee business since 2000, according to Wondessen Lema, its general manager. The share company harvests 10qt to 12qts of coffee a hectare once a year from its farm. In its 14 years of existence, the company has had its ups and downs triggered by various factors beyond the control of the company.

Bad weather and market slumps have left their marks on the history of the Company. But the past few weeks have brought nothing but good news for the coffee exporter. In the second week of March, the Company, which exports its products mainly to the European and American markets, was able to sign an agreement with a buyer from Europe to supply coffee in its stock, for a mouth-watering 3.2 dollars a pound (lb) – around 0.45kg.

“The buyer is an old customer and we signed the deal for the amount we have in stock,” Wondessen told Fortune.

Just a month and half earlier, a pound of exportable washed coffee was traded on the Ethiopian Commodity Exchange (ECX) floor – the sole marketing venue for major coffee trading in the fifth biggest coffee producer in the world – for 1.15 dollars a pound. At the same time, at the end of January, a pound of coffee was sold for only 1.25 dollars on the New York Intercontinental Exchange (ICE) – the international price index.

The sudden surge in international coffee price, which began in mid-February, was triggered by reports of drought in Brazil – the biggest producer of coffee Arabica, accounting for 29pc of the global coffee output.

Following the drought in the coffee producing belt of Brazil, the price of coffee in the futures market has shown an increment of 32.5pc in a matter of 20 days, according to the ICE. The export coffee market is a futures trade, where deals are made now for coffee shipments in months to come. Coffee, the second most sought after commodity, next to oil, has become a 100 billion dollar commodity, with 70pc of the global production being coffee Arabica.

This drought – which is being labelled as historic by the Brazilian media and has forced more than 140 cities in Brazil to ration water – has increased the price of not only coffee, but also sugar and soya bean. Brazil is the source of more than one-fifth of the world’s sugar output and about one-third of soybean production, according to the consulting firm Safras & Mercado.

Even before the drought began, there were concerns that there would be a global coffee deficit. At the beginning of the year, a closely-watched report by a commodities trading firm, Transworld Futures LLC, noted that the global coffee market could face a shortage for the first time in three years.  The report predicted that coffee supplies will be about five million bags lower than consumption for the 2014/15 season.

The sudden price boom is not making everyone happy though.

Mormora Coffee Plantation signed a deal with its foreign partner for the supply of coffee before the start of the price surge – a benefit it will miss.

“We signed our agreement on June 6, 2013, for 2.4 dollars a pound, to supply for a year and we have to honor the agreement,” Hailesellasie Taddele, general manager of the company, told Fortune.

The plantation owns a 200ha coffee farm in Odo Shakiso, in Guji zone of the Oromia region.

But Hailesselasie believes some of his counterparts abroad would not have acted similarly under such situations.

“We have incurred huge losses in the past because of contractual breach,” Hailesselasie remembers. “There is no level ground for buyers and sellers, and the Ministry of Trade (MoT) is powerless to change this.”

He was recalling a deal he had two years ago with a customer in Panama.

Ethiopian exporters normally stick to their contract obligations, but the importers in the recipient countries may not respect their contract and refuse to open a Letter of Credit (LC), according to Wondessen. An exporter Wondessen knows in Limu Genet had to go through a similar ordeal when a buyer from Australia declined to make the purchase after signing an agreement when prices went down from 2.4 dollars to 1.7 dollars in 2013.

“We respect international trade laws and work to dismantle trade barriers for our exporters,” Amakele Yimam, public relation and communication head at the MoT, told Fortune.

Importers, especially those from the Middle East, are known for this kind of behavior, according to an exporter who talked to Fortune on condition of anonymity.

Yet this is a rare incident, according to Yilma Gebrekidan, general manager of the Ethiopian Coffee Growers Association (EEA).

“Most of the importers that buy Ethiopian coffee are respected partners,” he said. “There are some dealers that want to take advantage of any gap in the market, yet these are very small in number.”

And such problems are better dealt with at the national level and through trade negotiations, rather than at the individual company level, says Seid Nuru, (PhD) Macroeconomic division head at the Ethiopian Economic Association.

“It all depends on the terms of trade and, with limited bargaining power, the terms may not be satisfactory for Ethiopian exporters,” he argued.

The Ministry is aware of the problem and hopes it will change in the future, as the country’s influence increases and with it its negotiation capacity, according to Amakele. But, for now, it has to settle for providing information to exporters.

The MoT, the governmental body designated to spearhead the growth in the export performance of the country and increase the size of foreign exchange that the country earns through trade – vital for financing major infrastructural projects in the country – has reported a dismal performance in its first six month report of the year.

The Ministry achieved only 65.49pc of its target of two billion dollars from the export sector in the first half of this fiscal year.  The target for coffee during the same period was 333.2 million dollars, but the performance was only 222.5 million.

Following this result, the MoT has set up a command post to facilitate the achievement of the target export value, according to officials at the Ministry.

“We have enough product, but traders were not incentivized enough to bring their produce to the market,” Amakele said. “But now, the current price surge is expected to change the trend.”

The hopes of the ministry seems to be becoming reality, at least partially. Following the price increment, the volume of unwashed coffee traded on the ECX floor has increased by 500pc, in the last three months alone.

But the trend of volume sold in the normal washed and specialty coffee category does not show the same trend.

“There is always a lag witnessed in the increment on the volume of supply on such kind of products, due to the effects of prior contracts and the seasonal character of the product that takes time before the product is ready for market,” the macro economist explains.

An economy based on commodity exports, especially an agricultural export product is always volatile, according to Seid.

“Countries that depend on earnings from commodity exports, unless they are strategic minerals, will always stay at a disadvantage,” he said. “This has been clearly shown in the volatile coffee export of the country.”

Since there are limited barriers to entry, countries with no substantial background and technological base can become major competitors in the market in a relatively short period of time. Vietnam was able to take a prominent place in the international coffee market and Ethiopia did the same in the floricultural market, with limited experience very quickly.

Ethiopian exports of coffee, under the Harari and Abyssinian brands, started in the 1920s. Currently, up to twenty percent of the Ethiopian population, directly or indirectly, depends on coffee production and coffee trading for a living. The product earned close to 25pc of the foreign exchange that the country earned in 2012/13 and accounts for two percent of the country’s GDP, according to the ECEA.

The country’s coffee production has increased over the last five years from 230,000tns in 2008/09 to 400,000tns in the 2012/13 crop year, with an annual average growth rate of 11.3pc. Half of that is assumed to be consumed locally. And with the per capita consumption of 2.3kg, the country leads the continent in domestic consumption.

Though there is a marginal increment in the export of value added products like roasted and branded coffees, still it accounts for a very small portion of the total export, with nearly 70pc accounted for by sundried coffee and nearly 30pc by wet-processed (washed and semi-dried) coffee, according to the Association.

The government plans to increase the earning that the country gets from coffee to over two billion dollars by the end of the GTP and increase the volume of export to 800,000tns. It has managed to reach only around 1.1 billion dollars in the 2011/12 fiscal year – to date the biggest amount.



Ethiopia: New stadium Deal goes to Qatar, Australia consortium




Ethiopia’s FIFA/Olympic-standard stadium is to be built by a Qatar and Australia consortium, the Doha-based Australian company Designsport said in a statement.The company, in partnership with local Ethiopian architects JDAW, won the bid based on its design for a sunken arena for a new national stadium and sports village in the Ethiopian capital, Addis Ababa.
According to TradeArabia news, the stadium evokes “Ethiopia’s world-famous excavated architecture and the ‘Mother womb’, the skeleton of one of the first humans, Lucy, who is about 3.2 million years old.”

The stadium will be designed and erected in the likeness of a coffee bean, highlighting the country’s main source of income.

“The façade material that wraps around the stadium was similarly inspired by Ethiopian culture, modeled on the Massob, an Ethiopian communal serving basket made from woven grass,” the companies’ said. Construction is scheduled to begin in 2014 and will be the largest sports structure in the country.

Samantha Cotterell, CEO of Designsport, a consultancy specializing in sport architecture and event design, who led the bid, said: “The brief was to design a center that would revitalize sport in Ethiopia. The result is a sports venue which can be used by all. It is for community use at a grass roots level right through to providing a high performance training center for elite athletes and a location for major international sporting events.”

Chris Bosse, who led the design team, and is a director of Lava, said: “We have gone back to the very origin of stadium design with the sunken arena surrounded by grandstands formed from excavated material.

“The man-made crater is a clever remodeling of the existing terrain, integrating facilities within the landscape. It is an efficient use of space which optimizes the site’s environmental performance while minimizing construction costs.”



Construction sector should contribute 20% of the country’s GDP



By Groum Abate 

Construction should contribute 20 percent of the total Gross Domestic Product (GDP) in the coming few years according to State Minister of Urban Development, Houses and Construction Hailemeskel Tefera.

According to the United Nations 2012 report Ethiopia is placed 85th from a total of 193 countries with an estimated GDP that amounts to USD 41,605 million.
This was said at the event organized by the Association of Ethiopian Class one Contractors (AECOC) to honor participants and sponsors of the second “Construction for Ethiopian Renaissance” exhibition that was held at the Addis Ababa Exhibition and Market Development Center from March 21- 25, 2014.
During the event held at Elilly International Hotel on Tuesday April 1, the State Minister said that the exhibition is one of a kind and  will help the industry players to work more closely and effectively.
“Many exhibitors were present with their work and this kind of event will help the industry grow better.” “We want many firms in the construction industry and this is how we can overcome the problems in the sector,” he said.
Over 150 companies participated in the event to showcase their work.
Mulugeta Gessese General Manager of AECOC told Capital that the exhibition was a unique occasion that demonstrated the progress  construction has made. “It has been growing at an unprecedented rate recently and we demonstrated that,” Mulugeta said.
In the exhibition which was officially inaugurated by Mekuria Haile Minister of Urban Development, Houses and Construction, major players in the industry such as the Metal and Engineering Corporation (MeTEC), Ethiopian Railway Corporation and Ethiopian Roads Authority, showcased their achievements and future goals.
“This exhibition was a place where leading builders can network,” Hailemeskel said. Construction companies brought tons of equipment and displayed cutting-edge technology.
The state minister also presented awards to the sponsors of the event.
Architects, contractors, importers, insurance firms and others working in the construction industry   participated in the trade fair.
Capital Newspaper was the official media partner of the event.



Ethiopia, Uganda to strengthen business ties


There is wide room for Ugandan investors to work in Ethiopia


African to African business and investment cooperation is a yet not grown trend though regional economic blocs like the Common Market for Eastern and Southern Africa (COMESA) are currently working for a preferential arrangement to boost trade and investment between African countries. It is usually the Western investors that took over the intra-regional trade.

Currently, however, the interest of African investors is growing to transact with neighbouring states. Accordingly, over 20 Ugandan investors and businessmen yesterday discussed with Ministry of Foreign Affairs State Minister Dawano Kedir and Ethiopian Investment Agency Director General Fitsum Arega possible investment and business opportunities in Ethiopia to which the Ugandans can go for.

State Minister Dawano said there is wide room for Ugandan investors to work in Ethiopia as there is a similar culture and demographic nature between the two countries. The State Minister told the investors that Ethiopia is a country with a population of more than 90 million of which the majority is young and productive.

He also briefed the investors on duty free incentive for prioritized areas of trade and investment such as importing capital goods and participating in the manufacturing industry and irrigation development.

Ethiopian Investment Agency Director General Fitsum Arega also explained the group the areas of investment opportunities in Ethiopia. He said the investors are warmly welcome if they have interest in leather industry as there is a huge livestock population, agro-processing, food packaging, commercial farming, pharmaceuticals and textile industry.

The Ugandan investors are expected to meet with Ethiopian private sector representatives today to discuss possible investment areas.



$8.5 Million Contract Will Foster Development of Agriculture and Nutrition Policy and Programming in Ethiopia


With award, researchers at Feinstein International Center at Tufts University will lead project supporting USAID Feed the Future Initiative

Newswise — BOSTON (April, 9 2014) ─ The Feinstein International Center at Tufts University is the recipient of an $8.5 million USAID contract to help advance rural development in Ethiopia. The Agricultural Knowledge, Learning, Documentation and Policy Project (AKLDP) will support evidence-gathering from a wide range of agriculture, livestock, nutrition and food security projects as part of USAID’s Feed the Future initiative.

“One of our main roles is to help USAID and partners to better understand the impact of agricultural development projects,” said Andrew Catley, Ph.D., research director for policy process at the Feinstein International Center and principal investigator of AKLDP. “As agriculture grows and commercializes, we need to understand who benefits and who doesn’t, and look at alternative livelihood options for people moving out of agriculture.”

Working with the government of Ethiopia (GoE), aid donors, USAID and local universities and research institutes, the AKLDP will conduct real-time analyses, evaluations and reviews and provide coordination support, The evidence will be used to guide improvements to programming and to support development policies and strategies, particularly those geared towards assisting poorer households to benefit from various agricultural growth programs.

“The Feinstein International Center has led the way on researching just what really happens to people’s livelihoods and economies in crises and disasters, said Peter Walker, Ph.D., the center director of and the Irwin H. Rosenberg Professor of Nutrition and Human Security at the Friedman School of Nutrition Science and Policy at Tufts University. “What we are learning now is that universities also have to play a role in ensuring that the knowledge from that research gets to the farmers, government policy makers and aid workers in a form they can use.”

Previous FIC research conducted through the USAID-funded Pastoralist Livelihoods Initiative in Ethiopia helped set the foundation for the current project. In the last decade, Catley and other FIC researchers have conducted impact assessments on USAID development and humanitarian projects ranging from irrigated agriculture to emergency drought response, with the results contributing to the establishment of good practice guidelines and policy reform.

The $8.5 million AKLDP contract is the largest in the 17-year history of the FIC and expands the center’s presence in Ethiopia. A separate team of FIC researchers is providing the research and evidence-gathering component of another USAID project, Empowering New Generations to Improve Nutrition and Economic opportunities (ENGINE). Implemented by Save the Children International, ENGINE targets Ethiopian mothers with children age 5 and under in an effort to lower the maternal, neonatal and child mortality rates.

The Gerald J. and Dorothy R. Friedman School of Nutrition Science and Policy at Tufts University is the only independent school of nutrition in the United States. The school’s eight degree programs, which focus on questions relating to famine, hunger, poverty, and communications, are renowned for the application of scientific research to national and international policy.



 Bako gets modern water supply


The two treatment plants together have a potential of screening 2400m3 water per day


Known for its agriculture investment and research, Bako is located in West Shoa Zone of Oromia State. The town got a modern Potable Water Treatment Plant which serve 40,000 population treating 300m3 water daily.

Installed by the German-based MENA Water FZC, the plant has started treating water from Gibe river. The project, which was completed in nine months at a cost of 28 million birr, is an alternative water supply for town residents and its environs.

Oromia Water, Mineral and Energy Bureau Deputy Head Ibrahim Haji Hussen told The Ethiopian Herald this simple and new technology would also be installed in other areas of the state. “We have assessed demand in areas which have no access to potable water. For instance, we have planned to extend the same project in Oromia and Somali the border areas particularly Bale,” he added.

MENA Water East Africa Area Manager Mengistu Getaneh also said that though Ethiopia is known for its ample water resource, it has not effectively utilized it. “This is mainly due to failure in applying modern technology. MENA Water is working to fill that gap by introducing new treatment plants which can screen surface water in short period of time. The treatment plant installed in Bako is part of that project,” said Mengistu.

MENA Managing Director Eng. Atif Gafar on his part indicated that the company’s priority ahead is introducing small package plants in the country’s major towns and cities like Bako. As to the Managing Director, the company is participating in the sewerage system management of condominiums in Addis Ababa.

MENA Water is an engineering and manufacturing company that provides innovative solutions and services in the fields of water and waste water treatment.



Guts Agro-industry introduces nutritious chickpea products


Guts Agro Industry in Ethiopia is set to launch three packed nutritious chickpea Shiro product using harvests from farmer cooperative union partners including Becho Weliso, Erer and Lume Adama from the Oromia Region.

The United States Government, through the United States Agency for International Development (USAID) has provided Guts through market linkages, grants and technical assistance.  

Agriculture is a fundamental cornerstone of the Ethiopian economy contributing 47% to the national GDP and employs over 80% of the population, and continues to be a priority for the Ethiopian Government’s 5-year Growth and Transformation Plan (GTP).

Chickpea is one of the leading value chains in Ethiopia ranking sixth in the world and first in Africa, with an annual production of over 322,000MT (FAO’s 2010 report). According to Central Statistics Agency there are more than 800,000 smallholder farmers involved on chickpea productions in the country.

GUTS Agro Industry is one of the few front runner private companies working hard for the last years engaged on chickpea processing by outsourcing its supplies to the farmer cooperative unions.

Under an USAID facilitated MOU with chickpea producers, GUTS Agro Industry sourced 4,000 MT chickpea for local processing from 52,000 smallholders, namely Becho Woliso Lome Adama and Tulu Bolo Cooperative unions with each over 20,000 member farmers each. USAID also assisted GUTS Agro Industry to expand its processing lines with a vision to be a niche player in the specialty nutritional food processing business using Chickpea as primary inputs.

GUTS is actively collaborating with the Agriculture Transformation Agency (ATA), USAID and WFP in launching its new Chickpea products for Ethiopian and International markets.

“GUTS Agro Industry signed a Letter of Intent (LOI) with commitment to expand its operation by collaborating with Government of Ethiopia, Development Partners and other Private Sectors at a G8 summit for “The New Alliance for Food and Nutrition Security” held in Washington DC in May 2012” said Endigu Legesse, GUTS CEO.

GUTS also joined Scaling Up Nutrition (SUN) Framework and pledged to improve the nutrition and consequently the productivity and health of over its workforce members in the company at Global Nutrition for Growth Compact which held in London on June 8, 2013.

This April, GUTS launched a new ready to cook chickpea shiro powder branded as “Yanet Shiro”. This nutritious, savory and popular Ethiopian meal is made of chickpea ground into flour mixed with spices used for making Shiro and Metin Shiro. Shiro is a common Ethiopian meal has never been processed at a factory level before.

GUTS’s new chickpea products include a chickpea-based Ready -to- use- Supplementary food (RUSF) developed with and for supply to WFP, with support from PepsiCo. RUSF are supplementary food for young children between 6-59 months of age and will be distributed in Ethiopia.

The third new chickpea product includes dry roasted chickpea snacks, or “Kolo”, which is the first of its kind to be produced in Ethiopia

GUTS Agro Industry Plc is an ISO 22000 certified nutritional food processing company in Ethiopia specializing in supplementary and therapeutic foods. GUTS current product range includes cereal for children, snacks, iodized table salt and non-iodized industrial use salt production to domestic wholesalers and retailers and for international humanitarian organizations.

GUTS has two production facilities located in Hawassa city, 280km from Addis Ababa for snacks and cereal products and Bishoftu town.

“Chickpea farmers who participated in multiplying the new Kabuli seed variety have gained up to 100% yield increases and higher market value as a result of assistance from USAID,” said USAID/Ethiopia Director Dennis Weller at the launch.

“We are confident that the new products processed and packaged by GUTS Agro will set a trend in value addition, increase exports, and contribute to the improved livelihoods of the farmers.”

Developing the chickpea value chain is an important part of USAID’s Agricultural Growth Program-Agribusiness Market Development Project, part of the U.S. Feed the Future initiative, working in six value chains to provide increased income to over one million smallholder farmers.



Billions of US dollars disappear from Africa each year – UN


Accomplished researchers and respected scholars are set to share their ideas Billions of US dollars disappear each year without a trace Addis Ababa, Ethiopia.

The two-day seminar expected to open on Wednesday 9th April 9, 2014, deals with capital flight that represents a higher burden in Africa than in other regions. A significant part of this outflow is driven by multinational companies seeking to evade taxes where they operate.

“Thus, actions to stop illicit capital flight must be taken by decision makers such as senior policy makers in both Africa and in the West if they are to succeed,” says the United Nations Economic Commission for Africa in its press statement. 

Recent research shows that the sum that leaves developing countries each year as unreported financial outflows, referred to as illicit capital flight, amounts to as much as ten times the annual global aid flows, and twice the amount of debt developing countries repay each year.

The issue of capital outflow from Africa and the absorption into western economies, therefore, deserve attention and require concerted effort. Through greater transparency in the global financial system, illicit outflows could be curtailed.

There is also a need for specific measures at country level. Such measures would include the building of legal frameworks better suited to address the problem, awareness-raising about the links between tax evasion, tax revenue and social services, as well as capacity building of tax authorities.

Tax administrations in developing countries are often poorly resourced and lacking in staff capacity. Inadequate technology and capacity to collect taxes, as well as the inefficiency and lack of expertise of tax authorities, create loopholes that otherwise could be plugged.

In response to this challenge, the African Economic Research Consortium’s (AERC) Senior Policy Seminar (XVI) selected the theme Capital Flight from Africa. This event will be jointly hosted with United Nation Economic Commission for Africa (ECA).

AERC senior policy seminars are forums designed specifically to bring together senior policy makers from sub-Saharan African countries to exchange experiences and deliberate on topical issues pertaining to sustainable development of their economies.

Participants in these seminars are drawn from the highest levels of government, including the presidency, ministers, governors of central banks, heads of civil services, permanent secretaries and heads of government agencies and parastatals.





 And a couple current analyst reports for those interested in Allana Potash….







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