08 July 2014 Development News Briefs


Europeans finance the Awash – Weldya railway project


Seven financial institutions along with the Ministry of Finance and Economy Development (MoFED) and the Ethiopian Railway Corporation (ERC) are going to sign a loan agreement to construct the railway project that has been awarded to a Turkish company.
The signing ceremony was consecutively postponed, though it has been set to be held here in Addis Ababa in the presence of top government officials.
The signing ceremony will take place in the beginning of the coming budget year that will start on July 8. It will enable the Turkish construction giant, Yapi Merkezi to commence the 400 km railway project connecting Awash to the northern town of Weldya (Hara Gebeya), a section of the larger railway network running from Mekele via Weldya and Semera, to Port Tadjourah in Djibouti.
The Turkish EXIM Bank already has approved USD 300 million for the railway. It is the largest ever amount the bank has provided for one project in a country. “It is the first time one project has received this big a loan in Ethiopia from the side of Turkish and European financial firms,” Emre Aykar, chairman of Yapi Merkezi, told Capital at his head office in Istanbul.
The total amount that will come from Europe for the stated project is USD 1.4 billion.
He said that his company has created a link between European financial institutions and Ethiopia.
“We have managed to convince different European financial sources like SACE Group, Italy, EKF (Eksport Kredit Fonden), Denmark and others from Sweden, Austria and two from Switzerland,” Aykar said.
He said that during the current rainy season the company will focus on the establishment of camps, soil investigation and other related works and the ground work will commence in September.
The company has signed a USD 1.7 billion contract with the corporation to undertake the project.
The loan agreement ceremony was expected to take place in May, but some procedures with the banks and MoFED contributed to the delay, the chairman said.
Yapi Merkezi has handled big projects in places like Dubai, Saudi Arabia, Morocco, Algeria and Sudan.
The company officials stated that the current railway project in Ethiopia is a breakthrough for the company as they hope to expand their activity.
“We have big interest to be part of the country’s development,” Aykar said.
The project is expected to end within 40 months.
The China Communication and Construction Corporation (CCCC) will build the Mekele to Weldya part of the rail line. The estimated USD 1.5 billion cost is financed by the Chinese EXIM bank and covers some 260kms.
The section that stretches from Mekele to the Port of Tadjourah, Djibouti, covers a total distance of 675kms, and is expected to link the northern part of the country. The Indian EXIM Bank has also pledged USD 300 million for the Asayita to Port of Tadjourah segment of the Mekele-Port of Tadjourah railway line.
The Chinese contractors, China Railway Engineering Corporation (CREC) and China Civil Engineering Construction Corporation (CCECC) are currently constructing the Sebeta-Mei’so-Dewele railway line. For the 657km project, the Chinese Export Import (EXIM) Bank has provided the majority of the USD 2.3 billion needed.



Djibouti Scraps DP World Port Concession Citing Corruption




Djibouti’s government said it rescinded DP World (DPW)’s concession at the Doraleh Container Terminal after finding evidence of corruption and has begun arbitration proceedings.

The agreement was canceled after an investigation that showed an accord signed with the company “unfairly favored” Dubai-based DP World, according to a statement e-mailed by Consulum, a London-based communications consultancy, on behalf of the government. Talks aimed at resolving the matter have broken down and the state will seek damages for losses it has incurred, it said.

DP World rejected the accusations and will “vigorously defend our position during arbitration,” the company said in an e-mailed response to a request for comment. “We are disappointed that the government has chosen to take this action after working so closely with us as partners over the past 14 years.”

Djibouti’s $1.2 billion economy relies on services related to the country’s location on the Red Sea, one of the world’s busiest shipping lanes. Transport accounts for a third of gross domestic product in the Horn of Africa nation, which is targeting doubling capacity at Doraleh to 3 million containers a year by 2015. DP World is the world’s third-biggest ports operator.

The government will take “all necessary steps to ensure the continued smooth running of its ports,” it said in the statement. The terminal is the country’s largest employer.

30-Year Concession

DP World and Djibouti’s government established a joint venture in 2006 with the signing of a 30-year concession to operate the container terminal, which the company describes as “the most technologically advanced” depot in Africa. The facility, inaugurated in 2009, has a 1.05 kilometer-long (0.66-mile) quay and the capacity to handle eight super-post-panamax cranes, according to its website.

The government offered DP World the opportunity to continue running the port until the arbitration tribunal ruling.

“Whether or not DP World accepts that offer, Djibouti has measures in place to avoid any disruption to the increasing number of customers using its facilities,” it said.

Djibouti, slightly larger than New Jersey, hosts a U.S.-led military task force at Camp Lemonnier, a base and staging area for tracking and launching assaults on al-Qaeda militants in Yemen and Somalia.



UN Report Finds African Growth Lacking, Unsustainable


–  Development of productive capacities and structural transformation, two key components of poverty reduction and job creation, are lacking



A report about Economic growth in Africa released on Thursday July 3, 2014, by the Conference on Trade & Development (UNCTAD) – a UN economic think tank- revealed that the growth narrative of Africa over the past decade is lacking two of the vital elements for generating productive employment and laying the foundation for sustained poverty reduction.

To the delight of Mekonnen Manyazewal, commissioner of the national planning commission, who is also working on the second generation of the Growth and Transformation Plan (GTP 2), the report also calls for priority to be given to a substantially increased allocation to the public sector.

Characterising the nature of the recent growth in Africa as contributing to the slow progress in poverty reduction, the report says that “Africa’s recent growth has not led to the development of productive capacities and structural transformation”, which are the two vital aspects of poverty reduction and employment generation.

Structural transformation is a shift of resources and policy focus from traditional sectors to modern sectors, from traditional activities to modern activities and from low productivity and limited technology to high productivity and advanced technology, according to Taffere Tesfachew, director of the UNCTAD division for Africa, least developed countries and special programs, who presented a summary of the report last Thursday.

The fast growing economy of Africa is basically consumption driven, which makes it import dependent and difficult to sustain, according to Teffere.

“Consumption driven growth is difficult to sustain,” Taffere said, during his presentation of the findings of the report at the launching ceremony. “It is time to shift to investment driven growth.”

Given the fact that the continent is in the early stages of its development, the structural change observed in Africa defeats the normal expectations, according to the report. The high and steady growth of the continent is not backed by a shift from low productivity activities to high productivity activities, it says.

The structural transformation concern of the report has, however, overlooked an important element that precedes it, for Eyob Tesfaye (PhD), a macroeconomic analyst who was also in attendance on the launching of the report.

“Intra-transformation within the sectors has not been undertaken yet,” he told Fortune. “For instance, the agricultural sector, which is still backwards, rain fed and powered by low technology, needs to be transformed.”

The share of manufacturing has declined, with the services sector dominating African economies, it states. It has declined from an average of 14pc for the period between 1990 and 1999 to 11pc during the period between 2000 and 2011, according to the report.

“The continent has experienced a deindustrialisation over the past two decades, as evidenced by the fact that the share of manufacturing in total value added fell from 13pc in 1990 to 10pc in 2011,” it reads.

Highlighting the problem on the supply side in the African growth narrative, the report considers the dominant role played by the services sector as unusual. This is worrisome because it is mostly driven by low productivity activities in informal and non-tradable services, it claims.

“Africa’s recent growth is fragile and is unlikely to be sustained in the medium to long term if current trends continue,” it concludes, calling for investment driven growth backed by high productive and tradable services.

In what Taffere has called “the untold story” in the African economic growth trend, the degree of inefficiency in the use of the capital accumulated in the economy has declined in Africa.

Measured by the incremental capital-output ratio (ICOR), Africa’s capital productivity increased significantly from the 7.4pc it was for the decade between 1990 and 1999 down to 4.1pc after the following ten years.  An economy with a higher ICOR has lower efficiency or productivity of capital, in economic terms.

Ethiopia has also benefitted from this untold story, according to the report.

Ethiopia is in third place in the list of countries where the accumulated capital had a very high productivity in the period between 2000 and 2011, the report identified. Angola and Equatorial Guinea are the first and the second, while African countries, such as Liberia, Mozambique, Nigeria, Rwanda and Sudan, are also among those with high productivity of capital.

This is neither for all African countries nor for the public investment areas, though.

“Although there has been an improvement in the efficiency of total investment in Africa, more works need to be done, particularly in the area of public investments,” it comments.

The inability of the economic growth to generate jobs has led to Taffere concluding that the growth narrative of Africa is in essence a “jobless growth”.  The African economies are not absorbing the 15 million new entrants every year, he said. The growth of employment in the predominantly youth populated Africa is 2.8pc, with many of the new jobs created coming from the informal sector, which is difficult to sustain and less productive.

Here again, Ethiopia is singled out by Taffere in his presentation. Ethiopia has created about 1.4 million new jobs over the past decade, registering a 3.4pc growth in employment – 0.6 percentage points more than the average growth for Africa, he said.

The employment growth account of Ethiopia, however, is due to the casual employment opportunities being created by the booming construction sector in the country, according to Eyob Tesfaye (PhD), a macroeconomic analyst who was also present at the launching of the report.

The report person at the helm of Ethiopia’s national planning commission, Mekonnen, commended the findings of the report in many respects. Highlighting what Africa should take from the report, underlines the need for the provision of institutional support to domestic investors, which the report considered as an aspect not accorded with adequate attention in the growth of Africa.

Mekonnen, rather questions the nature of the leadership and the state in Africa as a challenge to the implementation of the recommendations of the report. He calls for the developmentalist model of state and government for the proper mobilisation and channelling of resources to the appropriate directions.

“The UN system is serving as the intellectual voice for Africa,” he said. “We will give the report adequate weight and eternalise in our future plans.”



MIGA Vice President Visits Ethiopia




Michel Wormser, Vice President and Chief Operating Officer of the Multilateral Investment Guarantee Agency (MIGA) the political risk insurance and credit enhancement arm of the World Bank Group will visit Ethiopia from July 8-11. Wormser s visit underscores MIGA s continued support to the country s development goals through private sector investment.

The aim of Wormser s visit is to identify areas where MIGA can help the country mobilize capital for important projects including those in the infrastructure, energy, agribusiness, and manufacturing sectors and other job-creating enterprises that can help the country meet its development objectives. Wormser will meet with government ministries and private sector entities.

MIGA has supported private sector investment into Ethiopia in agribusiness and manufacturing. The purpose of my trip is to underscore our willingness to continue to support foreign direct investment in Ethiopia and identify priority areas where MIGA s support can be the most helpful in advancing the country s development agenda, said Wormser.



Canadian Investors with 367 million CAD Engaged in Ethiopia


Canadian investors with a total capital of 367 million Canadian dollars (CAD) have secured licences to invest in Ethiopia, according to the Canadian Ambassador to Ethiopia.

The trade exchange between Ethiopia and Canada has also reached 141.3 million CAD.

In an exclusive interview with ENA, Ambassador David Usher said the investors are engaged in importing machinery, leasing construction equipment, education, health, consultancy, tourism and information technology.

In addition, 12 Canadian companies have secured mineral exploration licenses in the country, of which two have substantial assets, he said.

Many Canadian investors are also showing huge interest to engage in the various investment sectors in Ethiopia, according to Ambassador Usher.
The trade flows are, however, modest despite the half-a-century old relationship of the countries, he said.
According to the ambassador, joint consultative forums are being organized with the Ethiopian Ministry of Foreign Affairs to boost the trade exchange between the countries.

Ethiopia imports aircraft and parts, machinery, precious stones, metals (coin) electrical machinery from Canada. Canadian merchants, on the other hand, import mainly coffee, tea and spices, oil cereals and other agricultural products, it was learned.

The direct flight of Ethiopian airlines three times a week to Toronto has highly contributed toward raising investment and cultural ties, according to Ambassador David Usher.

Canada applauds Ethiopia for its open door policy towards refugees on all its borders alongside showing great effort to bring stability in the Horn of Africa, he pointed out.

Canada has raised its developmental support to Ethiopia to 210 million CAD in the current year, it was indicated.


Chinese premier vows closer cooperation with Ethiopia




BEIJING, July 8 (Xinhua) — Chinese Premier Li Keqiang met with Ethiopian President Mulatu Teshome in Beijing on Tuesday, vowing closer cooperation.

Li recalled his trip to Ethiopia in May, during which he reached broad consensus with the Ethiopian side on friendly cooperation.

China hopes to help with Ethiopia’s transportation and power infrastructure through a regional aviation center, manufacturing center and a demonstration center of development and poverty reduction, Li said.

He proposed more projects including economic and industrial zone, expanded energy exploration, personnel training and agricultural cooperation, to set an example for China-Africa cooperation.

Hailing cooperation between China and Africa, Li said China hopes to work with African countries and the African Union to build railway, highway and aviation networks.

Mulatu, on his first China trip since taking office last October, said Li’s Ethiopia visit has promoted bilateral ties to a new level.

Ethiopia-China relations are based on mutual understanding, trust and mutual benefits, he said.

Calling China a best cooperation partner, he vowed joint efforts with China to implement the achievements of Li’s visit to promote greater progress of bilateral ties as well as Africa-China cooperation.



COMESA Member States Provide Greater Clarity with New Guidelines



–  The draft document has now been tabled for approval by the board of commissioners

Member states of the Common Market for East & Southern Africa (COMESA) have finalised a draft document entitled “Merger Guidelines”, after a validation workshop held on July 1-2, 2014. It has now been tabled for approval by the board of commissioners in August of this year.

Aimed at providing merger guidance for companies within the common market, the guidelines have been prepared in response to calls for greater clarity and legal certainty in the supranational merger control regime of the regional competition law dubbed COMESA Competition Regulations. The enforcement of said law was announced in January 2013, following its ratification by the council of ministers established under the treaty that established the common market, according to the guidelines document.

The regulation has established a separate entity, named the COMESA Competition Commission, which has the power to apply the part of the regulation that deals with trade between member states and promotes competition within the common market. The commission has a board as its supreme policy body. Launched in December 2008, the commission officially commenced operations on January 14, 2013. It is composed of the secretariat, headed by a director, which is responsible for investigation; the Committee of Initial Determination (CID), responsible for making initial determinations on notification and complaints, and a Board of Commissioners also mandated with the adjudicative functions.

The board shall consist of not less than nine and not more than 13 Commissioners appointed by the council of ministers of the common market on the recommendation of the secretary general. The first board was appointed in the year 2011.

It was through this commission that  the current guideline was prepared with financial assistance from the International Finance Corporation (IFC) of the World Bank (WB).

The first draft of the guideline was publicised in April 2013, in order to collect  comments from stakeholders. The draft is designed to clarify parts of the COMESA competition regulations, in force since 2004, which deal with mergers and acquisitions.

Following the submission of the initial deliverables by the consultants, which included the revised draft merger control guideline, the Commission, in collaboration with the IFC, organised a regional workshop, which took place in April 2014, in Johannesburg, South Africa. Here, the Member States deliberated on the guidelines produced by the Consultants.  Since then, the consultants, in collaboration with a steering committee, have been working to perfect the document taking into account inputs from the member states and other stakeholders.

The draft was finalised last week during a workshop organised by the commission in collaboration with the Ethiopian Trade Practices & Consumer Protection Commission (TPCPC). The draft has now been sent to be approved by the supreme policy organ of the commission, the board of commissioners, who are scheduled to meet in August this year, according to George K. Lipimile, director and chief executive officer (CEO) of the Commission.

In addition to the representatives from the national competition authorities of the COMESA member states, the workshop was attended by a cross section of competition law experts and practitioners from the region and beyond, according to Lipimile.

“The merger control guideline is expected to be in line with international best practices and should meet the expectations of the users,” he said.

Among the detailed clarification on the regulations provision concerning merger is the meaning attached to merger control by the regulation. Accordingly, the merger control mandate of the commission – based in Lilongwe, Malawi – concerns those mergers capable of having a regional dimension, with an appreciable effect on trade and which restricts competition.

It also provided much more detailed clarifications on the control of merger, notification of a proposed merger, merger proceedings and considerations of a merger, which are generally provided in the competition regulations. Further detail clarifications and explanations are made under the guideline on the matter of what constitutes a merger to territorial nexus; from pre-notification consultation and comfort letters to the notification process; from assessment of the merger and merger assessment considerations to analytical approaches and methodologies.



Ethiopia Defies IMF Warning In New Budget



VENTURES AFRICA – Ethiopia’s parliament Monday, approved a 178.6 billion-birr ($9.2 billion) budget for 2014-2015 in which more than 64 percent of the total amount is earmarked for development spending against the advice of the International Monetary Fund (IMF) to cut its public spending.

The 2014-2015 budget- a 15 percent rise from the previous year- which will boost spending on education, health and road building defies the IMF’s warning that Ethiopia’s huge spending is suffocating private lending. In 2013, the IMF warned that the expanding public expenditure as well as the government’s tight monetary policy, to bring down inflation, could imbalance macroeconomic development by depriving the private sector access to credit and foreign currency.

However, Ethiopia’s intervention over the past decade has boosted the economy with the IMF forecasting that its economy will grow to 8.5 percent in 20014/15 from 8 percent in 2013/13. The government embarked on Infrastructural projects like hydro-electric dams and other power projects to offer cheap electricity and also focused on expanding the network of roads and railways.

With its latest budget, the East African country, which is second in population to Nigeria in Africa, aims to expand its road network to 136,000 km (84,500 miles) by 2015 from less than 50,000 km in 2010.

There are also plans to build 5,000 km of railway lines by 2020. The capital will soon have its own metro, a rarity in Africa.

The budget, which was unanimously passed by the parliament, also sees a 6.7 percent rise in Defence spending, from 7.5 billion birr in the previous budget to 8 billion birr. Ethiopia has the largest army in the Horn of Africa, it is also a key U.S ally in the region and is fighting al Qaeda-linked insurgents in Somalia as part of an African Union mission. It has also deployed peacekeepers in South Sudan.



ECX to Launch Commodity Traceability, Online Trading Projects


ECX to Launch Commodity Traceability, Online Trading Projects

The Ethiopia Commodity Exchange (ECX) said it would implement commodity traceability and online trading projects this Ethiopian fiscal year.

ECX Interim Chief Executive Officer, Shimelis Habtewold, told a press conference on Tuesday July 8, 2014 that the traceability project will be realized with an outlay of 1.3 million USD in collaboration with USAID.
The traceability project is expected to provide buyers with origin and processing information on commodities traded, in addition to creating market access to ECX members and clients.
Similarly, the online trading project will be implemented with an outlay of 3.8 million USD in collaboration with Investment Climate for Africa (ICA).

According to the CEO, “when the project begins service, it will enable market actors to participate directly in trading from remote online trading centers established in different parts of the country, including Humerra, Gondar, Adama, Hawassa and Jimma.”

Online trading is envisaged to increase access to ECX and its service. In addition, it will build the capacity of various stakeholders groups and increase efficiency, it was pointed out.

Meanwhile, the total value of the traded commodities in the just-ended fiscal year reached 26.2 billion birr from the sale of sesame, coffee and white pea beans during the last budget year, it was learned. The amount exceeded that of the previous year by 7.3 billion birr or 38 percent.

The number of ECX members which was 100 upon its establishmnet has now reached into346, and 14,725 clients as well as 10 percent farmer cooperative unions reaching out to 2.7 million small farmers.


Kenyan Exchange to Sell Shares in Africa’s Second Bourse IPO




Kenya’s stock exchange will become the second publicly traded African bourse with a share sale that was planned at least five years ago.

Nairobi Securities Exchange Ltd. will hold an initial public offering from July 24 to Aug. 12 and list stock on the market, it said today in an e-mailed statement. The FTSE NSE Kenya 25 Index has climbed 15 percent this year, compared with a 17 percent gain in the MSCI FM Frontier Markets index.

“We are putting our money where our mouth is,” Head of Market and Product Development Donald Ouma said by phone today. “We are saying capital markets are the best place to raise long-term capital.”

Kenya’s stock exchange first announced plans for selling shares in 2009. The market has been seeking ways to deepen trading and attract listings from companies in East Africa’s largest economy. The 62-member all-share index has a value of 2.14 trillion shillings ($24 billion), according to data compiled by Bloomberg.

“We are also looking into new products and services such as derivatives and real-estate investment trusts, and we are better suited to do so as a listed entity,” Ouma said.

JSE Ltd. (JSE), the operater of the Johannesburg Stock Exchange and Africa’s first listed exchange, gained 11 percent this year, compared with a 12 percent increase in the FTSE/JSE Africa All Share Index.



Malfunction at factories creates severe sugar shortage




A sugar shortage hit major manufacturing industries, including soft drink manufacturers after two of the nation’s three sugar factories ceased production of sugar due to mechanical and sugar cane failure. Wonji Shoa and Finchaa Sugar factories stopped production slashing the quotas of manufacturing industries by two thirds forcing them to stop or minimize production significantly.
Sources told Capital that, machines at Wonji Shoa Sugar Factory were broken and are currently under maintenance. The other sugar factory Finchaa, also faced a crop failure, forcing the factory to stop production.
Soft drink companies are also slashing working hours as the corporation is not providing them with enough sugar for production.
Sources at one of the soft drink companies told Capital that their company is reviewing a plan to lay off some of their employees if the problem persists.
The country has faced a shortage of sugar from time to time. The shortages have led to the price of sugar increasing over the limit set by the Sugar Corporation in recent years.
The three state-owned sugar factories Wonji Shoa, Metehara and Finchaa produce 2.8 million quintals of sugar per annum, while the demand has reached 4.6 million quintals per year.
However, as part of the five year Growth and Transformation Plan (GTP) 12 new factories are to be constructed making the country a sugar exporting state.
Ethiopia expects seven of the sugar factories to start operating by end of 2015.
The Sugar Corporation said that once commissioned the seven factories will significantly boost the country’s sugar production capacity to 1.58 million tons – a five-fold increase. This is however lower than the 2.25 million tons the country would have produced if all 10 sugar factories came into operation.
Sugar production has been one of the cornerstones of the government’s plan to increase the country’s competitive advantage in agro-processing sub-sector.
The factories that are expected to be fully operational by the end of next year are Tendaho – 1 and 2, Omo-Kuraz-1, Kesem, two of the Tana Beles factories and Arjo- Dedesa.



Government urged to foster sugar development endeavor


Native residents of the Omo-Kuraz Sugar Development Project surrounding areas requested the government to foster the sugar development effort so that they can significantly benefit from the development.

In the discussion held at Jinka town of South Omo Zonal Administration between clan leaders, elders, women and the youth of the project surrounding areas comprised of Boddi, Murssi and Mieinnit nationalities and the leaderships of Sugar Corporation as well as the SNNP regional government, the resident participants requested the government to foster the sugar development activities in order to maximize their social and economic benefits.
Some of the participants of the discussion represented from South Omo Zone disclosed that they are eagerly waiting to see the sugar factories under construction in their area commence sugar production like that of Wonji Shoa Sugar Factory which they have paid a visit to earlier.
According to the Bodi community just from the outset of the development process they have got access to infrastructures and social services. Moreover, the project has enabled them introduce themselves with farming so that they have started enjoying their own harvest.
On the other hand, the Murssi nationalities from South Omo Zone and the Mieinnit nationalities of Keffa and Bench-Maji zones who came from areas where the project activities have not reached yet asked the government to accelerate the sugar development activities which will enable them improve their living condition like those residents of other areas where the project’s activities are already underway.
Disclosing their firm commitment to overcome whatever challenges they might face in the process of realizing the late Prime Minister Meles Zenawi’s development vision which he shared them while he had visited the area, they declared their readiness to contribute their part for the realization of the sugar development effort.
Moreover, the participants noted that the development endeavor has brought all nationalities which were used to view one another as enemies rather than friends stand together in fostering the development effort.
The sugar development work has, therefore, brought about a strong social link to them, they also mentioned.
Director General of Sugar Corporation at the level of Minister, Sheferaw Jarsso, while presiding over the discussion forum, on his part, said that the points raised in the meeting showed the encouraging results achieved in the sugar development activities.
In addition to creating access to canal schemes, the government’s effort to ensure infrastructures and social services accessibility to all areas irrespective of the command areas clearly demonstrates the government’s firm commitment in benefiting the local community, he further added.
He at last called up on the native residents to play their part in facilitating the sugar development endeavor.
On the other hand, Tagesse Chaffo, Vice President of the SNNP Regional Administration, reminding the government’s effort in making the natives the first beneficiaries when diverting the Omo River, disclosed that both the federal and regional governments execute any development activity at any area giving priority to the benefit of the natives.
Moloka Webneh, Head Chief of South Omo Zone, on his part, said that the reflections of the participants during the discussion showed the evasion of suspicions and fears which were used to be noticed earlier on similar discussion forums. The villagization program under execution has native residents to access various infrastructures and social services.
The Omo-Kuraz Sugar Development Project is found at South Omo, Keffa and Bench-Maji zones of SNNP Regional State in which five sugar factories in total will be constructed with 175 thousand hectares of sugarcane plantation field.



Major shoe company comes to Ethiopia



US based footwear producer, Brown Shoe Company, will establish an office in Ethiopia to buy domestic footwear products for its international market.
Recently large shoe makers have seen Ethiopia’s potential and invested in the country and there are some international garment companies like H&M but this is the first time a global shoe company has entered the Ethiopian market.
Wendu Legesse, Director General of the Leather Industry Development Institute (LIDI), told Capital that the company is expected to open its office in the coming fiscal year which starts next week.
Wendu said Brown Shoe mainly exports to China but now is encouraging Chinese firms to produce footwear in Ethiopia.
Leather industry experts are hopeful this will bring more leather technology and experience into Ethiopia.
“This is a good example of how international producers can contribute to Ethiopia,” Wendu added.
According to LIDI’s head, the Brown Shoe’s investment will not only increase production but will also bring international knowledge and standards.
He said that the company will not only open an office here, but will also provide laboratory service and capacity building.
“Brown Shoe has provided scholarships for seven experts who worked at LIDI and four of them are already taking the training,” the director general said. LIDI is the government institution responsible for overseeing the leather industry. It also has a training center that provides higher education in leather technology.
The government’s goal is to bring in half a billion dollars from leather exports by the end of the Growth and Transformation Plan (GTP). Currently that target is not on track to be met because experts explain that the number of companies expected to invest in Ethiopian leather has been less than expected.
Even though the GTP ends in a year government officials are hoping that as more large companies enter the market they will still be able to meet the leather earnings target. The government is not only encouraging footwear producers to invest in the country, but companies who have the potential to export the products.
For example international footwear companies like Huajian Shoe Company, and Gorge Shoe Corporation are coming to Ethiopia and joining the sector and they have the potential to produce a large amount of leather products.
According to Wendu, another global footwear producer, Stella, which makes 52 million pairs of shoes every year has demonstrated an interest in investing in Ethiopia.
“Stella paid two visits to the country and is interested in investing here. We are also encouraging synthetic leather shoe producers, who produce sneakers and sports footwear, to invest in the country,” he added.
Brown Shoe Company, based in Missouri, is a USD 2.6 billion footwear company with worldwide operations. It owns the 1,100-store Famous Footwear chain, 100 specialty retail stores in the United States, Canada and China under the Naturalizer name, as well as Shoes.com, the Company’s e-commerce subsidiary. Brown Shoe’s wholesale divisions own and market leading footwear brands including Naturalizer, LifeStride, Via Spiga and Sam Edelman. The company also markets licensed brands including Franco Sarto, Etienne Aigner, Dr. Scholl’s, Carlos by Carlos Santana, Fergie Footwear and Vince branded footwear.




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