New report forecasts drought in the Horn of Africa
- A new report says reduced moisture could lead to drought in the Horn of Africa
- The drought could hamper the harvests of main cereal crops and destroy livestock
- Measures are needed to counter the effects of the drought, says an expert
The report by the UN Food and Agriculture Organization (FAO)’s Global Information and Early Warning System, in collaboration with the European Commission’s Joint Research Centre (JRC), predicts a high risk of drought in key agricultural regions of Ethiopia, Kenya, Somalia and Tanzania in the coming months.
According to the report which was released this month (3 June), the rainy season in 2014 deviated from normal patterns since January with unusual rainfall occurring during the dry season while the rainy season only had above average rainfall in some areas.
But the report also predicts increased likelihood of El Niño — a periodic warming and cooling of the Pacific Ocean with its effect around the globe — which could lead to above average rains from October 2014 to March 2015, possibly resulting in favourable conditions for planting new crops. It notes that these conditions might hamper harvesting of the main cereal crops and destroy livestock.
In many countries in the East Africa the growing season of January to March this year was extremely dry, leading to a high risk of drought in the main agricultural areas, according to the report.
Simon Muhindi, a food security analyst from FAO Kenya, tells SciDev.Net: “According to research, the dry season might continue to [the] end of July, [but] there is a 70 per cent likelihood of experiencing El Niño rainfall right after that”.
Muhindi also indicates that the Horn of African countries should heed to the warning and come up with strategic measures, especially for areas likely to receive heavy rainfall.
“If these measures are not put in place the pastoral areas, infrastructure … human and livestock diseases will also be a problem to deal with,” says Muhindi.
He adds that the bottleneck faced is that medium- and long-term contingency measures such as stocking pasture for livestock are always well laid out, but no contingency funds are put in place to deal with these conditions.
Bernard Chanzu, a forecast specialist at Kenya Meteorological Service, says in Kenya signs of El Niño develop towards the end of the year, but not all such conditions result in heavy rainfall.
Chanzu adds that in parts of central Rift Valley in Kenya, several meteorological stations recorded less than 50 per cent of their seasonal long-term means of rainfall for March to May this year.
Link to the report
Workshop on ways of achieving MDG-5 kicks off
Addis Ababa, 15 July 2014 – A three-day workshop on ways of scaling-up action to achieve MDG 5 kicked off here yesterday.
Representatives from ten countries with high burden of maternal mortality namely; Afghanistan, Bangladesh, DRC, Ethiopia, India, Indonesia, Nigeria, Pakistan Sudan and Tanzania are attending the workshop.
Opening the workshop Ethiopia’s Health Minister Dr. Kesetebirhan Admasu said Ethiopia managed to reduce maternal mortality by 69 percent over the past two decades, putting the nation on the right track to achieve the target.
“If we keep up the tremendous efforts made over the past years, the country will meet its MDG 5 target,” he said.
Ethiopia’s achievements in family planning and reducing maternal mortality should be considered as best practice by other countries with high burden of maternal mortality, the Minister said.
Ethiopia is keen to learn from best practice of India, Indonesia and Bangladesh on provision of quality health service, improve sustainability of medical equipments and medicines, and technology utilization, he said.
He added that the country also managed to reduce under-five mortality and new HIV infections by 77 per cent and 90 per cent, respectively. It has also reduced new malaria and TB cases by 60 per cent.
According to Dr Kesetebirhan, this demonstrates the political commitment of the government.
Allocating good amount of budget for the health sector, deploying large number of health professionals and the operationalization of health development army contribute for the good results, the Minister said.
UN Population Fund (UNFPA) Country Representative Faustin Yao on his part said “ending preventable mortality is critical for the health of women and to sustain development.”
Maternal mortality is rife in many parts of the world and 75 per cent of these deaths can be averted if women have access to comprehensive sexual and reproductive health and family planning services as well as interventions for preventing or treating obstetric complications, he said.
ECX goes online
Sesame outpaces coffee trade
Online trading is coming to the Ethiopian Commodity Exchange (ECX). Since ECX began operating in 2008 with the goal of implementing a modern transparent trading system for major agricultural commodities traders had to bargain on the ‘floor’ of ECX headquarters near Mexico Square.
Now it will introduce online trading at a cost of USD 3.8 million.
As a result, now it will not be necessary to visit the ECX exchange center in Addis Ababa to trade thanks to a new technology brought in with collaboration from the Investment Climate for Africa (ICF).
ECX officials say they have already completed 95 percent of the preparations needed to start the electronic trading.
“We are in the trial stage and we are also giving training to traders,” Shimelis Habtewold, interim CEO of ECX said. The exchange will begin online trading in selected towns of Hawassa, Jimma, Adama, Humera and Gonder, according to ECX officials. The online trading system will be tested at the headquarters of the exchange.
“When it 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 the towns mentioned above,” the head explained.
“Online trading is designed to increase access to ECX and its services. It will be more efficient and give traders the ability to accomplish more,” Shimelis added.
According to the head, the electronic trading system will help them make more informed decisions because they will have the ability to access more information.
High Tech Tracking
Another advantage of the electronic trading system is that it will involve a commodity traceability system allowing traders to keep track of their exchanges. The project will cost USD 1.3 million.
Traceability provides buyers with information about the origin and processing of the commodities being traded. “In addition to creating market access, traceability will enable ECX members and clients to meet the demands of international buyers who want to know the whereabouts of the commodity, ensuring sustainability, quality, safety and security of commodities,” the interim CEO said.
Products that are traceable when they are traded will have more value which in turn is good for the traders.
“The traceability system will be applicable with new software. We have come to terms with the company and it will be available soon,” Shimelis explained.
Moving on up
ECX hopes these new services will help it expand its trade volume by 20 percent compared with the past year’s achievement.
In this past fiscal year 586,164 metric tons (MTs) of commodities were traded on the floor of ECX and this year that number should rise to 697,137 MTs. “Agricultural production is forecasted to grow this year so we believe the trading volume will increase by 20 percent,” Abenet Bekele, chief strategy officer of ECX, said.
Another reason for the increase in trade volume is the emergence of the mung bean. It was included during the 2013/14 fiscal year, but the legal procedures for trading it were in the process of being finalized, now this year the exchange will be the exclusive place for trading the commodity.
“This will also increase the amount of items being traded,” he said.
In addition to coffee, sesame and white pea beans, traders and exporters will now be legally required to go through ECX to or buy mung bean. Previously people could trade using either ECX or alternative methods.
Soon, according to Abenet, ECX will also trade red pea beans, which will increase the number of products traded on the floor to eight. The exchange also facilitates the trade of haricot beans, maize and wheat using a different system.
This previous fiscal year, which just ended, USD 1.3 or 26.2 billion birr worth of commodities were traded.
Since the second CEO Anteneh Assefa left the country for the US a few months ago the exchange has been in the hands of interim CEO Shimelis Habtewold. He says the exchange has been experiencing magnificent success when compared with last year. The interim CEO who was appointed in March pointed out that this year’s 7.3 billion birr in earnings was a growth of 38 percent when compared with the earning in the 2012/13 fiscal year.
“This growth is the result of a increase in the value secured from all the commodities including sesame, coffee and white pea beans,” the interim CEO said.
Sesame trading heated up lately, becoming one of the reasons for the dramatic improvement in results at ECX. According to ECX report, sesame has become the leading commodity traded on the floor, growing by five billion birr this fiscal year.
“The 280,552 MTs of sesame traded at the exchange was 106 percent more than what we hoped to achieve,” the chief strategy officer of ECX, said.
On the other hand, coffee, which was greatly affected by fluctuations in international prices during the earlier part of this fiscal year still managed to grow by 1.7 billion birr but declined in volume when compared to the previous year.
A year ago coffee led the way with 240,551 MTs while sesame and white pea beans followed at 215,234 and 82,675 MTs respectively.
According to Abenet, the coffee trading this fiscal year met 88 percent of the target with an actual trading volume of 239,778 MTs, compared with the goal of 270,000 MTs.
White pea bean trading also increased. The exchange disclosed that transactions of white pea beans skyrocketed by 445 million birr worth of 65,702 MTs. Meanwhile 100 MTs of mung beans were traded at ECX last fiscal year.
The total traded volume of the commodities traded reached 586,164 MTs by the end of the 2013/14 fiscal year which is an increase of 47,000 MTs or nine percent more than the volume during the 2012/13 fiscal year.
“We have met 92 percent of our target,” the exchange head said.
Compared with the 2012/13 fiscal year performance the trading volume of coffee decreased slightly in the just ended fiscal year, while sesame trading demonstrated outstanding growth. The white pea bean trading volume also decreased significantly in the 2013/14 fiscal year compared to last year’s performance.
The exchange chief strategy officer said that the actual achievement of white pea bean trading volume was 65 percent, which is the weakest performance of the commodities.
According to officials of the exchange in the past fiscal year 13.5 billion birr worth of coffee was traded on the exchange, which made coffee the major commodity traded in terms of value. “Changes in the international market are contributing to an increase of coffee trading at the exchange,” one expert said. Abenet said that the international market is showing some improvement compared with the beginning of the past fiscal year.
The trading value of other major products; sesame and white pea beans was 11.2 billion birr and 1.1 billion birr respectively.
The focus of ECX is to facilitate a modern market system. It plans to offer futures trading and it has teamed up with market experts in Asia and North America to study the possibility.
“We plan to trade futures and we will implement this when the right time comes,” Abenet said.
In the past six years since ECX began operating, there have not been any defaults on transactions. There have been some illegalities that were tracked by the exchange and its regulatory body and this led to some prominent traders being suspended.
Sudanese investments in Ethiopia hit $2.4 billion
Sudan is ranked as the second biggest investor in Ethiopia after China with an estimated $2.4 billion in investments, Awad al-Kareem Sa’eed, President of the Sudanese Investors Society in Addis Ababa announced.
He said obtaining investment permits and licenses is a very smooth procedure, contrary to Sudan.
According to the chairman there are 800 Sudanese businessmen registered at the Ethiopian Ministry of Industry, which is in charge of investments in the country.
He noted that the Ethiopian Parliament is expected to debate a new bill for investment, if approved will raise minimum investment capital from $200 to $3 million.
Boosting Economic Opportunities In Ethiopia Via India-Ethiopia Relations
VENTURES AFRICA – A 14-man delegation from the Confederation of Indian Industry (CII) is billed to visit Addis Ababa beginning from 14-15 July to talk about multi-sector projects that will boost Indian business in Ethiopia.
Industry sources have it that among the delegation to the capital of Ethiopia, are resident representative of EXIM Bank of India, Karthikeyan B., country head and CEO of State of India, Subramanian Venkataraman, and international regional director of Africa, Gulf and Middle East of CII, E.B. Rajesh and others.
The delegates will meet higher officials and business partners, plus Addis Ababa Chamber of Commerce and Sectoral Association (AACCSA), the Ethiopian Chamber of Commerce for a business to business (B2B) agreement with the Ethiopian businesses.
During the three days 10th CII EXIM Bank Conclave on India – Africa Project Partnership organized earlier this year in March with the theme “Accelerating Economic Growth through Innovation, Transformation, and Inclusion and Governance conclave, Ethiopia was one of the countries that benefited immensely.
As part of the benefits from the 9th to 11th conclave, Ethiopia, a population of over 91 million people, was given a line credit of $1 billion for the construction of sugar and power industries and rail network in an attempt to bring the country to a middle class country status.
Again, among other programmes, the delegation will meet with officials from the Ethiopian Investment Agency (EIA) in order to talk and harmonize all the business opportunities that could allow the Indian companies participate in boosting businesses in Ethiopia. As part of the programme, they will meet with the Ministry of industry (MoI) and Minister of Water, Irrigation and Energy (MoWE), the Ethiopian Minister of Agriculture Investment and Land (EAIL). Even interaction with CEOs is not left out in the meeting.
This visit is targeted at opening up new business frontiers in Ethiopia and find out possible areas of investment which can deepen Indian companies’ presence in the country that is making rapid effort in eradicating poverty and becoming self-sufficient in food, Source from the Indian embassy in Addis Ababa, quoted Vijayakumar K., the first secretary and head of chancery at the embassy.
He maintained also that the meeting will indeed promote strong industrial relationship between Ethiopia and India and ultimately bolster economic opportunities.
Investments in Ethiopia from the United States and Europe have been increasing rapidly over the past few years with their proportion equivalent to the amount of Asian investment.
Of 40.61 billion Birr (about US$2.06 billion) of foreign direct investment (FDI) in Ethiopia between mid-2010 and mid-2014, the share of U.S. and European investment was more than 19.27 billion Birr or about 47 percent of the total, according to official data.
During the past 10 years, Chinese and Indian investments had formed the lion’s share of FDI in Ethiopia but the situation has changed today. “When we see the FDI flows over the past ten years, most of the investments had come from Asian countries especially China and India, but now investment flows are nearly at an equal rate from Europe, America and Asia,” said Ethiopian Investment Agency public relations director Getahun Negash.
The year 2011 was the start for the boost in U.S. and European investment to Ethiopia with the trend continuing in subsequent years.
During the just concluded fiscal year, the U.S. and Turkey were just behind China in the number of investment projects and aggregate capital invested.
U.S. investment reached a high in 2012 with 194 projects involving 1.4 billion Birr in capital approved.
European investment reached higher in 2011 when 29 projects with 4.6 billion Birr projects were licensed (US$1 = ETB19.72).
Nile International Conference Center inaugurated
A new conference center named Nile International Conference Center was inaugurated in Bahirdar July 14, 2014 in the presence of Deputy Prime Minister Demeke Mekonen, Foreign Minister Dr. Tedros Adhanom, Ambassadors of the Nile Riparian states and other high level dignitaries.
The Center which was constructed with a cost of more than half billion birr has one main hall and 10 syndicate boardrooms. The 10 syndicate rooms are named after the 10 basin states.
The center which rests on 110,000 square meters comprises also an amphitheatre, photo gallery, café and restaurant among other things. On the occasion Demeke Mekonen noted that Ethiopia’s federal governance is playing great role in speeding up the development of the regional states.
He went on to add that apart from its natural attractions, the fact that Bahirdar has now conference center, a stadium and its advances in acquiring modern technologies should be taken as a symbol of the national development.
He also noted that the designation of the syndicate rooms after the 10 Nile basin states will have a role in consolidating the close ties of the basin states and their aspiration to grow together.
Abate Yalew, Speaker of the Amhara Regional Council said that the 10 states are allowed to keep artworks which reflect their culture and history in the designated rooms.
Dr. Tedros Adhanom for his part underlined that the centerpiece of Ethiopia’s foreign policy is predicated on ensuring common development and peace of Ethiopia with its neighbors in a bid to guarantee the benefit of the people in general.
He said Ethiopia’s stride in development of mega projects will have a big role in integrating the region through development and eventually realize a prosperous, democratic, conflict-free continent.
The fact that syndicate rooms are named after the basin states in Bahirdar which is the source of the Nile, shows that they should play their role in realizing common development and the development of the continent in general.
Egypt’s Ambassador to Ethiopia Mohmmed Edris and Philp Karenzy, Deputy Head of Mission of Rwanda said that the designation of the syndicate rooms after the basin states symbolizes Ethiopia’s contribution to the realization of the continental integration and regional development.
It also reflects Ethiopia’s contribution to Africa’s peace and security and promotion of rapid and inclusive development. The construction of the conference center took 4 years.
129% salary increase
The government has significantly raised the salaries of civil servants and the topic has excited the nation, even though the amount of the increases has not officially been disclosed. However, according to a document Capital obtained, the salary of government employees is doubled. Workers at the bottom of the pay scale will see their salary grow by 129 percent, while others with higher salaries have also gotten about a 76 percent raise.
Civil servants have secured a very impressive and unprecedented salary increment. Three weeks ago Prime Minister Hailemariam Desalegn disclosed that the government will increase salaries of state employees as of this month (the beginning of the budget year). The exact sum has not officially been confirmed. Sources close to the issue told Capital that the amount the government added is significant and as high as 129 percent.
According to the new salary rate, the minimum starting salary has been raised to 1,031 birr from 450 birr and the ceiling amount has reached 11,713 birr, for professionals.
Experts indicated that the minimum salary for sub professionals’ that previously stood at 450 birr, has now grown to 1,031 birr, which is a 129 percent increase.
The starting salary for professionals and scientific or fresh graduates that was 1,499 birr has now risen to 2,649 birr, which is about a 76 percent increase.
The previous maximum basic salary for professional and scientific recruits was 4,343 birr and now it has been raised to 7, 815 birr, which is also about a 76 percent rise.
According to the new salary scale that Capital obtained the minimum salary increase is not lower than 76 percent, even though the percentages vary on different levels.
Civil servants, who were earning the lower amounts, have secured the biggest raise.
Experts said that the percentage of the new pay raise is much higher than in the past.
Four years ago the government raised salaries for civil servants and then after that it also increased pay for teachers.
When the PM announced the salary hike during the Civil Service Day Celebration held at the African Union Conference Hall on June 23, he said that the government decided to increase its employees’ pay starting from the first month of the budget year (July 8, 2014) aiming to inspire them to engage in the nation’s development.
“It is intended to improve the working atmosphere as well as the living conditions of civil servants,” Hailemariam said.
“The increase will be made with consideration to the government’s financial capacity, in a way that avoids awakening inflation or disturbing the stability of the economy,” Hailemariam added.
He said that the increase was approved about a year ago, but the government suspended it with the intention of seeing the trend of the inflation remain in single digits.
Even though there are not accurate statistics, the number of civil servants in the country is believed to be about 1.3 million.
Since the government disclosed the salary increase three weeks ago price hikes and new tariffs are being observed in some market places. Some experts say that the inflation may return, but the government is dismissing fears of price hikes. It also stated that price hikes and inflation would not be seen in relation with the salary increase.
Some of the government bodies also stated they would take legal action against traders who impose artificial price hikes on the public. Early this week the Trade Competition and Consumers’ Protection Authority announced that consumers are informing the authority about price increases related to the pay raise of civil servants. In a statement that the authority sent to Capital it reiterated that it will take legal measures against the traders who apply price hikes without any economic reason. The authority also advised the public to inform them by calling a 8478 toll free line when they perceive that price hikes are occurring.
Due to fears of artificial price hikes the newly organized wholesale public enterprise, Alle, has disclosed that it will terminate the contract of retail traders if they sell consumer products at high rates.
Major Tax Revision Coming to Ethiopia
– Two committees have been established to look into how the application of direct and indirect taxes could be revised
The revision and consolidation process of these tax laws was initiated by the Ethiopian Revenues & Customs Authority (ERCA). The proposed changes are based on the different clarification questions it has been receiving from taxpayers and others concerned; problems encountered while applying the laws and questions forwarded by tax payers at different times during the enforcement of these laws.
The Authority established two committees to look into how the application of direct and indirect taxes could be revised. The revisions the committees are suggesting would affect many of the tax laws currently in place – some of them since 2002, including income, excise and turnover taxes; VAT registration; classification of taxpayers; settlement of tax disputes and the issue of the highly debated hefty deposits for settling those disputes.
The revision suggests a higher minimum income, for salary and businesses, that will be taxed, says Seyoum Woldaregay, legal advisor to the Director General of the ERCA.
The exemption threshold for salary income tax currently is 150 Br, while for businesses it is set at 1,800 Br. After exempting this amount, the tax rate progressively grows from 10pc up to 35pc under the income tax proclamation. The amount of employment income exceeding 5,000 Br shall be taxed by a flat rate of 35pc, while if the income is from business activities the same rate is applied for the amount exceeding 60,000 Br. The suggested revision affects both the minimum taxable income and the maximum from wherein the flat rate is applied.
The ERCA also wants to change the conditions for the classification of taxpayers into small, medium and large; the existing system categorised those businesses with an annual turnover of 100,000 Br or less as small and those with half a million Birr or more as large, with the rest falling into the medium category. This has been in place for over 10 years, and the ERCA wants to revise it so that it accommodates the depreciation of the Birr over the years.
The proposal also includes having a dedicated section to deal with tax disputes and also limiting the 50pc deposit requirement of those who appeal for tax revision to just the base tax levied on them, excluding penalty and interest payments, as is the practice now. Currently there is a tax review committee, whose function is a secondary responsibility for its members in different departments of the ERCA.
The mandatory VAT registration also applied for minimum annual turnover of half a million Birr in a practice that has been in place since 2002. This could now go up to one million Birr. The 2007 regulation that enforced the use of cash register machines based on other tax laws could also be elevated into a proclamation all on its own “in a comprehensive and inclusive manner,” according to a source who declined to be named.
The MoFED received the proposed amendments two months ago, but it is yet to see them to the next stage.
Simien Park to get $1bln hotel
African Wildlife Capital, a mission-based investment company has signed agreements with a British-Ethiopian venture to build a world-class boutique hotel in Ethiopia’s Simien Mountains National Park, one of the heritages of Ethiopia inscribed by UNESCO.
Called Limalimo Lodge, the hotel will offer high-end accommodation, tailor-made activities, and gourmet cuisine in one of the most beautiful places in the world, according to a press release the Lodge sent to ENA.
The Lodge, funded by African Wildlife Capital with one billion USD, scheduled to open in fall of 2015 and bring benefits to area’s wildlife and people
The investment will bring tangible benefits to the neighboring Limalimo community by employing locals to both help during the construction phase and to work at the lodge once open.
Shifteraw Asrat, CEO of Limalimo Lodge, said together with the African Wildlife Capital, African Wildlife Foundation, and the Ethiopian Wildlife and Conservation Authority, “we can develop long-term, sustainable conservation practices in the Simien Mountains and showcase the potential for well-managed tourism projects in Ethiopia.”
As the lodge draws more visitors to the Park, it will generate ‘much-needed’ revenue through conservation fees for the Authority and establish a financially and environmentally sustainable model for conservation tourism that can be replicated across other parks in Ethiopia, the statement said.
Listed as a World Heritage Site in 1978 by UNESCO, Simien Mountains National Park offers dramatic mountain scenery with a wide variety of endemic fauna and flora, including the Gelada monkey and the Walia Ibex, a type of mountain goat.
It offers excellent trekking opportunities, including Ethiopia’s highest mountain Ras Dashen/Dejen.
The area, which is under threat from livestock grazing and agricultural sprawl, was put on UNESCO’s List of World Heritage in Danger as a result of declines in a number of native species.
African Wildlife Capital hopes to improve conservation around Simien Mountains through its investment in sustainable tourism.
“We have seen how lodges like Limalimo can play a key role in the conservation of sensitive areas such as the Simien Mountains National Park,” said African Wildlife Capital Investment Manager Giles Davies.
“In Ethiopia, tourism is still in its infancy but is growing fast, and rarely have we been able to engage in a country during this stage of tourism development.”
“The Simien Mountains, a key tourist destination in the country, will benefit, both from a socioeconomic and conservation perspective, from a well-managed and thoughtfully constructed lodge such as Limalimo.”
Solomon Taddesse, the director of the newly established Ethiopian Tourism Organization, acknowledged the benefits the lodge will bring to both wildlife and people.
“This is a tremendous investment for Ethiopia,” said Taddesse. “This public-private partnership will create jobs for the local community as well as improve Ethiopia’s national parks,” according to the release.
Sugar shortage continues
MOHA stopped production
Sugar may soon be imported from abroad to alleviate the current shortage, Capital has learnt. The industry was already experiencing some problems as Tendaho Number One which was expected to produce 75,000 tons as of January 2014, is not yet completed. This coupled with the sudden crop failure at Finchaa sugar factory in early May 2014, has forced the Sugar Corporation to reduce quotas or eliminate sugar subscriptions.
As a result, Moha Soft Drinks Share Company- one among the biggest subscribers of the corporation- and maker of Pepsi products stopped production for the last two weeks. Moha, was usually consuming 16,062 quintals of sugar each month from the corporation, however has not received anything from the corporation since June 28, 2014, according to a spokesperson for Moha. As a result all seven of its factories are currently idle.
“When we have received sugar it was lower quality than our standards so it has to go through another process to be used as a raw material. But we can still tolerate that because we want to keep our good relationship with the corporation. However when we can’t get any sugar at all obviously it becomes very difficult,” Solomon Bekele, Sales and Marketing manager of Moha, told Capital.
Though the damage varies, a number of the industries- especially soft drink and biscuit manufacturers like the East Africa Bottling Share Company (Coca Cola) – another giant subscriber- are facing challenges, although the East Africa Bottling Share Company declined to comment.
Some have brought the issue to the Ministry of Trade (MoT) and the Ministry of Industry (MoI).
The corporation is hoping, to minimize the problem by pushing Tendaho One to start production within the coming week. “We are hopeful that Tendaho will start production within the next few days. It is already completed. The impact will then be high,” Zemedkun Tekle, communication director at the corporation told Capital.
“Now that it is almost finished we will make up for the lost time by working through the summer starting next week,” Zemedkun said.
Kesem – another state owned sugar factory being constructed by a Chinese company will start production in November 2014, according to the corporation.
Yet the margin in the demand and supply of sugar in the country remains high. The quota for the total of 129 subscribers which are manufacturers was 90,000 quintals of sugar. The rest is distributed to associations for household consumption. “Normally, our demand is 25,000 quintals per month. We want to expand it so we can increase our taxable revenue from the current 1.9 million birr but with the current situation we cannot sustain the current amount,” Solomon said.
“At such moments, we give priority to households” said Zemedkun from the corporation. Currently, the quota set by the government for household consumption per month is 507,000 quintals of sugar – 102,000 for Addis Ababa and 405,000 quintals for other regions- per month.
Two New Dams Planned to Provide Flood Protection to Sugarcane Farm
– The MoWIE is also looking to restructure itself into the Water Resources Development Engineering Corporation
The Water Works Design Services Enterprise (WWDSE) has finalised an inception report for the construction of two multipurpose dams on the Middle Awash River and Logia River – a lower basin tributary of the Awash. The Enterprise has also begun conducting a feasibility study for the construction.
The Enterprise was awarded with the task of conducting the feasibility study and design of the two multipurpose dams by the Awash Basin Authority of the Ministry of Water, Energy & Irrigation (MoWEI) in April 2014. It signed an agreement during the same month, according to Leulseged Abayneh (Eng), Lower Awash Multipurpose Dam and Irrigation Project manager with the WWDSE. It will be paid 8.5 million Br for the study and design of the dam on the middle basin of the Awash and 13 million Br for the same task on the dam and irrigation project on the Logia River, he said.
Upon signing the agreement, in May the WWDE started conducting a pre preliminary study to prepare an inception report, which it submitted to the Authority in the first week of June 2014. It has reviewed available documents on the project areas, identified data gaps and additionally required data, revised the work plan it has submitted in the tender proposal and conducted site visits and inquiries at this phase of its activities. After a discussion is made with the basin authority on the draft inception report, comments from the client were received at the end of June 2014. The enterprise is working on the inclusion of the comments, as they prepare the final inception report to begin the feasibility study, according to Leulseged.
As one of the main objectives of the pre-feasibility study is to prepare the inception report, engineers at the WWDE have identified and proposed two alternative sites for each of the dams, in addition to identifying the areas that required additional data and collection methods.
It was at these sites that they have started gathering field data, as part of the preliminary study the enterprise is required to perform under the contract. The feasibility study for both the dams includes a topographic survey of the dam site and reservoir area, climate and hydrology study, hydrogeology study, engineering geological and geotechnical investigation, updating irrigation agronomy study, environmental impact assessment (EIA), socio-economic study, financial and economic analysis and engineering study and feasibility level design, according to the contract agreement
The feasibility study on the Lower Awash includes eying a total area of 10,000ha for irrigation, which may be reconsidered based on the findings of the study on the soil and water volume of the river.
After finalising the preliminary study and getting approval from the client, the enterprise will prepare the detailed design for the dam and structures, as well as irrigation and drainage system design. It will also conduct a dam break analysis, as a safety measure in case of failures in the dams. The enterprise finalises its tasks under the contract by preparing the detailed engineering specification for the construction of the dams, preparation of tender documents and engineering cost estimation – the rough estimation of which will be known at the end of the feasibility study.
The major objective of the two projects – Middle Awash Multipurpose Dam and Lower Awash Multipurpose and Irrigation Dam – is to curb the recurring floods that are threatening threaten the sugarcane farm of Tendaho Sugar Factory, which is under construction and expected to begin production in the new fiscal year, says Ashenafi Negia, the Middle Awash Multipurpose Dam project manager at the WWDSE
The multipurpose dam on the Middle Awash is found in the Afar and Oromia regions around Awash town – 223Km north-east of Addis Abeba and two kilometres from the Addis Abeba-Djibouti road. While the Lower Awash Multipurpose Dam and Irrigation Project will be constructed on the Logia River – one of the downstream major tributaries of the Awash River, flowing most of its length southwards. It is located about 80km upstream of the Addis Abeba-Djibouti road main bridge.
Besides the main objective of controlling floods, the dam to be constructed at the middle stream of the Awash River will also be used to supply water for Middle Awash irrigation development schemes, already in place, mini hydropower generation, a recreation centre and water supply for Awash town. The dam on the Lower Awash basin will primarily be used for flood control and the provision of water for irrigation development schemes, according to managers of both projects.
Operating at its headquarters – newly built at an outlay of 100 million Br, near Bob Marley square in Gerji, Bole District – the WWDSE is the major operator in the fields of waterworks design and study. It has done design works for the Tendaho, Kuraz and Kesem Bollhame sugar development projects, as well as the Halele Warebessa hydropower project and many other similar tasks since its establishment in 1999, as a profit making public enterprise with a paid up capital of 35.2 million Br. Currently, it has more than 38 ongoing projects, including more than 11 projects for which it is conducting feasibility and prefeasibility studies and 15 projects under its supervision.
It has been expanding ever since its establishment by increasing its annual turnover from eight million Birr in 1999 to 220 million Br over the past 11 months of this fiscal year, with its net profit growing from a little more than one million in the year of its establishment to 43.5 million Br in 2013. Its gross revenue during the past 11 months of this fiscal year has been about 105 million Br, according to the recent financial report of the enterprise.
On top of this success, the MoWIE has drafted a reorganisational regulation that will make it the Water Resources Development Engineering Corporation, with a capital of 700 million Br. Its areas of operation and responsibility, as well as its organisational size will be enlarged accordingly upon approval of the regulation, which is expected before September 2014.
Profiting from poverty: Do some companies benefit from twisted images of Africa?
BY Kate Douglas | 15 July 2014
In recent years there has been a change in thinking and narrative when it comes to Africa’s representation in western media. A good example of this is The Economist’s special report last year that referred to Africa as the “Hopeful Continent”, a mere 13 years after publishing the front cover that dubbed it the “Hopeless Continent”.
Today, Africa’s investment and business potential is making headlines, with McKinsey’s statistics of growing consumer spending power commonly quoted alongside the fact that the continent is home to six of the world’s 10 fastest growing economies. With this narrative shift comes the view that Africa needs trade, not aid, to prosper, as the former results in sustainable development, while the latter leads to dependency on handouts.
According to Nigerian-American journalist and author, Dayo Olopade, the perception that Africa needs western assistance to survive is often exploited by profit-seeking businesses.
Olopade is the author of The Bright Continent: Breaking rules and making change in modern Africa, a book she spent three years researching whilst travelling across the continent. She says a key goal of her work is narrative correction concerning Africa.
In a recent interview with How we made it in Africa, Olopade explains that some for-profit western companies reinforce and leverage the existence of poverty as a clever marketing tactic and brand differentiator. She uses the example of US shoe company, Toms Shoes, which has trademarked the slogan “One for One” where for every pair of shoes the company sells, a pair of new shoes is given to a needy child.
“The fact that they leverage the existence of people without shoes, or more specifically the perception that there are people without shoes, is kind of dishonest… Not only are there shoes available across many parts of sub-Saharan Africa for local purchase, there are people who are making shoes in Africa who are employing people, creating capacity, creating skills and training, and steady income and formal sector employment,” argues Olopade.
She adds that companies like Toms, which seem charitable in their donations, are actually depressing the local economy and “reinforcing the incorrect perception that people in poor countries can’t afford anything”.
The Toms ‘One for One’ model
Last year, Fast Company reported that Toms had given away their 10 millionth pair of shoes. The company was founded in 2006 by American serial entrepreneur Blake Mycoskie who was inspired during a visit to Argentina where he met a group of women who were collecting shoes for school children. In an interview with The Business of Fashion last year, Mycoskie described his motivation behind starting the company.
“I went with these women to this village [in Argentina] and saw kids and families who were so excited to get these shoes – and they weren’t even new shoes. They were used shoes. And it just hit me right in the heart. This was what I wanted to be doing. I mean business is great. Making money is fun. But making people have tears of joy? That’s what life’s about.”
Mycoskie says that his first thought was to start a charity, but he hated asking people for money. And so the idea was formed to have a business where for every pair of shoes sold, he would give one away.
“It was the birth of the ‘One for One’ model,” adds Mycoskie. “But it wasn’t like, ‘oh this is going to be the greatest tagline in the world’ or “this is the best way to connect with customers”. The easiest way to keep track of everything was simply: you sell a pair, you give a pair. It just seemed really simple.”
In 2011, the ‘One for One’ model was expanded and Toms Eyewear was launched, where for every pair of sunglasses purchased, “Toms helps restore sight to a person in need”, according to the company’s website.
While Toms did not respond to How we made it in Africa‘s request for a comment on Olopade’s views, Mycoskie did address some of the common criticism around his business model in an interview with The Huffington Post. “If you really are serious about poverty alleviation, our critics said, then you need to create jobs. At first I took that personally, but then I realised that they were right… using our model to create jobs is the next level.”
The company states that its shoes are made in China, Ethiopia and Argentina and, according to Mycoskie, by the end of 2015, Toms plans to have one-third of all shoes produced in the countries to which the company donates.
Mycoskie describes himself as a social entrepreneur and says the company remains profitable because the footwear and eyewear categories are two of the highest margin businesses in the fashion industry. This, along with using social media to reduce marketing expenses, is why Toms can carry the cost of giving away a second pair of shoes for free, says Mycoskie.
According to Olopade, the ‘One for One’ model is simply a way to differentiate the Toms Shoes brand from others.
“So for a company… that has no particular brand advantage other than the pseudo-altruistic for-profit scheme – because again, people think it’s a charity but it’s a for-profit company – I find it to be super disingenuous.”
She added that there are a number of other companies employing the same “charitable” business model, and thereby reinforcing common misconceptions about Africa and third world economies.
“People realise this gimmick works. So you have all kinds of other companies – from food to coffee to sunglasses – emulating this model… It has its own incentives, its own profit motives and is very often misaligned with the addressable needs of people who are poor.”
Aid versus trade: do charitable donations do more harm than good?
Olopade says that the common perception that Africa is waiting on western assistance is “patently false” and the impression that “people are sitting around refugee camps with flies on their eyes waiting for some handout” undermines the population’s potential.
“If you spend any time in sub-Saharan Africa, people have two jobs, three jobs, working twice as hard to get half as far. And are extremely energised and animated and motivated to solve exactly the problems that folks in Geneva, Brussels or New York are pondering in conference rooms.”
During a recent Zócalo Public Square event, a non-profit ideas exchange platform based in the US, Olopade said that many perceptions on Africa have been manipulated.
“Most images of Africa arrive from sources that are interested in making you feel bad about Africa. And I say this not to discount the important humanitarian work that can be done in situations of crisis.”
Olopade holds the view that Africa needs trade, not aid, for sustainable development and noted that charitable donations, such as second-hand clothing, can actually do more harm to an economy than good.
“Mali is always the example I use. It’s one of the biggest cotton producers in the world but it no longer makes T-shirts, in part because of the flood of donated items that come from countries like the US, and put workers out of jobs.”
Customs agents prohibited from freight forwarding
The Maritime Affairs Authority (MAA), a maritime operation supervisory organization, has excluded customs clearing agents from being involved in forwarding operations with the goal of halting the traditional operation system, Capital learnt.
The authority has ordered the customs clearing agents to engage only in services stipulated in a 2004 Customs Clearing Agents Regulation, sources said.
According to experts, agents who have a license for customs clearing were also working in the freight forwarding business, which also has its own laws and procedures. Under the new rules that MAA disclosed this week, the customs clearing agents will not be able to work in the forwarding business.
The country’s law stated that customs clearing agents are only allowed to work in customs issues inside the country and cannot be involved in international transportation activity.
The Customs Clearing Agents regulation issued in 2004 stated that ‘Customs Clearing Agent’ means a person authorized to deal with the customs, for and on behalf of another person, to carry out customs formalities related with the importation, exportation and in general with the movement and storage of such goods within the customs territory of Ethiopia.
The regulation also indicated that ‘Customs Formalities’ means any customs operations carried out in connection with importation, exportation or transit of goods from the time of arrival at the customs port until released from the customs control.
However there was a growing trend, until a week ago, for agents with a customs clearing license to get involved in the forwarding process from the port of Djibouti or other similar facilities to import their customer’s cargo.
“The previous trend was very wrong and it is the right decision taken by the authority to exclude the stated type of agents from the forwarding business,” experts stated.
It was unclear how the customs clearing agents were able to simultaneously get involved in the freight forwarding business. Because there are different criteria needed to transport cargo from international ports; for instance the agent must open a letter of credit to settle the payments in the third country (Djibouti) and only freight forwarding agents are allowed to open a letter of credit “But customs clearing agents were carrying out this business previously,” an expert said.
Individuals who are involved in the freight forwarding business that Capital interviewed said that it is the right decision taken by the authority, because their business was affected by the involvement of the customs clearing agents.
Since the authority declared the new system the business community engaged in the customs clearance claims they have discontinued freight forwarding.
MAA was established in 2007 in accordance to the proclamation No. 549/2007, but it began operating in November, 2008. The authority is accountable to the Ministry of Transport and is engaged in expanding the maritime sector with a modern system.
Ethiopia, which is the most populated nation in world without a seaport, is mainly using the port facilities at Djibouti which is rapidly expanding the number of ports and services to meet the growing cargo of east African landlocked countries, Ethiopia and South Sudan.
Capital’s efforts to get details about the issue from Mekonnen Abera the director general of the authority, on Friday July 11, were unsuccessful.
New Mineral Deposit Sites Identified Despite Lagging Performance
– Rain, scarcity of vehicles, old machinery and the lack of skilled manpower were among the issues identified for poor performance
The Geological Survey of Ethiopia (GSE) has identified 20 new mineral deposits, pushing the national total up to 143 in the 2013/14 fiscal year, although revenue from its services was only 62pc of its target that planned to collect 21.7 million Birr.
Eighteen of the deposits involved gypsum, limestone, marble and potash. Nineteen of these deposits are found in Oromia, with seven in the Gugi zone, six more in south-west Oromia and six in Holeta and Meki. The 20th, a coal deposit, was found in Wolkite town in the Southern Regional State.
The GSE collected only 13.3 million Br from the services it provides for its local and international clients in the just ended fiscal year – 62pc of its 21.7 million Br target. The company managed to collect 10.5 million Br from core drilling services, two million Birr from sample testing and the remaining 845,000 Br from the sale of geosciences information and consultation services. It attributed its failure in attaining its target to delays in the import of chemicals for its laboratory and late orders from clients, which didn’t start coming in until February, according to Tamiru Mersha, communication directorate director at the GSE.
It offered core drilling services to the Ezana, LL, Berber and Kripto Mining companies for the exploration of gold and conducted a study for the Tigray Water Development Bureau for the construction of a dam.
The GSE has conducted the geological mapping of the country, with a coverage of 74pc. According to this mapping, there is the potential in Ethiopia for 200tn of gold, 4.7 trillion cubic feet of petroleum, 100 million tonnes of marble, 360 million tonnes of coal and 5,000 MW of geothermal energy. Its geothermal excavation has only been 200m, out of a plan for 6,750m.
The GSE, now under the Ministry of Mines(MoM), was established in 1968, with the responsibility of collecting basic geosciences information from the whole country to disseminate to all stakeholders. The GSE carries out geological mapping and investigations related to mineral resources, oil and natural gas, hydrogeology and engineering geology. It also undertakes geochemical analysis of solid and liquid samples, physical property testing and petro graphic and mineralogical studies.
It has carried out soil tests for the Great Ethiopian Renaissance Dam (GERD) project and also engaged with 11 additional capital exploration projects. Six of the ongoing projects have faced issues of poor performance.
The projects showed poor performance because of untimely rain, scarcity of vehicles, old machinery, lack of skilled manpower, repeated breakdown of machinery caused by the incompatibility of the area and high worker turnover, according to its annual report.
Ethiopia Has Over 20,000 Ton Tantalum: GSE
Geological Survey of Ethiopia (GSE) disclosed that there is over 20,000 tons of tantalum deposits in Oromia Regional State.
EGS Communication Director, Tamiru Mersha, told Ethiopian News Agency that the deposit would help the country in its efforts to become an industry-led economy.
He said the mineral is abundantly found around Kenticha in Guji Zone of the Oromia State.
Tantalum is used as input for producing medical equipment, mobile accessories and other industrial purposes, according to the director.
Exploiting tantalum within a short period would, therefore, help in transforming the country from an agricultural-led to industry-led economy, he further elaborated.
Communication Director of Ministry of Mines, Bacha Faji, on his part said seven companies, including Chinese, Israeli and the Ethiopian Mineral Development Share Company, have secured licenses for exploring tantalum.
Among the companies, only Ethiopian Mineral Development Share Company is developing the resource, the director said, adding that the others engaged in exploration would hopefully soon undertake development.
The Ethiopian Mineral Development Share Company secured over 3 million USD by exporting 80 ton tantalum to China during the past Ethiopian budget year.
Traditional miners obtained about 1.3 million USD, he indicated.
TO BAN OR NOT TO BAN
There is no crop that creates as much confusion for policymakers as Khat – a popular stimulant. They are regularly seen being put in a difficult position when the issue of the crop is raised. On the one hand, they are happy about the export earnings the crop brings to the nation, which suffers from a long overdue foreign currency conundrum and expanding budget deficit. On the other, they seem to be concerned of the impact of the stimulant crop on the health and psychology of its ever-increasing consumer population across the country. As a result, there is no clear policy on the crop, which continues to bless the nation with huge export earnings. In the first ten months of the 2013/14 fiscal year, export earnings stand at 249 million dollars – 22 million dollars short of the earnings for the entire 2012/13 fiscal year. Further enlightenment over the policy confusion with the crop is the fact that growers are left alone. They do not receive any coordinated agricultural support. Despite the confusion, however, the demand for the crop has continued to increase from countries as varied as Somalia, Israel, the United Kingdom and the Netherlands. Yet, a headwind has come in the trading of the crop, with a recent ban in the UK – the third largest importer of the crop from Ethiopia, with a total import value of 14 million dollars in the 2012/13 fiscal year. The ban, informed by medical researches and psychological surveys, which illustrated a significant negative impact on consumers themselves and the wider community, has become the latest test to the export regime of the nation. But, little has transpired from policymakers over the ban, even though Kenyan politicians, whose nation also exports the crop to the UK, are trying to push back the implementation of the ban by at least one year.
– Foreign Ban Challenges Khat Export, While Gov’t Remains Indifferent
The legend behind the discovery of this addictive leaf is very much the same as that of coffee: A Yemeni herdsman, on seeing his goats becoming overactive after chewing the leaves, tried it for himself, before sharing his wisdom with the world.
As the elder son of a Khat farmer in East Hararghe Zone, Abdella has been on the farm helping his father since early childhood.
Only demand has kept khat as one of the top commercial agricultural commodities
Khat has served many purposes in his locality. On top of being a means of making a living for almost all of his neighbourhood and extended family members, it is used to welcome and entertain guests, in mourning, at weddings and during collective labour.
He withdrew from school in grade eight, becoming one of the numerous small scale Khat traders supplying different varieties of the crop with different vernacular names in Dire Dawa. He expanded his business upon reaching the market in Addis Abeba during his early 20s.
Successful enough to find foreign markets for the green leaf he regards as “the one I know most”, he began exporting Khat to China a decade and a half ago. Business was going well; so too was life. He has married and became a father to a daughter. There were no problems of supply from the East and West Hararghe Zones. No problem of market too. He was sending between 800kg to 1000kg of dry and fresh Khat he acquired from farmers in Aweday – the place most famous for quality Khat – and Baddessa, another famous region for the crop. Almost a decade in the business and with an increasing number of daughters, now four, the first blow came when China banned Khat from crossing its border.
“When China banned Khat, I was quite confused at first,” he recalls. “My best experience and knowledge is all about Khat, I don’t know what to do if not Khat.”
Thus, a shift in the destination to the two types of Khat he has been exporting. He succeeded in gaining access to Khat chewers in The Netherlands. But, not such a large amount as was being sent to China is possible there. The scale of his exports, as well as his earnings, have decreased by half. But now, the same blow comes from the government of The Netherlands.
A third market destination had to be found, in order to reach members of the Somali, Yemeni and Ethiopian communities, accustomed to chewing the green stimulating leaf, beginning from the time spent back in their home countries.
However, this Ramadan has not come with good news for Abdella, though he was aware of it ahead of time. Right at the beginning of the fasting season, on Saturday, June 22, 2014, Ethiopian Airlines informed him that it will no longer carry Khat to the UK. And in the UK, two days were left for the deadline that activated a legislation by the House of Commons to add the crop to the banned category C drugs in the country. Amidst this, Abdella’s 1,700 Kg of Khat ready to be transported to the UK on Saturday and Sunday has been left in the store.
“I thought I would be sending on those days and so brought 700kg to Addis Abeba and collected 1,000kg in my stores in Aweday and Baddessa,” he said.
With the latest classification of Khat as a category C drug, penalties for possession could lead to two years in prison. For the supply and production, up to 14 years of imprisonment could result.
“Police can issue a warning or an on-the-spot fine of £60 for the first two times that \ person is found with Khat,” says the UK government’s document on drug penalties. “If you’re found with khat more than twice, you could get a maximum penalty of up to two years in prison, an unlimited fine or both.”
It seems that the decision has been made in the west that Khat is a harmful drug, with the UK joining the league of nations that have banned its import, use and distribution. In the producing countries, such as Ethiopia and Kenya, however, the repercussions are unsettling in many respects.
Abdella is one of the 300 exporters of Khat to different destination across the globe, with Somalia and Djibouti taking the lead.
Their collective exports make Khat one of the top three export items in terms of dollar revenues for Ethiopia. The amount of dollars it has brought to the nation, as well as the volume of export, has been steadily rising. The country exported 22,000tn of Khat in 2007/08, earning 108 million dollars. This increased by 3500tn the following year, with 31 million dollars in additional earnings. The volume of exports increased to 36,000tn, 41,000tn, 41,100tn, respectively, for the three consecutive years that followed 2008/09. The country has also earned 209 million dollars, 238 million dollars and 240 million dollars during those years.
The rise, both in terms of volume and earnings, has also continued in 2012/13, reaching 271 million dollars in earnings from the export of 47,000tn of Khat. This was followed by 249 million dollars being earned from 44,000tn over just the past ten months.
Among the top three export destinations of Khat from Ethiopia, the UK is third, with Somalia taking the lead followed by Djibouti, in terms of dollars earned. In 2012/13 alone, the country reaped 14 million dollars from the Khat exported to the UK. Somalia, which is contributing 78pc of the earnings, bought 201 million dollars worth of Khat, followed by Djibouti, with 42 million dollars. A small portion of the earnings, 1.6 million dollars, is also earned from export to Israel.
Nonetheless, the country is exporting only a small portion of the total amount of Khat it has been producing. In 2012/13, only 47,000tn made its way to the foreign market, out of the 190,000tn produced by close to 2.5 million farmers cultivating the crop on a total area of 201,115ha.
It is mainly produced in the Oromia region, which accounted for 64pc of the total production in 2012/13, with close to 1.5 million farmers engaged in its cultivation. Next is the Southern region, which contributed 24pc of the total production through its 714,276 million smallholder farmers. A considerable amount of farmers also produce 3.2pc of its production in the Amhara region, with other regions, including Somali, Harari, Dire Dawa and Benishangul Gumuz, contributing the remaining amount.
If there is one thing puzzling about the cultivation and trade of this plant in Ethiopia, even as a premier export item, it is its power to prove itself both on the domestic and foreign markets, completely independently and with no policy provisions from the government.
The only one section within the Ministry of Trade (MoT) working on issues related to Khat is the Khat Marketing Team under the Food Crops Marketing Directorate. The main task of this team is to oversee the export aspect of the Khat market, according to Tesfaye Amare, the team’s coordinator.
“There is neither research nor a package for extension support for the product,” he told Fortune. “It seems that the government is not concerned, even if the whole world bans it.”
Officials at the Agricultural Extension, Crop Department within the Ministry of Agriculture (MoA) and the Agricultural Research Institute have also confirmed that the cultivation and distribution of the plant is being operated solely by the farmers, without any support from them.
“We do not have any package or program regarding Khat, thus we have no policy ground to take action in any way,” says the crop department section head at the MoA. “However, as one of the major sources of foreign currency, it needs to be packaged and supported by the government.”
Only demand has kept it as one of the top commercial agricultural commodities, though, according to Tesfaye.
With the latest ban coming from the UK, Abdella, unlike the government, is not remaining indifferent. He is looking for other market opportunities.
Dashen Bank Jumps on Board the American Express
– Although initially only available for overseas issued cards, Dashen will soon begin providing cards to local customers
Dashen Bank is to begin accepting American Express cards as of July 26, 2014, in addition to MasterCard, VISA and UnionPay. The service will initially only be available to people who have acquired the card from foreign banks.
The Bank’s deal with the American Express Company has cost a few million dollars, although bank officials declined to say how much. The new deal will enable local and international American Express card holders to access the services of Dashen’s 170 ATMs to withdraw money and 800 POS terminals to make payments at hotels, supermarkets and other stores. Where ATMs are not functioning and where queues are long at the Bank’s branches, card holders can issue a receipt for the amount of money they need from encashment POS terminals available at the Bank’s branches. The Bank gives priority services to clients presenting these receipts, says Estifanos Befekadu, head of the Promotion Division at the Bank.
The payment Dashen has made on signing the agrement enables it to deliver services to domestic clients obtaining the cards from Dashen, whereas foreign banks, whose clients come to Ethiopia and use the cards they bring along, pay Dashen a commission for that service.
Dashen will begin issuing this card to its domestic clients in September, in addition to the VISA card it is already issuing. It does not have such provisions for MasterCard – an American electronic payment service – or UnionPay, which is a Chinese service.
Though officials of the Bank refrained from disclosing the amount paid to American Express for the right to acquire as well as issue these cards exclusively in Ethiopia, it is said to be in the millions of dollars.
Dashen Bank pioneered Visa and MasterCard into the Ethiopian banking industry. It is also the first private commercial bank in Ethiopia to sign a similar agreement with the Chinese UnionPay. It made the move to include American Express following persistent demands from operators of hotels, supermarkets, restaurants and jewellers in Ethiopia, says Estifanos.
It is also a lucrative business, as the Bank has discovered with the other cards already in business, he added. Transactions of the VISA card through ATM and POS outlets has reached 3.6 billion Br, as well as generating 100 million dollars in foreign currency. Dashen has 1.2 million customers, as of June 30, 2014, of which 300,000 are VISA card holders, according to Estifanos.
With its total deposits reaching 18 billion Br, the Bank is also underway in its bid to launch mobile and agent banking, through which companies and commercial establishments, through an agreement with the Bank, provide services to the Bank’s customers. It is set to start serving through agents within the coming three months, which will also be followed by internet banking services, according to Estifanos.
Established over a decade ago, with an initial capital of 50 million Br, Dashen has increased its total capital to two billion Br in 2012 – 737 million Br of this is paid up. It is the biggest private bank in the country, with deposits of 18 billion Br mobilised from 1.2 million depositors.
Dashen’s dividend per share has been one of the highest in the industry over the past few years. It achieved a staggering 926 Br earnings a share from its operations in 2011/2012, up from 753 Br the year before and 609 Br in 2008/09. The earnings per share for the year 2012/13 were down to 823 Br, which was due to the declining net profit to 607 million Br in 2012/13 from 652 million Br the previous year. The Bank operates 134 branches and five forex offices in the country at present.