Sudan’s economic ties with Ethiopia are deepening
In mid‑July Ethiopian media reported that Sudan had become the second-biggest foreign investor in Ethiopia, after China.
Figures for Sudanese investment in Ethiopia appear to be only rough estimations. For example, the head of the Sudanese Investors Society in Addis Ababa has said that Sudanese capital investment in Ethiopia totals US$2.4bn, while the Ethiopian Ministry of Industry has said that some 800 Sudanese companies currently operate in Ethiopia. However, no details behind these figures have been reported. In contrast, the Central Bank of Sudan’s own trade statistics indicate that in 2013 Sudan’s exports to Ethiopia totalled US$51.3m (compared with US$96.4m for exports to Egypt), and that imports amounted to just US$29.9m (compared with US$743m of imports from Egypt).
Whatever the exact extent of Sudanese investment, there is little doubt that Ethiopia is an important economic partner for Sudan. As the most populous country in the Horn of Africa, and the closest neighbour to some of the most developed parts of Sudan (in particular, Khartoum, Gezira and Gedaref states), Ethiopia offers business and trade opportunities that Sudan can ill afford to ignore. One example of the deepening ties between the two countries is the recent start of electricity exports from Ethiopia to Sudan. In late 2013 a 296‑km electricity transmission connection was inaugurated between Metema, near the border in Ethiopia, and Gedaref in Sudan. The transmission line was built with the help of a US$41m loan from the World Bank and enables Ethiopia to export up to 100 mw of electricity to Sudan. Conversely, Sudan exports fuel to Ethiopia.
The economic benefits of good relations have long encouraged the Sudanese government to be pragmatic about hydroelectric projects in Ethiopia. This is in contrast with Egypt, which remains openly wary or critical of Ethiopia’s hydroelectric schemes and efforts to draw up a new charter for Nile Basin countries’ use of the Nile waters. With Ethiopia planning to increase its electricity generation through schemes such as the Renaissance Dam, on the Blue Nile, Sudan can anticipate importing more electricity from Ethiopia in the future. This has even prompted suggestions that one day Sudan might sell electricity on to Egypt and Eritrea.
Impact on the forecast
Sudan will maintain cordial relations with Ethiopia, for the sake of both economic and political benefits. We will not alter our forecast.
Economic development in Ethiopia very impressive: UK Ambassador
UK Ambassador to Ethiopia Greg Dorey said the consecutive economic development registered in Ethiopia over the past years is “very impressive”.
In an exclusive interview with ENA, the Ambassador said the development in Ethiopia is “very impressive” and “potentially sustainable” as well if the government continues to take the right decisions.
“I think it is very impressive whether you take the government’s figures or you take IMF figures … in terms of GDP growth. That is very very impressive and its potentially sustainable growth as well if the government takes the right decisions on the economy then that growth can continue into the future.”
The economic growth in Ethiopia has been accompanied by a huge social investment in human development.
The Ambassador appreciates the strides that have been taken in improving the health, education and social wellbeing of the people.
“Of course this has been accompanied by a huge social investment in human development which is equally important. And you can see the tremendous strides that have been taken in improving the health, education and social wellbeing of the people in Ethiopia really is very acknowledgeable; what has been done in a relatively small space of time.”
“Ethiopia is still a poor country so that work needs to continue.” he added.
“So I have to say everything is moving in the right direction; it just needs the right decision to be taken to continue those achievements.”
He expressed hope that the economic growth in Ethiopia will continue to benefit the people through job creation and sustainable development.
The bilateral relation between Ethiopia and UK is ‘very diverse, mutually beneficial and very good,’ according to the Ambassador.
“Our bilateral development cooperation is the biggest such program in the world for Ethiopia it has been for some years and I expected to continue to be.”
UK provides over 300 million pound sterling annually to Ethiopia in connection with development programs.
Trade and investment relationship is also taking off from a ‘low base’. UK imports of goods from Ethiopia have grown by 48 percent from 48 million pound sterling in 2009 to 70 million pound sterling in 2013.
In the same period UK exports to Ethiopia have also grown by 29 percent from 77 million pound sterling to 99 million pound sterling.
Climate change is one of the areas where the two countries are working together.
The Ambassafor recognizes the efforts of the government to create a climate resilient green economy by 2025 and achieving a middle income status with zero carbon emissions.
Ambassador Dorey said the Climate Resilient Green Economy Policy of Ethiopia can be a model to other countries.
“It is an absolutely adorable policy. I could recommend it highly enough not just for Ethiopia but it’s a model to other countries as well.’
The UK government is putting 45 million pound sterling into this area partly into creating or enhancing institutions which deal with climate change both public and private.
African Economic Outlook 2014
Authors: Admit Wondifraw Zerihun, Haile Kibret, James Wakiaga
- In 2012/13, Ethiopia’s economy grew by 9.7%, which made Ethiopia one of Africa’s top performing economies.
- Through co-ordinated, prudent fiscal and monetary policies, the Government of Ethiopia (GoE) has brought down inflation to single digits.
- Trade and industrial policies are not yet attuned to global value chains; such policies should address all obstacles and opportunities linked to each level of the global market.
In the 2012/13 fiscal year, Ethiopia’s economy grew by 9.7%, the tenth year in a row of robust growth. In 2012, Ethiopia was the twelfth fastest growing economy in the world. Average annual real GDP growth rate for the last decade was 10.9%. Agriculture, which accounts for 42.7% of GDP, grew by 7.1%, while industry, accounting for 12.3% of GDP, rose by 18.5% and services, with 45% of GDP, increased by 9.9% in 2012/13. This momentum is expected to continue in 2013/14 and 2014/15, albeit at a slower pace because of constraints on private-sector growth.
In an effort to combat inflation, the government pursued a tight monetary policy stance using base money as the nominal anchor to control monetary expansion. This measure, in the context of a slowdown in global commodity prices, resulted in annual consumer price inflation of 7.9% in November 2013, compared to 39.2% and 15.6% in November 2011 and 2012, respectively. The government’s determination to reduce inflation was further reflected in the pursuance of prudent fiscal policy focused on strengthening domestic resource mobilisation and reducing domestic borrowing. The strong fiscal stance, particularly measures to improve tax administration and enforcement, contained the fiscal deficit at 2.0% of GDP in 2012/13 compared to 1.2% of GDP in 2011/12.
Between 2011/12, merchandise exports totalled USD 3.1 billion, posting a 2.3% decline from the previous fiscal year and decreasing from 7.4% to an estimated 6.5% as a share of GDP. The value of imports, mainly from Europe and Asia, increased from about USD 11.1 billion in 2011 to USD 11.5 billion in 2012/13. With imports rising faster than exports, the trade deficit deteriorated to USD 8.4 billion in 2012/13, from USD 7.9 billion in the previous year. However, the overall balance of payments deficit in 2012/13 decreased significantly, down by 88% compared to the previous year, mainly due to a good performance in other accounts (surplus in the non-factor services trade, huge private transfers and the surplus in the capital account).
Though the stock of external debt as a ratio of GDP increased from 21.6% in 2011/12 to 24.3% at the close of 2012/13, the country remains at low risk of external debt distress. Rebuilding gross official foreign reserves has, however, resurfaced as a challenge because foreign exchange reserves fell to less than two months’ of import coverage.
Table 1: Macroeconomic indicators
|Real GDP growth||8.8||9.7||7.6||7.2|
|Real GDP per capita growth||6.2||7.1||5||4.7|
|Budget balance % GDP||-1.2||-2||-0.4||-0.3|
|Current account balance % GDP||-6.5||-5.4||-9.4||-10.9|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.
Russia’s Gazprombank unit inks PSA for Ethiopian oil field
MOSCOW, Jul 21 (PRIME) — GPB Resources, an affiliate of Russia’s Gazprombank, has signed a production sharing agreement for an oil and gas field in the Afar Region of Ethiopia and will invest at least U.S. $2 million in the development of the deposit, Kommersant business daily reported Monday, citing a GPB Resources representative Sergei Togashev.
GPB Resources will have seven years to explore the deposit and 25 years for the development, Togashev said.
The territory is mostly unexplored and its potential resources are unknown. The company will spend $2 million during the first three years of exploration and then decide whether it needs to prolong works, Togashev said.
Ethiopian authorities have proactively given licenses for local exploration. Large companies deem the region to be too risky, while independent Ireland’s Tullow Oil and Canada’s Africa Oil found signs of commercial reserves of oil in the country in 2013.
“The general geologic logic is the following: Ethiopia stands on the way of the Great Rift Valley, which starts in Mozambique and finishes in the Red Sea. Large oil and gas deposits have been found on the borders of the Earth’s surface fault in Mozambique, Tanzania and Sudan, and lately in Uganda and Kenya,” Togashev said.
Ethiopia Continues Jatropha Biodiesel Production
Ethiopia is producing biodiesel from jatropha plant with 56 million birr said Water, Irrigation and Energy Ministry.
According to Public Relations Director with the ministry, Bizuneh Tolcha , the production of biodiesel from jatropha is helping the country save foreign currency.
With a five year Jatropha Biodiesel Project, starting from the past Ethiopian budget year the country plans to produce 500 million liters of bio fuel, said Bizuneh.
The project is being implemented in the states Amhara, Oromiya, SNNP, Afar and Tigray in 18 Districts with the money from Ethiopian and Norwegian governments.
The Jatropha biodiesel project is benefiting over 14 million farmers and pastoralists.
Gates to receive honorary degree from AAU
The Addis Ababa University (AAU) said on Saturday that it will provide an honorary doctorate degree to Bill Gates, the founder and owner of Microsoft.
In a statement, the university said that Gates will arrive in Addis Ababa on Tuesday to receive the degree.
Gates is selected to receive the degree “for his efforts to enable African students benefit from technology and the philanthropic works he is undertaking in Ethiopia through the Bill & Melinda Gates Foundation,” the University said.
The degree will be given to Gates in a ceremony to be organized at Nelson Mandella Hall in the University next Thursday.
Gates is an American tycoon and philanthropist, who stood first and second in the list of the world’s richest persons during the last ten years. This year, with over $79 billion, he stands second in the list.
The Bill & Melinda Gates Foundation’s Ethiopia Office undertakes programs in different areas including, family planning, maternal health, HIV, malaria, polio, and vaccination services.
The Foundation made its first program investment in Ethiopia in 2,000. On February 27, 2012, the foundation appointed an Ethiopian native to serve as the Foundation’s first representative to Ethiopia.
So far, Gates has received eight honorary degrees from different universities of the world.
Ethiopia Determined To Intensify Campaign Against Terrorism, Says PM
ADDIS ABABA, July 21 (BERNAMA-NNN-ENA) — Ethiopia would consolidate its campaign against terrorism so as to protect its growth and development from obstruction, Prime Minister Hailemariam Dessalegn said.
In a press statement, the premier noted that Ethiopia has been working closely with its neighbours to fight terrorism in East Africa.
It is on this basis that one of the leaders of Guenbot 7, Andargachew Tsige, who was working in collaboration with Shaebia and other parties that do not wish to see the prevalence of peace and stability in Ethiopia, was apprehended.
Individuals engaged in terrorism under the disguise of journalism and memberships in political parties were also detained, he added.
Those terrorists are not individuals or groups that should be taken lightly as they are supported by governments which want Ethiopia to be in chaos, the PM said, adding that cutting to shreds the network is therefore the responsibility of the Ethiopian government.
Since terrorism is an international crime everyone engaged in terrorism, even if he or she changes citizenship or is a citizen of another country, is held accountable, the premier stressed.
The crackdown on those terrorists has nothing to do with the upcoming election in 2015, and efforts will be made to make the election peaceful, democratic, fair and credible, he elaborated.
With respect to peace keeping and other areas Ethiopia has been gaining acceptance by strengthening its role as a voice of Africa, Hailemariam noted.
Referring to the big projects underway in the country, the Prime Minister said the GERD, railway, sugar and other similar projects are progressing as per the schedule.
To solve problems related to infrastructure, the government has devised short, medium and long term plans. The completion of the projects would solve the problems, even if satisfactory results cannot be registered in the short and medium range, the PM indicated.
Efforts would also be exerted to gradually solve problems of governance witnessed in the country, according to Hailemariam.
Legal measures would be taken against merchants who try to create inflation following the salary increment made to civil servant this month, he concluded.
Ethiopia Establishes Modern Military – Premier
Prime minister and Commander-in-Chief of Defense Forces, Hailemariam Desalegn said that Ethiopia has built a modern military having a capacity of accomplishing different missions at once.
The premier, graduating 58 military officers from Defense Command and Staff College, said that because of the Defense Forces and other bodies’ capacity to protect the national peace and security from internal and external enemies, Ethiopia can advance its development.
According to Hailemariam Ethiopia has built a military capacity being effective in peace keeping missions in the neighboring countries beyond assuring the national peace and security.
He noted that Eritrean government is continuing destabilizing the region, supporting anti-peace elements and terrorism ignoring the peaceful alternative Ethiopia has offered to settle the disagreements between the two countries.
The graduating military officers said that the training they got enables them to accomplish their missions in a better way scientifically.
Out of 58 masters’ degree and diploma graduates 10 are from South Sudan and Burundi.