Huajian Group to build its own industry zone
– Receives 138 hectare plot
The Chinese shoe company, which has already heavily invested in Ethiopia at the Eastern Industrial Zone in Dukem town of the Special Zone of the Oromia Regional State, Huajian Group, is now set to invest USD 2.2 billion on an industrial zone of its own located around Lebu area in the South Western outskirts of Addis Ababa.
The Reporter learnt from the Ministry of Industry that the company has applied and secured a license in addition to acquiring a plot for the construction of an industrial zone of its own which is expected to kick-start next year. The project is expected to cost some USD 2.2 billion and make the company an industrial zone operator apart from being one of biggest shoemakers in world.
The group already received 138 hectares plot of land in the Lebu locality for the construction of the planned industrial zone.
The zone is expected to house some 45 textile and garment, leather and leather products, chemical and pharmaceuticals, agro-processing and metal engineering factories. According to sources, all of the shades in the industry zone is reserved for companies which have affiliation with the Huajian Group. Back home, Huajian is known to own and operate huge industrial zones in three districts.
According to the tentative plan, the construction and population of the industrial zone will go in harmony with the country’s Growth and Transformation Plan II, currently under preparation. The plan shows that the construction as well as the population of the shades will happen in phases where by the end of the first year (2015/16) three leather processing plants are expected to go operational in the zone. The three plants are also projected to employ some 3,000 workers.
In the second phase, which commences by 2016/17, the number of companies will grow to six with additional three companies in textile and garment joining the industrial zone. All in all, at end of the GTP II and also at the last phase of the development of the zone the number of companies is expected to reach 45: ten in textile and garment, ten in leather and leather products, ten in agro-processing, another ten in mental engineering and five in chemical and pharmaceuticals will be housed in the industrial zone. By the time all 45 become fully operational, some 30,000 workers are expected to find employment there.
By the end of the development phase, the industrial zone will require 53 megawatt of power supply and 15,555 metric cube of water supply per day.
Huajian is also planing to generate 250 million dollars annually in export revenue for the country.
Eastern Industry Zone, which is owned and operated by a Chinese company, is the first and one of the few industry zones in Ethiopia where Huajian had setup shop when it first came to Ethiopia. The government of Ethiopia has placed a lot of hopes in the so called industrial and economic zones to transform the country’s agriculture based economy to that of industrialized one.
Convinced by the commitment and the industrial strategy of the government, the World Bank Group provided USD 250 million few weeks ago for the expansion of the Bole/Lemi Industry Zone which is being developed by the ministry. The government also envisages to expand industrial and economic zones to Kombolcha and Dire Dawa of the Amhara Regional State and Dire Dawa City Council, respectively. The Reporter’s sources also disclosed that Chinese companies are showing strong interest in the Dire Dawa Industrial Zone project.
ZTE under fire for failing to pay over $1billion income taxes
Ethiopian Revenue and Custom Authority (ERCA), Large Tax payers Branch ordered Ethio-telecom to suspend any payment to ZTE. The order came through a letter written by the Large Tax Payer’s branch of ERCA to Ethio-telecom finance department. The letter stated that ZTE failed to pay tax of over One Billion Birr. After numerous attempts by the tax authority to collect the tax from ZTE, the tax authority finally decided to stop any payment to ZTE by its major customer, Ethio Telecom until the tax overdue by the company is fully paid.
ZTE is one of the two Chinese companies who signed the 1.6 billion dollar Ethio Telecom second expansion project signed last year. ZTE entered the telecom market of Ethiopia in 1996 and officially set up its Ethiopian Office in 2000. The company involved in some small projects between 2003 and 2005 but a substantial deal had not been made until 2006. In 2006 the company entered into a three-year sole supplier framework agreement with Ethio Telecom(the world’s only project in which a national telecom network is built by a sole equipment supplier) financed on seller credit. Unlike the current expansion project which has a greater scope and estimated to cost 1.6 billion dollar, the first expansion project involved 1.9 billion USD of investment by Ethio Telecom—1.5 billion USD for equipment and 0.4 billion USD for engineering construction. The implementation started in 2007 and was marred with many problems and had not received acceptance by Ethio telecom until recently. On the second phase of the expansion project Ethio telecom went for a multi-vendor strategy and selected Huawei in addition to ZTE giving each 50% of the project.
Over the last few years ZTE’s financial performance declined and the company declared a loss in 2012. Since then ZTE didn’t change its declining trend in the stock market. However it is a crucial time that ZTE is expected to put its resource in Ethiopia for the second expansion. However, instead of responding actively to this need, ZTE hasn’t yet had any contribution in the current expansion project delivery. The company delayed the signing of the contract and now postponing the delivery. It even reduced the staff number in Ethiopia.
Sources close to the case said that it’s a shame ZTE after being paid billions of dollars from Ethio telecom’s huge investment and other government ICT infrastructure failed to pay the tax. the amount of unpaid tax by ZTE is a significant percentage of the country’s annual budget and is more than the total amount allocated annually to building roads, hospitals, and schools in some of regional states.
It is not clear how the company was allowed to participate in projects in Ethiopia without obtaining a tax clearance from ERCA which is major precondition to participate in any government project. How ZTE signed these projects without a tax clearance from ERCA and eluded its customers especially Ethio Telecomremains a mystery.
An official from ERCA who wants to remain anonymous said this year is the last year of the GTP. To realize the GTP the revenue from tax plays a decisive role. ZTE’s tax debacle is not just starving the country of much needed finance but a stark contrast to the Ethio China good relationship. China is supporting Ethiopia financing the country’s major infrastructural projects and the behavior of ZTE is unbecoming to a company with a significant shared held by the Chinese government. ZTE should stop thinking it can do whatever it wants because of its relationship with the Chinese government, and concentrate in its delivery and compliance to the law in Ethiopia including paying its due share of tax and stop to be an embarrassment to the good relationship of the two countries.
Officials of ZTE in Ethiopia were not imediately available to coment on the matter.
Ethiopia eyes regional integration through highways
A total of $610.6 million has been allocated for the implementation of the Ethiopian part of the project, with the funds coming from the Ethiopian government, international financial institutions and donor organizations.
World Bulletin/News Desk
Ethiopia is pinning high hopes that the construction of a network of inter-state highways that connects it with its East Africa neighbors would help achieve the aspired economic integration in the region.
“The roads would link Ethiopia with Sudan, Kenya, South Sudan, Somalia and Djibouti,” Ethiopian Roads Authority (ERA) Communication Director Samson Wondimu told Anadolu Agency.
The inter-state highways, which would stretch through 2000 kilometers, are expected to “play a significant role in bringing about economic and social integration in the region,” Wondimu added.
According to the official, the network would also be instrumental in creating more access to maritime ports for Ethiopia, a country that became landlocked following the 1991 cessation of Eritrea.
A total of $610.6 million has been allocated for the implementation of the Ethiopian part of the project, with the funds coming from the Ethiopian government, international financial institutions and donor organizations.
One of the highways is Assosa-Kumruk road, which would help Ethiopia get access to Port Sudan, Samson said. Another is the 324-kiolomter Shire-Adigosh-Humera-Lugdi, which also provides a shortcut to Port Sudan from the northern part of Ethiopia.
The roads would help Ethiopia export agricultural products to Sudan and import petroleum and other goods on the other way around, he said.
“Ethiopia has also constructed 122-kilometer Gambella-Etang-Jikawo asphalt road linking it to South Sudan,” Samson said. “This road is believed to attract investment to the nascent country and also enhance socio-economic development [in South Sudan].”
He said a 260- kilometer Mizanteferi-Boma concrete asphalt is yet another inter-state highway linking Ethiopia and South Sudan.
Meanwhile, well under construction in the southern region is also the Mombasa–Nairobi–Addis Ababa road corridor.
“It is an important part of the Trans-African Highway Corridor project stretching from Cairo in Egypt to Cape Town in South Africa,” Wondimu said.
Ethiopia Hosting Infrastructure Forum
A forum intended to assess the implementation of Africa’s cross-border transport infrastructure Project is opened in Ethiopia on Thursday.
During the forum a paper which examines the relationship between infrastructure and economic growth was presented. The paper argued it is possible to increase institutions’ productivity by 40 percent, providing them the required infrastructure only.
Getachew Mengiste, State Minister for Transport, during the occasion presented Ethiopia’s experience in the sector. He indicated his country used its own capacity and finance for infrastructure development.
He furthered during the past 16 years Ethiopia has covered 77 percent of the financial resource to building road infrastructure.
Marry Teresso, a researcher, on her part noted landlocked countries can develop their economy by building their infrastructure in alternative corridors which lead to different ports.
US Providing 800 mln USD to Advance Country’s Development
Ambassador Patricia M. Haslach said the United States is committed to working in partnership with the Government of Ethiopia to better the lives of its people.
“We have a long and fruitful partnership with Ethiopia in development assistance projects,” said the ambassador, adding that among those include the Feed the Future, Global Climate Change, Power Africa, Young African Leaders Initiative (YALI) and the Global Health Initiative, the Presidential Malaria Initiative (PMI) and several other President Obama’s initiatives which meet the GTP and MDGs.
“The contribution of the U.S in the health sector, particularly in reducing maternal and child death, is one of the most successful areas of development cooperation, and the largest amount of USG assistance goes to the health sector and we are proud to have supported Ethiopia’s attainment of MDG 4 to reduce child deaths under five by half,” Ambassador Haslach elaborated.
“Our current priority is to reduce maternal and newborn deaths and help Ethiopia move toward attainment of MDG 5,” she added.
Over the past decade the US Government, through the President’s Emergency Plan for AIDS Relief (PEPFAR) has contributed over 2 billion USD in support of Ethiopia’s efforts to address HIV/AIDS, according to the ambassador. “There has been tremendous progress. Ten years ago AIDS was truly a death sentence, disrupting the lives of millions of individuals and their families. Today in Ethiopia, new infections have been reduced by 90 percent, HIV-related deaths by 54 percent and more than 330,000 adults are now receiving antiretroviral drugs.”
Furthermore, the ambassador admired the Ethiopian competency in bringing regional integration and building lasting peace in Africa in general and in East Africa in particular.
The position of Ethiopia and IGAD countries on Somalia, and on security in the Horn of Africa coincides with that of the US, it was indicated.
Ambassador Haslach said USA also provides emergency relief to refugees and displaced persons hosted by Ethiopia. Ethiopia is a good host to almost 600,000 refugees from Eritrea, South Sudan and Somalia, she stated, adding that “We very much appreciate the fact that Ethiopia opened its borders and the hospitality it extended to this desperate people really needs to be acknowledged”.
African Monetary Fund establishment approved
The African Union has approved the establishment of the African Monetary Fund (AMF), which will have a paid up capital of 23 billion USD.
At least a quarter of the capital must be raised by the 54 members but only 15 members are required to ratify the protocol for the fund to be deemed active.
The AMF is seen as crucial to helping African countries eliminate trade barriers and increase monetary integration by acting as a policy watchdog and currency clearing house, besides giving credit to help member countries tackle balance of payment deficits.
“The functions and activities of the Fund shall be to be… to promote and facilitate trade, the settlement of commercial payment and encourage capital flow between State Partie ” reads the AMF Protocol.
Under the AMF ownership plan, Kenya, Tanzania, Uganda will contribute 2.50, 2.41 and 2 per cent respectively of the paid up share capital while Rwanda and Burundi will own 1.27 per cent and 1.17 per cent respectively.
The financial input also doubles as voting rights.
If regional member states ratify the protocol, Kenya is expected to contribute 141 million USD in paid-up capital over the next eight years and will be obliged to inject 283 million USD if called upon.
AMF will be based in Yaoundé, Cameroon and is one of three institutions envisaged in the AU Treaty for spearheading the creation of an African Economic Community.
The others are the African Central Bank and the African Investment Bank.
The fund is expected to dilute the International Monetary Fund’s role in Africa as emerging economies voice concerns over its failure to give them a say commensurate with their newfound economic clout.
Strengthening Competitiveness Can Boost Exports and Help Transform Ethiopia’s Economy
Buoyed by favorable external conditions, exports helped create jobs and earn much-needed foreign exchange in Ethiopia. However, the country is vulnerable to price swings because its exports are dominated by unprocessed and undifferentiated agricultural products. While benefitting from upward price trends since 2003, the recent drop in prices of key commodities has led to the worst export performance in a decade. Ethiopia does have encouraging examples of “self-discovery” that should be replicated, including the way it created and nurtured a high-value horticulture industry and expanded its air services exports.
More than “what” is being exported; it is the “how” that is hindering potential. “There is scope for improving the quality of existing commodity exports, through basic value addition, such as coffee wet processing or machine flaying of animal skins,” said Guang Zhe Chen, World Bank Country Director for Ethiopia. Even in products with a revealed comparative advantage, little upgrading or branding has occurred to earn higher value per unit over time. “By starting to compete on the quality of existing commodity exports (and not just on price), Ethiopia can reduce sensitivity to volatile international prices thereby supporting the gradual shift of production and exports into agro-processing and light manufacturing,” Chen said.
Several challenges need to be addressed in order to expand the country’s export sector in order to contribute to structural change, which is vital for sustaining economic growth and development. “Ethiopia’s export sector is currently too small to contribute to structural transformation, unlike in East Asia, where booming exports helped shift economic activity and workers away from low productivity agriculture into higher-productivity manufacturing and sustain high rates of economic growth for decades,” said Lars Moller, World Bank Lead Economist and Program Leader and one of the lead authors of the report.
Although it is the second most populous country in Sub-Saharan Africa, Ethiopia has the lowest ratio of merchandise exports to GDP in the world. It has half as many exporting firms as Kenya (which has half the population of Ethiopia), and the average exporter size is small. The business environment also favors existing firms and deters new export businesses from entering the market, and even so, no multi-product, multi-country “export superstars” are emerging. This is a challenge because rising and dynamic firms often create more new jobs than established firms, according to the World Bank Group.
“The expansion of exports is often behind spurts in economic growth. Successful exports also create dynamic efficiency gains by exploiting economies of scale, adopting best practices in foreign technologies and business processes, and by being subject to international competition,” said Michael Geiger, World Bank Senior Economist and one of the lead authors of the report. “Export sectors are also associated with productivity gains leading to wage premiums and job creation. Moreover, there is a foreign exchange element of exports that is important for sustainable growth,” he added.
The report suggests that a more competitive real exchange rate could support export promotion. In the simulation carried out as part of the analysis in the report, it shows that, all things being equal, 10% of devaluation could lead to 5% improvement in export. However, in the presence of macroeconomic trade-offs, the government has to weight in other factors in using the exchange rate as a policy tool, such as its impact on inflation as well as on the import cost of capital and consumer goods, according to the World Bank Group.
Ethiopia Registers Impressive Growth in Human Development
The United Nations Development Programme (UNDP) 2014 HDR Report was launched on Thursday, July 24, 2014 at Hilton Addis.
According to the report, in the years between 2000 and 2013 Ethiopia’s Human Development Index (HDI) value increased by over fifty percent and the country progressed in all the three dimensions of (HDI), namely education, life expectancy and income.
The life expectancy of the country at birth increased by nearly 20 years and expected years of schooling increased by 5.3 years between 1980 and 2013 and its Gross National Income (GNI) per capital grew by over 100 percent between 1990 and 2013, the report added.
The report also pointed out challenges with which it said practitioners in Ethiopia would be familiar. These relate to inequalities, high rate of multi-dimensional poverty and gender equality.
“This year, Ethiopia ranks 173 out of 187 countries. But, as all of us who work here do know, this rank does not tell the full picture of the tremendous human development gains which the country has recorded over the last 15 years,” UN Resident and Humanitarian Coordinator and UNDP Resident Representative Eugene Owusu said.
Minister of Environment and Forestry, Belete Tafere, on his part said Ethiopia has been doing tremendous efforts to eliminate the vulnerabilities of human development by formulating its Climate Resilient Green Economy Strategy (CRGT) and the country is implementing development plans emanating from it to protect it from the adverse effects of climate change.
He also indicated that “Ethiopia is geographically situated in Horn of Africa, a region that experiences severe weather-related shocks such as droughts, foods and other forms of weather variability that keep intensifying with climate change. The region also suffers from violent conflicts, which may not be related to climate change… The theme of the 2014 Human Development Report is thus relevant to us because it responds to the need to minimize the vulnerabilities that are often felt in our part of Africa.”
The theme of this year’s report is “Sustaining Human Progress: Reducing Vulnerabilities and Building resilience.”
The government of Ethiopia has been proactively engaged in disaster prevention and preparedness program like Productive Safety Net Program (PSNP) would enable to building resilience to various shocks and reducing vulnerabilities, he stated.
The report, according to minister, will contribute to policy discourse in Ethiopia and across the African region as well as throughout the rest of the developing world.
Ethiopia gets $13.5mn World Bank loan for forest coverage
The World Bank has provided a $13.5 million loan to Ethiopia to help the country reduce carbon emissions and increase its forest coverage.
“Ethiopia is one of 35 countries supported by the World Bank for the implementation of the Climate Resilient Green Economy (CRGE) Strategy,” Yitebtu Moges, national coordinator of the Reducing Emission from Deforestation and Forest Degradation (REDD) strategy, told Anadolu Agency on Saturday.
“Ethiopia managed to secure the required $13.5 million from Norway and the UK through the World Bank to implement its preparation phase for the same purpose,” he said.
Moges said that $8.5 million was provided by Norway, while the remaining $5 million was granted by Britain.
Last year, Ethiopia and Norway signed a REDD Partnership agreement to support Ethiopia’s forest sector and the implementation of the CRGE strategy, according to Moges.
“Norway has provided additional $10 million to encourage Ethiopia keep up its satisfactory performance,” he said.
He said that Norway has also provided $3 million for designing a program aimed at the expansion and preservation of forests in Ethiopia’s Oromia Regional State and pledged $50 million for the implementation of the program.
As of next January, a national forest assessment program will be implemented to help have complete information about the country’s forest coverage by June 2016, Moges said.
© 2014, Abebech Tamene. All rights reserved. – The views expressed here are purely those of the author and not necessarily those of the publishers. – Newstime Africa content cannot be reproduced in any form – electronic or print – without prior consent of the Publishers. Copyright infringement will be pursued and perpetrators prosecuted.
Bill, Melinda Gates Foundation Pledges to Scale Up Support to Ethiopia
Bill Gates, the founder of Bill and Melinda Gates Foundation, pledged on Thursday, July 24, 2014 to further consolidate his support towards reducing maternal and child mortality and preventing malaria in Ethiopia.
Prime Minister Hailemariam Desalegn held talks with the Vice Chairman and founder of Bill and Melinda Gates Foundation, where he thanked the philanthropist for the assistance he has been extending to the health sector through the foundation.
Ethiopia is working hard to achieve its millennium goal in health sector and Bill and Melinda Gates foundation is playing a major role in this, the PM said.
He further expressed his belief that the foundation would stand alongside the government in its social development endeavors, beyond health.
Bill Gates said on his part Ethiopia’s success in the health sector effort in particular can be taken as a role model for other African countries.
He finally pledged to scale up his support in the agriculture and health sectors as the assistance is bearing fruit in Ethiopia.