28 August 2014 News Round-Up

Ethiopia ready to join COMESA free market area



The government of Ethiopia has finalized preparations to join the Eastern and Southern African Common Market (COMESA) free market area, the Ministry of Trade said.

Trade Relations and Negotiation Director-General at the Ministry Geremew Ayalew told ENA that the country has been searching for markets for the increasing market demand of its industries.

The competence of Ethiopian industries has been growing and the industries are in their stage of producing items meeting international standards, he said.

The rapid and consecutive development of the country and involvement of foreign-based companies which led to technology and knowledge transfer enabled industries build their capability.

The country has been engaged in various dialogues with various countries and entities to meet this increasing demand for market, he added.

The government has been making arrangements using bilateral agreements, sub-regional free markets like COMESA, and international markets through negotiations with WTO.

The nation has so far signed bilateral trade agreements with 16 African, Asian, European and North American countries. These agreements are aimed at expanding markets, he said.

He mentioned the agreement signed with Sudan to create free market area between the two countries as an example.

Promoting expansion of trade and economic development, fostering advancement of economic activity, increasing productivity and financial stability; and providing fair conditions of competition for trade between the two countries are the main objectives of agreement.

The nation has also searching markets using sub-regional free markets like COMESA. And the country has finalized preparations to join the free market, including the ratification of the free market area arrangement by the parliament, he said.

Under this arrangement, the countries agree to eliminate tariffs, quotas and preferences on most (if not all) goods that they trade among themselves.

The consultations to accede to the WTO are also another thing the country is engaged in. Consultations have been undertaking since 2003.


Premier Calls For Extension of African Growth and Opportunity Act


Premier Calls For Extension of African Growth and Opportunity Act

Prime Minister Hailemariam on Thursday, August 28, 2014 called on American Senators he met here in Addis Ababa to support the extension of African Growth and Opportunity Act (AGOA).

The PM held talks on agricultural development in Ethiopia, food processing, empowerment of women and health with US Agriculture Deputy Minister Krysta Harden and other five female senators. The parties also discussed tourism, aviation, roles and benefits of women.
During the discussion the premier asked the support of the senators in extending AGOA, which hugely contributes to the agriculture and foreign trade of Africa.
The delegation leader, Senator Debbie Stabenow, appreciated the agricultural extension model introduced in the country and the effort being exerted to familiarize new technology.

The senator said she had visited successful female agricultural experts prior to meeting the premier.

She further said the delegation was pleased with the visit they made, adding that boosting the contribution of women to growth and peace through creating female leaders is essential.

The senator indicated that they are willing to assist the continuous growth of the country and in the provision of education for women in cooperation with Ethiopia.

With respect to the extension of AGOA, Senator Stabenow said support is voiced at both Congress and Senate, although decision would be reached later.


US-African summit bears fruit for Ethiopia


Foreign direct investment (FDI) from the US to Ethiopia has been increasing after the latest US-Africa forum earlier this month. In his latest press briefing, Redwan Hussein, minister of the Government Communication Affairs Office, stated that the interest of US based companies is growing.

Even though most of the investment interest in Ethiopia is still dominated by growing economies like China, India and Turkey, Western Europe and the US have been taking notice of Ethiopia in recent years.

Redwan said that the latest Ethio-US Business and Investment Summit in Houston and Los Angeles attracted US based multinational companies who are interested in investing in Ethiopia. Several companies involved in mining, agriculture, tourism and energy among others may now want to get involved in what has become one of the world’s fastest growing economies.

“Chevron, one of the top three companies in the world, has showed an interest to begin oil exploration in the country,” Redwan added.

“Previously the US companies were not that much interested in investing in Ethiopia, a country with a small economy, but now they are assessing the investment directions in the country,” he explained.

Other companies that are already engaged in investment are also interested in expanding their business. “There are also many companies that would like to construct five star hotels,” the minister added.

He said that the US-Africa Business Forum has also been a good opportunity for the country to promote itself. During the recent event held in Ethiopia between the US government and African countries, several US based energy firms stated that they are interested in engaging in the power sector and some of them have already contacted the relevant government offices to engage in the sector.

“We will strongly follow up and support the investors, who will be part of our development and interested to come into Ethiopia,” Redwan said.
He mentioned that the US-Africa event has been also very successful for the country, while it has presented its experience about development.

Top government officials including Mulatu Teshome (PhD), president of Ethiopia, and Prime Minister Hailemariam Desalegn attended the investment summit and US-Africa events.



Japan to provide loan for geothermal power, other projects: Ambassador


Japan has plans to provide loan for Aluto-Langano Geothermal Power Plant and other power generation projects.

According to Ambassador Markos Tekle, Ethiopia’s Ambassador to Japan, the Japanese government used to largely extend aid to Ethiopia in the forms of assistance and technical support.

This has now changed as the country has been registering rapid economic growth and its ability to refurbish loans is strengthened, he said, adding that as a result Japan has plans to extend loan to Ethiopia so that it could complete different projects.

Among the projects that would benefit from the loan are the Aluto-Langano Geothermal Power Plant and other hydro-power projects, the ambassador added.

Ambassador Markos further stated that the Japanese government is also willing to give additional loan to other projects based on the request of the Ethiopian government.

Trade and investment tie between the two countries has been growing as the relationship between the two countries has been strengthening, he noted.

Following the visit of the Japanese Prime Minister Shinzo Abe to Ethiopia, the interest of Japanese investors to engage in the Ethiopia market has grown, according to the ambassador.

Because of the increasing desire of Japanese investors to do business in Ethiopia, the Ethiopian Embassy in Tokyo has been organizing exhibitions and seminars to attract big Japanese companies, Markos stated.

Japanese, through Kaizen institute, are also providing support for the improvement of product and productivity in Ethiopia and to make the country’s industrial policy better, the ambassador added.

At present, 24 Ethiopian students have completed their education in Japanese universities and are doing internship in various companies, it was indicated.

Bilateral Cooperation Director with the Ministry of Finance and Economic Development (MoFED) Kokeb Misrak for his part said Japanese developmental assistance for

Ethiopia through Japan International Cooperation Agency (JICA) has been growing from time to time.

Infrastructural development, agriculture and rural development works as well as education are among the sectors that have been supported by JICA, he explained.



Accountability, focus of Post MDG discussions


Accountability was underlined as being extremely crucial at a meeting on the Post MDG Agenda at the UNECA on Thursday August 21st.

The round table meeting had present African stakeholders, which included academicians, government representatives’, the private sector and women and youth groups.

According to the stake holders that participated in the in the discussions, Africa’s role in the formulation of the Millennium Development Goals (MDG’s) has been very limited which has resulted in weak ownership and slow progress by many African countries.

The round table discussion is part of a substantial proactive effort to ensure African ownership of the forthcoming global development agenda that will replace the current Millennium Development Goals (MDGs). The event led by the African Union High Level Committee (HLC) on the Post-2015 Development Agenda comes as a result of a request, made by the AU Heads of State Summit held in Malabo from 26-27 June 2014, to explore the “emerging issues of accountability”.

This includes the need for a data revolution – a central issue to monitor, evaluate and assess progress, which are, in turn, key aspects of accountability”, according to the Decision of African Union at the Malabo Summit.

According to Anthony Maruping, Commissioner of Economic Affairs at the ECA, statistics will be very important because timely statistics are crucial to be able to see the extents of achievements.

“Africa has indeed been a visible presence in the Post-2015 development agenda and as early as 2011 the continent initiated consultations to articulate its priorities for the successor global development framework” Dr Abdalla Hamdok, ECA’s Deputy Executive Secretary, stated speaking on the Common African Position (CAP), which reflects Africa specific needs and goals that need to be included in the Sustainable Development Goals (SDG).

“The consultations are intended to build on existing accountability frameworks, so to design and formulate an accountability framework suitable for the post 2015 development agenda”, reiterated Hamdok. Such a framework is expected to provide alignment from the global to continental to national levels,” he further said.



Political, Economic Stability Luring Multinationals Into Ethiopia



VENTURES AFRICAPresident Mulatu Teshome of Ethiopia has expressed satisfaction at the country’s economic success, noting that a stable political environment and enabling investment atmosphere is attracting a pool of international firms into the country’s business landscape.

According to the President, the number of foreign companies coming to set up shop in Ethiopia has increased recently unlike some twenty years ago when Ethiopia was a chief recipient of aid.

“Conducive condition for investment, abundant resources, political stability and economic development are the main reasons that attract more investors to Ethiopia. Cheap labour, power and raw material supply make Ethiopia preferable for investment compared to other African countries,” the President said.

He further noted that foreign companies can easily enter into the EU and US markets once they set up in Ethiopia because of its beneficial relationship with these regions which allows it to enjoy various duty and quota free agreements.

Also, the President has disclosed the move of his government in giving priority to the manufacturing and agriculture sectors such as leather, textiles and agro‐processing. Investors in those areas are therefore welcomed.

Information from the World Bank is consistent with the President’s claims; for instance Ethiopia’s economy has grown at an average of 10.9 percent per year over the past decade while poverty has reduced by 9.1 percent over the past half-decade. Also, Ethiopia is on track for achieving most of the eight Millennium Development Goals (MDGs) and has already achieved the goal for Child Mortality.



East African Bottling SC to invest $ 250 mln on new projects


East African Bottling Share Company stated that it will be investing more than USD 250 million in the next five years in Ethiopia to increase the company’s capacity. “We are just finishing our strategic plan for the next five years and it has been approved, so we will spend more than 250 million dollars in Ethiopia during the next five years, which will allow us to increase our capacity and satisfy our customers across the country,” stated Xavier Selga, General Manager of East African Bottling Share Company bottler of Coca Cola.

According to the General Manager, the company is in the process of launching a new production line in September 2014 and by 2015 and will be investing in a new production plant as well. He also stated that the company will be investing in trucks and coolers so as to be able to transport and supply its products in different areas of the country.

The company is also working with Coba Impact, an Indian recycling company, to carry out recycling of plastic bottles.

“We are working to empower 2,000 women in the recycling industry. We want to make sure that the environment in Ethiopia is more sustainable and we can also help these women economically. Right now we are training the women and explaining the routine and giving them the tools,” Selga stated.

Recently, soft drink manufacturers have been facing some problems regarding the shortage of one of the most important inputs to their products; sugar. According to Misikir Mulugeta, Brand Manager, Coca-Cola Ethiopia, the shortage of sugar has not affected Coca Cola so far and the company’s products are still well supplied to the market.

In related development, on Friday August 22, the Coca-Cola Africa Foundation (TCCAF) and World Vision announced a new Replenish Africa Initiative (RAIN) project to extend clean, sustainable water and sanitation to communities in the Tigray region of northern Ethiopia.

The Tigray project, with a commitment budget of USD 1 million, is the third RAIN project in Ethiopia and expands a partnership which has been on-going since 2007.

“We plan to implement a range of activities including boreholes, drinking water infrastructure, building of ventilated pit latrines and formation of school clubs to promote behavior change in sanitation as well as raise awareness about the health benefits of safe water handling and hygienic practices,” said Margaret Schuler, National Director of World Vision Ethiopia.

Replenish Africa Initiative (RAIN) is a commitment of The Coca-Cola Company to provide access to safe drinking water for two million Africans by 2015.



Corporate Income Tax Targeted in Bid to Boost Manufacturing Sector


The manufacturing sector only achieved 30pc of the government’s plan during the last fiscal year

A government committee is finalising a draft amendment to reduce the 30pc corporate income tax levied on manufacturing industries.

The committee, drawn from the Ministry of Finance & Economic Development (MoFED) and the Ethiopian Revenue & Customs Authority (ERCA), has been at work for the past two months, according to an official close to the issue.

The corporate income tax is a flat rate of 30pc tax, which is levied on the service and manufacturing industries. The amendment, however, concerns only those in the manufacturing sector.

The draft will pass through the Council of Ministers and Parliament in less than two months’ time, says a source close to the case.

The 30pc rate was the subject of discussion during a two-day training programme for the private sector, given by Ahmed Abtew, Minister of Industry, at Millennium Hall, on June 30 and July 1, as well as the second Public Private Consultation Forum, chaired by Prime Minister Hailemariam Desalegn, on July 2, 2014 – also at Millennium Hall.

After the suggestions from the various businesspeople, officials from the ERCA, MoFED, Federal Investment Commission (FIC) and Ministry of Industry (MoI) held a meeting. At this time, they agreed that the rate must be reduced, according to an official who was part of the meeting.

The suggested rate will be somewhere between 20pc to 25pc. This could improve the private sectors’ engagement in the manufacturing sector, the official said. The sector only achieved 30pc of the government’s plan during the last fiscal year, 2013/14, according to data from the MoI.

“Tax rate reduction and investment incentives should not be confused; each has its own principle,” says an anonymous tax law expert. “Reduction in tax rate should be inclusive of all sectors, so that the tax system could be simple to understand and implement.”

In addition to the proposed tax incentive for the manufacturing sector, an overall tax review is in process by the MoFED and ERCA, including Income Tax, Excise Tax, Turn Over Tax (TOT) and Value Added Tax (VAT). This, too, could be approved by Parliament during the first quarter of the current fiscal year, according to an official from the ERCA.

The ERCA – created in 2008 as a result of the merger of the Ministry of Revenues, the Ethiopian Customs Authority and the Federal Inland Revenues – experienced a major tax revision of customs during the last quarter of the last fiscal year. The revision includes incentives on the import of semi processed products by the local manufacturing sector, in a bid to encourage manufacturers.



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