03 Sept 2014 News Round-Up




Programme *.pdf  –  http://www.ipipotash.org/udocs/463-ssa-2014-program.pdf


Turkish Company to Supply Textile Factories Through Bonded Warehouse


The scheme enables foreign countries to test the water in Ethiopia, before deciding whether or not to invest

A Turkish chemicals manufacturer, Eksoy Chemical Industries Ltd, is to become the second supplier of chemicals and dyestuff to the textile factories in Ethiopia through a bonded warehouse Scheme.

This scheme is available for chemical manufacturers outside Ethiopia. They can have their products in a bonded warehouse, from where the customs clearing will take place as the products are sold. This is supposed to enable them to test the domestic market for two to five years, during which time they will be expected to open a factory in Ethiopia or leave. The manufacturer’s proposal is evaluated by the TIDI, which makes a recommendation to the Ministry of Industry (MoI). The Ministry of Industry gives approval for companies to be involved in the bonded warehouse transaction. They get their trade and investment licenses and customs certificate after that, according to Yared Mesfin, marketing director at the Ethiopian Textile Industry Development Institute (TIDI).

The first was Bezema Dyestuffs & Chemical, a Swiss based company, which has been supplying various chemical and dyestuffs to the local textile manufacturers through its warehouse in the Jemo area and its outlet in Lafto since September 2012.

Eksoy has finalised all the requirements to be licensed by the Ethiopian Revenue & Customs Authority (ERCA), which is basically the last requirement to begin the import and distribution of all sorts of chemicals and dyestuffs necessary in the production process of textiles.

It has renovated a warehouse leased around Kality, with a total area of 1,000sqm, in accordance with the specifications set by the ERCA, which has a stake in the chemicals and dyestuffs to be stored in the warehouses.

Based on the scheme, the companies that have already secured a permit from the Ethiopian Investment Commission (EIC) to undertake the trading will import and store the products in bonded warehouses under the supervision of the ERCA. The stored items will be handled by Eksoy and the customs authority, and both will follow the transaction of the products.

Eksoy had to make adjustments to its warehouse based on comments from experts at ERCA, Hadgu Araya, a representative of the Company, told Fortune.

“We are in the final stage and will secure the customs certificate within a week,” he said.

Left with the last go-ahead from the ERCA, the Company has made arrangements for the importation of the first batch of its chemicals and dyestuffs to arrive in two weeks time, according to Araya. The Company has secured its license with an initial capital of one million Birr and is set to hold a stock of chemicals worth eight to 10 million Br, depending on the demand of the market, he says. The Company could open the factory in three years’ time.

“The scheme provides the manufacturers with the opportunity to test the market and build confidence,” Yared said. “Then they are required to establish a manufacturing company within two to five years.”

Based on this obligation, Bezema has already submitted its request for land to the city administration to establish a dilution plant in Addis Abeba, according to Yared.

Bezema has supplied a total of 217tns of different chemicals and dyestuffs for 21 textile factories through the bonded warehouse arrangement in 2013/14 fiscal year, according to the annual performance report of the manufacturing industry sector.



Yabelo-Mega Road connecting Ethiopia and Kenya is open for traffic


Yabelo-Mega Road connecting Ethiopia and Kenya is open for traffic

The Yabelo-Mega road that connects Ethiopia and Kenya has been inaugurated and is open for traffic.

Speaking at the inauguration, Ethiopian Minister for Transport, Workneh Gebeyhu, said the road is one of several many projects underway in the country aimed at linking Ethiopia with its neighbors through infrastructure.

President of the Oromia Regional State, Muktar Kedir, on his part said the road plays a critical role in connecting different woredas of the Borena Zone, enhancing provision of health, education and other public services to the local communities.

Ethiopian Roads Authority (ERA) disclosed the construction of the road lasted for over three years consuming 740 million Birr in expenses. The project was contracted by a Chinese company.



Africa Losing up to 23 Percent Harvest


Africa Losing up to 23 Percent Harvest

Sub-Saharan countries annually lose up to 23 percent of their total harvest due to poor post-harvest conditions, a research conducted by Rockefeller Foundation revealed.

The report released at the African Green Revolution Forum (AGRF) on September 3, 2014 here in Addis Ababa stated that poor storage facilities and pests as the three major causes of the huge loss.

According to the experts who presented the study, Africa needs to improve its agricultural facilities, market chains and create awareness among farmers about the adverse impacts of post-harvest loss.

After the session, Dr. Dieudonne Baribusta, a researcher at the University of Purdue, told ENA that Ethiopia has gone far in achieving a New Partnership for Africa’s Development (NEPAD’s) program of Africa Agriculture Development (CAADP) to reduce post-harvest loss by half; and it would achieve this fully very soon.


Awash Bank Takes Leap Forwards with New Advanced System


The first of its kind in Ethiopia, the technology will enable the bank to provide numerous new services


Awash International Bank (AIB) will launch an advanced CORE banking system to enable it to introduce new services in September 2014.

The system, BankFusion Universal Banking (BFUB), is being brought to AIB by Misys International Financial Systems Ltd – a UK based software development company – for 200 million Br. Misys boasts on its website that the front-to-back integration achieved by its universal banking solution allowed “for the accelerated launch of financial products from design straight through to distribution – across any channel”, slashing time-to-market and achieving increased profitability by decreasing the cost-to-income ratio.

“Unlocking operational data from the core, FusionBanking Essence turns data into actionable intelligence – helping you identify new business opportunities,” it says.

The CORE banking currently in use by the bank, Bankmaster, is a centralised system that handles all retail banking operations, such as savings, time deposits, loans, demand deposits, subsidiary ledger and general ledger. This application was also supplied by Misys, which has branches in the United Arab Emirates (UAE), Germany, Amsterdam and India, with customers in 130 countries.

Misys has sent its own people here to install the system, which it says could remain in operation for 10 years without failing. One of the strong sides of the new system is that data can be smoothly transferred from the existing setup, according to an official of the bank, without the bank having to interrupt the services it is giving to its clients.

Misys took the responsibility for any risk that might be caused by the system during installation,” said the official, adding that most vendors did not take such measures.

The new system is being installed at a new three-room data centre in the basement of the Awash headquarters with one room each for, servers, network operation and power unite. The data centre is already housing servers for production, backup, test and disaster recovery, all newly supplied by Misys itself as part of the 200 million Br deal.

Once set up, Awash will be able to offer new services in internet banking, mobile banking, agent banking, portal transaction and point of sale, according to bank officials. The new system will minimise the cost of building new products and will also make processes easier, said another official close to the issue.

“It will increase the productivity and competiveness of the bank,” he said.

Awash expects all tests for the new system to be completed and to begin service by the end of September 2014. The system has the capacity to give services for the coming 10 years without any trouble.

AIB was established in 1991 with 486 founding shareholders and a paid-up capital of 24.2 million birr. Licensed on November 10, 1994, it started banking operations on February 13, 1995. It now has 3000 shareholders and a paid-up capital of 1.2 billion Br. The bank and its sister company, Awash Insurance, have been headquartered in Awash Towers – a twin-towered building that cost 217 million Br – since the buildings inauguration in 2010.

Awash deployed 100 ATMs and 400 Point of Sale machines in Addis Abeba during the fourth quarter of the last fiscal year. These are on top of those it jointly uses with other private banks.



Roads re-open as AALRP progresses

Most roads that were temporarily closed for traffic are re-opening as the Addis Ababa Light Rail Project makes remarkable progress.

The Ethiopian Railways Corporations told Fana Broadcasting Corporate (FBC) that laying rails is taking place as per the schedule.

The Corporation added the roads from Abune Petros to Merkato and St. George to Afincho Ber will open for traffic once the rainy season ends.

The AALRP is 73 per cent complete, with installation of electric lines and construction of boarding stations also well underway.

Dejene Tefera, Corporate Communication Services Head, said bid will be issued to hire an able international company to manage the administrative affairs of the light rail system.

He added the first tram which was recently manufactured in China will make its maiden appearance in Addis Ababa this September.



Nyota Minerals Continuing Discussions With Ethiopian Ministry For Mines



LONDON (Alliance News) – Nyota Minerals Ltd Wednesday said it has recently submitted renewal applications for both of its Northern Block licences, and added that technical reports for the license and field work for the year just ended are being prepared.

In addition, the company said it is continuing discussions with the Ethiopian Ministry for Mines over the potential for its Towchester subsidiary to mine and treat the alluvial river gravel deposits adjacent to the Abay River, or Blue Nile, that bisects the Northern Block licenses.

According to Nyota, the gravels are known to be gold-bearing and are being hand dug and panned for gold by local people at a number of localities within the licenses.

“The areas will, within a few years, be flooded by the Grand Ethiopian Renaissance Dam; a new hydroelectric power dam being constructed on the Blue Nile. Alluvial gold deposits in Ethiopia are usually reserved for exploitation by artisanal miners. However, as the deposits will be flooded, large scale mechanized mining to maximize potential gold recovery is receiving favorable consideration,” Nyota said in a statement.

“The flooding caused by the dam will not affect the highest priority hard rock gold exploration targets in the Northern Block licenses,” the company added.

Nyota shares were Wednesday untraded at 0.27 pence.



U.S. will continue strengthened cooperation with Ethiopia

U.S. Ambassador to Ethiopia, Ambassador Patricia Haslach said efforts being made to enhance investment ties between the U.S. and Ethiopia are bearing fruit.

In an exclusive interview Ambassador Haslach gave to Fana Broadcasting Corporate (FBC), she stated that in addition to cooperation of the two countries in investment endeavors, the U.S. is providing assistance for Ethiopia’s Growth and Transformation Plan (GTP), especially in areas of health care, agriculture and education.

Trade between the U.S. and Ethiopia reached USD 1.1 billion in 2013, although the trade balance favors the U.S. Haslach said talks and lobbying are in progress in the U.S. to extend the Africa Growth Opportunities Act (AGOA) which can potentially narrow the trade imbalance.

Accordingly, various tasks aimed at finding markets for Ethiopian products in the U.S. are taking place. Haslach added major U.S. investment firms and multi-national companies are being made aware of all the investment opportunities in Ethiopia, intended at bolstering their presence here. Efforts to bring major U.S. companies to Ethiopia have been successful.

The special focus the Ethiopian government has dedicated to the sector will prove important in transforming Ethiopia into an investment hub, Haslach said. In this regard, Ethiopia’s remarkable achievements through its extensive investment on educating its young, manifested in the tens of thousands of university graduates, is crucial to attract global investors. The ambassador said, this will open a new chapter and boost investment and trade relations between the two countries.

Ambassador Haslach expressed her Government’s commitment to continue its support for the implementation of Ethiopia’s GTP. She added, Ethiopia’s successive double-digit economic growth is encouraging and the Ethiopian Government’s policies and strategies are vital to keep the growth sustainable.

Ambassador Haslach appreciated Ethiopia’s role in East Africa in maintaining peace and security and fighting extremism and terrorism, stating that peace and security is a major aspect of Ethio-U.S. cooperation. The U.S. and Ethiopia will continue to work together to fight al-Shabab in Somali, she said.

The ambassador concluded the various bilateral relations between Ethiopia and the U.S. will transcend their relationship to a higher level and the U.S. will strengthen its cooperation with Ethiopia.



Giant American Clothing Company Eyes up Ethiopia’s Industrial Zones


The company, Phillips-Van Heusen (PVH) Corporation, generated a revenue of 8.2 billion dollars in 2013



Phillips-Van Heusen (PVH) Corporation – a giant American clothing company and owner of the Tommy Hilfiger, Calvin Klein and Heritage brands – has set 10 investment preconditions to the Government of Ethiopia (GoE).

Officials of the company made a visit to Ethiopia, along with 27 textile and garment factories from different countries, last week, for the third time in two months. The second round visit was made by 40 companies led by Mark Green, vice president of the company in May 2014.

The third stay saw a high level meeting between the representatives of PVH and government officials, including Sisay Gemechu and Tadesse Hiale, both state ministers for Industry, and Likyeleshe Abay, deputy commissioner of the Federal Investment Commission (FIC), as well as representatives from the Textile Industries Development Institute (TIDI), on Wednesday August 28, 2014, at the Radisson Blu hotel on Tito Street.

During the discussion, the officials of the Company forwarded 10 prerequisites to the government to make adjustments. The prerequisites include consideration of tax incentives, logistics issues, priorities for electricity power and getting a ready-made industrial park, according to sources.

“The officials decided to form a government committee to review questions forwarded by the Company after they submitted them in written form, because some of the issues demand a policy reform,” said same source.

PVH, which was established in 1881, generated a revenue of 8.2 billion dollars in 2013, with a 967 million dollar profit. Its products are sourced from factories in Bangladesh, Sri Lanka, China, Honduras, Hong Kong, Indonesia, the Philippines, Malaysia, Mongolia, Singapore, Thailand and Taiwan. It sells these products through 700 outlets across different countries, where it employs over 12,000 people.

The government wants this company to take its investment to Dire Dawa or Hawassa, but the company has its eyes on the Bole Lemi Industrial Zone in Bole District. Phase one of this zone has 20 shades on 156ha; five of these shades have already been taken by various companies, including George Shoe; the remaining 15 shades, under construction have already been given to 22 companies. PVH wants the government to give it a ready-to-use industrial park for all the factories that it wants to bring to Ethiopia to dwell on phase two which will be constructed on 186ha of land.

The officials of PVH also visited Dire Dawa, 515km east of the capital, and Hawassa, 273km south of the capital in the Southern Region – two areas that the government wants to promote as industrial zones.

The company says it is coming to Ethiopia seeking to benefit from low labour and input costs, as well as enough land to invest in, according to the officials from the company during the meeting, who declined to comment further. Currently, there are 17 textile factories in Ethiopia and 1,120 cotton farms, despite the textile and garment export performance being disappointing over the last four years. The government has identified the unreliable inputs supply as a reason for the poor performance of the sector and is about to establish a four billion Birr enterprise to supply inputs to the local textile and garment industries.

Another company called H&M (Hennes & Mauritz), from Sweden, with its own brand clothes has maintained an office in Ethiopia for the last two years, although it has not done much.



Gov’t Introduces 4b Br Enterprise to Supply Manufacturing Inputs


Enterprise will open factories in neighbouring countries to export inputs home

Eager to boost manufacturing export from Ethiopia, the government is planning to open factories outside the country to export inputs that manufacturers in the country will need.

This will be part of the job for the four-billion Birr Ethiopian Industrial Inputs Development Enterprise (EIIDE), whose job will be supplying inputs to some parts of the manufacturing sector both by producing them and by procuring from local and international markets and by manufacturing them. The government expects this enterprise to undertake its manufacturing activities through factories it will establish both in Ethiopia and outside.

The bill for the establishment of this enterprise, which will come with the dissolution and take over of the resources of the Merchandise Wholesale Import & Trade Enterprise (MWITE), was approved by the Council of Ministers two weeks ago.

The new enterprise is meant to rescue the ever failing performance of the manufacturing industry, which has been largely challenged by the shortage of supply of inputs leading to continuously disappointing records, despite an ambitious Growth & Transformation Plan (GTP).

Ever since the beginning of the GTP in 2010/11, government plans have grown contrary to its actual delivery, with performance falling progressively short of targets – from 58.6pc in the first year to 54pc and 51.8pc over the following two years. It has now reached a new bottom of 25pc. During these four years, Ethiopia’s export revenue has been growing sluggishly – up from 207.9 million dollars to 255.4 million dollars, then 281.1 million dollars and finally 398 million dollars – up by nearly 117 million dollars from the previous year.

The performance of the three categories where the government had pinned its hopes and to which the new enterprise is going to supply inputs were textiles and garments, with a target of 350 million dollars; leather and leather products with 347 million dollars, and agro processing with 250 million dollars for the 2013/14 fiscal year. The performances in these areas, all below 40pc, were 111 million dollars, 133 million dollars and 76 million dollars, respectively.

Accordingly, the Enterprise will establish three leather processing factories in Sudan and one in Somali land, which will process raw leather at a pickle and wet blue level and export to Ethiopia, according a source close to the issue.

“The government has already conducted a study for the import of semi processed leather,” this source told Fortune. “Sixty million Birr budget is proposed for the establishment and operation of these factories.”

The bill, which was prepared by the Ministry of Industry (MoI), has counted on the experience of the India and China on the idea of investing abroad and importing semi processed inputs that the factory established abroad will produce, in order to match the growing demand of domestic industries, according to a source with knowledge of the drafting process.

The new enterprise will also have a 200.5 million Br budget to grow cotton in partnership with private investors, with the enterprise owning 51pc share, according to a document that Fortune has acquired.

A little more than half a billion Birr will also be allocated to the enterprise for the purchase and transportation of inputs for leather and leather products and agro-processing industries as well as cotton for textile industries that will be used for the running fiscal year of 2014/15, according to sources close to the issue.

This is a “principled approach” by the MoI, says Fasil Tadesse, president of Ethiopian Textile & Garment Manufacturers’ Association (ETGMA).

“It will make sure that inputs are delivered to the textile and garment manufacturers appropriately,” he told Fortune. “Stabilising the market, it will enhance the competitiveness of the sector in the international market.”

Out of the close to four billion authorised capital for the new enterprise 1.4 billion Br is paid up both in cash and in kind, according to the constituting law of the enterprise. Close to half of this is an amount that is transferred to the new enterprise from the dissolved MWITE, according to sources. In addition to its assets and capitals the liabilities and rights of MWITE are also transferred to the new enterprise, according to the establishment regulation, which has also repealed the law that established MWITE.

Established in 1993 by the merger of two previous trading corporations, the Ethiopian Domestic Distribution Corporation (EDDC) and the Ethiopian Import Export Corporation (EIEC), MWITE currently has 83 branch offices in Ethiopia, out of which 35 supply basic commodities. Its authorized capital is set at 90 million Br, out of which 50 million is paid-up. The products it supplies are also more varied, ranging from basic commodities like sugar and palm oil to building materials, foodstuffs, paper, stationery items, textiles and government.

On top of ensuring the availability and adequate supply of industrial inputs for the sectors that the government has pinned its hope in the transformation of the country’s economy, the new enterprise will also engage in the export of the inputs, which are found to be in excess of the domestic industries consumption.

This has to do with the experience of the country in 2011/12 when the production of cotton had by far exceeded the domestic demand of textile factories. A total of 29,710tn of cotton were found to be a surplus out of the 79,710tn produced in the year. That had led to many cotton growers shifting to other cash crops such as sesame, which in turn led factories to import cotton from India, China and Turkey. Three textile factories have imported an aggregate of 3360tn of processed cotton from these countries, according to the latest data available from the TIDI.

This is also welcome news for the cotton growers though with uncertainties.

“The existence of an entity that will make timely purchase at times of excess production will solve the marketing problem we have been facing for the last two years,” said Yusuf Umer, managing director of Amibara Business Group and a board member of the Ethiopian Cotton Producers, Ginners & Exporters Association (ECPGEA).

The price at which the Enterprise will buy from them will be an issue to worry about when the time comes, he adds.




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