06 September 2014 News Items


Potassium to be the first chemical fertilizer for teff




While kicking off the first international potassium symposium on the role of potassium in cropping systems of sub-Saharan Africa, Ethiopia looks to be ready to start using the compound as a chemical fertilizer on teff farms for the first time. 

In an occasion scheduled to take place in Addis Ababa between September 4 and 5, organized jointly by the International Potash Institute (IPI) and the Ministry of Agriculture (MoA) and Agricultural Transformation Agency (ATA) is the first of its kind in Africa since 1973.

IPI has been inactive for decades in Africa following the first potash symposium it held in Abidjan, Cote d’Ivoire, and the upcoming event aims at unlocking the potash potentials of sub-Saharan African countries, according to the organizers. “We have long been forced not to use potassium as a fertilizer but DAP and UREA; and this is the time to turn our face to it,” Tekalign Mamo (Prof.), minister’s advisor and state minister of agriculture, said. He also noted that the ministry has finalized its studies in 275 woredas (districts) to identify the types of soils suitable for potassium fertilizer.

Agriculture in Ethiopia claims in excess of 15 percent of the total national budget. And, according to Tesfaye Mengiste, representative of the minister, the country is yet to utilize its potash resources. “In the future, we will export potash products to the international market, however, we should also make potassium one of the major fertilizers in farms in Ethiopia,” he said. IPI advocates that potash has been a widely applied fertilizer in Eastern and Southern Asian to increase productivity by up to 30 percent. “Potash is six times cheaper than nitrogen and Israeli farmers appear to be the most benefited from it,” Hillel Magen, director of IPI said on occasion. He further advises Ethiopia to apply more potassium on its most important cereal crop—teff. “We have seen a significant increase in maize, rice and wheat production across the globe. And this is the time for teff” he suggests.

Chief Executive Officer (CEO) of ATA Khalid Bomba said that investing in fertilizer helps to realize the key mandate of the agency, which is achieving food security, since fertilizers improve productivity by 50 percent. The ministry of mine has already identified the potential of potash mining in the Danakil (Dallol) Depression where the Canadian firm Allana Potash is set to start production of potash by 2015.

According to the ministry, Yara International is also on its way to finalize case studies to invest in the large scale potash mining project in the country, apart from the 3.2 billion tons under Allana’s concession. Although IPI is yet to fully recognize the quality and deposit of Ethiopia’s Potash, the ministry has already conducted studies revealing the high-grade, shallow and world-class quality of potash in the Danakil Depression.



Ethiopia working to utilize potassium fertilizer to improve soil fertility


Prof. Tekalign Mamo Assefa


Ethiopia is working to properly utilize potassium (K) fertilizer to improve soil fertility thereby increase agricultural productivity the Ministry of Agriculture said.

Speaking at the 1st International Potash Institution Symposium held here today the State Minister Prof. Tekalign Mamo said Ethiopia has considered the need to use potassium fertilizer and boost soil fertility.

Considering the necessity of potassium for crop growth, the country started to use six new blended fertilizers including potassium.

After four decades of detachment from potassium fertilizer, researches conducted in recent years revealed the importance of potash for soil fertility, he said.

Nitrogen and phosphorus have been considered as the nutrients least present in soils; therefore, DAP and urea fertilizers have been the only fertilizer sources that have been in use in Ethiopia and in several other SSA countries.

A shift in this thinking in Ethiopia was triggered by research activities conducted during the last few years, the results from nationally launched soil fertility mapping, and ongoing new fertilizer demonstration trials being conducted in many areas.

Results from these studies proved that several nutrients including potassium are limiting crop yield. Based on these results, Ethiopia introduced six new fertilizers (including potassium) for distribution to farmers.

The IPI Director Hillel Magen on his part said sub-Saharan African countries including Ethiopia haven’t been widely used potassium fertilizers.

Studies conducted in the country displays that the country could increase productivity by using proper fertilizers including potassium.

The two-day symposium “The role of potassium in cropping system of Sub-Sahara Africa” on the current status and potential for increasing productivity is deliberating on soil fertility, quality of mineral fertilizers, and efficient use of fertilizers.

The symposium is also expected to address issues related to role and benefits of potassium fertilizers, focusing on chemical, physical and biological processes in soil and plants, farm management and economic application of fertilizers.


WAFA organizes Ethio-Canada business summit


WAFA Marketing and Promotion is organizing the Ethio-Canada Business and Investment Summit 2014 to be held on September 15 at the Fairmont Royal York Toronto Hotel, Canada.

In a statement sent to The Reporter, WAFA said the Ethio-Canada Business and Investment Summit is organized under the auspices of the larger Canada-Africa Business Summit, 2014 scheduled to be held from 15 to 18 September in the same venue.

The summit is organized by Wafa Marketing and Promotion PLC and the Ethiopian Embassy in Canada while the Ethiopian Ministry of Foreign Affairs and the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) are co-organizers of the summit. According to WAFA, the Canadian Embassy to Ethiopia, Trade Facilitation Office-Canada (TFO-Canada) and Canadian Council on Africa (CCAfrcia) have been providing technical support for the success of the summit from the Canadian side.

WAFA said the event, which is the first of its kind to be held in Canada, aims to be the largest gathering of the Canadian and African economic movers and stakeholders. The summit will bring together prominent experts, government officials and business people who will discuss strategic topics for Africa’s economic development including construction, infrastructure and transport, agriculture and agri-business, education, natural resources and financing.

WAFA said as part of the larger Canada-Africa Business Summit, Ethiopia has already been provided with the opportunity of taking part as a Country of Focus , which entitles Ethiopia to have its own half-day  “Doing Business in Ethiopia Forum” session on  15 September. According to WAFA the forum will enable Ethiopia to showcase the existing business opportunities to the wider Canadian market and African businesspersons through networking, and business to business meetings.

WAFA said the half-day session will be held in a premium location at the summit hall in the presence of more than 300 participants, including senior Ethiopian government officials as guest speakers and panelists of both the Doing Business Forum in Ethiopia as well as the greater Canada-Africa Business Summit sessions. More than 65 local businesses comprising petroleum, mining, textile/garment, leather and leather products, coffee, construction and machinery, oilseeds, tour and travel, representatives of business associations as well as Canadian, African and other international investors will participate in the summit.

The Ethiopian delegation will be led by Minister of Foreign Affairs Tedros Adhanom (Ph.D.), – one of the keynote speakers in the greater Canada-Africa Business Summit on September 16. Tedros will be accompanied by the Minister of Mines, Minister of Water, Irrigation and Energy, the director of the Investment Commission and other pertinent institutions.



Ethiopia to Contract Most Expensive Dam Ever


Ethiopian Electric Power (EEP) to award a contract to build a dam on Gebba River, whose cost per megawatt (mw) is twice the amount spent on the Great Ethiopian Renaissance Dam (GERD)

The Ethiopian Electric Power (EEP), a state monopoly tasked with the investment, expansion and operations of a generation as well as transmission of electric power, is to award a contract to build a dam on Gebba River, whose cost per megawatt (mw) is twice the amount spent on the Great Ethiopian Renaissance Dam (GERD), sources disclosed.

Although last minute negotiations were still underway at the time of going to press, a joint venture arrangement between Chinese and Ethiopian companies is to get hired to build the dam planned to generate 391mw electric power, sources disclosed to Fortune.

The company, which has been unbundled recently from its predecessor, the Ethiopian Electric Power Corporation (EEPCo), has selected SINO Hydro and CGCC, Chinese construction firms active in Ethiopia, to work with SUR Construction and Oromia Water Works Enterprise (OWWE), according to these sources. Nonetheless, while the involvement of the first three companies has been confirmed by officials of the company, these officials have declined from confirming the participation of OWWE in the project.

EEP’s Chief Executive Officer, Azeb Asnake, is expected to sign the contract worth over 700 million dollars (over 14 billion Br) at the Hilton on Monday, September 8, 2014. The 12th dam in the country and first after the launch of the GERD, Geba Dam will consume more investment than any of the 11 dams that preceded it.

The most expensive dam to date was put on Tana-Beles, with 15.4 million Br for a megawatt while Gebba will consume over 35 million Br, according to reliable sources. GERD is projected to take a little over 14 million Br for a megawatt electric power generation when it gets completed in 2017, according to the plan. “GERD has economy of scale,” said an expert with vast experience in the industry.

To be built on Gebba River, near the border between Jimma and Illubabur zones of the Oromia Regional State, the cost is to be financed with a loan provided by the Chinese government, these sources disclosed. The life of the project comes a long way since its inception in 2005, where the World Bank and African Development Bank (AfDB) had shown interest to finance part of the 535 million dollars project at the start.

AfDB had sent a team of appraisal two years to determine the feasibility of the project and its impact on the environment, with the hope that AfDB would provide a 100 million dollar loan.

“With AfDB only providing a loan of 100 million dollars, the difference will have to be covered by the Ethiopian government and other financiers,” Lamin G Barrow, resident representative of AfDB at the time, had told Fortune.



Inside Ethiopian’s plan to dominate African skies


By ANDUALEM SISAY in Addis Ababa



In the 1940s, the American aviation market witnessed a major breakthrough when Trans World Airlines (TWA), then controlled by the famous American maverick film producer Howard Hughes, emerged as the pre-eminent competitor to Pan American World Airways’ monopoly of the country’s air travel.

During the Second World War, TWA also produced aircraft and spying equipment for the US government, according to documentaries on the secret life of the business magnate. Following the end of the war, the government was left with a surplus of aircraft.

These airplanes are now behind the success stories of some modern-day airlines, after the US decided to use them to cement partnerships with other countries while also looking to counter the expansion of the Soviet-led communist bloc.

The US government also used TWA to train pilots from across the world, while helping to establishing national airlines for countries in Europe, Middle East and Africa where it set up its air bases during the Cold War.

These include Germany’s Lufthansa, Saudi Arabian Airlines, and today’s Ethiopian Airlines (known simply as Ethiopian).

Ethiopian’s international flight story begins in April 8, 1946 when it flew to Cairo using one of the five surplus C-47 aircraft acquired from TWA with whom it established the joint venture, the Ethiopian Airlines INC.

The national carrier, which is now fully owned by the Ethiopian government, has since become one of Africa’s top airlines, with a total of 59 aircraft and 7,300 full time employees.

It has over the years braved a number of important challenges to remain in the skies, including pressure from the country’s former communist regime to dump the US and buy Soviet planes instead.

Big deliveries

Over the past seven years Ethiopian’s revenue has grown by an average of 25 per cent. The airline recently announced $107 million in annual net profit for 2012/13, a 178 per cent leap from the previous year.

The profit comes as a result of transporting 5.5 million people and 174,000 tonnes of cargo, with 190 daily flights and 1,330 weekly.

It also received a record number of 14 new airplanes and set up nine new stations across the world last year.

“We’ve got new airplanes [such] as the B787, B777 which were fuel efficient so our fuel cost is managed, although our fuel cost has gone up,” said Mr Tewolde Gebremariam, the chief executive officer of Ethiopian.

“Also the fact that we’ve got the airplanes, and are able to open nine new stations, that enabled us to grow the revenue, but the management was prudent in managing costs, so the cost hasn’t grown as much as the revenue, allowing us to register very good profit,” he said.

The revenue boost followed its membership to the Star Alliance last year and the arrivals of Boeing Dreamliners that are said to save up to 20 per cent in fuel consumption.

Of its total 13 orders, Ethiopian–the first airline outside Japan to own the model–has already received five Dreamliners so far. Next year it expects to bring in an additional four of these planes which are also said to cut carbon emission by 20 per cent.

In addition to US airplanes, by 2016 Ethiopian also expects to get some 14 Airbuses from Europe.

Fair share

As Africa’s trade and investment within itself and the rest of the world is on the rise, Ethiopian is eying this opportunity to expand its business and contribute to the continent’s growth of the continent. Currently, about 80 per cent of flights to and from Africa are operated by non-African airlines.

“We have to develop African aviation, it is our continental obligation. We (African airlines) should at least get our fair market share, which is 50 per cent,” Mr Tewolde said.

Today, 46 out of Ethiopian’s 76 international destinations are in Africa.

By opening different hubs in Africa, Ethiopian is now working to increase the market share of African airlines, including by snapping up smaller rivals.

In 2010 the Addis Ababa-based carrier acquired 40 per cent of ASKY Airlines of Togo, followed by a 49 per cent stake in Malawi Air.

ASKY, currently plying 12 destinations in its region and transporting 500,000 people yearly is expected to turn in a profit next year, while Malawi Air is under formation.

In addition, Ethiopian is also negotiating the opening of another hub in central Africa, according to Mr Tewolde, who noted that the airline is also currently supporting Cameroonian and Cape Verde airlines.

Following TWA’s model, Ethiopian is also training pilots and technicians from different African countries. Its aviation academy now accepts 1,000 students annually, with plans to expand this to 4,000 every year.

The airline is also set to open a four-star hotel in the capital, a walking distance from its Bole International Airport hub.

Its revising its Vision 2015 to introduce seven profit centres, it hopes to increase its current $1.9 billion annual revenue to $10 billion by 2025.

These centres are Ethiopian cargo, Ethiopian aviation academy, Ethiopian maintenance and overhaul, Ethiopian international passenger, Ethiopian domestic and regional passenger, Ethiopian In-Flight Catering and Ethiopian Ground Services.

In today’s globalisation era, Ethiopian Airlines, a child of the Cold War, now flies to 194 countries, picking up several aviation awards, while its parent TWA airline was sold and merged with American Airlines a decade ago.

Opportunities abound.



Germany to assist universities in science, technology, engineering

german coop

Germany signed a new grant commitment worth 123.8 million Euros to support Ethiopia in three priority areas for the coming three years, until 2017.

Ahmed Shide State Minister of Finance and Economic Development of Ethiopia (MoFED) and Thomas Silberhorn Deputy Minister of Economic Cooperation and Development of Germany identified three priority areas during their triennial negotiation concluded on September 4.

Education, agriculture and conservation of natural resources and biodiversity are the three priority cooperation areas identified for the coming three years from 2015.

“Ethiopia values very much the cooperation it has with Germany, it is a unique one,” Ahmed Shide told his German counterpart on the signing ceremony held at the MoFED head office located off King George VI Street.

Ethiopia will benefit from all three cooperation areas, for instance the accord to reform university programs will bring Germany’s expertise on science, technology and engineering fields, according to the state minister.

The program will be mainly carried out by two German implementing agencies, GIZ and KfW Development Bank. With this new commitment Germany’s total volume of bilateral technical and financial cooperation since its formal inception 50 years ago amounts to one billion Euros, according to information obtained from the embassy.

Germany’s cooperation during the last few years contributed mainly to education and sustainable land management.

According to the embassy’s information, more than 50 vocational schools and universities are now offering new training courses and better practical training, and more than 180,000 hectares of degraded land were taken back into productive use through farming methods, benefiting 194,000 households.



Inflation considerations delays income tax reform


Sufian Ahmed, Minister of Finance and Economic Development

Sufian Ahmed, Minister of Finance and Economic Development


The Ministry of Finance and Economic Development (MoFED) is said to have halted the revision of Ethiopia’s income tax structure following advice

from Prime Minister Hailemariam Desalegn’s macroeconomic team on the inflationary implication of rolling out the tax amendment so close to when the government gave its employees a pay bump.

According to The Reporter’s sources, the PM’s macro-economy advisory team recommended exercising some precaution when thinking of introducing the revision made on the income tax structure mainly for the inflationary pressure it might have when coupled with the salary increment. As per the suggestion of the advisory team, MoFED delayed the tax revision proposal submitted to it by the Ethiopian Revenues and Customs Authority (ERCA) two years ago.

After conducting a thorough assessment of the country’s tax schedule, ERCA proposed a general tax reform affecting many of the tax proclamations including the Customs Proclamation, which had caught the attention of the authority much earlier. Both the proposal and the revision gained acceptance quickly, which culminated in the ratification of revised customs proclamation by the parliament a few months ago.

Among other tax categories that need revising, payroll and corporate taxes from the income tax category and those indirect tax types such as turnover taxes and value add taxes levied on the end user of products or a services are the main ones, according to sources.

However, the advice of the macro-economy team to MoFED focused more on the two stands of taxes from the income tax category; payroll and corporate taxes. According to the same sources, the team focused more on payroll taxes and corporate taxes due to their potential to start inflationary pressure on consumer prices in the local market. They further explained that a reform on income tax categories would directly affect the disposable income left in the consumers’ pockets after paying their taxes, and that would directly affect the price of the commodities that they buy from the market.

“It is mandatory for us to delay the revision on employment and corporate taxes categories at least for one year,” the source said.

The proposed revision on the payroll tax for instance is anticipated to have a significant effect on the existing minimum taxable income bracket or the threshold beyond which income will not be taxed, the 150 birr mark, and the 35 percent flat rate levied on salary bracket exceeding 5,000 birr. In fact, the two have always been identified to be the most controversial areas of the payroll tax structure in Ethiopia. For the 150 birr minimum threshold, the basic idea behind leaving income below that of the tax system seems to have been the main driving factor for its long time revision. According to experts, the basics of exempting income brackets below 150 birr is that if a person is perceived as an enterprise that is producing but getting the reward in the form of a salary as opposed to corporate income of businesses, then 150 birr is supposed to be the minimum amount of money that a person needs to ensure its survival. Just as costs in the case of businesses, which is deductible from the income of businesses before taxes are paid, 150 birr is assumed not to eligible to be taxed, hence deducted from the whole of the income of individuals before taxes. But, revision was long overdue since the value of 150 in market has long lost its value to achieve what it is assumed to achieve, pundits argue.

Hence, with this revision forthcoming together with the recent move of salary increment to government employees means that employees could have received much more money in the form of disposable income which could in turn be inflationary.

It is to be remembered that aiming to adjust the existing cost of living, the government of Ethiopia has decided to make adjustments to the pay of its employees by as high as 46 percent, incurring a total 10 billion birr additional cost per annum.



Catering service demand surges



Sheraton Addis


A recent report by Bench Events, a London-based event organizer, said that Ethiopia is well among the ten top African nations experiencing an unprecedented rise in development of hotel chains in the region.

According to the report, Ethiopia currently has some six international standard hotels in the pipeline, which upon completion would add 990 rooms to the existing capacity of the hospitality industry. Still, the report indicated that Ethiopia remained one of the bottom ranked countries compared to Nigeria and Morocco, which have 6,614 and 4,828 rooms in the pipeline respectively.

However, a research by Awash International Bank suggested that Ethiopia might fail to accommodate tourists expected to come to the country both in 2015 and 2020. By 2015, Ethiopia plans to attract some one million tourists and sees to amass USD 3 billion. The country also envisages being one of the top five tourist destinations in Africa by 2020. Assuming a tourist would want to stay at least for a night, the demand for hotel rooms is projected to be some 1.3 million a day by 2015. The bank’s projection also shows that the single night demand will swell further to 3.1 million by 2020.

The current state of the tourism sector reveals that a little over half-a-million visitors come to Ethiopia every year, from whom the nation gets close to USD 300 million. For critics, such poor performance is way behind the targets set for the years to come and manifests the nature of the unrealistic targets set by the government for the tourism sector. However, in his recent interview with The Reporter, Solomon Tadesse, chief of the newly established Ethiopian Tourism Organization (ETO), said that the government has realized this and is taking measures to transform the sector. The establishment of ETO along with the Ethiopian Tourism Council, chaired by Prime Minister Hailemariam Desalegn, Solomon says reflects the commitments of the government.

In his statements, Matthew Weihs, managing director of Bench Events, said that Ethiopia should increase the supply of good quality, high-end hotel accommodations to grasp the opportunities in the catering industry. Bench Events is scheduled to organize the Africa Hotel Investment Forum (AHIF), which will be hosted here for three days starting September 29th. High-level international players, African officials and experts are planned to attend the forum.

Currently, the most high-end star rated hotels in Ethiopia include Sheraton Addis, Hilton and the recently opened Radisson Blu.



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