01 October 2014 Economic News (UPDATED)


Ethiopia seeks Turkish government support for railway fund


By Beyene Geda


Ethiopia has requested support from the Turkish government to press for the release of a $700 million loan that the Turkish EXIM Bank pledged to finance the construction of the African country’s Awash-Woldia railway project.The 389km railway line will connect northern Ethiopia with the country’s central region.

A senior Ethiopian government official Tedros Adhanom, who held bilateral discussions with his Turkish counterpart Mevlut Çavuşoğlu on September 29 in New York, said the project was part of efforts to improve infrastructure in the country.

He said the Awash-Woldia railway, expected to be mainly financed by Turkish EXIM Bank, was one of the major projects.

Ethiopia’s Foreign Affairs ministry on Tuesday said Tedros had asked Çavuşoğlu “to encourage the bank to release the agreed funding of US$700 million”.

A contract between Ethiopian Railways Corporation and Turkish YAPI MERKEZI for the construction of the railway project was signed a couple of years ago.

Tedros also commended the Turkish government’s efforts in bringing more investors to Ethiopia, the statement said.

Turkish investors, this year, surpassed China in terms of investments in Ethiopia.

China has invested $836 million in Ethiopia over the past 10 years, while Turkey has put in $1.2 billion worth of investment into Ethiopia, so far.



Industry’s Push


By Muluken Yewondwossen 


The Ministry of Industry (MoT), the office responsible for following the manufacturing sector, has set an ambitious target for exports this fiscal year.

They plan for manufacturing to earn 275 percent more from exports than it did during the 2013/14 budget year.
If everything goes right the manufacturing sector would earn USD 1.5 billion though exports this year.
The Growth and Transformation Plan (GTP), a five year development plan, which was endorsed in the 2010/11 budget year has focused on increasing industrial output in the country.
To follow this strategy the government has put in place several policies and strategies to help the manufacturing sector grow. Manufacturing exports have been doing well lately but they didn’t meet the expectations for the GTP.
Every year the ministry evaluates the progress of manufacturing and makes adjustments. This year it addressed the issue of improving export volume and earnings.  MoI said that it did not revise the original GTP target a year ago it planned to generate USD 1.2 billion. In the GTP target during the 2013/14 budget year the manufacturing sector was supposed to generate USD 1.6 billion from exports. The actual export earnings from the manufacturing sector in the past budget year was almost USD 400 million, which is very high compared with the 2012/13 budget year, where the country earned USD 282 million.
Similar to last year, the ministry’s goal is to earn USD 1.5 billion from manufacturing export products.  The original GTP target stated that in the 2014/15 fiscal year the country would earn USD 2.449 billion from manufacturing product exports, (this figure  does not include the exports from public enterprises).
In the 2014/15 budget year MoI plans to generate almost USD 434.9million from textile and garment exports. Currently, clothing and textiles are the manufactured products which earn the most money from exports.  The GTP called for textiles and garments to earn USD one billion this year.  During the past fiscal year the manufacturing sector earned USD 111 million, which is three times lower than last year’s target.
Leather was seen as another big earner and plans were for it to be dramatically improved during the GTP. By the end of this fiscal year leather was projected to earn USD 500 million, according to the GTP matrix. In its latest project MoI plans to generate almost USD 357.7 million by exporting leather and leather products whereas last year they earned around USD 133 million.
Sugar was expected to bring in the third highest amount of export revenue at USD 286 million.  Hopes are that when the new factories are finished sugar will take off. Tendaho Sugar Factory is expected to begin production by the middle of this year.  This should alleviate the fact that sugar has been behind GTP projections.  During the current and past budget year sugar was expected to generate USD 661 million and 244 million from exports respectively. Meat and dairy products which earned USD 76 million last fiscal year are expected to earn USD 255.5 million during this fiscal year.

According to the government’s target, the sector was expected to generate USD one billion from exports, including livestock. Other sub-sectors the government plans to earn a large amount of money from through exports include: agro-processing and pharmaceuticals (USD 134.6 million), chemicals and manufacturing (USD 20 million) and metal engineering (USD 19.3 million).
Originally agro processing was intended to bring in USD 300 million and Pharmaceuticals USD 20 million.
To meet the targets this year the manufacturing sector is expected to increase its output to 21.4 percent.
The Ministry of Finance and Economic Development forecasted manufacturing’s contribution to the Gross Domestic Product (GDP) to increase from 21 to 23 percent, last fiscal year.  Expanding industrial output seems plausible given that industry along with service and agriculture is one of the three economic sectors that have been rapidly growing and eventually it is expected to grow even more rapidly.
To achieve these goals the ministry has identified challenges and recommended adjustments.
Some of the steps the ministry recommends include implementing new technology, improving management skills and the process of conducting business, strengthening production capability, improving the quantity and quality of raw materials and coming up with ways to make labour production more efficient.
Reducing bureaucracy and improving links between industries are seen as other improvements that will help manufacturing in Ethiopia.
The ministry pointed out that it wants more industrial leaders to focus on the export market as opposed to local consumers. They added that they will continue to work on these goals.
Another thing it is doing is working directly with factories to improve their outputs in tangible ways. For example if a factory produced 70 percent of its capacity last year it will work with these factories to boost capacity 80 percent this year.



Getting Closer


Turkey’s interest in investing in Ethiopia has been significantly expanding. Even though Ethiopia has been growing significantly in the past five years, Turkish businesses have just recently been flocking to the country.

The number of companies who visited Ethiopia and attended international trade fairs and business to business (b2b) meetings are increasing. For instance about five months ago a large number of Turkish company representatives attended the b2b held with Prime Minister Hailemariam Dessalegn.

Since the biggest Turkish business association, Tuskon, established its continental office in Addis Ababa about a year ago, other Turkish companies have followed suit. On Thursday September 25 about ten Turkish companies came and met with colleagues in Ethiopia to link their business with the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA).



KEFI Minerals numbers underline the potential of Ethiopia project


By October 01 2014

It said operating costs would be US$626 and all in costs are expected to be US$844 (which is well below the industry average), while the initial investment to build the operation is put at US$130mln.


It said operating costs would be US$626 and all in costs are expected to be US$844 (which is well below the industry average), while the initial investment to build the operation is put at US$130 million

The huge potential of KEFI Minerals’ (LON:KEFI) Tulu Kapi project was further underlined as the company unveiled cost estimates for the proposed gold mine in Ethiopia.

It said operating costs would be US$626 and all in costs are expected to be US$844 (which is well below the industry average), while the initial investment to build the operation is put at US$130mln.

KEFI said it will need a further US$20mln of working capital for start-up.

Chairman Harry Anagnostaras-Adams said: “This independent verification represents another key milestone towards reactivating the mining licence application in October and reaffirms our expectations that construction will commence in 2015.”

The stand-out figure is the all-in cost estimate, which is well below the US$999 an ounce given by Tulu Kapi’s former owners.

It reveals the mine ought to be economic at a gold price much lower than today’s.

The net present value of the Tulu Kapi at US$1,500 gold is put at US$345mln and US$100mln at US$1,250 an ounce for the precious metal.

Last week the company secured independent verification of its mine plan.

The respected Snowden Mining Industry Consultants provided the sign-off at a higher than previously slated annual production of 86,000 ounces (2,000 ounces more than previously forecast).

The plan is to mine 13mln tonnes of ore to unearth 925,000 ounces of gold over Tulu Kapi’s ten-and-a-half year life at a processed grade of 2.4 grams per tonne.



Ethiopia to Benefit from World Bank Support for Social Safety Net



The World Bank’s Board of Executive Directors on Tuesday approved a US$600 million credit to fund Ethiopia’s social productive safety nets project.

Ethiopia first ran the project in 2005 and the World Bank says the East African country has managed to score some commendable successes.

Since its launch, the Bretton Woods Institute says it has witnessed the programme make notable contributions in reducing household vulnerability and food insecurity, improve resilience to shocks and promote sustainable community development in rural areas across Ethiopia.

the program will be expanded across the country to eventually reach up to 10 million people each year

The new PSNP4 project, supported by the World Bank through the International Development Association, plans to contribute in poverty reduction and promoting shared prosperity by providing a safety net for Ethiopia’s food insecure and most vulnerable people.

To face the challenges of improving nutrition, PSNP4 will provide support to the country’s nutritional goals and address long-term income challenges, among other things.

World Bank’s country director for Ethiopia, Guang Chen said “since its launch nearly a decade ago, the productive safety net programme has made unparalleled contributions not only to food security and Ethiopia’s progress in meeting many of the MDG goals, but to reversing land degradation”.

Chen added that the new PSNP4 “will build on these successes”.

“And also support the development of long-term social protection systems and disaster risk management. I am very pleased that the program will be expanded across the country to eventually reach up to 10 million people each year,” he said.

The PSNP4 will be implemented in 411 districts in Ethiopia, reaching up to 10 million food insecure people per year.

The project includes a total budget of approximately $3.6 billion from the government and 11 international development partners, including the World Bank.



Best Western International to open two hotels in Addis


Best Western International to open two hotels in Addis

Best Western International Inc, along with Great Abyssinia Plc and Noah Real Estate Plc announce the development of two Best Western branded hotels in Addis Ababa, Ethiopia.

The BEST WESTERN PLUS and BEST WESTERN branded hotels are planned to be opened in 2015 and 2016 respectively, a release issued to ENA said.

These properties will be the first Best Western branded hotels in Ethiopia joining existing hotels in Tanzania and Kenya in East Africa.

Best Western Plus Abyssinia Hotel will be an Upper midscale hotel in Addis Ababa located at Bole Medhane Alem Round.

The eleven-story the hotel with 168 rooms offers the ideal location for business as well as leisure travelers as it is ideally situated in the growing cosmopolitan part of Addis Ababa.

Best Western Noah hotel will also join the Addis hospitality arena as a midscale internationally-branded hotel located at Bole Medhane Alem Area with 121 rooms, small and medium size meeting rooms, a café, an all-day dining restaurant and lounge bar that will bridge the gap for a truly midscale hotel in the capital.

“We are very excited about bringing our world famous brand to Addis Ababa, Ethiopia one of the fastest growing economies in Sub Saharan Africa with amazing world heritage sites recognized by UNESCO and is considered as a cradle of mankind by many” said Suzi Yoder, Best Western International’s Senior Vice President International Operations.

“The addition of these properties to our existing hotels in Africa outlines our ongoing commitment to the growth of our brand in the region”, Yoder continued.

“The potential for Addis Ababa to add new internationally branded hotels is still untapped as the home of the African Union, United Nations Economic Commission for Africa, home of 4th largest diplomatic community and Pride of African Carrier Ethiopian Airlines, we are excited to take part in this exciting opportunity and we look forward to expand in the other historical destinations of Ethiopia” Theodros Zerihun Co- Founder of Great Abyssinia and Noah Real Estate.


Wyndham Hotel Group to Open Four-star Hotel in Addis


Wyndham Hotel Group to Open Four-star Hotel in Addis

The US-based Wyndham Hotel Group announced on Tuesday, September 30, 2014 that it would open a four-star hotel here in Addis Ababa.

The 136- room Ramada Addis is expected to be completed in the first half of 2015, it was indicated.

According to a press release issued by the group, Ramada Addis is the seventh hotel of Wyndham Hotel Group in the African continent.

Owner of Ramada Addis, Adugna Bekele, stated that the partnership of the local company ADM Business PLC with Wyndham Hotel Group will have a great importance for the Ethiopian economy.

He said, “We are deeply privileged to be part of the country’s ever growing tourism industry and we believe this partnership will bring world-class service to the capital. Once open, Ramada Addis will create job opportunities for over 250 people, serve Africa’s capital city to host its multitude of conference attendance and play a vital role in bringing foreign investment into the market.”

Part of Wyndham Hotel Group, Ramada is a global chain of nearly 830 midscale and upscale hotels.


Ethiopia named best coffee growing country


Ethiopia named best coffee growing country


Ethiopia ranked first among top 10 coffee growing countries by a group of 11 roasters and writers.

Thrillist.com asked 11 coffee industry experts to rank their top three coffee growing countries.

The experts ranked Ethiopia the best coffee growing country with 25 points, while Kenya and Colombia stands second and third respectively with 12 and 10 points.

“With sweet fruit notes and delicate floral aromas, it’s hard to imagine a coffee that tastes better than a finely washed Yirgacheffe or a big, sweet, natural processed Sidama,” said Lorenzo Perkins, Director of Education at Cuvée Coffee.

Ethiopia is the genetic birth place of Coffee Arabica, which has been growing wild and harvested here for millennia, he said.

“Every time I drink coffee from Ethiopia, I can’t help but feel that this is how coffee is supposed to taste and everything else is an imitation, a copy of a copy, changed in some way inadvertently because of genetic drift or changing climates,” he added.

He acknowledged that there are many unclassified coffee varieties, which he said contributes to the ‘uniqueness of the cup character.’ For Ethiopia to produce ‘great’ coffee every year is because ‘it’s truly the birthplace of coffee’, according to Sarah Allen, editor of Barista Magazine.

She stated that it is native to Ethiopia means its producers ‘rarely contend with problems that can overwhelm’ coffee growers in Central and South America (where coffee is not native, but rather introduced).

She mentioned the recent example of the coffee-leaf rust that has plagued Central America this past year and wiped out thousands of farms.

“Because coffee is native to Ethiopia, it rarely incites climate or disease-born chaos. Coffee still grows wild all over Ethiopia, and there are thousands of undiscovered varietals in Ethiopia.”

“Specialty coffees from Ethiopia are known for their syrupy body, which is a result of the dry processing method still popular with Ethiopian producers, in which the coffee’s cherry skin is left intact. This process also lends the coffee an exceptionally fruity and floral character,” she said.

The largest producer of coffee in Sub-Saharan Africa, Ethiopia is the fifth largest coffee producer in the world next to Brazil, Vietnam, Colombia, and Indonesia, contributing about 7 to 10 percent of total world coffee production.

Coffee production is important to the Ethiopian economy with about 15 million people directly or indirectly deriving their livelihoods from coffee.

Ninety five percent of Ethiopia’s coffee is produced by small holder farmers on less than two hectares of land while the remaining five percent is grown on modern commercial farms.

Coffee is a major Ethiopian export commodity generating about 25 percent of Ethiopia’s total export earnings.



State Minister Dewano meets Swiss business delegation


State Minister Dewano Kedir met with the Swiss business delegation visiting Ethiopia on Monday (September 29).

Representatives from Swiss companies led by Ambassador Andrea Semadeni, the Swiss Ambassador to Ethiopia, discussed the investment environment, priority investment sectors and market opportunities of Ethiopia as well as ways to expand Swiss investment in Ethiopia.

State Minister Dewano emphasized that as economic diplomacy was now a central factor of Ethiopia’s foreign policy, Ethiopia would like to see the economic ties between Switzerland and Ethiopia be strengthened and expanded.

He explained the need for European investment in Ethiopia, adding that Europe’s investment, including Turkey, was larger than that of any other continent.
The State Minister noted the country’s peace and stability and detailed the investment and market opportunities available, pointing out the huge market potential of the growing economy.

He said that it was now “the third largest economy in Africa, after Nigeria and South Africa.”

Ambassador Semadeni and the delegation showed their interest in economic and business cooperation between Ethiopia and Switzerland and discussed matters which could enhance economic cooperation and increase Swiss investments in Ethiopia.

They also emphasized the Swiss investments already present in Ethiopia and the companies making assessment of the possibilities.

Ambassador Semadeni said he was willing to encourage other Swiss investors to come to Ethiopia.

The delegation was made up of representatives from 10 companies and 2 media organizations including BSI SA, Handelszeiitung/ Axel Springer Schweiz AG, Hoffman- La Roche, Metter Toledo Sales International GmbH, Motivation Africa, Swiss African business circle (SABC) and Switzerland Global Enterprise.



SNNP to build 154 secondary schools



Some 154 secondary schools will be built in the SNNP Regional State this budget year, according to the regional state education bureau.

Government communication process representative at the bureau, Adane Niguse, told WIC today that the schools will be constructed with half a billion birr earmarked by the regional state.

He said indicated that sites selection and the schools’ layout have already been completed. Currently, contractors screening process is underway to commence construction.

According to Adane, the construction of the schools would raise the secondary school coverage in the region to 49 per cent from 42.5 per cent now.

He said over 476,000 students are enrolled in secondary education this academic year. More than 4 million children are also admitted to primary school.

Some 1.2 million adults will also get access to education this academic year, he noted.



Commission receives 3,380 reports of corruption last fiscal year


The Federal Ethics and Anti- corruption Commission (FEACC) said it has received 3,380 corruption reports from whistleblowers last Ethiopian fiscal year.

Ethics Education and Communication Affairs Directorate Director at FEACC Berhanu Assefa, told WIC that 43.5 per cent of the reports fell within the commission’s jurisdiction.

The Commission filed charges against reported corruption cases which were within its responsibility and mandate, he said.

According to Berhanu, the Commission filed charges against 868 corruption cases last year, of which the Court decided on more than 90 per cent of the files in favor of the Commission.

As part of the efforts to prevent corruption, the Commission also offered training of trainers (ToT) and awareness raising training for 1,250 and 44,360 people respectively, he said.

The Commission has so far registered assets of 80,000 government officials and high ranking appointees, of which 17,288 officials and appointees registered their assets last fiscal year alone, he said.

The Commission had also submitted a draft law to the Council of Ministers – a law that will provide the Commission a legal framework to tackle corruption in the private sector.

Ethiopia, one of the countries which signed the UN Convention against Corruption, will present its achievements in implementing anti-corruption measures at a forum to be held in Togo and Malta, he said.



State Minister Dewano meets CPF President

State Minister for Foreign Affairs, Dewano Kedir, met on Monday (September 29) with Kasem Jarusawatd, President of the Tanzania branch of the Thai company Charoen Pokphand Foods Tanzania Limited and its Africa Project.

The CPF is the leading agro-industrial and food conglomerate in Thailand and plans to set up in Ethiopia.

The State Minister noted that CPF would open the door to a stronger, closer, cooperative partnership between Ethiopia and Thailand, adding that the launch of CPF’s project in the near future would help both countries improve and expand bilateral relations.

He noted that CPF’s engagement with Ethiopia in manufacturing suited the Government’s development policies and strategies and could be considered as a step forward for closer cooperation between the two business communities.

The State Minister promised that the Ministry of Foreign Affairs would provide CPF with what it needed, and added that other Ministries, including Ministry of Agriculture and Industry, would also contribute to the success of its efforts.

Jarusawatd said his company attached special importance to Ethiopia, a place of emerging business and investment opportunities.

He indicated that CPF was keen to assess the business potential in manufacturing animal feed, animal breeding and animal farming; poultry; meat processing; and feed-mill business in close association with small-holder farmers and others.

He also underlined that the company was committed to share best experiences, expertise and know-how with small-holders.

State Minister Dewano recently paid a five day visit to Thailand (September 15-20) on the occasion of the celebration of the 50th anniversary of Ethio-Thai bilateral relations.



Industrial zone creating more jobs for citizens


The industrial zones being constructed in Ethiopia are creating more job opportunities for citizens alongside improving competitiveness of firms, the Industrial Zones Development Corporation said.

The first phase of the Bole Lemi I industrial zone constructed at the southern outskirts of Addis Ababa which lies at 156 hectares land alone creates job for 1,500 individuals, Shifarew Solomon Director of the Corporation told ENA.

The nation is working to create more jobs by developing additional industrial zones at the outskirts of the capital, Addis Ababa.

Expansion of the Bole Lemi industrial zone (phase II) and construction of new hub at Kilinto, 30km further south of Bole Lemi are expected to be launched soon.

Up on going operational, the two industrial zones in which their construction is financed by a 250 million USD loan secured from the World Bank, are expected to create jobs for 30,000 people.

These projects are part of the government’s initiative launched this September to improve employment through development of industrial zones.

Companies are waiting the opening of 15 industrial sheds being constructed at the Bole Lemi I site, he added, many companies have also shown interest to operate at the Bole Lemi II and Kilinto sites.

The Bole Lemi II and Kilinto sites will lie on 186 and 308 hectares land respectively.

In addition to increase employment opportunity, the sites will be home for export-oriented firms, will help to substitute specific products the country has been importing with domestic products and earn additional revenue by exporting the products.

The Bole Lemi I and II sites are dedicated for industries engaged in textiles and leather, while the Kilinto site is for companies in the pharmaceuticals, food processing and construction areas, among others, the Director said.

“The companies operating at the Bole Leli I site are engaged in garment and leather industries and similar companies are expected to operate at the Bole Lemi II site. The Kilinto site is left for companies engaged in pharmaceuticals, food, construction and related areas.”

Similar industrial parks will also be constructed in different parts of the country, Shiferaw said.

Assessments are being conducted in Kombolcha, Hawassa and Dire Dawa towns, in Amhara and Southen Nations Nationalities and Peoples states as well as Dire Dawa Administration respectively.



Toshiba Concludes MoU with Ethiopian Electric Power


Toshiba Concludes MoU with Ethiopian Electric Power


Toshiba Corporation on Sunday disclosed that it has concluded a memorandum of understanding (MoU) with Ethiopian Electric Power (EEP) in geothermal power development.

With the agreement the parties collaborate in power generation projects and personnel development.

EEP, a publicly owned utility, engages in the development of geothermal resources and the construction of power plants.

Through the partnership with EEP, Toshiba said it will draw on its long-standing experience and expertise in geothermal systems to contribute to projects in Ethiopia.

More specifically, the company will develop and manufacture major equipment, create operation and management guidelines, cooperate in personnel development, and start a waste heat utilization business.

Ethiopia is geothermal rich, with resources estimated at equivalent to 6,000 megawatts. However, this potential has yet to be explored and developed, and over 90 percent of the country’s electricity is from hydropower sources.

Looking to the future, Ethiopia plans to increase its current installed generating capacity of 2,268 megawatts to 37,000 megawatts by 2037, and the development of geothermal power will play a significant role in reaching that target.

Toshiba commands the world’s largest market share for geothermal equipment with 24% of total installed capacity.

The company delivered Japan’s first geothermal turbine and generator, with a capacity of 20 megawatts, to the Matsukawa Geothermal Power Plant in Iwate in 1966.

Since then, Toshiba has delivered 52 geothermal turbines and generators with a total installed capacity of approximately 2,800 megawatts to North America, Southeast Asia, Iceland and elsewhere around the world.

According to Business wire, Toshiba will continue to promote various forms of renewable energy generation in the global market, including geothermal, wind, hydro and photovoltaic energy, to contribute to a reliable supply of renewable energy worldwide.



 Weed invades most grazing land in Afar


Weed invades most grazing land in Afar


Prosopis juliflora, an invasive weed, is posing a threat in Afar regional state by invading most of the grazing lands, the region’s agriculture bureau said.

Prosopis juliflora is an invasive weed grows to a height of up to 12 meters and has a trunk with a diameter of up to 1.2 meters.

The weed has invaded almost all of the grazing land in the region, Ibrahim Mohamed deputy head of the bureau said.

The weed is also expanding to the neighboring states, Amhara, Oromia and Tigray, he added.

The weed invaded 1.7 million hectares land in Afar, he said quoting a study conducted by the Ministry of Agriculture and FAO.

Activities are being underway to eradicate the weed.

Crushing the fruit of the weed and bulldozing the plant are the activities being carried out, he added.

The federal government said it is working to destroy the weed in collaboration with stakeholders.

Efforts are being exerted to crush the fruit of the tree and provide for cattle as a fodder, Agriculture State Minister Dr. Gebre-Egizabher Gebre-Yohannes said.

A strategy is being prepared to destroy and control expansion of the weed, he added.

It will be effective after a month.

Prosopis juliflora is a shrub or small tree looking like a mesquite.

It is native to Mexico, the Caribbean. The weed has become established as an invasive weed in Africa, Asia, Australia and elsewhere.

A mature plant can produce hundreds of thousands of seeds, which remain viable for up to 10 years.

Seeds are spread by cattle and other animals that consume the seed pods and spread the seeds in their droppings.

It is estimated that the tree is was introduced to the region in the late 1970s and early 1980s, its aggressive growth leads to a monoculture, denying native plants water and sunlight, and not providing food for native animals and cattle.



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