Ethiopia-to-Djibouti Rail to Be Complete in a Year, PM Says
Oct 17, 2014
An electrified rail link from Ethiopia’s capital along its main trade route to neighboring Djibouti will be completed by October 2015, Prime Minister Hailemariam Desalegn said.
“Priority has been given to it,” Hailemariam said in response to questions from members of parliament. “Next October, the line will be finished.”
The 656-kilometer (408-mile) railway is part of a five-year growth plan for Ethiopia started in mid-2010 that seeks to spend 569.2 billion birr ($28 billion) of public and private funding on infrastructure and industry. The new route to Djibouti may halve travel times, according to the government.
Seven out of 10 cane factories being built by the state-owned Sugar Corp. will also be completed in a year’s time, with the rest finished in the subsequent six months, the premier said. “We will be able to export the sugar they produce this year,” he said, referring to the Ethiopian calendar year that ends Sept. 11.
Sugar Corp. signed $580 million of government-guaranteed loans last October with the China Development Bank to finance six processors in the South Omo region, while China’s Ex-Im Bank provided a credit line of $500 million in May for a sugar plant in the northern Tigray region, according to data on the Finance Ministry’s website.
In September 2011, the government said it planned to increase sugar production almost eightfold to 2.3 million metric tons by mid-2015, leaving a surplus for export of 1.25 million tons. Plans to build 10 sugar factories, a 2,395-kilometer rail network and boost power supply fourfold to 8,000 megawatts haven’t been fully achieved, said Girma Seifu, the only opposition legislator of 547 members of parliament.
“At this point in time we’re just importing sugar,” he said by phone from the capital yesterday. “The plan is just for propaganda purposes rather than implementation.”
Turkish contractor Yapi Merkezi Insaat VE Sanayi AS has commenced work on a northern railway line from Awash to Woldiya, while a Brazil-funded project to the southwest hasn’t begun, Hailemariam said. Russia plans to fund a link to Kenya, according to the Railways Corp. “Because there is an economic slowdown those countries have not been able to release the loans,” Hailemariam said.
An advance of $300 million from the Export Credit Bank of Turkey funds the Turkish project at the six-month London interbank offered rate plus 3.75 percent, according to the Finance Ministry. Credit Suisse Group AG (CSGN) is loaning $450 million at the same rate and $415 million at six-month Libor plus 4.59 percent for the line, the data shows.
All the agreements were signed July 7. The maturity of the recent loans for rail and sugar is about 12 years. That compares with a four-decade repayment period for World Bank advances, which come with interest rates of about 0.75 percent.
The first Credit Suisse funding was released in August for the “essential infrastructure” project that will be finished in three years, bank spokesman Adam Bradbery said in an e-mailed response to questions. Its financing for the 389-kilometer track is split into a $450 million, seven-year maturity commercial loan involving lenders from Europe, Africa, the Middle East and the U.S., he said today.
The bank’s other loan is backed by Sweden’s Exportkreditnamnden, Denmark’s Eksport Kredit Fonden and Swiss Export Risk Insurance, and will be paid back over 13 years, Bradbery said.
Ethiopia is on the “cusp” of going from a low to moderate risk of debt distress, the International Monetary Fund said this month. “Commercial loans to finance large public investment projects by state-owned enterprises could increase the risk to Ethiopia’s public debt sustainability,” it said.
To contact the reporter on this story: William Davison in Addis Ababa at firstname.lastname@example.org
Ethiopia’s fast-growing capital aims to become greener and cleaner
ADDIS ABABA (Thomson Reuters Foundation) – Ethiopia’s capital city, Addis Ababa, has a name that means “new flower” but for up to four million people living there, it’s more likely to conjure up images of worsening pollution and traffic gridlock.
The city administration started rolling out a 10-year master plan in 2012 aiming to make the rapidly developing city in Africa’s fastest-growing economy greener, cleaner and pleasant to live in. Many residents aren’t convinced it is working yet.
Alemu Dagne, 48, an engineer and father of two, says he misses the clean air of the once-sleepy city.
“Every day I have to set out for work at 6 am (on public transport) and commute back home starting early at 4pm, as the road is clogged with cars, which not only crowd the roads but also pollute the air,” he told the Thomson Reuters Foundation.
He hopes the city’s new light rail system, powered by electricity – with the first stage scheduled for launch in January – will provide a cleaner, faster mode of travel.
Asamenewe Tekleyohanes, legal affairs officer at the Addis Ababa City Government Environmental Protection Authority, said the capital suffers four types of pollution: air, water, soil and noise.
His organisation is working on a study with a local green group on air pollution, especially from cars, and looking at potential technologies to reduce it.
The authority says it has overseas tools to measure the greenhouse gas emissions of the city, the nation’s economic hub.
“Development has its own adverse effects so, in addition to awareness training, we are carrying out inspections on industries to check whether they have put in place cleaner technology to offset potential pollution,” Tekleyohanes said.
CRACKDOWN ON INDUSTRY
The Ministry of Environmental Protection and Forestry gave industries five years until January this year to control pollution or face consequences ranging from warnings to closure.
The agency is now taking administrative and legal measures against non-compliant industries but Tekleyohanes said the problem of vehicle fumes was harder to tackle.
The authority plans to check emissions levels in its next annual inspection of cars, regardless of model and age, at facilities with modern equipment and trained personnel.
One solution proposed could be to take old cars off the road by restricting imports of secondhand vehicles and replacing them with new environmentally friendly cars.
Ethiopia is aiming for net zero carbon emissions by 2025. Prime Minister Hailemariam Desalegn told a U.N. Climate Summit in New York last month that the government was targeting double-digit economic growth so it can become a medium-income country by 2025, while at the same time curbing emissions.
Part of that plan involves investing in clean and renewable power, he added. By the middle of next year or soon after, Ethiopia will have increased power generation from renewable sources to 10,000 megawatts (MW) from the current 2,268 MW.
Abrehet Gebrehiwot, another official with the city’s environmental protection authority, believes forests could help.
Her office is striving to protect local forest cover, especially in the city’s northern districts, while also replacing the foreign eucalyptus tree – known for soil leeching – with local tree varieties like olive, juniper and hygenia.
The city’s rising population and increasing demand for land – whether for private, industrial or residential needs – are becoming a threat to some of its most treasured forest areas.
The city master plan envisages forest cover of 22,000 hectares or 41 percent of its area but it remains at 14 percent.
“We want to use Addis’s forests as a carbon sink, (for emissions) coming from cars, factories and homes, in addition to using it as protection against dangerous rays and foul smells,” said Gebrehiwot.
Negash Teklu, executive director of the PHE Ethiopia consortium which groups NGOs, researchers and government agencies working on population, health and the environment, is confident Addis Ababa’s rising pollution can be addressed.
“We want to initiate a comprehensive strategy to make the city green – be it sewerage systems, industrial plants and parks – using the city’s own master plan,” he said.
Nation working to boost coffee production by 20%-25%
The Ethiopian Coffee Exporters Association (ECEA) announced various tasks aimed at boosting the country’s coffee production by 20%-25% are under way.
President of the ECEA Husien Adraw said several research papers on quality of coffee from different coffee producing countrys will be discussed at the conference.
More than 300 coffee exporters from India, China, South Korea and South Africa will take part in the conference.
Kaizen improving quality, production in Ethiopia – EKI
Manufacturing industries implementing Kaizen have registered promising results in quality, production and profitability, the Ethiopian Kaizen Institute (EKI) said.
Quality and production improvements and commitment of the management are among the gains of Kaizen in manufacturing industries, Director of the Institute Getahun Tadesse told ENA.
Trainings have been provided for implementers and management body of the industries for the past two years to build capabilities, he added.
“This helped to change the traditional working culture, wipe out bad practices and challenges related to bureaucracy,” he said.
A good lesson has learnt from Kaizen implementation particularly in the sugar industry, he added.
“We learnt a lot from Kaizen implementation especially in the sugar industry. Other giant corporations need to learn from it. This result has registered because of the commitment of the management and employees,” he said.
He urged the need to implement Kaizen in industries that export products so as to duplicate the success gained in the manufacturing industries.
Industry Minister Ahmed Abitew emphasized the need to develop human resource to sustain the ongoing development.
“If the industries are mainly engaged in manufacturing, and the manufacturing industries are labor intensive, we should prioritize the development of our human resource so as to improve quality and production,” he said.
The evaluation undertaken about the impacts of Kaizen on the industries shows that encouraging results have gained, the minister said.
Activities are being underway to improve capability of industries by implementing Kaizen. The establishment of the Kaizen Council, led by the Prime Minister to intensify the achievements gained from Kaizen implementation is one of the initiatives.
The nation has set plan to implement Kaizen in all sectors, during its third phase of Growth and Transformation Plan (GTP) implementation, between 2015 and 2019.
Regional and town kaizen institutions are going to be established until January so as to implement it across the nation.
Ethiopia has started implementing Kaizen since 2009 with two phases, in selected industries and areas.
Ethiopia picks three banks for debut US dollar Eurobond
The Federal Democratic Republic of Ethiopia has picked BNP Paribas, Deutsche Bank and JP Morgan to arrange a debut US dollar-denominated Eurobond, according to sources.
The bond is likely to have a minimum 10 year tenor, according to a source.
The banks declined to comment.
Ethiopia hopes to issue a bond either by the end of this year or early 2015, finance minister Sufian Ahmed Beker told IFR earlier this month.
Ethiopia is rated B1 by Moody’s and B by both Standard & Poor’s and Fitch Ratings.
Ethiopia continues registering double-digit growth – Premier
Prime Minister Hailemariam Desalegn said, Ethiopia, which has long been recognized for its fast economic growth, will attain the 11.4 percent economic growth it has planned for this fiscal year.
President Dr. Mulatu Teshome stated, in his October 6 speech delivered to the joint session of the House of Peoples’ Representatives and the House of Federation, that Ethiopia will do the double digit growth in this budget year.
The joint session of the Houses on Thursday endorsed the president’s speech after long deliberations.
During the deliberations, the premier explained the successful progress of the Growth and Transformation Plan (GTP) during the past years and expressed his confidence that the target would similarly be achieved in this final year.
The government will provide capacity building in all sectors to raise the economic growth of the country and to improve the limitations in capacity, he pointed out.
The government is also striving to ensure democracy and good governance in the country, according to the premier.
He said the ruling party is committed to addressing public grievances and called on members of the EPRDF to play their roles in mobilizing the public in the effort to ensure democracy and good governance.
The ruling EPRDF is always ready to hold discussions with opposition parties in a matured way, if the opposition is ready to do so, Hailemariam noted.
Thegovernment will work closely with the National Electoral Board of Ethiopia (NEBE) to make the 2015 election just, fair and democratic.
Hailemariam nonetheless revealed that the national saving is not expanding as desired.
Speaking of Ebola, the PM said Ethiopia has a responsibility to work with various African countries to prevent the virus as it is the seat of African Union.
According to him, a national committee chaired by his deputy was established and a strategy is designed for awareness raising and training on Ebola.
ERA undertaking road projects with 30b Birr
The Ethiopian Roads Authority (ERA) announced that it would carry out 43 road projects with close to 30 billion Birr this Ethiopian budget year.
ERA Public Relations Director, Samson Wondimu, said that over 90 percent of the cost for the 2,787km road projects would be covered by the Ethiopian government.
According to the Director, some 79 percent of the projects would be asphalt roads, the remaining being gravel.
The road projects to be finalized in the budget year include Wolkite-Arakit-Hosaena, Yezarima-Maytsebri-Shire, Mana begna-Lemlem Bereha, Mazorya-Hadero-Durgi, Emi-Lab-Gode, Agula Barahle-Dalol, and Tsegede Megenteya-Ketema Nigus, among others.
The roads would help strengthen the relations between regions as well as help them utilize untapped natural resources and supply their products to the market.
Among 43 projects being built, 31 are being constructed by local contractors.
Addis to acquire 300 modern commuter buses
300 buses expected to ease transportation problem in Addis Ababa will be introduced within five months.
Tiblest Asgedom, Deputy Head of Addis Ababa Roads and Transport Office, and Colonel Shegaw Mulugeta, Marketing Director at the Metals and Engineering Corporation, on Wednesday signed a deal worth 1.1 billion Birr for the purchase of the buses.
Each bus costs some 3.6 million Birr, it was revealed, and the buses are fitted with GPS, cameras and other hi-tech gear.
Commuters will pay for services of the buses and a new office is being set up to handle the administration of the service.
The number of the buses is expected to double later.
Ethiopian sheep skin keeping Europeans warm
The leather industry is one of Ethiopia’s biggest foreign exchange earners, and Pittards, a U.K.-based leather company, has seen the potential.
The steady hum of sewing machines fills the air inside a large glove making factory on the outskirts of Addis Ababa, the bustling Ethiopian capital. Patches of leather move through an array of working stations as busy laborers work feverishly to meet the company’s export quota: 5,000 gloves a day.
The operation belongs to Pittards, a UK-based company whose trading partnership with Ethiopia dates back to the early 1900s.
Here, hardy, durable cow hide is made into work gloves. These are ideal for builders and gardeners, and are mainly exported to the U.S.
And then there are the stylish designs — created from a different type of animal skin, these are made to keep fingers warm in Tokyo, Paris and Rome.
“The fashion glove is made of sheep skin which is unique to Ethiopia,” explains Tsedenia Mekbib, general manager at Pittards Products Manufacturing. “The durability, the stretch ability and the strength makes it popular for gloving leather specifically. That has been the one strength of Ethiopia and the leather sector.”
Sophisticated designs with decorative touches may be the hallmark of this type of glove, but they must also be practical. Ethiopia’s climate makes this animal skin effective at withstanding the winter chill — an essential selling point.
And this effective material is in abundant supply. Ethiopia’s 90-million cattle, sheep and goat population is one of the world’s largest, according to the United Nations Industrial Development Organization.
What slips onto the customer’s hand may be elegant, but the process to create the glove certainly is not.
It all starts in the tannery where workers — dressed in aprons and thick, elbow-high protective gloves — convert the raw animal hides and skins into finished leather through a number of processes.
Some of the steps include soaking the skin and fleshing it to remove any unwanted parts. A retanning process where the leather is colored is followed by a stage under a special vacuum dryer where the skin is dried and then stretched to increase its surface area.
Once all this has happened, another machine softens the leather to make it flexible — an important feature of gloves. The end product, ready for export, is pure sheep skin prepared to be turned into gloves — labeled with the thickness and the area it covers.
In a move to encourage value addition and increase revenues generated by the leather sector, the Ethiopian government banned all exports of raw hides and skins in 1989. Between 2006 and 2012, the total value of Ethiopia’s exports of leather and leather products grew from $66 million to $112 million.
And it’s not just Pittards that have realized the opportunity to make gloves in Ethiopia. According to the Leather Industry Development Institute, two other factories in the country are focused on creating the hand garments.
Shoes is another major area which uses Ethiopian leather. The country is home to dozens of shoemaking companies, including local names such as Oliberte and international players like the Huajian Group, a Chinese company that has been exporting some 20,000 pairs of shoes a month since it launched its manufacturing facility outside Addis Ababa in 2012.
Despite a major focus to rapidly build its energy and transport infrastructure, Ethiopia is still struggling to provide the best conditions for businesses setting up shop in the country.
“The challenges that we encountered when we started business are from power cuts to logistics to foreign currency availability, to lead time in having available raw materials,” explains Mekbib. “Having the solutions to these challenges would allow us to be competitive as a country and as a company as a whole.”
Beyond these issues, international manufactures also struggle to recruit workers. Ethiopia’s population is growing at a rate of 2.89%, placing it among the top 15 fastest growing populations in the world, according to the CIA Factbook.
But a large workforce and a skilled work force is not the same thing. In fact, Mekbib says “bridging the gap between the rest of the world and the skills set in Ethiopia on the ground has been the greatest challenge so far.”
Another growth area, is the number of Ethiopians entering the middle class and showing a desire to buy high quality clothes. In a report published this month, the IMF said the country is on track to achieve its goal of reaching middle income status by 2025. The trend is so clear to Pittards that they are now targeting consumers inside the country.
But for Ethiopians, it’s not just the top quality of the leather products that makes them take out their wallets, it’s also access to a label they can call their own: made in Ethiopia.