Pee or get off the potash Ethiopia!

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Any available opinion regarding Ethiopia’s further economic trajectory starts and ends on the official line, but what is the passive observer to make of what is offered before them? The failure of the potash resource exploitation is a sore case in point.

Is it enough that the GDP growth declared by the government leads the world and all good things may come as a result? A very tricky equation results from what appears obvious in that real wealth and prosperity is largely dependent upon the ability of those involved to realize profit near term from capital invested: thus the dilemma. Where and when does large capital expenditure return in Ethiopia, and how, in comparison with other jurisdictions, does it make sense to apply resources accordingly? Where’s the payoff?

If the government expects investors to supply infrastructure as well as factory capex then they are running up against other jurisdictions who have already surpassed them, and the world economy is far too agile to wait for them to catch up, thus some under serviced sectors are ultimately left behind. There is a hard push by the government to catch up in this regard, but they are sadly mismatched at this point. For instance, while the Addis-Djibouti railway is well underway, the hinterlands that can supply resources and foreign exchange are grossly disconnected and will be for the foreseeable future. All well and good for the Addis based manufacturing sector, but crippling for all the supportive industries that might support it and the larger export trade that might pay down the huge loan burden manufacturing alone may serve to carry.

All well and good if Addis can float bonds and maintain payments until industry supports revenues according the plan. Certain segments of the industrialization however are well under the timeline anticipated, most notable of which is resources, potash being being the most glaring of examples. While several companies have been anticipating large scale production of potash from the Danakil basin in the cumulative order of some $US 1 billion per year, the government has seen itself incapable of providing roads, rail or power where needed to make this a reality, despite the assistance of IDA and others. This sort of failure is what has managed to bankrupt companies and keep further investment from committing, be it FDI or development agencies and players like AfDB or others so mandated. Why a paved road from Berhale to Agula is more advantageous than one connecting Dallol to Afdera is a mystery to all but those in ERA who decided it was so, but nonetheless provides some insight into the disjointed plan which currently prevails. One can draw their own conclusions.

Having said as much, it must be said that Ethiopia has done an admirable job in coming so far in such a short time, given the deficit they were starting from relative to so many, but it is the hope of many they might concentrate their efforts in places, such as the potash extraction sector, which might further their efforts exponentially as no other might and give it the sincere effort it’s due, and on a level deserving as that of hydro-electric power and the sugar factories. The benefits are that deep and important to the economy. The time for talk is long passed. It is not simply the task of private industry to nurture what is Ethiopia’s ultimate prize regarding it’s world class potash resource, but if all are to benefit and prosper it must be by the effort of all concerned, each of they measured by what they stand to gain and can muster according their resources. Ethiopia and their agricultural industry hold all the cards in this regard, but have yet to play them. Unplayed cards have little value, and bankrupt companies have none at all. The decision is that of the Ethiopian government. Stand strong beside or aside bureaucrats.

Hopefully the ministries and the representatives involved will see their way clear of brinksmanship and negotiate a way clear to move all development forward for the advancement of all parties concerned. The stalemate of negotiation and the hundred year long failure of potash monetization realization and utilization has gone on far too long. Meanwhile, the wealthy nations sell fertilizer at a premium to Ethiopia while it’s soils further deplete to the point of critical shortage of potassium and sulphur in many woredas. Something has to give. The eventual publication of EthioSIS results will hopefully make it clear how crucial potassium is to the soils and agricultural productivity of Ethiopia and the rest of Sub-Saharan Africa before western multinationals make inroads to the market before those who might mine it here. Maybe finally sound minds will expedite production before that time comes.

 

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