RLPC-Ethiopian Government signs $865 mln railway financing
Oct 27 (Reuters) – The Ethiopian government has closed a $865 million financing package that funds the development of some of the country’s railway infrastructure.
The proceeds of the financing will be used to build the Awash-Weldia/Hara Gebeya Railway Project, one of the key railway corridors that will form part of the National Railway Network of Ethiopia.
The financing is split between a $450 million seven-year commercial loan, which includes a syndicate of lenders from Europe, Africa, the Middle East and the US, and pays 375 basis points over Libor.
A $415 million 13-year loan backed by the Swedish Export Credit Guarantee Board (EKN), Eksport Kredit Fonden (EKF) and Swiss Export Risk Insurance (SERV) export credit agencies is also included.
Credit Suisse acted as co-ordinating commercial facility arranger and export credit agency facility lead arranger. Some of the loans have already been disbursed.
In addition to Credit Suisse, the mandated lead arrangers for the EKF, EKN and SERV backed facilities are Deutsche Bank, ING Bank and KfW IPEX-Bank.
Turk Eximbank provided a parallel financing of $300 million for the Turkish goods and services under the same project.
This project is being undertaken by the Ethiopian Railways Corporation. It will be built in the next three years and will run between the Ethiopian towns of Awash and Weldia.
Yapi Merkezi Insaat ve Sanayi AS, a Turkish company, is the appointed contractor on the project and will design and construct 389km of the railway line.
The financing has also been arranged under the OECD Common Approaches for Officially-Supported Export Credits and Environmental and Social Due Diligence which commit OECD countries to taking environmental and social impacts into account when granting officially supported export credits.
Ethiopia is rated B by Standard and Poor’s, B1 by Moody’s and B by Fitch.
Investors look to stock exchanges to tap into African growth
Facing subdued growth at home, a growing number of Western investors are now looking to Africa’s “frontier markets” for high returns and hoping the continent’s budding exchanges can help them tap in.
The IMF predicts sub-Saharan Africa’s economy will expand by 5.1% this year and 5.8% in 2015 – the highest growth outside Asia – despite the heavy economic toll from the Ebola epidemic.
“The Americans are beginning to take a look, the whole world is looking, because it’s the last big territory with a lot of opportunities for fast growth,” said Hubert Segain, a partner at law firm Herbert Smith Freehills, at a recent conference.
This new appetite for African investments has driven a proliferation of stock exchanges across the continent, with countries such as Mozambique, Uganda and Tanzania setting up their own markets.
“In the 1990s, there were a dozen, today they have more than doubled,” said Segain.
These markets offer African companies a means to access Western capital in a stable and transparent environment, governed by more defined rules than private investments.
The BRVM exchange based in Ivory Coast, which covers eight west African countries, already gets more than half of its volume from international investors, according to its chief executive.
Western exchanges are also looking to get into the game, linking up with their African cousins and tempting companies to double-list.
Segain said more than 10 African companies, or those with assets on the continent, have debuted recently on the London Stock Exchange, one of the world’s largest equity markets which has been on a marketing drive on the continent.
“Double-listing is one path we are exploring, but the heart of our approach” is “the sharing of good practices and sharing technologies,” said Anthony Attia, chief executive of Euronext Paris.
The exchange operator in March signed a cooperation deal with Algeria’s stock exchange and agreed to provide Tunisia and three Middle Eastern exchanges with trading technology.
But the potential for profits also comes with many challenges.
“The first hurdle is seeing Africa as a single entity. It brings together very different geographical areas with varied levels of political and economic stability,” said Attia.
Another major problem is liquidity, as there are still only a limited number of players in Africa’s financial markets.
Liquidity is important because it allows investors and companies to be flexible with their holdings. Without it, it can be difficult to find buyers and sellers of shares.
BRVM, which started up in 1998, has only 37 companies from eight countries listed. Its chief executive Edoh Kossi Amenounve believes it will take another five or six years for it to reach a decent size.
“Asset managers are essentially local… there are very few foreign funds operating on African stock markets,” said Jean-Jacques Essombe, a partner with Paris law firm Orrick Rambaud Martel.
South Africa has by far the most developed market on the continent, with around 400 companies listed, followed by Egypt and Nigeria, both with around half of that, said Segain.
The Johannesburg-based JSE is also far and away the largest by market capitalisation, with US$378 million (RM1.2 billion), more than four times as much as its nearest rival Nigeria.
“Levels of market capitalisation are low, as are trading volumes, which represent an obstacle for investors,” noted Karim Zine-Eddine, director of research at Paris Europlace.
The variety of legal and financial systems in Africa, coupled with a lack of financial infrastructure, also present difficulties.
“There should also be more regulation, but not too much, because it must incorporate the cultural aspects of the countries concerned,” said Essombe.
Regional exchanges, such as Ivory Coast’s BRVM exchange, are one way to smooth out national differences.
But, said Segain, this can cause problems as a stock market is often seen “as a tool for sovereignty”, and so regional exchanges can prompt “a kind of financial arms race” between countries.
Crucially, share markets need to tailor their services according to their clients, as the needs of an African and US investor are not the same, said Orrick Rambaud Martel partner Pascal Agboyibor.
“The most important thing is to work first on a local ecosystem and not try to copy international models,” said Attia.
Leaders Commit Billions in Major New Development Initiative for the Horn of Africa
UN Secretary-General, WBG and IsDBG Presidents, and other Agency Heads Visit Region to Link Peace Efforts with Economic Progress
Addis Ababa, Ethiopia, October 27, 2014—Leaders of global and regional institutions today begin an historic trip to the Horn of Africa to pledge political support and major new financial assistance for countries in the region, totaling more than $8 billion over the coming years. UN Secretary-General Ban Ki-moon, the World Bank Group (WBG) President, Jim Yong Kim, as well as the President of the Islamic Development Bank Group and high level representatives of the African Union Commission, the European Union, the African Development Bank, and Intergovernmental Agency for Development (IGAD) are combining forces to promote stability and development in the Horn of Africa.
On the first day of the joint trip, the World Bank Group announced a major new financial pledge of $1.8 billion for cross-border activities in a Horn of Africa Initiative that will boost economic growth and opportunity, reduce poverty, and spur business activity.
The initiative covers the eight countries in the Horn of Africa — Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda.
“This new financing represents a major new opportunity for the people of the Horn of Africa to make sure they get access to clean water, nutritious food, health care, education, and jobs,” said World Bank Group President Jim Yong Kim. “There is greater opportunity now for the Horn of Africa to break free from its cycles of drought, food insecurity, water insecurity, and conflict by building up regional security, generating a peace dividend, especially among young women and men, and spurring more cross-border cooperation.”
Leading the trip to the Horn of Africa, the United Nations Secretary-General, Ban Ki-moon said “The countries of the Horn of Africa are making important yet unheralded progress in economic growth and political stability. Now is a crucial moment to support those efforts, end the cycles of conflict and poverty, and move from fragility to sustainability. The United Nations is joining with other global and regional leaders to ensure a coherent and coordinated approach towards peace, security and development in the Horn of Africa.”
The European Union also announced that it would support the countries in the region with a total of around $3.7 billion until 2020, of which about 10 percent would be for cross-border activities; the African Development Bank announced a pledge of $1.8 billion over the next three years for countries of the Horn of Africa region; while the Islamic Development Bank committed to deploy up to $1 billion in new financing in its four member countries in the Horn of Africa (Djibouti, Somalia, Sudan and Uganda).
The Horn is diverse, with some of the fastest growing economies and huge untapped natural resources. However, it also has many extraordinarily poor people and populations that are now doubling every 23 years. Unemployment is widespread among growing numbers of young people. Women, in particular, face huge obstacles because of their gender, including limited land rights, limited education, and social customs that often thwart their ability to pursue economic opportunity, and improve living conditions for their families and communities.
Countries in the region are also vulnerable to corruption, piracy, arms and drug trafficking. Terrorism, and related money flows are significant and interconnected threats in the Horn of Africa. People-trafficking is also a growing problem in the region. However, there are commendable efforts being made through regional cooperation in parts of the Horn to tackle the root causes of these problems.
The new financing announcement will support those efforts and comes on the first day of the trip led by UN Secretary-General Ban Ki-moon, to discuss peace, security, and resilience. In addition to the UN Secretary-General, other leaders making the trip are World Bank Group President Jim Yong Kim; Islamic Development Bank Group President Ahmad Mohamed Ali; African Union Commission Deputy Chairperson Erastus Mwencha; Intergovernmental Agency for Development (IGAD) Executive Secretary, Ambassador Mahboub Maalim; African Development Bank Group Special Advisor to the President, Youssouf Ouedraogo; Deputy Director General for Development and Cooperation, European Commission, Marcus Cornaro and European Union Special Representative for the Horn of Africa, Alexander Rondos.
The World Bank Group said its new $1.8 billion packaging, which is in addition to its existing development programs for the eight countries, would create more economic opportunity throughout the region for some of the most vulnerable peoples, including refugees and internally displaced populations and their host communities. Wars and instability have generated more than 2.7 million refugees along with over 6 million internally displaced people. The Bank Group will also help the region build up its communicable disease surveillance, diagnosis, and treatment capacity.
Many of these diseases are associated with or exacerbated by poverty, displacement, malnutrition, illiteracy, and poor sanitation and housing. Increased cross-border trade and economic activity in the Horn of Africa will necessitate simultaneous investments in strengthening disease control efforts and outbreak preparedness.
The Bank Group will also support greater regional links between countries with regional transport routes, stronger ICT and broadband connectivity, more competitive private sector markets, increased cross-border trade, regional development of oil and gas through pipeline development, and the expansion of university and other tertiary education.
The Bank Group’s pledge includes $600 million from the IFC, its private sector arm, which will support economic development in the countries of the Horn. IFC investments under the new Horn Initiative will include a regional pipeline linking Uganda and Kenya; greater investment in agribusiness expansion in storage, processing, and seeds; possible public-private partnerships in pharmaceuticals, renewable energy and transport; and financial advice and support to government and companies to improve business confidence and investment, access to markets, and access to private finance. Another $200 million is for guarantees against political risks from the Multilateral Investment Guarantee Agency.
A new World Bank Group paper forecasts that the Horn will undergo dramatic and lasting change when oil production starts in Kenya, Uganda, and possibly Somalia and Ethiopia.
For its part, the European Union’s Horn of Africa approach is based on a strategic framework adopted in 2011. Support programs for 2014-2020 will be guided by the same analysis that underpins the World Bank’s Horn of Africa Initiative and will focus on the development challenges that must be tackled to unlock the region’s considerable potential. EU support will mostly target the three pillars of the Horn of Africa Initiative: boosting growth, reducing poverty by promoting resilience, and creating economic opportunities.
“The EU stands ready to further deepen its long-standing partnership with the Horn of Africa – helping to build robust and accountable political structures, enhancing trade and economic cooperation, financing peace keeping activities and providing humanitarian assistance and development cooperation,” said European Development Commissioner Andris Piebalgs prior to the trip.
Other leaders on the trip said that the Horn of Africa region needs new development assistance in order to secure peace and opportunity to thrive and prevent future conflicts.
The Islamic Development Bank Group said its new financing for Djibouti, Somalia, Sudan and Uganda over 2015-2017 would focus on critical infrastructure development, food security, human development, and trade. A further $2 billion could be provided by the Arab Coordination Group over the same period.
Commenting on this announcement, Islamic Development Bank Group President Ahmad Mohamed Ali said “The Horn of Africa is an important gateway to Africa and a bridge to Western Asia. Bringing stability and sustainable development to the Horn of Africa will undoubtedly significantly contribute to stability across the entire African continent. The Islamic Development Bank Group salutes this renewed focus on the Horn of Africa and stands ready to work with all partners, including the Arab Coordination Group, to support regional cooperation and the economic revival of the Horn of Africa, especially in its four member countries.”
“Given the complexity of the environment prevailing in the region, we must convince ourselves that it is not the financial means that will win in the Horn of Africa region, but our commitment and determination to act under the leadership of the countries in a united and coordinated manner,” said African Development Bank Group Representative, Youssouf Ouedraogo, Special Advisor to the President.
African Union Commission Deputy Chairperson, Erastus Mwencha, added, “Our efforts to create peace and stability must be reinforced by investments in the peoples and countries of the Horn.”
A new WBG regional study on the Horn of Africa released today at the start of the trip found reasons for hope for the region: “Despite the challenges the Horn of Africa faces, there are encouraging signs of political momentum for enhanced regional economic interdependence. Increasingly, Horn of Africa countries are members of the East African Community, IGAD in Eastern Africa, and the Common Market for East and Southern Africa. Some countries are showing strong political will to solve both security and development issues through increased cooperation—for example, many have sent troops to participate in peace-keeping efforts and have participated in diplomatic initiatives.”
“This mission is the apex of an ambitious partnership approach that will provide the necessary instruments to strengthen the resilience agenda in the IGAD region,” said IGAD Executive Secretary, Ambassador Mahboub Maalim.
For the UN’s Ban and World Bank’s Kim, this is their third trip in 18 months together to Africa. In 2013, the two travelled to the Great Lakes and Sahel regions, drawing attention to the need to promote both peace and development. During the two previous trips, Kim pledged $2.7 billion for regional projects for programs to improve health, education, nutrition, access to energy, and job training. To see the results of these previous peace and development regional initiatives, visit: http://www.worldbank.org/en/region/afr/brief/world-bank-group-sahel-and-great-lakes-initiatives
To see the new WBG regional paper on the Horn of Africa, please visit: http://documents.worldbank.org/curated/en/2014/10/20316926/
First Quarter Sees 30pc Rise in Federal Revenues
The outcomes of the first quarter of the fiscal year brought pleasant news to those in charge of ensuring the domestic mobilisation drives of the federal government. The Ethiopian Revenue & Customs Authority (ERCA) has not only achieved a quarter of its annual target in three months, beginning July 2014. With close to 33 billion Birr already in the public coffer, the Authority has surpassed its plan for the period by 400 million Birr.
This has stirred high hopes among the authorities that the failure to meet target seen last year, where the federal government bagged 20 billion Br less than the 126 billion it had hoped, may not be repeated.
The largest revenue of this, representing more than half, came from domestic taxes, an area where the federal government hopes to bag 72.8 billion Br in this fiscal year. Customs duties collected from the imports of merchandise in the country claimed 44.3pc, while the National Lottery Administration (NLA), the nation’s monopoly over gambling and raffle businesses, has contributed 15.38 million Br, representing a mere 0.2pc.
The federal government hopes to mobilise a total of 134.2 billion Br during the current fiscal year, according to Ephrem Mekonnen, communications head of the Authority.
Accomplishing this will be a high feet to the Authority, compared to the struggle it had had back in 2008 to pick up 19 billion Br. An institutional engineering carried out in the same year, under the directorship of Melaku Fenta, now in jail fighting allegations of corruption, brought the Ministry of Revenue, the Ethiopian Customs Authority and the Federal Inland Revenues Authority under a single mammoth federal entity resulted in the collection of far higher revenues in the subsequent years. Last year, for instance, ERCA has collected 106.6 billion Br, although falling short of its plan of 126 billion Br.
However, the nation is far off from bringing in its ambition of boosting tax to pross domestic product (GDP) ratio to 17.1pc, from 14.1pc recorded in 2013/14. Although this figure has a marginal success from 13.7pc recorded in 2010/11, Ethiopia trails far back from the African average of 24pc.
The Authority deploys its thousands of taxmen and women in its 18 branch offices across the country, of which two of the largest mobilisation points are situated in Addis Abeba. Nonetheless, it was these two branches – western and eastern branches – which turned out to be a source of disappointment to the authorities for they have failed to meet their designated targets. They have achieved only 77.6pc of the nearly six billion Birr they were hoped to collect, Ephrem disclosed.
At a press briefing he gave on Thursday, October 23, 2014, at ERCA headquarters, off Equatorial Guinea Street, in Megenagna area, Ephrem blamed lag in time to collect taxes and massive fraud for failure to meet targets. Tax fraud, poor use of cash register machines, which Ephrem conceded is improving, and failure to issue receipts by businesses are reasons Ephrem attributed as major challenge seen during the first quarter.
Branches in Mekelle and Bahir Dar were reportedly points of high tax collection destinations to the Authority.
Agreement Reached to Launch Africas Largest Free Trade Area
The Tripartite Sectoral Committee of COMEA-EAC- SADC Ministers meeting in Bujumbura, Burundi from 24 – 25 October 2014 has agreed that the Tripartite Summit of Heads of State and Government to be held in Egypt in mid-December 2014 would launch the Tripartite Free Trade Area (FTA).
The decision to launch the Tripartite FTA took into account the fact that the majority of the Tripartite Member/Partner States have made ambitious tariff offers and were agreed on Rules of Origin to be applied in the interim whilst further work continues on product specific Rules of Origin.
The Tripartite TFA encompassing 26 Member/Partner States from the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and the Southern African Development Community (SADC), with a combined population of 625 million people and a Gross Domestic Product (GDP) of USD 1.2 trillion, will account for half of the membership of the African Union and 58% of the continent’s GDP.
The Tripartite FTA popularly known as the Grand Free Trade Area, will be the largest economic bloc on the continent and the launching pad for the establishment of the Continental Free Trade Are (CFTA) in 2017.
The Tripartite FTA offers significant opportunities for business and investment within the Tripartite and will act as a magnet for attracting foreign direct investment into the Tripartite region. The business community, in particular, will benefit from an improved and harmonized trade regime which reduces the cost of doing business as a result of elimination of overlapping trade regimes due to multiple memberships.
The launching of the Tripartite Free Trade Area is the first phase of implementing a developmental regional integration strategy that places high priority on infrastructure development, industrialization and free movement of business persons. In order for the Tripartite FTA to realize inclusive and equitable growth, the meeting agreed on the need for expeditious formulation and implementation of a regional industrial programme.
The Chairperson of the Ministerial meeting, Honourable Chiratidzo Iris Mabuwa, Deputy Minister of Commerce and Industry of Zimbabwe, hailed the agreement to launch the Grand FTA as a milestone in regional and continental integration.
“Africa has now joined the league of emerging economies and the grand FTA will play a pivotal and catalytic role in the transformation of the continent”, she declared at the close of the meeting. “We have made significant progress in negotiations on trade in goods, and we now need to expedite negotiations on trade-related areas, including trade in services, intellectual property and competition policy to ensure equity, among all citizens of the wider region.”
Ethio-American Firm Celebrates a $600m Solar Deal as EEP Officials Get Silent
– Electric power officials curiously silent, while the Ethiopian-American partner celebrates
The Ethiopian Electric Power (EEP), whose executives are largely mum on the subject, signed a Memorandum of Understanding (MoU) with Green Technology Africa Inc. (GTA), with Azeb Asnake (Eng), chief executive officer (CEO) of the EEP, and Dereje Mesfin, president of the GTA, as the signatories.
Azeb confirmed the deal but declined to discuss details. It is a position echoed in the corridors of the utility monopoly.
“We are not ready to give any further details about the project and the MoU signed with the GTA,” said Misiker Negash, external relations director at the EEP.
GTA has, nevertheless, published the story on its website, applauding the Ethiopian government for, “supporting organizations that have been launched internationally by Ethiopians that have acquired years of training and professional expertise overseas and choose to return home to go with local specialists to demonstrate best practices and solutions for a greener Ethiopia.”
Green Technology Africa Inc. (GTA) was founded in Arlington, Virginia, by Dereje Mesfin, according to its web site, with the aim to supply innovative solutions at cost effective prices and technologies for local and international business. This project, the first of its sort in the country, could generate 300mw of electric power.
It will be a welcome addition to the national grid, which received close to 2,000mw electric power from nine dams. The nation’s aggressive drive to get electric power from all sources – water, dry land, wind and now solar – is in a bid to expand national electricity coverage to 75pc by next year as outlined in the GTP. The total coverage has now reached at 55pc.
GTA will deliver the electric power from solar sources, in a turnkey project to be set up in Dire Dawa, Kombolcha and Desse. The company hopes the MoU it signed with EEP managers will enable it to start a full and complete feasibility study on the identified areas, it says.
Copies of its prefeasibility study have been sent to the EEP and Ministry of Water, Irrigation and Energy (MoWIE), the company confirmed in its email to Fortune. The project is anticipated to begin in six months, according to this email response. It will take another six months for opportunity identification and project validation, and two years for project execution, acquisitions and building infrastructure.
This project is a huge development in the power sector and it will encourage local companies to engage in such kind of mega projects, said Dereje Woldegabriel, an Ethiopian businessman running Lydetco Plc, which has been supplying solar system components to Non Governmental Organizations (NGOs) and the private sector. The power generated by the new project is vast, compared to small solar off-grid projects, and it will go directly to the national grid, says Dereje Woldegebriel, who is aware of the signing of the MoU, but not involved.
A 2011 study by GIZ shows that Ethiopia has a huge solar power potential, especially in western and eastern lowlands which receive high density of radiation, even though the Ethiopian solar market is still at an early development stage with an estimated installed capacity of five megawatt power. Demand comes mostly from off-grid areas which constitute 80pc of the country, according to a study conducted by GIZ.
World Bank approves $75 mn for pastoralists in Horn of Africa
The World Bank has approved an additional credit of USD 75 million to improve the livelihoods and resilience of pastoralists in the Horn of Africa.
The funds will help to strengthen the organisational capacity of the Inter-Governmental Authority on Development (IGAD), including the sustainable development of pastoralism in the Horn of Africa, Xinhua reported citing the statement Saturday.
According to the World Bank, the latest financing for the Regional Pastoral Livelihoods Resilience Project will benefit Ethiopia which will join Kenya and Uganda in the ongoing project.
“The additional financing will directly help 132,000 Ethiopian households, which mainly rely on pastoral activities, including livestock activities,” the World Bank statement said.
“This number will add to the 135,000 households (93,000 in Kenya, 42,000 in Uganda) included in the first phase, to make a total of 267,000 households in the three countries.”
Delays in Mega Projects Bleed the Nation
– Authorities positive about recommendations, but seek to see the details first
Three road projects, two dams and one hospital financed with public money have run short of time and price, consuming far more money than originally designed, hence pressure on public coffers, a new survey discovered.
The Adiremet-Dejen Dansha, Azezo-Gorgora, Mhal Meda-Alem Ketema road projects, the Ribb and Tendaho Kessem irrigation dam projects, as well as the Jimma University Teaching & Referral Hospital have taken time beyond original schedule and budgets, according to the report. These were half of the 16 government financed projects found to be failing to meet budget both in time and cost, Construction Sector Transparency Initiative (CoST) Ethiopia said.
CoST is a global initiative started in South Africa and the United Kingdom in October 2012, with the support of the World Bank. Ethiopia is one of the five African countries covered In the Initiative. Guatemala, the Philippines, and Vietnam are the other countries where CoST looks at major roads, water and building projects and their procuring entities as well as the way in which procurements are carried out.
“The aim of these surveys is to guarantee that government entities engaged in the construction of large projects have a transparent procuring system,” said Eyasu Yemer, country manager at CoST Ethiopia.
Close to 25 projects in Ethiopia – from roads to education, water and health sectors – were under the watchful eyes of CoST during its pilot phase five years ago before the official launch in 2012. It found at the time that “the feasibility and design stage as well as bid evaluation process and contract implementations,” are found to be a major cause of concern, according to CoST.
Its latest report was a result of its second scrutiny on Ethiopia, focusing on 16 projects. The findings were tabled two weeks ago to officials from the Federal Ethics & Anti-Corruption Commission (FEACC) and the construction as well as procurement agencies at the Elilly Hotel, on Guinea Conakry Street, near the United Nations compound in Kazanchis area.
The second phase of Adiremet-Dejena-Dansha project, a 97Km road construction in northwestern regions of Tigray Regional State, was reckoned to be finalised in February 2012. It was only three fourth of the projects that came to finalisation this month. The price of time lag on this has cost the federal roads authority an additional 274 million Br from the originally projected cost. Lack of transparency and prolonged procurement, design modification as well as limited capacity of the contractor, are attributed as major problems, according to the report.
Contracted out to the Chinese Hunan Huanda Road & Bridge Corporation (HHRBC), this road will connect, upon completion, areas in the Tigray Regional State to the Gondar-Humera road at Dansha Town.
Another project, a 72Km road from Mehal Meda to Alem Ketema, undertaken by Sunshine Construction Plc, remains under construction, although its deadline passed in September 2014, after three years of work. With a budget of 802 million Br, the project was only 30pc completed during site inspection by COST-Ethiopia in June 2014.
The delay was caused due to change in the first design, which took a year and a half, according to Samuel Tafesse, chairman of Sunshine Construction. Nonetheless, completion is now expected in February 2016, he told Fortune.
The construction of Ribb Irrigation Dam in South Gonder, in the Amhara Regional State, was projected to cost 1.3 billion Br upon completion two years ago. A redesign work carried out in October 2007 led to price escalation that nearly doubled the cost, which the Ministry of Water, Energy & Irrigation (MoWEI) hopes would develop 20,000ha of farm land. The project was 62pc complete in June 2014.
“We understand that there is a delay in the time of completion on these specific projects and a cost overrun,” said Bezuneh Tolcha, communication director at the Ministry. “This came about because of machinery and human resource shortages with the contractors.
The contractors are the state owned Water Works Design & Supervision Enterprise (WWDSE) and Water Works Construction Enterprise (WWCE).
Atakilt Teka, chief executive officer of WWCE, blames outdated cost valuation conducted in 2005.
“This in return made us short in finance, of which machinery could neither be bought nor rented,” Atakilt told Fortune. “There was also a shortage of inputs such as cement; we are running the project at a Negative cost.”
The response from the federal agencies responsible for these projects is quite cautious.
“We are yet to find out the details of the findings,” Samson Wendimu, communications manager of the Ethiopian Roads Authority (ERA), told Fortune. “We have already begun working with CoST-Ethiopia. We welcome their recommendations though.”
Biosafety amendment to ease restriction on controversial GMO import
A Biosafety Proclamation amendment, which seeks to lessen the restriction on the contentious issue of importation of Genetically Modified Organisms (GMOs), was tabled before parliament on Thursday, angering environmentalists.
The bio-safety proclamation, which was ratified in 2009, has strict provisions on importing GMOs. It requires an applicant to obtain an Advance Informed Agreement, a written consent granted by the Ministry of Environment and Forest, or a special permit to import GMOs. The existing law also requires “the competent national authority of the country of export to the effect that the competent national authority takes full responsibility.”
The proposed draft amendment takes away the full responsibility from a government office of the GMO’s country of origin and gives it to the exporter.
There has been a strong push, particularly from researchers in the field of bio-technology, for a more lax legislation whereas environmentalists, wary of the risks associated with GMOs, wanted a stricter law.
“Some provisions contained in the existing law were an obstacle to undertake works in bio-technology and do not meet the current developmental needs of the country,” states a document attached to the draft amendment.
In a bid to boost to the manufacturing sector particularly the textile sector, the government has been considering the option of using genetically modified crops like BT cotton. The option was considered as an alternative to alleviate shortages of raw material which has plagued the textile sector.
However, local environmental activists found the proposed amendment as “worrisome”. A bio-engineering expert and activist, who opted to remain anonymous, believes that the precautionary legislation is being used to promote modern bio-technology.
“We have no issues with modern bio-technology but it is very dangerous to use modern bio-technology as a cover to promote genetic engineering,” he told The Reporter. Despite the well documented risks associated with GMOs the draft amendment is proposing to render inapplicable the existing law enacted with the aim of averting the dangers associated, he added.
Four leaked Cables of US Embassy Addis Ababa of August to December 2009 and Feb 2010 reveal strong opposition to the Ethiopian Biosafety Proclamation and a persistent lobby to scrap it. The Cables claimed that move was driven by US corporate interests.
The draft bill, which was submitted to Parliament’s Forest and Natural Resource Standing Committee, contains amendments to six provisions to the existing legislation. The bill was drafted by the Ministry of Environmental & Forest (MoEF), Ministry of Agriculture (MoA), Ethiopian Institution of Agricultural Research (EIAR) and the Ministry of Science and Technology (MoST).
NBE Earmarks Over 600 Million USD to Prevent Inflation
Addis Ababa Oct 27/2014 The National Bank of Ethiopia (NBE) announced that it has earmarked over 600 million USD loan to prevent inflation on cereals and other consumer goods in the country.
National Bank Governor Teklewold Atnafu told ENA that the loan is allotted for the purchase of wheat, edible oil, sugar and other consumer goods.
The government has finalized preparations to release the loan now so that the commodities could be imported, he said, adding that it would discharge the loan soon.
The Governor said more than 120 million USD is specifically allocated to prevent the shortage of sugar in the country.
According to him, all the necessary works have been carried out ahead of time in order to control the inflation caused by the economic growth of Ethiopia as the root causes of the problem are identified.
He recalled that the nation has been registering double-digit growth over the past two decades.
On the other hand, NBE has readied 45.5 billion birr loan and foreign currency for the mega projects underway in the country, Teklewold disclosed.
He further said the saving culture of the country has shown steady impressive growth.Saving has jumped from 86 billion birr to 295 billion birr during the past five years. Public saving, which was 9 percent five years ago has reached 22 percent. The number of branches of banks has similarly reached 2,208 from the previous 680, it was indicated.
Last Sugar Import Arrives as Factories Resume Production after Rainy Season
The last batch of 300,000ql of sugar imported from abroad by the federal government is expected to arrive at the Port of Djibouti today, October 26, 2014. The Ministry of Trade ordered the sugar two weeks ago from Dubai, United Arab Emirates (UAE), with the approval from the Prime Minster’s Office.
However, this import was a cause of interagency dispute between the Ministry’s officials, who saw the local stock of sugar depleted, and the Ethiopian Sugar Corporation, which has senior managers convinced seven new factories will begin operations this year. They have objected to the Ministry’s order, arguing that an earlier purchase of a million quintals had already arrived from Dubai in June 2014.
The MoT wrote to the Prime Minister’s Office saying that the million quintals that had been bought earlier were all distributed throughout the country by mid September, winning an approval for 300,000ql until Fincha, Wonji and Metehara Sugar factories resume operation, which happened last week.
Kebede Chane, minister of Trade, downplayed the intensity of the squabble, his Ministry has suffered with the Corporation.
“The two government bodies argued on the subject as a normal working process,” Kebede told Fortune.
Both the Ministry and the Corporation, the latter directed by Shiferaw Jarso, a senior government official, who hopes to see the first export of sugar before the end of the year, declined to say how much the imported sugar cost the government.
The shortage of sugar occurred following the damage caused on the farms of Fincha Sugar Factory after heavy rains, which were also prolonged and postponed the resumption of production at the Fincha, Metehara and Wonji factories by about a month, Zemedkun Tekle, communications director of the Corporation, confirmed to Fortune.
Vehicles to transport the sugar from ports in Djibouti have already departed from Addis Abeba on Friday, October 24, 2014, Fortune confirmed.
The imported sugar will be distributed to different parts of the country to ensure government intention to stabilise the domestic sugar market, according to Gashaw Aycheluhem, communications officer at the Corporation. The Sugar Corporation is in charge of distributing the commodity nationally, based on quota from the Ministry. Consequently, it distributes monthly 90,000ql to 122 food and beverage manufacturing factories as well as 102,000ql a month to consumers’ associations in Addis Abeba, where demand is high, and 405,000ql of sugar every 45 days for the repose of the nation.
“The seven sugar mills that are under construction will commence production by the middle of this year,” Gashaw told Fortune. “We think the problem will be solved then.”
These factories, along with the existing three, will have a capacity to produce 1.2 million tonnes of sugar annually, which could lead to an export of 660tns, according to the Corporation’s plan.
Tendaho One Sugar Factory has already started trial production a week ago.
Involvement of private sector important to increase honey export
Involvement of the private sector is important to develop Ethiopia’s honey production and increase the country’s income generating from it, the Ethiopian Apiculture Board said
Beekeeping is a well established traditional household activity in almost all parts of Ethiopia, which is one of the world’s largest honey producers and by far Africa’s biggest.
The nation is working to increase its export of table grade honey through various means, General Manager of the Board Negash Bekena told ENA.
By improving the beehives, providing training and advisory services for beekeepers and by increasing involvement of investors, the nation is striving to increase its export of table grade honey.
In spite of being the biggest producer of honey in the continent, honey in Ethiopia is mainly used to produce honey wine, a popular drink, in spite of being the leading producer of honey and beeswax in Africa.
Low involvement of the private sector in both processing and exporting honey is the main reason for the low performance, Negash said.
The nation exports 800 – 900 tons honey annually, which represents 2 percent of the total production. Sudan, Germany, U.K and Norway are the main destinations for Ethiopia’s honey.
With only 2 percent export amount, the nation is supplying raw honey through over 40 beekeepers’ cooperative unions.
Exporting raw honey has decreased the country’s revenue earnings, the manager added. The nation would secure 1.5 billion USD from the 800 tons, the current export amount, if it were processed. But because of exporting it as raw revenue has to be 32 million USD, he said.
Improving capacity of the cooperative unions’ and promote involvement of the private sector would help to commercialize the sector, according to Negash.
According to report estimates, Ethiopia, with over 10 million honeybee colonies, is the country with the highest honeybee population in Africa.
The country has a high potential for beekeeping as the climate is favorable for growing different vegetation and crops, which are a good source of nectar and pollen for honeybees.
Although the country is favorable for beekeeping, the potential differed from one area to another.
Oromia regional state is the leading honey producer, with 41 percent, followed by Amhara, South Ethiopia and Tigray state with 27 percent, 15 percent and 8 percent respectively.
Middle East investment increasing
Investment flow from Middle East countries has increased over the past four years, the Ethiopian Investment Commission said.
Middle East FDI which was low before the beginning of the Growth and Transformation Plan (GTP) period, increasing in the past four years, Getahun Negash public relations director at the Commission told ENA.
In spite of the age-long relations and connections, Middle East investment has not reached at a desired level, he added.
The government of Ethiopia has understood the region’s potential in terms of investment and is working to attract more investors from there.
Intensive promotion of the country’s investment opportunities, coupled with the fast economic growth and stability Middle East investment has increased during the GTP period.
Some 254 investment projects owned by Saudi Arabia, UAE, Yemen, Kuwait, Qatar, Bahrain and Oman were licensed during those years, of which 35 projects with an aggregate capital of 5.87 billion Birr have become operational.
Derba Cement, the country’s largest cement plant, Saudi Star Agricultural Development Plc and Julphar Pharmaceuticals plant are among the operational projects.
Middle East companies are largely engaged in agriculture, agro-processing and manufacturing sectors, Getahun said.
”Middle East companies largely engaged in agriculture sector. Next to agriculture, they are taken part in the agro-processing and manufacturing sectors. In agriculture, they are working to get market for their local consumption, plus they are involved in agro-processing activities by adding values in Ethiopia’s agricultural outputs and re-exported to their markets. In similar, they have an active participation in the manufacturing sector.’’
Saudi Arabia (112), UAE (56), Yemen (56) and Kuwait (16) are the countries with large number of licensed projects during this period, Getahun stated.
Saudi Arabia is the leading country from the region in terms of number of licensed projects with 112 projects of which 10 have already commenced operation.
These projects with an aggregate capital of 5.4 billion Birr have created 3,604 permanent and temporary jobs. Investments owned by billionaire Sheikh Mohammed al- Amoudi take the lion’s share of Saudi investment.
‘Derba Cement Factory and Saudi Star Agricultural Development are among the major projects of Saudi investment.
The 351 million USD Derba Cement, with the capacity to produce 8,000 metric tons of cement per day was inaugurated in February 2012.
UAE is the second largest country with 56 licensed investment projects among which 16 are operational. These projects with 345 million Birr capital created jobs for over 1,000 individuals.
The Julphar Gulf Pharmaceutical Industries plant in Addis Ababa is among the UAE owned investment.
Opened in February 2013 in joint venture with a local company, the facility produces solid and liquid dosage forms of medicines in Ethiopia.
The facility believed to be one of the largest pharmaceutical industries in East Africa has a capacity of producing 25 million bottles of suspension and syrup, 500 million tablets and 200 million capsules per annum.
‘Among the Saudi Arabia investments, Sheik Mohammed Hussein Al Amoudi’s companies take the lion’s share. MIDROC hugely invests in Ethiopia and created employment for a large number of citizens. In similar, United Arab Emirates Julphar Pharmaceuticals recently opened a pharmaceutical facility that able to render the largest injection treatment in East Africa.”
Intensive promotional activities combined with the successive economic growth and security contributed to improve Middle East investment, Getahun noted.
Support of the government for companies that are interested to invest in the country and incentives given to companies engaged in priority areas are also causes for the increase, according to him.
The government is working to attract more Middle East investment, since the region is among the promising areas, he remarked.