ZTE at Risk of Losing Ethiopia Telecom Contract
Ethiopia Already Giving Pieces of ZTE’s Business to Huawei Amid Pricing Concerns
The Ethiopian government has warned ZTE Corp. that it may cancel a huge contract it awarded to the Chinese telecommunications firm last year, amid concern about the prices ZTE is proposing to charge for its equipment, people familiar with the negotiations say.
Ethio Telecom, Ethiopia’s government-controlled, monopoly telecommunications operator, has been in contact with Swedish telecommunications giant Ericsson and Nokia Corp. as possible replacements for ZTE, these people said. But Ethio Telecom has already started to award parts of ZTE’s contract to its Chinese rival, Huawei Technologies Co., an indication that the entire contract may be awarded to Huawei, said a person familiar with the moves.
The contract in question, worth around $800 million, is to provide mobile-phone base stations and other equipment to upgrade and expand Ethiopia’s mobile network.
The dispute between Ethiopia and ZTE is the latest problem to hit the country’s rickety communications network over the last eight years, during which ZTE has been the country’s main supplier of network equipment. Cancellation of the contract would also be another blow to ZTE’s business in Africa, where several countries have annulled contracts awarded to the firm because of concerns that it violated government purchasing rules, acted improperly or wasn’t up to the job.
Neither ZTE nor Ethiopian officials responded to repeated request for comment.
Last year, ZTE and Huawei split a deal worth $1.6 billion to upgrade Ethiopia’s network. Like many of the contracts that ZTE and Huawei have won in Africa, the two firms offered Ethiopia large amounts of financing backed by Chinese state-run development banks, brushing aside Western competitors for the contract.
While Huawei has since been carrying out its half of the contract, focused on bolstering the network in the capital Addis Ababa, ZTE and Ethio Telecom have been locked in a standoff over prices that Ethiopia would pay for ZTE’s equipment and other issues, say people familiar with the discussions.
Ethio Telecom could make a decision within the next month or two, said a person familiar with the talks. Ethio Telecom has been in touch with Ericsson and Nokia, but people familiar with the discussions says neither of those two companies may be able to provide the amount of financing that Ethiopia needs for the contract. That may be why Ethio Telecom is moving to give Huawei pieces of ZTE’s half of the contract, one of them said, since Huawei has access to state-backed Chinese financing.
In 2006, Ethiopia awarded a contract to ZTE that made the Chinese firm the sole supplier of telecommunications equipment in Ethiopia, for a huge expansion of the country’s telecommunications network.
ZTE agreed to provide $1.5 billion in financing to Ethiopia for the deal, funded by lending from the Export-Import Bank of China and the China Development Bank. An investigation by the World Bank subsequently found fault with the deal, criticizing Ethiopia for sidestepping government procurement rules to give the project to ZTE and for awarding such a big contract to one company. ZTE has said it didn’t violate the government’s rules.
The contract was awarded over the objections of some staff and executives at Ethio Telecom, who worried about ZTE’s performance record and about giving the contract entirely to one firm.
Since then, Ethiopia’s network has been afflicted by persistent problems. ZTE has helped Ethio Telecom expand mobile phone usage dramatically, but complaints about call quality are widespread. Internet connections are still slow. And Ethiopia still has one of the world’s lowest percentages of its population that have a mobile phone or access to the Internet.
Meanwhile, Ethiopian officials have continued to worry about ZTE’s prices. ZTE has argued that it must charge higher prices in Ethiopia in part to recoup the cost of financing provided by the Chinese banks.
“If you just think about the price compared with the others, you think, ‘Oh, your prices are very high, then you make a lot of money,’ “ Jia Chen, the head of ZTE’s Ethiopian division, told The Wall Street Journal last year. “But you have to think: This money, I’m going to get it back in 13 years!”
Israel Chemicals CEO: We’ll fire 600 in Israel, invest overseas
Will the Israeli cabinet and the Knesset call Borgas’ bluff, and how serious is ICL really about it’s Ethiopian interests? Minimal financial commitment in Danakil indicates little more than posturing thus far.
The threats follow the Sheshinski 2 Committee’s recommendations for increasing government revenue from natural resources.
AUC and KfW Sign a Financing Agreement for the Geothermal Risk Mitigation Facility
The African Union Commission’s Department of Infrastructure and Energy and KfW, on behalf of the UK Department for International Development (DFID) signed a Financing Agreement in support of Geothermal Risk Mitigation Facility for an amount of £47,040,000 (Forty Seven Million, Forty Thousand Sterling pounds) on 12th November 2014.
The GRMF was established by the AUC, the German Federal Ministry for Economic Cooperation and Development and the EU-Africa Infrastructure Trust Fund, in cooperation with the German Government owned development bank, KfW. The objective of the GRMF is to encourage public and private investors (project developers) to develop geothermal prospects for power generation in Eastern Africa by providing cost sharing grants for surface studies and drilling of reservoir confirmation wells. Approximately $62 million has been made available for such grants.
In his opening remarks, Director of Infrastructure and Energy Dr Aboubakari Baba Moussa expressed his gratitude, saying the agreement signed is a remarkable milestone for the GRMF programme, and will reflect positively on geothermal development in Africa, adding that the contribution is not only for cost sharing in early exploration, but will also create an enabling environment for private sector, that is necessary for geothermal development in Eastern Africa countries.
“The DFID’s contribution comes at the right time as we are in the implementation phase of the GRMF programme, with projects being implemented in two countries namely Kenya and Ethiopia. Additional funds are required so that the GRMF programme can provide support to more countries and more geothermal developers, extend its application rounds and stimulate other potential donors to join.”
In his remarks, the GRMF Project Manager Mr Philippe Niyongabo appreciated the support and the partner’s continuing efforts in the development and expansion of modern and sustainable energy services in Africa, saying the DFID contribution will be a
big boost for the technical assistance required to create an enabling environment for private sector participation in the energy sector.
The KfW Director General Ms Doris Kohen echoed the project manager’s sentiments saying that geothermal energy development is one of the key strategies in achieving sustainable energy for all in Africa. She also added that the projects not only welcome the established partners but also upcoming partners who aim at developing their competencies.
The Germany Embassy representative Mr Hanno Spitzer, expressing his excitement in being part of this project, noted that energy provision is very vital in hastening economic development in the continent, and said they will continue to remain a strong partner in the future. DFID representative, Mr Tim Stern emphasized that geothermal development will greatly aid in poverty reduction in the region.
UK-DFID support will be through a series of contributions to the GRMF, and the initial contribution is 10 million pounds sterling. The contribution will enable the third application round of the GRMF, which was launched on 30th October 2014 in Arusha, Tanzania. The financial support will also enable future application rounds of the GRMF to proceed.
East Africa Targets Cross-Border Debt Sales to Fund New Railways
Nov 13, 2014
The East African Community plans to allow bond sales across four markets in the bloc as investors look to fund projects such as railways that will link up the region.
The framework will allow for the sale of “multi-jurisdictional, multi-currency” debt from within or outside the four-country group, Paul Muthaura, acting chief executive officer of the Capital Markets Authority in Kenya, the region’s biggest economy, said at a conference in Cape Town today.
The group that also includes Uganda, Tanzania and Rwanda is set to expand 6 percent this year, faster than the sub-Saharan African average of 5.1 percent, according to the International Monetary Fund, as governments in the region invest in roads and energy projects. Kenya sold infrastructure bonds last month for the first time in a year.
A railway linking Mombasa, Kenya with Kigali and Kampala is project that may be funded with debt, Muthaura said. Another is the Lamu Port and New Transport Corridor Development to Southern Sudan and Ethiopia project, which will include an oil pipeline and refinery, he said.
‘‘As we see many domestic issuers in any one of the EAC markets moving into the others, they want to be able to capital raise relevant to their pipeline of projects in different countries,’’ he said. One ‘‘regional entity’’ has been approved for a bond sale, Muthaura said, without giving details.
‘‘They’re just looking at the markets to find the right timing for the issuance,’’ he said. ‘‘There are ongoing engagements with other potential issuers. We’re hoping to see that once an actual issuance hits the market, we hope it will have a very catalytic effect.’’
Ambassador Sinknesh Ejigu presents credentials to the president of Brazil
The newly appointed Ambassador of Ethiopia to Brazil, Chile and Argentina, Ambassdor Sinknesh Ejigu presented her credentials to the president of Federal Republic of Brazil, Dilma Roussef on Monday , November 10, 2014.
On the occasion of presenting her credential, Ambassdor Sinknesh convey the good wishes of Ethiopian President Dr. Mulatu Teshome for the well being of the president of Federal Republic of Brazil and prosperity for its people.
Ambassador Sinknesh also congratulated president Dilma for re –election as the president of Brazil and emphasized her appointment will bolster the existing bilateral relations between the two countries.
Ambassador Sinknesh appreciated Brazil’s pro-poor policies and its dramatic economic growth and development, which has positive inspiration in sharing the best practices of Brazil to eradicate poverty for many developing countries like Ethiopia.
President Dilma on her part admired Ethiopia’s role in promoting peace and security within the horn Africa and African continent using IGAD and AU.
During their conversation both parts agreed to work hard in the areas such as technology transfer, investment, tourism and culture further strengthen the relationship between the two countries.
ABB to power new railway line in Africa
Traction substations to ensure reliable power supply to new rail corridor connecting northern Ethiopia to the Addis Ababa-Djibouti railway line
Zurich, Switzerland, November 12, 2014 – ABB has won orders worth around $16 million to supply traction substations and auxiliary power supply for a new rail corridor in Ethiopia. The Awash-Kombolcha-Weldia line is part of a five-year growth and transformation plan being implemented by the Ethiopian Government to provide efficient mobility, facilitate trade and strengthen the economy. The order was booked in the third quarter.
The contract was awarded by Yapı Merkezi Construction and Industry Inc., a leading Turkish transportation infrastructure company. The project is scheduled for completion in 2017.
ABB will design and supply engineered equipment packages for five 230/25 kilovolt (kV) traction substations, eight section posts and about 30 auxiliary substations. Key products to be supplied include a range of high and medium-voltage switchgear, traction transformers rated at 25 megavolt-ampere (MVA), power factor correction (PFC) transformers, FSK II+ railway circuit breakers and auxiliary power supply equipment.
The 400-kilometer Awash-Kombolcha-Weldia railway line will connect the northern and eastern traffic corridors of Ethiopia via Kombolcha and Weldia/Hara Gebeya in the north. The line will also connect to the line linking Addis Ababa, the Ethiopian capital, to the port of Djibouti. This will enhance passenger travel and trade, reducing travel time to the port by 50 percent.
“These substations will enable the efficient supply of electricity to power the network’s expansion and ensure reliable operation and performance of this rail network,” said Claudio Facchin, head of ABB’s Power Systems division. “ABB has a wide range of technologies and a strong track record of providing innovative solutions for the rail sector, serving communities all over the world. This order also shows our increased focus on expanding in Africa.”
ABB has a range of power and automation products and solutions for the rail industry and a vast global installed base. Increasing concern for the environment, rapid urbanization, the need to move more people and freight faster, and volatile fuel prices make rail a strategic focus sector for the company.
ABB (www.abb.com) is a leader in power and automation technologies that enable utility, industry, and transport and infrastructure customers to improve their performance while lowering environmental impact. The ABB Group of companies operates in roughly 100 countries and employs about 145,000 people.
President urges Ethiopian professionals to adapt technology, effect knowledge transfer
President Mulatu Teshome said Ethiopia will work hard to get out of foreign dependency by gradually making transformation in technology and knowledge.
The president made the statement while visiting the Adama I and II wind power generating projects along with China’s Ambassador to Ethiopia Xie Xiaoyan and other officials.
He noted on the occasion that the main objective of the visit is to witness the ongoing constructions that ensure that the country can build green economic development and nation building by utilizing renewable resources.
According to Mulatu, Ethiopia has the potential to generate 1.3 million megawatt electric power from wind. Even if the country currently produces 100,000 megawatt from the sector, this will hugely speed up the growth of the country, he added.
Commenting on the relatively short height of the stand of the windmills in Ethiopia, the president pointed out that it was due to the difficulty in transporting them.
Attention should therefore be given to the problem and Ethiopian professionals have to produce those locally, he stressed.
Ethiopian engineers should not only design and produce similar components but adapt those to produce better items, Mulatu stated.
As it was possible to substitute big construction equipment that require huge foreign currency for the construction of the GERD, the production of wind power generating materials should also be given due attention, President Mulatu said.
China’s Ambassador to Ethiopia Xie Xiaoyan on the occasion said the longstanding Ethio-China relationship has been consolidated in all spheres.
Wind power generating projects play a vital role in supporting the effort in building green economy by using renewable power source, he added.
Head of Adama II Wind Power Electric Generating Project, Solomon Tadesse on his part said 83.6 percent of the project is finalized. The project, which is expected to generate 153 megawatt, costs 345 million USD.
The Chinese government covers 85 percent of the cost and the rest is covered by the Government of Ethiopia, it was indicated.
According to ENA, the project is expected to get finalized by the end of the current Ethiopian budget year.
Sub-Saharan Africa will overtake Europe as second-largest mobile internet market by 2020
A new forecast nominates 2020 as the year that half the world’s population is connected to mobile internet, and the forecaster, GSMA Intelligence, says Sub-Saharan Africa will lead the boom.
The number of mobile internet users globally is set to reach 3.8 billion by 2020, up from 2.2 billion total users in 2013.
Sub-Saharan Africa is set to lead the boom, having been the world’s fastest-growing mobile region for the last five years. 49% of the population in this region will be accessing the internet via mobile by 2020, overtaking Europe to become the world’s second-largest mobile market after Asia Pacific.
As 3G and 4G connections gain availability in developing regions such as Sub-Saharan Africa, the number of 2G mobile internet subscribers is set to shrink from 900 million to 800 million, while the number of mobile broadband users doubles.
Communications technology provider Ericsson expects mobile data traffic in Sub-Saharan Africa to grow 20-fold between 2013 and 2019, twice the expected global growth rate over the same period (from 37,500 terabytes a month in 2013 to 764,000 terabytes a month by 2019).
The six largest markets of the total 46 countries together account for over half the region’s unique mobile subscriber base. In order of size, these are: Nigeria, South Africa, Ethiopia, Kenya, Democratic Republic of Congo and Tanzania.
The GSMA’s ‘Digital Inclusion’ report states the following four challenges as being critical for mobile operators, governments and NGOs to deal with this mobile internet boom:
- Extension of network coverage into remote areas,
- lowering the cost of mobile ownership by not imposing heavy fees,
- improving illiteracy and a lack of internet awareness, and
- ensuring availability on a variety of devices in many languages.
The GSMA has released a Code of Conduct for Mobile Money Providers, outlining how businesses can provide safe and responsible digital financial services. Mobile network operators to have endorsed the code represent money deployments in 51 countries and include Airtel, Avea, Axiata, Etisalat, Millicom, MTN, Ooredoo, Orange, Telenor, Vodafone and Zain.
GSMA director general Anne Bouverot described mobile as “the gateway to the internet” for billions of people across the world who are currently unable to get online.
“Mobile technology is already playing an invaluable role in the social, economic and environmental development of the developing world; the mobile internet has the potential to trigger a new wave of growth and innovation if we can remove the barriers to digital inclusion.”
Israel Chemicals posts 8% rise in Q3 sales
The company has earmarked $435 million for investment in its Catalonia potash works.
Ethiopia earns close to $1 Billion US from pulses, oilseeds
The President of Federal Democratic Republic of Ethiopia Dr. Mulatu Teshome said Ethiopia has earned close to 1 billion USD from pulses, oilseeds and spices in the 2013/4 fiscal year.
Addressing the participants of t the 4th International Conference on Pulses, Oilseeds and Species, the president said the sector contributed 920 million USD to the export earnings of the country with a share of over 28 per cent.
The growth trajectory that we have had observed in the last four years is very encouraging, notwithstanding that the country earns from the sector is still below what it would have potentially endowed, he added.
The president also said that Ethiopia has endowed with untapped and immense investment opportunities in the areas of agriculture with favorable climate which is suitable for the production of Pulses, Oilseeds and Spices.
He urged stakeholders to participate in the sector and do their level best in contributing to Ethiopia’s strong economic performance through value addition of Ethiopian pulses, oilseeds and spices.
He also called up on investors to invest in Ethiopia where there is availability of vast, virgin, fertile and cultivable land, abundance of trained and easily trainable labor force.
Ethiopia’s trade performance has improved since the commencement of GTP I in the 2010/20111 fiscal year. However, our exports remained dominated by agricultural primary commodities, and the observed performance was substantiated by increasing the volume of export, and not through value addition, the president underscored.
According to the president, the government is fully committed not only to boost the sector’s potential but also its operational capacity by making it more vibrant to meet the needs of international markets.
The conference is organized under the theme of “Global Partnership for Sustainable Market Growth” with the objective of boosting the sector and make benefit more the economy and all the stake holders in the value chain.
Ministers, ambassadors, stake holders and Ethiopian business partners were in attendance in this a two days conference.
Doing Business in most parts of the world becoming easy
Ethiopia is placed 132 out of 189 countries for ease of doing business, according to a new report.
Singapore and New Zealand took the top spots, while Libya and Eritrea are labeled as the worst in the Doing Business Report, published by the World Bank and International Finance Corporation.
Joining Singapore and New Zealand on the list of the top 10 economies with the most business-friendly regulatory environments are; Hong Kong, China; Denmark; the Republic of Korea; Norway; the United States; the United Kingdom; Finland; and Australia.
The report finds that 85 percent of economies in Europe and Central Asia implemented at least one regulatory reform aimed at making it easier for local entrepreneurs to do business in 2013/14, a larger percentage than in any other region.
“Since 2004 the Doing Business report has captured more than 2,400 regulatory reforms making it easier to do business. In the year from June 1, 2013, to June 1, 2014, 123 economies implemented at least one reform in the areas measured by Doing Business” the report reads.
Doing Business 2015: Going Beyond Efficiency shows that in the past year, economies in Europe and Central Asia further improved the regulatory environment for local entrepreneurs, adding to the gains recorded in the past decade. For example, 10 years ago, starting a new business took a Macedonian entrepreneur 48 days. Today, the process can be completed in 2 days.
The report further said that 21 economies, including 6 in Sub-Saharan Africa and 6 in the OECD high-income group, implemented 3 or more reforms reducing burdensome bureaucracy or improving legal and regulatory frameworks. Globally, more than 80 percent of the economies covered by Doing Business had an improvement in their distance to frontier score, “it is now easier to do business in most parts of the world” according to the report.
“Sub-Saharan Africa, the region with the largest number of economies, accounted for the largest number of regulatory reforms in 2013/14, with 39 reducing the complexity and cost of regulatory processes and 36 strengthening legal institutions.
Sub-Saharan Africa had the second largest share of economies implementing at least one reform and the second largest average improvement in distance to frontier scores. Latin America and the Caribbean and South Asia remain the 2 regions with the smallest share of economies implementing regulatory reforms as captured by Doing Business.
The report also stated that online access to credit reporting systems is growing in the developing world. “Ethiopia’s central bank established a credit information center to allow banks to submit data and inquiries electronically. A pilot program was launched in August 2011 with 3 commercial banks, and by April 2012 the online system was fully implemented.”
“Today 17 Ethiopian banks are registered as data users and provide monthly updates. The objective for the online system is to preserve and distribute 5 years of historical data on the repayment status of all loans.”
Among the 21 economies with the most reforms making it easier to do business in 2013/14, 10 stand out as having improved the most in performance on the Doing Business indicators: Tajikistan, Benin, Togo, Cote d’Ivoire, Senegal, Trinidad and Tobago, the Democratic Republic of Congo, Azerbaijan, Ireland and the United Arab Emirates.
“Together, these 10 top improvers implemented 40 regulatory reforms making it easier to do business. Among these 10, only Cote d’Ivoire featured among the 10 top improvers in last year’s report.”
However the report states that being recognized as top improvers does not mean that these economies have exemplary business regulations; instead, it shows that these economies have placed serious efforts in regulatory reform in the past year and made the biggest advances toward the frontier in regulatory practice. “Many of the 10 top improvers still face many challenges on their way to international best practices in business regulation, including high bureaucratic obstacles, political instability and weak financial institutions” the report reads.
This year’s Doing Business report launches a 2-year process of introducing important improvements in 8 of the 10 sets of Doing Business indicators. These improvements provide a new conceptual framework in which the emphasis on the efficiency of regulation is complemented by an increased emphasis on its quality. In the area of dealing with construction permits, for example, Doing Business will measure the quality of building regulations and the qualifications of the people reviewing the building plans in addition to the efficiency of the process for completing all the formalities to build a warehouse.
Doing Business 2015 is the 12th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it. The report presents quantitative indicators on business regulations and the protection of property rights that can be compared across 189 economies. Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Strategic Document Prepared to Make Ethiopia Major Fruits, Vegetables Exporting Country
A strategic document that envisages making Ethiopia a major fruits and vegetables exporting country in the coming ten years by consolidating irrigation development is readied, according to Ministry of Agriculture.
Small Farmers Horticulture Development Head, Solomon Dagne, said studies have proved that Ethiopia can attain impressive achievements in irrigation development by utilizing its suitable farm land, reliable water resources and productive human resource.
According to him, the Ministry of Agriculture has prepared a strategic document that enables the country to become fruits and vegetables exporting nation by using its potential resources in irrigation development within ten years.
The head, who noted that the demand for Ethiopian fruits and vegetables has been growing at the international market, added that its annual income from the products has jumped from ten million to 30 million USD.
Regional states that require special support would be made to extensively engage in irrigation development and to supply their products directly to foreign markets and local industries in the coming years, according to Solomon.
Ethiopia has 4.2 million hectares of irrigable land, out of which only half is utilized to produce annually more than 203 million quintal produces in the sector, he indicated.
Farmers turn to fruit farming for juicy returns
Written by Harrison Agundo for Farmbizafrica
As the market for traditional crops become saturated and diseases ravage traditionally lucrative crops like maize and wheat, farmers keen on maximising their income are turning to fruit farming which has seen them more than triple yields and incomes.
From yellow and purple passion fruits, Red Royale pawpaws, bass avocados and apples, vanguard farmers have found gold mines in these fruits with demand coming from both local and international markets.
In Kenya for example a health conscious middle class with an affinity for spending are driving the demand for fruit farming as are soft drink companies who prefer to buy from farmers rather than import the highly priced fruit pulp.
Among the fruits though, passion fruits- both the yellow and purple varieties are a notch higher in the popularity. “Passion fruits are lucrative and easy to make money from. I have been able to expand my orchard relying mainly from the passion fruits proceeds,” said Charles Mureithi, a high school teacher and a fruit farmer in Dimcom village in Sipili, Laikipia district.
Charles Mureithi a farmer in Laikipia is among pioneer farmers in fruit farming with an orchard that has mangoes, avocados, apples, oranges, loquat and cherimoya. The passion fruits however stands out. The over 1200 vines are his cash cow.
“Business is good as far as passion fruits are concerned. Infact i am increasing acreage under cultivation of my passion fruit and have already secured four more acres. A quarter of my household spend is catered for by proceeds from passion fruits sales,” said Mureithi who also teaches Swahili at Lanai Day Secondary School.
When he was testing the project three years ago with only 150 passion trees, he could earn Sh80,000 with a kilo fetching Sh30.
And with the lucrative nature of passion fruit business, a group of seven local farmers have moved and expanded their orchards to meet the rising demand for the fruits from neighbouring towns.
“I have been able to educate three students through high school using passion fruits returns. I can comfortably advise that one may well retire and rely on fruits farming in old age”, said a middle aged Joseph Gatama, another of the local farmers. A bishop with a local church, Gatama has 250 passion trees on his three-acre farm. “Every two weeks, we are able to sell Sh2,300 worth of passion fruits and I expected to earn more as the newly established orchard comes to maturation,” he said.
He remembers a year he was able to make Sh60, 000- a pricey sum for rural farmers- from sale of passion fruits. Locally the passion fruits have two picking seasons the August November and the April-May-June season. The November season has bigger and more fruit that the May one, according to local farmers. However, with the dry conditions that punctuate the semi-arid Laikipia district, the local fruit farmers have to invest heavily in water systems to cushion their valuable fruits.
“We have to construct underground water tanks to store surface runoff for use as irrigation water. A full tank, of five metres wide by five metres depth is able to sustain the orchard till the rainy season,” added Mureithi, who has since constructed such a tank of his flat piece of land. On his part, Gatama-with a similar storage facility on his farm- has purchased a water pump and invested in pipes to ferry water to the plants. “An initial investment of less than Sh100,000 is easily recouped once the harvesting season arrives. We are unable to meet demand for fruit as buyers arrive on our farms seeking fresh ripe fruits,” said Mureithi.
High value agriculture places smallholder farmers in big boys’ league
Jacob Muhia stands amid the splendour of his lush small farm, in what he attributes to heeding to the advice of local agricultural officers that the future is in higher value intensive agriculture.
Muhia’s quarter acre of tillable land is awash in high value crops like tomatoes, peppers, cabbage and bananas. Barely a foot of soil is unplanted. The plots are fertilized, chemically treated and regularly watered. The produce, in this time of high commodity prices, fetches close to Sh350, 000 on the market over the year, an enormous return for the land available. “We can make money on this,” Muhia said. “Input prices are high but for now, we expect to make money.”
For Mutuku, this lush jam-packed small-scale farm plot is exactly what he hopes for the future. Mutuku has been encouraging smaller farmers to quit growing low-return crops like corn and move into higher value ones that will pay enough to give the farmer money to buy other food and essential commodities and services. One of his campaigns is to convince dairy farmers to support local dairy processing enterprises that will pay five times as much for their milk as the open local market will pay.
“I am encouraging small holder farmers to grow crops that will insulate them from food insecurity, crops like sweet potatoes, cassava and beans that are drought resistant and would provide a good diet,” he said. “There is no need for food insecurity here. Beyond that, growing high value crops and value-adding are strategies that make these small holdings viable.”
It is a vision in sharp contrast to the one presented by market development specialists who insist small-scale farms in Kenya and Africa are too inefficient to produce required food and must be consolidated to create bigger units and economies of scale. In Rome in June last year, delegates to the United Nations world food summit affirmed that small-scale agriculture needs better and affordable access to seeds, fertilizer, chemicals and other inputs to become more productive and intensive.
The Kenya National Federation of Agricultural Producers agreed. It represents 1.4 million farm households, most with less than two acres of productive land. “The cost of inputs is too high and the only way to deal with that is to have subsidies on inputs to help farmers plant,” said federation general manager Lucy Mwaugi. “Otherwise, small-scale farmers cannot make money.”
In the countryside east of Nairobi, not far from Muhia’s successful intense farming space, John Waithaka’s small farm offers proof of that reality for most of Kenya’s more than one million small farms. His half acre in Kiamwangi has corn, bananas and beans and two dairy cows.
The crops help feed the family. The cows and their combined 20 kilograms of milk per day, worth about Sh250, produce what little cash the family has to buy other food and amenities. “You cannot have that little income, depend on the production for family food and survive,” said Frances Kiarie Njoroge, who led a tour of the farm and is vice-chair of a group of community farmers looking for answers.
“We need better solutions, adding value.” At a community meeting of the local farmers, Njoroge said input costs have risen so high and food prices have soared so much that small farmers cannot afford inputs and cannot afford the high cost of foods needed to supplement their family diets. All in the room agreed.
While a few small farmers embrace intensive money making strategies, the vast majority of Kenya’s army of small producers remain caught in the vicious cycle of high food prices, limited production and high input costs that make their lives marginal. “The current situation of high food prices and input costs are a loss for farmers,” Njoroge said at the community meeting. “We are not benefiting.”