09 December 2014 Business News (UPDATED)

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Intra-COMESA Trade now at US $20.9 billion

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Intra-regional trade in COMESA has steadily risen from US $3 billion to US $20.9 billion since the establishment of a Free Trade Area in 2000.

This however, excludes the informal trade across the borders that currently goes largely unrecorded but which has been estimated at over 30% of formal trade.

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According to the 2013 status report presented to the COMESA Intergovernmental Committee (IC) in Lusaka, Zambia (4-6 December 2014) intra-COMESA trade is still low partly due to the similar products that compete for the same market within the Member States and the existence of Non- Tariff Barriers (NTBs).. For example in 2013, intra-COMESA trade was recorded at 7% as compared to other regions such as the ASEAN that have recorded 25% intra-regional trade.

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In his address while opening the IC meeting, Zambia Minister for Commerce and Industry Hon. Bob Sichinga said that focus should now be place on addressing the bottlenecks to intra-regional trade, such as NTBs, supply side constraints, border measures that affect and impact on volumes and values of intra-trade.

“It is incumbent upon all the stakeholders to address these bottlenecks to sustain the momentum thus far achieved, deepen COMESA’s integration agenda beyond the FTA, and attain a fully functional common market by 2018,” the Minister told the IC meeting which is comprised of Permanent Secretaries from Member States.

He appreciated that COMESA’s had developed draft NTB Regulations that would enable the region to address barriers related to intra-regional trade under a legal framework such as the arbitrary imposition of NTBs.

“The Annex on NTBs that also includes enforceability through the invocation of Article 171 of the Treaty is before this Committee, and the expectation is that pursuant to past Council decisions, you will now recommend the same for adoption by the Council of Ministers to facilitate its implementation,” the Minister urged the PSs.

COMESA has focused on industrialisation to address part of the supply side constraints and has subsequently put in place the Clusters Programme initiatives in the cassava, textiles and leather sectors. These clusters aim at establishing linkages between the SMEs to the particular cluster value chain; for instance, the cassava cluster links the small scale farmer to the market, through the making of industrial starch.

“Such initiatives go a long way in addressing the supply side constraints, but more importantly, increased value addition, leading to diversification of intra-regional exports,” the Minister said.

http://www.comesa.int/index.php?option=com_content&view=article&id=1401:intra-comesa-trade-now-at-us-209-billion&catid=5:latest-news&Itemid=41

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UNCTAD and Luxembourg join forces to strengthen competition policy and consumer protection in Ethiopia

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09 December 2014
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The UNCTAD Secretary-General and Luxembourg’s Ambassador signed an agreement to reinforce the capacities of Ethiopian enforcement authority on 5 December 2014 in Geneva.

Ambassador Hoscheit and Dr. Mukhisa Kituyi
H.E. Mr Jean-Marc Hoscheit and Dr. Mukhisa Kituyi

In response to a technical assistance request from Ethiopia and in consultation with its government, UNCTAD developed a project proposal based on the needs of the Ethiopian Trade Competition and Consumer Protection Authority.

The Grand Duchy of Luxembourg provided financial support for the three-year project, set out in an agreement signed in Geneva on 5 December between UNCTAD Secretary-General Mukhisa Kituyi and Ambassador and Permanent Representative of Luxembourg to United Nations at Geneva Jean-Marc Hoscheit.

The project aims to reinforce the capacities of the authority in implementing competition and consumer protection laws.

During the signing ceremony, Dr. Kituyi expressed his appreciation to Luxembourg in supporting this project, and said that UNCTAD looked forward to its work in Ethiopia.

Mr. Hoscheit said that his country was happy to support the project in partnership with UNCTAD, an organization with which Luxembourg has had a long-term relationship.

The project, which starts in December 2014, will cover four broad areas; the policy and legal framework, the institutional framework, enforcement capacity building, and advocacy for competition and consumer protection.

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=896

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A Paradigm Shift: Entrepreneurship Taking Precedence Over Public Jobs In Ethiopia

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UNDP's 2

VENTURES AFRICA – In Ethiopia, a country of 90 million the main and almost the only source of employment was the government. Previously many young graduates dreamed of joining a government offices and becoming a public servant. But these days this attitude has been replaced by the idea of becoming an entrepreneur or self-employed.

Getahun Ekyawu is one of these new thinkers. He graduated six years ago from Hawassa University in Hawassa City, 268km south of Addis Ababa. He began thinking about starting his own business even when he was student at the university. After graduating, he started his first business, establishing a mushroom farm with an initial capital of $450.This business has blossomed into a $10,000 entity and employs over 15 people. Gethaun’s learnt about entrepreneurship from a course he took at the university. However, there are now a number of private training institutes for young or prospective entrepreneurs. These institutes offer short and long term courses ranging from three to nine months. The average cost of such trainings is between $45 and $110.

Dr. Werotaw Bezabeh owns a training centre. He established Genius Entrepreneurs Training Center 10 years ago with an initial capitalization of $2250. It currently generates more than $25,000 in revenue annually. “We have trained students for 413 rounds and our plan is to train one million entrepreneurs,” said Werotaw. Identifying business opportunities, how to prepare business plans and business ethics are some of the courses offered at Genius.

http://www.ventures-africa.com/2014/12/a-paradigm-shift-entrepreneurship-taking-precedence-over-public-jobs-in-ethiopia/

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Ethiopia’s $1bn eurobond oversubscribed on debut

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By Tinishu Solomon

Ethiopia has declared that its debut on the Eurobond market was a success after its $1 billion bond was oversubscribed by 260 percent last Thursday.

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The East African country debuted with a 10-year- $1 billion Eurobond at a coupon rate of 6.625 percent.

According to the Finance and Economic Development ministry, the success of the bond “affirms widespread positive receptivity to Ethiopia’s track record of significant economic growth, prudent fiscal management and targeted reform agenda”.

Investors remained engaged throughout the process

“The transaction successfully crystallised the positive momentum generated from Ethiopia’s international roadshow, during which over 80 institutional investors were visited in the United States and Europe,” the ministry added in a statement.

Ethiopia attracted high quality investor interest despite a challenging environment in the market.

“Investors remained engaged throughout the process and reflected sizeable appetite to participate in the deal,” the Finance ministry said.

Initial price projections for the bond were put at a yield level of around 6.750. The government eventually settled for 6.625 percent for the $1 billion bond.

Ethiopia focused on a 10-year maturity rate to create a strong benchmark, which matched its preference for duration given its infrastructure-driven use of proceeds.

The transaction was distributed primarily to United State investors who accounted for 50 percent of the subscribers, followed by those in the United King (35 percent), Europe (14 percent) and others (1percent).

Fund managers dominated allocations (receiving 96 percent), underscoring the high calibre of demand.

A company from France acted as a financial advisor to the Finance and Economic Development ministry.

Deutsche Bank and J.P. Morgan acted as joint lead managers for the transaction.

Ethiopia has said the funds would be used to finance new infrastructure for the Horn of Africa nation, which battled against famine three decades ago and now boasts some of the fastest economic growth rates in Africa.

Ethiopia’s success follows that of Kenya whose $2 billion Eurobond in June was heavily oversubscribed.

http://www.theafricareport.com/East-Horn-Africa/ethiopias-1bn-eurobond-oversubscribed-on-debut.html

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A new frontier for yield

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With developed market bonds yielding record low returns, fund managers are venturing into frontier and emerging markets – notably in Africa, the fashionable destination for intrepid investors.

Ethiopia, for instance, is seeking to raise up to $1bn (£630m) with a 10-year bond, following a recent roadshow to European and US investors. The aim is to build roads, railways and hydroelectric dams.

Rated B1 by Standard & Poor’s and B by Moody’s and Fitch Ratings, Ethiopian sovereign debt is well into junk bond territory. Yet this has not deterred pension funds, insurers and sovereign wealth funds from subscribing to the issue.

The bonds are expected to generate a yield of approximately 6-7 per cent a year, compared to consensus forecasts for emerging market debt of 4 per cent (down from 9 per cent), according to Amin Rajan, chief executive of Create Research.

Meanwhile, former Barclays chief Bob Diamond is targeting Africa’s banking sector through his Atlas Mara vehicle, and private equity group KKR recently took a $200m stake in a Kenyan flower farm.

Retail fund managers are also eyeing esoteric plays. One is Mary-Therese Barton, an emerging market debt manager at Pictet Asset Management, who plans to take advantage of higher-yielding markets such as Lebanon and Vietnam. Unlike the debts of China, Malaysia and Mexico – which move with US Treasuries due to their dollar peg – these countries’ debts move in relation to domestic issues, she says.

Martin Harvey, deputy manager on the Threadneedle Global Opportunities Bond fund, says he has increased exposure to “quality markets” such as Mexico and Columbia. At the same time Zsolt Papp, who works on the emerging market debt team at JPMorgan Asset Management, says it has taken tactical trading positions in Brazilian debt after the price fell and the yield rose correspondingly.

The team is also reviewing the Ethiopian bond issue. “Like with any emerging market debt investment, if it carries a strong growth story and good valuations, then it is something we would consider gaining exposure to,” Mr Papp says.

Anthony Gillham, who co-manages multi-asset funds at Old Mutual Global Investors, thinks emerging market government bonds issued in local currencies are currently among the best value assets across the entire fixed income spectrum.

“Yields are above 6 per cent, which compares very favourably with developed market government bonds, particularly when you risk-adjust these yields,” he says.

“A 10-year gilt offers just 25 basis points in yield per year of duration, whereas Brazilian 10-year government bonds offer approximately 2 per cent yield per year of duration.”

He thinks many of the factors that have held back emerging market currencies since 2013 are abating, which will boost bonds denominated in those currencies. Indonesia has stabilised its balance sheet in terms of imports versus exports, he says, while weaker commodity prices have been a tailwind for nations such as Turkey.

“Given such reasonable valuations in the more mainstream parts of the asset class at the moment, I question whether it is necessary to move into frontier markets such as Ethiopia, particularly at a time when market makers are structurally pulling back from providing secondary market liquidity,” adds Mr Gillham.

Mr Papp argues esoteric corporate bonds are not necessarily less safe than esoteric government bonds, since their issuers recognise they could be shunned by the capital markets if they fail to meet their debt service obligations.

This pressure is perhaps more potent where companies are concerned, he says, because governments can rely on financial support from supranational lenders such as the International Monetary Fund.

He adds that investors should differentiate between fundamentally sound sovereign issuers and those facing a deteriorating or vulnerable macro backdrop.

“One of the main factors is the ability to absorb potential contagion from global financial market events, such as higher bond or foreign exchange market volatilities or a hike in US Treasury rates,” he says.

Mr Papp favours countries with strong solvency and foreign currency reserves, low debt ratios and no problems refinancing their budget or current account deficits.

“As commodity and energy prices look likely to stay under pressure, we believe commodity importers are better positioned than exporters, including central-eastern European issuers such as Hungary or Slovenia, but also South Africa, India and Panama,” he predicts.

Mr Papp says average emerging market debt yield and spread levels look attractive, with the company’s index of emerging market government bonds trading at approximately 350bps, implying an average yield of roughly 5.7 per cent.

Even with the recent rises in Russian, Brazilian and Venezuelan yields, he thinks emerging market debt offers attractive relative value, but cautions that risk-averse investors should maintain a broadly diversified portfolio.

This does not necessarily mean developed market debt should be substituted for emerging market debt, he says, but that it might suffice to add some emerging market debt to an existing portfolio to improve its Sharpe ratio.

“If investors decide to replace developed with emerging market debt, we would suggest maintaining a similar rating and duration distribution in the new portfolio, in order not to radically change underlying portfolio risks and interest rate sensitivities,” Mr Papp says.

http://www.ftadviser.com/2014/12/09/investments/a-new-frontier-for-yield-avjD9kyK3PXByqLLoT8nON/article.html

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Unlocking East African businesses’ access to Indian markets

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by ITC News

East African businesses are set to trade more with India by learning to take advantage of the country’s duty-free market access scheme, facilitated by the Supporting India’s Trade Preferences for Africa (SITA) project of the International Trade Centre (ITC).

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Following an amendment two years ago to India’s Duty-Free Trade Preference Scheme, least developed countries will receive preferential zero-duty access on 98% of Indian tariff lines. This means goods exported from least developed countries should have a competitive edge when entering the Indian market.

However, the five SITA countries – Ethiopia, Rwanda, Uganda, the United Republic of Tanzania, and Kenya, the only non-least developed country – have not seen trade with India increase to the expected levels since the scheme went into full effect in October 2012.

‘For beneficiary countries to reap the most benefits from the scheme, they just have to send letters of intent and meet the rules of origin requirement as specified in the scheme,’ said Pranav Kumar, Head of International Policy and Trade, Confederation of Indian Industry. ‘Much needs to be done to raise awareness of the scheme among members of the Indian private sector, as they have yet to fully understand how to source products from less familiar trading partners, and also invest in least developed countries to export products to India.’
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Representatives of business, government and international organizations gather at SITA’s second Partnership Platform meeting in Kigali, Rwanda, to discuss priority sectors for development in East Africa

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Tackling trade obstacles

To promote such awareness and understanding, African and Indian entrepreneurs, policymakers and members of international organizations will discuss ways to make better use of the scheme at SITA’s third Partnership Platform meeting in Addis Ababa, Ethiopia, on 4-5 December, following previous meetings in Nairobi, Kenya, and Kigali, Rwanda.

‘Further investments from India would certainly help Tanzania make better use of the scheme,’ said Adam Zuku, Director of Industry Development, Tanzanian Chamber of Commerce, Industry and Agriculture. ‘It would help address the country’s limited capacity to meet export demands, and Indian investors would be better placed to source the right products and access the right buyers.’

‘Building productive capacities, market linkages and enhancing investment attractiveness in the selected sectors will be a key way to ensure that SITA delivers impact and provides a sustainable template for similar South-South trade and investment projects,’ said Govind Venuprasad, SITA Coordinator. ‘It will also allow companies working in these sectors to become export ready to supply other markets.’

At the meeting, members of the East African public and private sectors will learn about the Duty-Free Trade Preference Scheme’s compliance and market requirements, particularly in sectors with high untapped export potential. Representatives of the Indian private sector will learn to make better use of the scheme to source products from Africa. The discussions will also focus on addressing procedural and regulatory obstacles to trade, in part through governments creating a more business-friendly environment through effective policies.

The stakeholders, representing business, government and civil society, will work together to finalize SITA’s intervention plan, focusing on specific activities in the selected sectors in each of the five East African countries. The sectors, selected through a series of consultative meetings, reflect demands in international markets as well as the capacity of African suppliers, and are selected in line with national and regional trade development goals.

The goal of SITA (2014-2020) is to enable East African enterprises to enhance their competitiveness to produce high-quality goods that match overseas market requirements. Indian businesses will partner by providing technology, skills know-how and investment to build capacities in SITA African countries for value-added production in sectors such as cotton, coffee, pulses and beans, oilseeds, and information and communications technology. SITA is funded by the United Kingdom of Great Britain and Northern Ireland’s Department for International Development.

http://www.intracen.org/news/Unlocking-East-African-businesses-access-to-Indian-markets/ 

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Non-Tariff Barriers in Focus at COMESA Ministers Meeting

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COMESA Council of Ministers held their 33rd meeting in Lusaka yesterday with a call to address the Non-Tariff barriers inhibiting intra-COMESA Trade.

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The most frequently reported NTBs, reported through the online system are customs and administrative procedures, transport, clearing and forwarding issues. Currently intra COMESA trade stands at only 7% and has slowly been rising since the establishment of a Free Trade Area in 2000.

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Acting President of Zambia Dr Guy Scott who opened the Ministers meeting cited the Sanitary and Phytosanitary measures imposed by regional states on agriculture and tourism as major bottlenecks to trade.

“I have received complaints from the industry all the time on the non-tariff barriers that they can’t move their products because of Sanitary and Phytosanitary requirements by importing countries”, Dr Scott said.

He added; “It was disappointing to note that some countries had continued to request for the certification of Yellow Fever despite the low prevalence levels of the disease in our countries. This has made the tourism industry to suffer because it restricts movement of people.”

Dr Scott cited Zambia as one of those faced with tremendous difficulties in exporting or importing their products as a result of the NTBs. He called on the secretariat to come up with harmonized rules and regulations that will allow member states to trade freely a scenario, which will result in, reduced cost of doing business.

In their last meeting held in February this year, the Council of Ministers had directed that the COMESA Secretariat undertake an audit and impact assessment of existing NTBS in order to come up with a schedule of their removal.

Article 49 of the COMESA Treaty provides for the elimination of NTBs and prohibits Member States from introducing new ones.

The report presented to the Ministers showed that NTBS have a negative impact on trade flows and were mainly responsible for the high cost of doing business in the region.

The meeting of the Council which was held under the theme of “Consolidating intra-COMESA trade through Micro, Small and Medium Enterprises development” ends Tuesday 9 December 2014. It is expected to come up with a raft of policy decision to be implemented by the Secretariat and Member States including those aimed at eliminating non-tariff barriers.

http://www.comesa.int/index.php?option=com_content&view=article&id=1402:non-tariff-barriers-in-focus-at-comesa-ministers-meeting&catid=5:latest-news&Itemid=41

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Ethiopia’s development throws in to regional economic integration: Djibouti emphasizes

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Djibouti, 9 December 2014 (WIC) –

The past ten years witness that the overall development in Ethiopia has brought a huge possibility to regional economic integration of the Horn of Africa, Djibouti Ports & Free Zone Authority said.

The Chairman of the Djibouti Ports & Free Zone Authority,  Aboubaker Omar Hadi,  told journalists the double economic growth in Ethiopia has played greater roles in economically integrating the countries in the region.

The chairman said that Djibouti is at a point where Africa, Europe and Asia are intersected that about 50 per cent of world shipping passes in part of the country’s maritime routs.

Due to the boosting infrastructure in Ethiopia, Djibouti is connected to Ethiopia by road and rail via which Djibouti will reach to the heart of Africa.

Ethiopia has now a huge and fast growing economy with a large market and population, 80 per cent of the goods handled by Port of Djibouti belongs to it, the chairman said.

Ethiopia has also been transporting 95 per cent of its oil through Port of Djibouti, the chairman said, adding that Djibouti has modernized and developed Horizon Djibouti Petroleum Terminal with storage capacity of 371, 000 cubic meters, he added.

Djibouti had made an additional 20 ha of dry yard area available so as to particularly accommodate the growing demand of Ethiopia, WIC learnt.

According to the chairman, the fast economic development and boosting of road infrastructure in Ethiopia has come with a bright future, which is mutual development and economic integration of countries in the region.

The sustainable development of Ethiopian market has paved ways for the expansion of port of Djibouti and the development of new ports like the Lac Assal and Tadjourah.

The newly under construction Export Terminal Project at Lake Assal with a coast of about 64 million USD is expected to load 6 million tones of salt per year extracted from the Assal lake, Engineers at the site pinpointed.

According to Djibouti Officials, the plan is to export salt extracted from Lake Assal to china and Japan and European countries.

The Tadjourah Port is also under construction with a cost of about 70 million USD and is designed for the export of potash. 25 percent of the construction has already completed, according to the site Engineer.

http://www.waltainfo.com/index.php/explore/16463-ethiopias-development-throws-in-to-regional-economic-integration-djibouti-emphasizes 

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Ethiopia’s Economy Expands By 9% Annually

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Ethiopia said on Friday it had completed raising $1 billion with its debut Eurobond with a term of 10 years and coupon of 6.625 per cent, adding that the offer had been oversubscribed.

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eurobond

Ethiopia is the latest African sovereign to receive a strong response on its first foray into the international debt markets. Investors have been eyeing Africa’s sturdy growth rates and Ethiopia’s economy is now expanding by about 9 per cent a year.

“Ethiopia attracted high quality investor interest despite a challenging market environment,” the Finance Ministry said in a statement, adding the 10-year maturity aimed to create a benchmark and proceeds would be invested in infrastructure.

Deutsche Bank and JP Morgan were the lead managers. The ministry said a French firm had acted as financial adviser but did not name the company.

Despite strong growth rates, analysts said Ethiopia had limited hard currency earnings, making its debt-servicing capacity weaker than some African states. It will also be more difficult for Ethiopia to build foreign reserves, which now cover little more than two months of imports, they said.

Kenya, Ethiopia’s southern neighbour which issued its debut Eurobond earlier this year, has reserves to cover around four months of imports

http://www.spyghana.com/ethiopias-economy-expands-by-9-annually/

See also  http://www.borkena.com/2014/12/09/ethiopia-inflation-rises-5-9-pct-year-november/

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Expansion of Ashegoda Wind Farm to help Ethiopia add 40MW of power

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Adama wind farm Ethiopia
Adama wind farm in Ethiopia

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Vergnet Group SA is conducting a feasibility study in Tirgay Regional State for expansion of the Ashegoda Wind Farm, a project that will help the country add to the grid a total of 40MW in Tirgay Regional State. Lodovic Dehondt, Ashegoda’s project director for the first phase has said the project is expected to end in 2015.

Ashegoda is considered to be one of the windiest places in Ethiopia and its one of the 11 sites that had been identified by experts with the potential to generate power from wind. Feasibility studies in the area commenced in October this year. The wind farm has capacity to produce 10 – 40 MW of electricity once it becomes operational.

German-based company Lahmeyer International GmbH has been hired by the government to provide project consultancy services and contract supervision and administration works. The funds for the project will be sourced from European banks and the French Development Agency (AFD).

The Minister of water, Irrigation and Energy (MoWIE) Alemayehu Tegenu, and the Minister of Communication and Information Technology, Debretsion Gebremichel have also entered into another agreement to expand power generation.

Ethiopia aims at generating 10,000Mw electric power from water, wind and geothermal sources through the Ashegoda wind farm and Adama wind farm during the conclusion of the government’s five-year growth plan.

Vergnet Group SA is based in French firm and deals with power generation from  wind,  solar  and  hybrid  sources. It has installed 900 wind turbines and operates in nearly 35  countries. Ethiopia has recently announced setting aside US$20bn for energy projects in a bid to construct 10-12 new power generating projects between 2015-2020.

http://constructionreviewonline.com/2014/12/05/expansion-ashegoda-wind-farm-help-ethiopia-add-40mw-power/

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GERD progressing well

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Addis Ababa, 9 December 2014 (WIC) –

Ethiopia’s mega hydroelectric power project being built on the Blue Nile River, known by the Great Ethiopian Renaissance Dam (GERD), is progressing well, Ethiopian officials have said.

The project in the East African country will generate 6000-MW of electric power upon completion.

The dam is being constructed in Benishangul Gumuz Regional State of Ethiopia, western part of the country, about 40 km east of the border with Sudan.
Engineer Simegnew Bekele, Project Manager of the GERD, told Xinhua on Saturday that the project is progressing well in all its activities.
All the activities on the project “are progressing healthily in order to realize the project.

“We are mobilizing all the people, nations and nationalities of Ethiopia, including the Ethiopian Diaspora,” said Simegnew.

Ethiopia is now harnessing its potential for renewable energy to fight against poverty and improve the lives and livelihoods of its people, said Simegnew.

“This is a green energy; and this supports other renewable energy; and Ethiopia is the power hub; we have tremendous natural resources.
“So, we are now exploiting; we are now harnessing this potential to improve lives and livelihoods of individuals,” he noted.

“This is our primary agenda, number one agenda for our country; this is a project which is equipping us to fight poverty, our common enemy.
“The government has devised a strategy to improve the lives and livelihoods of individuals, the citizens.

“And we have already started developing such kind of infrastructures that allow us to fight poverty,” he said.

He said, “On Nov. 28, 2014 we already booked world record with a daily average of 16,949 m3 roller compacted concrete.

“At the Great Ethiopian Renaissance Dam hydroelectric project on the Nov. 28, 2014 we have already placed 16,949 m3 of concrete, which is roller compacted concrete.”

Bereket Simon, Policy Study and Research Advisor Minister to the Prime Minister, told Xinhua on Sunday that the project is progressing on the schedule.
“It is amazing; right now it has reached around 40 per cent.

“We are right on the schedule in all fronts; the clearing of the bushes, the forest has been done well; construction, filling of the Dam have been done also according to plan,” Simon said.

Ethiopia celebrates Nations, Nationalities and Peoples Day on December 8 annually to commemorate the Day on which the country’s constitution was adopted about 20 years ago.

This year the Day is marked under the theme, “Constitutionally Embellished Ethiopianess for our Renaissance,” in Asosa, capital of Benishangul Gumuz Regional State. (Xinhua)

http://www.waltainfo.com/index.php/explore/16472-gerd-progressing-well

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Ceramics Factory to Launch in 10 Months

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Medtech is going to be the second ceramic manufacturer to join the sector

medtech

Medtech Ceramics Manufacturing Plc (MCM), a ceramic and sanitary ware manufacturer, is expecting the delivery of two ceramic manufacturing machines in three months, for the factory which could begin operation in 10 months. MCM was established jointly by Medtech Ethiopia Plc and Sheikh Faisal bin Al Qasimi, chairman of Julphar Gulf Pharmaceutical Industries, and Star Group Holdings.

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The Company, established six months ago with a capital of 450 million Br, has finished construction of its factory building on a 20ha land. It is situated in Butajira, Southern Regional State, 132Km south of Addis Abeba, according to Mohammed Nuri (MD) general manger of the ceramic factory.

Medtech Ethiopia, a local pharmaceutical products manufacturer, has a 30pc share. The two United Arab Emirates (UAE) based shareholders, Sheikh Faisal and Star have 30pc and 40pc shares in the ceramics and sanitary products company, respectively.

“The main aim of the factory is to substitute imported ceramics,’’ said Mohammed.

Ethiopia imported ceramic products worth four billion Birr during the 2012/13 fiscal year; imports mainly come from China and the United Kingdom (UK), according to ceramic importers in Merkato.

Medtech says its goal is to produce 30,000sqm of floor and wall tiles on a daily basis when production begins in September 2015. It could employ 500 people, some of them coming from India and Arab countries.

The company and the Ministry of Mines (MoM) have identified an area adjacent to the factory site, where the company will mine red ash. It will only receive a mining license from the Ministry when it has finished the factory, according to a Ministry source.

The Company will get 98pc of input locally and the remaining two percent will be imported, including dices, mixers and colouring materials, according to Mohammed.

“We decided to establish the Company because thanks to the recent construction boom there is high demand for ceramic products which cannot be met by current production,’’ says Mohammed.

The only local ceramic manufacturer currently is Tabor Ceramic Products S.C, which was founded in 1989 on a 206,259sqm plot of land in Hawassa, in the Southern Regional State. It manufactures ceramic electrical insulators, table ware products, sanitary products and tiles.

Medtech made the order for the two machines three months ago from Caravan & Marine Equipment Company (CAMEC), a machinery equipment manufacturer, for 10 million dollars, according to Mohammed.

“The Medtech that is already planted in Butajira is at phase one. We are in phase two, getting land for the project in Addis Abeba,’’ Mohammed told Fortune.

Medtech-Ethiopia and Julphar Gulf Pharmaceutical Industries were inaugurated in February, 2013. It is a 170 million Br pharmaceutical manufacturing factory in Bole District, Addis Abeba, and has a production capacity of 25 million bottles of suspensions and syrups, 500 million tablets and 200 million capsules annually.

http://addisfortune.net/articles/ceramics-factory-to-launch-in-10-months/ 

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Ethiopia seeks Indian help to revitalise higher education

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education

As the Ethiopian government works towards revitalising higher education to meet growing demand by boosting investment in education under the country’s Growth and Transformation Plan (GTP), India, with its long experience in the education sector, could help invest in Ethiopia, officials state.

This was stated at a three-day international seminar on “India and Africa: Developmental Experiences and Bilateral Cooperation”, and the Sixth Doctoral Scholar International Conference in African Studies that started here Monday.

The three-day seminar is being organized by the Wolkite University of Ethiopia in collaboration with the Policy Research Institute of African Studies Association (PRI-ASA) of India and the Centre for African Studies, Jawaharlal Nehru University (JNU).

“This seminar can contribute ideas or innovations in this field so that we can incorporate this officially to the second phase of the GTP that we are now preparing”, Admasu Shibru, president of Wolkite University, told IANS.

“It is very important for us to realise the educational vision and transform the socio-economic situation of this country even as we are trying to benchmark all possible innovations in terms of developing each sector.”

The seminar under the theme of “Development, Diaspora and International Relations of African Countries” is being attended by academicians from India as well as the business community, civil society organisations and NGOs from Ethiopia.

“The very important thing that we are doing today is establishing the collaboration so we are just starting and once it is established we have to continue strengthening by shaping the partnership strategies that we are going to have,” Shibru further stated.

“This conference that has brought experts from across the world will explore the various faces of their bilateral cooperation from different paradigms,” said Aparajita Biswas, president of ASA, Mumbai.

“It is not only contributing to the global discourse on India and Africa but it will hopefully alter the existing narratives of this complex relation,” she said.

“This initiative is certainly the beginning of a fruitful relationship between ASA India and Wolkite University as we can work together for an enriching partnership to promote the exchange of the knowledge and people across the Indian ocean.”

India is known for its knowledge economy, it is known for its contribution to the world economy in areas of knowledge in modern science and technology and in social science and literary writing, says Dubey, director of Centre for African Studies, University of Mumbai.

“Exposing them to African countries and establishing interaction with them will enrich their own experience as well as give access to African academics and help postgraduate students link up and see developing countries’ academics how they are seeing the world and how the situations are in similar paradigms,” he said.

“Different countries were confronting almost similar issues of development, proper action in healthcare and negotiating globalisation from a developing country’s perspective”.

According to Dubey, India’s policy on Africa needs to first look at the basic educational sectors. “As a knowledge-based economy, our scientists, our academicians, and our literary writers are making a difference all over the world. Therefore, it gives an opportunity to share this experience with Africa and the world”, he asserted.

This seminar that has so far been organized every two years was previously held in Kenya along with the University of Nairobi and in Durban, South Africa.

“Seminars like this have the power to fill the serious lack of academic interaction amongst academicians and scholars of India and Africa,” a participant of the seminar told IANS.

“This seminar is expected to come up with long term and sustainable partnership with India and Ethiopia and Africa in general. Then this will bring about sharing of all sorts of technologies, skills, innovations of all kinds which could help us improve our education quality.”

 http://www.bignewsnetwork.com/index.php/sid/228370077

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Meta Abo Brewery to source all cereal raw materials in Ethiopia locally

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Meta Barley

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Meta Abo Brewery S.C., a Diageo company, announced last week that it will source 100% of all cereal raw material needs in Ethiopia locally in time for Meta’s 50th Anniversary, by the end of 2017. This local sourcing strategy will serve as a commitment across the entire Meta business and will not be limited to specific products or brands.


According to a statement from the company, currently, more than half of the brewery’s raw materials are sourced locally. It also said that for the past three years, Meta has pioneered local sourcing in the Ethiopian beer industry, being the first multinational brewery to engage in the contract farming of barley through its “Partnership for Agricultural Growth in Ethiopia.”
“Together with partners such as the Ethiopian Agricultural Transformation Agency, the Oromia Bureau of Agriculture, Technoserve, Syngenta, BASF, Nyala Insurance, and local distributors, Meta has contracted 6,113 farmers across Arsi, West Arsi and South West Shewa Zones of Ethiopia and works with 5 farmer unions and 39 farmer cooperatives as part of this contract farming agreement.”
By 2016, the brewery plans to engage 10,000 smallholder farmers, increasing this number to 20,000 by 2017.
Francis Agbonlahor, Meta Abo Brewery’s Managing Director, stated that, “’Diageo continues to demonstrate its long term commitment to the socio-economic development of Ethiopia. Locally sourcing 100% of our raw material needs is a major milestone on this journey and I am deeply proud about the phenomenal progress we have made thus far.” I am looking forward to continuing to partner and collaborate with the Government of Ethiopia, our numerous farmers, and our key partners to deliver even greater successes in the years to come.”
The scope of Meta’s work in local sourcing addresses many aspects of the supply chain, including barley varieties, seed availability, input sourcing and mechanization. All farmers that Meta contracts receive a comprehensive “Meta Package” that includes seeds, DAP and Urea fertilizers, herbicides, fungicides, training and crop insurance which is pre-financed by Meta and repaid by farmers after they sell their harvested barley. In addition to these inputs, capability building is carried out for farmer groups, cooperatives and unions in the areas in which farmers are contracted.
Meta’s local sourcing work is part of Diageo Africa’s strategy to source at least 70% of raw materials locally by 2015 and an even greater percentage by 2017.
“The brewery’s pledge to sourcing locally is a key piece of Meta’s overarching strategy of growth and sustainability in Ethiopia. One pillar of this strategy is investment in the communities in which it operates,” the company said. The business is also committed to promoting responsible drinking, most recently launching the first fully-fledged Don’t Drink & Drive campaign in Ethiopia, Shoom Shufair. On a global level, Diageo was one of the 13 leading global producers of beer, wine and spirits to sign the “CEO Commitments” to implement the World Health Organization’s global strategy to reduce the harmful use of alcohol.
Diageo is the world’s leading premium drinks business with a collection of beverage alcohol brands across spirits, wines and beer categories. These brands include Johnnie Walker, Crown Royal, JεB, Buchanan’s, Windsor and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Baileys, Captain Morgan, Tanqueray, Meta Beer, and Guinness. Diageo is a global company, with its products sold in more than 180 countries around the world. The company is listed on both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE).

http://addisstandard.com/meta-abo-brewery-to-source-all-cereal-raw-materials-in-ethiopia-locally/ 

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Ethiopia to invest US$1.4bn in petroleum pipeline project

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Ethiopia would spend US$1.4bn to build a petroleum pipeline from the Port of Djibouti to a storage facility in order to reduce the cost of transportation in the country

pipeline

The petroleum pipeline project is expected to take two years to construct.

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According to the government of Ethiopia, the 550 km of pipeline would carry oil directly from the vessels at the port to a storage facility in Awash. The trucks would then distribute fuel from Awash to the rest of the country including Addis Ababa.

The Ethiopian Ministry of Water, Irrigation and Energy (MoWIE) confirmed that the proposal had been submitted and they would look into it before discussing it further with the Ministry of Finance and Economic Development (MoFED), Ministry of Foreign Affairs (MoFA) and Ministry of Transport (MoT).

Demelash Alamaw, assistant CEO at Ethiopian Petroleum Supply Enterprise, said, “In 2013 Ethiopian Petroleum Supply Enterprise imported 2.6mn tonnes of fuel. In 2014 it has plans to import 2.9mn tonnes.”

The Djibouti government noted that the current port infrastructure is not big enough to meet Ethiopia’s long-term needs. Currently, the demand for refined fuels in Ethiopia is growing at 10 per cent per year.

http://www.oilreviewafrica.com/downstream/downstream/ethiopia-to-invest-us-1-4bn-for-pipelines

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 Press 4 for fertilizer – M-farming in Ethiopia

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ADDIS ABABA, 3 December 2014 (IRIN) –

One reason farmers in Africa mostly produce so much less than those in other parts of the world is that they have limited access to the technical knowledge and practical tips that can significantly increase yields. But as the continent becomes increasingly wired, this information deficit is narrowing.

While there are other factors, such as poor infrastructure and low access to credit and markets, that have helped keep average yields in Africa largely unchanged since the 1960s, detailed and speedily-delivered information is now increasingly recognized as an essential part of bringing agricultural production levels closer to their full potential.

In Ethiopia, which already has one of the most extensive systems in the world for educating the 85 percent of the population who work the land for a living, this recognition has driven the development of a multilingual mobile phone-based resource centre.

The hotline, operated by the Ministry of Agriculture, the Ethiopian Institute of Agricultural Research, and Ethio Telecom, and created by the Ethiopian Agricultural Transformation Agency (ATA), has proved a huge hit. Since its July launch and still in its pilot phase, more than three million farmers in the regions of Amhara, Oromia, Tigray and the Southern Nations, Nationalities, and Peoples’ Region (SNNPR) have punched 8028 on their mobiles to access the system, which uses both interactive voice response (IVR) and SMS technology.

“On average we get approximately 226 new calls and 1,375 return calls per hour into the system,” Elias Nure, the information communication technology project leader at ATA, told IRIN. When the number of lines doubles from the current 90, he said, “these numbers should significantly increase.”

More than 70 percent of users are smallholder farmers, he said.

Timely, accurate information

Ethiopia has the largest agricultural extension system in sub-Saharan Africa, the third largest in the world after China and India, according to the UN Development Programme.

This system has led to the establishment of about 10,000 Farmer Training Centres, and trained at least 63,000 field extension workers, also known as development agents. It facilitates information exchange between researchers, extension workers and farmers.

However, the reliance on development agents means that sometimes agronomic information reaches farmers too late or is distorted.

Push and pull factors

The agriculture hotline was proving popular due to its “pull” and “push” factors, according to ATA’s chief executive officer, Khalid Bomba.

Farmers could pull out practical advice, while customized content could be pushed out, such as during pest and disease outbreaks, to different callers based on the crop, or geographic or demographic data captured when farmers first registered with the system.

Recently, it warned registered farmers about the threat posed by wheat stem rust.

“These alerts and notifications were not available to smallholder farmers in the past and could greatly benefit users of the system by getting access to warnings in real-time,” said ATA’s Elias.

According to Tefera Derbew, Ethiopia’s minister of agriculture, ATA should boost its content to meet more needs.

“The IVR system offers users information relevant to the key cereals and high value crops, but I envisage that in the near future there will be the opportunity to upscale the service to include content relevant to all of the major agricultural commodities in the country, including livestock,” said Tefera.

The hotline currently focuses on cereal crops such as barley, maize, teff, sorghum and wheat, but plans are under way to provide agricultural advice on other crops, such as sesame, chickpea, haricot beans and cotton, while incorporating farmers’ feedback on needs.

For Ayele Worku, a teff farmer in Gurage zone of Ethiopia’s SNNPR State, the system’s benefits outweigh the frustrations of a patchy mobile network.

“The way of farming, especially for row-planting for teff is kind of new for me although I heard rumours about its advantage a while ago,” he told IRIN.

This break with tradition in the way teff is sown has seen yields increase by up to 75 percent.

An agricultural extension and rural development expert working at Addis Ababa University, Seyoum Ayalew, said: “The new service could build a synergy with the previous approaches of the public extension system, which is largely based on trickle down approach of communication.”

Seyoum noted that within the traditional extension system, “where information passes through different channels before reaching the farmers, [it] is subjected to distortion through filtering and translation errors.”

http://www.irinnews.org/report/100911/press-4-for-fertilizer-m-farming-in-ethiopia

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Eurobonds and potash will boost Ethiopia and Africa’s food security

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imagesS53K6I3ZEthiopia issued a dollar based bond to fund its development goals focused on increasing agricultural production, power generation and transportation infrastructure including the 6,000 megawatt Millennium Dam hydroelectricity project on a Nile river tributary. Deutsche Bank and JP Morgan will be handling the sale of the ten year bond (yielding 6.75%).

Ethiopia has been Africa’s fastest growing economy for the past few years; it follows in the lead of other African countries that have issue similar bonds (Eurobonds) recently, including Kenya, Ivory Coast, Senegal and Ghana. Ethiopia’s bond issue reflects both the scope of its development ambitions – needing to raise at least USD$ 50 billion before the end of the decade to complete its development targets – and foreign investors’ growing interest in the country and Africa in particular. The Millennium Dam is seen as crucial to boosting agriculture in Ethiopia as well as some of its neighbors such as South Sudan, Kenya and Uganda. Indeed, Ethiopia has taken full responsibility for funding the Millennium Dam in order to establish greater control over the flow of the Nile waters and its power will allow Ethiopia to become a regional hydro-electricity hub.

It was exactly 30 years ago when the world learned of a terrible famine in Ethiopia, which also included present day Eritrea at the time prompting worldwide relief campaigns punctuated by songs like ‘Do they know it’s Christmas’ and ‘We are the World’. Much has changed today: Ethiopia is home to the third largest agricultural industry on the African continent and it is on track to achieve food security. Despite the huge challenge of expanding agriculture in a country that was not long ago on the brink of famine to ‘Africa’s bread basket’ is a huge challenge but thanks to farming method innovations and research, the country will, in the very near future, achieve food security. But Ethiopia’s ambitions reflect the wider agricultural growth phenomenon that has been occurring throughout Africa, which have been fueling the enthusiasm of local populations and private investors alike. With increasing urbanization and an exponential growth of the middle class, the African food market just waiting to grow and is expected to triple by 2030 according to a study by the World Bank in 2013. There is also a growing food deficit between demand and regional supply, which has contributed to interest in agriculture. Ethiopia and Africa will gains benefits in development and wealth creation along with agricultural best practices, better yield per hectare, and more intense trade links to developed countries. Recently a US private equity fund (KKR & Co) has made its first investment in Ethiopia.

The international investment and financing such as today’s aforementioned bond issue will help to address the technical challenges to agriculture throughout Africa as multiple land expansion projects are being planned all over the continent.  Thus, the enthusiasm of the private equity companies for Sub-Saharan Africa is accelerating, agriculture appears as a natural investment sector. An international law firm, Freshfields, has pointed out that agriculture investments in Africa have increased by 137% in the first half 2014 compared to the same period in 2013, facilitated by improving political risk and easier transactions. It should be reminded that Africa is huge, covering the second largest area after Asia, holing the second largest population. Moreover, the UN has noted that Africa has 17% of the world’s arable land and agriculture accounts for more than 20% of the Continent’s GDP. Farming now occupies 60% of the workforce in Africa.

African agriculture has tremendous growth potential because the continent still has many reserves of uncultivated land, counting 226 million arable land but being able to reach almost 500 million. Much of Africa is well irrigated and the climate is favorable to the production of maize, soya and sugar cane. The Chinese are well aware of this potential and have signed leases in the long term, using already 2-3% of the resources and Ethiopia is one of their leading targets. Africans will need more arable land and implement agriculture to increase food production yields. Production costs are low and the workforce is young and plentiful. If over the past 15 years, it has been Brazilian agriculture’s turn to shine, now is the time of Africa and it is estimated that the continent will become a net exporter of corn and soybeans in the next ten years. Other cereals include barley, sorghum, cotton, sugar cane, groundnut, millet and cassava. However, investment in infrastructure is not enough. African agricultures needs the right soil and productivity to flourish.

Potash and other mineral fertilizers are one of the keys to the Continent’s agricultural growth strategy. To this effect, Allana Potash (TSX: AAA | OTCQX: ALLRF) could become one of the largest potash producers in Africa thanks to a promising project in Ethiopia, addressing domestic, African and Asian potash demand. The Horn of Africa, from where Allana’s potash will be shipped, is strategically located to serve India, China and more importantly, all of the markets where potash demand is rising fastest such as Indonesia, Malaysia and Laos – all countries featuring potash intensive palm oil production. But it is Africa, where potash consumption, now among the lowest in the world, is slated to increase the most. Ethiopia alone will guarantee significant sales for Allana. Indeed, Ethiopia, which is home to some 90 million inhabitants, has ambitious economic growth plans and agriculture is its highest priority given that some 85 percent of the people work in that sector.

There is room for growth because most agricultural production revolves around a vast number of small rural areas with operations smaller than one hectare. Now, there are 12.5 million hectares of arable land in Ethiopia but the potential is 50 million hectares. The country has already sought international cooperation to help improve land productivity and make fallow land available for farmers. There is no more effective way to achieve this process than through a greater use of potash, which is essential to increasing yields and providing the kind of nutrients that African soils are known to lack. In the 1960’s-70’s, the use of mineral fertilizers grew considerably in Latin America while dropping in Africa. Not surprisingly, those decades (and until now) saw various famines in Africa, while food production increased in Latin America. Now, the International Fertilizer Industry Association suggests that African potash use could reach five million tons over the next few years. It is now not even close to a million tons. Allana is edging ever closer to production phase having been granted all relevant mining permits from the Ministry of Mines of Ethiopia; its strategy is to help develop and expand the mineral fertilizer market in Ethiopia and Africa in general – even if the initial focus will be East Africa. The African continent presents tremendous market potential for mineral fertilizers and potash in particular, given that it has the potential to attract 880 billion dollars of investment in agriculture by 2030, which will drive demand for products such as fertilizers, seeds, pesticides and machinery as Africa develops its own production of biofuel, grain refinement and food.

http://investorintel.com/potash-phosphate-intel/eurobonds-potash-will-boost-ethiopia-africas-food-security/ 

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Will A Eurobond Boost Ethiopian Food Security?

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By Dana Sanchez Published: December 8, 2014

Teff field, Ethiopia<br />
Thinkstock

Teff field, Ethiopia Thinkstock

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Deutsche Bank and JP Morgan will handle the sale of a 10-year, dollar-based Ethiopian bond yielding 6.75 percent to fund increased agricultural production, power generation and transportation infrastructure, InvestorIntel reports.

Agriculture investments in Africa increased by 137 percent in the first half of 2014 compared to the same period in 2013, thanks in part to improved political risk and easier transactions, according to international law firm, Freshfields,

Ethiopia has been Africa’s fastest growing economy for the past few years, according to InvestorIntel. It follows the lead of other African countries that issued similar bonds (Eurobonds) recently, including Kenya, Ivory Coast, Senegal and Ghana.

Ethiopia’s bond issue reflects both growing interest of foreign investors in the country and Africa, and the scope of its development ambitions, according to the report. The country needs to raise at least $50 billion USD before the end of the decade to complete its development targets.

Ethiopia has taken full responsibility for funding the Millennium Dam, considered crucial for boosting agriculture in Ethiopia as well as some of its neighbors such as South Sudan, Kenya and Uganda. This will give Ethiopia greater control over the flow of the Nile. Its power will allow Ethiopia to become a regional hydro-electricity hub.

Ethiopia is home to the third largest agricultural industry on the African continent, according to InvestorIntel. Not long ago the country was plagued by famine. Now it’s on track to achieve food security thanks to farming method research and innovation.

But Ethiopia’s ambitions reflect the wider agricultural growth occurring throughout Africa, which has been fueling private investors. The African food market is expected to triple by 2030 with exponential growth of the middle class and increasing urbanization, according to a 2013 World Bank study.

U.S. private equity fund KKR & Co recently made its first investment in Ethiopia.

International investment and financing such as the bond issue will help address the technical challenges to agriculture throughout Africa, according to InvestorIntel. Enthusiasm is growing among private equity companies for Sub-Saharan Africa. Agriculture appears to be a natural investment sector.

 http://afkinsider.com/81039/will-eurobonds-boost-ethiopian-food-security/

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Insurance for Ethiopian herders aims to combat drought, conflict – TRFN

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YABELO, Ethiopia – Nomadic livestock herders in Ethiopia have received their first payout from an insurance scheme that tracks poor pasture conditions with satellite technology.

Ethiopia has difficulty drawing full advantage from its livestock resources – the largest in Africa – because of the unreliability of pasture and water caused by persistent drought.

The new insurance scheme, known as index-based livestock insurance, aims to reduce losses, support pastoral communities, and lower the risk of conflict sparked by pastoralists migrating into agricultural areas in search of forage or water.

Coverage has been sold since July 2012 in southern Ethiopia’s Borena zone by Oromia Insurance Company (OIC), with technical assistance from the International Livestock Research Institute (ILRI), U.S.-based Cornell University, and Mercy Corps, an international development organisation. Just over 500 pastoralists took up coverage initially.

The scheme was based on an earlier insurance effort rolled out in 2010 in neighbouring Marsabit region in northern Kenya, said Andrew Mude, principal economist at ILRI in Nairobi.

There, payouts were based on livestock deaths. But “the (experience) we had with the Kenyan programme was that some animals are more hardy than others, and so (with) differential mortality rates … (it) was a bit complex,” Mude said.

The insurance offered by OIC in Ethiopia instead offers coverage based on the actual scarcity of the herders’ forage, rather than the mortality rate of their livestock.

HOW IT WORKS

The insurance uses NASA satellite data to look at forage availability in the Borena zone. Experts from ILRI and Cornell University compare current images with historical data from the past 30 years.

“We provide the technical expertise to understand how to use the information from satellites on the state of forage on the ground,” Mude said.

The timing and amount of insurance payouts are then calculated based on the severity of the lack of forage.

OIC’s insurance will pay out up to 6,000 Ethiopian birr ($300) for a cow, 10,000 birr ($500) for a camel, and 800 birr ($40) for a sheep or goat annually. Pastoralists pay premiums averaging about 7.5 percent of the value of the maximum payout.

If forage levels become scarce compared to the index based on the historical satellite data, the herder receives compensation, even if no livestock have been lost.

In response to poor forage conditions, OIC made its first payout to all the insured holders, totalling 570,000 birr ($28,300), at the beginning of November this year at a ceremony in Yabelo, a town 565 km (353 miles) south of the capital, Addis Ababa.

Mude said that although livestock is the key productive asset and source of income for pastoralists, the novelty of insurance in this remote region initially made it difficult to sell.

ILRI spent two years researching the needs of the Borena zone herders before formally launching the insurance.

A further challenge is how to assess the damage suffered by policyholders when dealing with a mobile population.

Mude explained that an important feature of the insurance is that pastoralists remain covered even if they migrate out of the woredas (districts) where they are insured, since migration itself implies that there is a severe lack of forage. Compensation is therefore calculated based on the area where they were initially insured.

Wondimu Beteyo, a pastoralist who received a payout for his cattle and goats, says that until recently he had to trek several days for pasture and water. Now, he says, the money he has received will allow him to replenish the cattle he lost during the recent drought.

Dono Kotelo, from Teltale woreda, insured his two goats and two cattle for a total of 1,048 birr ($50) after learning about the insurance scheme. Although none of his animals died, because he migrated to find pasture, he received a payout of 192 birr ($10) for costs associated with the dry season and said he plans to buy insurance again for the coming year.

LOWERING CONFLICT RISK?

Getaneh Eerena, a livestock insurance officer at the micro-insurance department of OIC, said that in the long run the programme is not just about financial payments but about avoiding conflicts.

“The area tends to have high conflict incidence, both within (the) pastoralist community and against agricultural communities,” Eerena said.

Kotelo, the herder, said his Borena community used to cross into the land of agricultural communities when their own pastures were exhausted, often leading to deadly clashes.

Mude and Eerena said their organisations planned to extend the insurance scheme eventually across the country.

http://in.reuters.com/article/2014/12/05/ethiopia-insurance-idINL6N0TP1GW20141205

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