Low costs attract investors, but there are many obstacles to the country’s industrialisation.The Ethiopian government is pouring resources into industrialisation in an effort to break into global markets.
In the near future, everybody will produce the right products to fit the international market
But, in a country where manufacturing accounts for only 4.2% of gross domestic product, challenges loom large.
Ethiopia’s largest garment producer, Almeda Textiles, imports machinery from Asia and chemicals from Europe, says general manager Libelo Gebreslassie.
It then exports finished garments to retailers like H&M of Sweden, KiK Textilien of Germany and Steve Horne Enterprise of the US.
“The very important thing is support from the government,” Libelo says.
“Even though there are a lot of problems, this is the reason why international investors are coming.”
He adds that Almeda faces obstacles including low-quality domestic cotton, the high cost of imported chemicals and low managerial capacity.
Ethiopia’s ability to break into global value chains is inhibited by difficult trade logistics, power shortages, red tape and a lack of access to credit.
The country’s advantages include low costs – labour, land leases and electricity are relatively cheap – and duty-free machinery imports and duty-free access to Western markets, according to Lars Moller, the World Bank’s lead economist in Ethiopia.
“Ethiopia’s image as an investment destination has improved tremendously in recent years, which is positive and is supporting the trend of an increased number of companies investing here,” Moller explains.
“But it will take a while before this will transform the economy.”
Foreign-owned firms, including Chinese leather producers and Turkish textile factories, are indispensable to Ethiopia’s industrial sector.
Locally owned businesses hope to gain more market share.
“Everybody is aware that we have a good opportunity, and in order to utilise this opportunity, we have to change internally,” Libelo says.
“In the near future, everybody will produce the right products to fit the international market.”
Yara International (Yara) is a chemical company that specialises in the manufacture of agricultural products and environmental agents including fertiliser products (such as potash). To support this Yara has started a subsidiary company called Yara Dallol BV, which is involved in the exploration and development of potash minerals in the Danakil Depression of Ethiopia. Yara Dallol BV is also working together with Novopro Projects Inc. (Novopro), a Canadian Project Development and Management Company, to develop a potash mine and production unit.
The proposed Project is located in the Danakil Depression in the Afar region, Zone 2 of the Dallol Woreda.
Before proceeding Yara Dallol BV must conduct an Environmental and Social Impact Assessment (ESIA) to assess how the proposed Project is likely to affect the local natural environment and surrounding communities either positively or negatively. The ESIA process will also work to identify ways of minimizing any negative impacts and maximizing benefits (positive impacts) related to the proposed Project. In addition the ESIA report will, further advise if and how the proposed Project can be developed in a sustainable manner, as well as assist the Ethiopian officials with the permitting process.
PART 1 – DRAFT ESIA
Background Information Document
English (1Mb PDF)
Amharic (815Kb PDF)
Final Scoping Report
Chapters 1 – 4 (2Mb PDF)
Chapters 5 – 8 (3Mb PDF)
Chapters 9 – 13 (3Mb PDF)
Annex A (679Kb PDF)
Appendix A (151Kb PDF)
Appendix B1 (160Kb PDF)
Appendix B2 (3Mb PDF)
Ethiopia expects to complete the Chinese-backed construction of a $475 million metro rail system in the capital Addis Ababa next month, the head of the project said.
The project, built by China Railway Engineering Corporation (CREC) and mostly financed through a loan from China’s Exim Bank, is a rarity on a continent plagued by poor transport links.
Beijing is a major partner in Ethiopia’s bid to expand its infrastructure, with cumulative investments by Chinese firms reaching well over $1 billion, official figures show.
The Horn of Africa country is building a new rail link to neighbouring Djibouti and wants to complete 5,000 km of railway lines by 2020.
It will also aims to almost treble the size of the road network by next year, from less than 50,000 km in 2010.
Ethiopia is one of Africa’s fastest growing economies, expanding by about 9 percent a year and attracting overseas investment with its with rock-bottom wages, cheap and stable electricity and transport projects such as the metro.
A country where many still rely on subsistence agriculture, Ethiopia is nonetheless developing a reputation for producing clothes, shoes and other basic goods that have attracted firms from China, as well as India and the Gulf.
The metro system will transform the lives of the more than 5 million people in the capital, where commuters currently wait in long queues before they are crammed onto buses and minivans.
Project manager Behailu Sintayehu told Reuters nearly 80 percent of the tracks had been laid and he expected it to be completed by the end of January 2015, three years after the plan was launched in January 2012.
“We believe that it will have a great impact in alleviating the problem of transportation in the city,” Behailu said.
Stretching for a combined 32 km, two lines dividing Addis Ababa north-south and east-west will serve 39 stations, in underground and overground sections.
The state-run Ethiopian Railways Corporation signed an agreement this month that will see Shenzhen Metro – the enterprise managing the Chinese city’s subway system – operate the lines for a period of 41 months alongside CREC.
CREC will carry out a trial phase of up to three months and then the teams will decide when to start operating the system, Ethiopian Railway Corporation’s spokesman Dereje Tefera said.
Other African capitals with either subway systems or light rail networks are Cairo, Algiers and Tunis. South Africa has an extensive system linking several cities.
Djibouti embarks on $9.8 billion mega projects
By ANDUALEM SISAY in Addis Ababa
Djibouti has announced embarking on several mega infrastructure projects with a total investment of $9.8 billion.
The cost of the projects is six times more than the tiny eastern Africa country’s Gross Domestic Products (GDP).
Djibouti is currently constructing $804 million multi-purpose and three specialized ports to be dedicated for export of livestock, and 4 million tons of potash export per year from Ethiopia and 6 million tons of industrial salt annually from Djibouti.
“Out of the $9 billion total investments for the 14 mega projects, we have already secured 58 per cent funding,” Mr Abubaker Mohamed Hadi, the Chairman of the Djibouti Ports and Free Trade Zone Authority (DPFTZA), told visiting journalists from Ethiopia.
The funds, he explained, are from China Exim Bank and the 23.5 shareholder of DPFTZA, China Merchants and other financers.
Currently, most of Ethiopia’s $13 billion import and $3 billion export goods come and exit through Djibouti port.
In addition to Ethiopia, which has become a major client of the Djibouti port following the 1998 Ethiopia-Eritrea War, Djibouti also plans to expand its services to South Sudan.
“…Of the 17 landlocked countries in Africa, 10 are in our region,” Mr Hadi said, explaining the prudence of investing in the mega infrastructure projects.
The other mega projects in the country with less than one million people, include new airports, national shipping company and an airline, crude oil terminal, development of business districts and $3 billion natural gas refinery.
The $525 million Doraleh Multipurpose Port is expected to be completed in the two years.
When complete, the old Port of Djibouti will be converted to a business district, according to Mr Hadi.
Mr Hadi further noted that the investment also took into considerations the connectivity plan of Africa and integration of the continent.
He indicated that Ethiopia’s fast economic growth in recent years had helped Djibouti to grow by 5 per cent on average annually for the past five years.
NO ORDINARY MATTER: CONSERVING, RESTORING AND ENHANCING AFRICA’S SOILS (2014)
Agriculture for Impact presented the new Montpellier Panel report ‘No Ordinary Matter: Conserving, Restoring and Enhancing Africa’s Soils’ on Thursday 4th December 2014 at the International Fund for Agricultural Development, Rome- ahead of World Soil Day on the 5th of December.
In sub-Saharan Africa, an estimated 65 per cent of soils are degraded, and unable to nourish the crops the chronically food insecure continent requires. Poverty, climate change, population pressures and inadequate farming techniques are leading to a continuous decline in the health of African soils, whilst the economic loss is estimated at USD 68 billion per year. Conversely, better land management practices could deliver up to USD 1.4 trillion globally in increased crop production – 35 times the losses.
This report from the Montpellier Panel argues that if left unaddressed, the cycle of poor land management will result in higher barriers to food security, agricultural development for smallholder farmers and wider economic growth for Africa.
The report is a comprehensive analysis of land management in Africa today, and answers a series of critical questions:
- Are donors and governments neglecting soil health in Africa?
- What are the key approaches to restoring Africa’s soils?
- How can improved land management tackle climate change in Africa?
Agriculture’s ability to catalyse rural development and eradicate poverty has been widely cited, with the World Bank claiming GDP growth from agriculture in Africa approximately 11 times more effective for reducing poverty than growth coming from any other sector. In 2006, the African Union’s Abuja declaration called for fertiliser use in sub-Saharan Africa to increase from today’s average of 8 kg/ha — the world’s lowest — to at least 50 kg/ha by 2015. However, agriculture must be implemented sustainably in order for food security to be possible for future generations, therefore the panel calls for ‘Integrated Soil Management’; combining targeted and selected use of fertilisers alongside traditional methods such as application of livestock manure, intercropping with nitrogen-fixing legumes or covering farmland with crop residues.
The launch was opened by Kanayo Nwanze, President of the International Fund for Agricultural Development at the United Nations in Rome.
Director of Agriculture for Impact, Professor Sir Gordon Conway chaired the panel discussion – comprising David Radcliffe Senior Advsior for Development and Cooperation DG at the European Commission, Camilla Toulmin, Director of the IIED, and Henri Carsalade, Agropolis Foundation – before opening up the conversation to questions from the audience.
You can also click here to watch the recording of the event, courtesy of IFAD
Arup South Africa to Prepare Transit Oriented Development Master Plan for Addis Abeba Light Rail
Arup South Africa has won the contract to prepare a Transit Oriented Development (TOD) master plan for ten of the key stations that are part of the Light Rail Transit (LRT) system being built in Addis Abeba.
The 34.24 km network, based on two initial lines, one running north-south from Menelik Square to Kaliti and the other running east-west from Ayat to Tor Hailoch is set for completion in January 2015, with 41 stations in all.
The network is designed to carry 15,000 passengers per hour per direction.
“We have been retained by the Ethiopian Railway Corporation (ERC) to illustrate what activities, uses and yield can be created around the new stations within a 400 meter radius,” says Nico Venter, leader of Integrated Urbanism at Arup SA.
In a statement sent to Addis Standard, Arup further said that within this walkable node it needs to assess if each place and loci can accommodate appropriate use and bulk development. This forms part of the regeneration of a 125-year-old city with over 3 million people. Arup will visualize these nodes and illustrate potential future development, culminating in a broad based bankable approach, cognizant of costs and the catalytic potential these nodes could have on the city.
“This is a typical African city and each precinct has its own unique requirements and sense of place,” the statement said, adding the framework must therefore look to short, medium and long-term approaches that allow for flexibility and that can change over time as the node develops and matures.
“We have been requested to provide an independent view, using a multi-disciplinary approach, within a tight schedule of five months. We look forward to this task, as an exciting step forward in the future of city making,” said Venter.
Arup is an independent firm of designers, planners, engineers and technical specialists that makes up the heart of the creative force of many of the world’s most prominent projects in the built environment and industry.
Ethiopia To Build Three New Airports At A Cost Of $64.5M
By Kevin Mwanza
Ethiopia is set to expand its airport reach with construction of three airport runways in three major regional cites, with a capacity to host big jets like B737.
The Ethiopian Airports Enterprise (EAE) the state company tasked with expanding and supervising Ethiopia’s increasing airports signed a $68.5 million (1.37 billion Ethiopian Birr) with three local firms who won tenders for the construction of three airport runways, on December 11, 2014.
The Runways which will each have 2,500 meters length and 60 meters width, are part of the government’s drive to boost trade and tourism ties across the country for it’s next ambitious economic goal named Growth and Transformation Plan II (GTP) set to start in end of 2015.
The most anticipated contract was the one for the southern city Hawassa, Ethiopia’s premier resort and tourism Hotspot as well as an industrial hub with a total cost $ 22.9 million. The contracting company is named Yotek Construction private Limited Company (PLC) with the supervisory form being Saba Engineering (Plc).
The second contract pertains to runway construction for another southern city Robe Goba, won by Akir Construction PlC for $ 24.7 million and to be supervised by Transport Construction Design Plc.
Robe is better known for its proximity to the UNESCO listed natural wonder the Sof Omer Cave system, and for being an agricultural belt of Ethiopia.
With The third project being in the Far North of the country near the city of Shire, to be constructed by Ethiopian Roads Construction Corporation (ERCC) and supervised by Transport Construction Design Plc at a cost $ 20.9 million.
The Third project hopes to utilize the mineral resources of the area especially gold which in that part of the country is heavily dominated by Artisanal mining.
Ericsson to take part of telecom deal after ZTE row
Swedish telecom group Ericsson is set to sign a contract with Ethiopia to expand telecom infrastructure, taking a slice of an USD 800 million contract from Chinese firm ZTE Corp because of a row over terms, a senior official told Reuters on Thursday, Dec. 11.
ZTE Corp’s deal with state-run operator Ethio Telecom was signed in 2013. The other half of the overall a USD 1.6 billion package to help double mobile subscribers was shared with another Chinese firm, Huawei Technologies Co Ltd.
But Ethiopian and ZTE differed over the cost of upgrading an existing network. Ethiopian officials said the firms were expected to carry out the upgrade at no extra charge, while ZTE said it would cost an additional USD 150 million to USD 200 million.
Ethiopian officials had said Nokia and Ericsson could take some work if agreement was not reached.
Ethio Telecom Chief Executive Officer, Andualem Admassie, told Reuters that discussions with Ericsson were nearing completion.
“Ericsson will start working on that share of expansion work,” he said, without giving a value for the deal. “We are only waiting for confirmation from the (Ethio Telecom) board.”
“Huawei is continuing its role,” he said, adding that ZTE would continue with some work. “ZTE have lost parts of their share but have made it clear they are willing to resume work, no matter what the current circumstances.”
Ericsson could not immediately be reached for comment.
The overall project aims to help the nation of more than 90 million people double mobile subscribers to 50 million in the next year and expand its 3G service.
The overall contract also includes a plan for Huawei to roll out a high-speed 4G network in Addis Ababa.
China has extended its economic influence in Africa in recent years, with state-owned firms winning road tenders in Kenya, signing deals for construction of energy projects in Uganda and running mining projects in various countries.
The USD 1.6 billion contract signed with the Chinese firms in Ethiopia had a long-term loan package to be paid over a 13-year period with interest of less than 1 percent, officials said.
Israel Chemicals to invest $452m in Chinese phosphate company
– Israel Chemicals will set up a joint venture with Yunnan Yuntianhua and hold a 15% stake in the Chinese company.
Israel Chemicals Ltd. (NYSE: ICL; TASE: ICL) is to invest $452 million for 50% ownership of a joint venture that will operate a fully integrated, phosphate business in China. Israel Chemicals will also take a 15% strategic holding in Yunnan Yuntianhua, one of Asia’s leading producers of phosphate rock, which is traded on the Shanghai stock exchange with a market cap of $1.8 billion.
The joint venture will include a mine that produces 2.5 million tons of phosphate rock annually for the next 30 years, a downstream phosphate operation and a marketing and sales organization that primarily serves the Chinese and the Asian markets.
Israel Chemicals mulls Namibian Leviev investment
Israel Chemicals faces new market reality
Israel Chemicals says that the strategic alliance will leverage its and Yunnan Yuntianhua’s technical, marketing and production expertise and will include a joint phosphate R&D platform in the Yunnan province to develop process improvement and new products for both partners.
Israel Chemicals says that it has identified significant expansion and synergy potential and the major thrust of the joint venture’s strategy will be its transformation from a commodity fertilizer company to a specialty player in agriculture, food Ingredients and engineered materials.
Ethiopia, Turkey keen to boost business ties
Opening the second Ethio-Turkish Business Council Forum, Prime Minister Hailemariam Desalegn called on more Turkish investment in the areas of development and finance, investment and bilateral trade with between the two countries.
The Turkish delegation, numbering some 200, led by the country’s Minister of Economy, Nihat Zeybekci, discussed with its Ethiopian counterpart on means of bolstering investment relations between the two countries.
Prime Minister Hailemariam said that his government has started negotiation with Turkey on the basis of financial freedom to attract more investment from the country.
“Turkey is one of the most reliable development partners the Government of Ethiopia has in its endeavors to extricate itself from poverty,” Hailemariam said during the opening of the forum at the United Nations Economic Commission for Africa (UNECA). The Prime Minister also urged the Turkish EX-IM Bank to finance projects in Ethiopia.
“There is still ample room for further expansion, in terms of volume and quality, of the development financing that the government of Turkey has been putting at our disposal [which nevertheless] has been increasing,” Hailemariam added.
On the occasion, the Turkish Minister of Economy, Zeybekci, made official the USD 300 million loan his country extended for the Awash-Woldiya Railway Project.
According to Yusuf Aydeniz, chairman of Ethio-Turkish Business Council, the ever growing investment and trade volume between the two countries has weighted over the last few years.
When the investment reached USD 1.6 billion, the largest Turkish investment in Africa, the trade volume jumped from USD 70 million to USD 450 million, Aydeniz said.
Solomon Afework, President of Ethiopian Chamber of the Commerce and Sectoral Associations, vowed to take the partnership with Turkish Confederation of Businessmen and Industries (TUSKON) forward by participating in the 9th International Turkish-African Congress which will be held next year in Istanbul, Turkey in April next year.
Back in August, the Ethiopian Investment Commission announced that Turkish Foreign Direct Investment (FDI) to Ethiopia is leading the group of emerging economies that have shown interest in investment opportunities in Ethiopia.
Although the Chinese lead in terms of number of companies that have invested in the country, the Turks lead others in combined capital outlay, the commission said.
Ethiopia, Kenya ink cross-border trade agreement
The governments of Kenya and Ethiopia have signed an agreement that aims at creating opportunities for communities at the borders of the two countries, President Uhuru Kenyatta said on Wednesday adding that the agreement will create stability and security.
Speaking at a farewell ceremony for Ethiopia’s Ambassador to Kenya, Shemsedin Ahmed, President Kenyatta assured the outgoing envoy that his government is determined to implement the special status agreement signed between the two countries.
On the recent terror attacks that took place in Kenya, the president said that his country is committed to winning the war and that his government will continue working with and borrow best practices from Ethiopia, which also neighbors Somalia.
“A busy person will have no time thinking of taking a gun to commit crime, rather he would be so committed to their businesses which he/she knows will ensure they get their daily livelihoods,” the president said.
The Ethiopian envoy condoled with the president and the people of Kenya following the recent terror massacre in Mandera saying the Ethiopian government will work closely with Kenya to ensure they root out the Al-Shabaab menace in the region.
He assured the president that his government is committed to the implementation of the agreement saying it will ensure security and stability within the region.
Ambassador Shemsedin said conflict between border communities has also contributed to border insecurity.
He said that the ongoing construction of Isiolo-Moyale road onwards to Ethiopia will facilitate economic growth and that the Ethiopian government is committed to enhancing border trade without much bureaucracy.
“Issues of currency will not matter when it comes to border trade. We will allow our people to trade freely with their neighbors with no restrictions,” Shemsedin said.
President Kenyatta said the agreement will not only accelerate the implementation of the infrastructural projects but also enhance relations between the peoples of the two countries.
“Everybody will gain; no one will lose in this agreement. This agreement will help our people move freely and develop together. It will help us move from government-to-government engagement to people-to-people relations,” Kenyatta said.