Ethiopian diaspora, back home to boost economy
New Rural Insurance Policy for Small-Holder Farmers on the Way
A new policy of rural insurance is to be drafted in the near future as officials from Ministry of Agriculture (MoA), Ethiopian Insurance Corporation (EIC) and Federal Public Financial Enterprises Agency (PPEFA) have discussed a policy framework study made by the latter two.
The discussion at the stakeholders’ forum held at Hilton Hotel in order to use ideas rose as an input for the policy framework on January 13, 2015.
The study focused on designing a new policy framework for rural insurance; and it took more than a year to finalize, says Fikru Tsegaye, Marketing & Strategic Management director at the Ethiopian Insurance Corporation. It is mainly focused on providing insurance solutions for agriculture and rural based risks targeting smallholder farmers. It emphasizes that lack of a single framework has left the service fragmented.
As the majority of farmers are smallholders, the study gives more emphasis on how to use a holistic approach that would help to provide the insurance. The study has indicated that such fragmented practice of providing agriculture insurance was only implemented as a pilot project by EIC but failed to deliver significant changes due to several drawbacks such as infrastructural limitation, telecommunications, and financial limitations.
As the nature of agricultural insurance needs a well-developed communication infrastructure that would facilitate the way data, such as weather forecast, is acquired, such limitations were considered as challenges. Moreover, financial incapability of smallholders is also another challenge as most Ethiopian farmers depend on subsistence farming. To overcome this, the sector needs subsidy from government, said Fikru Tsegaye, director of marketing & strategic management at EIC.
Solomon Zegeye, general insurance manager at Nyala Insurance S.C. shares this view. This policy, in order to materialize, needs the support of government, especially on subsidizing the farmers, as many of them cannot afford to buy insurance policy, he told Fortune.
Nyala is among the few insurance companies that have worked on agricultural insurance since 2009 but it mainly focused on providing insurance for commercial farms and livestock production at a larger scale. The company provides three kinds of agricultural insurance, namely multi-period crop insurance, livestock insurance and weather index insurance.
Three main suggestions were given by Solomon; one is that this policy framework, prior to its drafting process has to be backed by subsidy of farmers, a regulatory framework by National Bank of Ethiopia and founding national reinsurance company.
As risks associated with agriculture are high and occur at a larger level, the establishment of national reinsurance companies is a must, noted Solomon. The policy framework will attempt to design a rural insurance that considers the financial capacity of poor farmers, added Fikru.
The state-owned EIC as well as Nyala, Africa and Oromia insurance companies are currently engaged in providing rural insurance. The EIC has gained 8.2 million Br of gross premium and at the same time incurring 5.6 million Br of gross claim, in 2013/14.
According to the 2014 report by NBE, total capital of insurance has reached two billion Br and private insurance companies accounted 78.6pc of the total capital.
Successful training to develop soil and site specific fertilizer recommendations
From January 12-14 CASCAPE gave a training on developing soil and site specific fertilizer recommendations using the QUEFTS toolbox. QUEFTS is a software tool to derive fertilizer recommendations using commonly available soil properties and different target scenarios.
For application under Ethiopian conditions the tool was extended with micro-nutrients.
QUEFTS applies a semi-mechanistic approach and considers interactions between nutrients, which makes it a very practical, yet science based tool.
The training was attended by 27 participants from different organizations including ministries, research institutes and CASCAPE innovators.
At the end of the training a Community of Practice was establish to foster joint learning.
An experience sharing workshop is scheduled for autumn 2015.
Smallholder Agricultural Carbon Projects in Eastern Africa
Moses Masiga, Pauline Nantongo Kalunda, Lillian Kiguli, Annet Ssempala, Seth Shames, Krista Heiner, Margie Miller – ENR Africa Associates, Environmental Conservation Trust of Uganda, EcoAgriculture Partners, Environmental Conservation Trust of Uganda
This manual has been developed to help build the capacities of farmers, farmers groups, extension staff and project managers who are implementing agricultural carbon projects in Eastern Africa. The manual describes the steps for implementing an afforestation/reforestation voluntary carbon project based on the Plan Vivo Standard. It builds on experience gained by the Environmental Conservation Trust of Uganda (ECOTRUST), ENR Africa Associates, and EcoAgriculture Partners while undertaking a participatory action research project focusing on the institutional arrangements of smallholder agricultural carbon projects in Sub-Saharan Africa. This work was supported by the CGIAR Research Program on Climate Change, Agriculture, and Food Security (CCAFS).
The manual was created specifically for use by trainers as part of the Trees for Global Benefits project in Uganda, managed by ECOTRUST, in order to facilitate capacity building among local actors in the project. It was piloted in the Mt. Elgon Region of eastern Uganda, and has benefited from the input of farmers and extension staff.
The manual is divided into four modules: Getting Started; Carbon Project Development and Implementation Cycle; Implementing the Carbon Project; and, Stakeholders and their Roles. These modules are further subdivided into sessions, which are an indication of progress from one stage of the training to another within a module. Not all modules will be appropriate for all learners. Within each session the training activities listed may have to change based on the expertise of the trainers, the experience of the learners, and materials at hand.
The first module, “Getting Started,” introduces learners to the key concepts of the training, such as climate change, climate change mitigation, and the need to undertake climate change mitigation actions commonly referred to as carbon projects. The first module is intended for three target audiences: farmers, extension workers, and carbon project managers.
The second module, “Carbon Project Development and Implementation Cycle,” is more technically oriented, and it seeks to provide hands-on experience to learners on the modalities of designing and implementing a carbon project. The specific approach that is described in the module is for a Plan Vivo afforestation/reforestation project, although the information provided in the manual can be used for training on other carbon projects in agricultural landscapes. This module is targeted at project developers and, to a limited extent, extension staff.
The third module, “Implementing the Carbon Project,” focuses on afforestation/reforestation activities and the implementation plan for farmers. This module is targeted toward farmers and extension staff who will conduct farmer trainings. Even though the steps of the training process have been provided in the manual, the farmer groups and extension staff can subdivide the steps based on the resources, time, and level of knowledge in order to better target these training materials to their specific outcomes. Project managers can also benefit from this module by increasing their understanding of how the farmers and other carbon project implementers carry out their tasks. A field demonstration and a land use planning session are among the many activities planned during this module.
The fourth module, ”Stakeholders and their Roles,” is beneficial for farmers, extension workers and carbon project managers. However, the level of detail required in describing the key stakeholders and their roles will change based on the audience. For farmers, the most important stakeholders to consider are those clearly linked to farmer activities. In a similar way, extension staff may be interested in the project stakeholders or partners that help farmers supply inputs and manage benefits. For the project developers, the main focus should be on the carbon value chain, from farmer activities to the carbon market.
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When Dr Mitslal Kifleyesus-Matschie returned to her country Ethiopia in 2007, she went with the aim to contribute to poverty eradication in rural areas by creating a company that allowed farmers to enter the 21st century market.
By Annika Burgess on January 19, 2015
However, bridging the centuries-long knowledge gap wasn’t going to be easy. “The requirements of the 21st century are impossible to apply if you’ve been working a certain way for 300 years,” Dr Kifleyesus-Matschie said of her initial concerns. But, she had a plan: “I said, ‘I’ll do it with technology.’ We needed an instrument and the best instrument was ICT.”
Since then, her company Ecopia has been embracing developments in ICT to provide over 11,000 farmers with the knowledge and skills required to process and market organically certified products that can be sold locally and abroad. Today, 54 products from Ethiopia’s organic farmers are under the Ecopia label, which has impacted local economies and made traditional ecological farming methods more profitable.
“When you are producing things like jam and juice on your farm, at Ethiopian and European level, you need to fulfil certain quality control documentation to get the permission to sell products in the supermarket. Ethiopian farmers weren’t allowed to do that. The reason they weren’t allowed until recently to participate in the value chain was because they could not provide the data, the information that is needed for the inspections to be fulfilled,” Dr Kifleyesus-Matschie says.
“What the information technology did is give us an instrument, a very easy way to fill a gap of around 300 years within five- to-ten years. The farmers are now able to fulfil the requirements that are asked from the standards office.”
Due to advancements and increased uptake of technology, Ecopia has been able to build an extensive database that contains detailed information about ingredients, regions and processing techniques; serving as an electronic marketplace. Farmers initially provided this data to a call centre but soon moved to using computers and mobile devices.
The company also developed an online and mobile traceability system that provides consumers with product codes so they can trace the components right back to the farmers and find information on raw materials, time of harvesting, transportation, specific manufacturing conditions and delivery status of the products.
Furthermore, training has become a major factor in the growth of the company. “The training has become very easy because we have a beamer and pictures, and they understand it easily,” Dr Kifleyesus-Matschie says.
Ecopia trains farmers, students and local stakeholders not only in how to produce organic products in a way that fulfils international quality standards, but also in skills such as leadership and entrepreneurship. The aim is to empower rural farmers at the ‘base of the pyramid’ with the necessary skills and know-how. The company has also adopted a train the trainer approach, thus contributing to the sustainability of the programme.
“The most fascinating part of the development of Ecopia is not only that we transmitted this information to the farmers, but those farmers then provided information to the well-educated Ethiopians on how to conduct inspections,” Dr Kifleyesus-Matschie says.
“We needed an inspector to test the standard and certify that the food is clean, so it was our farmers who needed to train the Ethiopian government and authorities and show them that it is possible to create products that are fulfilling international rules and regulations.”
Due to the visual nature of the training programmes Dr Kifleyesus-Matschie says teaching positions are often given to the region’s deaf community.
“When one of the deaf women goes to train, all she needs is a beamer and a mobile. She may use a translator at times, but when it comes to answering questions she needs only to type the answer and show it on a mobile. This is huge for the self-confidence of a person, especially a deaf person who is outside the system and doesn’t have a lot of opportunities to earn a living.”
Ecopia’s goal is to provide opportunities for two million Ethiopian farmers, and it’s the company’s next steps Dr Kifleyesus-Matschie thinks will have the most significant impact. She is planning to develop an open source enterprise resource planning system (ERP) – a platform where farmers can easily communicate and access market information.
Farmers previously had to rely on Dr Kifleyesus-Matschie to inform them if supermarkets had increased their profit margins, but this is the kind of information that will now be readily available. Most importantly, free of charge.
“My intention now is to have everything open source. Ecopia will be willing to give the data for this system and farmers will have the right to verify – it’s the first of its kind in Africa.”
Dr Kifleyesus-Matschie is also in discussions with Airbus to use their satellite technology to track deliveries. “As an environmental company we want to be part of the Ethiopian green economy 2023 – complete green economy. So, we want to minimise our carbon footprint. As transportation contributes dramatically to carbon emissions, you need an efficient tracking system to measure your footprint, and for this you need to use satellites,” she says.
“Airbus is saying they have access and a database for this information that makes the application possible for the farmers. If we do this then we are really complete – the circle is finished. The ICT revolution has been done.”
Blog of Project manager Remko Vonk
As per April 22, Remko Vonk joined the CASCAPE team as its new Project Manager. Remko holds a MSc. in tropical crop science and tropical forestry (1984) from Wageningen University and has extensive project management experience working for international organisations such as IFDC (International Fertilizer Development Center), ICRAF (International Center for Research in Agroforestry), UNEP (United Nations Environment Programme), the private sector and governments. Remko has done long term assignments working in the agriculture and natural resource sector in Kenya, Madagascar, Haiti, USA, The Netherlands, Rwanda and Sudan. Below you can read the first blog from Remko;
Blog #1: The dung cake
During my first visit to the field in Ethiopia, while visiting a Mekele University research site, I met a farmer who was drying animal dung on the wall in the form of cakes. This was the first time for me to see animal dung used as fuel.
At home I found out that this is a widespread practice, being practiced on all continents.
I even found a picture from around 1900 of two French women doing the same as the Ethiopian woman I met was doing: drying dung cakes using a wall.
Dung cakes can be heralded as “green” energy, but the smoke they generate is seen as a disadvantage. From an energy perspective, dung cakes make sense, from a health perspective a little less.
Yet, there is another disadvantage to dung cakes. Soils in Ethiopia are low in organic matter and nutrients. Dung is a high quality organic fertilizer. Combining dung and mineral fertilizer in what is known as “Integrated Soil Fertility Management” can give a sustainable and significant boost to crop production. In the densely populated Ethiopian highlands, this boost is badly needed to feed a growing population. Applying mineral fertilizer at the recommended rate will only address N and P depletion of the soils, but will not address the extraction of all the other nutrients. And this extraction will only be accelerated by the initial yield boost resulting from the NP fertilization.
The North Ethiopian countryside I visited does not have many trees. I saw hilltop Eucalyptus plantations, but only very few trees were integrated in the crop lands. Firewood is obviously scarce. In all the decisions that farmers have to make about land use, be it on private or common land, apparently the integration of trees is loses out in the considerations. Land tenure insecurity is often cited as a reason.
On that same day, I saw many women collecting just about any organic material for fuel: a mix of branches and crop residues. I had seen the use of maize cobs for fuel, but the use of straw for fuel rather than for animal feed or compost was new to me. Farmers told me that they even uprooted the maize stubble for fuel.
Between the stubble, straw, and dung cakes being used for fuel, the organic matter on the farm literally goes up in smoke.
The CASCAPE project’s efforts to encourage farmers to combine organic and mineral fertilizer indeed have positive results. Yields are doubled or even tripled. But what to do if the organic fertilizer is not there? The soils are already depleted of many minerals, and just adding N and P will not suffice to secure a sustainable increase in production. Actually, it only accelerates the mining of the soil of the other nutrients. Adding organic manure secures the presence of elements like S, Mg, Zn and K.
I was left with a complicated puzzle. How to increase production in a sustainable way in a situation where there is hardly any organic manure. Growing legumes won’t help, as they also need their nutrients! Maybe the starting point is with the energy supply on the farms. A difficult option, as it takes time for trees to grow. Yet, N-fixing trees can provide a useful source of energy, N, and can recycle washed out fertilizer. At the same time they can provide necessary organic matter to the top soil. Sounds easy, but currently it does not make it to the list of solutions the project is validating and as long as the underlying tenure problems are not solved, little enthusiasm can be expected from the farmers.
Erdoğan’s Africa tour to kick off with Ethiopia visit
President Recep Tayyip Erdoğan is to go to Addis Ababa on Jan. 22 as part of his scheduled visits to several African countries, including Ethiopia and Djibouti, with a large group of ministers, bureaucrats and businessmen.
During his visit to Addis Ababa, Erdoğan will meet with Ethiopian President Mulatu Teshome Wirtu and Prime Minister Hailemariam Desalegn, according to a recent statement issued by the Office of the President.
He is scheduled to visit Djibouti the following day, and there meet with Djiboutian President İsmail Omar Guelleh. The visits will help businessmen from Turkey and these African nations to establish close ties, the statement said.
Erdoğan’s office also pointed out that Turkey has close historical and cultural ties with the countries of the Horn of Africa and that these countries are the strategic gateways to Middle Eastern and world markets.
The visit will also be an opportunity to discuss regional developments in Africa, the statement said. Erdoğan is expected to return to Turkey on Jan. 24.
The president plans to travel to 12 African countries this year, according to reports by the Office of the President.
The Djiboutian ambassador to Turkey, Aden Hossein Abdillahi, told Today’s Zaman that the current trade volume between his country and Turkey is only $550 million, but that this can be doubled within a couple of years if Turkish businessmen are ready to make the most of the opportunities Djibouti offers as a gateway to the entire African market.
In an interview with Today’s Zaman in November 2014, Abdillahi said his country aims to be a trade center, the “Dubai” of the region.
Economists Predict Africa’s Growth to Go Beyond Oil, Commodities in 2015
Economic experts from across the African continent say this may be an exciting year for African economies, which could be ready to move out of their traditional roles and into new sectors.
African nations have struggled for decades to go beyond their role as providers of basic raw materials, like oil, gas, minerals and agricultural products.
Their efforts have had mixed success. While nations like South Africa and Kenya have managed to diversify their economies, others, like Angola and Nigeria, are largely known to investors as energy sources.
But then oil prices fell. And fell. And continue to fall. And while that trend is clearly alarming to those energy producers, economists say this might represent an opportunity for resource-poor African nations, which have struggled to be heard in the resource-packed African market.
Experts gathered in this month in Johannesburg — still the continent’s economic hub, home to Africa’s strongest banking sector, and the headquarters of many international mining giants — to discuss this new trend.
Analyst Martyn Davies said change is afoot.
“Africa has predominantly been this commodity-driven economy where growth is allied to commodity prices. We now see the headwinds of rapidly declining oil prices. What future does that hold out for continental growth? What implications does that have for business? And I think arguably, is Africa then rebalancing away from traditional commodity-driven growth to one that is more balanced, more consumer-driven and new wealth, new value being created, beyond the simplistic business model of non-beneficiated raw materials?” asked Davies.
That move away from the simple export of raw materials, said analyst Gareth Newham, could also prompt wider improvements in governance and in society. After all, diversified economies spread wealth in more ways than one, and also add much-needed jobs to the economy.
Newham is the head of the Governance, Crime and Justice Division at the Pretoria-based Institute of Security Studies.
“In commodity-driven economic growth, where a very small portion of the population benefits, while very high levels of inequality and poverty do lead to higher levels of instability, making it more difficult to pull together a stable environment for business. And so there’s a very close connection between good governance and the possibility and opportunities for business going forward — and the opposite when there’s not stability,” said Newham.
Davies predicts a geographic move as well, from the traditional West African powerhouses to their East African competitors.
“So I think we’re going to start to see the interests of business, the interest of capital, move away from what has traditionally been oil-propelled economies in West Africa, think Nigeria, think Angola, amongst others, to more sort of East Africa, Ethiopia, Kenya, Tanzania. Yes, Tanzania, is going to be a natural gas story going forward as well. And also Mozambique. So I think the center of interest will shift from West Africa increasingly to East,” said Davies.
Gas prices are expected to stay low for much of the year, and will be closely watched by investors — and consumers — around the world. For many consumers, the low prices present a welcome opportunity to save money.
But for African economies, low commodities prices might be a chance to grow in new directions.
BGI’s Hawassa Plant to Boost Beer Capital Production to 1.44m hl
BGI Ethiopia, Ethiopia’s giant brewery, received eight large fermentation tanks for the expansion of its Hawassa plant on Thursday January 15, 2014 with an investment of 30 million euros.
The eight large fermentation tanks will increase the production capacity of the Hawassa plant by nearly double, said Essayas Hadera, marketing manager of BGI Ethiopia. Each having a capacity of 2,200hl, two of the tanks are Bright Beer Tank (BBT), used for fermentation process and the remaining six tod tanks used for processing the beer.
Ziemann International GmbH, a Germany based Company supplied beer tanks for many countries, including Russia, Mexico, and Belgium, manufactures the fermentation tanks. The tanks were purchased two months ago, all of which arrived at the Hawassa plant last Thursday.
St George beer entered the Ethiopia market in 1922 by Belgian owners. Later it had German owners, before it was nationalized by the military regime. It is currently owned by BGI, which also has a winery at Zeway. BGI has three plants at Hawassa, Addis Abeba and Kombolcha, with a total of 2,687 permanent and temporary workers.
BGI Brewery has three brands – St. George, Amber and Castel– with an annual production capacity of 2.65 million hectoliters. It has paid a total of 1.5 billion Br in taxes during the last fiscal year, having a total investment of 2.8 billion Br.
The Hawassa plant was inaugurated on June 7, 2011, as the company’s third plant in Hawassa town, located 273km south of Addis Abeba.
“Installation of the tankers will start by this week,” Essayas told Fortune.
The installation of the tankers will be completed in process between April and September 2015, he added. When all have been installed, the Hawassa plant will have the capacity to produce 1.44 million hectoliters a year, raising the total of the three plants to 3.6 million hectoliters. A quarter of the installation will be finalized by April 2015 and will increase the production capacity by quarter, according to Essayas.
Ethiopia’s beer industry consists of five major breweries: Meta Abo Brewery, Harar Brewery, Bedele Brewery, Dashen Brewery, and BGI. Combined, they have an annual production capacity of close to 5.62 million hectolitres. Raya is expected to be inaugurated by mid-February 2015, having a total capacity of 5.62 million hectoliters annually and BGI has a 42pc share in Raya. Habesha Brewery another new company is currently under formation.
BGI sources 50pc of its malt input from the Assela Malt Factory, supplier of malt for the existing breweries except Dashen, who sources from Gonder Malt Factory. Currently, Assela meets only 52pc of the annual malt barley demanded by the breweries. Production amounts to 36,000tn to 40,000tn a year.
The demand for beer is projected to grow by 15pc annually, much higher than the African average of five percent recorded in 2014 and the current production stands at 5.6 million hectoliters. On the same day BGI received the tanks, Heineken inaugurated its plant located at Kilinto, which it built for 110 million euros, with 10 tanks and a production capacity of 1.5 million hectoliters, pushing the total production capacity of the factory to three million hectoliters. By the next Ethiopian fiscal year, the country will have a total production capacity of 12.2 million hectoliters annually from the six breweries.
Heineken Inaugurates its Largest Ethiopian Plant
– Plant will produce Harar and Bedele products, as well as the Heineken brand
Heineken Brewery, the world-renowned brewery with a presence in 84 countries, operating over 165 breweries producing 254 brands, inaugurated its largest factory in Ethiopia with an investment of 110 million euros.
The factory, which rests on a 343 sq. metre plot of land in the outskirts of Addis Abeba in a place called Kilinto, on the way to Debre Zeit, has a capacity of producing 1.5 million hectoliters a year. Heineken opened its first African plant in 1923 in the Congo; it now has a presence in more than a dozen African countries, where it employed around 15,000 people in 2010.
The new investment, which comes following the acquisition of Harar and Bedele breweries in 2011, raises the total investment of the company in the country to 310 million euros. Heineken employs 280 people at the new plant, out of which 180 are permanent.
Heineken, which reported revenue of 3.07 billion euros in Africa and the Middle East that led to an operating profit of 665 million euros in 2013, needs a total of 20,000tns of malt a year for the new factory, out of which 50pc is sourced from the local market.
“We are planning to source our malt barley from local farmers through the integration of smallholder farmers in the CREATE project that the company launched in 2013,” said Jean-François van Boxmeer, Chairman of the executive board and the CEO of Heineken NV.
CREATE is a program by Heineken aimed at improving both quality and quantity of barley grown in Ethiopia as well as improved access to markets for the small-holder farmers. By 2017, the company plans to support 20,000 farmers in the production process.The company has now integrated 6,000 smallholder farmers in the supply of the malt barley. And by 2020, the factory plans to source 60pc of its production ingredients from the local market.
Diageo, owner of Meta Brewery, had also designed and piloted barley contract farming project with the aim to source 1,000 metric tons of barley from a substantial number of local smallholder farmers with a potential to source up to 20,000 metric tons of barley within Ethiopia for local use and/or export a year.
The factory gets the water needed for the brewing process from the two water wells 1.5km from the factory each having the capacity of generating 141 cubic meters of water per hour. The wells have a 400m and 500m depth with a temperature of 32 degree Celsius.
The new factory at Kilinto is now producing the seven brands of the company’s beers through its two brewing lines, each having a capacity of producing 42,000lt an hour. The seven brands produced are Bedele Regular, Bedele Special, Walia Beer, Harar Beer, Hakim Stout, Harar Sofi, and Sofi Lemon. It is also planning to commence producing Heineken beer in April.
While this happens in Addis Abeba, Heineken plans to reach the eastern Ethiopia market through Harar Brewery and the western market through Bedele Brewery.
In a country with a per capita consumption of beer at about five litres, Heineken produced 101 hectoliters only in December.
The civil construction of the brewery, done by Rama Construction Plc, took two years to complete.
The inauguration ceremony on the 15th of January, 2015 was attended by Prime Minister Hailemariam Desalegn and the state minister of Industry Mulatu Meles (PhD).
Heineken, which has invested 310 million euros in the country, plans to expand the factory within the same compound.
Together with the 600,000 hectoliters and 900,000 hectoliters production capacity of Bedele and Harar beer factories respectively, the factory’s production will make the country’s production capacity of six million hectoliters increase by three million hectoliters.
“The major strategic purpose of opening this factory is the need to address the 1,000km distance between the Bedele and Harar factories, which is difficult for logistics,” stated Johan Doyer, the managing director of Heineken Ethiopia.
Heineken plans to export products from Ethiopia to African and the Middle Eastern markets.
New Crown Cork Factory Joins Market
A new crown cork factory is prepping to begin production by mid-February 2015, bringing the total of such factories in Ethiopia to six, including one which plans to go into production around July this year.
The factory, to become operational by February, Peniel Industry Plc, is established by Birtukan Abeba with a capital of 120 million Br. The crown cork company rests on 2,000sqm of land in Nifas Silk Lafto District at Lebu Industrial Village. The land as well as the building was property of its sister company Alba Aluminum Plc. A two-year feasibility study was done, after which it took the company around a year to modify the interior of the building to a cork factory, which meets the ISO standard, says Birtukan, adding that the machinery have all been imported and ready for installation, at the plant which will employ 83 people.
The company will begin manufacturing three billion crown corks a year; it could also begin producing cans after conducting market evaluation, according to Birtukan. The principal raw materials required for the production are sheet metal and polyvinyl chloride (pvc), which will be imported from Germany, according to the manager.
The local demand for crown cork is met through both local production and import. At present, the major source of supply to the local market for crown cork is mainly import. During the period between 2011 and 2013, on average, about 93.25pc of the total imports of crown corks were supplied by five countries, India (42.39pc), Spain (14.34pc), Egypt (14.2pc), Italy (12.97pc) and France (9.35pc), according to the Ethiopian Revenue & Custom Authority (ERCA). Others supply the remaining.
Ethiopian Crown Cork & Can Manufacturing S.C.,CGF-crown Cork and Aluminum Cap Manufacturing Factory, Daylight Applied Technologies Pvt. Ltd Co. and Metal Crown are the four local factories in Ethiopia. Based on the existing production trend, it is estimated that 1.3 billion pieces of crown corks have been produced locally in 2013, showing 12.6pc production growth compare to the 2012 fiscal year, according to Central Statistics Agency (CSA).
Besides Peniel Industry Plc, a new Ethio-Italian company is also set to join the four local factories. The Italian New Box S.P.A and Alemayehu Negussie, who is an Ethiopian Investor, own the company. The company will go through the commissioning process by March and start manufacturing by June or July, 2015. It will have the capacity of manufacturing one billion crown cork a year. Therefore, these two companies are expected to raise the total local crown corks production to 4.3 billion pieces, which will still fail to meet the growing demand.
The demand for the crown cork in 2014 was 3.3 billion pieces. This figure is estimated to reach 5.5 billion pieces in 2015, according to research by One Cent Management and Marketing S.C.(OCM), May 2014. One Cent Management is an Ethiopian private equity and assessment management share company established on December 3, 2010. The demand for crown cork depends mainly on the performance of its end-users such as beverage, mineral water and cosmetics industry, explains Fitsum Getu, chief investment and research director at OCM. It has seen a higher demand compared to the market supply of crown corks.