26 January 2015 Business News Round-Up



Turkey to invest in Ethiopia’s hydropower


Turkish President visiting Ethiopia on January 22, 2015 at national palace of Ethiopia


The Turkish President Recep Tayyip Erdogan, who began his official visit in Ethiopia this morning, announced that his country is interested to invest in generation of electricity from hydro power.

“A new era is incepted between Ethiopia and Turkey. We want the energy field to be part of our cooperation. We encourage our energy companies to invest in this sector as Ethiopia has over 45,000 megawatts hydroelectric generation potential,” President Erdogan said after attending science and technology cooperation agreement signing between the two countries with Prime Minister Hailemariam Desalegn of Ethiopia.

Prime Minister Hailemariam Desalegn on his part indicated that his government is ready to sign the power purchase agreement from the Turkish when they are ready to be engaged in power generation.

When the Turkish began producing hydroelectric power, the Ethiopian government will buy from them and resell it to the public for only power generation is allowed for foreign companies according to the law of the land.

Ethiopia is currently generating a total of slightly over 2,000 megawatts of electricity from various hydropower plants and is also undertaking construction of the 6,000 megawatts Great Ethiopian Renaissance Dam with only local financing. In addition the 1700 megawatts Gibe III hydropower undertaken with external financing is also expected to be completed this year.

Having total area of 1.1 million km 2 , 122 billion m 3 of water resource per annum and 75.8 Million populations in the Horn of Africa, Ethiopia is often referred to as the water tower of Africa Ethiopia.

Trade and WTO accession

Appreciating Turkish companies’ investment in Ethiopia so far, “We want more Turkish investment and will be working very hard with Turkish government and companies,” Prime Minister Hailemariam said expressing his hope that the currently $400 million trade between the two countries will increase by the end of 2015.

“With a total population of 170 million in the two countries, the trade volume is insufficient. By the end of 2015 we want to increase it to 500 million,” President Erdogan said.

Ethiopia as part of its accession journey to the World Trade Organization (WTO), Ethiopia will start bilateral discussion with Turkey.

Currently Turkish companies are the major investors in Ethiopia with around $2.3 billion. The investment could triple if Ethiopia allowed Turkish banks to operate in Ethiopia making international money transfer of Turkish companies easy, Erdem Karal, Second Secretary at the Turkish Embassy told newBusinessEthiopia.com reporter in Addis Ababa.

Turkish president at the National Palace of Ethiopia on January 22, 2015

During the bilateral WTO talks Turkey, which is the member of WTO, among others is expected to request Ethiopia to open its doors for Turkish banks to operate.

As part of the principle of open your market first before accessing the WTO members market, when a country applies to WTO membership, a member country who has specific business interest in the applicant country usually demands the applicant to open a certain sector or industry for its investors.

Investment financing

Currently Turkish Eximbank has also financed a section of Ethiopia-Djibouti route under construction. In addition, Turkish companies so far have created jobs to around 8,000 Ethiopians in the areas of textile, construction materials production and railway, among others.

Apart from economic cooperation the heads of the two countries have also expressed their interest to deepen relation in supporting the Government of Somalia. Beyond infrastructure trade and investment, the two sides have agreed to work closely in military training and defence as well as cultural areas, according to President Erdogan who also visited Somalia and Djibouti after Ethiopia.

Sourced here  http://www.newbusinessethiopia.com/index.php/component/k2/item/211-turkey-to-invest-in-ethiopia-s-hydropower/211-turkey-to-invest-in-ethiopia-s-hydropower


Semera – Tadjoura Railway Tender Postponed Again for the Fifth Time


CEO points at the need to give more time and more information to bidders


Ethiopian Railway Corporation (ERC) postponed the tender it had announced to hire a contractor for Semera -Tadjourah, railway project for the fifth time.

Initially, the tender was announced on August 7, 2014 requesting the bidders to submit their technical and financial proposals by August 22, 2014, for the construction of a 280Km rail project connecting Semera with the Djibouti port at Tadjourah. Totally, 11 companies purchased the bidding documents. But the Corporation postponed the bid submission date to October 13, 2014 and subsequently changed the dates to November 2, 2014, and January 30, 2015.

The recent submission date was meant to take place by this week on January 30, 2015, but according to a letter sent to the bidders on January 15, 2014, the ERC stated that the bid document submission date is again extended to March 3, 2015.

“We received the letter with the changed submission date for the fifth time without specifying the reason why the Corporation is changing the date,’’ said one of the bidders.

The project is part of the national project that extends form Mekele – Weldya/Hara Gebeya – Semera-Tadjourah Port Railway Project. But the 268.2Km Mekele-Woldiya/Hara Gebeya Railway project was awarded to the China Communications Construction Company (CCCC) for 1.6 billion dollars in 2012 after obtaining the financing from (EX-IM) Bank of China. The project is expected to take three and half years to complete.

The Corporation has changed the requirements in the tender, which could lead to the exclusion of some of the bidders, said one international bidder. These changes included a requirement that bidders should previously have worked on a project worth 200 million dollars as well as undertaken 180Kms of road project and 180Kms of rail project.

The tender was postponed for two reasons, says Getachew Betru (PhD), chief executive officer (CEO)of ERC.

“One is because of requests from the bidders for more time to prepare financial and technical proposal. The second reason is that we needed to provide some explanations to some bidders who were not clear about some points in the bid document.’’

The ERC facilitated and took the bidders for sight visits to the place of the construction on September 2014 and December 2014.

This project will be a 280Km railway connecting Afar Regional State and Djibouti with the aim of transporting potash, metals and other products from northern part of Ethiopia to Djibouti’s Port Tadjourah for the international market.

The detailed feasibility study of the project was conducted by Overseas Infrastructure Alliance Plc (OIA), an Indian firm, in 2012 with the financing of the government of Ethiopia. OIA also prepared a bidding document and detailed engineering design for the project that is expected to be finalized in five years with a 300 million dollar financing that is secured from Indian government.

The ERC is undertaking the construction of railways in two schemes – Light Railway Transit (LRT) and National Railway Network of Ethiopia (NRNE). The LRT project which has a 31Km length was awarded to China Railway Engineering Corporation (CREC) with 475 million dollars in 2011. The project is expected to start operation by May 2015. For the NRNE, the ERC has identified eight railway corridors for study, design and subsequent implementation, the total estimated length of which is 5,060km. Semera to Tadjourah rail project is part of the national project that was planned to be constructed as phase one.

From the NRNE projects, another Chinese company, China Railway Eryuan Engineering Group Co. Ltd. (CREEC) is constructing the first lot of the 317Km Addis Ababa-Me’eso railway lines. The second lot of the 340Km Me’eso-Dire Dawa-Dawale electric railway project was awarded to another Chinese state owned enterprise China Civil Construction Corporation (CCECC) in 2011 and progressing well.



Danakil DFS to potentially uplift value of Premier’s interest in Circum


23rd January 2015

potashJOHANNESBURG  – Circum Minerals expects to complete the definitive feasibility study (DFS) for its Danakil potash project, in the northern margin of the Danakil depression, in Ethiopia, by mid-year and foresees the production of 2.75-million tonnes a year of saleable potash salts over a minimum of 30 years.

Aim-listed Premier African Minerals CEO George Roach noted on Friday that if the DFS realised Circum’s hopes that the Danakil project was a “potential major, world-class potash project” under development with robust economics, Premier expected a substantial uplift on the value of its interest in Circum.

Premier held two-million shares in Circum, which had received a further $5-million on an exercise of investor warrants which, at the exercise price of $1.25 a Circum share, valued at $116-million on a fully diluted basis.

Premier’s interest was currently valued at $2.5-million

“We believe that the completion of the resource estimate by K-Utec Salt Technologies and the proposed DFS should provide an opportunity for Premier to realise its investment at an attractive valuation during the latter part of this year,” he added.

Circum had currently completed road construction, drilling and the seismic portion of Danakil’s feasibility study, which was scheduled for completion in 2015. The company also expected to update the project’s resource estimate in the first quarter of this year.

Circum finalised its drilling programme at Danakil on the western area resource at the end of November and the eastern area in December. The seismic survey was also completed in December.

Other elements of the feasibility study to be completed this year included the definition of the Danakil project’s water resources, plant design, operating and capital costs, and the completion of its transportation and port infrastructure plans.



Why Investors Should Consider These Three Developing Countries

–  Ethiopia one of three developing economies given the nod due to a perceived United States – friendly bias



Turkish President Seeks to Boost Bilateral Trade from $400m to $500m


Ayka Addis, the largest textile factory in the country was established with 140 million-dollar investment in 2010 being an ice breaker to the entrance of Turkish investors in Ethiopia.

Since then, Turkish companies especially in the textile sector have been flowing to the country reaching more than 150 and employing 50,000 Ethiopians currently. These Turkish companies invested more than three billion dollars in the country. The number of the Turkish investors in the country in 2004 was only one with jobs created standing at five. The number of the investors grew to 155 within the following 10 years.

The country geared its focus to Africa adopting the African initiative in 2003 following the 1998 African Action plan; and declared 2005 as the year of Africa. And Ethio-Turkish business forum was also established in 2009 with a mission of serving as a business platform for bringing business people together.

In 2003, the Turkish investment in Africa was only four billion dollars while this number grew to 25 billion in 2013.

The overall volume of foreign trade has increased from 742 million dollars in 2000 to four billion in 2010 and 7.5 billion dollars in 2011. The volume of Turkey’s foreign trade with all African countries has increased from nine billion dollars in 2005 to 14.1 billion dollars in 2010 and 17.1 billion dollars in 2011.

With the visit to Ethiopia of Recep Tayyip Erdogan, the 60 year old president of Turkey, hope was laid in the investors both in the country and others intending to invest in the country.

“We would like to become Ethiopia’s partners and we have to promote and protect companies on both sides,” said Erdogan.


President Erdogan and Prime Minister Hailemariam Desalegn at the press briefing.


Although Turkey is among the 10top destinations for Ethiopia’s exports, the trade balance between the two countries still remains in favour of Turkey. In the 2013/14 fiscal year, the export to Turkey earned 84.6 million dollars standing at the ninth rank accounting to 2.6pc of the total earnings from export. And the trade gap between the two countries stands at 100 million dollars.

Among the top 10 destinations of Ethiopian exports are China, Somalia, Germany, Saudi Arabia, Netherlands, Switzerland and US.

But the Ethiopian government seems to be comfortable with the existing relations between the two countries as Hailemariam Desalegn, Ethiopian Prime Minister stated during a joint press briefing with President Erdogan at the national palace.

“Although the trade balance is in favour of Turkey, the growing foreign direct investment (FDI) from turkey will fill this gap,” he said.

Turkey is the number one investor in the country having 115 projects with an investment of 69.2 million dollars within the time January 2010 and October 2014. Out of these projects, 26 projects are under the implementation stage investing 3.6 million Br and employing 3,384 permanent and 2,492 temporary employees, 35 projects are in operation with a capital of 18.4 million Br and creating 1,627 permanent and 1,798 temporary jobs. The remaining 54 projects are in the pre-implementation stage creating 26,708 jobs permanently and 12,180 temporarily. India and China follow with investments of 38.9 million Br and 25 million Br respectively. Saudi Arabia and Sudan take the fourth and the fifth stages with investments of 14.2 million Br and 13.6 million Br.

The total trade turnover between the two countries stands at 400 million dollars in the first 11 months of 2014 growing from the 110 million dollars in 2004. And there is an interest in the two parts to increase the figure to half a billion.

“The first target is to bring this number to 500 million and then we will proceed to establishing a free trade agreement, which we have discussed and is a must to sign,” stressed Erdogan.

The major export items of Ethiopia are coffee, oil seeds, pulses, spices, khat, livestock, meat, flower, fruits and vegetables, textile and skin and hide products.

The human resource of Ethiopia, a country with the second largest population in Africa after Nigeria puts it at the primary focus of his country, according to Erdogan.

Erdogan, who expressed the financial bureaucracy problems of Turkey’s investors stressed that this has to get its end by the opening of Turkish Bank in Ethiopia which, as he said were discussed between the two leaders.

“Our Bank should come here and it will be a good leap to Ethiopia as well,” said Erdogan.

Turkey came to ninth rank as export destination for Ethiopia in 2013/14from 15th in 2012/13. China came to first place from its second rank; Saudi came to fourth from fifth, and Israel came from 10th to eighth position, while Somalia went down from first to second.

Turkey was a destination of Ethiopia’s oil seed that generated 38.4 million dollars, pulses that generated 15.6 million dollars, meat that generated 349.5 million dollars, and textile that generated 27.4 million dollars in the 2013/14 fiscal year.

Believing to transform this relationship to a higher stage as both the leaders were pronouncing, the two nations have launched a new relationship project for the years 2015 to 2018.

“Africa is going to be the next growth pool of the world,” said Hailemariam Desalegn. The two governments signed a memorandum of agreement to cooperate in the fields of science and technology. The Addis Abeba University, which will be linked to universities in Turkey for cooperation, conferred an honorary doctorate degree on the president

The president, who made his first visit to Africa making his first start from Ethiopia since he assumed the position of the presidency in 2014 promised that Ethiopia is going to be the central place or headquarter for the Turkish investment in Africa.



Norway to place Ethiopia among six focus countries for development cooperation


Foreign Affairs Minister Dr Tedros Adhanom received on January 25 a Norwegian delegation led by Foreign Minister, Borge Brende.


The bilateral discussions of the two Foreign Ministers dwelt on numerous issues of common interest. Both Ministers exchanged views on the promotion of Ethio-Norway partnership and expanding the depth, breadth and scale of the relations of the two friendly countries.

Dr Tedros gave a briefing on Ethiopia’s renaissance journey, the ongoing IGAD-led peace talks as well as IGAD’s role in supporting the South Sudanese warring parties end conflict and advance the cause of peace and stability. Dr. Tedros noted that Ethiopia will remain committed to advancing peace and stability in the region and attaches special importance to dialogue to resolve disputes.

He also recalled the successful conclusion of the 53rd Extraordinary Meeting of the IGAD Council of Ministers held in Mogadishu on January 10, adding that the very fact that meeting was held in Mogadishu tells a lot about the improving security situation in Somalia.

Foreign Minister Borge Brende on his part noted that his visit to Addis Ababa is a demonstration of Norway’s commitment for the further strengthening of the bilateral ties with Ethiopia.

He also underscored that Norway stood committed to step up its cooperation with Ethiopia. The Foreign Minister underlined the need for further consolidation of the bilateral partnership of the two countries.

Borge Brende noted that Norway’s Foreign Affairs Ministry is prposing placing Ethiopia among the six focus countries for development cooperation program.

Dr Tedros expressed his gratitude to Norwegian Foreign Affairs Ministry’s decision to make Ethiopia as one of the six priority countries in the country’s development cooperation program. This, he said, would help Ethiopia’s efforts to realize a carbon-free middle- income country status by 2025.

Both sides reached a consensus in jointly pushing cooperation forward in many areas including climate change, education, private sector engagement, trade and investment.



Industry Ministry Deliberates Draft Strategy for Construction Inputs


Draft vies for domestic production substituting imports of nine input categories


The Ministry of Industry (MoI) received first draft of an industry strategy which the Addis Abeba Institute of Technology (AAiT) produced with Korean experts and a hired consultant, with a team travelling to several countries across the world for experience sharing.

The MoI gave the job to Institute in July 2014 to produce a Construction Input Development Strategy for 2015-2025. The strategy considers nine construction inputs with the aim of increasing the country’s construction input manufacturers within a decade, according to a senior official at the Ministry. The input sectors included in the strategy are marble, plastic, aluminium, wood products, gypsum, glass, adhesives, ceramics, and pints. The strategy vies to make production of these inputs competitive enough to substitute imports.

The draft has been discussed with stakeholders three inputs at a time, with the draft for the last three input items being discussed on January 10, 2015, according to Abubeker Yimam (PhD), project engineer of the strategic plan from AAiT.

The draft strategy explores the problems of the sectors and suggests solutions for the problems such as enabling industries to improve actual production to their capacities; to increase the number of factories in a sector, such as ceramics production, where there has been only one factory for a long time, with a new one coming soon; as well as beginning aluminium manufacturing in Ethiopia. It also suggests local production of inputs for flat glass manufacturers.

“The strategy will help the plan of increasing the manufacturing industry’s contribution to the Gross Domestic Product (GDP) to 17pc from five percent currently,” says an official.

This strategy is part of the ministry’s current engagement with Addis Abeba University, AAiT, Adama Science and Technology University and Industrial Training Services (ITS) working on the design of plans for the industry sector in three platforms; feasibility study, strategic plan and man power study. Recently, Adama Science & Technology University finalized a draft Cement Industry Development Strategy, with the aim of increasing the country’s cement consumption by more than threefold and had a discussion with the stakeholders’ manufacturers of cement in December 2014.

AAiT conducted the research with Korean experts and external consultant. The process involved 24 people in groups of four, each travelling to one country including China, Turkey, United Arab Emirates (UAE), Spain, Italy and Korea, for best experiences, according to Abuberker.

The strategic plan was conducted with the assistance of a steering committee organized by the MoI having six members chaired by Haile Assagide, chief executive officer (CEO) of Derba Cement Factory, Mesfin Abi, CEO of Habesha Cement Factory, two from Chemical & Construction Inputs Industry Development Institute and additional two representatives from the industry.

Comments from participants included problems to be reconsidered such as access to finance, problems related to lack of infrastructure such as road, water and electricity, the establishment of industrial bank, according to Abubeker.

The strategic plan included budget for the implementation, but both the Institute and MoI declined to disclose the budget saying it needed revision as the draft came up with lower implementation cost.



Local company to export bamboo chopsticks to China



Bamboo Star Agro-Forestry, a company established in 2007, is set to produce bamboo chopsticks and other products that will be destined for the Chinese market. 

Michael Gebru, a returnee from the US who was living there for 24 years, said that his pioneering company in the industry is making ways to export chopsticks to major Asian markets, mainly China. Michael told local reporters on Friday at his office, located off Yared Street, in front of the Swedish Embassy that currently he is looking at the possibilities of manufacturing furniture made out of bamboo.

According to Michael, the products processed out of bamboo trees include parquet, toothpicks, windows and door frames. However, he intends to diversify that into various types of furniture. The demand for a lowland bamboo made products is immense due to its strength, he said. Bamboo trees are classified as both lowland and highland trees where the lowlands are favored for their strength.

The company’s manufacturing plant is located in the town of Assosa, Benishangul Gumuz Regional State. Erected on a 6,000 sqm plot, the plant has the potential of processing 3,000 sqm bamboos per month. However, the installed capacity of the plant is some 10,000 sqm.

Established with an investment capital of 60 million birr, Bamboo Star currently runs on a 100 million birr capital. The company has approached the Development Bank of Ethiopia (DBE) for financing and is awaiting the approval of some 60 million birr loan request.

In a related news, the giant aircraft manufacturer Airbus is considering to use Ethiopian bamboo for its cabin components. Michael told reporters that two Airbus engineers were at his plant to examine the quality of the trees.

Bamboo Star is also working to set up a pulp and paper processing factory. Michael said that his company is dealing with Chinese and Saudi companies. Michael went on to say that he is on the process of establishing a bamboo institute here since the country tops Africa where 67 percent of the bamboo trees are found here.

China is well known for utilizing bamboo made, wind-mill blades in many of its power generating plants. Bamboo tress are the most exploited plants where some 1,500 products are manufactured. Food stuff, bicycle parts, clothes, pulp and paper are among the various items which are making everyday life easy. In Benishangul Gumuz region, local residents widely eat bamboo shoots which are edible in many forms.

Michael was featured as one of the Africa’s entrepreneurs in major media outlets   for making a difference employing a unique business venture. His company currently has created job opportunities for some 500 workers and out of whom 200 are permanent employees.



House Ratifies Three Proclamations to Deal with Corruption


Anti-Corruption Commission gains more power, while financial fines are enhanced


The first anti-corruption law that is made in separation to the 1994 criminal code of the country was ratified by the parliament. The new proclamation included new provisions in addition to those in the criminal code.

Among the new provisions that the proclamation brought into light are the punishment to the improper disclosure of secret codes and keys in order to get personal benefits, licensing or certifying unqualified persons, disclosing military secrets- as punishable both by the criminal code and corruption proclamation, and the bribing of mediators.

The new proclamation that strengthens the punishments to be effected on the corrupt has also included monetary punishment on every imprisonment. Therefore, if an enterprise that has got legal personality is found to be involved in corruption, for those actions punishable by simple imprisonment, less than five years imprisonment, from five to 10 years of imprisonment, and more than 10 years of imprisonment, it will be punishable by 20,000 Br, 30,000 Br, 50,000 Br, and 80,000 Br respectively.

This amount of money was set on the public hearing process of the Law, Justice and Administrative Affairs Standing Committee of the parliament. The former punishments were 30,000 Br, 50,000 Br, 100,000 Br and 200,000 Br respectively.

“This is because monetary punishment has a better deterring effect in the eyes of the corrupt than imprisonment,” states the proclamation.

Although many governmental and nongovernmental organizations were put into consideration while making the law, there are some that are excluded from being questioned by the law. These are corruption cases that are committed by religious organizations, political organizations, international organizations, small and micro enterprises and other religious or cultural institutions.

This is because, the income collected in religious institutions, which is based on faith, does not follow proper controlling mechanisms, which is done to comply to the believers’ faith as the believers do not question the use of the money. International organizations have immunity not to be questioned by the law and the expense is higher than the result to be found by the trial process to question small and micro enterprises.

Together with the proclamation, the parliament also ratified other two proclamations, a proclamation to amend the revised anti-corruption special procedure and rules of procedure of evidence proclamation, and revised anti-corruption commission establishment proclamation.

The proclamations were necessitated because of the need to include public organizations and ensure speedy and effective gathering of information, investigation, prosecution and hearing of corruption offenses and the injunction and retrieval of property obtained thereof.

As a result of the new proclamation, other provisions in the criminal code are revoked and corruption cases are to be seen using the new proclamation. But those that have been committed before the ratification of the new proclamation are to be tried using the provisions in the criminal code.


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