Ethiopia expects to open a new railway line linking the capital Addis Ababa with the Red Sea state of Djibouti in early 2016, a project at the centre of plans to create new manufacturing industries, the head of the state railways said.

The 700km line is being built at a cost of US$4 billion (RM14.47 billion) by China Railway Engineering Corporation (CREC) and China Civil Engineering Construction (CCECC).

Ethiopia is seeking to have 5,000km of new lines working across the country by 2020.

“By October 2015, a considerable portion of the Addis Ababa-Djibouti project will be finished,” said Getachew Betru, chief executive of the Ethiopian Railways Corporation, adding that trains would run soon after. “We will start early 2016.”

In addition to the Djibouti line, two others are being built across the country which are among a range of big infrastructure investments that also include new roads and dams to produce hydro-electric power.

In a bid to keep the economy expanding at the 8% or more it is already achieving, the nation of 96 million people wants to become an African manufacturing hub, offering investors efficient transport, plentiful labour and cheap power.

In the capital, a new US$475 million light railway system will be tested in the next few weeks before scheduled services start. It will be the first city metro to operate in Sub-Saharan Africa.

Among the new national railway lines, one will connect the region of Afar, where Ethiopia is encouraging the mining of potash for fertiliser, to Djibouti, the main export point for land-locked Ethiopia. Canada’s Allana Potash Corp is among the firms developing mines in Afar.

Most Ethiopians still depend on subsistence agriculture, but the country is building a textile and garment industry, produces shoes, assembles cars and trucks and other products. It is drawing some investors from China and India, where wages are rising.

For now, logistical difficulties such as poor roads and an old fleet of trucks mean transporting goods from the capital to Djibouti can take days. The new railway line will cut the journey time to about eight hours.

“It is a game-changer for us,” said Getachew. “It will be one of the most vibrant economic corridors in the world.”


Premier Urges Chinese Companies to Engage in Building Industrial Zones, Parks


Premier Urges Chinese Companies to Engage in Building Industrial Zones, Parks

Prime Minister Hailemariam Desalegn invited Chinese companies to participate in the building of industrial zones and parks in Ethiopia.

During the discussion he held with the Special Envoy and Vice Foreign Minister of China, Zhang Ming, the premier said the Ethio- Chinese cooperation in aviation, railway infrastructure building, road construction, poverty reduction and industrial development is vital for Ethiopia’s development.

He particularly noted that the participation of Chinese companies and investors in the building of industrial zones would contribute a lot to Ethiopia’s industrial development.

The PM also urged Chinese companies to engage in potash development and benefit themselves as well as Ethiopia.

The government of Ethiopia would provide support to Chinese companies that engage in the various sector, the Prime Minister pledged.

Hailemariam finally appreciated the support of China to IGAD in its effort toward stabilizing Eastern Africa and particularly South Sudan.

China’s Vice Foreign Minister Zhang Ming said on his part the bilateral ties between Ethiopia and China have shown tremendous growth last year.

According to him, the leaders of the two countries have set long-term plan to further strengthen the friendship of the states.

The relationship of China and Ethiopia has been growing fast after the signing of a comprehensive cooperation agreement in 2003.


Dangote Says Nigeria Will Become Africa’s Number One Urea Exporter By 2017


Aliko DangoteVENTURES AFRICA- World’s richest black person and President of the Dangote Group, Alhaji Aliko Dangote says Nigeria will be the largest exporter of urea in Africa by 2017.

He made this declaration during an interactive session between members of the organised private sector and the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, concerning global oil prices in relation to Nigeria’s foreign exchange market.

“Nigeria will be the biggest exporter of urea in Africa by 2017. Most of these plans are in the pipeline,” said Dangote, who is building a 2 billion dollar fertilizer plant in the country’s Edo State. He urged all members of the private sector present to support the government’s approach to diversifying the economy. Urea is an inexpensive form of nitrogen fertilizer with an NPK (nitrogen-phosphorus-potassium) ratio of 46-0-0.

Dangote noted that the recent global crisis has made the need to refocus on ways to further develop the Nigerian economy more dire. He described it as an opportunity for stakeholders in the country’s economy to sit down and discuss about how to diversify the economy and encourage more exports, “because that is the way we should be going instead of going to the Central Bank of Nigeria every day to buy forex”.

The rate at which the Nigerian population is growing, it is projected to hit 210 million by 2020. This will therefore be a great opportunity to promote exports and expand the economy.

In response to a statement made by the CBN governor that sugar is one of the items importers always seek forex to import, Dangote had this to say: “I can assure you that in the next four years, you will not allocate forex for sugar importation.”

He then concluded that boosting productivity is paramount to the strengthening of the economy. With the plans on ground, Dangote expects the country to become the highest seller of foreign exchange by the first quarter of 2018. “Our plan now is to start exporting most of our other products.”


Betting on Sub-Saharan African Currencies: What African Currencies to Sidestep


VENTURES AFRICA – The boom is still going in sub-Saharan Africa. Sovereign bond issuance hit record highs in 2014 and now investors are speculating on currencies. But weakening commodity prices and widening domestic deficits are currently hurting certain currencies (with little relief imagined in the near term for some countries).


This week’s article highlights the top five currencies to avoid in the near term:


Ghanaian Cedi

The decent of the Ghanaian Cedi is well documented in 2014. The currency was the continent’s worst performing currency in 2014, plummeting 26% against the dollar. The country fiscal policy has been lax, as emphasized by the IMF’s initial commentary following Ghana’s request for a $1.5 billion bailout as part of greater stabilization plan. The country’s budget deficit of 10% of GDP in 2013 is a manifestation of a country that is struggling to meet cost-cutting and revenue-boosting goals promised to the IMF. The country was once hailed as an up and coming economic giant. But the government is struggling to capitalize on a pseudo tax break from low oil prices as a net importer. It has not escaped the pain of falling commodity prices as the country stalls in its efforts to boost the mining sector. All indications from the IMF and the country’s leadership point to efforts to turn the corner. But changing a lax financial culture and waiting on commodity prices to increase does not lend to a promising outlook for the Cedi in the near term.

Zambian Kwacha

Zambia’s commodities industry is still booming despite a drastic slide in copper prices. But the question remains for how long the industry can survive the decent. The Zambian currency is a good indication that things are challenging in the current environment. As the price of copper dropped nearly 20% between the end of January 2014 and the end of January 2015, the Zambian Kwacha nearly dropped a staggering 18% against the dollar. The government took aggressive measures to combat dollar growth and popularity within the country in 2012 when it banned the use of the US dollar for domestic transactions and in 2014 when it added a regulation that forced businesses to remit foreign currency profits back home into local currency. The efforts have achieved little in protecting the Kwacha. It is hard to bet on the Kwacha despite the government’s desire to do something better to protect the 12% growth in financial services from 2014. Also what will a new president mean for the country’s economic policies going forward?

Nigeria Naira

The fall of the Nigerian Naira began in early May after the kidnapping of the 2000 Nigerian girls and the #BringBackOurGirls campaign around mid- to late-April. If a political miscue in the government’s response to Boko Haram’s acts of terrorism created the initial bad taste in investors’ mouth, the fall in the oil price was a bitter addictive to economic brew in the country. The currency tumbled 13% in the last six months as the Brent crude oil price nearly plunged a remarkable 58% in the same time period.  The government is limited in options as timing is a huge factor. First, the 2015 proposed budget was based on a revised benchmark oil price of $65 per barrel, which is 32% higher than the current price. Elections are in February and politicians naturally must play to the masses than to actual needs of the economy at hand. Accordingly the Nigerian Central Bank appears prepared to hold interest rates around 13% and stall a necessary increase until after the presidential election. The myriad of timing constraints and the overall oil environment does not bid well for the currency of Africa’s biggest oil producer.

South African Rand

Africa’s second largest economy struggles mainly from internal disruption as the African National Congress’s reelection has not reenergized the economy. Foreign investors continue to call for structural changes within the South African market. The country relies heavily on the mining sector but relationships with mining companies has slowly deteriorated due to employee strikes, reactive government policies and responses (that often frustrate mining companies), and an all-inclusive rising cost of doing business in the country. Low GDP growth expectations and a fall in commodity prices are further deterring factors for betting on the South African Rand. The Goldman Sachs Commodity index dropped more than 40% in the last six months and the South African Rand – unable to fight the tailwind – fell 10% in the same period. Little is coming from the government and the market to suggest a change in the near term.

Uganda Schilling

The Ugandan shilling sadly is an easy currency to target for this list with its current start to 2015. The currency has fallen almost 4% since the start of the year in addition to the approximate 11% it fell against the dollar during 2014. This year’s early fall is due to a drop in coffee exports and a widening trade deficit. The country should currently benefit from lower oil prices as it receives pseudo tax break as a net oil importer. But these low prices similarly work against the country’s desire to expand its oil sector. A Brent crude oil price below $50 provides little incentive for foreign investors to invest directly in the oil industry in the country or invest in sectors that would support the oil industry.  The tourism sector has also missed its targets as potential tourists are scared by increasing safety concerns in East Africa and the country’s decreasing patience for particular groups of individuals within its border (including gays).


Positive outlook but tricky downside dynamics


Mozambique Metical

Betting on Mozambique is betting on a booming giant. But the country is budgeting on the potential of a gas bonanza in the future. Yet the gas price is not working in its favour, particularly at a time when the country requires a great amount of infrastructure investment. The price has not been above $6.00 since February 2014. A new norm was assumed by mid-2014 in $4.00 range but now prices sit below $3.00, equating to drastic 37% drop in the last two months. Then why bet on Mozambique? The country has investors heavily locked into infrastructure projects that it can still support from a large pot of foreign aid. Running a large deficit is less a faux-pas in economic management as foreign donors remain adamant in their support of the country.  All indications from donors suggest that financial support will remain, especially after a successful presidential transition, and that the government is intent on seeing infrastructure projects to fruition. Those commitments and the potential for a rebound in gas prices suggest that the Mozambican metical is priced cheaply and has nice upside, even if it may take a while. But no one knows how long “a while” may be and, as one big former investor in the country described it, delays in project completion should easily be anticipated, undercutting the upside in the near term.

Ethiopia Birr

Ethiopia arguably should be a benefactor in the current oil and gas environment. Government insiders suggest that the country could save $500 million on refined petroleum imports in the current environment. However that number is exaggerated as it does not account for the potential volume increase of imports. Regardless of the volume considerations, the country has a pseudo tax break from lower oil prices and is prepared to use it to further invest in infrastructure to support other sectors, especially manufacturing, and boost Ethiopian exports. Exports should benefit from lower transport prices. But, as the government continues to warn us, these numbers are all things considered except any “major disasters.” Local sentiment is that the government could devalue the currency again to boost its exports (and consequently devalue the wealth of local individuals in one night). In other words, it is hard to bet on a currency that (1) locals fear could be devalued by the government, (2) could immediately suffer once oil prices rebound, and (3) endures in a very strict foreign exchange environment.


Allana Potash Developing Low Cost Potash In Emerging Markets In Africa


Allana Potash Developing Low Cost Potash In Emerging Markets In Africa   //   Allana Potash Développement Faible Coût De Potasse Dans Les Marchés Emergents En Afrique

Allana Potash Site in Ethiopia 

January 26 – 2014

Developing a potash resource in the middle of Ethiopia where the temperature remains a steady 40 degrees Celsius all year round is a process. Allana Potash Corp. (T.AAA) knows it has a substantial resource but it also knows that lining up the financing to bring the resource to market is critical.

We spoke to Farhad Abasov, President and CEO of Allana as he swung through Vancouver on an investor road show which took him to Toronto, New York and Chicago. We’d last spoken with Abasov in February when Allana announced its strategic alliance with Israel Chemicals Ltd, a deal which brought both investment and expertise to the Ethiopian project.

When last we spoke to Abasov the world’s potash markets were in some turmoil but this seems to have calmed. “The potash market has stabilized somewhat.” said Abasov, “We’re seeing price stability and supply discipline. The global price of MOP(muriate of potash or the standard potash applied to staple crops such as corn, etc.) is between $US300 and $US350 a tonne. High cost producers are reducing production which is creating a more balanced supply demand situation with the price stable.”

Against that background, Allana is performing optimization studies on its Ethiopian property. These studies and the general progress including financing for the project were announced in a press release November 5, 2014. (link)

“Our potential lenders required that we do extra work to provide comfort on the various elements of the project.” explained Abasov.

The first concern was the suitability of the aquifers Allana would be using for its solution mining operations. The solution mining process means that Allana will dissolve the potash underground and then pump brine to the surface where it will be placed in solar evaporation ponds. There’s where the 40C year round temperature does its magic.

“The first concern is the water supply. The lenders wanted comfort on the local aquifers that supplied the industrial water for our solution mining process. We have done aquifer stress tests on the flow and recharge rates. We needed to ascertain that the recharge rate was sufficient. On the water side we’ve had no surprises. The rates are quite good.”

The second area in which the lenders were seeking comfort was on the issue of scalability. “We had done work on a 40 meter sized solution mining chamber for our initial Feasibility Study, but the commercial scale production chambers will be 80 meters in width. So we needed to demonstrate that this larger size was achievable. Our work confirmed that is was.”

As the work on the project continues Allana is also deeply involved in the creation of the infrastructure required to get the potash to market. Here the focus is on the construction of a port facility in the region of Tadjoura in Djibouti. The construction of the port is on schedule with completion set for 2016. As well, a road linking the port to Ethiopia is set for completion in 2015. These key infrastructure elements are being completed by the respective government agencies in charge in both Ethiopia and Djibouti.

“We will process the potash at a plant on our site.” explained Abasov, “Then it is trucked to the port. We’ll be building our own low-cost handling/storage facilities in the port itself.”

Allana sees the market for its production as East Africa itself. “We want to create new demand with in the region. East Africa itself could use 300,000 to 400,000 tonnes per year with another 100,000 tonnes going to the rest of Africa. The remainder of our production could go to South East Asia.” said Abasov.

At the same time as Allana is working on conventional potash, it is also in the midst of doing a Preliminary Economic Assessment (PEA) of the higher valued Sulphate of Potash(SOP) potential at the site. “The Kainitite-rich brine we will eventually be producing is unique because it will already have sulfide in it. We are investigating how best to process it and if it is possible to produce SOP from it at a very low cost.” said Abasov. Producing SOP is very attractive as its current price in China is $US600 per tonne as opposed to $300 to $350 a tonne for conventional potash (MOP).

Corporately, Allana is looking to enhance its debt package. At this point it has development banks with significant experience in Ethiopia lined up to provide financing, but Abasov would like to bring on commercial banks as well. To that end Allana is in discussions with a number of large European banks. “We want to max up the debt side,” said Abasov, “because we want to avoid common shareholder dilution.”

At time of writing Allana is trading at C$0.31 with 325 million shares outstanding and a market cap of C$100.8 million dollars. Allana trades on the TSX under the symbol “AAA”.


Equity firm to inject capital in major hospital


Ascent, an equity firm based in Nairobi, Kenya, with an office in Ethiopia, is going to sign a final deal to pump additional investments in a company involved in the health sector.

Officials of the company however declined to reveal the amount of money or the name of the health institution. Michael M. Selassie Principal and Country Director of Ascent for Ethiopia told Capital that his firm will finalize the deal in the coming two weeks. “We have a confidentiality agreement, so we will not tell the amount we are injecting or the name of the company, however we will announce the deal in two weeks,” Michael said.
He also mentioned that another deal is in the pipeline, which will be finalized in the coming three to four months. He also refrained from stating the company and the money they are going to inject.

According to the partners of the private equity fund Ascent, the firm will be looking to pump money in small and medium enterprises (SMEs) across the East African region. The firm raised USD 50 million recently to be invested in enterprises in Kenya, Uganda and Ethiopia. The firm also announced that it will provide hands-on expertise to businesses pursuing long term growth ambitions under the Fund’s 10 year lifespan, which literally converts so that it will sell back the shares it bought after 10 years.

The firm also announced that it will focus on the manufacturing sector that produces fast moving consumer goods and service businesses. Other areas of interest include medical services, distribution operations, oil and gas plus Information and Communications Technology (ICT) sectors.
While high population growth of 3.2 per cent per year and proximity to large neighbouring markets like South Sudan and the Democratic Republic of Congo (DRC) has created big opportunities for fast moving consumer goods like soft drinks in Uganda and more sophisticated industrial operations bases in Kenya that have equally attracted investors keen on efficiency and stable returns on investment, according to various media outlets.
The Fund offers a 20 percent return on investment per year while transaction sizes range between USD 2 million and USD 10 million.


Ethiopian officials learning Korea’s food reserves policy


koreaEthiopian government officials are studying Korea’s farm policy and know-how in securing food reserves efficiently, Seoul officials said Tuesday.

The African country dispatched a delegation of high-profile officials to Korea, seeking inputs to deal with food security issues, according to the Ministry of Agriculture, Food and Rural Affairs.

The eight-member delegation, led by Mirafe Marcos, chief of staff of the Agricultural Transformation Agency, and Misrak Mamo, director general of the Strategic Food Reserve Agency, arrived on Jan. 25 for a weeklong discussion on managerial system and technology for food reserves.

Establishing an efficient food reserve system has been one of the key agendas of the Ethiopian government, according to food security experts, as the lack of sustainable food reserves has threatened the country’s food security. According to a 2013 report by the Swiss-based NCCR Trade Regulation, the core challenges of Ethiopia’s food security stems from poor distribution and policies.

“We were requested (by the Ethiopian counterparts) to share Korea’s know-how in increasing the efficiency of strategic food reserve policies, especially by fostering a strong partnership between the state and local business entities,” the Agriculture Ministry said.

“The event marks the first time Korea is sharing its provision of the food reserve system with a foreign country,” the ministry added, pointing out that both parties will hold a meeting Wednesday to primarily cover the (Korean) state control on strategics grain reserves.

The Korea-Ethiopia agricultural cooperation is supported by Korea’s International Development Cooperation, led by the prime minister. The IDC is currently engaged in partnership with 26 developing countries, including Ethiopia, to promote sustainable economic development on the global level.


Private sector discusses energy policy


greenpowerThe Ethiopian Climate Innovation Center held a round table session with the public and private sector to discuss the opportunities and risks of private investment in Micro-Hydro Power (MHP) development.

A research paper on the topic presented by Dr. Paulos Chanie says the private sector has not gotten involved in micro-hydro energy development for transmission and distribution of power to non-electrified areas in the country or selling it to the national grid as much as it could.

According to the research paper, for the private sector to get involved it needs finance, technical knowledge and more attractive policy.
Several questions were raised during the discussion such as what kind of policy changes would be needed and how small and medium enterprises (SMEs) can obtain financing for micro-hydro projects.

According to Paulos Chanie, so far there are no clear and focused institutional arrangements to facilitate and regulate the involvement of the private sector in the generation of power from MHP and the possibility for transmitting and distributing it either through a mini-grid or national one.
The research provided policy recommendations such as expediting the enactment of the feed-in tariff policy, which was drafted in2009 and still is under revision weaknesses, the need for highly centralized policy making the process easier. It also recommended getting stakeholders to participate and for tariffs and administrative procedures to be changed to favor smaller investors.

The Ethiopia Climate Innovation Center (ECIC) is an organization that supports Ethiopian small and medium enterprises (SMEs) that are trying to address climate change challenges. It aims to accelerate the development, deployment and transfer of climate technologies by providing SMEs a set of holistic country-driven support services, such as financing and capacity building.


PetroChina in running for Ethiopian tender for gasoline, diesel –sources


oilpriceSINGAPORE Jan 29 (Reuters) – Ethiopia’s tender to buy up to 180,000 tonnes of gasoline and diesel for delivery over March to August could be awarded to either Emirates National Oil Company (ENOC) or PetroChina, industry sources said on Thursday.

This is the first time PetroChina has participated in a tender to supply oil products to Ethiopia, traders said, a sign that Chinese state-owned companies are aggressively trying to market surplus oil products from the country.

Ethiopian Petroleum Supply Enterprise (EPSE) was seeking 40,000 to 60,000 tonnes of 91-octane gasoline and 80,000 to 120,000 tonnes of 500 ppm sulphur gasoil for delivery into Djibouti.

PetroChina placed the lowest out of three offers at a $5.75 a barrel premium above Middle East quotes for the diesel cargo and $6 a barrel premium for the gasoline cargo, one of them said.

The credit period it offered for the tender was 150 days.

ENOC’s offer was slightly higher at a $6.50 a barrel premium for the diesel cargo and $4.72 a barrel premium for the gasoline cargo. But it offered a longer credit payment period of 186 days, the source added.

Kuwait’s Independent Petroleum Group made the other offer.

The tender is expected to be awarded later on Thursday, sources said.

EPSE has an existing term contract to buy 1 million tonnes of gasoil, 45,000 tonnes of gasoline and 120,000 tonnes of jet fuel for 2015 with Vitol, traders said.


Lethal Maize disease outbreak to cut output significantly



A disease that infects corn has been found in Oromia and Southern Regional States, has the potential to cause a great deal of harm. Maize Lethal Necrosis Disease (MLND) which was first detected in Kuria, Western Kenya is a crop disease that infects and kills maize (corn).


It first surfaced in Kenya in 2011 and since has spread to Tanzania, Uganda and Rwanda. Now it is threatening parts of Ethiopia.

After the disease is identified agricultural experts have been travelling to Kenya to assess the damage done by the disease to learn more about it. A series of meetings have also been held to tackle the disease.  MLND produces a rapid synergistic reaction that severely damages or kills infected plants. If the infected crops are left untended, the virus continues to spread to nearby farms via insects. These pests are tiny and spread so quickly that this disease has the potential to cause widespread devastation to maize crops. MLND poses a serious threat to rural livelihoods and food security. Farmers have been told by the Agricultural Ministry to be on the look-out for corn that has a dead heart at the growing point, abnormal colours or patterns on leaves that are often yellow or necrotic; moldy seeds or stems that are stunted or have died back.


In Ethiopia the disease was first observed in the Rift Valley.  Extension workers are now being sent out to tell farmers to use certain chemicals to eliminate pests that might spread the problem. An expert with the Ministry of Agriculture told Capital that the disease might significantly reduce the annual yield.  One farmer in Oromia said,  “I saw a unique feature last July on my maize and now I lost 300 quintals in three days.’’ The Ministry says they are trying to alleviate the problem by sending seed inspectors to check for Maize lethal necrosis disease (MLND) in seed farms.  Alemayhu Kibert, an agronomist said that the government initiation must be strengthened to avoid catastrophe due to the new disease. “Maize is hugely consumed in different form in Ethiopia especially in southern region, and if the disease spreads, it will threaten our food security that we have been seeing a good result in the past ten years” he said. In the last budget year 253 million quintals of maize was produced which is an increase of 21 million quintals from the previous year.


The best approach for the management of MLND is to employ integrated pest management practices encompassing cultural control such as closed season, crop rotation and crop diversification, vector control using seed treatment followed by foliar sprays, and host-plant resistance, according to the Ministry. It is necessary to use good field sanitation methods, including weed control measures to eliminate alternate hosts for potential vectors the ministry advised.  In Kenya, varieties are being screened for resistance and tolerance and Ethiopia’s Agricultural Ministry says they are inspecting corn at the border to prevent infected maize from coming into the country.  In 2013, Ethiopia’s tomato production was severely affected by Tuta Absoluta, commonly called Tomato Leafminer (TLM) moth. This disease was suspected to have come from Yemen and entered into Ethiopia via the northern part of the country. TLM spreads fast into major tomato producing regions including Oromia and Somali Regional States jeopardizing 50 to 60 percent of the country’s total tomato production. 


 Somalia Takes One Step Further Towards Stability