Will The U.S Abandon Its Trade Pact With Africa?
By Emmanuel Iruobe
VENTURES AFRICA – Arguably, one of the factors responsible for Africa’s improved trading over the past decade has been the Africa Growth and Opportunity Act (AGOA), a piece of legislation that was approved by the U.S Congress in May 2000. It was granted to assist the economies of sub-Saharan Africa grow economic relations with the world’s greatest economy.
The act facilitates duty-free entry into the U.S for certain goods, and the result had been an expanded access mostly for textile and apparel goods and a surge in foreign exchange earnings. It was initially set to expire in 2008 but, again, the U.S Congress extended the Act till 2015.
Last year, at the U.S-Africa Leaders’ Summit, a number of African heads of state pushed for the pact to be extended by a further 15 years and suggested that the range of products covered by the act be expanded to include agricultural products. The rationale for this is clear; U.S bound exports from sub-Saharan Africa under the AGOA totalled about $26.8 billion in 2013 alone according to Reuters. This fulfils the exact reason the act was enacted in the first place.
Lesotho and Kenya can be said to be the biggest beneficiaries of the deal as their economies have been diversified and strengthened largely as a result of the trading opportunities created by the act. Nigeria, the continent’s biggest economy, has also seen trade flows blossom to $18 billion since the act enactment.
South African President Jacob Zuma, at the summit, emphasized the need for another extension, saying; “Almost 95 percent of South African exports receive preferential treatment under AGOA. We strongly believe that by endorsing the extension of AGOA, the U.S. will be promoting African integration, industrialization and infrastructure development – I’m sure the Americans would not want to lose this opportunity.”
Diverse criticisms have emerged over the years from elements in the United States. Their main argument being that a further extension could damage America’s interests in the long run.
Dr Carlos Lopes, Executive Secretary of the UN Economic Commission for Africa, explains the points-of-view of the critics in a 2013 article, in which he wrote; “The Act’s opponents argue that Africa’s impressive growth in the 21st century means the continent no longer needs special treatment. They also claim that it is China and other countries who have been investing in Africa which have been the main beneficiaries from the removal of restrictions and that, in some cases, they are simply re-exporting their own products through African countries.”
“Evidence, however, shows that while African countries have certainly gained, as intended, the most from AGOA, the benefits have not by any means been all one-way. In the first decade since it came into force, US exports to sub-Saharan Africa tripled to $21 billion. As the US commerce department estimates that 5,000 American jobs are created or sustained for every $1 billion worth of exports, this trade is helping support over 100,000 jobs in the US. The US trade department has also insisted that proper safeguards are in place to prevent abuse of the rules,” he added.
This is a win-win for both regions, making the case for further extension all the more necessary. Apparel and footwear companies continue to champion the largest support as several hundred thousand jobs were created via AGOA. But, with the uncertainty surrounding the renewal of AGOA, further investments will be likely stall and the already created jobs may be in jeopardy.
If the extension succeeds, it will benefit both regions. American exports and jobs will increase as African countries develop their economies in new sectors. This will bolster the US’s global influence even more.
The European Union, keen to escape its present economic uncertainties has already set up an Economic Partnership Agreement with 35 African countries. This is essentially a framework for free trade agreements. If this materializes and the AGOA fails to scale, the United States may remain at a permanent competitive disadvantage with respect to Africa, which happens to be the new investment frontier for global businesses.
In the run up to current AGOA expiry date of September 30, the world will be watching to see how the US treats its growing ally.
Giant Chinese Corporation Seals 339m Br Power Contract
– Project foreseen to improve electric networks in eight urban centres
Power distribution sub-stations in eight towns are going to be rehabilitated and upgraded with a finance of 339 million Br from the World Bank’s (WB) International Development Association (IDA).
This is according to the agreement the Ethiopian Electric Power (EEP) signed with the Chinese firm China Electric Power Equipment & Technology Co. Ltd. (CET) on February 5, 2015, for the project, which is expected to be finalised within a year and a half.
CET took the project, which covers the distribution, rehabilitation and upgrading of electric networks in Addis Abeba, Adama, Dire Dawa, Hawassa, Bahir Dar, Dessie, Jimma and Mekelle. The project also includes installing automated technologies for control supply systems and performing quality control on the electric distribution system.
“The aim of the projects is to solve the problem of power outage occurring in those towns. It is mainly caused by the capacity problems of the distribution systems,” said Misikir Negash, external relations director at the EEP.
Misikir attributed the problem of power outage to the age and capacity of the transformers and sub-stations currently in operation. The new expansion will enable the power distribution stations to accommodate the increasing power to the distribution and national grid system, according to Misikir.
In the coming two years, the power utility monopoly is expecting the power supply upsurge from Gilgel Gibe III, which has the capacity of producing 1,870Mw, and currently in the final stage to start power supply by the end of the current fiscal year. The Great Ethiopian Renaissance Dam (GERD), which will have a total power supply capacity of 6,000Mw, is also expected to generate power by the end of 2015/16 fiscal year.
When the Growth & Transformation Plan (GTP) was designed in 2009/10, the total electric power capacity of the country was 2,000Mw. Five years later, in 2014/15, it reached 2,268Mw, and the plan is to reach 10,000Mw after six months at the end of the GTP period.
“Two decades ago, the number of towns, both rural and urban that got electric power was 320. But now the number has increased to 6,000,” Misikir said.
Power transmission lines have currently reached 13,000Km; the plan for 2014/15, according to the GTP, is 17,787Km. Electrification service coverage reached 55pc in the 2013/14 fiscal year, against a target of 70pc. The GTP’s electrification target is 75pc by the end of 2014/15.
CET is a wholly-owned subsidiary of State Grid Corporation of China, which received a 1.2 billion dollar payment from EEP to connect the power generated from the GERD to the national grid on 2013.
The company, which will work on the 500Kv transmission and transformation project at GERD has a presence in 80 countries across the world and took projects with a total outlay of 3.2 billion dollar as of January 2014.
“After the finalisation of the project, the transmission capacity of the sub-stations of the eight towns will double,” Meskir told Fortune.
Ethiopia has the potential to generate 50,000Mw of hydro power, 10,000Mw of geothermal and 1.3 million megawatts of wind power where the aggregate demand for electric power reached 7,589GWh in 2013/14 by rising from 4,984GWh in 2010/11.
Ethiopia, Djibouti sign oil pipeline construction
|By Muluken Yewondwossen|
|Monday, 16 February 2015|
Ethiopia and Djibouti signed an agreement to realize the construction of an oil pipeline which the US- based Black Rhino, an African infrastructure development company, will manage.
Ethiopia’s green economy plan
One of the sticking points in global climate negotiations is the role of developing countries. As the biggest emitters historically, it is the industrialised nations that need to reduce their carbon, but they won’t do it unless developing nations make commitments too. And developing countries won’t do anything to disadvantage themselves in their efforts to industrialise.
There are several flawed assumptions behind the stalemate, including the idea that decarbonising is a bad thing that we won’t do unless we absolutely have to, like a child being told to tidy their room. The fact that a decarbonised economy would be more energy secure, healthier and actually sustainable seems not to have registered. Another assumption is that poorer countries can’t afford to limit their carbon emissions, and that they need to prioritise economic growth and come back to environmental action later.
Through the logjam there are, however, a few points of light and reason. One of them has been Ethiopia. Under the leadership of the late Prime Minister Meles Zenawi, it has taken climate change entirely seriously and adapted its development model accordingly, setting itself the goal of achieving “middle income status by 2025 in a climate-resilient green economy.”
I was reminded of this vision recently by the news that Ethiopia have just switch on the continent’s biggest wind farm. Since Ethiopia’s experiment is still hardly known, I though it might be worth looking at in a little more detail.
The Ethiopian government knows that the conventional development model has consequences, however taken for granted it may be elsewhere. “Following the conventional development path would result in a sharp increase in GHG emissions” says the 2011 green economy strategy document. Furthermore, it “could result in unsustainable use of natural resources, in being locked into outdated technologies, and in losing an ever-increasing share of GDP to fuel imports.”
Instead, the strategy outlines four main areas of focus:
- Agriculture: Improve food security and welfare of farmers while reducing emissions, by improving crop and lifestock production. Emissions can be reduced through sustainable intensification, which aims to improve yields on existing land rather than expanding it. Degraded land will be restored as part of a soil preservation strategy, rather than clearing new forest land for crops. Organic techniques will be used where appropriate, alongside more efficient use of fertilisers and better control of residues.
- Forestry: Re-establish forests and protect existing ones, creating carbon stocks and capitalising on REDD initiatives, while raising production in forest products such as honey and shade grown coffee. The country has been losing forest for fuel wood, so moving people from wood-burning stoves to biogas or electric is a priority. Degraded grazing land will also be restored and reforested.
- Power: The country is largely hydro powered as it is, and it expects to be entirely renewable by 2015. It also needs to expand power generation considerably, and recognises this as a “fundamental bottleneck to growth.” Future generation will be renewable, with wind, geothermal, solar, further hydropower projects and even landfill gas. The country is the first in Africa to invest heavily in wind power, and this meshes well with existing capacity – hydro drops off at the end of the rainy season, but wind speeds increase in the dry season. By investing in renewable energy now, Ethiopia intends to be a net exporter of electricity in the region.
- Transport, industrial sectors and buildings: leapfrog to modern and energy efficient technologies. Renewable based electrification will replace the widespread use of kerosene lamps. There’s an electric rail strategy, particularly within Addis Ababa and between the capital and the seaport in neighbouring Djibouti. “Shifting transport from road to rail would not only decrease transport costs and improve the trade balance through reduced import of fossil fuels, but would also lower emissions, congestion, air pollution, and traffic accidents.”
None of this, you will notice, ignores economic growth – and nor should it. As a poor country, Ethiopia needs growth far more than we do in Britain. Ethiopia is one of the world’s fastest growing economies, and it has no plans to abandon that momentum in exchange for sustainability. This is about building it green first time round, rather than following the usual fossil-fuel based industrial model and then hoping you can patch it later.
How successful Ethiopia are remains to be seen, and with acute poverty there is a real challenge to make this green growth inclusive. It could also be derailed. There has been fairly widespread support for the vision, but with the death of Zenawi last year, it is unclear how the policies will fare in his absence. But if the commitment survives the power transition, Ethiopia will remain one of the most progressive nations in the world when it come to climate change.
Packaging giant Tetra Pak eyeing Ethiopia for investment
Tetra Pak, one of the world’s biggest foods packaging company, is looking for investment opportunities in Africa. Ethiopia is on the list of countries the company is keen on exploring for a possible venture.
The company will send a high level delegation to assess opportunities the coming May 2015, Capital learnt.
Tetra Pak made its ambition known during the first Ethio-Swedish Agro Technology Forum of the dairy, sugar and energy sectors that was held at the Sheraton Addis Hotel on Tuesday, February 10. The event brought together major actors in the agro processing, dairy and energy sectors such as Tetra Pak, De Laval, Alfa Laval and Valley International Projects (VIP).
The Swedish company currently has two production facilities in Africa, South Africa and Kenya.
“The government is ready to support industries that are linked to the agricultural sector. The raw commodities that we are currently exporting are expected to go through a transition to become processed and value added so that they can be linked to the global value chain,” stated Dr. Mebrahtu Melese, State Minister of Industry when addressing participants of the Ethio-Swedish forum.
He also stated that companies such as Tetra Pak should really consider investing in the country to take advantage of the opportunity in the market as well as to enable the agro-processing sector export value- added products.
Swedish Ambassador to Ethiopia Jan Sadek said farming, food production and food packaging have been one of the most important pillars for Sweden’s economic development. He also said that innovation, invention and research within agro-techniques, in particular by companies such as Alfa Laval, De Laval and Tetra Pak, were instrumental in developing Sweden’s agro business and related services.
“I believe that agriculture and dairy here in Ethiopia, as it was the case in Sweden, have a potential both for the domestic economy, livelihood, biological diversity, energy production and more. We know that these areas have an important role in the current Ethiopian Growth and Transformation Plan and they are also likely to remain important in the future to come,” the Ambassador stated. He further said that the forum was an occasion to share experiences, create ties between Ethiopian and Swedish stakeholders and the beginning of a mutually beneficial business opportunity.
“Today, our cooperation is more about development, environment, peace and stability, of course trade and investment. Sweden wants to encourage a broader cooperation with Ethiopia with increased trade and investment relations and knowledge transfer,” the ambassador said.
The Forum was organized by the Ethiopian Embassy in Stockholm, the Ministry of Foreign Affairs and Valley International Projects (VIP).
VIP, a company that is also engaged in Agro-forestry stated that it has an interest to invest in the forestry sector in Ethiopia. The company has a plan to launch a project called a Paulownia Forest Project involving a fast growing tree that can provide a byproduct for energy.
According to estimates, the project could cost around USD 200 million and is planned to be carried out in Oromia; Amhara; Tigray, and Southern Nations, Nationalities and Peoples Region.
Travel: Ethiopia’s come a long way
By Helen McGurk
Remarkable landscapes, a wealth of wildlife viewing opportunities and fascinating historical sites are drawing foreign visitors to Ethiopia
Once ravaged by famine and poverty, Ethiopia has come a long way in the last 30 years.
Upmarket tour operators Kuoni and Scott Dunn have both tipped the destination as a place to visit in 2015, while an African safari contact recently told me: “Everyone in the industry seems to be heading to Ethiopia for their holidays.”
One woman who clearly recognised the East African country’s potential some time ago, is 64-year-old Susan Aitchison, a Scottish woman who arrived in 2007 to teach at a local school, and was so struck by Ethiopia’s beauty, she decided to open a restaurant.
Named Ben Abeba (Ben means hill in Scottish, and in Amharic translates as flower), the restaurant employs young people from the local area and aims to give visitors an insight into Ethiopian culture and hospitality. There are daily demonstrations of Injera (local bread) making, traditional coffee ceremonies and music and dancing most evenings.
Since opening in October 2011, Ben Abeba has climbed to the top of Trip Advisor’s Top Restaurant list, and with tourist numbers expected to increase this year, interest is set to gather pace.
Susan and Habtamu are in the process of building four guest bungalows, due to open later this year, set amongst more than 50,000 trees and plantations of banana, papaya, pomegranates and guava. Twelve more accommodation units are also in the pipeline, along with a conference centre and meeting room.
For those hoping to plan a visit, April to June, and October to February are considered the best times to go. Kuoni currently offer a nine-night Highlights of Northern Ethiopia tour, including a city tour of Addis Ababa, and trips to the Blue Nile Falls, Lake Tana, Gondar, Lalibela and the Bale Mountains National Park. Departures on October 5, and November 9, cost from £2,424 per person, including flights.
Government to set cotton price to stabilize market
The continuous criticism cotton producers and textile factories throw at each other regarding the very low price offered for locally produced cotton has led the Ministry of Industry to set the price.
Previously, the government imported cotton to fill the gap in supplies and to stabilize the price, but the new option encourages farmers to produce more and supply it to the textile factory at a fair price.
The textile factories, who are major buyers of local cotton, lament the inconsistent prices. Consequently, they were forced to change their production cost several times. Producers argue that the cost of labor, the high price of agriculture machineries, uncertainty in market, and weather conditions have deterred them from offering consistent prices to local producers.
The supply chain of cotton to market is also elongated resulting in lower earnings by farmers and channeling significant profits to brokers. Brokers buy a kilo of cotton under 30 birr from farmers and sell it to factories from 40 to 60 birr.
“It is right for the government to stabilize the cotton market,” Tadesse Haile, State Minister of Industry said at a meeting with cotton producers held at Ghion Hotel on February 9.
“We are aware of brokers who set the price of cotton randomly and that discourages textile factories which causes them to incur additional costs. If it has not been for that interference, we sometimes may experience cases where farmers produce plenty and find few buyers.”
So we have to mediate the situation by setting a price that is fair for both farmers and factories. And we don’t want to keep on importing cotton. We need all locally produced cotton to be consumed by our factories. And setting a price will help us realize that.”
Tadesse further noted that his Ministry is in discussion with stakeholders to draft a regulation prohibiting the involvement of brokers on the delivery line of agricultural products to the market, because that interference has significant impacts on the industry.
“Our agricultural products, especially those that are used as inputs for other industries, must be supplied at a fair price. Otherwise our effort to transform agriculture into an industry will face a big challenge. So we have to move the brokers who disturb the price. We only need producers and factories to deal with the products.”
According to Tadesse, his ministry commissioned a research on BT Cotton, one of the different genetically modified cotton variety that is reputed to rendering high yields. The industry ministry has submitted a draft bill along with a synopsis of the research for ratification by parliament.
“We need more cotton to maintain our growing industry, and using GMO is one of the alternatives to boost production,” he stated.
Though producers do not agree on the notion of shorter cotton supplies, the current bulk demand for cotton in Ethiopia is estimated around 100,000 tones while the supply is around 65,000 tones.
Second rate quality of local cotton, lack of modern agricultural methods, poor irrigation systems and shortage of labor hampered the cotton industry from expanding.
The Ethiopian Cotton Producers, Ginner and Exporters Association (ECPGEA) Vice President Abreham Tadesse criticized the government for not giving proper attention to the industry.
“There is 250,000 hectares of land available for cotton plantation but only 10 to 15 percent of it has been cultivated so far, and this shows underutilization of the resource,” the vice president corroborates his argument.
He argues that GMO cotton is not the solution to increase production. “We can still manage to scale up production without GMO cotton if government gives proper attention to cotton farming like it did to sugar farms.’’
Yet an agricultural researcher, Dr Million Belay, Capital requested to give scientific views on the issue opposes the Ministry of Industry’s plan to allow the use of BT Cotton.
Dr. Million Belay, Director of Melka Werer Agricultural Research Station told Capital, “the Industry Ministry tells us the experience of Sudan and other cotton producers who made a good production by applying BT Cotton, and they argue that the chemicals that are used to kill cotton pests demand more finance while BT Cotton has its own immune system to combat pests.”
“However, my institution disagrees as the condition in other countries and in Ethiopia is so different; the soil type and other related and relevant matters must be studied. No one gives an ear to our suggestion and the bill is in the final stages of ratification,” Dr. Million sadly commented.
Nation identifies 5 corridors for horticulture development
Semera February 16, 2015 –
The Ethiopian Institute of Agricultural Research said five development corridors said to be favorable for horticulture development in the country have been identified.
Addis Ababa- Oromia, Hawassa- Arba Minch, Awash- Dire Dawa and Harrar, Bahir Dar- Nile Gorge and South Gondar, as well as Mekele- Raya and Alamata are the corridors.
Some 50,000 hectares land has allocated in these areas for flowers, vegetables and fruits as well as coffee production, the Director-General, Dr. Fantahun Mengistu told ENA.
The horticulture development corridors need to be identified so as to further boost horticulture development thereby improve its contribution to the nation’s development, he said.
Favorable ecosystem and nearness to various transport systems including air transport are the criteria used to select these areas, he added.
Omo Kuraz project satisfactorily responding to native pastoralists demand for development
Addis Ababa, 16 February 2015 – Pastoralists living around Omo River have been leading their lives wondering from place to place in search of grazing land and water for their cattle.
As they are residing in remote areas of the nation, they knew neither social services nor infrastructures prior to the inception of Kuraz Sugar Development Project. Now things are changing and their demand for development is getting satisfactory response from both the federal and regional governments of the nation.
It was through the villagization program that pastoralists gathered for the first time at three villages of Arebijo area had started getting social services few years back when the Omo Kuraz Sugar Develoment Project was kicked off at Selamago District of South Omo Zone. And, witnessing the fruits of the sugar development project, pastoralists of same zone together with those at Keffa and Bench-Maji zones have started requesting both the regional and federal governments of the nation to foster the activities of the Omo Kuraz Sugar Development Project and reach where they are around and thereby they too become beneficiaries of social services and infrastructures as their fellow pastoralists at Selamago.
Hence, responding to the demand of these pastoralists, the project together with the regional and federal government have made social services and infrastructures available to pastoralists living at Gurra and Maki villages at which they started living together through the villagization program they had joined voluntarily. Furthermore, construction of social services at a village called Haillowa One is at its final stage while contractual agreements are signed with the constructing institutions so that they could start building similar service giving institutions at Haillowa Two village too.
As these all pastoralists were not acquainted with farming earlier , the project , giving training on how to till a land and harvest crops , has made available irrigable plot of land upon their request so that they can run farming business along with their cattle rearing job. And, it was pastoralists who have first started living at three villages of Arebijo that started farming and are now harvesting for a third round. At this village 2,400 hectares of irrigable land is made available to native pastoralists while irrigable land preparation work is underway to others gathered at Gurra, Maki and Haillowa villages.
Besides these the project, working hand in glove with the regional and federal government, is making irrigable land, social services and infrastructures available to those gathered at villages very far from the command area of the project.
On the other hand, pastoralists are benefitting a great deal from the market link created due to the constructed roads and other infrastructures which have helped them sell their herds with much better price as never before.
The Omo Kuraz native pastoralists have not only became beneficiaries of the above facilities but also got job opportunities at the project itself and those participating institutions of the project’s various activities.
Ollilu Charnielay is a native from Murssi nationality. He had went through a tractor machines operating training program at Chancho Tractor Training Center in 2013 and is now working as a regular employee of sugarcane plantation division of the project. His role in the division is land leveling and furrowing of cane cultivation field of the project using tractor machines. Asked to share about his opinion of the project, he said “I am very happy of working at this sector which is believed to contribute a great deal in doing away with the poverty our nation is leveled for”. Ollilu had no any idea about tractor machines before his training.
The other tractor operator employee of the project who shared his view about the project is Kassahun Metachew. He is from Dimmie nationality. Going through the same training program as Ollilu, Kassahun is working at the cane cultivation division of the project and is eager to see the sugar factory under construction producing sugar.
We found Metachew Deneke at Gura Elementary School. He is from the Dimmie nationality and is now working as a director of the elementary school built at Gurra village. He speaks the language of Boddis’ fluently. According to him currently 43 students are enrolled. Among them 18 are children while 15 are aged. And, what surprises him more is the enthusiasm the latter are showing for learning. The school is providing them with exercise books and pencils besides feeding their lunch. “We also have special incentive to female students; we provide them with edible oil every month as long as they attend the school with no interruption”, Metachew went on saying
Gatapai Zoggi is from Boddi nationality and we found her while she was getting the service of the flour mill constructed at Tikawoch Village of Gurra and asked her to share her relfections on her new way life. She and the villagers at Tikawoch have started getting services from potable water, flour mill, school and clinics of both human and cattle constructed at their village. “As I am attending the school regularly, I am now-a-days getting edible oil every month besides the lunch service during school days” She says.
These pastoralists living around the Omo Kuraz Sugar Development Project had paid a visit to Wonji Shewa Sugar Factory last year where farmers around it used have a long history of working with the sugar mill as sugarcane out growers. And, following their visit natives of the Omo Kuraz Sugar Development Project have time and again been requesting the project to let them work as out growers of sugarcane like those farmers around Wonji Shewa Sugar Factory. The project accordingly has allotted 1,072 hectares of irrigable land to 1,430 pastoralists each acquiring one hectare of land on which they are to grow sugarcane on 0.75 hectares and other crops on the rest 0.25 hectares. These pastoralists will also get professional assistance from the project including fertilizers and pesticides supply.
Till now more than 36,000 citizens have got job opportunities in the project itself and the participant companies of the project. And, 158 micro and small scale enterprises have become beneficiaries by taking part in the construction and service giving jobs. Moreover, both the regional and federal governments of the nation are working their level best in paving ways so that native pastoralists will step by step go up the ladders of various positions in the project. And, currently 30 native pastoralists are working in the project as irrigation experts after going through a training program at Arbaminch University while many in number are now working at different positions of the project.
Hence, as never before pastoralists around Omo Kuraz Sugar Development Project need no one to tell them what is best to their future unless he/she would dare want to run his/her obscured agenda.
Omo Kuraz Sugar Development Project command area encircles some woredas of South Omo, Keffa and Bench-Maji Zones. It is one among other projects Ethiopia has identified as a very promising one for the sector and it will in the end have 175,000 hectares of land for its cane cultivation. Five sugar factories will be constructed here three with 12,000 TCD and the rest two with 24,000 TCD.