Ethiopia: Cultivating agriculture, cutting poverty
Ethiopia aims to become a middle-income country in the next 15 years. But despite high economic growth rates, it struggles with poverty and food insecurity. For development to be successful, benefits must be widely shared.
That’s why UNDP has focused a significant portion of its support to Ethiopia on agriculture. It accounts for nearly half the economy and over 80 percent of employment.
- UNDP introduced simple plastic rain gauges so farmers could track weather patterns and plan for droughts
- Farmers were encouraged to re-adopt inexpensive and environmentally friendly farming practices and over 100,000 farmers now practice the new methods
- UNDP helped the Government devise a national Growth and Transformation Plan to double agricultural output and strengthen links to markets; an Agricultural Transformation Agency was established to guide implementation
- The Ethiopian Commodities Exchange, the first of its type in Sub-Saharan Africa, was established and in 2012, trading volumes on the exchange rose by 23 percent over the previous year, and earnings grew by 31 percent.
One intervention has been to help reduce vulnerability to climate change and erratic rainfall. Mohammed Hassen was one of many farmers who did not know how to adapt. People in his rural district had farmed the same way for as far back as anyone could remember.
Changes came through a partnership between the ministry of Agriculture, UNDP and the Global Environment Facility (GEF). It equipped Hassen and his neighbours with drought-resistant seeds. Based on experiences in Zimbabwe, UNDP introduced simple plastic rain gauges so farmers in one locality could track weather patterns and plan for droughts. Farmers were encouraged to re-adopt inexpensive and environmentally friendly traditional pesticides.
Today, Hassen marvels at how his income has doubled, and his family enjoys three meals a day instead of two. And he can buy supplies for his children to go to school.
The ministry of Agriculture has supplied the rain gauges nationwide; local extension offices collect data complemented by satellite feeds for national forecasts. Crop losses from pests have declined, and farmers have saved substantial sums on costly imported pesticides. Initially, the three-year project sought to assist 41,000 people. But word of its success spread rapidly, and over 100,000 farmers now practice the new methods.
UNDP has also helped the Government of Ethiopia devise a national Growth and Transformation Plan with goals that include doubling agricultural output and strengthening links to markets. An Agricultural Transformation Agency was established to guide implementation, and UNDP mobilized international donors behind a $300 million investment programme.
One major step forward has been creating the Ethiopian Commodities Exchange, the first of its type in Sub-Saharan Africa. It connects buyers, sellers, distributors and exporters, who trade agricultural products collected by 16 warehouses across the country. The exchange ensures that deliveries and payments happen on time, particularly important for smaller producers. Both buyers and sellers can access up-to-the-minute information on pricing through electronic notice boards in market centres.
In 2012, trading volumes on the exchange rose by 23 percent over the previous year, and earnings grew by 31 percent.
Since the exchange facilitates links with global markets, it has fostered new ways of managing the quality and marketing of commodities, particularly coffee. Ethiopia is the birthplace of coffee, and the industry today employs more than 20 percent of economically active Ethiopians.
Asec inks Ethiopia cement plant management deal
CAIRO – Asec Engineering and Management, a subsidiary of Egypt’s Qalaa Holdings (formerly Citadel Capital), has signed a plant management agreement with Ethiopia’s National Cement Share Company.
A leading cement plant Operations & Management (O&M) service provider in Egypt and the Mena region, Asec Engineering said the one-year contract, which is renewable for a five-year term, comes close on the heels of its successful foray into Mozambique market.
As per the deal, the company will provide full technical assistance to National Cement Share Company, one of the largest producers of cement in Ethiopia, for the operation and maintenance of the cement plant.
The Egyptian firm will also utilise its knowhow and expertise to help National Cement Share Company to boost production volumes, cut production costs, and improve product quality.
Located in the city of Dire Dawa, 450 km east of the capital Addis Ababa, the plant boasts a production capacity of one million tons of clinker per annum.
On the contract win, Asec Engineering CEO Khaled El Sebaie, said: “This is a result of the continued efforts of Asec Engineering and its ambitious plans to expand its business into Sub-Saharan Africa after its successful contract with Cimento Nacional Company in Mozambique.”
Under the contract, Asec Engineering will also introduce and implement systems for all aspects of production, quality, maintenance, warehousing and human resources, among other areas, he stated.
In addition to other regional contracts, the company also operates and maintains 10 cement production lines across 7 Egyptian plants representing 25 per cent of total cement production in the country.
Study recommends outsourcing shipping operations
The study that is expected to transform the current shipping and logistics system was delivered to the government earlier in the budget year and it raised several options of make do.
According to the country’s law of shipping and multimodal service scheme, these services are state monopolies of Ethiopian Shipping and Logistics Services Enterprise (ESLSE). Sources said that the new study mentioned that working in joint venture and letting in the private sector to the business should be the directions to modernize the system.
According to sources, the government is now considering a policy amendment on the national logistics strategy. “A new policy shall be developed after the evaluation of the study,” sources told Capital.
Currently, the study is being reviewed by relevant state stakeholders and the government is to come up with a viable strategy, according to sources.
Sources said that the government is considering outsourcing the shipping lines’ management for private companies like it does in the power and telecom sector.
Recently the government outsourced the management of Ethio Telecom to a French company and the Ethiopian Power Utility to an Indian firm.
Outsourcing management of an organization is not a new administration plan, but it was not tried here. “Outsourcing the management has been stated as a recommendation in the latest study,” sources said.
According to experts knowledgeable of the sector, they do not expect the government to give a decision to invite the private sector to invest in joint ventures or fully privatize the sector.
“Possibly the government can invite companies to invest in the sector separately or give a management contract for the shipping sector only,” experts told Capital.
According to sources, international logistics companies have shown interest to invest in the sector. Some of them have already expressed their interest to establish dry ports or depot in the country, an operation fully controlled by the government.
Chief Alemu Ambaye, Deputy Chief Executive of Shipping Sector at ESLSE, said that he does not have any information on the issue.
Mekonnen Abera, Director-General of Ethiopian Maritime Authority also declined to comment on the situation.
According to sources, government is now considering to come up with a new policy. Even though the import-export business had registered significant growth in the past years in relation with the economic growth and commencement of huge state projects, the logistics sector is not growing at a pace parallel to developments in other sectors, according to experts.
In the past few years, however, the government has made several changes including the amalgamation of three state-owned logistics and shipping enterprises under a single body to invigorate the sector.
Addis’ first seven star hotel
Addis Ababa is to get another world class hospitality image before the end of the year when the AU Grand Hotel managed by Westin Hotels and Resorts inaugurates its seven star hotel in the African Union (AU) compound.
The multibillion birr investment owned by the billionaire Sheik Mohamed Hussein al Amoudi will be inaugurated before the coming European Christmas, according to an insider source.
MIDROC Ethiopia Project Office Contracting and Management Services Plc. (MEPO), which is a collaborative partner of the MIDROC Group that develops, constructs and manages property, undertakes the construction of the hotel which is in its final stages. A two year prior cost estimation of the seven star hotel was USD 350 million. “The project cost can jump by more than 20 percent by completion of the work than the previous estimate,” the source added.
The hotel that will be the fourth international brand on the country after Hilton, Sheraton and Radisson Blu will also have several extraordinary facilities that shall serve heads of states and top officials.
“The project will be one of the top investments for the billionaire in Ethiopia,” sources at MIDROC told Capital.
On his initial investment in Ethiopia, Sheik Mohamed had established the five star luxury collection hotel Sheraton Addis at a cost of over USD 200 million. It is now approaching a two decades service mark. Until now, no other similar facility is erected in the capital or elsewhere in the country.
MIDROC has been negotiating with one of the prominent hotel chains owner in the world, Westin Hotels and Resorts, to lease out the management of the new hotel. Westin is part of the Starwood’s Hotels and Resorts chain. It was acquired by Starwood in 1994.
Especially in the last decade, Westin has focused on expanding globally and since 2005 its number of hotels has grown from 120 in 24 countries to over 192 in 37 countries by 2013.
Sources told Capital that Sheik Mohamed had got the contractor replace the cladding recently to stay in tip-top shape with the Westin brand. Installation of the polarized glass has also commenced.
Sources also said that the billionaire has ordered MEPO, which congregates professionals from different countries, to finalize the project before the end of 2015.
For the interior work, the contractor has ordered several European companies including from Spain and Italy to supply superior quality equipment. “The improvements made on the design and replacing the cladding has forced the contractor for more work,” the source said.
“Despite the adjustment that needs to be embodied, the project will be accomplished in the original timeframe,” sources at MEPO told Capital.
When it opens, the hotel will be the first seven star luxury facility in the country.
The African Union Grand Hotel (AUGH) is a complex, multipurpose hotel that is designed to cater presidents, diplomats and business travelers. It has suites, standard rooms, meeting rooms, restaurants and bars, swimming pool and spa, grand club, a multipurpose ballroom, business center and parking lot.
The hotel has 610 rooms including 27 presidential and 31 ministerial suites. AUGH will also have 3,500 seating capacity conference hall, which will be the biggest conference facility under a hotel business, and another one with a capacity of 2,200 seats for banquets. The hotel will also have eight medium-sized meeting rooms.
The hotel is mainly intended to accommodate high government officials who come to the capital city for meeting as well as various other reasons.
Initially, the Addis Ababa City Administration had allocated 90,000 square meters of land to MIDROC, but based on the company’s request an additional 12,000 square meter was given by the city administration for a security area and parking lots.
Sheraton Addis, the other luxury hotel owned by Sheik Mohamed, is also managed by Sheraton Hotel and Resort, which was formed in 1937 and is one of the luxury brands under Starwood.
Sheraton Addis has 294 rooms and 33 suites. This hotel has 11 conference rooms, and the biggest Lalibela Hall can accommodate 1,500 people at once.
Sheraton Addis shared the business with Hilton hosting major events and it became a preferred retreat for top government officials who visit the country.
MEPO has six ongoing projects including AUGH. MEPO will soon start 11 new projects which also includes an expansion project of Sheraton Addis.
Sheik Mohamed has over 70 companies in Ethiopia in different sectors.
Currently, interest of international hotel brands who aspire to join the hospitality industry is increasing.
American Company to Build Electric Car Assembly Plant in Ethiopia
Addis Ababa Mar 09, 2015 –
The first ever electric car assembly plant in Africa is going to be built in Ethiopia.
President Mulatu Teshome held here today discussion with America’s Ambassador to Ethiopia, Patricia M. Haslach, and Global Electric Transportation Ltd. Chief Executive Officer, Ken Monter, at the national palace.
Global Electric Transportation CEO Ken Monter said the company would start building the assembly plant in Ethiopia in September, 2015.
The assembly plant will have 4 million USD starting capital and the exact location where the plant would be built is under study, the CEO said. The plant could produce 10,000? electric cars within three months.
United State Ambassador to Ethiopia, Patricia M. Haslach, said on her part America is expanding its strong relationship with Ethiopia in peace and security to the economic sphere.
The plant that is going to be built is part of this initiative, she added. The cars would contribute to reducing car accidents in the country, Haslach stated.
President Mulatu said Ethiopia is working to expand green economic development. The plant that would be built should therefore be encouraged as it is going to produce carbon free cars.
He further urged the company owners to implement the project quickly.
Corporation constructs, repairs over 7, 800 km of roads
The Ethiopian Road Construction Corporation (ERCC) said it has built and renovated 7, 819 km of road at a cost of 1 billion birr during the past seven months.
ERCC Public Relations Head, Demeke Chane, told WIC today that the roads built and repaired across the nation by the corporation have a significant contribution for the economic growth of the country.
Shekosh-Kebridehar, Kebridehar-Denan, Denan-Gode, Gambella-Itang-Jikawo, Wezka-Gidole, Beseka-Baipas are among the road projects executed by the corporation in the reported period, he pointed out.
The authority has set a plan to build and repair more than 2,900 km road in the remaining months of this budget year, he said.
Ethiopian Road Construction Corporation (ERCC) is a new government development agency established under the Ethiopian Roads Authority (ERA), it was noted.
Ethiopia eyes Chinese meat market
Unhappy of the meager turnover by the current meat and dairy export, the Ethiopian Meat and Dairy Technology Institute (EMDTI) is poised to export its products to Chinese market to boost up the income expected from the sector.
Targeting to get USD 250 million from meat and dairy export in the last fiscal year of 2013/14, the sector however brought in USD 76 million.
The sector is crippled by a failure to expand the market, low quality chain management, lack of emphasis on veterinary care for animals, to name a few.
To fulfill the huge deficit in the income, Ethiopia has now started looking at other markets in Asia.
Dr. Tekeba Eshete, Vice Head of EMDTI told Capital that the institute is negotiating with Chinese higher officials and companies to enter into the Far East market.
“We are discussing with the Chinese government to export meat and they have welcomed our idea. Now, what is left for the experts is to examine the quality of the meat.”
The quality assessment covers a range of quality assurance benchmarks including the health facility in abattoirs, traceability and live animals registration.
The Ministry of Agriculture has started a pilot project that incorporates traceability and livestock registration in some rural areas and this project is expected to be applied fully throughout the nation in less than two years time.
“It is a great opportunity to enter the largely populated Chinese market and I hope the Chinese technical committee will conduct the evaluations soon so we can commence the export of meat to the Chinese market’’ he added.
He also said that EMDTI is looking forward to entering other Asian markets giving much emphasis to exporting good quality products.
Saudi Arabia and United Arab Emirates import large amounts of Ethiopian meat while Sudan, Egypt, Somalia and Yemen also import smaller amounts.
Workneh Ayalew, Livestock Value Chain Director with Agricultural Transformation Agency, hailed the EMDTI initiative to expand the export of meat.
“It is good to search other markets and good progress has been made so far, but protecting livestock for good quality export is an issue that all stakeholders should care about.’’
Recently, a national roadmap was prepared to handle the traceability and registration of livestock on a regular and mandatory basis. Yet, the plan is only in a draft form and it waits for ratification by parliament.
City has allocated 8 bln birr for this year housing dev’t project: Report
On its 2nd ordinary session the Addis Ababa City Administration reported that positive results are registered in areas of housing development, MSEs, employment opportunities, road construction, health sector, and others.
Presenting the Administration half year performance City Mayor Diriba Kuma said that as one of its prime focusing areas, the Administration has prepared 640 hectares of land to build additional condos. As part of this programme the Administration has allocated 8 billion Birr for this year housing development project.
Deriba also said so far the Administration has constructed and transferred 105, 000 condos. The report indicated that, though there are positive results in the housing development activities, the problem associated with contractors, lack of consultants and others were identified as a challenge, according to the report.
Concerning Micro and Small-scale Enterprises, the Mayor said that the sector is becoming the source of income for thousands of citizens and serving as a basis for industrialization.
Within the last six months the Administration together with other stake holders have created job opportunities for 103, 978 citizens out of whom 63,500 are permanent jobs.
In the health sector, the report indicated that expansion projects in four hospitals are being undertaken and 16 health stations are under construction.
In the area of road construction and maintenance, expansion projects have shown progress during the reporting period.
The report also indicated that the road network has increased from 4,671-kms into 4,801 -kms and the construction of new roads and expansion project have increased from 17.5 per cent into 18 per cent.
Regarding the transportation sector, the City Administration together with stakeholders is trying to address the gaps reported and registered in various ways.
Abay posts 93 million birr profit
Abay Bank S.C announced a 93 million birr gross profit made in the first six months of this fiscal year.
The total capital of the bank reached 579 million birr, the paid up capital reaching 486.7 million birr and total outstanding loan standing at 2.12 billion birr.
The bank’s President Mesenbet Shenkut said, “Services tailored to the low rank seating community groups gives us the way to perform well by promoting financial services in remote areas and we are strengthening our effort to do better.”
“We know that at the end of 2016, the National Bank will require us to have 500 million birr paid up capital and we currently have a paid capital of 486.7 million birr. We will make decision at the next general meeting which will take place after two weeks how we can achieve the boundary line.’’
Selling more shares or raising shareholders’ deposits are the two options the general assembly will discuss to meet the National Bank requirement.
Abay also announced that it will soon start interest free banking service to serve better Muslim customers who does not want to take interests from their saving account.
Mesenbet said that the bank is acknowledged by the National Bank of Ethiopia to offer the interest free banking service and it remains with the adjustment of some technical issues to launce the service.
“Since we have branches all over the country, the new service will attract many Muslims that want the free interest banking system.”
The president also indicated that the bank is planning to give special privilege loans to carbon emission reduction projects. “As citizens, we want to make a contribution to reduce the impact of climate change and what we are planning now is to give long term loans for those who request us to support carbon reducing projects.’’
Recycling projects which are known for reducing carbon emission are projects that will be given precedence in the carbon reduction projects financing plan, Mesenbet said.
Abay Bank started its operation in November 2010 with a subscribed capital of 174.5 million birr.
Breweries need to work with farmers for their barley demand
The Ethiopian Institute of Agricultural Research (EIAR) called on breweries to enter into more purchase agreements with farmers in order to save foreign currency on imported malt.
Beer production has increased significantly in recent years and currently seven million hectoliters of beer is being produced in the country.
To produce beer amounting to that, breweries need 196,000 tons of barley grain every year. Yet, only 40 percent of the demand for barley grain is filled by local supply.
Local production of good quality barley grain is hampered by traditional production methods, unavailability of quality seeds, poor soil fertility, and lack of market linkage.
Dr. Berhane Lakew, a National Research coordinator at EIAR, explains “Ethiopia’s barley production has increased by 15, even up to 20 percent, we are entertaining a paradoxical situation. We have one million hectares of land suitable for growing barley that can be used for malting but our production lags behind the demand due to technical problems that are surrounding us.”
“Breweries have gained good results by supporting some farmers to produce quality barley crops but this work has not been expanded to all producers. Making more agreements with farmers is a big assignment companies have to complete if they want to buy locally and reduce their costs. On the other hand, regional agricultural bureaus must work tirelessly to link farmers with companies” Dr. Berhane said.
He also added that researching new barley malt technologies, promotion of package-based extension schemes for the production of barley malt, and introduction of incentive mechanisms are crucial to boost the production.
Farmers state that minimal support they get from government organizations on soil research is one of the factors that is contributing to low quality grain production. This in turn attracted fewer breweries. Tewabu Derba, a farmer from Holeta said, “I have a hectare of land which produces up to 40 quintals of malt barley. But the soil losses its fertility over time and that affects the quality of the grain I produced, and I lose buyers. If the government helps us to improve the fertility of the land and create a market linkage for us the problem can be solved.” Tewabu also called on breweries to work with farmers and support them by providing technical support.
Tarkegne Garumssa, Raw Material Development marketer at Heineken Brewery said “There is a good progress that is being seen from breweries regarding working with farmers. For example, our company supports 6,000 farmers to harvest quality malt barley. But farmers still face several challenges such as acquiring large farmland and obtaining improved seed”.
Cash-strapped Gerbi dam waits Eximbank’s rescue
A portable water harvest project the Addis Ababa Water and Sewerage Authority (AAWSA) sought to develop on Gerbi river seats on the shelf as the fund required to start the construction is not obtained. The authority finalized study of the project last year.
The dam which will be constructed on Gerbi River, located in North East of Addis Ababa and a tributary of Abay River, has an estimated capacity of generation for 20 years. And it has a capacity to generate 73,000 metric cube water per day. The project is expected to take three up to five years to be constructed and has an estimated cost of 1.5 billion birr.
Tesfalem Bayu, Projects Manager of AAWSA told Capital that the Chinese Eximbank received the detail proposal of the dam but it has not yet approved the loan yet.
“We have finished the detailed study of the dam and we are searching a finance to commence the construction. We are expecting to obtain part of the money from loan that is expected to be secured from Eximbank.’’
The manager, however, declined to give a perspective how much the government will dedicate for the project.
AAWSA is also going to call a tender for detail study of Sibilu dam, another project on its assignment list, which will be erected on Sibilu River.
The dam will have a capacity to generate 480,000 cubic meter of water per day and with this additional capacity interruption in water supply could be totally stamped out, according to the authority’s forecast.
“Sibilu will be one of the dams that solely serve Addis Ababa. We are looking for a consultant who would make design of the dam and after that we will know how much money and time it will consume” said Tesfalem.
AAWSA also announced that an additional 114,000 cubic meters water is added in to the city’s provisions with a 1.8 billion birr loan from Eximbank.
The added volume increases total supply of water to the city to 464,000 cubic meters per day. The project will be officially inaugurated today March 8, in the presence of high government officials.
The additional capacity is feed by 24 wells that were dug in Akaki to generate 70,000 cubic meters per day.
The latest increase in AAWSA’s water supply capacity can ease the thirst for water by the metropolitan to some degree.
An additional 206,000 meter cubic water is needed to meet Addis Ababa’s daily demand of 670,000 cubic meters of potable water.
The development and enhancement project was supervised by Water Works Design and Supervision Enterprise.
Tesfalem said that excavation of 19 wells is in the pipeline at the ground water harvest site in Akaki with a one billion birr fund secured from the World Bank. Currently, Addis Ababa sustains itself on the four sites- Legadadi, Dire, Gefersa Dams and the Akaki Wells.