Reprieve for firms as Comesa favours lower merger fees
By ALLAN ODHIAMBO
Companies eyeing the regional market through mergers and acquisitions may get a reprieve as Comesa considers lowering by up to 60 per cent the fees charged to approve such deals.
Sindiso Ngwenya, secretary-general of the Common Market for Eastern and Southern Africa (Comesa), said many companies have raised concern over the Sh44 million ($0.5 million) notification fees and called for a review.
He said Comesa was considering passing a recommendation to reduce the mergers and acquisitions fees to $0.2 million. The lower fee would make it particularly easier for medium-sized entities that may find the current fee high.
“This means there shall be an increase in the number of notifications by firms involved in mergers and acquisitions that subscribe to the Comesa Competition Commission,” Mr Ngwenya said.
Currently, the filing fee stands at whichever is lower between $500,000 and 0.5 per cent of the merging parties’ combined turnover in the Comesa region.
If successful, the reduction in the filing fees for merger and acquisition fees will bring further relief to firms eyeing new opportunities in the region.
The Comesa Competition Commission last year revised its rules so that the fee would only apply to mergers that affect at least two of the 19 markets and for firms with a combined turnover of $5 million.
That means mergers involving small companies with no cross-border operations will only be required to pay the fee charged by national competition authorities such as the Competition Authority of Kenya, which had sought a legal opinion on the suitability of the Comesa charges for fear that they would hinder consolidation in the region.
Under the new guidelines, any party interested in merging with or acquiring another within Comesa will now be required to notify the commission of the transaction four months prior to the completion of the deal so as to allow the commission to assess the planned merger or acquisition.
However, if the Commission is not able to complete the scrutiny within the time frame, it can seek an extension of up to 30 days.
In East Africa, only Kenya and Tanzania have national competition authorities.
Ethiopia mines ministry gives go ahead for Tulu Kapi development
Aim-listed gold explorer and developer Kefi Minerals has received approval from Ethiopia’s Ministry of Mines to develop its Tulu Kapi project.
The company’s application for the 86 000-oz/y mine was now before the Council of Ministers for approval to execute a mining agreement and to issue the mining license and full permitting to develop and operate the project for 20 years.
Further, Kefi Minerals on Monday said the estimated development expenditure for the mine had been reduced from $150-million to $120-million, based on initial bids received from mining contractors and on terms on offer to the company for the acquisition of the identified suitable process plants.
The development funding plan would be a combination of debt and equity finance, drawn down in the second half of this year and comprising $100-million of project debt, with the balance of $20-million being financed by one of a number of possible sources currently being assembled, including financing from contractors and equity at the project or parent company level.
“It is an exciting period for Kefi, with a great deal of progress occurring across the board. As we rapidly move towards the receipt of the mining license and advance our funding plans, we remain on track to start development at the project this year, [aiming] for production in 2017,” Kefi executive chairperson Harry Anagnostaras-Adams said.
The company also planned to conclude its definitive feasibility study and start construction of the 1.2-million-ton-a-year processing plant, during this year.
The Tulu Kapi project had a probable ore reserve of one-million ounces of gold and mineral resources of 1.9-million ounces of gold.
House Standing Committee Sees Industrial Park Bill
Bill lets federal government build industrial parks at the national level
The bill, which will officially end the term “industrial zones”, a term that has been abused, according to an official, has seven sections, including establishment of organizations within the park, recruitment of foreign employees to work in the park, treatment of international park developers, acquisition of land and other immovable properties as well as conflict resolution.
The bill was referred to parliament on March 10, 2015, when the Standing Committee began looking at it. The first Industrial Parks Proclamation prepared by the Ethiopian Investment Commission (EIC)was referred for parliamentary review at the first meeting of the House after a month’s recess.
“The name industrial zone is an internationally used common name but its name has been abused in our country where some collection of manufacturing sheds or five to six factories are being referred to by the name industrial zone. Therefore, we have intentionally avoided the name industrial zone in the proclamation,” Fitsum Arega, director general of the EIC said.
Although industrial parks was an area of the government’s focus in the first Growth & Transformation Plan (GTP), the intention was not implemented through laws that defined what industrial parks are, institutional structure, and responsibilities of developers, administrators and enterprises, states the explanation on the draft proclamation that was presented to the parliament. Due to the absence of these legal documents, development of the Eastern Industrial Zone and Bole Lemi Industrial Zone failed to have full services required, such as connection roads, electricity, telephone, water as well as banking and customs services, according to Fitsum.
The bill claims that it will be vital to decrease environmental pollution, organise city dwelling, enhance export of manufacturing products and ensure sustainability.
“The works to make the existing zones fit the standards of parks will be done; these could be establishing one-stop services for Customs and other governmental services,” Fitsum said.
The preparation of the bill by Ethiopian Investment Commission had inputs from the Ministry of Industry (MoI) and the newly established Industrial Parks Development Commission (IPDC), regional government as well as a Chinese group that conducted a study and forwarded recommendations on its own. “The government is the one that builds the parks, supports for the construction and carries out issues related to that such as selling and renting plots,” said Fitsum.
An official from the IPDC states that the proclamation will enable the administration of the parks to be better than it has been so far.
The federal government acting as custodian will take land from the regional governments and build the parks, fulfilling the necessary infrastructure and rents to developers, said the same source. The IPDC recommends the establishment of the parks centrally in the federal level but the regions can also develop their own parks, the source added.
The producers in the parks are given more advantages than those outside. Such advantages include selling their products, all of which are expected to be exported, with tax exemption, which does not hold true for those outside. And the producers in industrial parks need to export all of their products to the foreign market.
There are four operational parks in the country and two are in the process of establishment. The operational ones are Bole Lemi 1 and 2, Eastern Industrial Park and George Shoe. The ones in progress are Ayka Addis, a Turkish textile factory and government’s joint project and Huagian industrial park. Industrial parks in Kombolcha and Mekelle will be constructed with Prime Minister Hailemariam Desalegn having laid the cornerstones for their construction.
“We are doing all the necessary preparations for the implementation of the proclamation after it gets passed by the parliament and we will immediately make the directives and implementation manuals to make the implementation take no more than three months from now,” Fitsum affirmed.
Seventy percent of industrial parks area will be factories while the rest will be residences and green areas as well as service giving sites and offices.
Israeli construction suspected of tax evasion
Transit (LRT) project, is suspected of illegal tax evasion activities worth some 52 million birr, The Reporter learnt.
Investigators of the Federal Ethics and Anti-Corruption Commission (FEACC) told the Federal High Court Second Criminal Bench on Wednesday that three employees of the Ethiopian Revenues and Customs Authority (ERCA) Large Taxpayers Office suspected in the alleged tax evasion charges were arrested the same day while the owner and general manager of Tidhar, Menashe Levy, who is also suspected of the same charges, was banned from leaving the country but not arrested.
The investigators explained that the alleged tax evasion happened when Tesfa Hadush, leader of the tax audit team, and a two-member team, Muhammad Agmass and Anteneh Gezehagn, were assigned to do Tidhar’s tax audit for the business operation between the periods of 2008 to 2012. The audit, conducted in December of 2013 for one month, ended with auditors finding out that the company owed some 52 million birr in back taxes and notified it of its obligations.
According to the FEACC investigators, the story does not end there. The three soon approached Levy with another proposal, to reduce the 52 million to 6.1 million for a price of 3 million. After negotiations, the Menashe allegedly reached an agreement with the three to pay 1.8 million, 600,000 each, and have the taxes reduced to the proposed amount. Hence the four personalities were said to have evaded some 46 million birr in taxes and damaged the country.
Investigators asked for some 14 additional days to complete their investigation, during which time the suspects were ordered to remain in custody. In addition to that, they asked the court to issue a travel ban on the general manager until such time that he is placed under arrest. After hearing the justification, the court rejected the suspects’ right to make bail and granted the investigators 10 days to complete their investigation and institute charges.
Some 1 million TV owners to pay fees via digital system
Addis Ababa, 16 March 2015 –
A trio agreement among two public entities and a private company, the Ministry of Communication and Information Technology (MoCIT), the Ethiopian Broadcasting Corporation (EBC), a state-owned TV station, and Kifiya Lehulu, a financial technology private company, envisaged the way to start an electronic system to collect registered and license fees from a million TV owners in Addis Ababa this year.
The new electronic payment system seeks to collect fees from one million television owners from March 16 to the end of this year. According to the contract that was made public this week, Kifiya Lehulu would collect fees from TV owners across the capital annually on the station’s behalf.
According to Berhane Kidanemariam, general manager of EBC, previously, TV license and registration fees were collected by dispatching employees to customers’ homes. However, the GM noted that this system remained quite difficult to manage for the TV station for long time.
To that effect, EBC decided to outsource the fee collection jobs to Kifiya Lehulu. EBC is entitled to collect annual fees from each and every TV owner which is around 60 birr per annum. In return to the services that Kifiya Lehulu provides, the public TV station will pay 10 birr per customer, the GM told journalists.
The state broadcaster had the authority by proclamation, enacted since the 1960s, when there was only one public TV station, to collect license and registration fees from TV owners.
The fate of private TV stations, if they would ever to appear in the air waves, would depend on the permission of the government. When that day comes, amending the existing laws is no doubt going to take place, Berhane told The Reporter.
According to Senait Haile, marketing and promotion director at EBC, the year-long process of outsourcing has finally come through. Based on the Central Statistics Agency’s and EBC’s data, around one million TV owners would be accessed to pay their registration and license fees this year.
Based on the existing laws, TV owners who fail to pay the annual dues face measures which include fines and confiscation of their TV sets. Senait told reporters that some 13 million birr was generated from license and registration fees just last year. And this year, the station has set a target of collecting some 60 million.
Kifiya Lehulu currently handles utility bills on behalf of public enterprises. Munir Duri, Chief Executive Officer (CEO) of Kifiya Lehulu, said that there are some 34 collection centers which are handling electricity, telephone and water bills in Addis Ababa, reaching some 600 thousand customers across the board. Per month, 1.2 million birr transactions are taken care of via this digital company. These are the very centers destined to collect TV registration and license fees, CEO explained.
Kifiya Lehulu is branching out further to cover mobile banking activities in the country. Munir said that some 20 thousand safety net beneficiaries were selected to receive monthly vouchers via an e-payment systems. Currently, this pilot project is serving the Amhara credit and saving microfinance institution customers.
A television license or broadcast receiving license is an official record of payment required in many countries for the reception of television broadcasts, or the possession of a television set where some broadcasts are funded in full or in part by the license fee paid.
The license is sometimes also required to own a radio or receive radio broadcasts. A TV license is therefore a hypothecated tax for the purpose of funding public broadcasting, thus allowing public broadcasters to transmit television programs without, or with only supplemental, funding from radio and television advertisements.
Whilst TV licensing is rare in the Americas, half of the countries in Asia and Africa, and two-thirds of the countries in Europe use television licenses to fund public television.
CBO to launch interest free banking
The bank’s proposal got an acceptance by the National Bank of Ethiopia. The bank said the service is launched after some technical adjustments are made.
Wondimagegnehu Negera, President of CBO said at a March 10 press conference, the service will be offered on separate windows.
The interest free bank service targets individual customers, government institutions and non-governmental organizations (NGOs). Services offered under the interest-free banking include deposits, foreign exchange and money transfer services and will be available for customers who are engaged in trade, agriculture, freight forwarding, construction, manufacturing, and import-export trade.
Interest-free banking mainly targets individuals and institutional customers that do not want interest on their deposits because of reasons such as religion and it is becoming a competitive factor for local banks. The bank is also getting ready to build a 35-storey headquarter building around National Theater and another facility in Debrezeit.
“We went through a lot of ups downs but thanks to the banks’ shareholders and our committed workers the paid up capital is increased from 156 million birr to 856 million in 10 years time.’’
“Boosting our service, we will focus on helping farmers to produce more by supporting them to invest in value added assets, and by lending more money.” The president further added that the bank will begin ATM and Point of Sale services in a short time.
CBO gave out a loan of 1.2 billion birr to its customers in the first six months of this fiscal year.
Last year, CBO made a net profit of 475.85 million birr. CBO currently has 133 branches across the country and it has 1,705 employees.
Cooperative Joins Dairy Processing Industry with 28m Br Brand New Factory
The Union, which was established in 2001, joined the market three weeks ago with its new pasteurized milk
Selale Dairy Cooperative Union (SDCU) has joined the dairy-processing business in Ethiopia with a new brand of milk and yoghurt at its new factory, which was built at a cost of 28 million Br.
The Union brought its pasteurized milk to the market, with yoghurt to follow in the coming two weeks.
The milk processing plant is located in Sululta, 40Km North of Addis Abeba. It took approximately three years to finalize the construction as well as the procurement and installation of machinery for the factory, said Hailu Tadesse, SDCU’s director. The Union exploited its stronger financial capacity to benefit more from the raw milk it collects by opening this plant, which was built after a five- month feasibility study, he said.
The Union used 13 million Br of its own, borrowing the remaining 15 million Br from the Cooperative Bank of Oromia.
The new facility can process 20,000lt of milk daily, while the Union collects 10,000lt to 12,000lt from its members. The Union expects to get the balance from increased supply by its members as well as from new members, explained Hailu.
The Union is now focusing on the Addis Abeba market, with emphasis on pricing as a penetration strategy, Hailu said. It is selling its milk to retailers for seven Birr per half-litre packages, whereas the retail price of other milk in the market ranges from 10 Br to 11 Br for the same half-litre.
SDCU was established in 2001, having nine cooperatives, with a total of 512 members in North Shewa Zone, Oromia Region. Presently, the union is an umbrella for 31 cooperatives, which have 3,000 members. Thirty five percent of the profit is always kept in reserve while the rest is divided among the members as dividend.
Currently, in Ethiopia, the demand for dairy products is met through domestic production and through imports. In 2014, around 2,544,579 Kg of dairy products were imported at a cost of 15,156,394 dollars, which shows a tremendous increase as compared to the previous budget year.
The big mark-up in imports is due to the diminishing amount of supply that fails to meet the existing demand, explained a study by Precise Consult International, a local firm. Data from the Central Statistics Agency indicate a decrease from 3.8 billion litres in 2012/13 to 2.9 billion litres in 2013/14.
The growing population,expansion of urbanization and urbanized lifestyles, as well as the income growth in Ethiopia are expected to increase the demand for dairy products, said Amanuel Assefa (PhD), deputy chief of party at Precise Consult International.
Currently, there are 32 registered dairy-processing companies in Ethiopia. In 2011, there were 22 dairy processing companies with nine of them operating in Addis Abeba and the rest in other major regional cities, according to the Food and Agriculture Organization of the United Nations (FAO) survey.
Algeria, Ethiopia ink three cooperation agreements
Algeria and Ethiopia have signed three cooperation agreements on Sunday in Algiers.
The agreements include a memorandum of understanding (MoU) between Foreign Affairs ministry’s Institute of Diplomacy and International Relations and the Diplomatic Institute of Ethiopia’s ministry of Foreign Affairs.
The Algerian and Ethiopian governments also signed an agreement on animal health and another on professional and technical training.
The MoU between the diplomatic institutes and the health animal agreement between the two governments were signed by Foreign Minister Ramtane Lamamra and his Ethiopian counterpart, Tedros Adhanom Ghebreysus.
The agreement on professional and technical agreement was inked by Deputy Minister for Maghreb and African Affairs Abdelkader Messahel and State Minister for Education Wondwossen Kiflu Woldmichael.
The agreements were signed in the presence of the prime ministers of the two countries, namely Abdelmalek Sellal and Hailemariam Desalegn.
Airport Expansion Project Cost Rises by $115m
The project, which was supposed to be completed in two phases, has now joined together the two
The Bole International Airport expansion project, which was planned at a cost of 225 million dollars, is now costing up to 340 million dollars as the scope of the construction has been stretched.
The construction, which was first planned to be completed in two phases, began with 225 million dollars secured by loan from the Export Import Bank of China (Chinese ExIm Bank), to finance the first phase of the project.
The plan for the first phase of the expansion was to enable the airport to accommodate up to 14 million passengers a year and the expansion construction was designed accordingly. The second phase was planned to raise the capacity from 18 million to 20 million passengers a year.
“The existing airport was constructed in 2003 to accommodate passengers for twenty years but it reached its limit after just 10 years,” Tewodros Dawit, chief executive officer (CEO) of Ethiopian Airports Enterprise (EAE) told Fortune.
After evaluating the demand for the airport facility for the coming 20 years, the first and second phases of construction were integrated so as to enable the construction to accommodate the estimated 20 million to 25 million passengers a year, according to Tewodros.
The Addis Abeba Bole International Airport, which used to accommodate less than a million passengers a year, can now handle over seven million passengers a year, according to Haylay G/Tsadik, deputy CEO of Airport Operations at EAE speaking at the Airport Infrastructure and Maintenance, Repair and Overhaul MRO meetings press conference.
The expansion construction that is now being carried out by China Communications Construction Company (CCCC) forced the Enterprise to integrate the two phases instead of embarking on a new expansion project in the near future. The design work of the expansion project was undertaken by a Singapore company, CPG Corporation Pte. Ltd., a building development and management services provider in the Asia Pacific region.
CCCC is the company that constructed the Addis-Adama Expressway and on June 25, 2014 it also won a bid to construct roads worth 2.57 billion Br. along the Omo River in the Southern Nations Nationalities and Peoples Region. CCCC is a subsidiary of the China Road & Bridge Corporation (CRBC), after the latter took it over in 2005. It has a presence in 50 countries
“When we decided the exact cost of the construction after the completion of the design after three years since it began in 2011/12, we saw that the demand had been increasing from time to time so we studied it again and integrated the first and the second phases of the construction,” stated Tewodros.
Although the additional cost of the construction is known, the source of the financing has not yet been determined and the Enterprise will request the Ministry of Finance and Economic Development (MoFED) to look for the finance, stated Tewodros.
“The contracting body might depend on the financing,” Tewodros stated.
The new expansion project is said to allow the airport to have the capacity of accommodating up to 20 million passengers a year in 15 to 20 year’s time.
“Thinking of another expansion after three or four years following the completion of the current expansion is not feasible,” Tewodros stated. “We will also work to finish the construction of the integrated phases within the first time-frame.”
In accordance with the changed design and cost of the expansion project, the physical work has also increased by 150pc, according to Hailu G/Mariam, EAE airport project head.
“The construction was expected to begin immediately after the plan was made three years ago and completed within five years; but as the designing took three years by itself, the demand increased more than the planned 14 million passengers a year,” Hailu told Fortune. “By the integrated expansion, at least we will have a breathing time until the demand exceeds that number.”
The total international aircraft movement at Bole International Airport between 2001 and 2010 grew by more than 240pc while the domestic aircraft movement grew by 12pc for the same period.
Currently, the EAE operates 20 airports, four of which provide international flight services while the rest provide services for domestic flights.
The deal with the construction company is based on a turnkey level in which the contractor constructs and submits the finalised project.
“The country’s tourism sector is still well untouched and the airport expansion facilities are one of the major requirements in the industry, which will facilitate the growth of the tourist industry,” Haile stated.
The expansion of the airport is also related to the Ethiopian Airlines’ 2025 vision, which includes increasing revenue to 10 billion dollars, increasing destinations from 104 to 126 and increasing fleet from 77 to 140, according to Tewodros.
The expansion project includes the construction of a new passenger terminal as an extension of the existing Terminal 1 (domestic and regional terminal) and Terminal 2 (international terminal) with related equipment. The new terminal will house boarding areas, lounges, recreation centers, shopping malls, offices and other facilities. New boarding gates, boarding bridges, and a new parking area for passengers and airport staff are parts of the expansion project as well. The other major component of the expansion project is the construction of a new VIP passenger terminal.
Ethiopia: The Schulze Global Investments level with Those of Singapore
Addis Ababa March 14, 2015 –
The Ethiopian Foreign minister Dr. Tedros has talks with Gabriel Schulze, Chairman and CEO of Schulze Global Investments
Dr. Tedros met with Mr. Gabriel Schulze, founder, Chairman and CEO of Schulze Global Investments. Discussions covered sector-specific investment opportunities, the maximizing of investment inflows and future regional trade and investment opportunities in the East African region.
Dr. Tedros discussed developments in Ethiopia’s industrial parks, its health system and the overall development of the country as well as its investment opportunities. He also detailed the future market and trade potential of the region pointing out that the ground had been laid for economic integration between Ethiopia and Djibouti during the recent High Level Joint Ministerial Commission Meeting.
The Ethiopian Foreign minister Dr. Tedros said Ethiopia and Djibouti are building telecom, rail, power, water infrastructures and other links as well as developing the integration of customs clearance visas and other areas. Mr. Schulze said that Ethiopia was a most stable and highly recommended country for private equity investment.
He noted the similarities of the development of the Ethiopian industrial parks with those of Singapore’s and expressed his wish to work in collaboration with the government to build more such parks for investors coming to Ethiopia, which, he said, offered a large potential market for investment.
IFC expresses readiness to support Ethiopia’s economic development
Addis Ababa, 16 March 2015 –
The International Finance Corporation (IFC) expressed its readiness to identify opportunities and further support the economic growth being registered by Ethiopia.
Following a discussion held with President Mulatu Teshome, IFC Executive Vice-President Jin Youg Cai told journalists that, as Ethiopia is due to start the Growth and Transformation Plan (GTP-II), there are a lot of requirements for capital thus the IFP delegates are here to learn the government’s plans and identify opportunities to support the economic growth.
He said Ethiopia has been registering the fastest economic growth in Africa as well as in the world with a very disciplined leadership and hard work people. “Because of this, we are encouraged to see the progress, be part of the economic development and a good partner,” he added.
In his discussion with IFP delegates, President Mulatu appreciated the IFC’s support and readiness to take part in the country’s economic development having prepared strong concept papers focusing on their specific areas of participation.
President Mulatu expressed Ethiopia’s readiness to receive support from the corporation particularly in the areas of the garment, textile processing, and leather industries. President Mulatu also called up on the IFC to keep up its role in the economic growth and assured the delegate that there will be other discussions.
Furthermore, the delegates were here to discuss how to strengthen the financial and technical support to the private sector and evaluate the status of the corporation’s assistance during the last two years during which the IFC gave support to private companies engaged in agriculture, consultancy, hotel and tourism and the like.
IFC, established in 1956 and a member of the World Bank Group, is the largest global development institution focusing exclusively on the private sector in developing countries. It is owned by 184 member countries.
Its work in more than a 100 developing countries allows companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities.
Polish companies seek business partners in Ethiopia
Members of the Ethio-Polish Parliamentary Group
– METEC to inaugurate polish tractor assembly line
Polish manufacturing, construction and IT companies are looking for business partners in Ethiopia with the view of forging joint ventures.
Up on the invitation of the Ethiopian parliamentary group (Ethio-Polish parliamentary Group) Polish parliamentarians and business people this week visited Ethiopia. The delegation comprising two parliamentarians and six business people led by Killian Munyama (MP), chairman of the Ethio-Poland parliamentary group in the Polish parliament, met Ethiopian parliamentarians, senior government officials and members of the Ethiopian business community. The delegation also held meetings with officials of the African Union.
The Polish business delegation comprising manufacturing, construction, coffee importer, IT and energy companies on Wednesday met Ethiopian businesses at Hilton Addis Ababa. Some 50 Ethiopian companies, who have shown keen interest to do business with Polish companies, held one-to-one meetings with the six polish companies representing more than sixty polish companies.
The business to business meeting was co-organized by the Polish Embassy in Addis Ababa and Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA). In his welcoming remark secretary general of ECCSA, Gashaw Debebe, said that Ethiopia’s relations with the Republic of Poland are far more solid than ever before. “Though the economic linkages between the two countries has been improved in recent years, mainly due to the encouraging achievements of economic reforms in Ethiopia and the enhanced bilateral relations between them, the trade and investment relations between the two countries is still lagging behind compared to the unexploited opportunities existing in them.
According to Gashaw, the total turnover between the two countries was only 23 million dollars in 2013, signifying the fact that much work is still needed to further enhance their trade and investment ties through the unrelenting efforts of the governments and business communities of the two countries.
Munyama, head of the Polish delegation, told The Reporter that most of the Polish companies are looking for Ethiopian partners. “Their line of interest is to put up joint ventures because we want the local community to be involved. We want to create jobs. We want to have a mutual benefit. We are not only after trade. We are looking at cooperation,” Munyama said.
Munyama said the business forum enables the companies to find a common ground to push forward to the relationship.
With the view of boosting trade and investment relations with Africa the Government of Poland in 2013 launched a trade initiative dubbed “Go Africa”. The Go Africa program enabled Poland to boost trade volume with African countries by up to 150 percent. Polish export to Ethiopia increased by 106 percent in the last two years.
“We do believe that Ethiopia is one of the biggest markets in Africa we can be able to cooperate with,” Munyama said.
Polish companies are entering Ethiopian market. A prominent tractor factory, Ursus, is supplying tractors to the Ethiopian Metals and Engineering Corporation (MetEC). MetEC is assembling the tractors in Adama Tractor Assembling Factory. Ursus is delivering 3000 tractors to MetEC worth 90 million dollars. The company began exporting the first 1500 tractors last year at a cost of 50 million dollars. Ursus tractors assembling line in Adama Tractor Factory will be inaugurated in four weeks time.
One of the largest IT companies in Europe, Asseco Poland, has set its foot in Ethiopia. Asseco Poland is closely working with the Information Network Security Agency (INSA). Munyama said that Poland wants to maximize the trade and investment relationship with Ethiopia.
“We are aware of the fact that some of the Polish products has entered Ethiopia though other European countries we want to change the trend, we want to establish a direct trade link between the two countries” he said.
Polish Ambassador to Ethiopia, Jacek Jankowski, told The Reporter that there is an increasing interest from Polish companies to do business with their Ethiopian counterparts. Jankowski said that there is a great potential between the two countries. “After my arrival in Ethiopia in November 2012 I have seen that the relation is getting stronger and stronger both politically and economically,” he said.
However, the ambassador said the level of bilateral economic relation between the two countries does not meet his expectation. “I see a great room for improvement and for bringing our countries closer and closer.”
According to Jankowski, polish software companies are cooperating with INSA, polish sugar factories are working Ethiopian Sugar Corporation. The biggest Polish chemical factory, the second biggest chemical company in Europe, will come to Addis Ababa to hold talks with the Ethiopian Chemical Corporation, Ministry of Agriculture and Agricultural Transformation Agency. Executives of the company will discuss the possibility that they can supply fertilizer and chemicals to the Ethiopian market.
“More Polish companies are showing interest to do business with Ethiopia,” Jankowski told The Reporter. “Some in Poland thought that Ethiopia is not a good place to do business but this is now changing. Many Ethiopian companies have shown interest to establish contact with Polish companies. “It takes two to tango. We have Ethiopian business people and Polish business people who are both interested to do business, he added.
Jankowski also told The Reporter that at the end of this year the president of Poland is scheduled to visit Ethiopia.
Last year the Ambassador received an award from the Polish Ministry of Foreign Affairs called “Friend of Economy” (Amigos Economy) for boosting trade relations between Poland and Ethiopia.
The Polish embassy is closely working with the Ethiopian Chamber of commerce and Investment commission in strengthening trade and investment between the two countries.
Ethiopia dam, Gibe 3, project could start power generation by June – official
The project should be fully operational by early 2016, an official said on Thursday.
Gilgel Gibe 3 will nearly double the country’s energy output, helping to resolve chronic power outages and sustain a booming economy. Work started in 2008 and was due to be completed around three years later, but the project has faced funding shortages over concerns about its environmental impact.
“88 percent of the work for the Gibe 3 hydropower projecthas already been completed,” Azeb Asnake, chief executive officer of the Ethiopian Electric Power Corporation, told Reuters. Two of ten units would be ready by June, Azeb said, while one additional unit would come on line each month after that. Upon completion the project will generate 1,870 MW of power.
Ethiopia plans to spend a total of 12 billion dollars to tap the rivers that cascade down its craggy highlands over the next two decades in a bid to beat energy shortages and become Africa’s biggest power exporter.
The country’s economy is expanding by 9 per cent a year, and the dam is part of an infrastructure plan aimed at sustaining that growth. A bigger project, the 6,000 MW Grand Renaissance Dam, is being developed along the Nile.
Power outages are common in this country of over 90 million, where a majority still rely on subsistence agriculture. Addis Ababa’s nascent manufacturing sector is also attracting firms from China, Turkey and India to produce clothes, shoes and other basic goods, but frequent blackouts hamper economic activity.
Ethiopia already exports power to neighbouring Kenya, Sudan and Djibouti, and it has signed agreements with Tanzania, Rwanda and South Sudan, as well as Yemen.
Critics of Gilgel Gibe 3 say it will reduce water flow and devastate the fisheries of Lake Turkana, which is fed by the Omo. Ethiopian officials admit criticism led the European Investment Bank and the African Development Bank to turn down a request to disburse funds.
The Industrial and Commercial Bank of China stepped in four years ago with a loan of 500 million dollars to pay for turbines.
Azeb dismissed the concerns, saying Ethiopia’s research suggests regulating river flow will stabilise fluctuating water levels. “If they read these studies, they would not continue with their arguments,” she said.
Intellectual Property Office Gets New Director
The office has been under an Acting Director since Berhanu Adelo’s removal in January
A new Director General has been appointed for the Ethiopian Intellectual Property Office (EIPO) by decree from the Prime Minister’s Office as of March 6, 2015. Teshale Yona took the position on March 10, 2015, as per the appointment letter.
The EIPO had been under an Acting Director, Girma Bejiga, after the sudden removal of Berhanu Adelo by Prime Minister Hailemariam Dessalegn on January 2, 2015.
Teshale started his career in 1993 as a primary school principal. In 2006, after receiving a Bachelor’s degree in Law (LL.B) from the Ethiopian Civil Service University, he worked for one year as Sidama’s Zone prosecutor. He was then appointed to the Southern Regional State’s Justice Bureau, where he simultaneously served as Head of Bureau and Prosecution administration. After five years on that job, he studied for his Master’s degree in Law and his new assignment is his first after being awarded his second degree.
The letter sent from the Prime Minister’s office on January 2, 2015, removed Berhanu from his post and assigned the then Director of Patents Girma Bejiga, as Acting General Director effective the very same day.
Berhanu first started working as a teacher at Teacher Training Institute (TTI) in Bonga and worked his way up to head the Prime Minister’s Office. He also served as Assistant Chief of Justice for the Southern Regional State, lecturer at Civil Service College and Minister of Cabinet Affairs. Among the 36 members of the politburo of the EPRDF, where there were nine representatives from the South, Berhanu was one of them along with Prime Minister Hailemariam and Shiferaw Shigute since 2010.
At the fourth general election in 2010, Berhanu ran against independent candidate Ashebir Woldegiorgis, for the seat in the parliament of Bonga, representing Southern Peoples’ Democratic Movement (SPDM) and lost.
With the appointment of the new General Director, Girma is back to his former post as Director of Patent. Girma joined the office in 2005 and worked as Junior Trade Mark Examiner, Patent Team Leader and Patent Director through the years, until his latest assignment as Acting Director General. Girma has a Bachelor of Arts degree in Physics from Addis Abeba University (AAU) and a Master’s degree in Intellectual Property from the Italian Turin University. Before joining the EIPO, he was a teacher at different high schools in the Oromia Regional State.
The EIPO was established in 2008 to facilitate the provision of legal protection against exploitation of intellectual property in the country and has been collecting, organizing and disseminating technological information contained in patent documents. It also encourages its utilization, study, and analysis and makes recommendations for intellectual property policy and legislation. The office is accountable to the Ministry of Science and Technology (MoST), headed by Demitu Hambisa.
1.6 million Jobs created in the past six months
In addition to creating millions of job opportunities, efforts to reduce poverty and improve livelihoods in urban areas had been successful, the Minister added.
The 9th Urban Development, Housing and Construction Sector summit begun yesterday in Adama. Manufacturing, construction, service, urban agriculture and trade were identified as the main areas where most of the jobs were created.
All rounded support, provision of loan, improved land administration and development saw progress while limited capacity and implementation problems proved a challenge, it was noted.
A progress report noted that there is a significant lack of capacity and gaps in performance.
The summit is expected to conclude tomorrow after regions exchange best practices.
Home Grown Leather Holds Sway at District Level
Visitors to the regularly held exhibitions in the sub city level everywhere in Addis Abeba would have their attention grabbed by the number of booths occupied by producers of leather products. shoes, belts, wallets, and sandals, all made of leather are the major products that occupy the spaces in the booths. These exhibitions provide market access, for the walk-in customers who buy the products.
TY, Fekade, Azenagash & Friends Shoe Work Union is a small enterprise that produces leather goods in one of the rooms in a condominium located in Ginfille Textile Production and Display Centre past Queens College in Arat Killo.
Fekade Woldeyes, the chairman of the Union, was sewing the leather pieces for shoes on a sewing machine. Two other members were also putting glue on the edges of the shoes and cutting the measured pieces of hide to suit their shoes.
Fekade Woldeyes showing the square feet of leather that is sold in rolls at Merkato
There were 10 members of the Union when they started in 2013 and five of them left not long after it was established, losing hope in the business as it lacked access to the market. Fekade’s Union was established with a start-up capital of 5,000 Birr. with each member contributing 500 Br.
“One of the major challenges in the business is the shortage of inputs that we use for the production,” Fekade said.
The inputs that are used for manufacturing leather products are fully processed hides that the producers cut into measured pieces and make the material that they want.
The hides, about 12 sq. feet each, are sold in bundles of 10 for 3,000 Br to 4,000 Br at Merkato’s Shera Tera by middlemen who buy from processing factories. One piece of these hides can make up to seven pairs of shoes. The other kind of leather that is used for the internal lining and tongue of the shoes is sold for 40 Br to 50 Br a kilo. It is very smooth, faint in texture and thinner than the leather used for the outer parts of the shoes. One kilo of this hide makes two dozen shoes according to Fekade. A synthetic lining that is used for the insole is sold at 90 Br a meter and this quantity makes one dozen shoes.
“The price in the market fluctuates over time, which limits our production capacity,” laments Fekade.
Fekade believes that it would be very nice if he could buy the raw material directly from the producers, which unfortunately does not happen for small-scale buyers like him as the producers prefer those that buy their products in bulk.
“I plan to grow big and export our products to the foreign market and we can do that as long as we maintain the quality of our products,” says Fekade. “The only thing that is hindering us is the lack of market linkage and the problem in the input market.”
Fekade Woldeyes, the chairman of TY, Fekade, Azenagash & Friends Shoe Work Union sewing the leathers to make up shoes at Ginfille Leather Textile Production and Display Centre
Salegziabher Fanta is a producer of such hides in Kality who operates on a rented plot of 4,500 sqm. He started producing in 2011 by buying semi-processed wet blue skins from bigger factories and upgrading them to a usable level. Before coming into the business, Salegziabher worked for Walia Leather and Leather Products Plc as a production manager. He studied Industrial Chemistry and joined the firm in June 2009 immediately after graduating from university.
He then invested his savings, totalling 5,000 Br, on machinery rental, which marked the beginning of the business, named Salegziabher Leather Production. Now he has bought six machines, five used machines and one new imported machine, each worth 1.5 million Br. Each machine has the capacity of producing 500 ox skins and 3,500 sheep skins a day.
Because of the lack of space for the processing, Salegziabher is limiting his capacity of production to 500 oxen skins a day. But he has the capacity of processing 6,000-oxen skin a week, receiving up to 2,000 skins a day from factories. One processed ox skin sells for 250 Br.
Established with such a small-scale production, Salegziabher now has capital value of 1.5 million Br and employs 15 permanent as well as seven temporary employees. He is planning to expand the plant to a level that can process skins from the beginning on 1,500 sq. m. of land with 34 machines. He has applied to the city administration for the plot of land that he requires.
“It requires us to spend up to 150,000 Br. for the installation of one machine. Therefore, we need to have one stable place to work,” Salegziabher told Fortune.
Salegziabher’s customers are both wholesalers and producers of leather products. But he prefers to sell to the wholesalers because of their financial capacity.
“Although the producers give me better price compared to the wholesalers, I sell mainly to the wholesalers as they take most of my products at a time,” Salegziabher said. “We give priority though to shoe producers as they give us better prices.”
According to data from the Federal Small & Micro Enterprises Development Agency, there are 564 small and micro level leather product producers in Ethiopia registered between the years 2010 and 2014 not including the regions Gambella and Afar.
Another small scale producer of leather products is Hussein Edris, manager of Hussein Leather Production Enterprise, who started out repairing shoes and now wants to buy machines and enter the export market. He had been in the business of making shoes out of finished skin for 20 years before establishing his enterprise in 2004 with 2,000 Br.
He started by producing sandals with one of his brothers and two relatives, then transformed to making covered shoes.
“We now make every kind of shoe and our customers are those who know our workshop,” says Hussein. “The only way we contact new customers is through bazaars held at the district.”
Although confronted by these challenges, the capital and the production capacity of these enterprises is increasing over time with some even reaching export level.
Bermero, a shoe producing private firm owned by Berhanu Isayas, is located at Piazza. He established the business in 2012 in 40 sq. m. of rented space but is moving from Piazza to Ginfille Textile Production & Display Center where he acquired a 400 sq. m. production space and a store. He plans to increase production five-fold as he has adequate production space that is separated from his shop. The shop was named Bermero, blending his name Berhanu with that of his wife’s, Meron.
“The market is very nice and I have started export of the products that we have made,” said Berhanu.
Once, a walk-in customer from Marseille in France ordered 500 leather bags but as it is the first time, he only sent 50 bags as a trial. He earned 4,500 dollars from that and is planning to open Bermero representative shops in Washington DC and in Zambia.