29 April 2015 Business News Briefs


Addis Metro to commence en mass test rides on Monday


Addis Metro to commence en mass test rides on MondayAddis Ababa: April 29, 2015  – 
Addis Ababa Light Railway Project will commence transporting commuters on mass next week.

The Ethiopian Railways Corporation disclosed that the Kality – Meskel Square route (which has access to a temporary supply of electricity) will conduct the trial session by transporting residents of the city.

The project carried out its first test ride a few months back with the presence of FDRE Prime Minister Hailemariam Desalegn.

It was noted that all 41 trams have arrived in Addis to begin operations. The maintenance garages for the trains have also been constructed in the city. All control and facilitation installations along the railway have been constructed, including power control sub stations.

Part of the objective of the trial session is to create awareness regarding the proper usage of the railway to the public.



MoM Says Mining Sector Helping Transformation of Economy

MoM Says Mining Sector Helping Transformation of EconomyAddis Ababa: April 29, 2015  –
The mining sector is contributing hugely to the transformation of the economy by supplying minerals required as industrial inputs amply, Ministry of Mines (MoM) announced.

MoM Communication Director, Bacha Faji said the mining sector has been accelerating the transformation of the country to industrial-led economy by producing minerals extensively.

The director, who recalled the acute shortage of cement in the country due to lack of mineral inputs for cement production, said the mining sector is now producing huge inputs such as lime stone, gypsum, tantalum and other minerals.

Besides, it is currently encouraging the establishment of factories near localities where the mineral inputs for them are found, he added.

According to Bacha, 2.255 billion USD was obtained over the past four years from gold, tantalum and other minerals.

Revenues from minerals increased from 12.7 billion USD in 2009 to the current 30.87 billion USD, the director stated.

Of the more than 315 companies engaged in the sector, 66 are foreign-owned, it was learned.

The sector has directly and indirectly created jobs for over one million citizens, it was also indicated.



Ministry, CSO Discuss about Creating Transparency in Extractive Industries

eitiAddis Ababa: April 29, 2015 –
Ministry of Mines and Civil Society organization (CSO) today held discussion about how to create clarity and transparency in Extractive Industries Transparency Initiative (EITI).

During the discussion State Minister of Mines, Alemu Sime said Extractive Industries Transparency Initiative (EITI) is an international strategy in which the government is working jointly with companies engaged in exploration of minerals   as well as civil society organization.

Transparency on revenues the government obtains from companies engaged in the sector will help to improve the revenue and ensure the benefits of citizens from the sector, according Alemu.

According to the state minster, the sector is striving to get additional foreign currency and to create more jobs through adding values on precious minerals and others minerals during the second GTP.

Civil Society Organization Representative in Multi Stakeholders Group (MSG), Eyasu Yimer said on his part this platform is arranged to discuss where we are now in implementing the initiative nationally.

When the country becomes full membership of the EITI it could create transparency in the sector and there will be a high probability to build trust among the government, citizens, local community and companies, he indicated.

Additionally, it will also help both government and companies to evaluate their performance because they would be expected to produce report.



Ethiopia’s old city eyes hosting dozens of new industries

One of the old cities of Ethiopia, Debre Berhan, which is founded 1456 at a distance of 120 kilometers north of the capital Adddis Ababa, eyes 40 new industries to start construction this Ethiopian Fiscal Year – before October 2015.

This is indicated by Getaneh Zeke, Mayor of the city over the weekend, who said at the ground laying ceremony of seven industries, which have a total cost of $125 million and will take 9.5 hectares to construct.

The event which was held last Friday May 24, had initially planned to see the laying of cornerstone of 15 industries, but had to be scaled down to seven to fit in with the day’s schedule.

“The 15 industries have registered capital of $490 million, and will create 20,000 permanent employment opportunity” stated Zeke adding that this will fasten the  city’s and region’s industrialization, and boost Ethiopia’s aim  to reach middle income status.

The City reportedly has made serious changes in running the bureaucracy, with land being given in possibly as soon as one day if requirements are fulfilled.

Electricity supply

Zeke also revealed that as some of the industries need significant electricity the city liaising with the federal government to secure uninterrupted power supply some of the seven industries whose corner stone was laid.

Juniper Glass (Private Limited Company) PLC which reportedly will cost $50 million will need 10 Mega Watts (MW) to operate while; My Shoes factory is expected to need in excess of 8 MW.

The other industries comprising of metallurgy, PVC factory, pharmaceuticals, Tractor assembly, Pulp and Paper are also expected to need significant electricity power to operate fully once construction is completed.

Amhara region Chief Gedu Endargachew on his part stated as the agricultural led industrialization drive is starting to showing fruition signaling the country’s growth isn’t just in some places but throughout the country to include industries outside of Addis Ababa and its surrounding.

“The Awash-Woldiya rail line being built by Turkish firm Yapi Merkezi is just is 93 kilometers from Debre Berhan,” stated Andargachew adding that with a road being constructed from Debre Birhan- Ankober Awash, this will make it even closer to the rail line and eventually Djibouti port.



New route opens promising future for specialty coffee


ethiopiacoffeeA new asphalt road that links the source of Ethiopian specialty coffee grower of Bensa Woreda of the Sidama Zone with  the regional center of Hawassa was inaugurated in the presence of top government officials on Tuesday April 21.

The 51 km concrete asphalt road project is constructed by a local contractor Alemayehu Ketema General Contractor at a cost of 427 million birr. Prime Minister Hailemariam Desalegn inaugurated the road that links three weredas of the Sidama Zone with the SNNPS regional state seat.

The contractor was pressed hard to complete the assignment on schedule as the project stretches  across difficult terrain and a long rainy season that is common in the SNNPS had reduced the pace of the work. A revision of the project’s design that was made after the contract was awarded was another challenge on the work.

The road that reaches  Bensa will surely have  high economic value to making possible transportation of  the high quality native coffee produce and other grains to markets. The new asphalt road connects Aleta Wendo area with Daye town. Bensa area is famous for its specialty coffee reserves which has a high premium in the international market.

At the inaugural ceremony, the prime minister said that the first grade coffee  the Woreda produces will now be easily delivered to central and international markets.

Ethiopian Roads Authority, the state organization that administers federal road networks, disclosed that the next phase of the project, which is under design study, will further connect Daye town with Nansobo via Chire with a 68km long road route.  This road connection can have considerable economic relevance for Daye town opening it up to markets and connecting the town with the regional capital Hawassa and several other towns in the region and Bale Zone of the Oromia regional state.

Several ministers had attended the opening, accompanied by a large crowed of the locality’s dwellers who were ecstatic.  The prime minister has also attended a program at Daye town that marks laying of the corner stone for a higher education facility that will be  managed by Hawassa University.

Residents of Daye asked the prime minister to make the facility an independent university instead of a campus. Hailemariam had promised that the facility will be upgrade to a university in the future.



Ethiopia to attain rural telecom access within 5 km radius of service target

Efforts are underway to attain the rural telecom access within 5 km radius of service target this budget year, Ethio Telecom said.

Ethio-Telecom Corporate Compunction Officer, Abdurahim Mohammed, told WIC recently that the rural telecom access within 5 km radius service has currently reached 96 per cent.

“And efforts are underway to achieve the coverage to 100% within the remaining months of the budget year,” he said.

The 40-50 kilometers tiresome journey, which the rural community had been travelling to find telecom services, is nowadays reduced to only five kilometers, he said.

The efforts made since 1987 EC to expand the country’s telecom infrastructure and ensure the all-round benefit of the people have paid off, according to the Officer.

As part of the efforts to expand its service and improve network quality, Ethio Telecom had built 725 stations in Addis Ababa alone during the past 20 years, he said.

Damages on fiber optic cables and power interruptions are among the challenges the service provider faced in its expansion and network quality improvement efforts, he said.

According to Abdurahim, some 1,477 fiber optic cable damages were occurred last Ethiopian budget year alone.

Ethio Telecom, which provides mobile, fixed line, internet, data, broadband, narrowband and GPRS services, currently has over 31.5 million customers across the country.



ETTE to construct new duty-free mall


auThe Ethiopian Tourism Trading Enterprise (ETTE) is poised to construct a grand  duty-free mall near Bole International Airport with the view of  expanding its duty-free retailing and  the provision of  new products.

“We decided to expand our duty-free businesses in relation  with the massive expansion project of the airport terminal,” Assefa Guya, General Manager of ETTE  told Capital. When the expansion project is complete,  the enterprise can supply a new pack of duty-free products for customers. Heavy duty furniture, electronics equipments, and vehicles are some of the items the enterprise plans to  add onto the list of availables at the duty-free mall.

Previously, the enterprise had  supplied  duty-free vehicles for individuals who have tax exemption rights for a short time before the service was discontinued.  The enterprise can earn hard currency from the sale of new vehicles which are normally supplied by motor and engineering companies at home.  Embassies,  international organizations, diplomats, and   expatriate workers are rightful bodies in Ethiopia that can  import vehicles free of duty.

ETTE is administered by  the Privatization and Public Enterprises Supervising Agency, a state  regulatory body that controls  public enterprises.
The enterprise, which  is one of the leading public enterprises that  fetch considerable hard currency to the state, has also plans  to open a training center at its workshop located in the north eastern outskirts of Addis Ababa. The construction work of  the training center has already commenced.  The center will train local people in hand crafts. The enterprise makes over one million dollars every month from the  sale of duty-free goods.  And  in the past ten years, its  profit has grown by three folds, the general manager has said.

A week ago, the enterprise has commenced celebrating its Golden Jubilee throwing a paintings exhibition at the National Theater. The exhibition held under the  motto ‘Ethiopia and Ethiopians’ is on display  for the seventh time and all the paints are commissioned works the  enterprise had sponsored.  Assefa said ETTE will  celebrate  its anniversary with a series of programs.

The enterprise has a department that specializes in making  hand-made articles.  “We are producing all types of cultural products including pottery and hand-made chairs and tables that are produced  from bamboo and wood,” he said. The enterprise has ten duty-free shops throughout the capital city  including the famous outlets at Bole International Air Port, AU and ECA. ETTE’s  biggest duty-free shop is housed in its head quarter edifice  located at Hayahulet area. The enterprise has ten art craft shops, one supermarket, and one handcrafts and paintings production center at Ayat area.

Last year, the enterprises  ripped 306 million birr from sales. “Even though our business is very big compared with other public enterprises, we have a big potential to expand more,” Assefa said.

The general manager noted that the tourism business, mainly conference tourism is growing significantly in the past years, and in relation   with the tourism growth, the enterprise’s turnover is also growing significantly. He said that the enterprise  has a plan to expand its business, and  currently, it is working to be one of the top five duty-free enterprises on the continent.

“Our goal is not only doing business but reflecting the heritage, culture and history of Ethiopia,” Assefa explained. The enterprise  uses mostly local inputs to produce craftworks, traditional clothes and traditional furniture. “We sell the crafts with local and hard currency, while the duty-free products are exclusively sold to  foreigners,” he said. “The enterprise is now growing  and its paid up capital has to be increased, while we are undertaking a study to expand the investment,” Assefa said. “We plan to expand the export volume  of handcraft products,” he added.

The enterprise also promotes  Ethiopia’s  tourism  internationally in collaboration with the Ministry of Culture and Tourism.
ETTE  links up with cottage  crafts people  to get   inputs including traditional wears and furniture for the products it makes.
ETTE commenced its service 50 years ago in a small shop at Bole International Airport. Today, it has 10 duty-free and 10 art craft shops, one supermarket, four liquor shops, and one pharmacy.
The enterprise is one of the oldest duty-free service providers in Africa, while it has a business tie  with 60 international companies.

The duty free stores ETTE operates are all retail outlets that are exempted from paying  certain local or national taxes and duties, provided that the stores sale the goods to travelers who will take the items  out of the country. Which products can be sold duty-free as well as the manner of sale, and the process of calculating the duty or refund vary among countries.

The global duty-free sales are forecast to reach US 73.6 billion by 2019, growing at a compounded annual growth rate (CAGR) of 8.6%. Personal care and drinks will continue to be the categories with highest expenditure in the Duty Free market. The Asia-Pacific region will fuel growth in the global market with sales reaching to US 37.6 billion in 2019. Growing low cost tourism, the expansion of space and the number of duty free stores in various airports, and wider brand availability will enhance channel sales.



Ethiopia’s progress and zeal


By Jacey Fortin in Addis Ababa
No rest for the construction workers on the future Addis Ababa light rail. Photo©DANIEL GETACHEW/EPA/Corbis

No rest for the construction workers on the future Addis Ababa light rail. Photo©DANIEL GETACHEW/EPA/Corbis

The ‘developmental army’ of Ethiopians recruited by the government has created real momentum, with the economy growing at a double-digit pace each year for nearly a decade. But many people are still struggling, and regular citizens complain about the lack of freedom and top-down initiatives.

From his hilly vantage point out- side the major city of Adama, Lema Mangesha can look in any direction and watch his country developing.

Local agricultural officials have lied about reports

Over the past 10 years, the 42-year-old farmer has seen new electrical lines strung up over his land.

He has witnessed the construction of three nearby factories: one for metal, one for cement and one for tyres.

His northern horizon is dominated by a wind farm erected about two years ago.

But while some of his neighbours have got jobs at the new factories, Lema still cultivates teff, barley and wheat.

Despite the power lines that criss-cross his fields, his home is not connected to the national grid. “Development has brought changes,” he says. “That doesn’t mean it’s enough.”

With official annual economic growth rates averaging about 10% during the past decade, Ethiopia is pooling every available resource to invest in roads, railways and industrial zones.

It boasts Africa’s largest airline, is working on Africa’s biggest dam and is about to complete its first urban light rail system in Addis Ababa.

Expansion as encroachment

Ethiopia is an overwhelmingly rural country, and Lema is among the 80% of Ethiopians who live outside of urban areas.

And like most rural dwellers, he comes from a family of smallholders.

The slow creep of development has hemmed him in on all sides, and the two hectares he works will not be enough to split between his three children. “When a person has a family, he has to expand his property. There’s no way for us to do that,” Lema complains.

In Africa’s second-most populous country, the government’s ambitions go far beyond gross domestic product (GDP) growth. Broad-based development is at the heart of its plans.

Officials also talk of reclaiming Ethiopia’s status as one of the world’s most advanced civilizations, a legacy that goes back to the Axumite empire and continues into modern times, when Ethiopia was the only African country to repel European colonial armies.

Today, the ruling party pursues modernisation with a relentless drive and authoritarian tools. But the results of its efforts are clear.

Growth has been relatively inclusive, and Ethiopia has achieved its Millennium Development Goals of halving poverty and reducing child mortality by two-thirds.

There are also mega-projects: capital-intensive ventures that aim to meet the infrastructure needs as fast as possible, even if it means going into debt.

“There is this conviction among outsiders that Ethiopia is poor and cannot fund such huge projects,” says state finance minister Abraham Tekeste.

“The figures we have for the last three years show that Ethiopia is still poor and the majority of people are still struggling, but still they can really save and postpone consumption for a very good cause.”

When it comes to electricity, for instance, he says just over 50% of households have access.

But Ethiopia’s generation capacity of 2,300MW will get a huge boost when the Grand Renaissance Dam – financed by citizens’ bond buying, electricity sales and local borrowing – comes online in a few years to add another 6,000MW to the grid.

In a bid to emulate the ‘Asian tigers’ that dominate global manufacturing, Ethiopia is constructing several industrial zones to attract foreign corporations.

“Manufacturing is top of the agenda as far as the government is concerned,” says state industry minister Mebrahtu Meles, pointing out that the resulting exports will bring a much-needed boost to Ethiopia’s foreign-currency reserves.

In this and other sectors, he adds, it is up to the government to lead the way until the private sector is capable of taking over: “Today, unfortunately, so-called demand and supply, or the invisible hand if you like, does not work. Ethiopia is emerging. It’s a new, infant economy, so we have to make sure that gaps will not be there.”

When it comes to agriculture, the government’s programmes include a call centre where farmers can get advice.

The ruling party also knows the value of social ties. It uses favoured farmers like Gadisa Gobena, 65, as exemplars.

On the 400ha under his control out- side the central town of Ambo, Gadisa grows certified hybrid seeds for sale.

“Only about 20% of farmers here are using certified seed,” he says. “We are very behind.” Gadisa also supports a government programme called five- to-one, where farmers form quintets to assist and monitor each other. It helps them adopt best practices, he says.

“With five men in one group, even a man who doesn’t use certified seed is forced to.”

Mobilising citizens

The five-to-one programme is in line with the government’s concept of a ‘developmental army’, whereby citizens are recruited to implement government policies.

For Adama resident Lema and many others like him, the project has been beneficial. But the groupings also serve another purpose: “The five-to-one leader forwards party information to us. We don’t debate it because it comes from a higher level,” he explains.

Ethiopia’s ability to mobilise its citizens it what sets the country apart, says Tewodros Hagos, head of politics for the Tigrayan People’s Liberation Front (TPLF).

“Ethiopia doesn’t have much money. We cannot do soil and water conservation programmes without voluntary
participation of the peasant,” he says, referring to projects done in Tigray using ‘developmental army’ principles. “Ultimately, people know they will benefit.”

The TPLF is the ruling party in the northern region of Tigray.

Outside the organisation’s headquarters in Mekelle, loud music memorialises fighters who helped overthrow the Derg military administration in 1991.

Key figures like late Prime Minister Meles Zenawi and influential deputy premier Debretsion Gebremichael were among the masterminds of that revolutionary struggle.

Today, Tigrayans are often accused of dominating Ethiopian politics – something Tewodros dismisses as “propaganda”.

The ruling coalition, the Ethiopian People’s Revolutionary Democratic Front (EPRDF), is a multi-ethnic grouping of four parties representing each of the county’s main regions.

Ethiopia’s foreign minister Tedros Adhanom describes a “change of mind- set” in government just as he was becoming the state minister of health in 2004.

Officials decided not to let limited resources thwart their ambitions, he says. Instead, they would set high goals and then work with international partners to find funding along the way.

It was “really thinking big, believing that you can do things differently,” he says. “That kind of mentality was really the paradigm shift.”

But critics say that the EPRDF’s single-mindedness leaves no room for debate.

The country’s outer edges are home to many semi-pastoralist communities.

Their lifestyles are endangered by mega-projects like sugar plantations in north-eastern Afar and irrigation schemes in the southern Omo, both of which require resettlement into villages for what the government assumes will be a more productive way of life.

Journalists imprisoned

“Eventually, the lifestyle is going to change,” says the TPLF’s Tewodros of pastoralism, adding that any relocation is voluntary.

“They have their resources. Is it not good to encourage them to use their resources instead of others coming and using it? Is that a crime?”

Long-simmering conflicts in other regions – like the Ogaden, populated mostly by ethnic Somalis, and Gambela, where Nuers and Anuaks jostle for dominance – make these outer reaches even more difficult for Addis to control.

Human rights concerns are not limited to the peripheries.

In Africa, Ethiopia is second only to Eritrea in the number of journalists imprisoned.

The 2005 elections delivered disputed gains to an opposition coalition and resulted in a fatal crackdown on demonstrators.

Today, Girma Seifu of the opposition party Unity for Democracy and Justice (UDJ), the lone opposition member in a parliament of 547, says the government is not remotely serious about allowing a multi-party democracy or even permitting EPRDF coalition members to deviate from the script.

“This is a unitary country,” he says. “And these people are very inefficient, even though they have been around for 24 years. They are still learning by doing, and they are unable to produce human capital. You see the same faces from 24 years ago.”

A national vote is approaching in May. Girma says he will not run again because the election board has dismantled the UDJ by recognising a fringe member as its leader and police have barred the doors to the party’s main office.

With the government all but certain to retain power for at least the next five years, officials say that they recognise the importance of protecting their founding ideals.

Corruption is an oft-cited threat to the EPRDF’s efficacy, but Tewodros says all of the regional parties combat this through constant self-evaluation.

There is also a problem of credibility. In its zeal for meeting production targets, officials have been known to exaggerate reports of progress.

This leads to inconsistencies: agricultural productivity claims that raise eyebrows, resettlement schemes that fail to deliver on services promised and factories that are commissioned despite technical problems.

Economic figures are also suspect, and the International Monetary Fund has disagreed with Ethiopia’s GDP growth figures for years.

Pressure to meet targets

Hailemichael Gebreselassie, a 30-year-old TPLF member employed by the Commercial Bank of Ethiopia, says these failures are the not the fault of the party but of lower-level officials who feel pressure to meet targets.

“Local agricultural officials have lied about reports,” he says while sipping coffee at a pavement cafe in Mekelle.

“Last year, they were given a budget to dig wells for irrigation. They reported to their superiors that they had already finished, but they hadn’t done it.”

He has also seen first hand how projects like the Grand Renaissance Dam have sapped credit for private enterprises at his local branch of the state-owned bank and how budgeted funds are sometimes siphoned off to pay for personal expenses.

“That doesn’t mean you give up on the party,” he adds. “We should discuss these things to make it better.”

The government’s plans and mega-projects will continue to encroach the livelihoods of people like Lema, who knows his small farm in Adama is becoming increasingly inadequate as the years go by.

But he says he is thankful for plenty of things that have appeared over the past decade: new wells for clean water, a health centre nearby and schools for his children to attend.

Those children are already taking work on larger farms and in the city.

“People who are deep party members know more about what is being done,” he says of the government’s developmental ambitions.

“From my perspective, from the outside, all I know is that this place looks better than it did before.”


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