Awash Woldia / Hara Gebeya Railway Line Project, Ethiopia
Awash Woldia/Hara Gebeya Railway Project is a new railway line being constructed between the Ethiopian towns Awash and Woldia.
Ethiopian Railway Corporation (ERC), the owner of the project, is investing $1.7bn in the project. The new line will be completed by December 2015.
The new railway line will connect northern Ethiopia with central region. It will also link the northern and eastern transportation network of Ethiopia.
Background, purpose and benefits of the Awash Woldia/Hara Gebeya railway project
The Ethiopian Government has been undertaking several transportation projects as part of a five-year growth and transformation plan (GTP), which aims to enhance the transportation network within the country by connecting to adjacent countries and ports. It will provide efficient mobility and improve the export and import activities, boosting the economic development. National Railway Network of Ethiopia (NRNE) is one of the several projects constituted in the plan.
ERC has recognised eight railway routes as significant for development. These routes will have a total length of approximately 5,060km including buffer.
NRNE projects will be implemented in two phases. Phase I is composed of five railway projects which include Addis Ababa – Djibouti Railway Project, Mekele – Woldia/Hara Gebeya – Semera-Tadjourah Port Railway Project, Addis Ababa – Ijaji-Jimma-Dima including Jimma – Bedele Railway Project, Awash-Kombolcha-Hara Gebeya Railway Project and Mojo-Shashemene-Arbaminich-Weyto Railway Project.
Phase II includes six projects, Jimma-Guraferda-Dima diorected to Boma , Ijaji-Nekemet-Assosa-Kumuruk, Mekele-Shire, Fenoteselam-Bahirdar-Wereta-Woldia, Wereta Azazo-Metema and Adama-Indeto-Gassera-Ginir.
Line routes and benefits of the Awash Woldia/Hara Gebeya railway project
The new Awash Woldia/Hara Gebeya Railway Project is an extension project that will connect to Addis Adaba – Djibouti railway line. Awash railway station lies along the railway line from Addis Adaba to Djibouti.
Addis Adaba – Dijbouti is the primary transportation link for mobility of goods and people. The route is also used for import and export purposes through Djibourti port. The 389km-long single railway line will start from the north east of Awash and progress northwards through Kombolcha to reach Woldia.
The line will also link with Woldia/Hara Gebeya- Semera-Dicheto-Elidar project which will connect northern Ethiopia with Tadjurah port in Djibouti. The Woldia/Hara Gebeya- Semera-Dicheto-Elidar project will provide second transport link to the port and enhance the country’s development. All the current design works are subject to changes according to the final design, however.
Infrastructure of ERC’s new railway line
The Awash Woldia / Hara Gebeya railway line will involve the construction of 389km of new rail line, 40km maintenance lines and 18km station lines. It also includes construction of new tunnels, three terminal stations with two platforms, and six intermediate stations with a single platform. The total length of the railway line will thus be 447km.
An operation control tower will also be built exclusively for the line. The overhead catenary will provide electricity for the main railway line, depot and stabling lines. Two maintenance facilities, warehouse, generator rooms, maintenance and painting workshop, mechanical service building, wash services, service and commercial buildings will be constructed adjacent to the railway stations.
Contractors involved with ERC’s new $1.7bn railway line
In June 2012, ERC signed an engineering, procurement and construction contract worth $1.7bn for the Awash Woldia/Hara Gebeya railway project with Yapi Merkezi, a company based in Turkey. The contractual terms mandate to complete the construction of the new line within 42 months.
Yapi Merkezi is one of the world’s leading transportation infrastructure companies with a vast experience in rail systems. In addition to the $1.7bn contract signed in Ethiopia, Yapi Merkezi has also successfully completed the Dubai Metro Project, Casablanca tramline and Ankara – Konya high speed rail line, which make Yapi Merkezi a world brand in rail systems.
Kessem Sugar Development Factory Poised to Begin Sugar, Ethanol Production
Ten state-owned sugar factories will eventually enhance sugar production but all are not yet in operation
Kessem Sugar Development Factory is to commence production of sugar with a start-up crushing capacity of 3,500tn of sugarcane per day, following the completion of the testing of machinery.
The factory is located in the Afar Regional State, in Fentallie and Dulecaha Weredas, 50 kilometres away from Metehara Sugar Factory’s 20,000ha of land for sugarcane cultivation.
Kesem was part of the expansion project of Metehara Sugar Factory. However, after the establishment of the Ethiopian Sugar Corporation, a decision was taken for it to become an independent project.
The factory will produce 153,000tn of sugar and 12,500 cubic metres of ethanol a year once it begins production. When it reaches its maximum crushing capacity of 10,000tn of cane a day, the factory will produce 260,000tn of sugar and 30,000 cubic metres of ethanol annually.
The construction of the plant was undertaken by a Chinese state owned construction company, China National Complete plant import & export corporation(COMPLANT) , after the Metal and Engineering Corporation (Metec) failed to deliver, because it could not handle the work load, on top of its engagement with Kuraz sugar development project, which has five factories, said Zemedkun Tekele, corporate communications director of the sugar corporation.
The country’s demand for sugar is estimated to be five million tonnes annually, whereas existing factories produce only three million tonnes, said GashawAycheluhem, team leader of media relations at the Sugar Corporations’ communication directorate.
The currently operating sugar factories, which are owned by the Sugar Corporation, are Wenji-Shoa, Finchaa, and Metehara. The biggest sugar factory with the largest production capacity currently is Wenji-Shoa sugar factory producing 174,946tn of sugar per year. Tendaho Sugar Factory,yet to be completed, will be the largest of all with a production capacity into 619,000tn of sugar and 63,000 cubic metres of ethanol annually.
When ongoing projects are completed, there will be 10 state-owned sugar factories. Of these, Arjo Dedessa, with a crushing capacity of 8,000tn of sugar cane, has already begun production.
Hiber Sugar S.C. has not yet entered into production with its shareholders being divided on its continuation and liquidation.
There are no privately owned sugar factories in the country.
Cabinet considers establishing corridor between Aswan, Khartoum, Addis Ababa
This new corridor would increase the trade volume with Nile basin countries, develop Upper Egypt and help explore gold at Alaqy mountain.
Preliminary maps and studies have shown that the corridor would start from the Cairo-Aswan main road, pass through Abu Simbel city, east of the lake, and reach Alaqy, which is rich in gold.
Gamal Hegazy, chief of the General Authority for Land and Dry Ports, said Transportation Minister Hani Dahi requested studies on the corridor, which are to be submitted to the Cabinet, particularly considering it is a strategic corridor in developing south and east of Aswan. The area is known to have gold and the smuggling of it, as well as other precious metals, has been an issue in that area for some time.
Ethiopia Prepares for Full Membership of the Extractive Industries Transparency Initiative
As a full member of the EITI, Ethiopia would have to report revenues and taxes from the mining sector
Ethiopia is to acquire a full membership of the Extractive Industries Transparency Initiative (EITI) for open and accountable management of the mining sector after it had obtained its candidate membership in March 2014.
EITI is an international organisation first initiated in 2002 by the former Prime Minister of the United Kingdom, Tony Blair at the World Summit on Sustainable Development in Johannesburg. The international organisation currently has 48 member countries. It was established to maintain the disclosure of taxes and other payments made by oil and mining companies to the government through annual reports and meeting the international organisation’s criteria.
Ethiopia has not yet joined the organisation because it has needed time to fulfill the international criteria for membership, said Merga Kena, director of the EITI implementation office at the MoM.
A national steering committee was established soon after the country obtained its candidature for membership, with 15 members, five from each of the three mandated stakeholder sectors, namely, government, companies and civil society.
The mining sector is a highly corrupted sector globally and this can lead to conflict and the establishment of liberation Fronts, if it is not managed well, Anteneh Abrham, member of the National Steering Committee of EITI said at the Initiative’s conference held on April 28, 2015 at Hilton Hotel. More openness and transparency in the sector is necessary to ensure that citizens benefit from the sector’s resources, he continued.
Previously the revenues obtained from the mining sector were not disclosed to the public and extractive companies passed through corrupted administrations due to lack of a platform to entertain compliance, Anteneh said.
After the country obtains full membership in the Initiative, similar reports will be disclosed to the public every year which will be beneficial in attracting investment and preventing corruption in the sector through creating a platform of discussion for the stakeholders, he added.
Once Ethiopia becomes a full member of the international organisation the country will have a duty to report the revenues and taxes obtained from the mining sector in addition to creating a knowledge exchange platform. The financial and technical support for the studies and reports will be provided by the World Bank and other organisations, Merga said.
The steering committee is currently drafting a Bill for EITI standards implementation in an 18-month timeframe. Its annual activity report will be published in June 2015, he added.
While the government and the companies are maintaining their representatives in the committee, the civil society organisations (CSOs) have identified five categories of CSOs from which the new representatives will come. These categories are mass-based, rights-based, advocacy, professional associations and resident CSOs.
Five CSOs with these mandates will each nominate one person to represent them in the national steering committee as EITI membership requires that the Initiative works in partnership with government, companies and CSOs in each member country.
The companies’ representatives are Afar Salt, Mugher Cement, MIDROC Gold, Alana Potash and National Mining, whereas from the government are the Ministry of Finance & Economic Development (MoFED), Ethiopian Revenues & Customs Authority (ERCA), the General Auditor’s office, Ministry of Mines (MoM) and National Bank of Ethiopia (NBE).
Some of the criteria for full membership of EITI are publication of an annual report on the mining sector, a comprehensive annual activity report of the stakeholders’ work plans, reconciliation of the revenues and taxes of the mining sector by an independent reconciler and creation of a platform for the engagement of the three stakeholders so that all will know the details of the activities of the mining sector.
Both the companies’ and the government’s reports, the royalties paid and revenues received, will be independently reconciled for accuracy in the financial reporting and will be published in 2016. But a similarly comprehensive report will be issued and sent to the EITI before the end of this fiscal year as part of the criteria for membership.
The country’s membership in the international organisation is beneficial to the government in ensuring the transparency of the revenues and costs resulting from the sector and creating confidence among investors and the people, State Minister of MoM, Alemu Sime said.
Low capacity of recording data both by the government and the companies, absence of simplified data systems, inadequate promotion of the economic value of the sector and lack of community awareness were raised as the major challenges in the transparency of the sector.
Highlighting Inclusive Growth for Sustainable Human Development in Ethiopia : National Human Development Report Launched
President Dr. Mulatu Teshome launching the National Human Development Report for Ethiopia with UNDP Resident Representative Mr. Eugene Owusu (far left) and Commissioner Mekonnen Manyazewal, National Planning Commission (far right)
UNDP has launched its flagship National Human Development Report (NHDR) for Ethiopia which computes region-specific human development indices and explores issues that could help in Accelerating Inclusive Growth for Sustainable Human Development in Ethiopia.
The report examines development trajectories over a ten year period, and notes that the country has witnessed double digit growth in recent years. While the growth has been commendable more needs to be done to accelerate the inclusivity of the growth.
The country’s Human Development Index (HDI) ranking stands at 173 out of 186 countries. At the same time, Ethiopia’s national HDI value has witnessed a 3.5 percent increase annually between 2005 and 2013.
A key finding of the report is that Ethiopia can move from its current ‘low human development’ designation to a ‘medium human development’ category by 2025 if it sustains the current growth trend.
The report has innovatively computed for the first time the HDI for regions in Ethiopia, which have also shown a marked increase from 2005 to 2013. However, disparities also exist across regions. For instance, Tigray region’s HDI in 2004/5 was 0.397. This has grown to 0.524 in the period 2012/13. Gambella, an emerging regional state for the same period recorded human development indices of 0.387 and 0.472 respectively. Other regions with HDI values above the national average includes Tigray, Addis Ababa, Gambella,Harari and Dire Dawa.
Delivering his opening remarks at the launch, UNDP’s Resident Representative Mr. Eugene Owusu said “Ethiopia is tackling some very complex development issues and there are bound to be constructive differences over how best to move forward. We produced this report as part of our contribution to that ongoing dialogue on how best to drive inclusive growth and enhance human development in the years ahead.”
Minister Mekonnen Manyazewal, Commissioner of the National Planning Commission, noted that Ethiopian growth had been broad-based and inclusive. However he also noted that “Progress has not been smooth sailing. Poverty is still widespread so we need to accelerate broad-based economic growth and address structural challenges of the Ethiopian economy.”
“Melody works best when there is harmony and that is what inclusive growth is,” reflected Ms. Sara Menkir, Founder and CEO of Gro Intelligence, which works with financial institutions, corporations and the public sector to make more informed decisions. She commended Ethiopia for investing heavily in infrastructure but stressed that, “We need to invest in the software as much as we have done in the hardware.”
The role the private sector was also highlighted by all speakers as an important catalyst for sustained growth.
The report’s recommendations outline the need for building fortified linkages between agriculture and manufacturing sectors, promoting private sector support and participation in development initiatives working closely hand-in-hand with Government to both create employment for youth and economic opportunities.
Ethiopian President Dr. Mulatu Teshome noted that, “While we are happy with the progress in tackling the level and severity of poverty, we fully recognize that we still have a long road ahead of us.” He added that, “I am confident that the findings of the report will generate constructive policy dialogue and debate that will further strengthen our responses to enhancing inclusive growth and human development in Ethiopia.”
Government to Resume Teff Exports with 180,000ql by Next Fiscal Year
Protective measures will be taken to ensure that teff exports do not result in scarcity and price hikes at home
Ethiopia is to begin the export of around 180,000ql of teff flour, one of the country’s major food staples by the next fiscal year, following the embargo set by the government on the export of teff in 2006.
Teff, produced by 48 commercial farms throughout the country, is intended to exploit the comparative advantage the country has in the international market because of the special flavor and taste of the teff it produces according to Khalid Bomba (PhD), the Ethiopian Agricultural Transformation Agency’s chief executive officer (CEO).
“Teff is becoming very popular in the international market although it is still at its infancy to reach the level of market items like quinoa, a gluten free seed,” Khalid told Fortune.
Khalid Bomba (PhD), the Ethiopian Agricultural Transformation Agency’s chief executive officer (CEO)
Quinoa is a Latin American seed found in Bolivia, Peru, Ecuador, Chile and Colombia. It became popular in the international market with the General Assembly of the United Nations declaring the year 2013 as the “International Year of Quinoa“. But, its popularity was soon followed by inflated prices of quinoa in places where the seed originated.
“We will be implementing it in two major ways; the first is we will not export raw grain and secondly, we will ensure that we will not affect the domestic supply of the product in the country,” Khalid stressed. “The case with quinoa will not happen with teff.”
For the production of teff for export purposes by the fiscal year 2015/16, 6,000ha of land is to be cultivated. From these farms, a yield of 20ql to 30ql of teff per hectare is expected, all of which will be exported.
The country’s teff production for the year 2013/14 was 44.2 million quintals with a yield of 14qt per hectare, according to the Central Statistical Agency (CSA) Agricultural Sample Survey Report on Area of Production of Major Crops. The cultivated land for teff for the fiscal year was three million hectares.
The production for the prior report year according to the same source was 37.6 million quintals with a yield of 13.8ql a hectare. Teff therefore showed a slight increase of 6.6 million quintals in production that year. The cultivated land for the reporting year was 2.7 million hectares of land.
“When compared to the existing land that teff is cultivated on, the 6,000ha of land is very insignificant and the production too small to affect the market,” said Khalid.
The exportation of the product is to be started by commercial farms for the following fiscal year’s export and in the future it will expand to smallholder farmers, making sure that the production in the country increases, according to Khalid.
When the exportation begins, it will be done with international partners who will trace the origin of the teff to ensure that it comes from only these commercial farms.
Identification of the Ethiopia’s teff based on its genetic characteristics and biological behaviour by preparing DNA make-up and labelling will be done, said Sileshi Getahun, state minister of Agriculture.
“It has to be known that the teff that is exported originated from Ethiopia,” added Sileshi.
Currently, the exportation of teff, unless it is in the form of injera, is prohibited and the new initiative will feature another way of exporting- by milling the grain and packaging it.
The government officially banned teff exports in January 2006 on the grounds that export is the main reason for the price surge, according to the January 2013 Food & Agriculture Organization’s (FAO), Monitoring African Food and Agricultural Policies Report on Analysis of Incentives and Disincentives for teff in Ethiopia.
For the effectiveness of the project, a national level steering committee and regional sub-committees have already been established.
The national committee, chaired by Tefera Derbew, minister of Agriculture, includes representation from the MoA, the Agricultural Transformation Agency (ATA), the Ministry of Foreign Affairs, for marketing and promotion works, the Ministry of Trade, for the monitoring of the trading system, the Ethiopian Revenues & Customs Authority, for issues related to tax and Customs, the Ethiopian Standards Agency, for the quality maintaining issues of the exportable teff, as well as the Ethiopian Agricultural Investment Agency, to deal with issues relating to the investment licensing.
The regional committees are chaired by regional agricultural bureaus and will have members from the environment protection and regional investment bureaus.
The role of ATA is that of project manager who will coordinate and implement the work of the national steering committee and seek solutions to challenges.
The exportation project has three key areas of implementation, according to Khalid. The regulation, supply chain and promotional marketing. The regulatory section deals with the licensing and regulation while the supply chain looks at the production process, the processing, logistics and traceability. The third one will consider the buyers and the market related issues.
The ATA has hired a foreign company to brand Ethiopia’s teff and to undertake marketing research, Khalid says.
“The teff that will be exported from Ethiopia will be tagged ‘Ethiopian Teff’ and companies can put their own signs in addition to that,” Khalid said.
In the project, there will also be milling companies that will mill only teff in order to avoid mixing exportable teff with other items so as not to affect the quality.
“All processes from the access to land to the time of export will be monitored by the government; the moisture content and the existence of any impurities will be checked,” Sileshi told Fortune.
As the trend for new products joining markets indicates, the major challenges of implementation will be penetrating the new market and creating awareness among the local community, according to Khalid.
“We are starting with commercial farms for the introduction of the market and the major focus is the national pride more than the income that will be gained from the sale of the product,” Khalid stressed. “Once we plant our name in the international market for better quality, we can even get premium value for our teff like Ethiopian coffee.”
Seven International Companies Bid for Procurement of 453,600mt Palm Oil
The call for the supply of 453,600 metric tonnes of palm oil has seen the participation of seven international companies from countries such as Malaysia and Indonesia.
The financial as well as the technical document for the bid was opened simultaneously on April 27, 2015, at the Public Procurement and Property Disposal Service (PPPDS) office at Sidist Kilo along King George VI St.
PPPDS had announced the bid on behalf of Merchandise Wholesale & Import Trade Enterprise (MEWIT) on March 30, 2015 where 75 companies had bought the bidding document.
The procurement is to be made in four lots of three litres, five litres, 20 litres and 25 litres. The supply for the three-litre packed palm oil comprises the largest share of the total amount of the announced palm oil supply, which is 30pc. The second and fourth lots each encompass 25pc of the total amount while the rest is for the procurement of twenty litre packed palm oil.
Six companies have bid for the first and third lots while seven bid for the second and fourth lots.
After the offers go through both technical and financial evaluation, the winner will be announced in about one month, Solomon Betre, procurement head at the PPPDS, responded, when asked by one of the bidders. The award will be in a 60/40 scheme, where the winner will be asked to supply 60pc of the total amount. The bidder that offers the second lowest price will supply the remaining 40pc of the price offered by the winner, he added.
If approved, this will be the second palm oil purchase for MEWIT in this fiscal year. The first was a 300,000mt purchase. Of the total quantity of palm oil purchased, 193,000mt have already arrived in the country and 37,800mt are being distributed weekly across the country, said Melkamu Defali, public relations officer of PPPDS.
The government has been carrying out the procurement of palm oil since May 2011 after it had placed an embargo on private companies importing palm oil following its failure to control the edible oil market with a price cap. The price cap had been introduced on 18 items, including sugar, between January and May 2011.
For the past three weeks, however, the Ministry of Trade (MoT) has been reconsidering the return of private businesses the importation of palm oil. Currently, a study is being carried out to analyse the economic impact of allowing private businesses to import edible oil. The study will first be shared with the Ministry of Finance and Economic Development (MoFED) and the Council of Ministers before any decisions are made, though it has not been stated when.
PPPDS, which is accountable to the Ministry of Finance & Economic Development, was established in 2010. It assists public enterprises in the procurement of goods and services and disposal of assets.
Ethiopia offers 100% FDI facility to India for healthcare
Addressing a summit on ‘India: The Future Global Healthcare Hub’ under the aegis of PHD Chamber of Commerce and Industry, Ambassador of Federal Democratic Republic of Ethiopia Gennet Zewide said, “Many patients travel from Ethiopia and other African countries for super critical care facilities. Ethiopia, particularly would offer 100 per cent FDI benefits for Indian professionals that intend to explore the country for setting up of (a) host of medical services including concessional land and bunch of incentives including holidays schemes to suitably protect the Indian investments in the health sector.”
The Chairmen of International Affairs Committee for Africa and Health Committee of PHD Chamber Sanjeev Sardana and Nishant V Berlia including the Secretary General of the Chamber Saurabh Sanyal assured the participants that the Chamber would take up the issue of setting up of facilitation centres for visiting African patients in India with the Ministry of External Affairs and other departments of the government so that such fleecing of patients is stopped.
Ethiopia earns over 281 mln USD from mineral export
Addis Ababa, 4 May 2015 –
The Ministry of Mines (MoM) said it has earned over 281 million US dollars in revenue from the export of various minerals in the last nine months of this budget year.
MoM Public Relations and Communications Director, Bacha Faji, told WIC that the income was earned from the export of over 7,352.2 kg of processed and 2,803.8 kg of raw gold, 152.9 kg of gemstone, 48,147 kg of opal, 353 tons of marble, 3.88 kg of platinum and 133 tons of tantalum.
The minerals exported to various countries were produced by companies and artisanal miners, he said.
According to Bacha, gold, marble and tantalum exported through companies have generated 92.02 million US dollars, while gold, opal, tantalum and platinum exported by artisanal miners made 188.96 million US dollars.
The revenue obtained in the last nine months decreased by 15 per cent compared to the same period last budget year as a result of price fall of gold at the global market, Bacha said.
The mining sector has created jobs for 82,827 compatriots, he said.
Illy to open university in Ethiopia
He made the announcement at the Expo world’s fair while presenting a memorandum of understanding with the United Nations Industrial Development Organization (UNIDO) to support coffee production in the impoverished African country.
“Ethiopia makes some of the best coffee in the world, but it remains a developing nation with very poor rural communities,” Illy said.
“Coffee can make a direct significant contribution to the reduction of poverty,” he added.
“Ethiopia is the motherland of coffee…and to this day it retains great biodiversity in terms of native plants, which need to be preserved because they are being threatened by global warming”.
The Illy University of Coffee, which is already set up in 25 countries, offers training to local growers in order to increase the quantity and quality of their crops.
Filling the world’s cup with certified coffee beans
Coffee is Ethiopia’s top export, valued at $851 million in 2014. Coffee sustains the livelihoods of 15 million Ethiopians, according to the U. S. Agency for International Development (USAID), which is working to nudge the industry to higher levels of success.
While coffee is a well-established product of Ethiopia, its value chain has yet to reach its full potential. That’s why the U.S. targeted Ethiopia’s coffee industry as a focus of its Agribusiness Market Development project, part of the Feed the Future initiative.
Through the project, USAID trains smallholder coffee farmers in better harvesting, processing and storage methods that improve their beans’ marketability.
Alemu Abagero is a coffee farmer in Oromia. Before the training, he harvested ripe, overripe and unripe coffee cherries together, then dried and sold them to the local market.
Now Abagero selectively picks ripe cherries. He sold an initial lot for processing, earning 20 percent more than he had typically earned. He dried another lot in a well-ventilated area to maintain its quality, then sold the cherries later, again at a good price. He staggered picking to allow the plants to remain healthy and to produce every year.
Since 2011, Ethiopia’s production of coffee per hectare has increased 45 percent in areas where USAID works, said USAID’s Robert Sauers.
Aid is good. Trade is better.
Abagero’s story is local. Nevertheless, it is one part of a larger push toward high-quality coffee and more trade with the rest of the world. USAID helped to improve Ethiopia’s coffee-washing system and to simplify its coffee grading. It worked with Ethiopians to expand traceability so buyers would know that Ethiopia is the source of the coffee they brew.
Traceability “is a game-changer investment” with significant benefit to both coffee producers and buyers, according to Sauers.
In May 2013, the Ethiopian Commodities Exchange coffee laboratory became the first in Africa to meet the quality standards of the Specialty Coffee Association of America. The recognition increased the value of Ethiopian coffee brands and earned them confidence from U.S. and other international buyers.
Five months later, the East Coast Impact Angel Network, a group of investors in the United States, invested in a new coffee-processing facility and in training for more local farmers.
As a sign of the growing reputation of Ethiopian coffee in the world, in 2016 Ethiopia will host the International Coffee Organization’s fourth world coffee conference.
What’s in a name? How new reforms are easing entry into Ethiopia’s formal sector
In Ethiopia, registering a trade name– a precondition for a business startup– had long been one of the most cumbersome procedures of starting a new business. One had to make frequent visits to the Ministry of Trade with a number of potential trade names, which in most cases were routinely rejected for no clear reason. In one documented instance, an applicant had to submit eighty different names before he was issued a legally registered trade name. The inordinate amount of time that one would spend in the process had created a huge public outcry.
Thankfully, things have changed. The Ministry of Trade, with support from the World Bank Group’s Investment Climate Program, has issued a new, simplified, and modern Trade Name Registration Law.
Under the previous version of the law (Commercial Registration and Business Licensing Proclamation No.686/2010), requirements were almost impossible to meet. Your company name could not be descriptive. Nor could it be a generic term. It couldn’t be named after a river or a mountain. It couldn’t be named after your village or region. And so on.
To make matters worse, provisions within the law were remarkably vague. Often, many requirements were confused with those necessary for trademarks– a form of intellectual property that falls under a completely separate legal regime.
As a result, the entire procedure suffered from inconsistency of practice, arbitrariness, and a disproportionately high degree of subjectivity in processing trade name registration applications. Most were routinely turned down.
Knowing how difficult it has been to become legally registered, firms and entrepreneurs have been driven into informality. Those that managed to register their businesses were often stuck with undesired trade names that didn’t reflect their values, and hence inhibited their growth.
Now, for the first time, a single directive issued by the Ministry of Trade covers the entire procedure. The new directive directly addresses the sources of many of the problems encountered under the old law. It also makes a clear distinction between company/legal names, business names, and trademarks. In addition, it provides practical examples and illustrations for each of the law’s provisions in order to help guide officers as they process trade name applications. As a result, the requirements for registering a trade name are now aligned with a clear and legitimate objective.
Applications are no longer rejected on the basis of vague and unnecessary provisions. The Ministry of Trade is required to register and protect any trade name, as long as it is not identical to or misleadingly similar to an existing one. Names also must not be deemed contrary to morality or public order. No more vague and burdensome requirements.
This is a very important response to the concerns of the business community– foreign and domestic alike– and it is a welcome relief to both registering officers and those seeking registration. The new directive is expected to simplify the process, help create consistency, and significantly reduce the time it takes to register trade names.
In parallel, the Ministry of Trade has decentralized the hitherto centralized trade name registration responsibilities to the major regions and towns. These changes will help foster formalization and encourage the creation of new businesses, particularly small and medium enterprises.
The Bank Group will continue to monitor the progress made in achieving these goals and work to quantify the savings achieved as a result of this reform.