03 June 2015 Financial News Round-Up (UPDATED)


Railway projects a priority in Ethiopia

Jun 4, 2015

Railway expansion and construction projects will continue to be a priority in Ethiopia even in the next growth and transformation plan (GTP) period; this is according to Ethiopian Railway Corporation.

The second GTP period which will commence in mid July will ensure that new railway projects are embarked on. This initiative will see different parts of the country connected hence leading to increased trade and better ways of enhancing the economic growth in the country.

“Railway projects commenced during the first GTP period and new ones will be undertaken in the GTP period, said the PR director of Ethiopian Railway Corporation., Dereje Tefera.

Some of the completed railway projects are the 370km long Awash- Weldia- Hara Gebeya railway, which is part of the system that connect with port of Tadjoura and the 220km Mekele- Woldia- Hara Gebeya- Semera- Tadjourah Port railway which will be finalized within this plan period.

Ethiopian Railway Corporation 656km Addis Ababa- Djibout railway project will also be completed in the next fiscal year.

Ethiopia is the first country in Africa to construct a light railway dubbed The Addis Ababa Light railway system, and it is projected to commence operation in the coming fiscal year. The government has been injecting a large sum of money in these projects that are going to tremendously improve the internal and regional trade.



General Electric seeks to double Africa revenue to $10 billion in 5 years, eyes Nigeria and Ethiopia


03 Jun 2015   Chris Spillane, Bloomberg

GE has identified Africa as one of its most important growth areas; plans to invest $2bn by 2018 as well as doubling its workforce on the continent.

GENERAL Electric is seeking to more than double revenue from Africa to as much as $10 billion over the next five years as it targets power, health and locomotive opportunities in countries including Nigeria and Ethiopia.

“We’re bullish on Nigeria,” Thomas Konditi, GE’s president for transportation for Africa and South Africa chief executive officer, said in an interview on Wednesday. “We met with a couple of the incoming leadership and they’ve put rail right behind power. They don’t have mines as much, so you’re going to look for more general freight.”

Nigeria, Africa’s biggest economy, transports only 0.1% of its freight by rail and could boost the number of locomotives to as many as 500 engines from 25 now, Konditi said at the World Economic Forum in Cape Town.

The company, based in Fairfield, Connecticut, plans to resume talks with the new government in Nigeria on an agreement with the previous administration for 200 locomotives, he said. Nigerian President Muhammadu Buhari took office on May 29 after defeating Goodluck Jonathan in March elections.

While nine of the world’s 15 fastest-growing economies are in Africa, some countries are contending with a downturn in commodity prices, power cuts and political instability. Electricity shortages and a lack of infrastructure, including rail, are limiting growth and offer opportunities for investment.

Jeff Immelt, GE’s chief executive officer, has identified Africa as one of the company’s most important growth areas, with plans to invest $2 billion in the region by 2018 as well as doubling its workforce on the continent.

The Africa spending by GE will go into developing facilities, improving supply chains and for training workers, he said last year.

Ethiopia hospitals

GE’s African revenues will be more than $4 billion this year, led by Nigeria, Angola and South Africa, compared with about $1 billion in 2010, according to Konditi. The company could open a manufacturing facility in Nigeria if there is demand for more locomotives, he said.

“Five years from now, I don’t know why we shouldn’t be up to the 8 to 10 billion range,” Konditi said, referring to revenue from Africa in dollars.

GE’s sales from the Middle East and Africa of $15.6 billion last year were about 10.6% of the company’s total revenue.

Ethiopia, the continent’s second-most populous country after Nigeria, also offered investment opportunities, particularly in the health-care industry, he said.

“Ethiopia holds a lot of interest,” Konditi said. “We’re probably going to open a health-care assembly facility in Ethiopia,” as the government builds new hospitals, he said.



Three supply nations for buyers to watch: Ethiopia, Vietnam and Uruguay


by Gill McShane

Emerging Markets graph analysis

Ethiopia, Vietnam and Uruguay are just three emerging sources of supply to consider


JOHN GILES Promar International John Giles, a market research consultant and the divisional director at Promar International, a leading UK-based agri food supply chain consulting firm, gives Produce Business UK a sneak peek of what to expect from his educational seminar about emerging future sources of supply for UK buyers at this week’s London Produce Show and Conference 2015 (LPS15)


Your presentation at LPS15 will focus on a market analysis of three increasingly important potential sources of supply – Ethiopia, Vietnam and Uruguay. Why those three countries in particular?

John Giles (JG): The idea is to present something different. We all know probably quite a bit about the likes of Chile, Turkey, South Africa and Egypt as suppliers. I want to move away from the familiar suspects and look at lesser-known countries around the world as an educational guide.

Ethiopia, Vietnam and Uruguay are three deliberately-chosen countries of which people will have some sense, but probably won’t know a great deal, yet they are becoming more influential and important. They can all produce a wide range of produce – a combination of fruits and vegetables – they are known for some products and some participation in international markets.

My objective is to give some insight into these countries as potential exporters or as in-country suppliers.

Why do you feel UK buyers need to take notice of these three countries now?

JG: At any forward-thinking produce company part of the role as a buyer is to be well informed about current sources of supply but also about future sources. You should be looking at what is happening in new areas and asking what is their potential.

If you look back in history, developing a modern fresh produce industry doesn’t happen overnight. Some 20 years ago Chile was only just coming on the scene and now it’s a firmly established supplier. Morocco, Thailand and Turkey are other good examples.

Ethiopia, Vietnam and Uruguay are just three interesting sources. Their fruit and vegetable sectors have grown quite significantly in the last 10 years. They’ve all shown what they can do in various products and they are all improving rapidly. In all three countries, the best of the best are already very good.

Over the next five to 10 years I’d expect more businesses in these countries to master the skills that international buyers are looking for, whether that’s the technical know-how, the commercial prowess or the accreditations required. They are only going to continue to get better and be more successful. Buyers should be considering them now.

Tell us more about Ethiopia. Why should this East African nation in particular pique buyers’ interest?

JG: Ethiopia will be remembered for a lot of the wrong reasons and while the images don’t fade easily, we mustn’t get trapped into that way of thinking. It’s a very different country to what it was 30, 20 and even 10 years ago. The reality is that the horticulture industry is now booming and it’s becoming increasingly impressive. Ethiopia is the fourth-largest exporter of cut flowers after the Netherlands, Kenya and India, and a growing exporter of vegetables. Just 10 years ago, you wouldn’t have dreamt of that scenario.

What has happened to change things?

JG: Ethiopia has had a sustained period of economic growth – 5-10% per annum – and its economy is booming [it’s the largest economy by GDP in East Africa and Central Africa]. There’s a population of over 90 million people [it’s the most populous landlocked country in the world and the second-most populated nation on the African continent]. There are movements towards democracy, like we’ve seen in Nigeria, and the politics are modifying.

Ethiopia is essentially still a poor country, but it has a massive aspiration. It’s seeking to become a middle-income country in two decades’ time. Turkey used to be a poor country, but now it’s a modern, thriving nation that’s a geographical hub with a per capita income of US$10,000 per year (£6,650). But Ethiopia can only achieve that with economic growth and political stability. Already, there’s been ambitious investment in the horticulture sector. Money is flooding in from China, the Middle East and India too. And there have been significant developments in infrastructure, such as at the airport and across both the road and rail systems.

As a landlocked country, is water availability an issue in Ethiopia? What obstacles does this present for produce?

JG: Certain parts of the country are well provided with water. In the Upper Awash Valley and south of Addis Ababa there are reservoirs and irrigation schemes. In other parts of the country, yes, water availability is more problematic. But Ethiopians are acutely aware of the problem. Saudi Arabia is investing in Ethiopian water projects, however they are short of water themselves. So, there needs to be massive investment in water and that may be helped through external finances.

What are the opportunities for the British produce buyers and, also, UK suppliers perhaps looking to extend their availability?

JG: Ethiopia wants to accelerate growth, so it needs expertise and technology to achieve that. There are opportunities for training, technology and management skills to be transferred to Ethiopia from other countries, and obviously for produce supply itself. We might see international produce companies setting up joint ventures in Ethiopia as a way of creating year-round supplies. British companies are already supplying polytunnels to the flowers companies and Ethiopian growers/exporters are also using British accreditation schemes.

What’s on offer in Ethiopia for buyers from the UK in particular?

JG: The UK is already an importer from Ethiopia, but the country plans to send a lot more fresh produce to western Europe. The UK will be a clear target market within that objective, so we are bound to see more Ethiopian produce arriving on our shores.

Moving onto Vietnam, what’s the scenario there?

JG: In reality, no one knows much about Vietnam. But it’s right at the heart of South East Asia and it has a fast-growing economy (one of the fastest in Asia). Following on from the Next Eleven, Vietnam is one of the CIVETS group of countries. These are six favoured emerging markets Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa – in view of their diverse and dynamic economy and young, growing population. Vietnam’s population is currently over 90 million people and that’s expected to reach just under 100 million by 2020. So, it has a very fast-growing population base too, with a GDP per capita of US$2,200 at the moment.

What do you think are the produce prospects in Vietnam? Are we talking more imports or exports?

JG: Vietnam has the best of both worlds. It’s an import market with a growing population, so it will be interesting for the established produce suppliers like North America. But there’s also supply potential from Vietnam too and Vietnam aspires to be an exporter. The Vietnam Fruit and Vegetable Association indicates that the country grows a lot of tropicals and exotics like mangoes, pineapples, melons, bananas, papayas, rambutan, mangosteen, star apple, durian, custard apples and jackfruit, as well as a range of Asian vegetables.

What can the UK expect to see from Vietnam?

JG: Of course, it’s questionable whether in the next few years, Vietnam will become a main supplier to the UK. But Thailand, India and Pakistan have all become established exporters to the UK, so why not Vietnam too in the longer term? Currently, Vietnam exports quite a substantial volume of fruit to China (US$600 million) and almost the same to North America, with a little less to the Netherlands and neighbouring countries. Its vegetable exports, meanwhile, are more modest and mainly go to Asian nations like China, Korea and Japan.

The UK doesn’t appear to be a major target market for Vietnamese fruit at the moment but some of the fruit that it ships to the Netherlands will be re-exported to the UK. If you look at the growth of Vietnam’s economy and consider its sizeable exports to China and North America, then Europe and the UK are bound to come under Vietnam’s radar in the future. And, if they’re looking at Europe, they will be looking at obvious markets like the UK and Germany etc.

What about Uruguay? We know the country has a long-standing history in exporting citrus to Europe. In recent years it has made a name for itself in counter-seasonal blueberries too. What else is there to learn?

JG: We’re all familiar with Chile, Brazil, Argentina and increasingly Peru. But we don’t know as much about Uruguay – it’s the lesser-well-known supplier in South America at the moment. Uruguay is a small country, and, like you say, it’s a recognised exporter of mainly citrus (oranges, soft citrus, lemons, limes) and berries. It’s actually the third-largest citrus exporter in South America and Univeg has invested in the country.

Uruguay’s horticulture industry is growing and it will need to export the additional volume to more diverse countries given that it has a small local market of just 3.5 million people. The Netherlands and the UK are already target markets, with US$25 million-worth of Uruguayan fruit heading to the Netherlands each year and US$15 million-worth to the UK.

But what other products are there? Uruguay also produces apples, pears, table grapes, squash, onions, carrots and tomatoes – a wide range of fruits and vegetables. Uruguay has a lot of potential and the country will have an aspiration to sell more to Europe and the UK. We need to find out more.

Do you see any other countries like Ethiopia, Vietnam and Uruguay which hold promising supply potential?

JG: There are a whole range of East African nations that have threatened to make a breakthrough in horticulture or floriculture, such as Tanzania and Uganda. For whatever reason they’ve not done it, but they will. Zimbabwe and Zambia have historically exported to Europe but they’ve found it increasingly difficult in recent years. A lot is to do with the macro-economic and political situation there. Other countries that are completely off field might include Bolivia and Paraguay who are probably not even on the international scene at all yet.

How can any buyers interested in these countries get involved in sourcing opportunities?

JG: From my experience, and definitely for Ethiopia, if any country wants to accelerate the growth of an industry their relevant institutions will be promoting a range of inward investment schemes. For Ethiopia, we at Promar could help depending on what the buyer is looking to do. For Vietnam and Uruguay their attitude towards inward investment is typically very open. A combination of trade associations and government institutions will welcome you with open arms if you wish to do business.

In general, trade associations are very responsive because they’re looking for investment or trading relationships to help buyers build relationships with growers and exporters, which can often lead to joint venture agreements. In a lot of these countries the natural resources are there but sometimes what’s lacking is the knowledge of export markets or their requirements and how to meet those demands. The learning process can be quite long so it helps to do it in association with someone else.

Increasingly, exporters are coming to markets like the UK to do business. But buyers obviously need to go to a country of interest themselves to visit the market and learn about the structure of the industry. So, if you’re going to Kenya, why not visit Ethiopia as part of your trip? Or if you’re visiting Chile, Brazil or Argentina, remember you are right on the doorstep to Uruguay. The only way you’ll find out what’s going on in these countries is to do some homework and go and see for yourself.



Cement prices expected to drop after recent price hikes


Cement prices expected to drop after recent price hikesAddis Ababa: June 3, 2015 –
Recent price hikes in cement price hikes due to disruptions at factories is expected to drop next week.

Chemical and Construction Input Industry Development Institute told fanabc.com that recent production disruption at Muger Cement factory has resolved its problem and resumed production.

The Institute’s Director Samuel Halala said a malfunction at Mugar’s control station at its production line caused the factory to temporarily halt production. The problem has been fully resolved, he added.

The other factor for the price hike was a capacity expansion project at Gefersa Power Transmission Station, which supplied electricity to Derba Cement Factory. The expansion project had forced Derba to stop production. However, the expansion project is fully completed and Derba has now resumed full capacity production.

Further good news for the cement market is the introduction of the newly established Dangote cement factory, with an annual production capacity of 2.5 tons of cement, expected to roll out its products next week.

Prices are believed to drop with resumption of production at Mugar and Derba; and the introduction of Dangote next week, according to Halala.



East Africa set for a bumper harvest



The home of coffee, Ethiopia, is set to record a stellar harvest for the 2015-16 growing season and in doing so boost the entire output of East Africa to new heights, if the latest market forecasts are to be believed.

The US Department of Agriculture’s Addis Ababa bureau has predicted that Ethiopia’s farmers are expected to harvest just over 6.5m bags of arabica this year, a record high.

However, as the old saying goes, you can’t please everybody: The Ethiopian government initially hoped that the figure would be somewhere in the region of 7.7m bags, a belief underpinned on the assumption that farmers would increase the ‘low’ yields of previous years.

This bump in production should help the Ethiopian coffee sector bring in more revenue from exports. Though it may not be as much as many would think; due to the rise in demand from domestic quarters, which is a nice problem to have when you come to think about it.

Overall for East Africa, the region is expected to produce a total of 12.46m bags of coffee, with 9.4m of those destined for foreign shores. If this calculation is correct then this plans to be the most fruitful harvest for the region since 1995-96 and the second highest since records began in 1961.

Alongside the predicted increase in Ethiopian harvests, the performance of Ugandan and Tanzanian farmers are also applauded in the report. Despite facing a number of problems, the US Department of Agriculture shifts to a more celebratory tone when discussing Uganda: After a troubling period of time they say that they have recovered remarkably well.

But it isn’t all sunshine and rainbows.

What could be worrying though, especially to purveyors of Yirgacheffe, Sidamo and Harar grown coffee, is that the US Department of Agriculture offered a warning about a potential dip in quality:

“The quality of the coffee crop might deteriorate somewhat due to the delayed Belg rains and the timing of the Meher rains.

“However at this stage, it is too early to tell what that overall impact on quality might be.”

Ethiopia is, currently, the fifth largest coffee producer in the world, behind the likes of Brazil, Colombia, Indonesia and the mass-market driven fields of Vietnam.



More than 3500 workshops and sheds to be transferred to enterprises this year


More than 3500 workshops and sheds to be transferred to enterprises this yearAddis Ababa: June 3, 2015  –
State Minister of Urban Development, Housing and Construction Desalegn Ambaw told fanabc.com that more than 3500 workshops and sheds will be transferred to enterprises this fiscal year.

The scheme will benefit more than 180,000 members of various enterprises, it was noted.

The State Minister said, micro and small enterprises have shown rise both in numbers and efficiency over the years, adding the ministry is working to address questions regarding land. The ministry had planned to allocate 10,329 hectares of land this year and managed to distribute double that figure.

PR Director at the Federal Micro and Small Enterprises Development Agency Asefa Ferede said there is a need to address the ever increasing demand for production and marketing space for these enterprises. The Agency has distributed more than 4600 buildings and sheds for enterprises this year alone, benefiting more than 279,000 people. .



South Boulder Mines changes name to Danakali


Tuesday, June 02, 2015 by Proactive Investors

South Boulder Mines has received shareholder approval to change its name to Danakali .South Boulder Mines has received shareholder approval to change its name to Danakali .

South Boulder Mines (ASX:STB) has received shareholder approval to change its name to Danakali (ASX:DNK).

The effective date for the change will be on Thursday 4th June 2015, when the company will begin trading under ASX Ticker Code DNK.

Danakali is primarily focussed on developing the Colluli Potash Project in Eritrea, East Africa, in partnership with the Eritrean National Mining Company (ENAMCO).

Paul Donaldson, managing director, commented: “The new company name has significance to what the Colluli Project represents both chemically and geographically.

“The Danakil region of East Africa is recognised as an emerging potash province, and to date over 10 billion tonnes of potassium bearing salts have been identified.

“Potassium is an essential plant nutrient and is chemically described by the symbol K, which comes from kalium, the Medieval Latin word for potash.

“Danakali is therefore a representation of Danakil Potash and is an appropriate company name against which to define ourselves as we make the transition from explorer to developer and subsequently producer.”

The company is well-funded with around $9.5 million in cash.

Upcoming catalyst

The definitive feasibility study for the Colluli Potash Project is expected to be complete by the end of Q3, 2015.

Colluli’s key investment drivers

The keys to the project include a large resource containing over 1.2 billion tonnes of potassium bearing salts, suitable for the production of potash fertiliser – an essential, non-substitutable source of potassium for plant growth.

The unique potassium salt composition also allows the production of a diverse range of potash types, and therefore can cater towards different markets.

Composition is particularly favourable for the production of sulphate of potash (SOP) – a high quality fertiliser that achieves a price premium over the more common potassium chloride.

It is an economically viable resources for primary production of SOP which are geologically scarce

Other defining factors include:

– Colluli has unrivalled access to the coast and is the closest SOP resource to a coastline anywhere in the world;

– Shallow mineralisation allows open cut mining which gives superior resource recovery relative to alternate mining methods;

– High purity product – Colluli SOP is at the top of the quality spectrum;

– Positive prefeasibility study results indicating lowest capital intensity and lowest operating costs for SOP production;

– Substantial project upside from rocksalt, gypsum and magnesium chloride; and

– Experienced and capable management team with track record of delivery.



KEFI Minerals releases Definitive Feasibility Study update


KEFI Minerals has released an update on its Definitive Feasibility Study for its Tulu Kapi gold project in Ethiopia.

The Company anticipates capital expenditure requirement of $120 million ounces, based on contract-mining and new process plant. This excludes historical equity-funded costs of over $50 million.
KEFI Minerals anticipates open pit gold production of approximately 960 000 ounces over 13 years and all-in-costs of $783 per ounce, including operating, sustaining capital and closure but excluding initial investment.
After-tax net present value of $112 million is anticipated, assuming an 8% discount rate and gold price of $1 250 per ounce and $73 million at a gold price of $1 150 per ounce.
KEFI Minerals reported that the targeted funding mix is for up to approximately $100 million from debt-style financiers and the remainder from financing arrangements with project contractors and/or equity from investment institutions at the project or parent level.
KEFI Minerals management is preparing final tender documents for the mining operations as well as for construction of the process of the plant and the infrastructure.
KEFI Minerals’ Executive Chairman, Harry Anagnostaras-Adams, commented “We are pleased with the progress that KEFI has made in the first five months of 2015. The updated Definitive Feasibility Study is nearing completion and preparations for the full funding required for project development are also on schedule. We remain on track to commence construction in late 2015, plant commissioning in late 2016 and gold production in 2017.”
KEFI Minerals is an AIM listed gold exploration and development company with operations in Ethiopia.


Nyota Minerals releases quarterly update


nyotaNyota Minerals Limited released its quarterly activities report for the three months ended 31 March 2015. 

Exploration activity at the Northern Blocks in Ethiopia had ceased at period end due to a lack of funding. The Company is conducting a strategic review of its Ethiopian assets and continue to engage in discussions regarding the sale f the assets.
The Company is seeking to diversify its commodity and geographic spread and is evaluating new opportunities.
As at 31 March 2015, the Company had cash on hand amounting to AUD 0.40 million.
Richard Chase, Chief Executive Officer of Nyota Minerals, commented, “During the quarter we have focussed on Nyota’s future, both inside and outside of Ethiopia, as we look to diversify our commodity and geographic reach.  In line with this, we were delighted to announce the acquisition of a 70% interest in the Ivrea Project in Italy – a project which we believe has the potential to yield significant value for the Company with modest exploration expenditure. Our focus remains on keeping operational and corporate costs at a very low level, as we evaluate and implement a value accretive plan to define our future.”
Nyota Minerals is an ASX and AIM listed gold exploration and development company with operations in Ethiopia.



Ethiopia endeavors to transform pharmaceutical industry


Ethiopia endeavors to transform pharmaceutical industryAddis Ababa: June 3, 2015  –
Ethiopia has been taking various measures towards transforming its pharmaceutical manufacturing sector with a view of ensuring social and economic benefits of the country, said senior government officials.

A one-day workshop held on Tuesday deliberated on a newly developed document dubbed “National Strategy and Plan of Action for Pharmaceutical Manufacturing Development” aiming to transform the sector over the next 10 years.

Speaking at the opening of the workshop in Ethiopia’s capital Addis Ababa, Mebrahtu Meles, Ethiopian State Minister of Industry, said the government has been taking various measures to transform the pharmaceutical industry, which he said is still very small in size with low capacity.

The National Strategy and Plan of Action has been developed jointly by the Ethiopian government and the World Health Organization (WHO) with technical support from different organizations and individuals.

In its first five-year growth and transformation plan (GTP), which ends this year, Ethiopia had targeted about 20 million U.S. dollars from the export of pharmaceutical products, but the country’s export was close to 2 million dollars in 2014, which was far below the set target.

The Ethiopian government has been taking a number of steps to incentivize the pharmaceutical manufacturing in the last 5 years, yet the country has not achieved the targets set, noted Kebede Worku, Ethiopian State Minister of Health.

“Local pharmaceutical manufacturing plants operate far below their designed capacities, and share not more than 20 percent of demand for essential medicines. As a result, more than 80 percent of essential medicines demand is fulfilled from international market,” said Kebede.

It is stated in the document that Ethiopia’s local industry in the sector presently comprises of 22 pharmaceutical and medical suppliers, manufacturers with nine directly involved in the manufacture of pharmaceutical products, and most of the manufacturers operate below their capacities.

The strategy is aligned and harmonized with the country’s next five years’ health sector transformation plan and its GTP to enhance the capacity of manufacturers towards ensuring supply of affordable and quality medicines to the local and regional markets, including the competitive international market.

The State Minister of Industry confirmed his Ministry’s strong commitment to leading the implementation of the National Strategy and Plan of Action in collaboration with Ministry of Health, WHO and all other partners.

Speaking at the workshop, Pierre M’Pele, WHO Representative in Ethiopia, and Jean Bakole, Representative of the UN Industrial Development Organization (UNIDO), have expressed the interest of their respective organizations to support Ethiopia’s endeavor in improving the country’s pharmaceutical industry.



Tuskys of Kenya Plans Share Sale, Ethiopia Stores in Five Years


Community-based health care insurance program to be launched in Ethiopia


Community-based health care insurance program to be launched in EthiopiaAddis Ababa: June 3, 2015  –
A community-based health care insurance program is to be launched in Ethiopia.

Pilot programs had been under way in 13 different Weredas of Amhara, Oromia, SNNP and Tigray national regional states over the past five years. After assessment of the pilot projects proved successful, the healthcare insurance will be launched nationwide, it was reported.

Acting Director of Ethiopian Healthcare Insurance Agency Mengistu Bekele said in the next five years all Ethiopians will have access to the insurance services.



Q&A: Why Ethiopia ‘just cannot be ignored anymore’


Addis Ababa, EthiopiaEthiopia is one of Africa’s fastest growing economies with GDP growth of 10.3% in 2014. Coupled with a population of over 90 million, this is prompting many consumer-focused companies to look at Ethiopia with fresh eyes. How we made it in Africa spoke to Addis Alemayehou, managing partner of Ethiopian advertising agency 251 Communications, about the opportunities in the market.

How would you describe the opportunities in Ethiopia from a foreign investment perspective?

Ethiopia is a country that just cannot be ignored anymore. You’ve got a population of 95 million, most of them young people. Other than Nigeria, you can’t get much better than Ethiopia in terms of numbers. The economy is also one of the fastest growing in the continent, if not the world. In addition there is significant growth potential in terms of consumer spending. So for these reasons a lot of FMCG multinationals are investing huge resources in Ethiopia.

What do foreign companies need to do to be successful in the Ethiopian market?

The most important thing is understanding and respecting the market. Second is your distribution channels. Third is your marketing, packaging and branding. A company such as Coca-Cola has done an excellent job in terms of distribution and reaching the masses. You can find Coca-Cola in places where you can’t find water. They have also localised a lot of their packaging and branding.

Ethiopia is a very unique market in the sense that the vast majority of the population don’t speak English. We have our own language, and our own look and feel. We have never been colonised so in a sense Ethiopia is an island within the region. Success in Ethiopia takes quite a bit of time and effort, but if you respect the market the payback is there.

Is the capital Addis Ababa the main market companies should target, or are there also opportunities in the rest of the country?

It depends on the product. If you are selling a $1,500 television, there might not be much of a market outside Addis Ababa. However, if you are selling a bottle of Coca-Cola, a bar of soap or beer, there is a huge market throughout the country. Addis Ababa only has four million people out of a total population of 95 million. There is more demand than there is supply for anything that is produced locally.

Should foreign entrants expect to face tough competition from the established domestic players?

The international brands are only just starting to enter the Ethiopian market. So I think the local brands that have been here for a while still have a bit of an advantage in terms of branding and market know-how.

But I also see a huge change in that private equity funds are coming in and snapping up these local brands. I think many of the local guys have realised there is a window of opportunity for them to scale up and sell equity stakes in their firms. About two years ago one of the major bottled water brands got bought out by a private equity fund out of Kenya. It is interesting to see the local brands that are now being targeted by major international resource. It’s just a very exciting time.



Tags: , , , , , , , , , , ,

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: