Ethiopia eyes extra 12,000 MW in power projects by 2020
By Aaron Maasho
ADDIS ABABA – Ethiopia plans to launch hydropower dams and other renewable energy projects over the five years to 2020 that will add an additional 12,000 megawatts of electricity upon completion, a senior official said on Monday.
With one of the continent’s fastest-growing economies, Ethiopia wants to become a manufacturing hub and Africa’s top energy exporter by tapping the numerous rivers that cascade through its highlands. Experts say the Horn of Africa nation has the potential to generate 45,000 megawatts of hydropower.
Under a 2010-2015 development blueprint, the Growth and Transformation Plan 1 (GTP 1), Ethiopia started work on the $4.1 billion Grand Renaissance Dam and planned to complete the $1.8 billion Gilgel Gibe 3. Together the dams will boost generating capacity from 2,400 megawatts now to more than 10,000 megawatts upon completion.
Under a new 2015-2020 plan, or GTP 2, that is due to be endorsed by parliament in September, projects generating 12,000 megawatts will be added, Azeb Asnake, Chief Executive of state-run Ethiopian Electric Power, told Reuters.
“For this ambitious plan, the idea is to finance at least 50 percent by our own coffers, by the Ethiopian government, and the rest from different sources,” she said of the projects slated to be launched by 2020.
Ethiopia’s total energy plans could cost the country up to $25 billion, Azeb said.
“They could be grants, soft loans and commercial loans from foreign banks, governments and the like,” she said.
Mega dams supplying up to 2,000 megawatts each set up on several main rivers and tributaries including the Omo and the Nile are part of the plan, according to official documents obtained by Reuters.
Solar, wind and geothermal projects are also planned.
Ethiopia said in 2011 it planned to launch projects to raise generating capacity to 20,000 megawatts by 2020. GTP 1 and GTP 2 will put the country slightly ahead of that target, once the projects are completed.
The government says its priority is to satisfy domestic needs but given demand still remains insignificant, a large amount of electricity produced will end up being exported.
Addis Ababa already sells a small amount of power to neighbours Sudan, Kenya and Djibouti. It has signed memorandums of understanding with South Sudan, Tanzania and Rwanda, while an underwater power link with Yemen is also in the pipeline.
Once Ethiopia’s grand plans are complete, it wants to export power to countries in North and southern Africa and beyond.
“We have sufficient resources to power a very large part of Africa,” Azeb said.
Other major African producers such as South Africa and Egypt boast generation capacity of about 42,000 MW and 34,000 MW, though their actual production is lower as many plants are old and need to be temporarily closed for maintenance.
Country’s First Modern Real Estate to be Built with 4 Billion Birr
Addis Ababa June 08/2015 – The first modern real estate comprising scores of buildings will be built in Addis Ababa with four billion birr.
The construction of the real estate to be carried out by a joint partnership of the Chinese private real estate company, Sino Mark, and Saba Engineering Company will have swimming pools, sport centers, trade area, children’s playground and green area.
The real estate to be built on 60 square meters around Gotera will have 21 buildings with a height of each over 20 floors, it was learned.
Laying down the foundation, President Mulatu Teshome said the construction sector has been contributing 10 percent to domestic growth of countries.
Real Estate and similar projects have been contributing 12.5 percent for the domestic growth of Ethiopia in the past 10 years, he noted.
According to him, the sector has been creating job opportunities to thousands, and this real estate would create 500 jobs.
Director-General of Sino Mark, Yan Sin Li said on his part his company will construct high quality modern real estate based on French design.
It would take three years to complete the construction of the real estate, Li said, adding that his company will however complete it within two years and a half.
The real estate will change the face of Addis Ababa, he added.
Billions Improperly Accounted for in Auditor General’s Report
The audit found a high incidence of inappropriate expenditure, improper purchases, payments and uncollected revenue
The Federal Main Auditor has found that billions of Birr have been spent inappropriately or have remained uncollected, citing this as a recurring challenge to the governmental organisations and institutions in the country.
Its report, which was presented to Parliament on Tuesday June 2, 2015 for the fiscal year 2013/14, came to this conclusion after having assessed the Financial Appropriateness Audit, Performance Audit and Protection of Basic Services in 133 federal governmental organisations.
The amount of money that remained uncollected by the Ethiopian Revenues & Customs Authority and its nine branches and other 12 government organisations, was found to be 1,039 billion Br while the money spent without proper documentation amounted to 368 million Br in 29 governmental organisations. The audit found that 53.4 million Br had been paid without following the legal procedure in 47 organisations and three branches.
The report urged proper implementation of the laws of the country, especially in the payment and purchasing processes.
Major culprits for inappropriate expenditure were Jimma University, 20.3 million Birr; Bahir Dar University, 7.2 million Br; Dilla University, 6.9 million Br; Hawassa University, 3.9 million Br; Arba Minch University, 3.4 million Br; Wolaita University, 3.3 million Br, and Wachamo University, 3.2 million Br.
This money was spent on overtime payments, students’ and workers’ per diems and payments to officials.
“But the recurring problems that are seen year after year could have been solved and indicate the need for more attention for the issue,” stressed Gemechu Dubiso, auditor general, in his report to Parliament.
The audit report also found out that in 63 organisations and three branches, there were purchases amounting to 957.5 million Br that violated the purchase laws. The major slice of this went to the Ministry of Industry.
The Ministry spent 743.8 million Br on the construction of the Bole Lemi Industry Zone, which, according to Melaku Taye, corporate communications director at the Ministry, was all legally done.
“We had sent them the relevant documents on May 14, signed by the Minister (Ahmed Abitew), but they did not consider it,” Melaku told Fortune.
The problem at the Ministry occurred because of the selection of 14 contractors and one consultant for the construction of the industry zone without tender or pro forma.
“There is no problem in the process of the procurement as it is done according to the law,” Melaku argues. “The problem was that the Audit Bureau did not discuss with us after finalising the report.”
The report shows the gaps, but enforcement is not for the Audit Bureau, Gemechu indicated.
“We notify the Federal Ethics & Anti-corruption Commission and the Prime Minister’s Office for them to investigate and take measures,” he said.
Although the problems are recurrent, there has been improvement in the past five years since Parliament, to which the Federal Main Auditor is accountable, started its term according to Teshome Eshetu, Government Expenditure Control Standing Committee chair at the Parliament.
The problem in universities is because of their engagement in both the academics and the administration. They give more emphasis to the academics and make errors in the administration of development works, Teshome reasoned.
“The administration in Universities needs to be given to other bodies and they have to be made to focus only on the academics,” he suggested.
The Auditor General indicated that the performance of his office was 98.52, auditing 133 organisations out of the planned 135. This happened because of the human resource shortage in the office with high turnover and the lag in closing financial accounts.
Ministry of Mines approves Dangote’s potash exploration
Tolossa Shagi, state minister of Mines told The Reporter that after learning about the more than a billion dollar investment Dangote had cashed in, the ministry approved the request the cement mogul proposed.
“Previously, they had submitted a permit letter request. Since we proved he is serious to do business here and is investing millions of dollars, we decided to approve the license requested. We have conferred with Aliko Dangote that he is ready to a erect similar plant for potash mining,” Tolossa said.
Dangote is the fourth company requesting license in the recent years. A year and half ago, the Canadian Allana Potash acquired a mineral production license and was expected to commence operations in the foreseeable future. However, according to Tolossa, Allana should have developed infrastructures and installed production plants by now. Even so, he still hopes they will commence on the schedule. The second entrant is the Norwegian Yara International. Yara Dallol BV, a subsidiary of Yara International, has finalized feasibility studies and is likely to receive a mining production license soon. The company hopes to launch production within two years. The UK based Circum Minerals is the other expected company to approach the ministry with results of feasibility studies finalized in eight months’ time.
Potash remains an unexploited mineral in Ethiopia, but studies confirm huge potash deposits lay beneath in the Dallol depression. Allana Potash has confirmed a proven reserve of 3.2 billion tons. Circum Resources stated weeks ago that it has proved a potash reserve of 4.2 billion tons in the area. Potash is primarily used for fertilizer production.
“We have previously halted issuing licenses unless we are certain that requesting companies are dead serious and committed to extract. However, now we are ready to issue licenses for these effortful companies at hand and we have initiated studies in the Afar area,” Tolossa affirmed.
The government has to provide basic infrastructures of road construction linking mining sites with the port gates into Djibouti, in addition to water supply and electric power where the government is required to embark on. If things move as planned, most of the potash mining firms are expected to launch production in two years’ time.
Back in 2013, Dangote Group submitted proposals and reached an agreements with a consortium of 12 banks in Nigeria to have access to USD 3.3 billion on credit. The conglomerate is vested to stretch out construction in areas in the vicinity of petroleum refineries, and near petrochemical and fertilizer plants in Abuja. Hence, the potash mineral sourced from Ethiopia would supply the fertilizer plant.
Dangote is known for approaching the government to receive investment permits in areas of cotton and sugarcane plantations. Ahmed Abitew, minister of industry told The Reporter that Dangote is still at the early stage of feasibility studies.
Dangote is known for approaching the government to receive investment permits in areas of cotton and sugarcane plantations. According to the Dangote Group profile, Dangote has been immersed in the business of sugarcane farming and sugar refinery since 2000. The group owns a refinery plant in Nigeria which has a 1.4 million MT of refined sugar production capacity per year. Dangote imports raw sugar from Brazil to refine and produce a fortified white sugar. A modern sugarcane farming and refining plant is one of the subsidiary firms operating in Dangote’s line of business divisions in Adamawa State, Nigeria.
BoA Awards Deloitte Consultancy Management Strategy Contract
The contract has been awarded but until it is signed the Bank is being tight-lipped about the cost
Deloitte, selected from four firms the Bank had shortlisted in September 2014, is expected to sign an agreement by the end of next week, Bank’s President, Mulugeta Asmare, disclosed, declining to give further comment until the signing.
Mulugeta, confirmed the winner but said, “We did not yet give them the letter of recruitment.”
Deloitte partners were not available for comment.
Such kinds of strategies are usually meant for application over a longer period according to Getnet Haile, Managing partner at Target business Consulting Plc.
“They might extend to five years,”Getnet told Fortune.
In preparing a strategy for institutions, especially in the financial sector, conditions such as the political, economic and other contexts need to be considered. It should, for instance, see the probability of the country’s banking sector being liberalised and consider the economic growth, Getnet explained.
The process started with a closed auction in May 2014, leading to a shortlist that included Deloitte Consulting, Ernst & Young Global, KPMG Consulting and Price Water House Coppers.
Details of the conditions under which Deloitte is to be contracted have not yet been revealed. However, an expert Fortune talked to, indicated that completion of a well-done strategy could take up to six months and cost the bank 300,000 dollars to 500,000 dollars. The major challenge will be data collection and compilation.
Bank of Abyssinia was established in 1996. It currently has 400,000 account holders, and generated 270.71 million Br profit after tax, in the fiscal year 2013/14. That same year it replaced Addisu Haba, its president for five years, with Mulugeta Asmare.
Mulugeta stated that he came to the position at a time when the Bank was in good standing and that his job would be to make sure that those achievements were kept up.
German-based chemical company ponders to set up a plant here
Carles Amengual, managing director of BASF East Africa Ltd, told The Reporter that the chemical giant focuses on Kenya and Ethiopia as prime markets. Despite vast ventures in many businesses, BASF still operates in small sales office.
According to Amengual, BASF has supplied the agriculture sector in Ethiopia with mainly pesticides and herbicides for the last ten years.
These days, in addition to sphere of influence in the agriculture sector, the European chemical giant has expanded into the home and personal care consumables.
“We are trying to expand the business here in other industries like homes and personal care, detergent, body lotion, hair care, construction, leather and footwear,” Amengual said.
BASF officials and technical experts have frequented the capital to get in touch with potential local distributors and customers. Two months ago, BASF had gathered about 35 personal and home care manufacturing companies to buy raw materials and chemical components. On Wednesday officials of BASF from Dubai and Johannesburg were in town customizing local contractors with BASF manufactured construction inputs. BASF is longing to penetrate the Ethiopian construction market with products like admixtures or additives that are ideal for augmenting the performance and quality of concrete mixes. Polyurethane, a material applied in different bundling applications, and waterproofing and flooring solutions are some of the items BASF is planning to embark on in Ethiopia.
Oumer Abdulahi, general manager of Afro Chemical and Steel PLC, said that his company has been working with BASF for the past ten years. Currently, Afro Chemical is dealing with BASF to erect a manufacturing plant here but says it’s too early to provide details of the negotiations. Francis Kirema, business lead and general manager of BASF trade representative office in Addis Ababa, told The Reporter that, since January, he has been witnessing challenges his company and many local and foreign companies are facing. Hard currency shortages, customs clearance and logistics are some of the hindering factors where the new venture shares with these existing firms.
Back in 2011, in accordance to the company’s strategy to expand in Africa, BASF erected two manufacturing plants in Kenya and Uganda. They hope to replicate that same trend in Ethiopia.
Founded 150 years ago, BASF has been involved in the construction of Burj Khalifa, the US World Trade Center, Dubai World Trade Center, Dubai International Airport, Doha Convention Center and the like. Here in Ethiopia, BASF construction materials are involved in the constructions of the African Union Grand Hotel, the Commercial Bank of Ethiopia branch offices, and Sheba Leather Factory (phase 2).
52 of 100 Seed Varieties Get Approval from National Committee
After 12 years of research, farmers have hundreds of seed varieties in food, medicinal and feed crops
The National Seed Approval Committee approved only 52 of the over 100 seed varieties submitted to it by federal and regional research institutions following their research which took as long as 12 years.
The announcement was made at a press conference held at the Ethiopian Institute of Agricultural Research (EIAR) headquarters on June 2, 2015. Thirty-four of the varieties were developed at federally controlled research centres, while the rest were developed by regional research centres and universities, Fisseha Zegeye, Research Partnership, Communication and IPR director at the Institute noted.
These varieties boost productivity and are disease and drought resistant, which are the requirements of the Committee to approve the seeds. The bulk of the varieties that were rejected failed to fulfil the requirements.
“The varieties are tested at the Institute’s test sites and farmers’ fields,” added Fisseha.
The types of seeds released fall under six categories. Twelve are from cereals, five from pulses, six from oil seeds, five from roots and vegetables, three from fruits, and three from fibre crops.
The EIAR has released two varieties of wheat that will increase productivity by 13pc and six corn varieties that will increase productivity by 10pc to 20pc. One malt barley variety increases productivity by nine percent to 11.5pc and another barley variety has high protein content.
Up to the year 2014, the Institute had released a total of 975 varieties, with cereals, pulses and oil seeds accounting for 346 varieties, 188 varieties and 90 varieties respectively, as well as 173 varieties of roots and vegetables.These include aromatic and medicinal crops, animal feed crops and stimulants.
The EIAR has 16 laboratories, one of which has been accredited by the Ethiopian National Accreditation Office.
“The study and release of one variety of seed takes seven to 12 years on average and the study begins with one grain of seed,” said Tesfaye Leta (PhD), director of agricultural research centre under the Oromia Institute of Agricultural Research.
The Sinana Centre in Oromia has released two wheat varieties that are resistant to rust disease, prevalent in Arsi and Bale, Tesfaye said.
The institute took 10 years to release the seeds, involving 10 experts in the field of seed improvement, experts that control the process of seed improvement and farmers.
The government’s GTP for seed distribution has failed by a wide margin with only 53,830.57ql distributed in the first four years, out of a total plan for 114,420ql in the same period.
Ethiopia endeavors to earn half a billion Dollars annually from its newest sugar factories
Currently the country’s sugar factories produce 300,000 tons of sugar annually, only meeting 70% of the local demand.
Ahmed Abitew, Minister of Industry disclosed that Tendaho, Kesem and Kuraz sugar factories will begin production until November. The three plants are expected to generate annual revenue of half a billion USD, with a combined daily capacity of grinding 25,000 tons of sugarcane.
The country had planned to build eleven sugar factories in the first phase of the Growth and Transformation Period, with an annual production of two million tons of sugar. However, the construction of seven factories had been delayed and the projects will be carried out in the second GTP.
Ethiopia endeavors to become Africa’s top sugar producer by 2020. The country has allocated 500,000 hectares of land for sugarcane plantations.
Lentil Scarcity Hits Consumer Pockets at 50 Br per Kilo
This year has not been a positive one for farmers such as Shimeles Tefera, who also owns a shop in the town of Bekea, 40 Km east of Addis Abeba. This area is known for the quality of its lentils.
Shimeles stated that he lost his entire crop of lentils, which he cultivated on a plot of land rented for 11,000 Br for three years, because of fungus.
“During our assessment of this area, we were able to identify that most of the lentil farms were infected with rust and most of them used unimproved seeds,” Million Eshete (PhD), national chickpea & lentil research coordinator at Debre Zeit’s Agriculture Research Centre, commented.
His research centre has 10 varieties of lentils that are resistant to rust and other diseases, he says.
Rust attacks crops about once every five years when it gets convenient temperature and humidity.
“Unlike the previous year, when I had harvested 10qt of lentils, now I have lost it all. For this year, I am going to plant other crops such as wheat and teff,” said Shimeles.
He currently sells a kilo of lentils for 42 Br at his shop because of the shortage that has occurred.
This seems to be the case for a lot of farmers, with the shortage contributing to a rise in the price of lentils in every shop and marketplace, according to farmers and traders in Bekea town.
The streets are empty and there are a small number of vehicles that come from lentil producing areas, said Shimeles.
According to the Central Statistics Agency’s (CSA) agricultural sample survey, the annual production of this year so far is 1.3 million quintals, declining from last year’s 1.6 million quintal.
Winnowing the lentils; one of the employee of Desta, is exposing the lentils to the wind so does it will help him to remove the husk from the main part.
Minor lentil production areas depend on the Belg (small rains) season. However, Bekea town is known as a gateway for the supply of lentils from such places as Dessie, in South Wollo, the surrounding Weredas of Gembecho and Jeru as well as districts in Wollo, North, Eastern and Western Shewa and Gonder are areas known for the greatest production of lentils, which are cultivated during Meher (big rains) season.
The crops from these markets pass through Bekea town on their way to Addis Abeba.
The same holds true that within these areas, during the Meher season, there was a decrease in production. For instance, the Amhara and Oromia regions have recorded 779,299qt and 552,971qt, respectively, this year. At the same time last year, these regions produced 798,120qt and 689, 425qt.
North and South Wollo have produced 214,135qt whereas North Shewa produced 330, 768qt, somewhat down from the previous year’s harvest of 218,244qt and 340,611qt, respectively.
At the same time the area coverage of lentils cultivation has also decreased from 125, 830ha to 98,869ha of land.
“It is hard to see any one whose life is not connected with lentils,” said Desta Tadesse, who has been selling lentils for 38 years in the town.
When Fortune met him on June 4, he said that he should have been in Addis Abeba to sell his lentils if the produce had been as good as before, as Wednesday is market day for lentils. He used to make two trips to Addis Abeba a week.
At his home that day, four workers were cleaning eight quintals of lentils which Desta said he had bought for prices of 3,000 Br to 3,600 Br. The price range is based on quality, which is measured in terms of how well the lentils have been cleaned.
The same quintal of lentils was sold for 2,000 Br per quintal last year.
Traders like Tadesse sell their bag of lentils at the local market called Ashewa Meda, near Tatek, west of Addis Abeba on Wednesdays and Mondays. From there it heads for Merkato.
At Ehel Berenda, the grain market at Merkato, lentils are being sold for 40 Br to 43.60 Br per kilo, and retailers like Adana Degefu from Dukum 37 Km of South of Addis Abeba struggle to purchase at this price. He came to buy one quintal of lentils from the shop that normally sells in bulk, where he is a regular customer.
“I do not have any lentils at my shop, so I want to have some for my customers,” said Adana. “If that was not the case I would prefer not have any at all,” he added.
Just over two weeks ago, the same lentils sold for 37.50 at the wholesale market are now being sold for 43.60 Br. During the Lenten fasting season, the price was 25 Br to 30 Br. Retailers in Addis Abeba are now selling lentils for 50 Br per kilo.
Bekelle Gurmu, the wholesaler selling to Adana, remarked that previously his store used to be full, not half full as it looked when Fortune visited on Wednesday.
Bekelle attributes the decline to reduce rainfall. The National Meteorology Agency (NMA) predicted that the average rainfall in Oromia regions would be 525 mm though the current report shows that most of the country’s production was below the expectation.
Reports show that major Belg season crop producing areas got an average of 125 mm of rainfall, which represents a three-fold decline from 2010/11, when rainfall averaged 350 mm.
It is advisable for farmers to use improved seed that has more resistance to such disease and so far we have increased the usage of these seeds through extension programmes, said Million.
Cork factory inaugurated
The plant, third to the country, built in the capital Addis Ababa at a cost of 120 million Birr.
Having the capacity to produce one billion corks per annum, the plant will enable the nation save foreign currency used to spend on bottle stopper importation.
These kinds of industries are among the priority areas in the manufacturing sector during the second five-year growth and transformation plan period, said Tadese Haile State Minister of Industry.
As beverage factories are increasing in the country, establishing such plants will enable to supply quality bottle stopper locally, he said.
On her part owner of the factory Birtukan Abebe said her plant will enable the nation save foreign currency used to spend on cork importation.
Ethiopia imports 80 percent of estimated six billion demand for bottle stopper.
The expansion activities being carried out at the factory will enable it to export product to neighboring countries, she added.
Pharmaceutical Industry to Get First National Strategy, Action Plan
WHO has drafted the national strategy and action plan for improving access to medicine made in Ethiopia
A first of its kind 10-year national strategy and a five-year plan of action for pharmaceutical manufacturing development are being developed by the World Health Organization (WHO) following a request by the government to develop the pharmaceutical industry and improve access to medicine.
The first draft of the strategic plan was discussed on June 2, 2015 in the presence of Kebede Worku (PhD), state minister for Health (MoH) and Mebrahtu Meles (PhD), state minister for Industry (MoI).
The draft national strategy was developed near the end of the first Growth & Transformation Plan (GTP I), which had failed to accomplish its targets for the pharmaceutical industry.
It aspires to increase the current market share of local pharmaceuticals manufacturers to 80pc by 2025 and the export earnings of the sector from the current two million dollars to 80 million dollars after 10 years.
In the first GTP, the government’s target for the pharmaceutical industry was to achieve full utilisation of the local pharmaceutical and medical supplies manufacturers; raise their local market share to 50pc and increase the export earnings of the sector to 20 million dollars.
The actual share of the local markets, however, with participation by all 22 local companies stood at 20pc and the export earnings of the sector was only two million dollars, far below the target in GTP one.
Incentives provided by the government for the local pharmaceutical sector during the first GTP, included tax free loans of up to 70pc for new companies and 60pc for well-established companies, 100pc Customs duty exemption on the import of capital goods such as construction materials and 15pc exemption of spare parts, two-year income tax exemption for companies that export 50pc of their products and others. But these incentives have failed to achieve the GTP I targets.
Financial and human capital problems in combination with the absence of defined policy were the problems in the first GTP and this strategy was necessitated because the government became convinced that access to medicine through local industrial development is an important substitute for imported medicine, which is 80 pc, Mebrahtu said.
Tsige Gebremaryam (Prof.) WHO consultant and general manager of Regional Bio Equivalence Centre told Fortune that the government’s incentive revived the pharmaceutical sector but there were multi-faceted and complex problems of management, human capital and planning that rendered the companies’ incapable of producing at full capacity and therefore hindered the achievement of the GTP I targets.
The plan for improving access to medicine through locally produced quality products is to be implemented by ensuring that the companies comply with good manufacturing practice (GMP) and international manufacturing standards of WHO.
Ensuring that 20 companies will have international GMP by 2025 is the target of the draft strategy. Presently there are no companies with such qualifications, though the Ethiopian Food, Medicine & Health Care Administration & Control Agency (FMHACA) had adopted a GMP road map for implementation from 2013 to 2018.
The draft strategy has seven action plans, which include improving access to medicines through locally produced quality assured medicines, providing new incentives for local pharmaceutical companies to create import substitution, developing a pharmaceutical cluster, and production of active pharmaceutical ingredients (API). Among the additional incentives proposed by the new strategy, is the pooled procurement of raw materials.
Only one target in the GTP did not have a strategic plan and there was no clear cut time frame for the targets, monitoring and meeting objectives, Tsige said. The development of the strategic plan in combination with the action plans will give ownership to the targets both for the regulation and production and put a time frame in which the activities are to be accomplished, he added.
Ethiopia topples Nigeria on foreign investment destination list in Africa
By JONAH NWOKPOKU
This was indicated by the buzz at the just concluded World Economic Forum on Africa, an annual summit of the continent’s rich and powerful, which was all about Ethiopia, where the economy is flourishing and the government is embracing select foreign capital.
Executives from General Electric Co., Dow Chemical Co., Standard Bank Group Ltd. and MasterCard Inc. attending the gathering in Cape Town were reported to have all singled out the East African nation as a market with strong potential.
Ethiopia was Africa’s eighth-largest recipient of foreign direct investment last year, up from 14th position in 2013, a report released by accounting firm, Ernst & Young showed. The number of projects in Ethiopia surged 88 percent, the most of all countries ranked, while those in Nigeria slumped 17 percent.
“It’s got a government that is managing economic development in a very deliberate, cautious manner. It’s the second-most populous country in Africa. It hasn’t urbanized like other African countries, but it’s going to. It’s a very exciting place,” Ross McLean, Dow’s president for sub-Saharan Africa, told the media in an interview last week.
Ethiopia’s economy is expected to expand 8.6 percent this year and 8.5 percent in 2016, compared with 10.3 percent growth last year, the International Monetary Fund said in its World Economic Outlook released on April 14. Nigeria, which has Africa’s largest economy and is grappling insecurity coupled with energy shortages and the fallout of an oil price slump, is forecast to grow 4.8 percent this year and 5 percent next year.
Recall that at that meeting, Nigeria’s former Finance Minister, Ngozi Okonjo-Iweala said her successor will face a “difficult” year because of plunging oil revenues and that the economy needs expert management to weather the storm.
“We have a serious situation with a cash crunch. But fundamentally, the economy is strong. If we can get through the cash crunch, manage the way through, build on some of the assets we have, by next year, things will be better.”
She added: “The next finance minister needs to focus on a strong policy, the fiscal consolidation path that we have and looking toward diversification of revenue resources.
Policy measures help to boost FDI
The policy measures combined with other initiatives help to attract up to 800 projects every year in average.
The government has modified the investment policy, helped to boost investment, four times over the past two decades, said Getahun Ngash, PR director with the Commission.
He mentioned as example that the recent modification to the policy that requires the allocation of 200,000 USD minimum capital for a single project through the National Bank of Ethiopia.
According to Getahun, this helps to identify investors who really want to implement the project and help them commence operation within short period.
Previously projects took up to five years to commence operation, he added, now this time has narrowed to one to three years.
Following the policy measures including a single window service that allows investors get all services at one place, increases number of projects receives licenses.
Number of foreign-owned projects that receive licenses 20 years ago was three per year in average, but this number has now reached up to 800, he added.
Operating capital of foreign owned projects has also doubled during this period and reached 1.3 billion USD, Getahun said.
Vehicle Licence Renewal Fees to be Implemented by 2015/16
The fee will fill a gap in the 2.6 billion Birr budget and is based on the 581,031 vehicles registered
A new regulation approved by the Council of Ministers will see vehicle licence renewal fees collected across the country starting from the 2015/16 fiscal year.
The Road Fund Establishment Proclamation No. 66/1997 sanctions the right to collect payment from vehicle licence renewal as one of the fundraising methods, with the establishment of a road fund in addition to the road maintenance fuel levy and the overloading fine.
The Ethiopian Road Fund Office, in concert with the Federal Transport Authority (FTA), announced the regulation at a press conference held at the Ghion Hotel on June 4, 2015, although the regulation was approved by the Council of Ministers on February 23, 2015. The Road Fund serves as a financial platform for road maintenance and road safety measures in Ethiopia.
The new regulation, known as Axle Load Based Annual Vehicle’s Licence Renewal Fee, will be levied annually on any vehicle on the basis of its loading capacity or on the number of seats it has. This is in keeping with the payment schedule declared under the regulation, according to Reshid Mohammed, director of the Ethiopian Road Fund Office.
Vehicles with up to five seats will be charged an annual fee of 125 Br, while mini buses used as taxis, with up to 12 seats will pay 150 Br annually. Higer buses, with 27 seats will be charged 200 Br.
While the minimum fee is 125 Br, there is a maximum fee of 800 Br for vehicles with over 44 seats. The renewal fee for freight trucks starts from 300 Br for vehicles with a loading capacity of 15qt, while those with capacities of 180qt will pay 2,500 Br.
A minimum 750 Br fee is levied on fuel or liquid loading trucks with up to 10,000lt (long ton) loading capacity with the maximum fee reaching 2,000 Br for above 14,000lt loading capacity. Motorcycles and off-road operating vehicles will also make an annual payment of 50 Br and 300 Br, respectively.
The vehicle licence fee is a good initiative to support road maintenance, but should be clearly stated and publicised in order to promote transparency and encourage payers, said Getachew Tesfaye, manager of Noah Transport S.C. The company, established in 1997, manages 61 freight trucks with a loading capacity of 400qt.
In the coming year, the Road Fund Office is expected to collect a total amount up to 150 million Br from vehicle’s license renewal fee, according to Reshid. The amount is calculated based on the number of currently registered vehicles, which are 581,031 in number.
In the last 10 months, the Office had planned to collect around 1.8 billion Br, which it exceeded by collecting 1.9 billion Br. Most of the money, which is some 1.7 billion Br, was collected from road maintenance fuel levies, with the rest coming from such sources as tariffs on lubricants and overloading fines.
The money generated is not sufficient to carry out quality and full road maintenance across the country. This needs a 2.6 billion Br budget, said Reshid. Therefore, the main objective to levy this licence renewal fee is to contribute as much for the budget gap, he added.
The 10-month period also saw the maintenance of 15,329Km roads from 17,724Km roads that were planned.
The Federal Transport Authority will oversee the collection of the license renewal fee, which will be collected along with the annual technical inspection and registration, said Kassahun Hailemariam, director general of the Federal Transport Authority.
The total sum of money deposited to Ethiopian Road Fund’s Office is distributed among 71 road agencies across the country. Sixty five percent of the total fund is disbursed to Ethiopian Roads Authority while regional rural roads authorities get 25pc from the fund and the rest is distributed among city’s roads agencies.