20 June 2015 Weekly Economic News Wrap


Ethiopian Electric Power Signs Contract Agreement for Transmission Line to Kenya

Ethiopian Electric Power Signs Contract Agreement for Transmission Line to KenyaAddis Ababa: June 20, 2015 –
Ethiopian Electric Power signed here yesterday a contract agreement with China Electric Power Equipment and Technology Ltd to construct the Ethio-Kenya transmission line project.

The over 119-million-USD contract agreement was signed by CEO Engineer Azeb Asnake and Vice President Chen Wei.

The project on the Ethiopian side is financed by a loan obtained from the African Development Bank.

During the signing ceremony, Engineer Azeb said the transmission line would cover 433 km stretch from Wolayita Sodo to the Kenya border and will be finalized in 26 months.

She added that the Ethio-Kenya power system interconnector with its bi-directional transfer capacity of 2000 megawatt is acknowledged and recognized to be the Eastern Electricity Highway.

The project is also believed to be the backbone to the regional power trade and has significance to the East African Power Pool.

The “realization of this project is also the interest of other East African Countries such as Uganda, Tanzania, Rwanda as it would strengthen their confidence and assure obtaining of green, sustainable and cheaper electrical energy for their development endeavors,” CEO Azeb added.

China Electric Power Equipment and Technology Ltd Vice President, Chen Wei said on his part his company will live up to the expectations of the Ethiopian government.

The contract agreement signed today follows the MOU signed between Ethiopia and Kenya in 2006 to interconnect the two power systems.



Obama to Become First US President to Visit Ethiopia


FILE - President Barack Obama in Washington, D.C., May 22, 2015.

U.S. President Barack Obama will travel to Ethiopia next month, becoming the first sitting American leader to visit the African country and the headquarters of the African Union.

The White House said the visit to Addis Ababa will come after a previously announced trip to Kenya.

While in Ethiopia, Obama will meet with government officials and hold talks separately with leaders of the African Union.

Obama’s trip to his father’s homeland of Kenya will also be his first as president.  He previously went to Kenya before winning the White House, including a visit while he was a U.S. senator.

The president is due to attend the 2015 Global Entrepreneurship Summit, an event that brings together entrepreneurs, investors, governments and other organizations to boost living standards around the world.

White House Press Secretary Josh Earnest said in a statement that the purpose of the trip was to “accelerate economic growth, strengthen democratic institutions, and improve security” in Africa.

Both Kenya and Ethiopia have been important security partners with the United States in the fight against the Somali militant group, al-Shabab.

Some human rights groups are questioning Obama’s visit to Ethiopia, noting that it comes so soon after a contested election.

Ethiopia’s ruling party won last month’s election with an overwhelming majority, however opposition leaders have accused the government of harassing and intimidating their supporters before and during the elections.

Following the vote, the U.S. State Department commended Ethiopia for holding peaceful elections but also said it is deeply concerned by “continued restrictions on civil society, media, opposition parties, and independent voices and view.”

Obama has previously visited sub-Saharan Africa while president, traveling to Ghana, Senegal, Tanzania and South Africa.

Last August, the White House hosted a Washington summit of African leaders to U.S. strengthen ties with the continent.



Los Angeles Trade Delegation to Visit Addis Ababa


Los Angeles Trade Delegation to Visit Addis AbabaAddis Ababa: June 20, 2015  –
Following the commencement of Ethiopian Airline’s flight to Los Angeles, an American trade delegation will visit Addis Ababa from June 22 to 25, a press release of the US Embassy in Ethiopia said.

The newly opened Department of Commerce Foreign Commercial Service Office located in the US embassy here in Addis Ababa organized the trip.

Members of the delegation would be drawn from the Los Angeles World Airports, the Los Angeles Tourism and Convention Board and the city of Los Angeles.

The delegation is expected to meet the Minister of Trade and Industry, the Mayor of Addis Ababa, the Addis Ababa Chamber of Commerce and Sectoral Associations and the Ministry of Culture and Tourism for networking and business-to-business discussions, it was learned.

Senior Commercial Specialist with the US Commercial Service in Ethiopia, Tanya Cole, said “U.S companies are continually evaluating new markets in order to grow their business. We are excited about the opportunities this new flight from Los Angeles will bring — globally bridging the two markets”.

According to Tanya, there are huge opportunities for doing business in Ethiopia, including an investment climate of double-digit, a growing youth and middle income population.



A study that will enable Ethiopia to own a communications satellite is finalized

A study that will enable Ethiopia to own a communications satellite is finalizedAddis Ababa: June 20, 2015 –
A study that will enable Ethiopia to own its communications satellite has been completed.

The country currently pays up to a billion Birr per annum to access a communications satellite to provide telecom, internet, television and other technological services to its public.

In Africa, Egypt, Nigeria and South Africa have their own communication satellites, reliving them from the burden of paying rents and even making some money by providing the service to others.

In the past five years, a growing demand for a locally owned satellite has enabled the country to complete a study that will enable it to launch its own satellite into space. The study has identified the type of the satellite based on the depth and flow of information in the country.

Director of the Information Network Security Agency (INSA) Major General Teklebrhan Teklearegay, noted that the study has identified the width and flow of information in the country. He added that an agreement has been reached with several universities to train personnel who will be in charge of running the satellite operation.

The Director noted that the country’s very own satellite will be in orbit in less than five years. Ground communication facilities to link the satellite will be installed starting from next year, he noted. After all preparations have been made, the satellite will be launched from one of the countries in the world with launching capabilities.



Space Science Agency to be established in Ethiopia

Space Science Agency to be established in EthiopiaAddis Ababa: June 18, 2015 –
Entoto Space Science Observatory and Research Center (ESSORC) announced that a National Space Agency that will coordinate research and studies on space science in Ethiopia will be established.

Tulu Besha (Ph.D.) from the Center said the proposed agency will coordinate various researches at universities and serve as a platform for adopting the findings into development programs.

A seminar organized to launch the agency will be held next week on 24 June in Ethiopia, Besha noted. Researchers, scientist and government officials will deliberate on the experiences of similar agencies in different countries. The seminar is organized in collaboration with Air Bus, the French Space Education and ESSORC.

The proposed agency will be established by a proclamation and is expected to administer the country’s satellite program which is in the pipelines.

The agency will coordinate research by Mekelle, Bahir Dar, Addis Ababa Universities and ESSORC and encourage transfer of knowledge and technology.

Ethiopia will benefit more with the establishment of the agency from space science and technology, he said.

There are 23 space agencies worldwide. In Africa, similar agencies have gone operational recently in South Africa, Egypt and Algeria.



Turkey leads G-20 towards Africa


–  Delegates to attend development financing conference


 g20By Birhanu Fikade, Bodrum, Turkey

Assuming the presidency of the Group of 20 (G-20) late last year, Turkey says one of the objectives for its leadership is to focus on Africa’s access to energy.

According to Ambassador Ayse Sinirlioglu (the current Turkey’s Sherpa for G20), member states are expected to address the challenges of 1.3 billion people who do not have access to reliable energy.

The Sherpa pointed out during a preparatory meeting for the G-20 Summit, which was held at Bodrum, 391km from Istanbul, that out of the 1.3 billion people worldwide living without electricity, more than half live in Sub-Saharan Africa. Hence, the Turkey-led G-20 will prioritize the topic of how inclusive growth and development should be. These are some of the topics that are expected to be addressed by the upcoming G-20 Summit in November. Among others, Turkey vows to push for the implementation of G-20 commitment towards creating jobs for 100 million women across member states.

Commenting on insufficient fossil fuel subsidies among the member states, “We note the importance of ‘G-20 energy efficiency action plan’ and will be monitoring implementations,” Ambassador Sinirlioglu said

This year, the G-20 countries are expected to discuss the need for inclusive growth and development, which includes the involvement of least income developed countries at the G-20 platforms. According to Sinirlioglu, non-G-20 countries will be considered to join the group so that G-20 can be expanded. Until Turkey took over the G-20 presidency from Russia, inclusiveness and investment were major concerns. This new topic of implementation is to be introduced by Turkey.  To that effect, Spain, Azerbaijan, Singapore and the chairs of the African Union, ASEAN and NEPAD, are to be invited to the Heads of State summit as part of the outreach effort Turkey vows to do.

Outlining the priorities, Sinirlioglu said that Turkey will lead a delegation to Ethiopia to attend the upcoming Financing for Development Conference which will take place in the capital, Addis Ababa. According to Sinirlioglu, her team of delegates will not only attend the conference, but will also venture on a sideline event to emphasize the activities of the G-20 in the global arena.

Among the G-20, there have been recent establishments of “engagement groups” representing experts or think-tankers (T-20), youth (Y-20), labor (L-20), civil society (C-20) and business (B-20). But Turkey is longing to bring a women’s engagement group, which will focus on, among other things, gender, unemployment, equality for equal pay and the like among the G-20 states. Each group has a representation of member states and makes recommendations for G-20 on pertinent issues. From the engagement groups, T-20 is one of the critical establishments, which goes as far as criticizing the functions and deliberations of the G-20 and its unfulfilled commitments.

During the Bodrum preparatory meeting, T-20 staged concerns regarding the existing global financial organizations activities, international tax systems, accountabilities and the like, and echoed the urgency of re-establishing or reforming the World Bank Group (WB) and the International Monetary Fund (IMF). Some financial experts suggested that these finance wheels of the world need to be better checked and monitored closely as they might bump into lack of governance.

Rahel Kassahun (PhD), was one of the T-20 think-tankers gathered in the resort town of Bodrum. She told The Reporter that Africa and beyond is in a better situation now, following the new financial institutions orchestrated by the G-20 members. Brazil, Russia, India, China and South Africa (BRICS) have managed to form a common bank. Asian Investments and Infrastructure  Bank are the two most recent and most promising institutions the least developed world sees as alternate sources of credit, Rahel noted. She warns that Africa be in a position to embark on opportunities to come. The banks Asian nations set up are believed to provide access to credit with reasonable cost and serve as a check and balance for the deeply rooted influence the IMF and the WB long sustained.

However, the G-20 itself is not far from criticisms. Many experts argue that G-20 is merely a “fat cat club” or simply “showdown business”. But on the other end, experts, including those from Brazil and Australia, argue that G-20 has managed to challenge the financial system of the world, contributing to a tougher regulation being put in place. The aftermath of the 2008/9 global financial crisis drove G-20 to scrutinize the state of the world financial systems.

The G-20 was established by the former Canadian Prime Minister, Paul Breton, in the aftermath of the major Asian and Russian financial crisis. Member countries of the group were selected based on their economy and influence. However, according to some reports, the number of individual member states is 19 and the inclusion of the European Union as the 20th member makes the G-20, the world’s giant countries’ communion. G-20 represents 50 percent of the global population and two-thirds of the poor worldwide. But engagement groups like C-20 urge for the establishment of a universal intergovernmental tax body under the auspicious UN.

That said, between 2003 and 2012, the developing world is estimated to have lost about 6.6 trillion dollars in illicit financial flows via crimes, corruption, tax evasions and the like.  Africa alone is believed to have lost about 50 to 70 billion dollars per year.



An agro processing plant to be constructed in Amhara Region with close to 1 bln Birr investment

An agro processing plant to be constructed in Amhara Region with close to 1 bln Birr investmentAddis Ababa: June 19, 2015  –
Farmers in three zones of the Amhara National Regional State are to join forces with Tiret Agriculture and Agro Processing Corporate to establish an agro processing plant by investing close to one billion Birr.

Farmers from Eastern, Western and Awi zones will collaborate with Tiret and invest 953 million Birr for the factory.

Habtamu Mengistu, President of Tiret, said feasibility studies have been conducted and financing the project will include purchase of bonds by farmers. Construction of the factory is set to take place in a year and the more than 46,250 farmers in the three zones are expected to invest on the project.

The plant will utilize 750,000 quintals of wheat and 144,000 quintals of maize to produce macaroni and corn flakes.

Farmers will have dual benefits as they will provide the input and also invest in the factory, according to Shumiye Alemu, the region’s Agriculture Bureau Deputy Head. The factory will enable the farmers to sell their produce with an added value.

The realization of such factories highlights the transformation from an agricultural led economy to an industrial one.



WB Lends Ethiopia USD 370 Million for Expressway Development Project


worldbankEthiopia and World (WB) sealed a 370-million-USD loan agreement to support the Ethiopian Expressway Development project.

Ethiopia will make use of the fund to construct the 57 km Zeway-Arsi Negele section of Modjo-Hawassa road.

Ahmed Shide, Finance and Economic Development State Minister, at the signing ceremony said Modjo-Hawassa Expressway Project upon completion will enhance trade interactions with neighboring countries.

Ahmed said Ethiopia applauds “WB’s efforts not only for its substantial support to our infrastructural development endeavor but also for its leading role to bring other development partners to support development efforts in the country.”

WB Country Director Guang Z.Chen stated the Bank has been supporting the road sector development.

WB’s overall contribution for Ethiopia’s road sector development over the last 17 years has reached 13.3 billion Birr, Ethiopian Roads Authority Director-General Araya Girmay noted.



Investment Winds Gravitating Towards Ethiopia, African Leadership Magazine

Investment Winds Gravitating Towards Ethiopia, African Leadership MagazineAddis Ababa: June 19, 2015  –
The recently concluded World Economic Forum (WEF) on Africa saw strong growth and investment winds gravitate towards Ethiopia, the famous political capital of Africa, according to African Leadership Magazine.

Multiple media reports suggest that executives from General Electric, Dow Chemical, Standard Bank Group and MasterCard, who attended the event, singled out the East African nation as a market with strong growth potential.

In the last two years, Ethiopia has raised from the fourteenth place on the list of African foreign direct investment (FDI) recipients to the second place and the number of projects in the country has spiked by 88 percent.

This is a direct result of a flourishing economy and a well-funded government.

“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,” remarked Ross McLean, Dow Chemical’s sub-Saharan African President.

The International Monetary Fund (IMF) says growth projections for Ethiopia are 8.6 percent for 2015 and 8.5 percent the following year, this correlates with historic growth of 10.3 percent in 2014.

Such impressive growth potentials, in a world characterized by slowing growth, continue to attract significant foreign capital and businesses into the country.

Recently, the Dangote Group, announced a 500-million USD expansion of its cement plant in Ethiopia, an addition to the 600- million USD already invested.

“We will leave no stone unturned to make this country a suitable destination for foreign investment,” Prime Minister Hailemariam Desalegn said at the opening of a production plant at Mugher, about 80 kilometers (50 miles) west of Addis Ababa.

The emergence of Ethiopia comes with lots of lessons for Africa, all of which hover around the power of effective and purposeful leadership as well as the prudent management of resources.



Boeing Places Remaining Overweight 787 ‘Teens’ With Ethiopian


dreamlinerBoeing Co. sold the remainder of its early, overweight 787 Dreamliners that have been in storage for years to meet demand from buyers eager to obtain jetliners that are otherwise sold out through the end of the decade.

Ethiopian Airlines is acquiring six of the models in a transaction valued at £1.3 billion at list prices, Boeing said in a statement on Wednesday. Air Austral already agreed to buy two of the jets nicknamed “terrible teens” for their assembly struggles and places near the start of the 787’s production run.

“The Dreamliners complement the airline’s existing 13 787s currently operating in the fleet and are part of Ethiopian’s long-term strategy to increase capacity and provide greater route flexibility to and from its hub in Addis Ababa, Ethiopia,” Boeing said in the release.

The early-build aircraft had been symbols of the delays that clouded the start of Dreamliner program and left Boeing struggling to profit from one of its best-selling models.

The teens had been parked for five years nose-to-tail on a taxiway near the planemaker’s Everett, Washington factory with black plastic shrouding their windows and 17,000-pound (7,700-kilogram) counterweights dangling from the wings in place of engines to keep the jets balanced.

Late Debut

The 787 is the world’s first airliner built mainly from composites instead of traditional aluminum. It debuted in 2011, more than three years late, as Boeing worked through kinks with its design, on-board systems and supply-chain.

The teens required extensive work, including heavy structural reinforcements to bolster their composite hulls, and were set aside while Boeing focused resources on later models that it could get more quickly to customers.

Once the modifications are completed, the planes’ range will be about 1,000 nautical miles (1,850 kilometers) shorter than the 7,850-mile range advertised by Boeing, Avitas has estimated. Passengers aren’t likely to notice since they’ll still feature the same creature comforts as other Dreamliners, including higher humidity to ease jet leg.

Ethiopian was Africa’s first Dreamliner customer.

For more on the 2015 Paris Air Show, go here: Special Report



Ethiopia to get giant edible oil plant

Ethiopia to get giant edible oil plantAddis Ababa: June 18, 2015 –
A new edible oil plant said to be the largest in terms of production capacity will be operational by July 2016.

The factory will be built in the town of Adama, in Oromia regional state after six months by Bekas Chemicals Plc, a local company.

The company yesterday signed a contract agreement with Lushan Win Tone Machinery, a Chinese firm for the importation of technologies.

Up on completion after a year, the plant will help the nation to meet additional 10 percent of the demand locally.

The plant which has the capacity to produce 20,000,000 litters cooking oil per annum will supply 70 percent of its product to the domestic market, while the balance will be exported.

Industry State Minister Mebirhatu Melese said the factory would be the largest vegetable cooking oil plant in Ethiopia

The plant will help the nation reduce the amount of cooking oil that the country imports, which is 325,000,000 litter annually, by 10 percent, he said.

Since Ethiopia imports 70 percent of the edible oil, the government is hopeful to reduce this amount by substituting them locally.

In this regard, he expressed hope that this factory will encourage others to engage in this area.



Arab Contractors to build new Residential City in Ethiopia at 2015-end

Arab Contractors to build new Residential City in Ethiopia at 2015-endAddis Ababa: June 16, 2015  –
Egypt’s Arab Contractors intends to start before the end of this year works on a new residential city project in the Ethiopian capital, Addis Ababa, chairman Mohsen Salah revealed Monday.

AC Chairman said his company is currently finalizing studies on the residential city project, in cooperation with the Ethiopian government. The studies aim to specify the project’s requirements of raw material and to identify the targeted business volume of buildings and utilizing.

He added that this project is part of Arab Contractors’ plan to expand presence into the Ethiopian market through carrying out a number of giant projects there.

Arab Contractors has successfully boosted its volume of businesses in 12 African countries to exceed US$2 billion, he noted.



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