Ethiopia earmarks $1.3 billion for first phase industrial parks
The advisor made the remark here today at a panel discussion organized to celebrate Africa Industrialization Day.
From 700 to 750 million of the total financial plan will be secured from the sovereign bonds issued by the country.
Ethiopia was able to attain the plan set in the sector in the first Growth and Transformational Plan (GTP) period, he said.
The Eastern Industrial Zone in Dukem, Oromia Regional State, is the most successful industrial park among Chinese government industrial parks in Africa, he pointed out.
It has 36 enterprises including Unilever, the world’s second-biggest consumer-products maker, having 187 million US dollars capital, he indicated.
He said Ethiopia offers up to 15 years tax break as incentive for industrial park developers.
According to him, Ethiopia’s industrial park development gives utmost priority to domestic linking and environmental soundness.
To ensure environment friendliness, Hawassa industrial park is being built in zero liquid waste way, he added.
Industry is expected to create 200,000 jobs annually in Ethiopia in the coming ten years, he underscored.
Tadesse Haile, Industry State Minister, said the industrial sector has shown a modest growth in Ethiopia from 10.3% in 2010 to 15.6 at the end of the first GTP period.
It has also created job opportunities for several citizens, he noted.
The construction of industrial parks for food processing, garment, metals and machinery manufacturing is underway in various parts of the country, he added.
There is a plan to create jobs for 50,000 people from the industrial park being built in Hawassa alone, according to him.
Amare Asgedom, Industrial Park Development Corporation Deputy Chief Executive Officer (CEO), said two million square meters of factory sheds will be built in the next 10 years.
Chinese Ambassador to Ethiopia, La Yifan, stated that Ethiopia’s efforts to build more industrial hub could be a model for other countries.
The expansion of industrial parks could be a foundation for Ethiopia’s efforts to shift from agrarian to industrial led economy, he said.
Jean Bakole, UNIDO Representative and Director of Regional Office in Ethiopia, said industrializations of Ethiopia and African countries should make women their top-priority.
Research papers showing Ethiopia’s achievement in the sector were presented at the event that attracted several stakeholders.
AYKA Addis Textile and Investment Group PLC, one of the biggest FDI in Ethiopia, presented a paper on Ethiopia’s investment climate and industrialization efforts.
Ayka Addis has created 8,000 jobs.
The company is also planning to engage in cotton plantations in Ethiopia.
Ethiopian to order 10 narrow-body planes, eyeing C-Series or E2-CEO
Tewolde, speaking on the sidelines of a global aviation forum in Montreal, said that he is visiting Bombardier’s Mirabel factory on Tuesday to review the 100-seater CS100.
He said in an interview that he is visiting the 100-seater CS100 at Bombardier’s Mirabel factory on Tuesday, but is also considering aircraft made by the company’s rivals.
“I’m also looking at E2, the Russians, the Japanese, the Chinese,” he said.
Ethiopian Airlines also has 14 firm orders for A350 aircraft between now and 2025. The carrier is looking at ordering 10 more aircraft, and is weighing B777 and A350 planes.
Ethiopian Airlines expects to grow from 77 aircraft and 7.4 million passengers this year to 22 million passengers and 150 aircraft by 2025, he said.
Ethiopia, Sudan to establish free trade zone
Dr Debretsion Gebremichael, Deputy Prime Minister for Finance and Economic Cluster and Minister of Communication and Information Technology, made the remark during a press conference here today.
The two countries have agreed to establish a free trade zone, he said.
A Joint Committee drawn from both countries has been formed to conduct a study on ways of implementing the agreement within the next three months.
The Committee is also tasked to carry out a study on how the Commercial Bank of Ethiopia (CBE) will open its office in Sudan and the Sudanese banks in Ethiopia.
Moreover, the Joint Committee is responsible to undertake a study on ways of filling the gap on the use of currency.
Hassabo Mohamed Abdelrahman, Vice President of the Sudan, said the trade zone will further cement the longstanding historical and economic ties of the two countries.
Public passenger transport service has been launched between the two countries in April last year. Ethiopian Airlines flies to Sudan three times a day.
Previously, the two countries signed 12 agreements to cooperate in trade, investment, federal and regional levels, sale of electricity, customs, youth, sport, banks and other areas.
The trade, investment and people-to-people relation between the two countries is growing from time to time. Sudan stands 7th, next to USA, China, UK, Kenya, Italy and France in sending tourists to Ethiopia.
About 513 Sudanese companies with a combined capita of 37 billion birr capital are currently engaged in various investment sectors in Ethiopia.
With continued rapid growth, Ethiopia is poised to become a middle income country by 2025
Fueled by substantial public infrastructure investment and a conducive external environment, the country’s growth has been stable, rapid and it has managed to decrease poverty substantially from 44% in 2000 to 30% in 2011, according to the national poverty line, according to a new World Bank report, Ethiopia’s Great Run: The Growth Acceleration and How to Pace It. The report, launched today, traces the reasons behind the impressive growth and also puts forth policy suggestions on sustaining it.
“Ethiopia began to see accelerated economic progress in 1992 and it shifted to an even higher gear in 2004, pulling millions of people out of poverty and leading to improvements in other areas like improved life expectancy and reduced child and infant mortality,” said Lars Christian Moller, the World Bank Group’s lead economist for Ethiopia and the lead author of the report. “To continue the impressive run, Ethiopia needs to continue its reforms efforts to further strengthen its growth foundations.”
The report’s key findings include:
• Services and agriculture have largely contributed to the growth. Initially, agriculture was the main contributor to growth but aided by a construction boom the services sector has taken over. Services contributed 5.4% to the GDP growth rate, followed by agriculture at 3.6%.
• Ethiopia witnessed accelerated growth as service sector began to rise. The shift of workers from agriculture to service and construction contributed to a quarter of Ethiopia’s per capita growth from 2005 to 2013. It was also complemented by a marked increase in the share of working-age population, the so-called demographic dividend, which can be attributed to up to 13% of per capita growth from 2005 to 2013.
• Rapid growth in the agriculture sector contributed significantly toward poverty alleviation. Each percent of agriculture growth reduced poverty by 0.9%. Yield growth averaged about 7% per year while the country registered a 2.7% annual increase in cultivated land.
• Public infrastructure investment has been a key structural driver of growth. With the country enjoying a long spell of relative peace, the government has been able to prioritize capital spending over consumption within the budget. In an analysis of 124 countries over four decades, the country was among the fastest 20% in infrastructure growth in the past decade.
Three policy recommendations to sustain high growth
1. Private investments will have a key role to sustain further growth – and in order to do so, they need to be supported through credit markets. According to six different survey instruments, access to credit is mentioned as one of the top three most binding constraints for the private sector and more binding than infrastructure concerns. Providing more credit for private companies would arguably help the Ethiopian economy. The government could institute two policy reforms – (i) To continue the existing system but to direct more credit toward private firms compared to public infrastructure projects; (ii) To gradually liberalize interest rates to better reflect the demand and supply for savings and credit.
2. Alternative sources of financing infrastructure needs to be identified. With Ethiopia having the third largest infrastructure deficit in Africa and infrastructure being one of the most important drivers of economic growth, Ethiopia needs new mechanisms to finance infrastructure as past financing options could have an impact on other areas most notably crowding out the private sector in the debt markets. Other financing mechanisms including raising tax revenues, increasing private sector involvement, and improving public investment management can be considered.
3. Need to tap into the growth potential of reforms. If Ethiopia can catch up with its peers in Sub-Saharan Africa in terms of financial modernization, its per capita GDP growth rate would increase by 1.9% per year. While Ethiopia has so far modernized its merchandise trade, the country could reap rewards by reforming the service sector. In doing so, it can benefit from the lessons of other countries and tailor reforms to its own circumstances.
Moving forward, the report also proposes a series of indicators that would monitor the trade-offs that could occur while implementing the current growth strategy. This could provide early warnings to policy makers and help initiate reform efforts to sustain higher growth.
Ethiopia to receive $50 mln from Green Climate Fund
Kare Chawicha, deputy minister of forestry, environment, and climate change, says the country will receive the amount after independent GCF experts decided on the $ 50 million ceiling.
However, Ethiopia had hoped to unlock up to $ 250 million from the fund through its ministry of finance and economic co-operation (MoFEC) to meet its ambitious green development strategy.
The government has previously consulted ambassadors of donor countries and organisations to discuss ways of funding climate friendly projects in GTP II, including from the GCF.
The GCF, based in South Korea, is a mechanism to redistribute money from the developed to the developing world, founded within the United Nations Framework Convention for Climate Change (UNFCCC), the organisation which is organising COP21.
The GCF has 24 board members, 12 each from the developed and developing world. The aim is to help developing countries adapt to and mitigate global warming.
“Although by 2020 GCF had planned to mobilise $100 billion, so far only $10.2 billion has been pledged,” said Zerihun Getu coordinator for the Climate Resilient Green Economy (CRGE) facility at MoFEC, adding that accessing funds directly from GCF has been challenging.
However, Anders Vatn, climate counsellor at the Norwegian Embassy in Ethiopia, one of the major green climate finance partners for the country, says his country has already committed 30 million Norwegian Krone (about $3.8 million) for GCF, and sees the contribution from his country continuing to plug the funding gap.
“We plan to fund projects on forestry and agriculture, renewable energy programs such as solar power,” said Vatn, stating that it will feed into the strategy of creating an economic opportunity based on sustainable use of natural resources.
Negash Teklu, Executive Director of Population, Health, Environment (PHE), a consortium of dozens of local and international NGOs, says unlocking funds for projects in Ethiopia is not just about helping Ethiopia achieve its CRGE goal of becoming carbon neutral by 2025.
He said regional countries were looking for a trans-boundary, developmental approach to climate change adaptation and mitigation.
Ethiopia is currently constructing thousands of kilometers of railway lines across the country, fully powered by electricity, as a way of improving local infrastructure, creating regional integration, and boosting external trade for a landlocked nation of 94 million people, all in a climate-friendly way.
It is also engaged in the construction of numerous renewable energy projects, including wind, geothermal, and hydro, to boost its total power production capacity from the current 2, 300 MW to about 17,000 MW.
With an eye to COP21, Getu says the government is finalising details to prepare proposals for candidate projects.
Ethiopia’s proposals will be focused on climate change mitigation through reducing greenhouse gas emissions, and resilience or adaptation strategies.
According to Getu, half of the GCF is supposed to be used for adaptation and half for mitigation, with at least 50 percent of the funds to be allocated to least developed countries (LDCs) which include Ethiopia. Which sectors will get priority in financing will be a political decision expected at the Paris conference.
For Teklu the financing of climate friendly projects is not just an issue of trans-boundary co-operation to fight off climate change, but about collective growth and security.
“Ethiopia is known for being endowed with renewable energy potential. The development and export of this potential will ensure that East Africa’s most populous nation helps in lowering the carbon footprint of both it and its regional countries, while still stimulating growth and reducing border communities tensions,” he said.
He apparently meant that sustainable development through climate-friendly energy supply would help reduce competition between border communities for scarce agricultural resources.
While Ethiopia hopes to unlock funds for its green economy strategy – which aims to help make it a middle-economy, with a zero carbon footprint – it is also soliciting non-monetary assistance, such as capacity building. It would put its demands in Paris, Getu said.
In the meantime, Ethiopia says it is starting its own results-oriented framework, which is going to be co-ordinated among three ministries, to co-ordinate CRGE and access the GCF.
“Accessing GCF is an important part of CRGE objective, integrating climate change resilient strategies in our economic development, enabling Ethiopia to be part of the global community,” Getu said.
Deputy minister Chawicha said agriculture, natural resources, livestock, energy, forestry, industry, and urban housing sector transport were the sectors of the economy most vulnerable to climate change and would get most of the US50 million from the GCF. But he stressed that government would also finance its climate measures from the treasury and non-governmental sources.
Over 140,000 people to gain access to electricity in five months
According to information obtained from the company tasked with electricity delivery service, the clients have been waiting for two years and above to get the service.
The people are often heard complaining that they didn’t get a satisfactory response from the EES after they made the necessary payment.
According to Gebre-Egziabher Tafere, Foreign Relations of EES, shortage of power poles, electric meters, transformers and other related problems were among the reason for the delay.
The priorities given for condominium houses, health institutions and water treatment plants as well as for small and micro enterprises (SMEs) were also the cause for the delay, he said.
However, various works are underway to address the problem, including indentifying areas with low and high electric load, he said.
The ongoing activities have shown good results, he said.
Hence, the over 140,000 clients will get the service within the coming five months, he said.
Ethiopia named Exotic Tourist Destination of 2015
The East African country named as top travel destinations of 2015 following the readers and viewers of this Journal were requested to vote on line for a specific destination of their choice, among the candidate countries in 12 different categories.
Russian viewers and readers of the Journal voted Ethiopia as the winner of the award in the category of “Exotic Tourist Destination of 2015” among the other two candidate destinations i.e Vietnam and South Africa.
Ambassador of Ethiopia to the Russian Federation, Gerum Abay received the award on the behalf of Ethiopia at a ceremony held in Moscow on 18 November 2015.
Some 50 Belgian investors undertaking feasibility studies in Ethiopia
State Minister of Foreign Affairs Taye Atske-Selassaie said during the occasion that the long-standing bilateral ties between Ethiopia and Belgium will help improve business relations between the two countries.
According to him, the Second Growth and Transformation Plan which started a couple of months ago has outlined very intensive infrastructural development in energy, in road, in railway and mining sectors that need more investor engagement.
The plan also attaches great importance to the manufacturing sector, particularly textile, garment and agro-processing, he said, adding that Belgian investors who engage in the sectors could benefit a lot.
The state minster said the government of Ethiopia is fully committed to assist investors in areas they get involved.
Moreover Ethiopia is keen to see more Belgian investors in different sectors, he pointed out.
Belgium’s Ambassador to Ethiopia, Didier Nagant, said on his part Belgium is the most important export destination of Ethiopia since Belgium imports coffee and horticultural products from Ethiopia, while Ethiopia imports agricultural chemicals and machinery.
This business-to-business forum will help to enhance the investment and trade ties among the two sides, Nagant said, adding that the two nations need to further consolidate their existing relations in investment and trade spheres.
According to him, Belgium is committed to using the strong long-standing bilateral ties that exist between the two countries as leverage for consolidating more trade and investment relations.
Ethiopia will start production of 4.7 trillion cubic meters of natural gas in two years time: Minister
The final results of the tests from the aforementioned fields are “positive” and Ethiopia could begin gas production within two years, he told Anadolu Agency Arabic website on Wednesday.
He pointed out that Ethiopia intends to achieve about $ 646 million revenue from minerals through this year and next, noting that his country is ” currently gets about 363 million dollars from gold, potassium and gemstones exports.”
He explained that his country is making great efforts to make the mining sector one of the largest economies over the next five years.
The contribution of the mining sector in the GDP is still slim, despite the possibilities to make the sector the largest contributor to it, he said.
Ethiopia to host International Agro-Industry Investment Forum
The forum organized by the government of Ethiopia and the United Nations Industrial Development Organization (UNIDO) will be held from May 2 to 4, 2016, it was learned.
At a joint briefing the organizers gave here today, State Minister of Finance and Economic Cooperation Ahmed Shide said the economy of the country is oriented towards technology-driven and high-value activities such as agricultural biotechnology, agro-processing, bio-farming, dairy farming, seed production, and technology-based farming.
Investment Commission Director-General Fitsum Arega said agro-processing is one of the priorities in Ethiopia that is attractive both to domestic and foreign investors.
He added that agro-industry sector of Ethiopia has many potential advantages including low labor cost, growing domestic market and proximity to European market.
The investment act has also been revised several times to create conducive environment for investment.
Early this year the parliament introduced new law that promotes industrialization through industrial parks development.
Accordingly, about 10,000 hectares industrial park is planned to be established in GTP-2.
State Minister of Industry, Dr. Mebrahtu Meles said on his part that Ethiopia has huge potential and comparative advantage in textile, leather and agro-food industry, and where it can accrue maximum benefit in terms of revenue generation and jobs creation.
He added that in the coming five years, the target is to increase revenue by over tenfold and to create close to one million new jobs in the three business sectors.
Some 600 high-level officials, representatives of international organizations, banks, investors, multi-national companies, and industrial associations are expected to take part in the forum.
Nation would provide incentives for private sector in value adding schemes: President
In his opening speech at the 5th International Pulses, Oilseeds, and Spices conference that kicked off here today, the president stated that private sectors engaged in agro-processing will be encouraged to intensify their efforts to add values to their products to secure better quality and income.
He said such support will roll out under the framework of the country`s ongoing target through the provision of more incentives.
Mulatu noted that such conferences are instrumental in creating market linkages and experience sharing among the private sector operating in agro-processing from productivity to market supply.
Since the conference is sector specific, it is of vital importance for promoting the country’s global partnership in trade and investment, the president added.
According to him, pulses, oilseeds and spices sector is one of the largest components of Ethiopia’s agriculture sector and a huge export sector next to coffee.
Ethiopia could be positioned in both the global value chain and in global supply by modernizing its agri-business and making progress in the food processing sector.
State Minister of Trade Ayana Zewdie underscored the relevance of this annual event as a platform for sharing ideas, information and networking across the oilseeds and pulses and spices sector.
Ethiopia is blessed with a diverse agro-ecology and favorable climatic condition that permit an equally diverse range of agricultural products, he indicated.
Ayana further noted that several initiatives are already formulated in to resolve longstanding structural problems.
Rapidly changing market conditions require timely and targeted responses and the ministry has been working on all rounded promotional and regulatory oversight to be resolved, the state minister pointed out.
International business leaders, importers and exporters from 20 different countries are attending the two days conference.
Ethiopia lifts 2.5 mln people out of poverty in eight years: AfDB
The Development Effectiveness Review on Ethiopia 2015 examines Ethiopia’s development challenges in recent years and assesses the Bank’s contribution to addressing them. It also looks at how effectively the bank manages its operations and organisation in Ethiopia.
The publication shows that Ethiopia is one of the fastest-growing economies in the world, averaging 10% growth over the past decade. Even with high population growth, the country’s per capita income has tripled over the last eight years. This strong economic performance has provided the Ethiopian government with a platform for pursuing its ambitious national development agenda. As a result, over the past eight years 2.5 million people have been lifted out of poverty and the proportion of Ethiopians living below the poverty line has fallen below 30%.
Over the past 40 years, the AfDB has been a leading provider of development finance in support of Ethiopia’s national development agenda, with 118 projects at a total value of $4 billion. From 2005 to 2013, the Bank’s investments have made a substantial contribution to expand Ethiopia’s road infrastructure and improve access to transport to over 7.5 million people. On electrification, its contribution helped Ethiopia to provide nearly 40,000 people with electricity connections, according to the report.
The report also explains AfDB’s support for national water and sanitation programmes, Ethiopia’s ambitious decentralised Promoting Basic Services programme (PBS) and private sector projects– including the national airlines, and small and micro business through its microfinance programme which has benefited nearly 2 million people.
The publication tracks the performance of the Bank’s Ethiopia portfolio against the goals and targets set out in AfDB’s Results Measurement Framework. The portfolio of the Bank in Ethiopia is in robust shape with fewer, but larger operations as the average size of its public sector operations is three times the average across Africa. With a focused and selective portfolio, the AfDB is able to address implementation challenges and achieve higher levels of impact.
AfDB remains committed to supporting Ethiopia’s national development goals. It will continue to help Ethiopia to close its infrastructure gap, pursue regional integration, and to support improvements in agriculture, basic services and the business environment. As the premier African development organisation, the AfDB stands ready to help Ethiopia promote transformation and achieve its vision of middle-income country status by 2025, the report says.
Dangote expands with 450 mln USD investment
The company requested the land from Oromia Investment Commission on September 16, 2015. Now it is processing right of way issues at woreda level. The new factory plans to employ 1,300 people when it is completed.
In addition to the local market Dangote sees a market outside Ethiopia in its neighboring countries. The total investment in the project will be in the purchase of capital goods, civil works and fixed assets.
It also has planned to open a bag factory which will supply packaging not only for Dangote but also for others in the sector.
Currently, the cement factories in Ethiopia are estimated to have a production capacity of 15.1 million metric tonnes a year, yet actual production is only 10 million tonnes.
The capacity is expected to reach to 27 million metric tonnes by the end of GTP II.
Commercial banks’ reserve exceeds 375 billion birr
The National Bank of Ethiopia is discussing with stakeholders on the activities it had carried out during the past five years. Representatives drawn from various banks and insurance companies are taking part at the discussion.
Taking local realities into account, banks have played a significant role for the economic growth of their country, Aster Mamo, Deputy Prime Minister for Good Governance and Reform Cluster and Minister of Public Service and Human Development said at the event.
Aster also called on the banks to keep up their momentum going in the second Growth and Transformation Plan (GTP-II) period and discharge their responsibility for the economic growth of the country.
Yohannes Ayalew, Vice Governor of the National Bank of Ethiopia, on the occasion presented a research paper on five-year performance of the bank.
The activities carried out in the finance sector have brought about remarkable changes and “this has contributed local investment and domestic savings to grow,” he said.
Works carried out during the past five years resulted in the number of banks to increase from 680 in 2010 to 2,868 now, while the reserve money of the banks has reached 375.2 billion birr from 98 billion five years ago, Yohannes added. The total loan disbursed by the banks also increased to 380.22 billion birr from 82.42 billion birr.
Teklewold Atnafu, Governor of the National Bank of Ethiopia, said various measures will be taken to improve the finance sectors, which include creating favorable conditions for banks to double the number of their branches over the coming five years.
Moreover, microfinance institutions will be opened in 10,000 rural districts, he said.
Ethiopian beer on rise
Ethiopia’s Dashen Brewery has launched the new facility in Debre Birhan, as part of a partnership with Britain-based companies Vasari Global and Duet Group, and the Ethiopian TIRET Group. Dashen is one of the largest brewing companies in Ethiopia.
Ethiopian Prime Minister Hailemariam Desalegn presided at the opening ceremony, saying the brewery is an example of his country’s international economic development capabilities.
“Duet, Vasari, and Tiret have shown that companies from the United Kingdom and Ethiopia can jointly venture for mutual prosperity and this best practice has to be scaled up,” Desalegn said.
The brewing partners say Ethiopians’ demand for beer shows there a growing middle class in the country and a good sign of Ethiopia’s economic health.
They believe there is rapidly growing demand for beer in the country as well a healthy export market. The owners expect the new brewery will employ several hundred people.
Combined with Dashen’s existing brewery in Gonder in northwest Ethiopia, the new plant means Dashen’s beer production in Ethiopia will have tripled since 2012.
Ethiopia has rapidly opened up its beverage sector to international investment, but has moved more cautiously in other industries. Telecoms remain in state hands while banks and retail businesses are off limits to foreigners.
China’s decision to become key partner in Ethiopia couldn’t have been more strategic…
But as a recent Quartz article put it, when it comes to Africa, “Chinese investment is everywhere.” And with polls showing more than 50% favourability of China in a number of African countries, many people on the continent don’t think that’s a bad thing.
Critical observers should revise their stances as well. China has enabled a number of much-needed, high-profile advancements in several African nations, and it provides useful case studies for how to invest successfully in the region.
Despite the Asian superpower’s reputation for disregarding human rights and dispensing legal concerns, Africa has found an important ally in China. In 2009, China surpassed the US to become Africa’s largest trading partner. By 2012, Sino-African trade stood at US$198.5-billion, compared to US-African trade at US$99.8-billion. That growth is meteoric by any measure.
The benefits of the Sino-African relationship haven’t been one-sided, either. The Export-Import Bank of China funded US$100-million of the US$360-million it took to build Kenya’s landmark Nairobi-Thika dual-carriage highway. That development slashed commuting time between the two cities and enhanced workforce mobility. China also financed more than 2 200 megawatts of thermal energy generation in Sudan. Such projects have been game changers in Africa’s business landscapes.
China’s Lessons to the World
Other countries should look to China’s example to navigate these emerging economies that are set for explosive growth during the next several decades. There are three areas, in particular, in which investors can learn from Chinese developers’ work in Africa:
1. Long-term strategies
China has taken a far-reaching view of Africa, seeing beyond present volatility to the potential evolution of the investment landscape. By analyzing the possibilities of the future rather than the difficulties of today, China has positioned itself as an indispensable presence throughout the continent.
China’s decision to become a key partner in Ethiopia, for instance, couldn’t have been more strategic. Ethiopia boasted the world’s fastest-growing economy in 2015, and the Exim Bank has played a crucial role in financing major development projects there. In fact, the Exim Bank provided 85 percent of the funding for the recently launched Addis Metro, the first light rail system in Ethiopia and sub-Saharan Africa.
Many foreign investors, particularly those from the US, find that by the time they get in on Africa’s investing opportunities, China is already there. The American private equity firm Schulze Global Investments set up shop in Ethiopia in 2008, but the China-Africa Development Fund had been helping Chinese firms navigate that market since 2007. In July 2014, the US-based Brown Shoe Company (now Caleres) announced that it would establish a presence in Ethiopia. Its Chinese peer, Huajian Group, had already opened its own factory near Addis Ababa in January 2012, taking early advantage of Eastern Africa’s lucrative leather hub.
2. Multisectoral approaches
Rather than focus exclusively on extractive industries, China has diversified its investments by strategizing for a variety of growth engines. The electronics manufacturer Hisense was one early investor, establishing operations in Africa in 2003 or earlier.
As African economies shift and develop, investors need to have multisectoral plans for capitalizing on new opportunities. They can’t have tunnel vision when it comes to resource extraction projects because those aren’t surefire long-term bets. And a number of other industries are ripe for foreign involvement, like the information and communications technology and financial tech fields.
3. Sustainable investments
China has served as a source of low-cost, commodity-backed credit to countries like Angola for several years. But volatility in Angola’s and Gabon’s oil industries signals the need for more stable investment strategies. Foreign investors should look beyond natural resources for market openings that promise worthwhile, consistent returns.
Downturns in Uganda’s and Tanzania’s oil and natural gas markets also indicate the need for caution, diversity, and sustainability in emerging areas. While these economies may use natural resources to drive initial growth, investors will need sophisticated approaches to weather volatile commodities markets.
China’s current widespread commitments in Africa are only the beginning of its investments there. Other countries should spend more time learning from Chinese strategies and less time looking for sinister motives. A critical eye can keep companies honest, but to view China’s Africa story only through the lens of skepticism is to miss a much bigger picture.
Dr. Tedros meets President of Gates Foundation’s Global Policy, Advocacy, Country programs
Dr. Tedros recalled the excellent work the Foundation is doing with its very genuine and successful partnership with Ethiopia.
He emphasized the Foundation’s work in assisting the development of Ethiopia in helping small farmers increase food production though seed improvement programs, expanding access to vaccines for children, safe water and sanitation for the poor, helping women to set up and engage in cooperatives and other areas.
He mentioned the importance of agriculture as an engine for the country’s growth and transformation, stressing that investment in this sector was particularly important.
Dr. Mark Suzman agreed with the Foreign Minister’s view of the partnership between the Foundation and Ethiopia, calling it “wonderful”.
He said his visit was part of the Foundation’s efforts to look for feedback to see how it could improve its cooperation with countries like Ethiopia. He said that the Foundation really needed “dynamic partners on the ground who know what they want to work and how they will achieve it.”
Dr. Mark said the new nutrition strategy, approved by the Bill and Melinda Gates Foundation, allowed for US$776 million to tackle malnutrition help all women and children survive and thrive. The program would include Ethiopia.
Dr. Mark promised to provide all necessary assistances to help the country improve its health, agriculture, financing and other areas.
The Foundation would, he said, align its policies with the core issues of the second Growth and Transformation Plan to ensure further successful cooperation.
Ethiopia, he said, was an important focus country for the Foundation which currently provides US$265 million in funding to partner organizations operating in various health and development programs across the country.
Authority plans to collect 1.3 trillion birr in GTP-II
The Ethiopian Revenues and Customs Authority (ERCA) plans to collect 1.3 trillion birr revenue during the second Growth and Transformation Plan (GTP-II) period.
In the first Growth and Transformation Plan period, the authority projected to raise revenue to GDP ratio to 13 per cent but stood at 10.12 per cent.
“In the second GTP, the plan set by the government is to increase tax revenue to GDP ratio to 17 per cent,” Sisay Bahiru, Plan and Implementation Directorate Director of ERCA told Addis Zemen.
The stated sum of income will be collected not only from the authority but also from tax collector offices at regional states, he said.
According to Sisay, rent seeking mentality as well as problems associated with attitude, skill gaps and taxpayers will be a threat for the success of the target.
In the first GTP period, the authority targeted to earn 483.21 billion birr, but managed to attain 91.3 per cent of it by collecting 44 1.1 billion birr, he said.
Ethiopia launches second agricultural growth program
The program, expected to significantly contribute for the success of the second Growth and Transformation Plan (GTP-II), will be implemented in 157 woredas in 7 regional states and one city administration.
The first phase was implemented in 96 woredas in four regional states.
The second program, to be executed at an outlay of 581 million US dollars, will mainly focus on sustainability of agricultural productivity.
Some 350 million US dollars of the total fund will be earned from the World Bank (WB), while the balance will be secured from other countries and lenders.
More than 1.6 million people will directly benefit from the program, 40 per cent of whom are women.
The program will be implemented during the five-year second Growth and Transformation Plan (GTP-II) period.
Dashen Brewery to inaugurate 3 billion birr second plant
Prime Minister Hailemariam Dessalegn is expected to inaugurate the modern brewing plant.
The new plant will triple the current production capacity of the brewery.
The plant, whose construction began four years ago, has created jobs for 600 people.
It is expected to play a significant role in linking agriculture with industry.
High level government officials, including Chief Administrator of Amhara Regional State, Gedu Andargachew will attend the inauguration ceremony.
Nile River to be re-diverted to culverts on GERD
Dr Debretsion Gebremichael, Deputy Prime Minister for Finance and Economic Cluster and Minister of Communication and Information Technology, yesterday visited the dam, which will be the largest hydropower plant when completed.
The flow of water to the main dam, which has currently reached at a height of 80 meters, is the turning point for GERD, he said.
Water from the river will begin to flow to the dam when the construction of the concert dam is completed after two months, thereby enabling two of the 16 turbines of GERD to generate power, he said.
The dam will begin generating power after an agreement was reached with the riparian countries on the volume of water to be released from the dam, Dr Debretsion said.
The dam has so far consumed 48 billion birr and the mega project won’t face any foreign exchange shortage problem, he said.
Engineer Simegnew Bekele, Project Manager of GERD, on his part said the civil, electro and hydro mechanical works on the project are going well and as per planned.
Office of the National Council for the Coordination of Public Participation on the Construction of GERD, said Ethiopians at home and abroad purchased government saving bonds worth 7.7 billion birr for the construction of the dam.
Of the total, Ethiopians at home procured 7.1 billion birr worth bonds, while Ethiopian Diaspora bought bonds worth 600 million US dollars, Fekadu Lemma, Public Relations Head of the Office, told FBC yesterday.
Fekadu finally called on those who pledge to buy bonds to honor their promise.
Ethiopia may export sugar in 2016
Unrefined sugar production in the fiscal year that ends July 7 should be more than 900,000 metric tons, primarily from the expanded Fincha, Wonji and Metahara factories and the almost complete Tendaho and Kessem operations, which are supported by state banks in the Asian nations, according to company spokesman Zemedkun Tekle.
“Not only will we stop importing sugar, but we will start exporting,” he said in a Nov. 9 interview in the capital, Addis Ababa.
Ethiopia, Africa’s largest coffee producer and second-most populous nation, wants to add 10 new plants to become one of the world’s 10 biggest sugar exporters by 2023. It failed to become self-sufficient as it forecast in 2013 and missed a target to export $661 million of the unrefined sweetener last year, according to a five-year growth plan that ended in July.
Metals and Engineering Corporation may finish a factory at Kuraz in southern Ethiopia and two plants in Beles valley in Amhara region this year, though only trial cultivation will occur, Zemedkun said. The China Development Bank and Export-Import Bank of China have committed more than $1 billion for Chinese contractors to build two other processors at Kuraz, the Welkait project in Tigray region, and Kessem in the arid Afar region.
Tendaho and expansions at Fincha and Wonji were funded with a $600-million loan from the Export-Import Bank of India agreed in 2007.
Last year, the government, which is currently the only sugar producer, imported about 200,000 tons of the sweetener after financing delays slowed projects, Zemedkun said. Domestic demand in the 12 months to July 7 may be as much as 650,000 tons, he said.
The corporation received 64 billion Ethiopian birr ($3 billion) for the industry since 2010 and needs another 172 billion birr to finish all projects by mid-2020, according to Zemedkun. The Finance Ministry said some of the $1 billion raised from a debut Eurobond in December will be allocated to sugar development.
Ethiopia won’t be able to meet the standards of refined sugar produced in developed markets, so will initially export the raw variety, Zemedkun said. Suitable ecology means plantations are relatively productive, though cost-efficiency in all areas needs improving, he said.
Ethiopia to invest $15-20 mln in Tulu Kapi Gold Project
This investment will provide the government of Ethiopia with an equity interest in KEFI Minerals (Ethiopia) Ltd (“KME”), a wholly-owned subsidiary of KEFI Minerals plc that owns and operates the Project, of approximately 20-25% based on the projected enlarged paid-up share capital of KME (c. 25-30% including the government’s pre-existing 5% free carried-interest).
The intended investment by the government implies a Project value of approximately US$75 million at its current stage of development and reflects the aggregate of equity capital invested into KME. At a typical consensus gold price of US$1,250/oz, Project NPV is c. US$168 million, once fully funded and based on the unleveraged after tax cash flows discounted at 8%.
Monies invested by the government will be used to fund the roads, power and certain other associated infrastructure required by the Project. This formal investment decision follows last month’s appointment of the preferred project contractors and supports the Company’s timetable to assemble the full financing syndicate in Q4 2015.
Harry Anagnostaras-Adams, Executive Chairman, said: “KEFI Minerals is honoured to have received from the government of Ethiopia the formal confirmation of its intended equity investment into the Tulu Kapi Gold Project. This demonstrates their commitment to the project and confidence in our ability to deliver it. We look forward to exploring other growth opportunities within Ethiopia in full compliance with the government’s policies and regulations, and to supporting the expansion of their minerals sector.”
The next stage of the financing process is to finalise selection of the remaining members of the preferred syndicate and agreed terms, and to move into full syndicate documentation for approval by all participants and the National Bank of Ethiopia. Updated information has been submitted to the relevant parties for formal consideration.
The latest financial projections provided by KEFI’s preferred contractors have further improved the Project’s economic outlook. Annual gold production during the first eight years has been increased from the average estimate contained with the 2015 Definitive Feasibility Study (“2015 DFS”) of 95,000 to 115,000 oz. Combined with the terms being discussed with potential syndicate members, the latest projections indicate that, at a gold price range of US$1,100 to US$1,400/oz, All-in Sustaining Costs would be reduced to US$731-752/oz and all debts could be repaid by the end of the third or second year of production respectively.
The tenor of proposed loan facilities will be four to eight years and debt-service obligations designed around appropriately conservative gold prices below the current spot price. KEFI is considering a range of alternative finance structures comprising senior debt facilities of c. US$70 million with the balance sourced from a combination of streaming of c. US$40 million and Project equity of c. US$20 million (in addition to historical equity invested into KME of c. US$50 million). The finalisation of the equity component will take place in early 2016 after procurement has been completed to ensure adequate cost-overrun facilities.
The 2015 DFS and independent technical reviews thereof have been completed, and contractors have commenced the FEED (front end engineering design) stage of the construction contract and associated in-country preparatory activities. Pending finalisation of procurement and drawdown of project finance, development activities in the meantime are to be funded largely by contractors under their respective arrangements and potentially by initial gold stream drawdowns.
Ethiopia wants to take advantage of all its water resources: Minister
“We want to take advantage of all our water resources,” he said.
According to Motuma, there are no conflicts with Kenya over the Gibe Dam. “We took into consideration the social and economic interests of the downstream countries,” he explained.
With regards to the Renaissance Dam, Motuma said at a press conference held after the ninth round of negotiations between Egypt, Sudan and Ethiopia in Cairo, that the dam will be beneficial to the three countries.
“Negotiations on the technical presentation of the two consulting firms are in accordance with the recommendations of the International Technical Committee and the Principles Agreement signed by the leaders of the three countries in Khartoum,” he said.
“And we have proposals to resolve the differences between the firms because we do not want to harm any party.”
Motuma confirmed, however, that Ethiopia will not stop the building of the dam, although it will commit to the results of the studies conducted by the firms.
The minister said he expects the negotiations, which he called difficult, to result in an agreement. He also said that Ethiopia is willing to form a tripartite entity to manage joint water projects.
He said the Renaissance Dam will generate environment-friendly hydropower, or green energy, so as to adapt to climate change and its ramifications on rainfall and drought.
He also pointed out that there was 50 percent less Nile water this year due to climate change.