According to the annual “Wealth Report” released by global real estate consultancy Knight Frank on March 5, Ethiopia’s capital is among four cities in the world dubbed as “Cities of the Future”, based on the wealth creation opportunities they will present in the future. The report says, “The cities featured on this spread are not those about to be listed among the world’s top 10 or even top 20 most important cities. Indeed, none of them yet boasts any billionaire residents, according to data from Wealth Insight, but their High-Net-Worth Individual HNWI (millionaire) and UHNWI (Ultra High Net Worth Individuals) populations are rising, and they are locations whose influence we believe is growing strongly at a regional level. Even if they are unlikely to be on the second-home list of most UHNWIs, they should certainly be on their radars in terms of the wealth creation opportunities they will present

Africa’s fastest-growing economy, Ethiopia, benefits from not only the political importance of Addis Ababa but also the 3.8% annual growth rate of the population within the capital. In addition to natural growth, there is vast rural urban migration, which planners predict combined could lead to the size of the city surging by 2040 to over 8.1 million.

Wealth creation has seen a near doubling of the population of HNWIs since 2007 to a little over 1,300, with one of the strongest forecast growth rates for the coming decade – with an expected expansion to 2,600 by 2024. The city is understandably witnessing severe growing pains, with public investment in transport including an overhead rail network, and construction dominating GDP growth. Relocation of existing residents to accommodate new infrastructure has caused severe stresses on some sectors of the city’s population.

The Renaissance dam under construction on the Blue Nile is Africa’s largest hydroelectric scheme and could provide energy security – a vital component for economic development.

With the presence of the African Union headquarters, and the headquarters of the United Nations Economic Commission for Africa, as well as a number of continental and international organizations, the city is commonly regarded as the political capital of Africa, lending a strong diplomatic and political edge to its growing economic strengths.

[Nazret]

[Image Source: www.africapoint.com]

The Ethiopia Sustainable Agribusiness Incubator (ESAI), a project of the United States Agency for International Development (USAID), held a graduation ceremony today for 14 entrepreneurs who successfully introduced an innovative idea to the sesame, dairy and honey sectors, established a company and have started generating revenue.

The graduating entrepreneurs have created a better climate for agribusinesses to prosper and have contributed to adding social value to the regions in which their businesses operate. As the first agribusiness incubator in Ethiopia, the entrepreneurs of ESAI have created employment opportunities for smallholders, increased productivity within the sub-sectors and have linked local products to the global market.

“These graduates are shining examples of the entrepreneurial spirit that is essential for Ethiopia to achieve its goals under the Growth and Transformation Plan,” said U.S. Ambassador to Ethiopia Patricia Haslach. “Projects like the Ethiopia Sustainable Agribusiness Incubator demonstrate the potential of Ethiopian entrepreneurs to transform communities and individual

Ireland’s development agency, Irish Aid, joined ESAI in July 2014, to launch the Dairy Innovation Fund with the goal of stimulating dairy agribusinesses by providing funds to entrepreneurs that are introducing new technology and innovative business models to add value to the dairy industry in Ethiopia. Through this Fund, the ESAI project today awarded grants to 18 recipients with innovative business models and technologies that demonstrate great potential for commercialization such as artificial insemination or in vitro fertilization services, distributing inputs to dairy farmers, producing and distributing animal feed, distributing veterinary care or creating long shelf life milk products such as cheese, butter, UHT and powdered milk.

Seán Sherlock T.D., Ireland’s Minister of State for Development, Trade Promotion and North-South Cooperation, spoke about continued support for Ethiopia’s private sector development. “Irish Aid is very proud to be part of this program in partnership with our friends at USAID and in the Ministry of Agriculture….By supporting firms with capital investment, I believe that aid can both leverage private sector funds for development and can encourage risk taking and innovation. Ireland is a leader in sustainable food and I hope that it is only a matter of time now before these entrepreneurs will be competing with us and challenging us to innovate further.”

Through collaboration with USAID, Irish Aid anticipates that the Dairy Innovation Fund will allow Ethiopian farmers and consumers to benefit from the latest techniques and technologies.

ESAI was established in 2012 under a cooperative agreement between USAID and Precise Consult International and part of the U.S. Government’s Feed the Future Initiative, to transform Ethiopian agriculture sector-by-sector by enhancing the competitiveness of entire value chains.

[www.usaid.gov ]

Many emerging markets, especially in sub-Saharan Africa, have seen solid GDP growth in the past decade driven mainly by natural resources. But with falling COMMODITY PRICES and Chinese demand dwindling, those with overly resource-dependent economies are being caught. Companies seeking to invest in emerging markets should be on the lookout for those countries that have invested in diversifying their economies. That will often mean having Ethiopia on their shortlist.

In 2012, Ethiopia was the 12th-fastest growing economy in the world, according to the World Bank. Hefty state-led investment has kept the economy of Africa’s second most populous nation growing at more than 8 per cent a year for over a decade. More than that, it has become Africa’s fastest-growing non-oil economy. The government’s focus on value-added activities has bolstered its transformation towards a diversified economy and, as a result, it is attracting the attention of ambitious businesses and investors alike. How has it solidified its position and what are the opportunities for businesses?

Most importantly, the country has invested in infrastructure. The government has delivered on its five year Growth and Transformation Plan, which has seen it making large investments (around 15 per cent of GDP) in infrastructure projects. At the heart of the program are railway, road and dam projects to give the landlocked nation cheap power and reliable transport. The programs poster child is the controversial Grand Renaissance Dam on the Blue Nile, which will become Africa’s biggest hydro-power plant and turn Ethiopia into a regional power hub.

At the same time, reforms to business registration and changes to regulatory institutions have simplified rules, improved the quality of business support and considerably reduced the cost of doing business. The time required to clear customs for export and to secure a business license, for example, has been cut to 15 days, from 44 in 2004.

With China slowly running out of inexpensive labor, manufacturers are looking at low-income countries like Ethiopia. Textile manufacturers have already been attracted by the rich local supply of leather and cotton. Multinational retail clothing companies H&M and Primark both source significant amounts of material from Ethiopia. The government has developed specific industrial zones that will see the companies within them benefit from a tax ‘holiday’ of up to 17 years. Chinese shoe maker Hujian Group has already invested heavily in the Chinese-built Eastern Industrial Zone and last year announced plans to invest a further $2.2bn in an industrial zone of its own, located in the Lebu area on the south-western outskirts of Addis Ababa. Turkey is currently the leading country investing in Ethiopia – Turkish companies have invested $1.2bn in the last decade. Other big names that have recently announced investment plans include Unilever, GE and GSK.

With a growing population of 94m, urbanization and rising income levels, Ethiopia is also surfacing as an attractive consumer market. By 2020, Coca-Cola hopes to sell 100m unit cases in Ethiopia, putting it on par with Egypt and South Africa. Meanwhile, Heineken has just inaugurated what it claims is Ethiopia’s biggest brewery to capitalize on figures showing the Ethiopian beer market has doubled over the last five years, with per capita consumption still relatively low compared to other east African countries.

However, the country is not without its challenges and there is some uncertainty ahead. Ethiopians will go to the polls on May 24. The elections will likely see another win for the ruling EPRDF party that has claimed victory in every election since the fall of the Derg regime in 1991. It will be the first election to be held under the current Prime Minister, Hailemariam Desalegnn, after the death in 2012 of Meles Zenawi, who ruled the country for 21 years. Complaints from many human rights activists about growing inequality and demands for freedom of press and political participation are likely to challenge the ruling party.

Investors will be keen to find out whether the government plans to loosen its grip on the economy – for example, many sectors remain closed off to foreign investors and even to domestic companies at times. Access to finance for the private sector remains difficult, even more so because of the government’s large infrastructure plans. For its boom to continue, Ethiopia needs a stronger banking sector. The World Bank’s survey on investing across sectors shows that Ethiopia has above-average restrictions on foreign equity ownership in many sectors, including telecommunications, financial services, media, the retail trade and transport.

Nevertheless, we see Ethiopia as a major future market for our clients.

[BeyondBrics-FinancialTimes]

[Image Source: www.bqdoha.com]

The Ethiopian government is striving to substantially increase exports to COMESA member countries, it was learnt.

At press conference held on Thursday state minister of the Ministry of finance and Economic Development, Ahmed Shide, said that Ethiopia has been exporting leather and leather articles to COMESA countries. Ahmed said the government is working hard to boost exports to COMESA member countries. “We should increase our productivity,” Ahmed said.

Ethiopia’s export to COMESA member countries is 30 million dollars.  Established 20 years ago, COMESA has 19 member states that trade 20 billion dollars’ worth of goods. COMESA trade’s volume with the rest of the world is estimated at 290 billion dollars.

The Ethiopian government will host the 18th annual COMESA summit in Addis Ababa from March 30-31 2015.

The Ministry of Foreign Affairs and Ministry of Finance and Economic Development (MoFED) are finalizing preparation for the 34th COMESA policy organ meetings that will culminate by the 28th COMESA summit of heads of state and government.

The summit is held every year and organized by member state on rotational basis. Ethiopia was selected at the 17th COMESA summit that was held last year in Congo Kinshasa to host the 18th COMESA summit. As a coordinating ministry for COMESA program, MoFED is leading the organization of the event.

Briefing local reporters on Thursday Ahmed said that Ethiopia has ample experience in managing similar forum in view of the fact that the African Union Summit at least once in every year. The country hosted the 7th COMESA heads of state summit in 2002 under the theme COMESA: promoting trade and investment. Ahmed said Ethiopia takes this opportunity again in 2015, as a platform to reiterate its support to the objective of the organization as well as an opportunity to share its best practices from the country’s national transformational agenda.

The chosen theme for the 18th COMESA is inclusive and sustainable industrialization. “It aims not only to bring forth the issue of supply-side constraints on tradable goods on the international and regional markets, but importantly also to ensure employment by creating decent jobs for the region’s population without leaving behind segments of the population-women and youth-and ultimately eradicate poverty. This theme is also very timely and important for COMESA transformation agenda,” Ahmed told journalists.

As a follow up to last year’s summit under the theme consolidating intra COMESA trade through micro small and medium enterprise development the 2015 summit is expected to add insight on effective ways to stimulate growth through sustainable industrialization and re affirms the critical roles of member states in successful implementing a systematic reform and cooperation agenda for inclusive industrialization.

Joseph Kabila, president of the DRC, will hand over the chairmanship to Hailemariam Desalegn, Prime Minister of Ethiopia. Accordingly, Ethiopia will chair all COMESA meetings until the next summit. The summit comprises nine sessions including administrative and budgetary committee meeting, intergovernmental committee meeting, council of ministers, council of foreign affairs meeting, senior officials meeting, council meeting, business forum, first ladies roundtable meeting and the 18th summit of heads of state and government.

According to Ahmed, the summit will discuss last year’s achievements and the progress so far made by COMESA. It will also look into the implementation status of the various relevant COMESA agreements. According to Ahmed, 17 heads of state and more than 1000 delegates are expected to attend the summit.

The trade transaction between COMESA member states is not up to the level of expectation of African leaders. Ahmed told The Reporter that member states should increase productivity by stimulating the private sector and boost productivity. According to the state minister member states would confer on increasing productivity and transformation into industrialization.

[TheReporterEthiopia]

Ayka Addis, Oyap Ethio Industry and Trading, Saygin Dima PLC, BMET Cables and MNS Textile are notable Turkish companies that are engaged in the manufacturing sector here in Ethiopia.

Turkish Foreign Direct Investment (FDI) to Ethiopia is leading the group of emerging economies that have shown interest in investment opportunities here. Although the Chinese lead in terms of number of companies that have invested in the country, the Turks lead in combined capital outlay, according to the Ethiopian Investment Commission (EIC).

The combined capital investment by the Turks is just shy of 20 billion birr, constituting 22.5 percent of the overall outlay. The EIC believes that Turkish companies are number one in the quality of the investment on account of having the highest share of overall capital investments by FDI in Ethiopia. This is music to the ears of the Ethiopian government. And it seems that that it is just a tip of the iceberg. In that regard, the relationship between the two countries was further cemented with the recent visit to Ethiopia of Turkish President Recep Tayyip Erdoğan.

Back in 2009, during a visit to Turkey, the then President of the Oromia Regional State, Abadula Gemeda, is said to have shared a joke with the man behind major constructions in Istanbul: that he was not leaving Turkey until a Memorandum of Understanding was signed between the two sisterly countries. Several government officials, including former President Girma Woldegioris, and the late Prime Minister Meles Zenawi, former Foreign Minister Seyoum Mesfin, former Trade and Industry Minister Girma Birru, former Ethiopian Ambassador to Turkey and current President of Ethiopia Mulatu Teshome (PhD) and other government officials have met and talked with him. Enthusiasm was high among the officials that the then foreign minister, Seyoum Mesfin, even called it “The mother of all investments.” The talisman behind the colossal project, Yusuf Akgün, Chairman of Akgun Construction, said: “They won our hearts.”

Akgün is at the helm of a company that already runs a major investment zone in Turkey. The company deals with and specializes in construction and design materials with many business partners from various well-known brands in the European Union. Its network extends to countries such as Germany, France, Austria, Belgium, Italy and South Korea.

Akgün is also the owner and chairman of Ikitelli Organized Industrial Zone, extending over some 1000 hectares of land and composed of 37 industrial cooperatives and 30,000 workplaces. It is the biggest industrial center in Turkey in terms of manufacturing capacity and number of hosted workplaces.

That is what Akgün is planing to have here in Ethiopia. Akgün Group signed an agreement with the Ethiopian government in 2009 that enables it to develop an international industrial zone in the Oromia Regional State near Legetafo. Akgün initially secured 100 hectares of land from the regional state, which would be eventually extended in the future once the project gets moving. The total cost of the project is estimated at 10 billion dollars and is projected to employ one million people.

The company has started some initial work and is conducting a soil test and  planning to start construction in the near future. Machineries and equipment are on their way to Ethiopia. However, the initial construction site is found in the catchment area of the Legedadi dam which supplies clean drinking water to 50 percent of the over three million Addis Ababa residents. This predicament has stalled the progress of the construction of the Ethio-Turkish Organized Industrial Zone.

Foreign Exchange Earner

True to form, the Turks are adept at construction and at managing industrial zones, which is one of the major revenue generators of the transcontinental country which links Europe and Asia. “Last year, we were the second top taxpayer in Turkey,” Mustafa Topçuoğlu, President of Demirciler Sanayi Sitesi, told The Reporter. In addition, the industries are foreign exchangeearners. “Out of 500 enterprises, 200 export their products to foreign countries,” Topçuoğlu said.

Turkey is one of the economic giants in the region. With a GDP of USD 1.5 trillion (PPP), according to the CIA World Factbook, in 2013, the export earning of the transcontinental country was a whopping USD 167 billion. Major exports include apparel, foodstuffs, textiles, machineries and transport equipment.

Technoparks: R&D

Turkey strongly supports Research and Development (R&D) and innovation-related investments through its comprehensive investment- incentive regime. Aiming to become a high-tech manufacturing and export base in the next 10 years, Turkey will heavily rely on its technology parks which are fast increasing in number and populated by the country’s visionary entrepreneurs and talented workforce. “Technology development and innovation in technoparks will bring an export revenue of USD 10 billion by the year 2023,” Turkey’s Minister of Science, Industry and Technology, Nihat Ergun, said back in 2013. “The target is to double the number of technoparks in Turkey and increase their exports 10-fold. Anything less will not be considered a success,” Ergun noted. Technoparks in Turkey have come a long way in the last decade, from only two in 2013 to dozens of active technoparks today.

“If you are an organized industrial zone, then you have to have a technopark. There is no industrial site apart from this which has been successful on this issue. We established a technopack after reaching an agreement with Yildiz Technical University about a year ago,” Topçuoğlu said. In that regard, the enterprises that work on R&D in the technoparks will be exempted from tax for 10 years, according to Topçuoğlu.

Currently, one research that is being conducted at the Yildiz Technical University technopark is on an Unmanned Ariel Vehicle (UAV) called the Heron. It is a medium-altitude long-endurance unmanned aerial vehicle. Turkey operates a special variant of the Heron, which utilizes Turkish- designed and manufactured electro-optical sub-systems. For example, the Turkish Herons use the ASELFLIR-300T airborne thermal imaging and targeting system. The Turkish Herons also have stronger engines in order to compensate for the added payload created by the heavier ASELFLIR-300T.

Focusing on the Next Generation 

There are more than 5000 engineers and scientists currently working at the Yildiz Technical University technopark and at least 75,000 people are now working in technoparks in different parts of Turkey with their main focus being on R&D.

For instance, Yildiz Technical University technopark gives due attention to the aerospace industry. “We develop solutions for airlines and software in aircraft maintenance. We have a very niche market. Major airlines are our main customers. There is only one technopark, which is focused on this area in Turkey and not more than ten in the world,” an engineer at the technopark said.

The technopark hires new graduates in addition to giving them on-the-job trainings. They also have summer internship programs for university students. “They come to us to work for one or two months. During their stay with us they learn about the industry and if we find a good potential student we will hire them up on their graduation,” the engineer told The Reporter.

This and other schemes are what Akgün and co have in store for Ethiopia. And to realize the project they have aggressively promoted the Ethio-Turkish International Industrial Zone project in Turkey, Germany, the US, the UAE and Japan. The industrial magnet, Akgün, is confident that his company will soon embark on the largest industrial zone development project in Africa which is backed by both the Ethiopian and Turkish governments. “We just need them [government officials] to give us a sovereign guarantee that there would not be further problem,” Akgün said.

[TheReporterEthiopia]

[Image Source: www.worldbulletin.net]

Polish manufacturing, construction and IT companies are looking for business partners in Ethiopia with the view of forging joint ventures.

Up on the invitation of the Ethiopian parliamentary group (Ethio-Polish parliamentary Group) Polish parliamentarians and business people visited Ethiopia this week. The delegation comprising two parliamentarians and six business people led by Killian Munyama (MP), chairman of the Ethio-Poland parliamentary group in the Polish parliament, met Ethiopian parliamentarians, senior government officials and members of the Ethiopian business community. The delegation also held meetings with officials of the African Union.

The Polish business delegation comprising of manufacturing, construction, coffee importer, IT and energy companies on Wednesday met Ethiopian businesses at Hilton Addis Ababa. Some 50 Ethiopian companies, who have shown keen interest to do business with Polish companies, held one-to-one meetings with the six polish companies representing more than sixty polish companies.

The business to business meeting was co-organized by the Polish Embassy in Addis Ababa and Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA). In his welcoming remark secretary general of ECCSA, Gashaw Debebe, said that Ethiopia’s relations with the Republic of Poland are far more solid than ever before. “Though the economic linkages between the two countries has been improved in recent years, mainly due to the encouraging achievements of economic reforms in Ethiopia and the enhanced bilateral relations between them, the trade and investment relations between the two countries is still lagging behind compared to the unexploited opportunities existing in them.

According to Gashaw, the total turnover between the two countries was only 23 million dollars in 2013, signifying the fact that much work is still needed to further enhance their trade and investment ties through the unrelenting efforts of the governments and business communities of the two countries.

Munyama, head of the Polish delegation, told The Reporter that most of the Polish companies are looking for Ethiopian partners. “Their line of interest is to put up joint ventures because we want the local community to be involved.  We want to create jobs.  We want to have a mutual benefit. We are not only after trade. We are looking at cooperation,” Munyama said.

Munyama said the business forum enables the companies to find a common ground to push forward to the relationship.

With the view of boosting trade and investment relations with Africa the Government of Poland in 2013 launched a trade initiative dubbed “Go Africa”. The Go Africa program enabled Poland to boost trade volume with African countries by up to 150 percent.  Polish export to Ethiopia increased by 106 percent in the last two years.

“We do believe that Ethiopia is one of the biggest markets in Africa we can be able to cooperate with,” Munyama said.

Polish companies are entering Ethiopian market. A prominent tractor factory, Ursus, is supplying tractors to the Ethiopian Metals and Engineering Corporation (MetEC). MetEC is assembling the tractors in Adama Tractor Assembling Factory. Ursus is delivering 3000 tractors to MetEC worth 90 million dollars. The company began exporting the first 1500 tractors last year at a cost of 50 million dollars. Ursus tractors assembling line in Adama Tractor Factory will be inaugurated in four weeks’ time.

One of the largest IT companies in Europe, Asseco Poland, has set its foot in Ethiopia. Asseco Poland is closely working with the Information Network Security Agency (INSA).  Munyama said that Poland wants to maximize the trade and investment relationship with Ethiopia.

“We are aware of the fact that some Polish products have entered Ethiopia though other European countries we want to change the trend, we want to establish a direct trade link between the two countries” he said.

Polish Ambassador to Ethiopia, Jacek Jankowski, told The Reporter that there is an increasing interest from Polish companies to do business with their Ethiopian counterparts. Jankowski said that there is a great potential between the two countries. “After my arrival in Ethiopia in November 2012 I have seen that the relation is getting stronger and stronger both politically and economically,” he said.

However, the ambassador said the level of bilateral economic relation between the two countries does not meet his expectation. “I see a great room for improvement and for bringing our countries closer and closer.”

According to Jankowski, polish software companies are cooperating with INSA, polish sugar factories are working Ethiopian Sugar Corporation. The biggest Polish chemical factory, the second biggest chemical company in Europe, will come to Addis Ababa to hold talks with the Ethiopian Chemical Corporation, Ministry of Agriculture and Agricultural Transformation Agency. Executives of the company will discuss the possibility that they can supply fertilizer and chemicals to the Ethiopian market.

“More Polish companies are showing interest to do business with Ethiopia,” Jankowski told The Reporter.  “Some in Poland thought that Ethiopia is not a good place to do business but this is now changing. Many Ethiopian companies have shown interest to establish contact with Polish companies. “It takes two to tango. We have Ethiopian business people and Polish business people who are both interested to do business, he added.

Jankowski also told The Reporter that at the end of this year the president of Poland is scheduled to visit Ethiopia.

Last year the Ambassador received an award from the Polish Ministry of Foreign Affairs called “Friend of Economy” (Amigos Economy) for boosting trade relations between Poland and Ethiopia.

The Polish embassy is closely working with the Ethiopian Chamber of commerce and investment commission in strengthening trade and investment between the two countries.

[TheReporterEthiopia]

Ethiopia’s leading private oil marketer plans to build a $5 billion refinery within ten years to meet the growing demand for refined products in a region experiencing fast economic growth.

A refinery could compete with imports from India, the Gulf and beyond, and also help African countries extract more value from their own oil discoveries.

Eastern Africa is the latest frontier in the global hydrocarbon hunt after gas discoveries off Tanzania and Mozambique and oil finds in Uganda and Kenya.

Tadesse Tilahun, the chief executive of National Oil Ethiopia, said the final decision to build a refinery producing between 200,000 to 300,000 barrels per day was yet to be taken.

“It is a firm plan because oil demand is growing in Ethiopia… about 10 percent each year from the annual consumption of 3 million cubic metres and in the next 10 years we expect that to double,” he told Reuters at an African oil refining conference in Cape Town.

“I would assume in the next 10 years we should have the refinery on the ground,” he said.

National Oil’s shareholders include Saudi billionaire Mohammed Hussein Al Amoudi, whose investment portfolio in construction, gold, hotels and energy has helped amass an estimated fortune of over $10 billion, according to Forbes.

Tadesse did not mention where the funds to build the refinery would come from but has previously said other private and public investors would need to come on board.

Ethiopia has becoming one of Africa’s fastest-growing economies, spurred by hefty state-led investment that has kept the economy of Africa’s second most populous nation growing at more than 8 percent a year for over a decade.

Kenya, Tanzania and Uganda have experienced an average economic growth rate of about 5 percent in recent years.

Tadesse said National Oil, which also runs cement factories in Ethiopia, plans to almost double its coal imports to 500,000 tons a year from South Africa by 2017 to generate power for the cement-making plants.

Coal is used as an energy source in cement production, with about 200 kg of coal need to produce one ton of cement, according to the World Coal Association.

[TheAfricaReport]

According to the 2014 Mini-Demographic and Health Survey, an estimated 40 percent of children under the age of five are short for their age, meaning they have not received adequate nutrition during their early years. An important contributing factor to malnutrition is micronutrient deficiencies. This new fortified flour with minerals and vitamins will therefore have a significant contribution to improved health of the Ethiopian population. In the near future, ASTCO’s macaroni and spaghetti products will contain essential minerals and vitamins.

“This is an extremely significant development that addresses nutrition challenges in Ethiopia, where under nutrition accounts for 45 percent of all child deaths,” said U.S. Deputy Chief of Mission Peter Vrooman. ”We expect the new products processed and packaged by ASTCO and other flour millers and processors to set a trend in micronutrient food fortification.”

The public private partnership, known as the African Alliance for Improved Food Processing (AAIFP), provides customized technical assistance to 20 medium and large-scale wheat processors as well as industry wide training to more than 165 food processors in Ethiopia. The knowledge and experience is remotely transferred from employees of world-class companies—General Mills, Cargill, Royal DSM and Buhler. The project objectives are to increase the quality and competitiveness of Ethiopia’s food processing sector and expand the availability of affordable wheat based nutritious food.

AAIFP in Ethiopia is supported by USAID through the U.S. Government’s $250 million Feed the Future Initiative, whose dual objectives are to improve agriculture productivity and the nutritional status of women and children in Ethiopia. AAIFP is also working with five more processors to fortify wheat flour with vitamins and micronutrients, which will increase the availability of nutritious foods in the country.

[NewBusinessEthiopia]

[Image Source: http://revistadigital.inesem.es/] 

Selale Dairy Cooperative Union (SDCU) has joined the dairy-processing business in Ethiopia with a new brand of milk and yoghurt at its new factory, which was built at a cost of 28 million Br.

The Union brought its pasteurized milk to the market, with yoghurt to follow in the coming two weeks.

The milk processing plant is located in Sululta, 40Km North of Addis Abeba. It took approximately three years to finalize the construction as well as the procurement and installation of machinery for the factory, said Hailu Tadesse, SDCU’s director. The Union exploited its stronger financial capacity to benefit more from the raw milk it collects by opening this plant, which was built after a five- month feasibility study, he said.

The Union used 13 million Br of its own, borrowing the remaining 15 million Br from the Cooperative Bank of Oromia.

The new facility can process 20,000lt of milk daily, while the Union collects 10,000lt to 12,000lt from its members. The Union expects to get the balance from increased supply by its members as well as from new members, explained Hailu.

The Union is now focusing on the Addis Abeba market, with emphasis on pricing as a penetration strategy, Hailu said. It is selling its milk to retailers for seven Birr per half-litre packages, whereas the retail price of other milk in the market ranges from 10 Br to 11 Br for the same half-liter.

SDCU was established in 2001, having nine cooperatives, with a total of 512 members in North Shewa Zone, Oromia Region. Presently, the union is an umbrella for 31 cooperatives, which have 3,000 members. Thirty five percent of the profit is always kept in reserve while the rest is divided among the members as dividend.

Currently, in Ethiopia, the demand for dairy products is met through domestic production and through imports. In 2014, around 2,544,579 Kg of dairy products were imported at a cost of 15,156,394 dollars, which shows a tremendous increase as compared to the previous budget year.

The big mark-up in imports is due to the diminishing amount of supply that fails to meet the existing demand, explained a study by Precise Consult International, a local firm. Data from the Central Statistics Agency indicate a decrease from 3.8 billion liters in 2012/13 to 2.9 billion liters in 2013/14.

The growing population expansion of urbanization and urbanized lifestyles, as well as the income growth in Ethiopia are expected to increase the demand for dairy products, said Amanuel Assefa (PhD), deputy chief of party at Precise Consult International.

Currently, there are 32 registered dairy-processing companies in Ethiopia. In 2011, there were 22 dairy processing companies with nine of them operating in Addis Abeba and the rest in other major regional cities, according to the Food and Agriculture Organization of the United Nations (FAO) survey.

[AddisFortune]

The two-way trade between Ethiopia and South Africa has reached about 145 million USD

Opening the Ethio-South Africa Business Forum aimed at bringing together the business community and other pertinent stakeholders from the two brotherly countries to deliberate on trade and investment advancement and cooperation at Washington Hotel on Monday, State Minister of Trade Dr. Yinager Dessie said that the two-way trade between Ethiopia and South Africa has reached about 145 million USD. Major export items to South Africa include coffee, agricultural crops and cut flowers while in return imports include fertilizers, automotive products, textile, chemicals, pharmaceutical and medical items.

South African investors are eyeing various opportunities to be part of the development of Ethiopia. Foreign Direct Investment from South Africa is projected to reach over 150 million USD, he added.

“Our continent’s success is not limited to this but making Africa achieve an impressive move in attracting FDI and diversifying its trade. African countries are trading with each other more than ever before and people to people contact is increasing tremendously with the expansion of infrastructure across the continent,” he said.

The Ethiopian Chamber of Commerce and Sectoral Associations President Solomon Aferwork said that Ethiopia is making rapid strides to emerge as one of the leading commercial centers in East Africa. “We are aware that a number of bilateral agreements have been signed between Ethiopia and South Africa. One of these is aimed at enhancing the bilateral relations between the two countries in various sectors including education, agriculture, culture, tourism and human resource development.

Ethiopia’s import from South Africa has been increasing significantly, though fluctuating in recent years, the highest import amounting to 134 million USD in 2013, he added.

Director for Export Promotion at the Department of Trade and Industry the Republic of South Africa, Dr. Julius Nyalunga said that the key for the growth of the South African economy is Africa. It is important to work together. “Ethiopia is one of those countries that we have identified as a prime partner”.

[TheEthiopianHerald]

Equity Bank plans to expand to ten countries in the next five years at a cost of Sh200 billion, it announced Tuesday.

The lender said it had already signed loan agreements for Sh36 billion ($400 million)—and Tuesday created additional shares worth Sh20 billion to be used in the acquisition process.

The bank which currently operates in five countries said it will raise the remaining Sh160 billion through a rights issues or a secondary initial public offering.

Equity plans to enter Ethiopia, Burundi and the Democratic Republic of Congo in the next two years before expanding southwards to Mozambique, Malawi, Zambia and Zimbabwe.

The bank will turn to West Africa after five years, eyeing Nigeria, Ghana and Cameroon.

“In some countries it is difficult to start from scratch because they are too big so we will enter by acquiring a medium-tier bank and upscale it. For acquisition we will give shares in Equity Bank instead of cash which is why we are asking you to create new shares,” said the bank’s chief executive James Mwangi.

Mr Mwangi said the bank will make acquisitions in three countries with the rest being new investments.

The shareholders, however, capped the cash to be spent in each at Sh9 billion ($100 million).

Equity currently operates in Kenya, Uganda, Tanzania, Rwanda and South Sudan with Uganda being the only market it did not start from scratch. All the subsidiaries recorded profits last year, the first time in the last five years.

Acquisitions will be funded by long term borrowings from international development companies including the International Finance Corporation and the Africa Investment Bank. Its long-term borrowings stood at Sh25 billion at the end of last year, up from Sh719 million the previous year.

Management said Burundi had been urging it to enter the country, which is the only eastern African state that it has no presence in.

The mineral-rich Kiswahili speaking Democratic Republic of Congo was said to be attractive due to its high population, estimated at 84 million with a low financial inclusion of 13 per cent.

“There is a strong belief that Ethiopia will sign the World Trade Organization agreement which will make it open its market to private companies,” said Mr Mwangi.

The Ethiopian government has locked out private investors from its financial sector through law.

[BusinessDailyAfrica]

International brewers are helping transform Ethiopia’s business landscape as it slowly sells the assets of the former communist state and opens up to foreigners drawn to one of Africa’s fastest growing economies.

Heineken, Diageo and privately-owned Dutch brewer Bavaria, have snapped up state breweries or built new ones in the past four years, introducing new beverages and increasing competition for St George, Ethiopia’s oldest beer brand, that was itself bought by France’s Castel Group in 1998.

The east African nation that once could not feed itself now draws investors keen to profit from the increasing prosperity of its 96 million people.

“We recognise the huge potential in Ethiopia,” Diageo said in a statement e-mailed to Reuters. It bought state-owned Meta Abo brewery for $225 million in 2012 and has doubled brewing capacity and invested in new brands. It launched Zemen Beer in December and non-alcoholic Malta Guiness in August 2013.

Heineken bought state-owned Bedele and Harar Breweries for a combined $163 million in 2011, introducing the Walia beer, which bar staff in Addis Ababa say is catching up St George.

A few years ago, small bars struggled to get hold of crates of St George as they were bought up by hotels or bigger restaurants but Castel has increased brewing capacity, meaning they are now readily available.

Prices have dropped as a result of the extra competition and supply. A St George bottle sells for 15 birr ($0.75) at Mery’s Pub, down from 18 birr in December.

“We have variety now for our customers — and more supply,” said Meron Girma, who runs the pub in a small shack with a corrugated iron roof next to the capital’s increasingly affluent Bole Medhane Alem district.

Per capita income is still below Sub-Saharan Africa’s average at just $470 a year, according to World Bank figures for 2013 but annual economic growth rates are 8 to 9 percent and the political outlook is stable. The Ethiopian People’s Revolutionary Democratic Front (EPRDF), in power for a quarter of century, is expected to sweep a May election.

“Ethiopia has started to attract high quality foreign direct investment,” Abraham Tekeste, state minister for finance and development, told Reuters.

The IMF estimates foreign direct investment will reach $1.8 billion in fiscal year 2014/15 and $4.3 billion in 2018/19.

GOVERNMENT CAUTIOUS

Investors will have to wait for entry into many areas of the economy, which is still dominated by the state. It rapidly opened up the beverage sector, but has moved more cautiously in other industries. Telecom remains in state hands while banks and retail businesses are off limits to foreigners.

The government says it needs the revenues from telecoms to pay for new railways, roads and dams. It says some businesses need protection until they can compete with foreigners.

Critics say the approach supports inefficiencies at state-owned companies, noting how the brewing industry has changed and prices fallen as international firms have come in. They say better run companies would deliver bigger profits, pay more tax and generate jobs.

Investors are watching developments in the drinks industry closely.

“When breweries go in, you know there’s definitely the demand,” said Guy Brennan of Ascent Capital, a private equity fund that this year bought a stake in a healthcare firm.

Some of Ethiopia’s new spenders crowd Abebe Yohannes’s bar even on a workday evening. He says the investment of big brewers has been good for his business.

“We have more sales altogether,” he said in the shack near one of the five-star hotels that have gone up in Addis Ababa.

When Castel bought St. George in 1998, beer consumption per capita was two litres a year but now is seven liters, said Gebreselassie Sifer, regional sales manager of Castel’s BGI Ethiopia unit.

“Every producer in the country will sell what they produce,” he said of the new competitors in the market.

But there are also challenges for investors. One concern is the availability of foreign exchange to repatriate profits.

In principle, there are no restrictions. In practice, requests for dollars can face delays as the central bank holds foreign exchange reserves that barely cover two months of imports – half the level of neighbors such as Kenya.

One source with knowledge of the Diageo deal said the firm had quietly reassured the government it would be investing for several years so had no immediate plans to take profits abroad. “That is how it was presented,” he said.

When asked if repatriating profits was an issue for Diageo, the firm said in its statement it was building “for the long-term future growth” and could deal with any such challenges.

There are other difficulties. While Ethiopia is expanding the road and rail network, the nation’s fleet of trucks is old and transport costs are three or four times those in Europe.

Part of Bavaria’s investment involves operating its own vehicles. “This is really a long-term deal,” said Thijs Kleijwegt, finance director of Bavaria-owned Habesha Breweries. “The potential is huge.”

[Reuters]

Omani investors have been encouraged to set up manufacturing units in Ethiopia, the most populous landlocked country in the world which provides a great gateway to other markets in Africa and beyond.

“There is a huge domestic market here in Ethiopia, so it would be good for Omani investors to have manufacturing units here,” Ato Dawano Kedir, state minister of the Foreign Affairs Ministry of Ethiopia, told the Times of Oman on Wednesday.

He was speaking on the sidelines of the Oman-Ethiopia Trade Meet in Addis Ababa, which was attended by senior officials from both countries as well as representatives of 20 Omani companies and some Ethiopian firms.

Led by Salem bin Nasser Al Ismaily, the chairman of the Public Authority for Investment Promotion and Export Development (Ithraa), the Omani delegation is exploring new avenues for business cooperation with Ethiopia, which has borders with Eritrea, Djibouti, Somalia, Sudan and South Sudan as well as Kenya.

The meeting was attended by Solomon Afework, president of the Ethiopian Chamber of Commerce and Sectoral Associations; Ayman Abdullah Mohd. Al Hasani, vice-chairman for economic and branches affairs at the Oman Chamber of Commerce and Industry (OCCI); Fahmi Al Hinai, honorary consul of Ethiopia in Oman; Nasima Al Balushi, director general of export development at Ithraa; and a number of other officials.

Major incentives 

The Ethiopian state minister said that almost 60 per cent of Ethiopia’s 90 million population is young; and cheap labor, cheap and sufficient electricity, excellent airlines and a wide range of incentives have made the country a preferred destination for foreign investment.  Whatever machinery Omani investors want to bring to Ethiopia will be tax-free and also, depending on the nature of the products that will be produced, there will be a tax holiday of two to nine years to help them become profitable, Kedir noted.

According to him, there is vast potential and abundant investment opportunities in agriculture, agro-processing, mining, tourism, manufacturing, energy and infrastructure development in Ethiopia.

Bilateral trade

Solomon Afework, president of the Ethiopian Chamber of Commerce and Sectoral Associations, said at the meeting that the bilateral trade between the two countries reached $24.5 million in 2013 from only $2.6 million in 2004.

“Ethiopia’s total export to Oman between 2004 and 2013 was $7,253,635 while the total import from Oman in the same period was $113,954,418,” he said.

According to Ithraa, Oman’s imports from Ethiopia in 2014 stood at $2 million, while Oman exported goods worth of $37.2 million to the African country.

The top imported products from Oman were semi-products of iron or non-alloy steel, uncooked pasta, wheat or meslin flour, polypropylene in primary form, fittings for tubes, pipes and hoses and sugar confectionary. Meanwhile, fresh, chilled or frozen goat meat, roses and other flowers, fresh strawberries, frozen edible offal of sheep, goats and horses and vegetables topped the list of imported products from Ethiopia.

Afework also noted that Omani investors have received a licence for three projects between 1992 and 2014 with a capital of 64.7 million birr (Ethiopian currency) and it is expected that there will be 138 permanent and 55 temporary jobs.

“Omani investors have also invested in partnership with Ethiopian, Sudanese, and Romanian investors with a capital of 17 million birr,” Afework said.

The proximity of the two countries has provided a great platform for the expansion of ties, he said, adding that Oman, one of the emerging economies in the Middle East, and Ethiopia, which is seeking to emerge as one of the leading commercial centres in East Africa, have a lot to offer to each other.

Afework said that Ethiopia is a member of the Multilateral Investment Guarantee Agency (MIGA), so there is strong and transparent investment protection and guarantee laws in Ethiopia.

In his speech, Ithraa’s chairman referred to the fact that first Muslim immigrants crossed the red sea to Ethiopia to seek refuge from religious prosecution in their homeland and noted that the current value of trade between the two countries does not reflect the spirit of deep-rooted and cordial relations between the two countries.

Al Ismaily said that Oman is ‘serious’ when it comes to enhancing its trade cooperation with Ethiopia, an emerging market which has registered an annual growth of not less than 10 per cent.

Omani exhibition

He also announced that Oman plans to hold a large exhibition in Ethiopia with the participation of around 150 Omani companies next year.

In addition, the official spoke about great investment opportunities in the Sultanate, noting that Oman is one of the 13 countries in the world registering an annual growth of 10 per cent for 25 consecutive years.

Diving factors 

Oman has progressed a lot in all areas, he said, adding that investment in people, establishment of institutions to ensure the rule of law, appropriate fiscal and financial policies, ease of doing business and a belief in cooperation with other countries are some of the driving factors behind Oman’s development.

Unique location 

In a speech at the meeting, the state minister said that Ethiopia’s location at the crossroads between Africa, the Middle East and Asia and its membership of the Common Market for Eastern and Southern Africa (COMESA) are all factors that offer unparalleled regional market potential and provide a comfortable platform to access the region’s fast developing markets. 

Kedir noted that the Oman-Ethiopia relationship has strengthened since formal bilateral diplomatic relations were established in 1995. Also, Ethiopia has opened an honorary consulate in Oman to strengthen ties with Oman in all spheres.

A delegation of Ethiopian embassy in Yemen visited Oman in March 2014 and a business delegation from Oman also paid a business visit to Ethiopia in December 2014, he said, expressing hope that efforts to enhance trade between the two friendly countries will continue.

[TimesofAman] 

One of the leading fertilizer manufacturers in the world, Israel Chemicals Ltd (ICL), is going to take over Allana Potash of Canada that owns a potash mine in Ethiopia.

Last year ICL bought 16 of the shares on Allana Potash. On Thursday Allana Potash announced that it reached an agreement with ICL to sell the remaining 84 percent of Allana’s share. The agreement was signed by the two parties in Toronto, Canada at the headquarters of Allana. Allana Potash is a publicly traded company registered in the Toronto Stock Exchange.

Co-founder and manager of Allana Potash Afar, Nejib Ababiya, told The Reporter that the deal was approved by the board of directors of Allana Potash. However, Nejib said the agreement is subject to shareholders’ approval.

According to Nejib, ICL will pay 0.50 Canadian dollars for each share of Allana’s outstanding shares. ICL will acquire additional 300 million shares valued at 150 million Canadian dollars. ICL will pay Allana around 150 million Canadian dollars in cash to Allana. In 2013 ICL paid 0.60 Canadian dollars for each share. Yesterday Allana informed the Ministry of Mines of the new deal.

Allana owns the first potash mine in Africa, in the Afar Regional State, in Dallol depression. The license area is 300 sq. km in total size. More than 200 sq. km of the area is underlain with potash material. After drilling fifty percent of the potash area, Allana discovered that there is 3.2 billion tons of potash deposit in the ground.

President and CEO of Allana, Farhad Abasov, commented “Allana’s Board and management believe that the Arrangement provides a very attractive opportunity for the Company’s shareholders to realize full liquidity at a substantial premium to the market price of Allana’s Common Shares. Allana has developed a very attractive project, but considering the generally challenging financial environment for junior mining companies we would expect the short and long-term financing needs of Allana to include potentially significant dilution to Allana’s current shareholders.”

According to the feasibility study conducted by Allana in 2012, the mine was valued at 1.2 billion dollars with a mine life of 25 years.

The declining price of the potash mineral in the global market and less interest to financing potash mines compelled the management of Allana to sell the company. The price of potash in the global market has been nose diving since 2013.

“We believe that this transaction provides the best liquidity opportunity for shareholders and firmly validates the efforts of the last six years of development by the Allana team. Allana thanks all shareholders and stakeholders for their support and encouragement over the years. We also congratulate the people and government of Ethiopia on this major milestone in the path to the full realization of the project for the benefit of the Ethiopian people,” Abasov said.

The price of potash, which was USD 570 per ton two years ago, plumbed by 50 percent to 280 dollars. The reason behind the price fall is the dispute between the potash cartel, Russia and Belarus which produce 40 percent of the world’s potash. After the dispute Russia and Belarus are dumping potash in the global market.

“Belarus is pumping more potash into the global market for cheap price. The demand for potash in the Chinese market is weak. Excess supply is coming to the market,” Nejib told The Reporter. “So finding financing for new potash mine is very difficult. The time is not right for a new venture,” Nejib said.

Following the price fall of potash in the global market the share price of potash companies soared in stock markets and Allana’s fate is no different. Allana’s share which was 2.8 Canadian dollars per share slashed to 0.34 cents in the last two years. Shareholders of Allana including Nejib lost a huge sum of money due to the fall of the share price.

However, Nejib says he is not depressed. “What is important to me is that the resource is going to be developed. I love my country and ICL is going to develop the potash mine and create thousands of jobs for my country men,” he told The Reporter in his office in Addis Ababa yesterday.

Allana Potash had a plan to invest USD 750 million dollars on the potash mine development. So far the company invested 130 million dollars on the exploration project. Allana had 200 employees during the exploration period but reduced its staff to 120. Nejib hopes ICL will keep most of the existing staff.

According to him ICL will invest more than one billion dollars and create 3000 jobs. The company plans to generate more than 300 million dollars annually from the potash export. “ICL is very committed to develop the potash mine. They have the knowhow and technical capability. They also have a deep pocket. They do not have to go anywhere to secure funding for the mine development. They can finance the project from their own coffer,” Nejib said.

The Ethiopian Ministry of Mines granted large scale mining license to Allana Potash that enables the company to develop the potash mine in October 2013. Production was planned to be launched this year.

Nejib is the first person to register an Ethiopian asset in international stock market. He is also the person that established the first potash mine in Africa. “I have worked for ten years to bring this project to fruition. I and my colleagues have been prospecting for the mineral in the hottest place on this planet,” Nejib told The Reporter. “When we commenced work on this project six years ago the site was a barren desert. It was a very difficult area to work in and Ethiopia was not considered as an investment destination. Our management board did a tremendous work in promoting Ethiopia and exploration work for the last six years,” Nejib said. “The project site has transformed and I am leaving a legacy.”

ICL operates potash mines in Israel and the UK. The economic life of ICL’s potash mine in the UK is expiring and the management will mobilize its experts who have been working there to Ethiopia. “They will start work immediately. They are excellent partners. I am happy that I am leaving the project in good hands,” Nejib said.

ICL is the 6th largest potash fertilizer, in the world and the 2nd in West Europe. ICL is a publicly traded company in Israel with a capital of 12 billion dollars. The company is recently registered in the New York Stock Exchange. The company was established by Israel’s richest person Idan Ofer. In an exclusive interview with The Reporter, Ofer expressed his interest to invest in electric power generation in Ethiopia. According to Forbes, the 59 year old Idan Ofer’s net worth currently stands at 4.8 billion dollars.

[TheReporterEthiopia]

As he tended to his goats one afternoon in the Ethiopian highlands some 12 centuries ago, a herder named Kaldi noticed that his bleating charges seemed energized after chewing mysterious red berries.

Intrigued by the strange reaction, Kaldi took the berries to a local monastery, where the monks promptly threw them in the fire disapproving of their apparently magical attributes.

As the berries were roasted by the heat, a heavenly aroma spread, and they were used to make the first coffee.

Or so the legend of coffee goes. What is more certain is that Ethiopia, widely regarded as the cradle of coffee, is a nation devoted to the stimulating beverage. The country is Africa’s biggest producer and ranks fifth globally. Last year it exported 190,000 tons of coffee beans, earning around $700 million, and in 2016 Ethiopia’s capital Addis Ababa will host the 4th World Coffee Conference, a high-level gathering of global experts.

Coffee connoisseurs

Far from being just coffee exporters, Ethiopians are also major coffee lovers. Cafes densely line the streets of the capital Addis Ababa, and in 2013/14 3.6 million bags were consumed in the country, representing 71.6% of the total domestic consumption of Africa and 8% of all exporting countries.

TO.MO.CA, with six branches in Ethiopia’s capital, is one of the most recognizable cafe brands. It has been owned by three generations of the same family for over 60 years, and now the company is opening its first international outpost in Tokyo, Japan, this May.

“Ethiopians are coffee drinkers with a history of drinking and enjoying coffee for over 1,000 years,” says Wondwossen Meshesha, the 28-year-old grandson of TO.MO.CA’s founder and the company’s current chief operations officer.

“Here, it’s not just about getting a coffee on your way to work,” he continues. “Ethiopians socialize and meet their business partners in coffee shops.”

Meshesha says that only 20% of the coffee in the country is commercially farmed, with the rest coming from small holder farmers, who harvest coffee mainly in forest. “The specialty of Ethiopian coffee comes from the emphasis of consistency in production of quality coffee rather than volume of coffee production,” the young businessman adds.

More than caffeine

In Ethiopia, consuming coffee has traditionally been a ceremonial affair with a deep, spiritual meaning, conducted at home. The beans are roasted in an open pan so that their rich aroma draws family, neighbors and other guests to gather.

After they are ground with a mortar and pestle, the coffee is brewed in a jug and poured into small cups from a height, with an up-and-down motion. Cups are filled to the brim, representing a wish for “fullness of life” for the guest, and there are three servings, the last of which is called baraka, or blessing.

“[The] traditional coffee ceremony is very sacred to the Ethiopian culture. It’s not just about the drinking of coffee but it’s a spiritual ceremony. Both Christians and Muslim practice it, and its purpose is spirituality, and family and social gathering,” says Meshesha.

He feels certain that, in spite of the increasingly fast pace of life, the coffee ceremony won’t die out because of the special status it enjoys in Ethiopian culture. However Meshesha adds that his company, and other coffee shops which have sprouted across Ethiopia’s cities in recent years, try to present traditional coffee drinking in a modern way.

Away from abundant local consumption, the government is trying to promote Ethiopian coffee as a premium product abroad, and increase exports from 190,837 metric tons in 2013/14, to 200,000 which would generate $1 billion in revenue.

“We have 5,000 varieties of coffee in Ethiopia,” says Meshesha. “It has huge potential.”

[CNN]

Dubai Chamber Representative Office in Addis Ababa organized outbound trade mission is attended by over 31 Ethiopian government officials and business delegates

As part of its efforts to attract foreign investments to Dubai and to promote Dubai as a global business center, the Dubai Chamber of Commerce and Industry organized a strong Ethiopian Government and business leaders’ delegation through its Representative Office in Addis Ababa in cooperation with the Addis Ababa Chamber of Commerce and Sectorial Association at the Chamber head office recently.

Seeking stronger bilateral ties with the emirate, the delegation included Shisema Gebresilassie, Head of Addis Ababa City Government Trade and Industry Development Bureau, Getachew Regasa, Secretary General, Addis Ababa Chamber of Commerce and Sectorial Associations, and 31 business representatives from the Africa country.

The meeting was attended by Atiq Juma Nasib, Senior Vice President, Commercial Services Sector, Dubai Chamber, H.E. Dr. Abdulkadir Risku Ambassador Extraordinary and Plenipotentiary, Embassy of Federal Democratic Republic of Ethiopia in UAE, Amb. Tekleab K. Aregawi, Head of Dubai Chamber Representative Office in Addis Ababa, and over 40 representatives of Dubai’s private sector.

In his welcome address, Nasib said, “Over the years there have been numerous visits and exchanges by high level Dubai Chamber and Addis Ababa Chamber officials which have strengthened the long serving ties between our two business destinations and this latest visit will help us highlight Dubai’s position as a safe and stable hub besides strengthening African and Emirati ties.

“On its part, Dubai Chamber is actively seeking ways to develop mutually beneficial business relations with key global partners. The markets of Eastern and Southern Africa are important to us. They have strong potential across a number of industry sectors, particularly trade and tourism.

“This is why we opened our second international office in Addis Ababa in 2013, to bring our business communities closer together and to increase two-way business and investment between our two destinations,” said Nasib adding that for Dubai Chamber members, Eastern and Southern Africa represents some of the highest trade volumes out of the continent.

“Dubai is a gateway for African entrepreneurs to international markets, including those across the Middle East, Europe and Asia,” he said.

The Senior Vice-President of Commercial Services Sector further stressed that there is also good potential to expand trade due to Dubai’s rising demands for quality food produce and Africa’s need for machinery, building materials and consumer products.

He added, ‘‘Trade is a pillar of Dubai’s economy and an important indicator of our international partners. Presently, Dubai Chamber has 371 Ethiopian companies among its members while non-oil trade between Dubai and Ethiopia in 2014 valued AED 1.75 billion making Ethiopia our 78th largest trade partner with a 6% growth on the 2013 value of AED 1.66 billion.”

Nasib also informed about the Chamber’s organising of two Africa Global Business Forum conferences dedicated to Africa-Dubai cooperation. “We are certain that Dubai and Africa are key partners for future economic growth, and this is why Dubai Chamber is building stronger partnerships across the continent today. Later this year, we will organise the Africa Global Business Forum once again, for the third consecutive year,” he said.

Thanking Dubai Chamber for its efforts to strengthen business ties between UAE and Ethiopia, H.E. Dr. Abdulkadir Risku, Ambassador Extraordinary and Plenipotentiary, Embassy of Federal Democratic Republic of Ethiopia in UAE, said that the bilateral relations between the two countries flourished after the opening of Dubai Chamber’s representative office in Addis Ababa as he expressed his country’s openness to attract UAE investments to the most promising sectors of the its economy.

The UAE can benefit from Ethiopia’s agricultural and organic products, and halal food investments while his country can take advantage of the UAE’s expertise in developing different economic sectors in light of the enormous investment opportunities, growing economic dynamism, peace and stability enjoyed by his fast-growing country.

In his keynote address, Shisema Gebresilassie, Head of Addis Ababa City Government Trade and Industry Development Bureau, stated that Ethiopia has historical ties with the Arab and Islamic world and the diplomatic relation of Ethiopia with the UAE is one of the strongest in the region.

“Ethiopia is becoming one of the most stable and preferred investment destinations in the world thanks to the generous investment incentives introduced by the government and the five-year growth and transformation plan transforming the agriculture dominated economy into industry. The active participation of local and foreign private sector, especially from Turkey, India, China and the Middle East confirms the country’s march towards economic growth,” he said.

Highlighting the purpose of the visit to strengthen trade relations and to keep the strong momentum of FDI flow into the manufacturing sector of Ethiopia, Gebresilassie called upon UAE companies to make the most of this meeting to discuss joint ventures as he also encouraged the local attendees to invest in his country’s hotel and tourism sector as well as large-scale farming and in the supply of construction and finishing equipment.

Pointing at Ethiopia’s exports to the UAE which included meat, dried beans, vegetables and flowers, and imports from the UAE including petroleum oils and machinery, he said there is still a lot to be done from both sides to exploit the untapped potential.

In his presentation on trade and investment opportunity in Ethiopia, Getachew Regasa, Secretary General, Addis Ababa Chamber of Commerce and Sectorial Associations, informed that the real GDP growth of Ethiopia averaged 10.9% during 2004-2013.

Regasa highlighted the areas of investment opportunities including manufacturing of textiles and garments, leather, chemical, pharmaceutical, engineering, and metal fabricated products, processing of fruits and vegetables, oil seeds, manufacturing of sugar, animal feed, and malt.

He also stressed on agricultural opportunities in sugarcane plantation, horticulture, floriculture, rubber tree plantation, fibre crop, cotton, jutes, animal husbandry and market opportunities with a domestic market of close to 90 plus million people and availability of efficient and reliable passenger and cargo services and a highly industrious labour force.

A Dubai Chamber presentation provided the visitors with an overview of the emirate’s achievements and its ambitious strategies and projects with an economic outlook for 2015 as well as the achievements, lucrative initiatives and added-value services offered by Dubai Chamber to global businesses and investors to set up shop in the emirate.

[AMEInfo]

A generation ago, this African nation was a magnet for Western charity. Today, some of America’s richest deal makers are delivering something new: Investment.

A number of high-profile investors have recently shown up here. KKR & Co., the New York-based private-equity firm, last summer bought control of a rose farm, Afriflora, for about $200 million, its first investment in Africa. Blackstone Group plans to build a $1.35 billion pipeline to bring gasoline to the capital, Addis Ababa. Hedge-fund manager Paul Tudor Jones is backing a $2 billion geothermal power project.

Why Private Equity Is Moving Into Ethiopia

The investors are following in the footsteps of Irish punk rock singer turned activist Bob Geldof, whose Live Aid concerts 30 years ago this summer raised about $145 million for the victims of a devastating Ethiopian famine. Mr. Geldof now chairs 8 Miles LLP, a London-based private-equity firm that invests in Ethiopia. 8 Miles raised a $200 million fund in 2012; Mr. Geldof put in a few hundred thousand dollars.

“They don’t have to die in vast numbers before we pay attention,” Mr. Geldof said in an interview. “The potential rewards in Africa are far greater than anywhere else.”

8 Miles, named after the shortest distance between Europe and Africa, made its first investments in Ethiopia in 2013, including state-owned Awash Winery. 8 Miles plans to double production at the company, add nonalcoholic drinks such as grape juice and increase exports, said partner Doug Agble. The firm also backed Ethiopian entrepreneur Eleni Gabre-Madhin in 2013 to build commodity exchanges across Africa.

From Aid to Trade

Rock star Bob Geldof and U.S. investors KKR, Blackstone Group and Paul Tudor Jones are helping to drive private-equity investment into Ethiopia as Africa makes a historic shift from aid to trade.

The private-equity firms are part of a historic shift: Global foreign direct investment has overtaken Western aid on the world’s poorest continent. Private-equity fundraising for sub-Saharan Africa hit $4 billion last year—more than triple what it was in 2013. 8 Miles plans to start raising a larger second fund next year, Mr. Agble said.

In Ethiopia, Western aid in 2013 was $3.83 billion, still far higher than the value of inbound investment at $953 million. But investors say more investment is sure to follow.

Colin Coleman, Goldman Sachs Group Inc.’s top Africa banker, visited Ethiopia for the first time in January. At an investment conference, he was clutching a booklet of profiles of people to meet. Consumer-goods companies, sovereign-wealth funds and private-equity groups are showing growing interest in Ethiopia, Mr. Coleman said in an interview. Ethiopia is “relatively undeveloped and therefore with significant upside,” he said.

‘They don’t have to die in vast numbers before we pay attention.’

Investors in Ethiopia must strike a delicate balance between profits and pitfalls. Many of the country’s 94 million people still live in extreme poverty

Investors say the potential risks are offset by rapid economic growth. Brian Herlihy, chief executive of Blackstone’s African infrastructure unit, BlackRhino, said that the 550-kilometer (340 miles) pipeline he is planning in Ethiopia will make money by helping to supply the country’s energy needs, rather than sucking resources out of the continent.

For a Dollar a Day

Some of America’s biggest private equity investors such as KKR and Blackstone Group are planning to plow billions of dollars into projects in Ethiopia. How will this affect ordinary Ethiopians who earn on average $470 a year?

David Petraeus, the former general who resigned as Central Intelligence Agency chief in 2012 and who now advises on geopolitical risks at KKR, said that Ethiopia has good land and water, improving roads and very good air links, as well as stable politics.

KKR director Kayode Akinola said “a key dimension of the investment” in the rose farm is a social program that includes permanent contracts for 9,000 workers, pensions, paid maternity leave, a hospital and a school for about 5,000 children.

Afriflora was founded by Dutch farmers 10 years ago and grew 730 million flowers in 2013 for export to Europe, where there is strong demand for low-cost roses in large supermarkets. KKR plans to add almost 5,000 workers and 60% more land by 2019.

Flower packer Basha Kadir, 20 years old, said she works late into the night, often for six days a week, and hopes to earn $600 a year at the farm. The average annual income in Ethiopia is just $470, according to the World Bank.

Ms. Kadir’s mother looks after the rose worker’s daughter. Her husband is a fisherman on the lake that provides water to irrigate the flowers. Other local women work carrying heavy loads of wood on their backs or laboring on other farms. Another option is leaving to work as a maid in the Persian Gulf.

“This is a better opportunity than any other job I could do locally,” Ms. Kadir said.

Still, some human-rights activists are critical.

“How do you justify shipping out fancy roses when people are hungry?” said Anuradha Mittal, executive director of the Oakland Institute, a California-based nonprofit that has investigated Ethiopian land rights. “How do you justify using Ethiopia’s land and water resources to satisfy our rose needs? What’s so sweet about it?”

A recent report by the International Finance Corp., a World Bank unit that is considering a €90 million loan to the farm, listed criticisms including too much overtime, a lack of formal process for handling workers’ complaints and inadequate places to eat or areas for working mothers to breast-feed. The IFC noted that pregnancy testing before employment will be discontinued and verification that new hires are aged 18 or older has begun.

KKR said the flower industry plays a “major part” in poverty reduction by providing jobs and that there is potential to grow both more flowers and food in the region. The private-equity firm said Afriflora is addressing the points raised by the IFC.

Mr. Geldof said investors can help build a stable Ethiopian economy and prevent the return of famine. “I never want to see again—ever—what I trawled through 30 years ago,” he said. “Developing the economy—not at the cost of exploiting people, not at the cost of hurting them—developing and producing what’s there and their skills seems to me to be what’s required now.”

[WallStreetJournal]

Preferential Trade Area (PTA) Bank for Eastern and Southern African states has donated 75,000 USD for three East African COMESA member countries operating in leather and leather products industry (LLPI) to advance industrialization.

The agreement was signed between PTA Bank President, Admassu Tadesse and COMESA/LLPI Executive Director Professor Mwinyikione Mwinyihija here today.

During the signing ceremony, Professor Mwinyihija said this is a valuable opportunity for COMESA/LLPI associating with PTA Bank in its endeavor to support corporate social responsibility (CSR) scheme.

This contribution is geared towards supporting three well-organized incubators situated in Ethiopia, Sudan and Uganda.

Ethio-International Footwear Cluster Cooperative Society, Sudanese Science and Technology University, and Ugandan Leather Association are the institutions selected for the purpose of building capacity and facilitating production of high quality leather and leather goods, he elaborated.

PTA Bank President Admassu Tadesse remarked that “PTA Bank is very pleased to support LLPI in its important regional work of strengthening the leather sector, one that has huge potential for industrial value addition.”

The COMESA region has an abundant supply of livestock and more can and should be done to unlock the attendant opportunities as has been done in the other regions and countries, he underlined.

Accordingly, PTA will continue to play its part to support resource-based best industrialization in the region in a disciplined and well considered manner.

PTA Bank aims to support developmental and sustainable initiatives and recognizes that the leather sector has been highlighted as priority agro-based commodity in the COMESA region.

COMESA/LLPI was approved by the Preferential Trade Area (PTA) for Eastern and Southern African states in 1988 to fulfill its industrial objective of supporting leather industries of COMESA region.

[EthiopianNewsAgency]

Alle, Ethiopia’s government-owned wholesaler, said it’s targeting as much as 30 percent of the country’s household-goods market by 2018 in an effort to stem rising consumer prices in Africa’s fastest-growing economy.

After considering inviting foreign companies such as Wal-Mart Stores Inc. to shake up an uncompetitive industry, the government in 2013 established the Ethiopian Trading Enterprise, known as Alle, to sell mostly imported items directly to licensed retailers.

It now operates three stores in the capital, Addis Ababa, and one in Shashemene town, with more than 3,000 retailers registered as customers and sales of almost 1 million Ethiopian birr ($49,000) a day, General Manager Nuredin Mohammed said in a March 23 interview.

“We want to be one of the best wholesalers in the country so the others can follow the example of us,” he said. Alle is seeking to attain annual sales of as much as 7 billion birr a year by July 2021, Nuredin said.

Consumer inflation was 8 percent in February in Africa’s most populous country after Nigeria, compared with a 5-year peak of 41 percent in August 2011. The economy grew quicker than that of any other African nation, at an average of 10.9 percent, over the past decade, boosted by spending on infrastructure, International Monetary Fund data show. The IMF said in October that authorities had controlled inflation by tightening money supply.

Higher Prices

Alle was set up to compete with eight dominant importers, including Get-As International and Al-Sam Group, Getachew Teklemariam, an Addis Ababa-based business consultant, said by phone on Wednesday.

A 2013 study by AT Kearney Inc. found that prices were as much as 50 percent higher than they should be because of actions by a “small group” of importers and brokers who controlled wholesaling at Merkato, the country’s main market in Addis Ababa, according to Dario Minutella, a manager for the Chicago, Illinois-based research consultancy.

Asnakech Eshete, a government worker shopping at the capital’s Shola market, said the salary increase she got last year hasn’t made life any easier. “Every time you come to the market the prices are going higher and higher,” she said in a Feb. 27 interview. Ethiopia’s lowest-paid civil servants saw their monthly wages raised 46 percent to 615 Ethiopian birr from August, according to the Addis Ababa-based Fortune newspaper.

Mixed Economy

Alle sells over 480 goods including pasta, soap and edible oil, mostly to the owners of small kiosks, Nuredin said. Using AT Kearney’s expertise on sourcing, logistics and inventory management, Alle is targeting a 30 percent reduction in import costs and a 5 to 15 percent price cut for consumers.

Ethiopia’s current government introduced a mixed economy following the overthrow of a military socialist regime in 1991.

Although foreign investment is welcomed in manufacturing and agriculture, industries such as telecommunications, banking and transport are dominated by state enterprises, while retail is mostly reserved for Ethiopians.

International companies that have expressed an interest in Ethiopia over the last three years such as Wal-Mart and Carrefour SA have been told by officials that Ethiopia isn’t ready to open up, Nuredin said. The government wants Alle’s example to help strengthen domestic companies before allowing foreign wholesalers to compete, he said.

A Carrefour spokeswoman declined to comment by phone on Mar. 31. There were no responses to e-mails on March 29 to Wal-Mart’s press office and on March 31 to the company’s senior director of communications and media relations for international corporate affairs, Jo Newbould.

Still Trading

Near Alle’s outlet in Merkato, women selling handfuls of tomatoes cram under a raised stretch of Chinese-built railway, as young men carry building materials.

Elias Adem, a 53-year-old grocer, says he’s happy with prices at Alle, where 20 liters (5.3 gallons) of cooking oil sells for 404 birr against a standard price of about 450 birr, which can rise by more than 50 percent when it’s in short supply. Yet Alle’s arrival hasn’t put price-gouging traders out of business, he said on Feb. 19.

Standing next to boxes of Golden Soya cooking oil, Nuredin, the manager, says Alle has been unable to prevent all illegal trading by its customers.

After buying from the store “they are coming right outside and selling on the street” to traders, he said.

Price Caps

Government inspectors will clamp down on illicit traders and also check that Alle’s customers aren’t selling above a set maximum retail price, Nuredin said. Alle is preparing to open two more wholesalers and wants to have 36 stores nationwide, including nine in Addis Ababa.

The company has borrowed 596 million birr from the state-owned Commercial Bank of Ethiopia to fund its expansion, with another 600 million birr loan under negotiation with the lender, Nuredin said.

The initiative faces a “tough time” to expand operations enough to affect prices, ensure retailers stick to agreed profit margins and convince potential customers that they won’t face larger tax bills because of increased traceability, said Abdulmenan Mohamed Hamza, a London-based independent Ethiopian economist.

Brokers thrive in Ethiopia during frequent commodity shortages caused by patchy supply chains and erratic demand, he said in an e-mailed response to questions in February. “Alle has to make sure there’s a reliable supply at competitive prices,” he said.

The government introduced price caps on basic commodities in January 2011 to try and lower costs, with then Prime Minister Meles Zenawi citing a lack of competition as the cause. They were removed about six months later.

Alle will be sold to private investors at an unspecified time if it succeeds in tackling inflation, while if it’s ineffective, the government will open wholesaling to foreign companies, Nuredin said.

[Bloomberg]

Ethiopia expects to start producing and exporting natural gas from under-developed reserves in its southeast by 2017, Prime Minister Hailemariam Desalegn said on Friday.

Several firms have already acquired licenses to explore more than 40 blocks throughout Ethiopia in the past four years, the vast majority of them in the southeastern Somali Region.

“Studies show the existence of natural gas reserves in several places, and they will all be gradually developed,” Hailemariam told a press conference in the Ethiopian capital.

Officials from the mines ministry say the Calub and Hilala fields in the Ogaden Basin have deposits of 4.7 trillion cubic feet of gas and 13.6 million barrels of associated liquids, both discovered in the 1970s but not yet exploited.

“For the time being, a Chinese firm is carrying out activities on the Calub and Hilala reserves,” Hailemariam said. “In the next two years, we plan to start exporting and using the natural gas from these areas.”

Hailemariam did not give further details, but China’s GCL-Poly Petroleum Investments signed a production sharing deal with Ethiopia’s mines ministry in late 2013 to develop both fields.

The prime minister was speaking a month after the Horn of Africa country signed an agreement with neighbouring Djibouti to construct a pipeline stretching from the same region to the Red Sea state’s port.

“GCL-Poly Petroleum Investments will fund the pipeline that will transport the Ethiopia gas to Djibouti for a total cost of more than $4 billion, of which $3 billion will be invested in the Djibouti section,” said Mohamed Nour, a communications adviser at Djibouti’s energy ministry.

A number of firms have filed requests to explore oil and gas in the country’s Abay, Mekelle, Metemma, Gambela and the Southern Rift sedimentary basins in addition to the Ogaden, including Tullow Oil and SouthWest Energy.

Ethiopia’s Somali Region used to be plagued by security concerns, with the Ogaden National Liberation Front (ONLF) waging a low-key struggle for independence.

Analysts say the rebels have been severely weakened over the years by government forces, but warn they can still hamper development with hit-and-run attacks.

[ReutersAfrica]