East Africa will remain a key target for Chinese investment while Ethiopia will continue to be the key regional market to watch in 2016, according to RiskMap 2016, a research by ControlRisk.

“With economic downturn in their home market, Chinese companies will continue to look overseas for opportunities to sustain growth,” the report said.

East Africa:

Ethiopia – key country to watch: Ethiopia has recorded double-digit growth for the last decade. Opportunities exist in infrastructure, manufacturing, commercial farming, as well as mining, oil and gas.

Uganda: President Yoweri Museveni is expected to win general elections due in February 2016, with opposition splits undermining the threat rivals pose. There is some risk of sustained and violent political protests ahead of the elections.

Central Africa:

Burundi: The political climate is likely to remain extremely volatile in 2016. President Pierre Nkurunziza and his entourage are reluctant to make political concessions and resume dialogue with the opposition, despite international pressure. The country sees frequent political assassinations, grenade attacks, unrest, as well as the gradual intensification of a rebellion in the north. Attempts to unseat Nkurunziza are likely to multiply.

DRC: A scheduled presidential election in 2016 is likely to be delayed as President Joseph Kabila seeks to extend his term in office. A series of policy initiatives including decentralization are thought to have been designed to derail elections, in which Kabila is constitutionally now allowed to stand. Kabila’s attempts to form a unity government overseeing a transition period until 2018 are denounced by the opposition. Growing political uncertainty, rising tensions, and increasing unrest characterize next year

West Africa:

Nigeria: President Muhammadu Buhari’s government and policy directions will continue to take shape after his election victory in March 2015. He and his cabinet, recognizing the urgency of enacting reforms that will help Nigeria cope with lower revenue from oil sales, will priorities work on reshaping the national oil company and taking more control over how it uses its income. His administration, seeking to avoid recession by passing an expansionary budget, is expected to target large-scale spending on building essential infrastructure. Reforms will however be slowed and made more difficult by a troubling fiscal situation.

Burkina Faso: After a contested transition period in 2015, Roch Marc Christian Kaboré’s election as president in a peaceful poll will boost prospects for stability and economic growth. However, various challenges await the new president in 2016: from reforming a political system that has entrenched corruption for nearly three decades, to restoring investor confidence in the mining sector and curbing the growing threat of Islamist militancy along Burkina Faso’s northern borders.

Southern Africa:

Angola’s political system is under strain from worsening socio-economic conditions and rising tension over President Eduardo José dos Santos’s eventual succession. This will undoubtedly influence the tug-of-war within the ruling People’s Movement for the Liberation of Angola (MPLA) over the presidential succession.

But there seems to be limited appetite and capability among the masses to challenge the MPLA’s supremacy.

In Zimbabwe, the perceived weakness of the ruling Zimbabwe African National Union – Patriotic Front (ZANU-PF) – is likely to prompt increasingly vocal opposition to the government. Political battles will have worrying consequences for business.

South Africa: The ANC’s political dominance will be severely tested in South Africa’s municipal elections with a very real possibility of it losing its majority in a number of key urban centers. The party’s center of influence has already been pulled towards its more populist extremes as it attempts to counter the rise in militant movements such as the Economic Freedom Fighters (EFF). A strong municipal election performance by such groups will have concerning implications for how the ANC responds to economic challenges, particularly regarding fiscal and labor policies.

A combination of elections, constitutional pressures and financial difficulties will test governments across the region, including in Chad, Uganda, Congo (Brazzaville), Angola and South Africa. Incumbents will however retain their hold on power. These are some of the key messages of RiskMap 2016, published today by global business risk consultancy Control Risks. RiskMap highlights the most significant underlying trends in global risk and security, and provides a detailed view from the markets that will matter most in 2016.

According to RiskMap 2016, entrenched elites continue to hold sway in many frontier markets in Africa and few countries nurture the pre-conditions for change driven by the masses, either through the ballot or mass mobilization. Amid widespread currency weakness and low commodity prices, the outlook for 2016 looks less gloomy than might be anticipated.

People power witnessed in 2014 and 2015, for example in changes of government in Burkina Faso and Nigeria, will be proved limited in 2016. Control Risks is a global risk consultancy specializing in political, security and integrity risk.

The company enables its clients to understand and manage the risks of operating in complex or hostile environments.  Through a unique combination of services, wide geographical reach and by adopting a close partnership approach with clients, Control Risks helps organizations effectively solve their problems and realize new opportunities across the world.

[www.newbusinessethiopia.com/]

Since 1950s, the prevalence of the global textile industry, in response to global economic movement, had shifted from Japan, to Korea, Taiwan and other Asian countries. But the trend shifted to China and India since the 1990s. As per the World Bank Group Trade and Competitiveness (WBG), textile and apparel companies continue to look for business opportunities under the constant cost pressures.

Recently, East Africa has been getting more attention from the textile and apparel industry as a potential investment destination. Moreover, Global Value Chain (GVC) also presents an opportunity for developing countries.

WBG indicated that the global apparel companies are emphasizing that they are not aiming at making quick bucks by relying on cheap labor – the previous model of only cutting and sewing operations. Rather, they see the advantage of setting up vertically integrated operation (from Fiber to Fabric in one place). This shift in business model signals more GVC participation and domestic value addition for host countries. In this regard, the WBG stated that it is closely analyzing and monitoring this trend to leverage it as a catalyst for African countries to attract investors in this sector.

With this view, Ethiopia-Korea Business Forum was held here in Addis Ababa recently. The main issue tabled for discussion was the growth opportunities in the Ethiopian textile industry. The discussion was focused on the investment environment of the textile industry, crafting growth opportunities for the textile industries in Korea and Ethiopia, changing landscape of the global textile industry and Korea corporate success story in establishing manufacturing base through industrial park.

Though, the first integrated textile factory was established in Ethiopia in 1939, for long its development had not been encouraging. However, the government highlighted the sector as a key industry for growth and development in 1995. In 2003, the Ethiopian Textile and Garment Manufacturers’ Association (ETGMA) was reestablished with international support.

According to ETGMA, Ethiopia is to be the next hub of textile and garment for Africa. This is also the goal of GTP 2. The export value of the textile and garment sector had reached 100 Million USD in 2013. Export value of some 500 million USD is expected from the sector in 2016.

According to Fasil Tadesse, Head of ETGMA, the textile industry is considered as number one priority by the Government’s Industrial Development Strategy. The availability of some 3 million hectares of land and climate suitable for cotton cultivation, out of which only some 5 per cent utilized so far, make the country preferable destination for textile industry, the Head said on the Forum adding, the country also has huge potential for organic cotton cultivation.

According to Fasil, Ethiopia provides several opportunities for those who like to invest in the textile industry. The country provides one of the cheapest environmentally friendly hydroelectric power supplies, competitive labor cost than the average in African, institute to provide inputs for factories and established textile development institute to care the textile.

He also indicated that skilled labor in the sector is increasing rapidly as a result of fast growing education and training institutions in textile technology in different universities, technical and vocational institutions as well as private training institutions.

The other advantage that Ethiopia offers is market. There are available international buyers such as H&M, George, Tchibo, KIK, Alde, PVH, VF and the likes in addition to the quota and duty free market access to the US and EU, COMESA and other 16 nations including China, India, Turkey, Canada and Russia. On the other hand, Ethiopia also offers one of the largest domestic markets in Africa, given its population size and rapidly growing economy.

The country is striving to fulfill the provision of infrastructure and all service for ongoing construction of Industrial Parks in Kombolcha, Makalla, Dire Dawa, Hawassa, Adama, and Addis Ababa Industrial Zones. State Minister of Industry Tadesse Haile, on the occasion said that special industrial zones and industrial parks had been setup in Ethiopia with one-stop shop services with the view to expand the manufacturing sector. The notable example, according to him is that, Shin Textile Solutions Co. of the Republic of Korea had moved into the existing industrial park at Bole Lemi in October, employing over 3,000 people.

In addition, the government also provides incentives particularly investment and operational incentives such as tax holidays (including 100 per cent free importation of new or used machineries, etc) and several other financial incentives.

On the other hand, Korea could provide several benchmarks for Ethiopia in the textile industrial development. According to the Korean Ministry of Trade, Industry and Energy, the number of firms and employees go as high as 300,000 and 837,000 respectively, if the linkage industries such as leather, bags, shoes, dyes, pigments, textile machinery, are included.

Korea is the 8th largest global exporter of textile products. The country’s textile industry is characterized by its import-dependency (import raw or processed materials) and export-led orientation. It has also complete system of manufacturing bases consisting of upstream and downstream industries stretching from the production of yarn, textile, dying, fashion apparel, distribution and the likes. The textile posted a greatest amount of export, while import of apparels recorded the largest amount among import of textile and fashion related products.

Recently, the industry shows signs of a contraction. The number of firms in 2013, for example, was decreased by 31.6% compared to 1995; the number of employees plummeted to a half of what it was in two decades ago. These changes are attributable mainly to industry-wide structural reforms and the re-location of production bases to overseas. In this regard, China has been the most preferred Foreign Direct Investment (FDIs) destination, accounting for 59% of the industry’s total investments in overseas, followed by Vietnam, USA, and Indonesia. The industry’s FDIs are in general on an increasing trend, as local business conditions in Korea are exacerbating, i.e. increase in labor costs, shortfall in the availability of labor, etc. Korean textile and apparel industry has been re-locating overseas, looking mainly for the availability of labor and affordable labor costs.

In this case, Ethiopia has great opportunity for the development of textile industries, it has an opportunity to become a destination for this lucrative FDI. But it was indicated in the forum that the country has to work hard to overcome its challenges such as shortfall in infrastructure, excessive costs incurring in logistics vis-à-vis potential competitors (the possibility in delays at the port of Djibouti, etc.), administrative red-tape and rigidity.

[www.ethpress.gov.et/herald/]

The Ethiopian flower industry is flourishing, with the help of government incentives and low labor costs, experts told Anadolu Agency on Friday. The country is now the second-largest flower exporter in Africa, with over 100 flower growers on 1,700 hectares (17,000,000 square meters or 182,986,477 square feet). “We are now second in Africa only to Kenya, and we expect to overtake them soon,” Berhanu Ludamo, Promotion and Information Service Head of Ethiopian Horticulture Producers Exporters Association told Anadolu Agency.

“Ethiopia earned $250 million from horticulture export in 2014. The amount is expected to increase this year due to the expansion of horticulture farms.” Berhanu said. The area will grow to 3,000 hectares in the coming five years and the revenue is projected to increase to $550 million, according to Berhanu.

Climate is a major competitive advantage. Parts of the country south of Addis Ababa are 2,000 meters (6,561 feet) above sea level, and this makes it an ideal environment for floriculture, according to Shiferaw Mitiku, a researcher and agricultural marketing consultant in Addis Ababa. “The export-oriented agricultural policy, attractive incentives, macro-economic stability and cheap labor constitute the competitive edge for the Ethiopian flower industry,” he said.

According to Ethiopian Investment code 2001, flower growers are offered “a five-year tax holiday, duty free imports, access to bank loans and farm lands as well as a 100 percent exemption from payment of export customs duties.” Berhanu said the competitive advantages are attracting foreign flower growers. “They are coming from Kenya, Tanzania and Uganda and from Ecuador,” Mitiku said. The Netherlands, which is the world center of the flower trade, is also investing in local flower farms.

Gizachew Wondimu, manager of one of the biggest farms, Gallica Flowers, which moved in 2008 from Ecuador to Ethiopia, told Anadolu Agency that “availability of adequate water and human labor encouraged the farm to move to Ethiopia. The   farm is located at 2,600 meters above sea level, which is suitable for growing best quality flowers,” Gizachew said. He also said, “We grow 82 premium quality flower stems per hectare annually on average and export to Italy, France, Germany, Middle East, Korea, Japan, Russia, Cameroon, Nigeria and South Africa. The farm exported 6 million best quality flower stems last year,” he said. Private investment will help the farm grow to one of the largest in Africa.”

 But the “Ethiopian brand” is not yet established in the world flower industry, according to Shiferaw. “Some countries re-export Ethiopian cut flowers and the brand disappears. We have very few experts,” he said. “And incorporation of the rural community is also a serious issue,” he added.

A floriculture entrepreneur, who asked for anonymity, told Anadolu Agency that the industry is led by foreign investors, and foreign demand. “Local demand is insignificant,” he added.

Berhanu said that the Netherlands is specialized in adding value to and re-exporting flowers it imports from different countries including Ethiopia.”

The Netherlands exported the highest dollar value worth of flowers amounting to $4.7 billion during 2014. Brazil is also a competitor, although a newcomer to the industry, with $25.8 million in flower exports in 2014.

Dutch floriculture in Ethiopia is reaching the global markets, however: Afriflora, from Ethiopia won a Dutch Flower Award on Nov. 5.

[aa.com.tr/]

Hawassa Industrial Park, which is being constructed on 350 hectares of land in Southern Regional State of Ethiopia, set to be completed the coming June, according to Fana Broadcasting Corporate (FBC).

The construction of the industrial park has begun the past Ethiopian budget year. Upon completion, it would create job opportunities for 50,000 people, Dr. Arkebe Equbay, Special Advisor to the Prime Minister, told FBC.

Tewodros Gebissa, Mayor of Hawassa town, said CCEC, Chinese company is undertaking the construction of 37 sheds at the park.

He also added that eight international companies have started work in the temporary sheds built on 250,000 hectares of land, including the US-based BVH.

Ethiopia has set aside USD 1.3 billion for industrial parks to be constructed in different parts of the country in the coming five years.

[www.fanabc.com/]

The Chairman of the Al Habtoor Group, Khalaf Ahmad Al Habtoor, met with a delegation from Ethiopia on Thursday Dec 10, 2015 at the Al Habtoor Group head office. The delegation was led by His Excellency Yibeltal Aemero Alemu, Consul General of the Federal Democratic Republic of Ethiopia in Dubai; HE Kedir Getahun, Deputy Consul General; M. J. Benny, Manager Investment and Business Promotion. Also present was Ziad Ida, Director of Community Relations and Safety of Al Habtoor Group and Abdul Salam Marzooqi, General Manager, Khalaf Ahmad Al Habtoor Foundation.

The group informed Al Habtoor about potential investments in Ethiopia, with a particular focus on industry. Al Habtoor informed the delegation that any investments for consideration would be in areas within the Al Habtoor Group’s expertise, namely the hospitality, automotive, car hire and education sectors.

His Excellency Yibeltal Aerm invited the Chairman to meet with the President and Prime Minister of Ethiopia and to see potential investments in sectors of interest within the country. He said that Ethiopia had witnessed a change in recent years and was now garnering attention from foreign investors.

The delegation briefed Al Habtoor on the economic landscape in Ethiopia saying it had experienced rapid growth, and reduced poverty significantly.  The country’s economy is now among the fastest-growing economies in Africa. The International Monetary (IMF) forecasts growth of 8.7 percent this year.

The Al Habtoor Group is a UAE-based conglomerate. While best known for construction, it is globally recognized through its involvement in the hotel, automotive, real estate, education and publishing sectors.

[www.arabtimesonline.com/]

Ethiopia and Jordan have agreed to raise the existing business relationships to the highest level.

Opening the first Ethio-Jordan Business Forum yesterday, Industry State Minister Tadesse Haile said: “Investors from Middle East are said to be a part and parcel of Ethiopia’s economic growth for they have been contributing to the economy by trading, investing and technically collaborating with Ethiopia”. He went on saying that Ethiopia has a very diverse and rich tourism attractions with 11 UNESCO registered heritage sites that range from Historic relics.

At the event, Tadesse called on Jordanian business delegates to engage in the untapped business of Ethiopian tourism. According to Tadesse, Jordanian business need to focus on investing in Ethiopia as the country is now the fastest growing country and the most stable nation in Africa both in terms of security and macro-economic stability.

During the forum, detailed explanation about the overall Growth and Transformation Plan II was given to the Jordanian business delegation. Delegation Head and Chairman of the Zarka Chamber of Industry Thabet Elwir on his part said that Jordan has signed bilateral agreements with various countries including Ethiopia and the forum would also pave way to further strengthen the all rounded economic ties between the two sisterly countries.

Business Development Manager of the United Flavors and Fragrances Co.Ltd. and a member of the delegation Mohammed Saudi noted that the forum was conducted in a professional manner and the support from the Ethiopian government is very inspiring. “Our company is the only factory producing flavors in the Middle East and that’s why we are trying to expand and sell our products in Ethiopia,” Mohammed added.

Some 44 Jordanian business delegates from 33 companies took part in the forum.

[www.ethpress.gov.et/herald/]

Ethiopia is going to host the 10th Biennial US Africa Business Summit to be held from February 1-4, 2016, according to Corporate Council on Africa (CCA).

The US Africa Business Summit will take place at the United Nations Conference Center in Addis Ababa.

African Heads and senior government representatives will be attending the Business Summit in which US and African corporations will be looking each other’s new business opportunities. More than 1,000 key African and US private sector actors will also participate in the Summit.

The first African country to host the US Africa Business Summit was Cape Town in 2007. This is the first time AU and the Ethiopian will co-host the event with an American business association. It is the second time Africa is hosting the CCA Summit.

Starting from 1997, CCA’s US Africa Business Summit has been seen as a significant conference for anyone looking to do business in Africa.

Participants at the event will secure business information on the latest trade and investment opportunities in Africa’s agribusiness, energy, health, infrastructure, security, trade facilitation, ICT and finance.

[addisfortune.net/]

Ethiopian Airlines is the fastest growing and most profitable airline in Africa. In its operations in the past close to seven decades, Ethiopian has become one of the continent’s leading carriers, unrivaled in efficiency and operational success. Ethiopian commands the lion share of the pan-African passenger and cargo network operating the youngest and most modern fleet to more than 91 international destinations in five continents, including 52 destinations in Africa, 24 in the Middle East and Asia and 12 in Europe.

Ethiopian fleet includes ultra-modern and environmentally friendly aircraft such as the Boeing 787, Boeing 777-300ER. In fact, Ethiopian airlines is the first airline in Africa to own and operate these aircraft. It is currently implementing a 15-year strategic plan called Vision 2025 that will see it become the leading aviation group in Africa with seven business centers: Ethiopian Domestic and Regional Airline; Ethiopian International Passenger Airline; Ethiopian Cargo; Ethiopian MRO; Ethiopian Aviation Academy; Ethiopian In-flight Catering Services; and Ethiopian Ground Service.

The airline is a multi-award winning airline registering an average growth of 25 percent in the past seven years. It also planned to expand to more than 146 destinations worldwide with the planned aircraft additions. In line with this growth, overall air traffic to and from Africa is expected to grow by about 6 percent annually over the next 20 years as new airplane technology increases efficiency and opens new international routes from high-altitude hot airports in Africa.

Wishing a very Merry Christmas and the happiest of the 2016 New Year to esteemed guests, Chief Executive Officer Tewolde Gebremariam explained that the airline successfully completed the 3rd year of its Vision 2025 journey by registering fast, profitable and sustainable growth.

As a result, he stated that the Ethiopian is now the largest and most profitable airline in Africa. As the leading aviation group, the Ethiopian operates the continent’s youngest fleet; connects Africa with the widest international network, spanning five continents; hosts the premier aviation academy; commands the largest cargo services; and more.

Delivering a message to the airline guests, Tewolde says that in an effort to support the fastest growth, “We have made huge investments in infrastructure development: construction of the largest cargo terminal in Africa; maintenance hangars; a new catering facility (with a capacity of producing 80,000 meals a day); a four star hotel; a new full-flight simulator building; new ground support equipment and ground support vehicles; parking and maintenance workshops is underway.” To accommodate the rapid increase in passenger traffic and best serve the customers, Ethiopian Airports Enterprise is investing over USD 350 million to expand Addis Ababa Bole International Airport, which is expected to handle 20 million passengers per year upon its completion.

Moreover, exploring new opportunities, Ethiopian wings touched down in eight exciting new destinations this year: Cape Town, Dublin, Gaborone, Goma, Los Angeles, manila, Semera and Tokyo. Its efficient network connectivity – which guarantees the fastest and shortest travel time between 49 cities in Africa and their global trading partner cities – introduced a phone call booking to make cargo tracking easier than before. Hence, Ethiopian celebrated several prestigious awards in 2015, including the APEX Passenger Choice award, the AFRAA “Best Airline in Africa” award, the “Best International airline of the year” by Business Executive Excellence, and many more.

Regarding its last performance, the 2012/13 fiscal year report of the Airline applauds that the capacity in terms of available seat kilometer grew by 15 percent, traffic when measured in revenue passenger kilometer by 14 percent and passenger number by 13 percent.

This exceptional growth represents three times that of the global industry average. It is all the more remarkable that this growth was achieved while also registering record operating profit of 2.8 billion birr and net profit of 2 billion birr. This result is a testimony of the unparalleled commitment and dedication of the entire Ethiopian team and of the soundness of its Vision 2025 strategic road map, was achieved in yet another challenging operating environment, especially here in Africa.

On the demand side, global economic growth, the main driver of travel demand, remained weak with anemic growth in the U.S., recession in Europe, and slowdown in emerging economies. The country is now in the bright spot, with impressive double-digit GDP growth.

More than ever before, the airline is fulfilling its commitment to bring Africa together and closer to the world in the year. This single effort of the airline should continue striving to serve its esteemed customers as well as throw contribution in generating income for national growth.

[www.ethpress.gov.et/herald/]

Several countries have been introducing and making use of single window system for better trade facilitation for many years. They as well have been heard of saying that the system has saved billions of money that would have been spent for not owning such a timely and modern system in the past.

Recognizing the paramount importance of a single window system for Ethiopia’s export-led industry, a special committee was established with a view to making practical assessments on the system taking into accounts the rich experiences of model countries in this regard. The government has also assigned the committee the task to come up with effective and long-lasting single window system for Ethiopia.

According to the committee, the planned single window system for the country has been finalized and is awaiting the final decision as well. When the system is put in place, it would hopefully play a pivotal role in modernizing the existing old and bureaucratic customs process in the country.

As it is well known, traders, export & import agencies as well as investors and others often voice their complaints about the unnecessary waste of time and money for exporting and importing goods, machinery or any items due to the frustrating bureaucratic red tape in the Ethiopian Revenue and Customs Authority (ERCA) as well as other related governmental and private organizations.

For instance, in order to get clearance for importing and exporting any given item, the customer has to knock the doors of several organizations. He/she needs to bring legal trade documents from Commercial Bank of Ethiopia, Ethiopian Shipping and Logistics, Customs port and transit and the like.

Under such circumstances wasting time in bureaucratic customs process, customers are forced to pay extra fees as it takes them several days or months for getting the required services. The planed single window system therefore would satisfy the interests and desires of customers for they get various services that have been given in various organizations at one place without wasting additional time and money.

Moreover, the system will help the nation save billions of birr that are being spent for the lack of such mechanism for trade facilitation and logistics. It will also prevent the mushrooming of petty corruption than ever before as it destroys fertile grounds for any forms of corruption.

Indeed, making single window system functional requires active participation and involvement of all stakeholders and the owner of such system as well. Furthermore, the software of such technology need to be adopted and developed by fellow countrymen after gaining the desired skills and knowledge in those model countries.

In fact, form its inception the nation’s Information Network Security Agency (INSA) is working closely with the established special committee and providing the needed technical and technological support as well. INSA will also play a big role in safeguarding the system from any cyber attacks in the future.

Obviously, the draft proclamations on e-commerce, e-payment, cyber security and digital signature have to be finalized and passed as bills of the nation with a view to launching the system soon.

In sum, the introduction of single window system project office under Ethiopian Revenue and Customs Authority (ERCA) will definitely bring about fundamental changes in the country’s trade facilitation and logistics so long as it is given the desired attention and support from the government and the stakeholders.

Those who knowingly or unknowingly resist or sabotage the making use of such latest technology need to have clear understanding on the advantages of single window system for the nation’s export-led industry. The system will also be a great relief for the customers who wait too long to get the customs services in this country.

[www.ethpress.gov.et/herald/]

One of the biggest economic surprises of 2015 is that the stunning drop in global oil prices did not deliver a bigger boost to global growth. Despite the collapse in prices, from over 115 dollars per barrel in June 2014 to 45 dollars at the end of November 2015, most macroeconomic models suggest that the impact on global growth has been less than expected – perhaps 0.5pc of global gross domestic product (GDP).

The good news is that this welcome but modest effect on growth probably will not die out in 2016. The bad news is that low prices will place even greater strains on the main oil exporting countries.

The recent decline in oil prices is on par with the supply-driven drop in 1985/86, when the Organization of Petroleum Exporting Countries (OPEC) members (read Saudi Arabia), decided to reverse supply cuts to regain market share. It is also comparable to the demand-driven collapse in 2008/09, following the global financial crisis. To the extent that demand factors drive an oil-price drop, one would not expect a major positive impact; the oil price is more of an automatic stabilizer than an exogenous force driving the global economy. Supply shocks, on the other hand, ought to have a significant positive impact

Although parsing the 2014/15 oil-price shock is not as straightforward as in the two previous episodes, the driving forces seem to be roughly evenly split between demand and supply factors. Certainly, a slowing China that is rebalancing toward domestic consumption has put a damper on all global commodity prices, with metal indices also falling sharply in 2015. (Gold prices, for example, at 1,050 dollars per ounce at the end of November, are far off their peak of nearly 1,890 dollars in September 2011, and copper prices have fallen almost as much since 2011.)

New sources of oil supply, however, have been at least as important. Thanks to the shale energy revolution, American oil production has risen from five million barrels per day in 2008 to 9.3 million barrels in 2015, a supply boom that has so far persisted, despite the price collapse. Anticipation of post-sanctions Iranian oil production has also affected markets.

A decline in oil prices is to some extent a zero-sum game, with producers losing and consumers gaining. The usual thinking is that lower prices stimulate global demand, because consumers are likely to spend most of the windfall, whereas producers typically adjust by cutting back savings.

In 2015, though, this behavioral difference has been less pronounced than usual. One reason is that emerging market energy importers have a much larger global economic footprint than they did in the 1980s, and their approach to oil markets is much more interventionist than in the advanced countries.

Countries such as India and China stabilize retail energy markets through government-financed subsidies to keep prices down for consumers. The costs of these subsidies had become quite massive as oil prices peaked, and many countries were already looking hard for ways to cut back. Thus, as oil prices have fallen, emerging-market governments have taken advantage of the opportunity to reduce the fiscal subsidies.

At the same time, many oil exporters are being forced to scale back expenditure plans in the face of sharply falling revenues. Even Saudi Arabia, despite its vast oil and financial reserves, has come under strain, owing to a rapidly rising population and higher military spending associated with conflicts in the Middle East.

The muted effect of oil prices on global growth should not have come as a complete surprise. Academic research has been pointing in this direction for a long time. Oil is now thought to be less of an independent driver of business cycles than was previously believed. Also restraining growth is a sharp decline in energy-related investment.

After years of rapid growth, global investment in oil production and exploration has fallen by 150 billion dollars in 2015. Eventually, this will feed back into prices, but only slowly and gradually: Futures markets have oil prices rising to 60 dollars per barrel only by 2020.

The good news for 2016 is that most macroeconomic models suggest that the impact of lower oil prices on growth tends to stretch out for a couple years. Thus, low prices should continue to support growth, even if emerging market importers continue to use the savings to cut subsidies.

For oil producers, though, the risks are rising. Only a couple – notably governance-challenged Venezuela – are in outright collapse; but many are teetering on the brink of recession. Countries with floating exchange rates, including Colombia, Mexico, and Russia, have managed to adjust so far, despite facing significantly tighter fiscal constraints (though Russia’s situation remains especially vulnerable if low oil prices endure). By contrast, countries with rigid exchange-rate regimes are being tested more severely. Saudi Arabia’s long-standing peg to the dollar, once apparently invulnerable, has come under enormous pressure in recent weeks.

In short, oil prices were not quite as consequential for global growth in 2015 as seemed likely at the beginning of the year. And strong reserve positions and relatively conservative macroeconomic policies have enabled most major producers to weather enormous fiscal stress so far, without falling into crisis. But next year could be different, and not in a good way – especially for producers.

[addisfortune.net/]

More than 100 Omani companies representing various sectors will participate in next year’s Omani Products Exhibition (OPEX 2016), which will be held for the first time in Africa.

The event, scheduled to be held from April 11 to 14, at Millennium Hall, Addis Ababa, in Ethiopia, is being organized by an Omani government committee formed by the Ministry of Commerce and Industry (MOCI), Oman Chamber of Commerce and Industry (OCCI), Public Establishment for Industrial Estates (PEIE) and the Public Authority for Investment Promotion and Export Development (Ithraa).

The participating companies represent a wide range of sectors including natural resources, metal, wood and manufactured products, furniture, foodstuff, medical and pharmaceutical products, fertilizers, plastics, minerals, perfumes, leather goods and logistic services.

The committee said Ethiopia is one of the leading and open markets for Omani products and one of the fast-growing economies in the continent.

The committee emphasized that it looks forward to investment opportunities and joint venture prospects in Ethiopia and believes that it is the right time for Omani companies to seize immense business opportunities.

A wide range of opportunities for direct and joint-venture investments exist in the manufacturing sector in particular.

“The Omani Products Exhibition is the most powerful medium of presenting and introducing high quality Omani products to the Africa. We aspire to get some ideas that contribute to the consolidation of industrial sectors and strengthen partnerships with various regional and international institutions,” the committee said.

“As an organizing committee, we expect that OPEX will play a focal role in stimulating the commercial exchange between Oman and Ethiopia, which may result in developing the business of domestic companies and expand their trade to various regional and international markets.”

The committee also aspires to witness positive outcomes of this exhibition by achieving the desired objectives of entering the African market.

OPEX 2016 aims to set common objectives for both Ethiopian and Omani governments to deepen comprehensive partnership, encourage cooperation in industry, technology and commerce, open new horizons for cooperation and integration between Omani companies and their Ethiopian counterparts and help increase the volume of trade exchange between the two countries.

OPEX is building upon the success of the fourth Omani Products Exhibition held in 2015 in Jeddah, Saudi Arabia, and previous editions in Dubai, Doha and Riyadh.

[http://www.timesofoman.com/]

An Ethiopian Investment Seminar under the theme, ‘Manufacturing investment and Development of Industrial Zone in Ethiopia,’ was held on December 17, 2015, in Tokyo, Japan, according to Ethiopian Herald.

The Seminar was co-organized by the Ethiopian Embassy and Japan Institute for Overseas Investment (JIOI).

Ethiopian Foreign Minister Dr. Tedros Adhanom told seminar participants that Ethiopian government is committed to creating a business environment that ensures the platform for a smooth flow of Foreign Direct Investment and to the growth of industrial parks in major cities. He further said among the advantages Ethiopia offers to investors are macro-economic stability, abundant natural resources and a trainable workforce.

Dr. Tedros added: “I would like to assure you continued support and facilitation by the relevant agencies in Ethiopia assist those interested to invest in our industrial parks.”

Ethiopian Ambassador to Japan Dr.Markos Tekle, Ambassador Extraordinary and Plenipotentiary briefed Japanese investors and companies on Ethiopia’s investment laws and the progress in industrial zones development.

Kenichi Ohno, a professor at Japan’s National Graduate Institute for policy studies, Junko Ishii, Director-General in charge of Industry and Business Development Support, Japan External Trade Organization and Endalkachew Sime, Deputy Secretary General-Operation, Ethiopian Chamber of Commerce and Sectorial Associations offered a speech in the Seminar.

[www.ethpress.gov.et/herald/]

30 French companies participated in the French-Ethiopian Business Forum held this week. The delegation of companies came from various sectors including finance, energy, construction and telecommunication.

Momar Nguer, President of the France-Eastern Africa Business Council stated that the French companies are here because they are confident of the opportunities presented.

“On the other hand, the purpose of this visit is to show our views as investors because it is very important from our perspective to understand the government and the private sector. It is very important for the government to understand where we are coming from and what we are expecting as well as to hear what the government wants,” Nguer stated.

He further appreciated the country’s recent growth and development. “One of the things you have managed to do in Ethiopia is increasing the quality of education. You cannot build the economy if you don’t have qualified people and Ethiopia has been able to achieve that in terms of literacy and technical skills. We are very confident,” Nguer said.

The delegation had a special focus on transportation and held discussions with different stakeholders in the sector. Financial and telecommunications companies were also present, looking into opportunities in sectors currently closed off to foreign investment.

“Yes those sectors are closed now but they are going to open one day, so these companies want to come and see if there is some other service they could provide in the meantime,” Nguer also said.

Present during the closing session of the Forum was French State Minister of Foreign Trade, Matthias Fekl. He stated that the French companies are here at the disposal of the Ethiopian government and potential business partners.

“Some of the very best French companies are here. France is ready to strengthen the economic ties between the two countries,” he stated.

The Minister also inaugurated the Business France Office at the French Embassy in Addis Ababa; an office that will further support economic and trade relations between the two countries.

“Our economic partnership and friendship is not new, let’s not forget that in 1897 France built the first railway in Ethiopia. Today French companies are happy and proud to be present in Ethiopia, across different sectors from the flower business to tourism, food, airport, environment, energy and several others. They are fully integrated within the Ethiopian economy, creating jobs,” he underlined.

Ethiopian Minister of Industry Ahmed Abtew on his part said that there are great opportunities for both countries and expressed that Ethiopia views France as a valuable partner in cooperation.

“Investment and trade activities have already been strengthened especially in the manufacturing and service sectors,” Ahmed underlined.

He further stated that Ethiopia envisions becoming a manufacturing hub in East Africa during the second Growth and Transformation Plan (GTP); the country plans to establish over 10 industrial parks to boost the manufacturing sector. This, Ahmed stated, opens up a huge investment opportunity in manufacturing for French and other foreign investors.

[http://www.capitalethiopia.com/]

The President of Afreximbank, Dr. Benedict Oramah, has announced in Addis Ababa that the Bank will support Ethiopian entrepreneurs seeking to engage in export manufacturing, especially to add value to coffee, cotton, textile, leather and other commodities.

A statement by the Bank on Tuesday said that Oramah told a business forum organized by the Bank that Afreximbank would also work with businesses engaged in importing or creating infrastructure goods, including renewable energy projects.

Oramah, who was represented by Kudakwashe Matereke, Afreximbank’s Regional Manager for East Africa, said that the Bank would also collaborate with government agencies and commercial banks to expand local involvement in the oil and gas, mining and agriculture sectors.

“Our ConTour facility is available to investors in the tourism sector,” he added, adding that Afreximbank was prepared to make its full array of programmes and facilities available in support of the Ethiopian economy.

Also speaking, Getahun Nana, Vice-Governor of the National Bank of Ethiopia, welcomed Afreximbank’s support to the Ethiopian economy, which, he noted, came to more than $100 million in the last few years.

“The business forum represents an opportunity to enhance and build new partnerships,” he said.

Ephrem Mekuria Tilahun, speaking on behalf of Bekalu Zeleke, President of the Commercial Bank of Ethiopia (CBE), commended the long-standing relationship between the CBE and Afreximbank, noting that the two had jointly facilitated import of power and energy equipment worth more than $90 million into Ethiopia.

He urged Afreximbank to also extend similar support to other local financial institutions to enable them finance trade-related activities in Ethiopia.

Participating in the one-day forum were institutions and corporate entities engaged in trade finance and trade-related activities as well as representatives of business associations, chambers of commerce and government agencies.

The event is part of an awareness campaign being organized by Afreximbank in its member countries to enhance knowledge about the Bank, further business linkages and expand trade finance activities.

[www.apanews.net/]

Emerging markets have given the global economy most of its muscle since the recession ended in 2009. But in 2016 rich countries will account for their largest share of global growth this decade. The BRICs are in a sorry state. Brazil’s government has been both incompetent and corrupt. Russia’s has been no better, with a dose of military malevolence thrown in. China will perform reasonably well in 2016—if you believe the government’s numbers. By that reckoning, its GDP will rise by around 6.5%. The reality almost certainly will be lower. China is mired in debt and has mismanaged its currency and stockmarkets, sending shocks through the global economy. India looks perkier: it will grow by more than 7%. But that is worse than its average of 8.5% growth between 2005 and 2010. All said, the BRICs will make up only 16% of worldwide growth in 2016.

Against all this, the rich world will look solid, if unspectacular. America’s economy will expand by around 2.5%, and the American jobs machine will crank out at least 2m new positions for a sixth straight year—the first time that has happened since the 1990s. Europe will no longer be threatened by recession or deflation, and the euro zone’s most obvious time-bomb, Greece, has been defused for now.

The world economy as a whole is forecast to grow by 2.7% in 2016, and it hasn’t managed an increase of more than 3% since 2011. Save for America, 2016 will be another year of repair, recovery, reform and risk for most countries.

[www.economist.com/]

Ethiopia’s earnings from remittances have reached an unprecedented level, announced the Ministry of Foreign Affairs.

In 2015 alone, the country has received 3.7 billion US dollars in remittance which, the ministry said, has beaten the income gained from the export sector in the same year.

Making the announcement, Demeke Atnafu, Director General of the Diaspora Information and Research Directorate at the Ministry said the country has never received remittance amounting to the 2015 level.

Remittance earnings in the fiscal year also exceeded funds that the nation has received from donors in the same year, he added.

While speaking during a High-level Diaspora Policy Dialogue, Demeke said the country plans to maximize the level of foreign remittance over the coming years as potentials in the sector have not been fully exploited.

“Ethiopia’s remittance service is still at a low level compared with other countries,” the official said referring to India’s earnings of USD 70 billion in 2014.

“We have to exert our maximum effort to change this scenario,” he stated.

Mentioning the factors for the increment, Demeke indicated that ‘‘Western Union and Money Gram were the dominant money transfer service providers which have signed agreement with the National Bank. Nowadays the number of money transfer providers is increasing.’’

Mussie Delelegn, Chief of Land Locked Developing Countries’ Section in the United Nations Conference on Trade and Development (UNCTAD) said 40 percent of the remittance service that Ethiopia has received has come from North America.

The Diaspora who has been sending money to their families are helping their families and contributing to the economy of their country of origin as well, Mussie stressed.

Illegal migration is hampering efforts to raise earnings from remittance as most Ethiopians who reside especially in South Africa and Saudi Arabia were not able to send money legally due to lack of residence and work permits.

These groups of people are forced to use illegal money transfer systems, according to representatives of Regional Diaspora offices.

It was indicated that the Ministry of Foreign Affairs Diaspora Directorate is working with the National Bank of Ethiopia to alleviate the problems related with illegal migrants’ remittance service (ENA).

[www.waltainfo.com/]

The government will not charge interest or cut tax exemptions and tax holiday for investments, despite the International Monetary Fund’s (IMF) recommendation to reconsider its generous tax policies to accelerate development.

Arkebe Oqubay (PhD), Special Advisor to the Prime Minister on the Minister portfolio, said that the government would not implement a short term cut on tax incentives in the near future. In its latest report, IMF stated that in terms of tax revenue collection, Ethiopia faces the typical challenges of a developing country.  “These include a low tax-to-GDP ratio, heavy reliance on trade taxes as a source of revenue generation, and generous tax exemptions and expenditures,” the report stated. IMF recognized that stronger efforts in tax administration allowed Ethiopia to catch up with peer countries in the region like Tanzania and Uganda, nevertheless, it still falls behind its own targets, and average performances in Sub Saharan Africa.

Greater efforts are needed through tax design and administrative measures to support inclusive growth and create sufficient fiscal space for scaling up the most needed social spending, according to the IMF. “The main consideration should be given, in this context, to reduction of excessive tax exemptions and tax holidays, as well as to policies promoting private sector development, which would facilitate broadening of the tax base,” the report stated.

Arkebe told Capital that the government will continue to provide attractive policies to expand the investment flow.

“The government has identified that in the manufacturing sector, the main issue is expanding the industry zone. That shall minimize investment costs and other address other concerns such as effects on climate,” he said.

The government will not reduce the tax incentives and duty free schemes, such as for the export sector and free for importing machinery.

“Incentives are considered as additional support for investors,” he explained. “We do not have any new plan to evaluate the tax incentives soon.”

The country government has up to ten years’ tax holiday for foreign direct investment. In addition to tax incentives, the government is establishing industry zones to attract more FDI for selected sectors.

[www.capitalethiopia.com/]

Japan External Trade Organization (JETRO) is said to open office in Ethiopia, according to Ethiopia’s Ministry of Foreign Affairs (MoFA).

Tewolde Mulugeta, MoFA’s spokesperson, told journalists about JETRO’s plan to open office in Ethiopia while conveying a regular bimonthly brief on the Ministry’s accomplishments.

Dr.Tedros Adhanom, Minister of Foreign Affairs, has concluded an agreement with its Japanese counterpart while he was in Tokyo to participate at the International Conference on Universal Health Coverage, the spokesperson stated.

The opening JETRO’s office is expected to help increase investment volume and trade relations between the Japan and Ethiopia.

JETRO was founded in 1958 to strengthen Japan’s efforts in export promotion. It works in areas related to strengthening mutual understanding with trading partners, import promotion, liaison between small businesses in Japan, their overseas counterparts and data dissemination. Import promotion services include publications, promotion of trade fairs, seminars and trade missions.

JETRO has 48 offices across the nations and operates 28 specialized JETRO Centers.

[www.2merkato.com]

Ethiopian Consulate UAE and Ajman Chamber of Commerce and Industry discussed ways of enhancing joint economic cooperation and investment and opening doors for business between the two sides.

The discussion came during a meeting that took place at the headquarters of Ajman Chamber between the Consul-General of Ethiopia, Ybeltal Aemero and the Chairman of the Board of Directors of Ajman Chamber of Commerce, Abduallah Al Muwaiji.

Al Muwaiji welcomed the Ethiopian Consul-General at the beginning of the meeting, stressing the keenness of the wise leadership of the Emirate of Ajman on strengthening economic cooperation with all countries and economic entities. He also emphasized that Ethiopia and African countries in general offered an attractive environment for investments and business dealings.

Mr. Yibeltal stressed the importance of increasing future cooperation with the UAE in general and Ajman in particular, given its integrated infrastructure that would increase the growth of business of Ethiopian investors.

He also extended an invitation to Ajman Chamber and businessmen in the emirate to visit Ethiopia and briefed on its tourism potentials and economic advantages, which he noted would open several areas of interest for UAE investors. The Emirate of Ajman is one of the seven states constituting the United Arab Emirates.

[addisfortune.net/]

Radison Blu will open a second hotel in Ethiopia after lengthy negotiations finally succeeded with Sahle & Family Business Group, signing a management contract with Carlson Reizdor Group. Five international hotels were in the bid for Sahle’s five star hotel sitting on a 2000 meter squares of plot, located in Bole around Peacock park. Reizdor, winner of the bid, will be in charge and take exclusive and full management of the hotel, including marketing and recruitment in line with international standards. According to the agreement signed on December 19 by Andrew Malachon, Vice Head of Business Development, Africa and Indian Ocean in the Reziodor Group, and Kinfe Sahle, owner of Sahle Group. The new building boasting 16 stories and 165 rooms and under construction for the last two years, will be named ‘Radisson Blu Plaza’ and is expected to start operation in 18 months.

The 700 million birr hotel project will create jobs for over 300 people when it goes operational. Sahle & Family Business Group, which is active in the garment sector located at Lebu area in the East-western part of Addis Ababa, fashioned the makeup of the building form the initial stage to fit for a hotel service. Carlson Rezidor Hotel Group is one of the world’s largest hotel groups, with more than 1,370 hotels in operation and under development in over 110 countries, employing over 88,000 staff. The group’s hotel brands include Quorvus Collection, Radisson Hotels, Radisson Blu, Radisson Red, Country Inns & Suites Park Inns, and Park Plaza Hotels & Resorts.

The first Radisson Blu, found in Kazanchis recently gained five star grading by Ministry of Culture and Tourism along with Sheraton, Capital and Elilly International Hotels.

[www.capitalethiopia.com/]