The government is preparing a legal and policy framework to expand the implementation of public-private partnerships (PPP). The minister of the recently restructured Ministry of Finance and Economic Cooperation (MoFEC), Abdulaziz Mohammed’s six-month report presented to parliament indicates that PPP will be a core strategy for development in the second Growth and Transformation Plan (GTP II).

“The contribution of the private sector is an option to expand the finance base and meet capital demands of government led developmental projects,” the Minister explained.

He said that expanding of the role of the private sector is a priority in GTP II that the ministry is working to affirm. Government strategies to work with the private sector have been drafted by MoFEC and will be tabled for amendment in the coming months, according to the Minister.

Focus on public-private partnerships has increased in recent years, with the government’s move to draft a strategy to develop industrial zones and parks with private sector partners. To push forward the initiative, the government has established the Industry Zones Deployment Corporation, under Ministry of Industry as an enterprise.

One of the first such projects will be a 1,000 hectare industry zone in Komblcha, Amhara region built in collaboration with an Israeli company.

[www.capitalethiopia.com/]

Ministry of Public Enterprises is set to privatize 4 public enterprises operating in Ethiopia: Bahir Dar Textile S.C., Kombolcha Textile S.C., National Tobacco Enterprise S.C. and Ethiopian Crown Cork and Can Manufacturing Industry S.C.

According to The Reporter, currently the government owns 78 percent of National Tobacco while the rest is owned by a Yemeni company, Sheba Investment Plc. The Ministry has now floated 40 percent of its stake, while intending to control the remaining 38 percent.

With regards to the two textile factories, the government is privatizing them via negotiated acquisition. Even if it the two factories has been floated for privatization on many occasions, they have failed to attract buyers in the past.

The same is true with Ethiopian Crown Cork and Can. Even if it was floated for privatization a year ago, it only managed to have the interest of Fairfax Africa Fund. Currently, the government owns 75 percent of the manufacturing enterprise.

[www.thereporterethiopia.com/]

The Ethiopian Agriculture Investment and Land Administration Agency (EAILAA) has given up offering land for large scale agricultural investments for an unspecified time.

The agency made the decision until problems related to overlapping in the granting of land, provision of loans and investors’ capabilities and profiles are addressed, Daniel Zenebe, Public Relations Director at the EAILAA, told FBC yesterday.

According to Daniel, 43 plots of land with various sizes were given overlapping last year. What makes the situation worse is that two investors who were granted a plot of land borrowed money each to develop the land.

The other problem is lack of adequate information on the capability and profile of investors who were offered land and loan.

BHO, an Indian company, which was offered 89 million birr loan, dispread after developing less than 3,000 of the total 27,000 hectares of land it was granted in Gambella regional state.

Moreover, 98, 800 hectares of land was retaken from the Indian Karuturi, because the company managed to develop only 1,200 hectares in the past after receiving 100, 000 hectares of land in the same regional state.

According to Daniel, these are indicators for the unsuccessfulness of the sector.

Hence, the agency quitted providing land for large scale agricultural investment until these problems are solved, he said.

In related development, the Development Bank of Ethiopia also gave up offering loan for large scale agricultural investments until problems in the sector are addressed, Isaias Bahire, the bank’s President said.

During the past five years, the bank offered 6 billion birr loan for investors engaged in the sector, according to Isaias.

[www.fanabc.com/]

The Development Bank of Ethiopia (DBE) has stopped providing loans to finance commercial agricultural projects for an undetermined period. The Bank issued a circular at the beginning of the month, signed by its President, Esayas Berhe, ordering staff not to process any loans for agricultural projects. This includes both new and expansion projects that may come to its table.

One possible reason for this move is what happened in some projects in Gambella, causing DBE to face a problem, a bank official who wished not to be named, told Fortune. Cases where the Bank was tricked by developers into giving two loans for the same agriculture project are now under investigation.

Agricultural loans account for 17.3pc of the 75.5 billion Br total loans given in Ethiopia, the highest share after industry. The agriculture sector also accounts for 8.5pc of all outstanding loans, surpassed by industry, domestic trade, imports, and housing and construction. In the fiscal year that ended June 2015, agricultural loans amounted to 13 billion Br of loans and 18.6 billion Br had been accumulated in outstanding credit.

“It seems like commercial farming is not operating as the government expected,” said Bisrat Teshome, a developmental expert who also works as a consultant.

He shared his experience working with a textile company as a consultant. Sourcing problems are always a headache for those in that industry.  It cannot continue buying cotton from smallholder farmers in a fragmented way; commercial farming has to support it, he explained. And the demand for the type and scale of cotton needed cannot be easily met without agricultural financing.

Given the risks involved in this dilemma, this change in arrangements for financing could also make a difference in the way industry sourcing takes place.

“The bank is transforming itself,” Esayas said. “The way agricultural investment has been handled will also change.”

DBE is currently undergoing some reforms. Late last year, it had come up with a new ratio of borrowers’ contributions to financing their own projects. Local investors are required to cover 25pc while the remaining 75pc would be covered by loan financing. Foreign-owned companies, however, are now required to equally share the financing – on a 50-50 basis. Before that, all borrowers were required to provide 30pc to get 70pc financing from DBE.

The second major change occurred just two weeks ago. By a directive from the central bank, DBE, like other banks, was required to change its interest rate, which had been 8.5pc until that point. Currently, the interest rate is 12pc on all loans, with the rate being lowered for priority sector investments but only until the project could prove that it was being successful.

On receipt of the central bank’s directive, Esayas cited increased bad loans as the reason for the change.

“Due to interest drawbacks,” he had said at the time, “it is believed that the Bank has to protect itself from continuous damage of failed projects.”

In the central bank’s self-audited report for the last fiscal year, the DBE had issued loans worth 6.84 billion Br – less than two per cent of loans issued in the country, and just four per cent of the number of loans issued by the Commercial Bank of Ethiopia (CBE). It had collected four billion Birr, and accumulated outstanding credit worth 27.6 billion Br.

These figures indicate that the agricultural sector is suffering from its own woes.

Because of gaps in the regional states’ administration and lack of coordination with the federal government, local officials are implicated in allocating the same plot of land to multiple developers, the official also indicated.

Land under the auspices of the Federal government, particularly the Agricultural Land Investment Administration Agency, reserved for agriculture in the region – was partitioned and allocated by local governments.

Recently close to 100 investors were found to have title deeds for land reserved for a special economic zone. Thirty of those with an area of 48,443ha of land found in Gambella, Dima Wereda, which had given them deeds to the land, were recently ordered by the same wereda to leave the land they had already started working on.

This may give the Bank time to reflect upon itself and come up with something that will solve its shortcomings, the official added.

The new directive does not end all types of agricultural financing.

Projects to which the Bank has already given its commitment, will not be treated under this circular, while developers with total investments of up to 37.5 million Br can use the Bank’s lease financing scheme, Esayas explained. The scheme is designed in a way that DBE will cover the cost of machinery from purchase to commissioning and the rest, such as working capital, will be financed by the developer. It will work on 20pc to 80pc ratio where the former is covered by the developers.

Machinery will be leased to them and when they finish paying all that is owed to the Bank, they will own that machinery.

“We are almost done with the preparation to launch the lease financing,” Esayas told Fortune. “There are requests that we have already received from borrowers and we will start it soon,” he continued.

For the last five to six months the Bank has been developing policies and manuals on how lease financing should operate.

“As far as the project financing for farms goes, we believe we will finish and resume it within one month,” Esayas disclosed to Fortune.

[addisfortune.net/]

Every year, the Global Entrepreneurship Congress (GEC) brings together thousands of entrepreneurs, investors, researchers, policy makers and other startup champions from more than 160 countries to identify new ways of helping founders start and scale new ventures. At the weeklong event, delegates make connections, gain insights, learn about new research, and leave ready to boost their ecosystems with the best practices gathered from their peers around the world.

This year’s event was hosted in Medellin, Colombia. The weeklong meeting showcased the country’s outstanding hospitality, offered a platform for showcasing the best in ecosystem building programs, and offered valuable networking opportunities. But maybe most important, was the strong representation from Africa. The continent is increasingly recognized as a hotbed of entrepreneurial activity, and is one of the key reasons the GEC event that will be hosted next year in Johannesburg, South Africa.

In the ongoing efforts to engage an international network of stakeholders, and in preparing for next year’s event, the African Business Angels Network (ABAN) and her partners traveled to Medellin under the title ‘Debunking Africa’s Startup Investing Myths’. The session organized by the Lions Africa, a public private partnership that includes organizations like ABAN, DEMO Africa, Microsoft and VC4Africa, aimed to create a greater public awareness and engagement for the role of business angels in helping new firms start and scale across the continent.

Here are some highlights from the Lions Africa panel session titled: Investing in African entrepreneurs: perceptions, myths and recommendations to improve deal flow:

• Africa is NOT one market. 55 countries and 2000+ languages means there is a vast plurality of ideas, cultures, environments, challenges and opportunities;
• Good quality data about early stage investments is hard to come by or does not exist; from what we do know, approximately US$200m was invested in early stage tech-related ventures in Africa in 2015;
• In comparison to the US and EU this number is still very small, but the differentiator in favor of Africa is the enormous untapped potential;
• A lack of organized angel investor groups leaves a significant gap in the funding cycle compared to more developed markets;
• Top sectors for 2015 mentioned: Solar, FinTech, Entertainment, eHealth, Telecoms;
• There are some really impressive stories to be told including Chura, a Kenyan venture connecting mobile networks on one SIM or; Tagmarshal, a company built in South Africa with funding from Germany and revenue in the USA, amongst many others;
• At the same time a growing number of outstanding ecosystem building platforms that include the likes of DEMO Africa, Impact Amplifier, VC4Africa or our very own ABAN.

The interest to know more about the African startup ecosystem is considerable. Hosting the GEC next year in Johannesburg, South Africa is a significant milestone for the industry and a unique opportunity to bring interested parties to the continent. Working with our partners and friends we are committed to building up a lasting impression that will result in more resources being invested into our brightest entrepreneurs.

[africa.co/]

Ethiopia’s agricultural sector is in a period of historic transformation, as it shifts from being subsistence based to market oriented, and is employing modern techniques to make dramatic differences in its yields, practices and results.

Khalid Bomba, CEO of the Agricultural Transformation Agency (ATA), said Ethiopia’s agriculture sector is indeed in a stage of transition and change.

ATA was formed at the beginning of GTP I to focus on more about transforming the agricultural sector- changing the dynamics of how the sector works so that it is not just producing more, but rather “How are we producing?” and “Are we producing sustainably?”, he said.

“Our primary role is to support the Ministry of Agriculture and other partners in effectively executing the specific issues within the Agricultural Transformation Agenda that we have all agreed are important for transformation,” he said.

We have been working during GTP I on 16 program areas with 84 deliverables. Each one of these 84 deliverables unlocks a particular issue, he said.

The first one is in the teff value chain. Teff is native to the country and it is one of the most important commodities for Ethiopia. It is grown by over 6.5 million farmers and it is the staple food of the country as well.

The yield of teff, when the GTP I began, was 1.2 tons per hectare. The ATA was asked to identify a technology that could increase the yield of farmers. Although many people were really worried that we were going to introduce biotechnology and GM approaches, what we found was that a very simple technology, which changed the way farmers grow teff, can increase their yield by about 70%-80%. This technology was essentially planting the teff seed in rows and reducing the amount of seed that farmers were using by 90%; so from 30-50 kilos of seeds per hectare down to 3-5 kilos instead.

In our first year of operations, only two farmers were willing to work with us. But last year we reached a milestone of 6.5 million farmers trained. Of those, nearly 2 million farmers are actually using the technology.

During the GTP I, what we have seen is over a 40% increase in the national yield of teff, from 1.2 tons per hectare to over 1.6 tons per hectare. Many individual farmers using the technology are actually achieving yields of 2.5 and 3 tons per hectare. This has been one of our most successful interventions, because it has directly affected the yield of over 2 million farmers and improved their incomes and their livelihoods.

The second example is in the fertilizer industry. Ethiopia had been using the same two types of fertilizer for 30 years. We did an analysis and came up with a new project called EthioSIS, which stands for Ethiopian Soil Information System.

This project has allowed us to map the soil fertility of the entire country’s agricultural lands using remote sensing and satellite technology, as well as collecting field samples from across the country.

In 2016, we will finish mapping the entire country. We have already finished mapping 65%-70% of the country and provided new fertilizer recommendations. So farmers are no longer just using the old fertilizers of DAP and urea, but they are now using NPS, and other fertilizers that include magnesium, calcium and sulphur.

The last one that I would mention is a project called Direct Seed Marketing. Ethiopia in the past has used its cooperative system to distribute seed and fertilizer to farmers. These cooperatives are essentially given directions from the government, through a very centralized process, for how much seed and how much fertilizer to distribute.

We made a recommendation to the government that by introducing a private sector element to seed distribution we could get better efficiency, better distribution of seeds, and ultimately lower prices for farmers. What started with only a handful of woredas, last year grew to over 400 private seed distributors in over 100 districts of the country working on seed distribution, something that the country has never had before.

Commenting on the small-scale irrigation (SSI) projects that the Ministry of Agriculture is implementing, he said this is the direction that we ultimately want to go across the whole country, to become less reliant on rain.

Irrigation is certainly one of the major ways of insuring that. What we have been working on together with the Ministry of Agriculture is the groundwater mapping; understanding how much water is under the soil, how deep it is, and how fast it recharges so that we don’t deplete it very quickly.

In addition to that, what we’re trying to do is to create a supply chain of irrigation pumps so that we are not just distributing pumps without anybody providing maintenance or spare parts. For example, we are training auto mechanics to also be able to maintain irrigation pumps, and training well drillers in local communities to go and drill these wells, instead of having international companies come and do this.

As regard to collaboration between the different stakeholders, Khalid said the engagement with investors has improved over time, but certainly, more can be done. The Ethiopian Investment Agency is now an Investment Commission that reports to the Prime Minister. That has been a very good and positive change, ensuring that there is one entity that is coordinating and supporting investors coming into the country.

That being said, the federal and regional level issues still have some additional challenges to be resolved. The one-stop shop that existed at the Ethiopian Investment Commission has to be strengthened. Some of the regulations and policies that the government is creating to support private sector investors also have to be streamlined. These are the things that the government is working on at the moment. The collaboration between different government partners has improved as well, but certainly more can be done.

When asked to highlight on the investment opportunities suitable for investors in the UK, he said, since I work in the agriculture sector, of course I am going to focus on agriculture as the opportunities that are probably best placed for UK investors.

I think one of the most important is on the sourcing side of the equation. For UK supermarkets to source fresh fruits and vegetables from Ethiopia, I think it’s a prime opportunity. But beyond fresh fruits and vegetables, there are also commodities such as the gluten-free teff that the UK market is becoming more informed about and which we can supply. So there is that kind of relationship that I think we can certainly strengthen.

But there are also opportunities for UK businesses to come to Ethiopia, similar to what Diageo & Pittards have done, and invest. Because we do have the raw materials to be able to process, add value, and export, not only to the UK but also to many regional and international markets.

[www.theworldfolio.com]

Ethiopia Africa’s top investment destination for Turkey. The Turkish ambassador to Ethiopia had disclosed that Ethiopia remains the biggest recipient of Turkish direct investment in Africa.

The US$1.5 billion Gibe III project dam is expected to generate 1870 MW of electricity. The newly-appointed Turkish envoy, Fatih Ulusoy, said the horn of Africa’s nation had so far attracted $2.5 billion of the total $6 billon Turkish direct foreign investments in Africa.

Ethiopia and Turkey also have strong commercial relationship with their trade volume seeing substantial growth every year.

According to the diplomat, Ethiopia is currently Turkey’s fourth largest trade partner among African countries. Last year, the two countries reached an agreement to boost their annual trade volume to half a billion USD after Ethiopia’s Prime Minister Haile Mariam Desalegn and Turkey’s President Recep Tayyip Erdogan discussed bilateral as well as multilateral issues in Addis Ababa.

Both countries also signed a cooperation protocol in the areas of science and technology. “Flag carries of the two countries, Ethiopian Airlines and Turkish Airways, fly daily to Istanbul and Addis Ababa thus facilitating their trade relations,” Ulusoy told reporters.

The ambassador further said that his government is committed to further consolidate the current economic partnership with Ethiopia and successive dialogues are underway with government of Ethiopia to attract more Turkish investment.

Currently, Turkish investors in Ethiopia are engaged in textile, as well as in construction sectors. The two countries are working together in the energy sector with Turkish companies engaged in installing electric transmission lines and supplying transformers.

Turkey is also supporting Ethiopia’s infrastructural development projects including railway.

Last year, Turkey officially announced that it would provide $300 million loan for the Awash-Woldiya railway project. Many others are also on a process to invest in power generation, food processing and the manufacturing sector.

According to Ethiopian government huge human resources, investor friendly atmosphere, broad market alternatives as well as conducive policy and stable atmosphere are factors that are attracting foreign investors.

Sudan Tribune has also learnt that Turkish companies have created more than 33,000 job opportunities in Ethiopia. There are also activities on going to establish an all Turkish industrial zone in Ethiopia.

The ambassador commended Ethiopia for the role it is playing to ensure peace and security in Somalia and in the volatile east African region at large.

He pledged his country would work together with Ethiopia to ensure peace and stability in the Horn of Africa and to fight the emerging threat of terrorism in the region.

Ulusoy said both Ethiopia and Turkey host a large number of refugees and expressed his government’s commitment to cooperate with Ethiopia to improve the condition of the refugees.

Turkish business groups that have invested in Ethiopia have also the desire to support the current drought victims in the country, according to the ambassador.

In terms of diplomatic ties, the ambassador said “Ethiopia and Turkey have enjoyed a long-lasting relation in that Addis Ababa hosted the oldest Turkish embassy in Sub-Saharan Africa”.

Ethiopia is Africa’s fastest growing economic with an average annual growth of 10.5%.

The country has embarked massive infrastructure projects including power plants that would make a significant stride in terms of its ambitious plan to become a middle income country in 2025.

[geeskaafrika.com/]

Only three commercial radio frequencies in Addis Ababa, of the six that were up for grabs by the Ethiopian Broadcast Authority (EBA), have been awarded to the businesses that offered for them.

One Love PLC, Arki Promotions and ED Stelar Event Management are now owners of the eighth, ninth and tenth commercial radio frequencies in Ethiopia, advancing the share of private radio stations in Ethiopia from their current share of 15pc to 20pc.

Thirteen frequencies were on offer, with six earmarked for the capital, Addis Ababa. The remaining were floated to operate outside of the city. The Authority found a total of seven offers from six companies.

On Thursday March 24, 2016, only those that raced towards the six Addis Ababa-based offers were opened.

Lack of information and fear of not profiting is holding companies from participating, Zeray Asegdom, general director of EBA opined.

“I guess that they do not see the demand,” he said, “or maybe they fear the cost.”

This is the second time the invitation to tender was issued. Despite the fact that 39 had shown interest by buying the documents the first time around, only four had proposed. From those, only one – a company whose identity the Authority did not wish to disclose – had passed all requirements before the bid was cancelled.

“Potential investors haven’t shown enough interest,” Workineh Tafa, public relations head of EBA had said at the time, adding that the requirement that was hard met was the financial one.

Notwithstanding, two of the contenders, One Love PLC and Habesha Weekly were both confident that they were the ones who passed as both had offered proposals exceeding 20 million Br.

Having participated in the Ethiopian Broadcasting Corporation’s (EBC) last three special holiday programmes for Christmas and the New Year, Adonic Worku, co-owner of Habesha Weekly, estimated that there would be returns on the investment in three years’ time. They intended to bring to the public information and entertainment that was geared towards business and was offered in a contextualized, Habesha way.

One Love is also no stranger to the field. Entertainers Seifu Fantahun and Serawit Fikre, household names in Ethiopia’s entertainment scene, partnered with Zerihun Assefa a new faceless name in the public sphere, to create the brand. Zerihun, a source close to the circle claims, is brother of Mahider Assefa, the renowned young actress who has recently joined the confidantes’ circle of Sheikh Mohammed Al Amoudi.

This might have implications on both for the success and inclination of a future radio station backed by the proprietors. Each of them is a force to be reckoned with in their respective niches within the entertainment industry. But also, they may be influenced by the richest man in the country with whom they are affiliated.

Profits in this sector mainly derive from advertisement, a sphere in which Seifu and Serawit already have a significant presence.

Twenty per cent of every show, or 12 minutes of every hour on air is usually reserved for commercials.

“Making profits won’t be a problem, Serawit said. “As airtime on the radio is much cheaper than on TV, the market is inclusive of a broader client base.”

But those pioneers in the businesses see less than a rosy ride.

“It’s good for the audience they get more options,” said Zerihun Teshome, CEO of Zami FM 90.7. “But being profitable is not easy, networking plays a bigger influence than professional excellence.”

Turning a profit takes time, and ads are controlled by a few, he explained.

The work is challenging, admits Sheger Radio owner Teferi Alemu, but he claims the market is profitable nonetheless.

This does not explain the paucity of interest in the November and the January calls. The Authority therefore re-issued the bid and adjusted requirements to encourage more participation. The financial requirement for a cashier payment order (CPO) of eight million Birr, or six million Birr if the company already has a studio, was decreased by two million Birr.

Also, the January deadline was postponed to increase participation after the Authority claimed they had received various requests, especially from regional competitors. That bid was cancelled in February, for the same reasons. But only one of the four proposals received passed evaluation.

One Love PLC, Arki Promotions, ED Stelar Event Management, Medco Bio Medical College, Habesha Weekly, and Elcam submitted proposals. Only the first three passed the first round of evaluations.

Yet, in the span of a few months, history repeated itself as the three that failed did so because they had not submitted CPOs.

“We had hoped to award them all,” said Mulugeta Sisay, director of mass media at EBA, “but only these passed the requirements.”

Medco Bio Medical College, had submitted two proposals, one for Addis, in Amharic, and the other for Meqelle in Tigrigna. Both were to have informative, medical themes, said Mekonnen Hagos (PhD) proprietor and president.

The nine million Birr proposed for Addis failed because a CPO was not attached with the documents. The bid for the regional states has yet to be opened, though their fate is so far unknown, they admitted that they entered similar proposals and no CPO.

They have submitted complaints but are not satisfied with the replies, said Jemal Suleiman, company consultant. He claimed they were not aware that CPOs had to be submitted.

“We are looking into why so few have participated,” said the Director General. He also said that they have not yet decided what to do with the remaining frequencies that have not yet been awarded.

Irrespective of the outcome of the tenders for radio stations, and without being able to explain why participation is sluggish, the Ethiopian Broadcast Authority has now announced that it is accepting project proposals for satellite transmitted TV stations. Successful proposals can receive licenses from the Authority starting from March 22, 2016.

[addisfortune.net/articles/]

Omani companies taking part in the Omani Products Exhibition (OPEX) 2016, scheduled to take place in the Ethiopian capital Addis Ababa from April 11 to 14, have high potential to sign contracts with companies in Africa, an official of the Oman Chamber of Commerce and Industry (OCCI) said.

“There is a good chance a major part of the companies will be able to sign contracts with African companies,” Ayman Abdullah Al Hassani, deputy chairman of OCCI and head of OPEX Committee told reporters on the sidelines of a meeting held on Tuesday between the organizers of the exhibition and companies participating in Addis Ababa.

He said that Ethiopia has been chosen since it is one of the stable and fastest growing economies in Africa. In addition, Ethiopia is a member of COMESA (Common Market for Eastern and Southern Africa), a cooperation of 19 countries in the region.

“We believe that there is a very good market to promote Omani products. There is a big potential for us, not only to promote our products, but also to find opportunities for joint ventures with Ethiopian companies,” he said.

Establishing joint-ventures with Ethiopian companies in the sectors of agriculture, leather, coffee and livestock will be particularly interesting to Oman. “These are some of the best Ethiopian products we can bring to Oman,” Al Hassani said.

Ethiopia is also interesting to Omani food and agricultural companies since food and agriculture are important sectors in Ethiopia. “They import a lot of food from all over the world and this is a big opportunity for companies in the food sector,” Al Hassani said.

Al Hassani said that 105 Omani companies will represent a number of sectors, including food, pharmaceuticals, building materials, furniture and handicrafts. He said that the organizers have invited countries that are member of COMESA, like Kenya, Tanzania and Sudan to take part in the exhibition. Also, a number of Omani startups will be present at OPEX.

Khalfan Al Khatira, representing Riyada, told the ‘Times of Oman’ that 15 Omani small and medium enterprises (SMEs), all less than five years old, will be participating in OPEX. He said that these SMEs are mainly into dates, perfumes, ceramics, steel, plastics and industry.

OPEX was established in 2012 to encourage exports of Omani non-oil products all over the world. It is organized by a joint committee comprising OCCI, Public Authority for Investment Promotion and Export Development (Ithraa) and Public Establishment for Industrial Estates (PEIE).

While the first three editions were all in Gulf Cooperation Council (GCC) states, exhibitors of the last edition in Jeddah voted in favor of Addis Ababa, Al Hassani explained. It is now the first time the exhibition will be held outside the GCC region.

[timesofoman.com/]

Ethiopia set to sell its potash resource in the global market within the coming four years, the country’s Ministry of Mines, Petroleum and Natural Gas said on Monday. Studies showed the existence of more than 100 million tons of potash deposit around Dalol region, Afar state of Ethiopia, making the east African nation the third country in the world to have rich deposit of the mineral.

Three international companies have asked for licenses to engage in potash development in the region, Tolosa Shagi, Minister of Mines, Petroleum and Natural Gas said.

Currently, the British Circum Minerals Ltd and the Norwegian Yara International are undertaking broad activities to export the product as the government is building infrastructure in potash rich areas.

Allana potash, which was previously licensed to develop potash mineral at the regional state, transferred its license to the leading Israeli Chemical Ltd (ICL) due to financial constraints.

Many investors are also showing interest to establish potash fertilizer factory in Ethiopia, the minister said adding the nation will be using the Tajura port of Djibouti to export the mineral.

[www.apanews.net/]

Teklebrehan Amabye & Family (TAF), a private conglomerate gaining momentum as a dominant local company, has signed a contract with a local IT firm, Fairfax Technologies PLC, to acquire a Systems, Applications & Products (SAP)-powered enterprise resource planning (ERP) solution. The contractual value of the solution borders on 25 million Br, company sources disclosed. Market price of ERP ranges from 5 to 8 million USD depending on the size of the company. Inking the deal on March 17, 2016, at TAF’s corporate office on Asmara Road, CMC area, the company will be the first private business in Ethiopia to deploy the technology.

The ERP solution offers companies the ability to exercise real time collaborations among their various divisions and departments, helping them operate as one unit. It is a customized technology solution which enables businesses to integrate their entire operation, as well as manage the flow and process of information with users accessing one database under the company’s possession. It gives top executives a cutting edge advantage in decision making, relying on real time data.

SAP and ORACLE are the two companies known across the world for providing the solution, working with local implementers.

Fairfax Technologies, a US-based company with a local subsidiary, works with both companies as their East African implementer. Owned by close to 20 shareholders, with Zemedeneh Negatu as the major stockholder, the company was registered here in 2006 with initial capital of close to 10 million Br.

Fairfax Technologies has since bagged multimillion dollar contracts with Ethiopian Airlines for a SAP made solution; the Commercial Bank of Ethiopia (CBE), and Ethio telecom, for ORACLE. Worldwide, the company has signed contracts worth 70.5 million dollars, with an annual turnover of 25.6 million dollars last year. Its business in African countries has an annual volume of close to 20 million dollars, company sources told Fortune.

The latest contract with TAF is the first for Fairfax Technologies to enter with a private company operating in Ethiopia. Although consolidated in 2015, TAF’s origins are in the humble start of Teklebrehan Ambaye Construction (TACON), a flagship company of TAF established by a former Addis Ababa University staff in a division responsible for building and construction.

TACON had a modest beginning with three employees, including the founder bearing the same name, and 5,000 Br in capital when it was first incorporated in 1993. Today, it has a project portfolio worth 4.5 billion Br, and secured a one-of-a-kind state-financed project, a fertilizer manufacturing plant under construction at Yayu, in Ill Aba Bora zone of the Oromia Regional State.

TACON is one of the frontrunners among local construction firms participating in multibillion Birr bids for the construction of industrial parks the government wants to erect in no less than seven sites across the country. In a joint venture with a Kuwaiti company, its bid to win the Hawassa Industrial Park project was lost to a Chinese competitor. Another bid for a similar project in Dire Dawa, in partnership with a Chinese company, remains undecided by the Ethiopian Industrial Park Development Corporation. In each of these projects, the value of contracts is estimated to reach five billion dollars.

Restructured under a corporate structure last year, TAF Corporate Group is an emerging family business empire with six companies: Edna Hi-Tech (HTS) PLC, Yebel Industrial PLC, Yutaf Aluminium PLC, Edna Mall, Sekota Mining PLC and TACON PLC.

TAF’s recent corporate overhaul and its current move in acquiring ERP solutions shows not only that the company’s leaders are “visionaries” but also demonstrates how the Ethiopian private sector is “evolving and growing,” according to people knowledgeable of the company’s growth.

“It tells you something when they decided to spend all this money in buying technology instead of machinery,” said a person who works for a consulting firm and advises many of the state-owned and private companies.

The Ambaye sons have a different view of how the world is changing; they aspire to be one of the leading companies in Africa, according to this consultant.

Seifu Ambaye, CEO of the Corporate Group and one of the six brothers of the Ambaye family, appeared to concur with this view.

“In the current very competitive market place, clients are increasingly demanding better value for money, quality of service and timely delivery that we have to meet, consistently setting far reaching goals for ourselves,” he said.

It will take six months for his Group to fully implement the ERP, a much shorter time than the average two years it takes to get the solution up and running. But the cost of the solution and its implementation period depend on the size of the company. Ethiopian Airlines has close to 8,000 employees, a size four times larger than TACON, thus the cost dropped by almost half of the eight million dollars the airline paid for ERP. Although implementation claims five to one of the total cost, licensing for use of the solution by employees weighs considerably on its cost, according to industry experts.

“The decision to embark on implementing the global leading ERP solution would provide TACON with a reliable tool for enhancing its capabilities and enhancing efforts in the march towards destinations mainly demanded by its wide-ranging internal and external stakeholders,” Siefu said.

For the implementation of ERP to TAF, Fairfax Technologies has partnered with ISYX Technologies, a company based in the United Arab Emirates (UAE). ISYX is hired to do the commissioning and testing of the technology, sending its experts to assist Fairfax.

[addisfortune.net/]

A high-level panel discussion on the theme “unleashing the potential of pharmaceuticals in the socio-economic transformation of Africa”, opens in Addis Ababa, Ethiopia on Sunday (April 3, 2016).

Chaired by Mrs. Fatima Haram Acy, African Union Commissioner for Trade and Industry, the forum is held as a sideline event during the African Development Week at the UN Economic Commission for Africa (ECA).

In her preliminary statement, Mrs. Fatima Haram Acy briefly described the pharmaceutical industry in Africa as hardly accounting for 2 per cent of the world’s pharmaceutical market.  She then underscored the importance of mobilizing resources to finance it.

Speaking in turn, some panelists said that for Africa’s pharmaceutical industry to develop, it must create an enabling environment through easing access to capital for investment, envisaging properly designed incentive measures that are limited in time, strengthening control of the regulations governing our markets and pharmaceutical industry, while at the same time enabling African businesses to accede to expertise and technology.

For others, there is need to fast-track implementation of the Pharmaceutical Manufacturing Plan for Africa adopted by the Heads of State and Government of the African Union, a Planthat will enable Africa to become less dependent on imports and thus gain in autonomy. According to the plan, a stronger and more reliable local pharmaceutical industry will also contribute to economic development, job creation, development of human resources and of related industries.

The discussions that followed the panel presentations concluded that there is need for Africa to equip its pharmaceutical industry with practical knowledge that will enable it manufacture medicines compliant with international standards and at competitive costs. Africa needs external capital for investment at affordable rates. Here, China is ready to enter into win-win partnerships will all African countries to develop strong pharmaceutical industries, said Si Chen.

Participants also appealed to Africa to protect its pharmaceutical industry against unfair competition with sometimes substandard and even counterfeit medicines.

Besides, they also broached the African initiative titled “Strengthening Pharmaceutical Innovation in Africa” approved by the Conference of African Ministers on Science and Technology that aims to improve access to medicines and local production. This will contribute to the development in Africa of a health innovation system that runs smoothly and that leverages the continent’s human capacities and natural resources to improve the health of the people and thus contribute to its economic development.

Thus, “thanks to these initiatives, the Pharmaceutical industry in Africa should experience an unprecedented boom in the years ahead”, the Chair of the panel concluded.

[newbusinessethiopia.com/]

The United Nations Economic Commission for Africa (UNECA) says Africa continues to be highly exposed to volatility and trade shocks as a result of its dependency on imports and resilience on commodity and natural export resources with a small number of buyers in the international market.

Speaking at the ministerial conference in the framework of African Development Week in Addis Ababa on Monday, he said low commodity prices are causing lower export revenues, fiscal imbalances and current account deficits across several African countries.

The impacts of these shocks are often aggravated by Africa’s under-developed domestic financial system and low institutional quality. However; the current volatility of most commodities (oil excluded) is not out of the ordinary when compared to the past trends, says the ECA.

Therefore; the ECA Executive Secretary Carlos Lopes urged African countries to transform their industrial sector structurally through the expansion of commodities value chains, transform agriculture and the capacity to attract low-value manufacturing production to bring about a robust growth.

Mr. Lopes remarked that “transformation will not happen spontaneously but rather as a result of deliberate and coherent policies that are entrenched into a coherent development strategy, enlightened by a transformational leadership.”

Addressing the gathering, Dr. Nkosazana Dlamini Zuma, the Chairperson of the African Union Commission, implored African countries to improve young people’s skills in science and engineering. “With an average of over 90% of graduates in social sciences, Africa’s innovation and scientific skills lag behind.”

She noted that with a burgeoning youth population, Africa has no choice but to look for solutions. She also spoke on industrialization and economic diversification, on the need to reduce import dependency and on creating regional centers of innovation.

[en.starafrica.com/]

Ethiopian Trading Businesses Corporation (ETBC) was established with more than 3.8 billion birr capital after the merger of four public enterprises.

The establishment of the Corporation helps to stabilize local market, carry out integrated business activities, put in place accountability and to efficiently exploit the capacity of the enterprises.

Corporation’s Deputy Chief Executive Officer (CEO) Mengistu Kebede, told ENA that the Corporation is mandated to distribute and supply crops, vegetables and fruits to domestic and overseas markets.

The merger helps the enterprises to contribute their share for the economic growth of the country, he added.

The Ethiopian Trading Enterprise (Alle Bejimal), Ethiopian Grain Trade Enterprise (EGTE), Ethiopian Procurement Service Enterprise and Ethiopian Fruit and Vegetables Marketing Share Company (Etfruit) were the enterprises merged to form ETBC.

[www.fanabc.com/]

Ethiopia has announced the construction of a 2,000 MW capacity dam, which would be funded by an Italian credit firm.

Ethiopia’s Prime Minister Hailemariam Desalegn announced the deal for the dam named Koysha this week. The announcement came after successful negotiations between Ethiopia’s Electric Power (EEP) and Italian construction firm Salini Costruttori.

The Koysha dam will reportedly be situated in southern Ethiopia, on the lower bank of the Omo River.

The Koysha dam is estimated to cost around $1.7 billion. An Italian financial firm called Servizi Assicuative del Commerce Estero (SACE) will reportedly fund the dam’s construction.

An Ethiopian delegation led by the CEO of EEP Azeb Asnake , and the head of the Ministry of Finance and Economic Cooperation’s Legal Affairs Directorate Wasihun Abate, travelled to Rome to close the financing agreement.

Under its five-year development plan, the Ethiopian government has made it one of its top priorities to increase the nation’s energy supply. The country is looking to utilize its rivers for power generation. Recently, the 1,800 capacity Gibe III dam became operational.

The country is also vested in the construction of the Grand Ethiopia Renaissance Dam (GERD), which is expected to be the largest in Africa. The dam, which is being built on the Blue Nile, is already over 50 percent complete.

Desalegn’s announcement of the Koysha dam in parliament came during the 5th anniversary of the commencement of the construction of the 6,000 MW GERD.

“Our Grand Ethiopian Renaissance Dam has become the leading project to ensure Ethiopia’s vision of becoming the centre for the renewable energy in Africa,” Desalegn said.

“Considering the development potential the Dam could generate, the Ethiopia government has plans to invest in the area,” he explained. “This investment, having its centre at the Nekempte Town, will considerably improve the lives of the target residents specifically and serve as the mega business centre for the entire citizens.”

Meanwhile, Ethiopia has also signed a $4 billion deal with a US-Icelandic firm Reykjavik Geothermal. The deal is for the construction of a 1,000 MW geothermal facility, which would be Ethiopia’s first privately-run power plant.

[www.zegabi.com/]

The richest African business tycoon, Aliko Dangote, is set to boost his investment in Ethiopia, it was learnt.

In a letter written to the Ethiopian government recently, Aliko Dangote, chairman of the Dangote Industries, affirmed his commitment to boost his investment in Ethiopia. Dangote has set up a cement factory in Ethiopia at a cost of 600 million dollars. The factory, with an annual production capacity of 2.5 million tons, began running in June 2015. The factory lying on 134 hectars of land in West Shoa Zone, Adaberga Wereda, near Muger town, 85 km west of Addis Ababa, employs 1500 workers.

Mesfin Abera, Dangote Cement (Ethiopia) head sales and marketing, told The Reporter that considering the fast economic growth Ethiopia is registering and the booming construction industry, Dangote Industries has decided to undertake a massive expansion project at the existing plant. Mesfin said Dangote Cement Ethiopia is set to build a second cement manufacturing plant with an installed capacity of 2.5 million tons at a cost of 600 million dollars.

The company has asked the Oromia Regional State for additional land for the expansion project. “We now have 134 hectares of land and we need only an additional 18 hectares. We submitted our request to the Oromia Regional State and we have got a positive response,” Mesfin told The Reporter.

The Chinese cement specialist Sinoma International will undertake the construction of the second plant. The same company had built the first unit. According to Mesfin, the construction of the second unit will take two years. “When completed we will have a total annual production capacity of five million tons of cement,” he said.

Asked about over-capacity problem, Mesfin said “We do not worry about the market. We have conducted a thorough market study. This country is growing in a double digit. Massive infrastructure development projects are being undertaken. If the development plans set in the second growth and transformation plan are properly implemented, there will be no market problem. The market situation does not worry us.”

Mesfin said that his company is also exploring the export market. Dangote Cement has started exporting cement to North Kenya. Since February, the company exported 2200 tons of cement valued at 240,000 dollars. “We are studying the South Sudan, Somalia and Djibouti markets and we have noted that there is a significant market potential in those neighboring countries.

Dangote Cement managed to produce and sell one million tons of cement in the first six month of operation (June-December 2015). Aliko Dangote is impressed with the performance of his new company in Ethiopia and granted the sales team a 45,000 dollars prize. This year the company plans to sell 2.3 million tons of cement.

In addition to the second cement plant, Dangote Cement is planning to build a cement-bag manufacturing plant. The cement-bag plant will be built in front of the cement manufacturing plant near Mugher town at a cost of 19 million dollars. The planned plant will-have the capacity to produce 120 million cement bags annually. “We will use only 30-35 percent of the produce. We will supply the rest to local cement factories,” Mesfin said.

There are about 20 cement factories in Ethiopia but only Messebo Cement has its own cement bag factory.

Mesfin said that Dangote Cement Ethiopia will expand the cement bag manufacturing plant and start producing PP bags used to bag sugar, cereals, fertilizer and other products. “Once we have completed the first bag plant we will build the second phase that will produce different PP bags for other purposes.”

Dangote Cement Ethiopia uses coal imported from South Africa to satisfy its energy demand. With the view to reducing its energy cost, the company is currently testing locally-mined coal. “We are buying coal from Jimma and blending it with the imported one. If our test is successful we could replace the imported coal with the locally produced one and that would enable us to bring down our cost and selling prices,” Mesfine said.

Mesfin said that if the coal mined in the Jimma locality has the required calorie value to produce cement, Dangote Industries would be interested in obtaining exploration license from the Ministry of Mines, Petroleum and Natural Gas Resources and prospect for coal deposits.

Dangote Industries is also interested in engaging in potash mine exploration in the Afar Regional State in north-east Ethiopia. The company has expressed its firm commitment to prospect for potash mine in the Dallol depression. The company wants to use the potash mineral to produce fertilizers in Nigeria. Currently, Dangote Industries is building a giant fertilizer factory in Nigeria.

Dangote Cement Ethiopia has opened 5,000 direct and indirect jobs for Ethiopians. More than 1500 workers are directly employed by the factory – 80-90 percent of them are local residents.

Dangote Cement has imported and deployed 443 trucks from China that haul cement products throughout Ethiopia. “We are now trying to import more trucks so that we can also expand our export market. When the railway lines are completed we shall also be using rail transport,” Mesfin said.

The Dangote Investment Group owns Dangote Cement, Africa’s biggest cement company and number one cement supplier in Africa, Dangote Sugar Refinery, Dangote Industries and Dangote Oil Services. According to Bloomberg Billionaires Index Mr. Dangote is worth 12.9 billion dollars.

[www.thereporterethiopia.com/]

Ethiopia signed a deal to boost trade through Somaliland’s Berbera port amid congestion at a facility in neighboring Djibouti.

Tariffs have been revised and a committee established to manage joint operations as part of the agreement signed on March 31, Sharmarke Jama, an economy and trade adviser for the foreign ministry in the semi-autonomous Somali region, said on Monday.

The committee will work on the “smooth implementation of the bilateral agreement and for improved facilitation of transit trade along the corridor,” he said in an e-mailed response to questions.

Landlocked Ethiopia more than doubled its cereal imports in the last 12 months as a drought left almost one-fifth of its population of around 100 million people needing food aid. On March 24 there were 10 ships waiting to unload 450,000 tons of wheat at Djibouti.

Ethiopia wanted 30 percent of its trade to go via Berbera by July last year, according to a five-year growth plan published in 2010. As much as 97 percent of shipments are still going through Djibouti because of problems with the capacity and condition of Berbera’s port, the poor state of roads to Ethiopia and the lack of international recognition for Somaliland’s statehood, said Ethiopia’s Transport Minister Workneh Gebeyehu.

“Now we have really negotiated the issue and decided to go very fast to use Berbera port,” he said by phone. “The only thing that is left is the operational issues.”

It isn’t clear how many ships carrying Ethiopian cargo Berbera will be able to deal with, although there is a plan for coal imports to go through the port, Workneh said. Port Sudan is already receiving fertilizer for northern areas of Ethiopia, he said.

The Berbera Port Authority held discussions with U.S. Agency for International Development officials about aid imports, Jama said. The facility delivered 40,000 metric tons of wheat in February through Berbera for the UN World Food Programme to distribute to Ethiopians, according to the UN.

Somaliland’s government has shortlisted Bollore SA, P&O, which is owned by DP World, MSC Group’s Terminal Investment Ltd, and Prime Africa for a Berbera renovation project, Jama said.

[www.bloomberg.com/]

Ethiopia was the leading economy on the post-China manufacturing model in Africa, and has been aggressively attracting foreign direct investment in garment and leather manufacturing. Global brands from H&M and Calvin Klein, to Lee, Wrangler and Timberland all have a presence in Ethiopia.

Ethiopia, as well as Kenya, were recently identified as a top sourcing destination by apparel companies, according to McKinsey & Co., which surveyed executives responsible for procuring $70 billion of goods annually—the first time an African country was mentioned alongside Bangladesh, Vietnam and Myanmar.

But if you think it is only global brands looking to set up shop in an Ethiopian factory, you’d be mistaken.

One Kenyan footwear designer looking to scale uphis productions has taken the plunge and is moving manufacturing operations to Ethiopia, where factories there have the capacity to produce 1,500 pairs of shoes a day.

Emo Rugene is the designer and founder of the successful shoe brand Afroshoes, and has been doing African-inspired shoe designs mostly made of Ankara fabric since 2012.

The intercity shoe

He is now looking to launch the “Nyala” sneaker as part of the Afroshoes brand, a new, sleek unisex sneaker, made of sheepskin leather – which makes the sneaker very light, ideal for everyday city life.

In fact, the urban theme runs strongly through the Nyala design, with inspiration coming from three cities – Berlin, Germany, where Rugene lives part-time; Nairobi, Kenya, his hometown; and Addis Ababa, the production hub – making it what Rugene calls an “intercity shoe”.

The sleek, minimalist design is inspired by Berlin’s architecture: its massive buildings, long visual axes, high ceilings and “beauty that is inconspicuous”, Rugene says.

The Nyala design is evocative of the philosophy of Dieter Rams, the famous German industrial designer with electronics company Braun, whose austere, ‘less is more’ approach made Braun a household name in consumer electronics, and more recently, provided the inspiration for Apple’s Inc.’s modern, clean look.

“If I tried to produce a thousand pairs of shoes in my Nairobi workshop, it would take me more than a year,” Rugene told Mail & Guardian Africa. “I chose Ethiopia because there, they can do the entire leather shoe manufacturing process – from tanning, cutting, stitching; everything.”

Rugene, 28, says he just got on a flight to Addis Ababa, with no real plan, only the number of just one contact person.

“I asked around, and figured out where the shoe manufacturing factories were. After visiting two or three factories, I found one that I could work with, “ he told Mail & Guardian Africa.

Art of shoemaking

Ethiopia’s dominance in the leather industry and in footwear shoe manufacturing and design has roots both in the traditional Ethiopian culture and economy – leather is readily available; by one estimate, Ethiopia has the largest livestock herd in Africa, with an estimated 49 million cattle, 25 million sheep, and 21 million goats.

The livestock industry accounts for 15 to 17% of total Gross Domestic Product (GDP), and 35 to 49% of agricultural GDP.

But by some accounts, the art of shoemaking was introduced to Ethiopians by the Italians in the mid-1920s – Ethiopia was occupied by the Italians from 1936 to 1941.

Indeed, one of the most intricate, and technically demanding, components of the Nyala shoe is the hard leather stamp bearing the brand name, done by an Italian shoe manufacturer based in Ethiopia.

In order to start production, Rugene needs more funding, and is therefore doing a Kickstarter campaign that will go live mid-April. He is looking to raise 30,000 Euros ($34,200).

There have been some garment and footwear projects from Africa on Kickstarter that have been successful, and hopefully this one will help make African design and fashion more visible on the global fashion scene.

[geeskaafrika.com/]

Soon after unveiling the first urban light railway in sub-Saharan Africa, Ethiopia accelerated the progress of its flagship project, a 700 km railway linking its capital Addis Ababa to the port of Djibouti. Due to become fully operational later this year, the link aims to provide landlocked Ethiopia with improved railroad access to the sea and is anticipated to have a dramatic impact on the country’s socio-economic development.

In 2015, during the first ever visit of a US president to Ethiopia, Barak Obama described Africa as the continent with the greatest potential to become “the next center of global economic growth”. Only two months later, Ethiopia unveiled the first phase of its $475m Addis Ababa Light Rail, the first electrified light rail transit system to open in sub-Saharan Africa.

The momentous launch however came at a time when Ethiopia is battling its worst drought in half a century. In response, the Ethiopian government decided that the country’s first mega railway project – the Addis Ababa to Djibouti line – would begin its operations ahead of schedule to deliver essential food aid to the worst drought-stricken areas.

Successfully carrying its first freight on 20 November 2015 along the partially completed line to Merebe Mermersa, 112km south of Addis Ababa, the railway solidified its flagship status and strengthened hopes in its potential for future socio-economic development.

With its official opening expected in early 2016, the railway, it is hoped, will slash transit times for both freight and passengers, attract further foreign investment and ultimately catapult Ethiopia to a competitive force in the global marketplace.

Addis Ababa – Djibouti Line: an exciting development

Ethiopia has long suffered from a lack of railway infrastructure across its territory. Its first meter-gauge railway, built by the French in the 1890s, has over time deteriorated due to lack of maintenance, cutting Ethiopia’s direct access to the port of Djibouti. Today, Ethiopia still accounts for around 70% of the trade through the port, but all freight transportation relies on trucking.

Now, after a three-year long construction process, the nation’s biggest railway infrastructure project is on track to officially begin operating this year. The 700 km electrified railway runs parallel to the now abandoned Ethio-Djibouti railway. Once complete, the $4bn line will see passenger trains reaching speeds of 160km/h, while 3,000t gross capacity freight trains will run at 120km/h. The line is double-track for the first 115km, from Addis Ababa to Adama, while the remaining 600km to Djibouti is a single track rail.

As a result, travel times between the two terminus points will be cut from several days to less than ten hours. Its capabilities were demonstrated in November, when the first freight, hauled by a diesel locomotive, delivered more than 3,000t of grain from Djibouti port to drought-affected areas during a 16-hour journey.

Gaining the trust of foreign investors

“We are a niche market in a good geographical position,” said CEO of the Ethiopian Railways Corporation (ERC) Dr Getachew Betru in an interview with The Worldfolio. “This is why the railway mode of transport is called a game changer.”

“A few years ago nobody took us seriously. […] The reputation of Ethiopia with the drought, war and famine did not play in our favor. We had to articulate our case very carefully, addressing the issues of bankability,” he said. But in 2013, ERC managed to secure $3bn in loans from the Exim Bank of China, with $2.4bn going to the Ethiopian section of the railway and the balance to be spent in Djibouti.

A big advantage playing in ERC favour was seeking foreign investment only after they had completed 30% of the project, at which point “people started taking them very seriously”, as Betru explains. Costs were further slashed due to ERC sourcing local resources such as the cement, sand and labour. The successful delivery of the Addis Ababa Light Rail project with no cost or time overruns served as a further guarantor to their credibility.

Two Chinese state-owned companies have been involved in building the new standard-gauge line: the 320 km stretch from Addis Ababa to Mieso is being built by the China Railway Group, while the 339 km section from Mieso to the Djibouti border is being built by the China Civil Engineering Construction Corporation. As of January 2016, the construction was on track and over 90% of the project was complete.

Game-changer: the economic impact on Ethiopia

The Addis Ababa – Djibouti line falls within the Ethiopian government’s ambitions to transform the Horn of Africa nation into a middle-income country by 2025. After an average economic growth of more than 10% of GDP over the past decade, one of its aims is to have 5,000km of new-built rail lines working across the country by 2020.

“It is difficult to think of rapid economic development, industrialization and international competitiveness without efficient, high quality and modern transport infrastructure,” said Minister Workineh Gebeyehu at the 8th Ethio-Djibouti Railway Project Joint Commission meeting.

As such, the new railway, earmarked as one of Knight Frank’s top global infrastructure projects, will undoubtedly leave its biggest mark along the Djibouti-Dakar corridor, as it can influence all businesses within a 60km range of the corridor. Firstly, reduced transit times will mean that consignment will be delivered in ten hours, with up to 3,000t of cargo transported in one go. This will also allow the landside port areas to be cleared quickly and avoid congestion.

Ethiopia will also be able to shift its attention to high-value imports, as the new transport corridor will be attractive to producers of perishables such as flowers, fruit and vegetables. In this context, Dr Getachew hinted at the possibility of branching out into business with the Middle East. “By all standards, the Ethio-Djibouti project will change the way things work for any investor, particularly one who wants to get involved in manufacturing,” he said. “The transportation cost will be low and it will be very reliable.”

In ten years’ time, a $7bn Djibouti Free Trade Zone currently being developed by China Merchants Holding will provide a new profit opportunity for Ethiopia, along with a new Doraleh Container Terminal operated by DP World and the establishment of a Turkish processing zone to represent Turkey’s “major point of entry to Africa”, as described by Djibouti’s finance minister Ilyas Dawaleh.

Preparing future generations of rail professionals

However, the nation’s ambitions stretch beyond just this railway project. Ethiopia also keeps a close eye on its green credentials and its focus on the rapid transition from road to rail falls within this common international goal. In April last year, Ethiopia put forward three Nationally Appropriate Mitigation Actions (NAMAs), a tool developed under the UN Framework Convention on Climate Change (UNFCCC) for developing countries to contribute towards global climate change efforts while moving forwards with their development in a sustainable manner.

The first NAMA proposes the establishment of a Railway Academy of Ethiopia for skilled railroad professionals, where people would be trained as managers, engineers, technicians, and researchers. “Hopefully, by the end of 2020 all the railways will be made in Ethiopia by Ethiopians,” Dr Getachew said. “My generation is trying, but it is the next generation, the youth, that will transform Africa, and we will see the real impact on education, health and economy in the 2020s.”

The second transformational NAMA is the launch of a transit-oriented development (TOD) along the light rail. The pilot project, at an estimated cost of $8.9m, would look at removing barriers, increasing safety and accessibility, stimulating ridership and lowering the price of transportation for all.

A $150,000 vulnerability assessment for the railroad, with a particular focus on climate change adaptation was also put forward. Nevertheless, the biggest transformational change, at least in the near future, will no doubt be delivered via the Addis Ababa – Djibouti line, an integral part of the “African Renaissance” as described as Dr Getachew.

“The creation of urban centers and integration of their resources through good transportation linkage will enhance the industrialization of Ethiopia and elevate its society to a better socio-economic environment.”

[www.waltainfo.com/]