Wednesday, December 26, 2012

Chaina Shoeing into Ethiopia|Business|

Shoeing into Ethiopia
Seyoum Mesfin, Ethiopian ambassador to China, says his country prefers the non-intervention policy that Chinese investors follow when doing business there. Zhao Yanrong / China Daily
East African country welcomes Chinese manufacturers to take on a larger presence
As China's labor, manufacturing and resources costs continue to rise, Ethiopia, one of the least-developed countries in the world is hoping Chinese companies will consider opening more factories there.
"China is one of our country's main donors in building infrastructure, a big constructor and a major technology provider," said Seyoum Mesfin, Ethiopian ambassador to China. "But China will also be a major factory owner in Ethiopia and a big market for products made in Ethiopia in the future.
"Chinese companies are assembling goods in Ethiopia to ship back to China, which is more profitable than producing in China today."
Mesfin said a good labor supply, low energy costs and high-quality materials support development in his country.
It was with plentiful labor, low-cost manufacturing and an export-driven economy that China accomplished its rapid development over the past three decades, and that is the model Ethiopia wants to borrow from.
To follow in the footsteps of Chinese constructors and engineers of its infrastructure, the Ethiopian government has been inviting more manufacturers in recent years, making two industrial zones available for entrepreneurs to set up business.
Huajian, a shoe maker, is one of the best known Chinese manufacturers in Ethiopia.
The company is an original equipment manufacturer from Dongguan in Guangdong province for leading global brands such as Calvin Klein, Coach and Louis Vuitton. After a meeting Ethiopian senior government officials last year, Huajian opened its factory near the country's capital, Addis Ababa, using an investment of $2 billion, which will create more than 100,000 jobs for local communities over the next decade.
"Ethiopia is an important manufacture base for us since we are going to be the OEM for world brands," Zhang Huarong, chairman of Huajian International Group, said during the World Footwear Development Forum in Dongguan last November.
Zhang said a manufacturer should not only be able to build its own reputation, but also should be able to help others by providing insight on global strategy.
"Within China, there are few opportunities to extend our manufacturing capability quickly," he said. "The best we can do is to maintain the status quo. But in Ethiopia, which is like China 30 years ago, we find many possibilities to make our business even bigger, with sufficient supplies of raw materials and labor. It's a beneficial business for the company and local people."
By the end of April, the company had opened three assembly lines in Ethiopia and hired 630 local workers in addition to 160 Chinese employees. A big contributor to Ethiopia's international trade, Huajian produces more than 2,000 pairs of shoes a day, all exported to Europe and the United States.
Three more Chinese companies started operating in Ethiopia in September and October.
"It's exciting to see more Chinese companies moving to Ethiopia," the ambassador said. "They bring excellent experience to our garment and textile industry."
With 85 million people, Ethiopia is the most populous country in East Africa. The ambassador said more than half of the population is engaged in productive labor. The average wage for workers in Addis Ababa is 300 yuan ($48) per month, a quarter of that in Dongguan, one of China's main manufacturing bases.
"We also have plenty of hydropower and wind power," Mesfin added. "In almost all major infrastructure programs in Ethiopia, you can find a Chinese company's footprint. They help us collect more natural resources and lower the cost of energy, which has become a major attraction for international investors."
The Ethiopian government said China is the third-largest foreign investor in the country by direct investment volume, which to date totals $364 million. The funds are distributed across the automobile, textile, hotel and machinery equipment sectors, and in the manufacturing of products for general use.
In an interview with China Daily earlier this year, Ethiopia's then-prime minister Meles Zenawi said he highly valued China's role in his country's development.
"Many countries can see those advantages and opportunities in Ethiopia," Mesfin said. "Chinese companies didn't get those contracts easily. They are winning in a very competitive market."
Compared with Western countries, which are the usual investors in Africa, Mesfin said they prefer the way Chinese investors do businesses in his country.
"Chinese investment has a very good policy of non-intervention in internal affairs," he said. "This doesn't mean that China does not care about the situation of African's human rights or democracy. The highest-level investments from Western countries are attached to concerns about those issues, which damages prospects."
To encourage more Chinese investment in Ethiopia, the embassy will host a weeklong event in Beijing next year to promote business opportunities and improve cultural exchanges between the countries.
Thousands of Ethiopian students are studying in Chinese universities. Besides learning about China, they also attend activities at their schools to introduce Ethiopian culture to Chinese friends.
"Our relationship is based on cultural exchanges at the people-to-people level," said Mesfin. "The more we understand each other, the better we can cooperate and seek common interest together. We welcome friends in China to come to our Ethiopian Week in Beijing next year to get to know us better."
Contact the writers at and
(China Daily 12/25/2012 page13

Sunday, December 16, 2012

World Bank praises Ethiopia's battle against runaway inflation-PANA

Ethiopia's battle against runaway inflation - The World Bank has praised Ethiopia for initiating reforms to reduce the runway inflation and reduce public debt to manageable levels, in a new report indicating ambitious goals to cut poverty are within reach.
Ethiopia’s economy has been growing at twice the rate of the Africa region over the past decade, averaging 10.6% of the Gross Domestic Product (GDP) yearly between 2004 and 2011, compared to 5.2 percent in sub-Saharan Africa, according to the report released Friday.
“Ethiopia has made progress in tackling the persistently high inflation which affected the economy over the past two years by tightening its fiscal and monetary stance,” it noted.
Annual inflation dropped from 33% in 2011 to 15.8% in October 2012, while public debt is on a declining trend at 35% of GDP in 2011/12. Ethiopia has a low risk of external debt distress.
“This is good news for the poor and for the overall economy,” World Bank Country Director for Ethiopia Guang Zhe Chen said.
“The Government target to reduce poverty to 22.2% by 2014/15 is ambitious but attainable,” the World Bank official said.
Some 2.5 million people in Ethiopia have been lifted out of poverty over the past five years as a result of strong economic growth, bringing the poverty rate down from 38.7% to 29.6% from 2004/05 to 2010/11.
Ethiopia’s fiscal performance appears to be adequate, given the current state of the economy and financing requirements for development, according to the Bank report.
Growth of goods exports has mainly been driven by volume of growth across a variety of product groups, implying that Ethiopia is increasingly diversifying its export base.
Although aid to the state including grants declined from 1.6% of GDP in 2010/11 to 1.2% of GDP in 2011/12, tax collections have been boosted by the 2010 tax reform, while reforms in the budgeting process have strengthened public expenditures.
“Ethiopia is one of the few large, land-locked economies in the world that exports more services than goods,” said Lars Christian Moller, Bank’s Lead Economist and Sector Leader for Ethiopia.
The Bank attributes Ethiopia’s economic growth mainly to agricultural modernisation, the development of new export sectors, strong global commodity demand, and government-led development investments.
“There is widespread perception that the comparative advantage of a low-income country like Ethiopia lies in export of primary products and labor intensive, low-skill manufacturing goods,” Moller said.

Sunday, November 18, 2012

Is Ethiopia ready for foreign investment? -BBC News

Unroasted coffee beansPrincipal cash crops in Ethiopia include coffee, pulses, oilseeds and cereals

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Ethiopia was once a byword for poverty and famine.
It is still one of the poorest countries in the world, with an estimated third of the population earning less than $1 (63p) a day, but the country also has one of the world's fastest growing economies.
Opinion is sharply divided, however, as to whether or not it is wise to invest in the country.
Since 2004, its economy has been expanding by about 10% a year. The government expects growth to continue in double digits - but a report by the International Monetary Fund (IMF) suggests it will slow to 6.5% in 2013.
Even the IMF predictions are impressive, however, considering the current global financial climate and the fact that unlike many other countries on the continent, Ethiopia does not have much in the way of natural resources.
Entrepreneurial spirit
Coffee is one of the biggest export earners in Ethiopia.

Start Quote

You need to be aggressive, but not arrogant”
Michael GirmaCoffee exporter
In Addis Ababa, the country's capital, coffee exporter Michael Girma says it was a challenge to launch his business.
"To start up in the export sector, you need to perform with your own cash. Then after that, you can approach the banks," he says.
Apart from exporting coffee, he now also owns a cafe, a bar, and a pizzeria, employing 140 people altogether.
Although the business environment is getting very competitive, he is achieving a profit margin of 20-30% each year and feels confident about the future.
"A lot has changed in the last seven years," Mr Girma says. "You need to be aggressive, but not arrogant."
Although foreign investors are encouraged, many sectors are reserved for domestic investors.
"The restricted sectors are those which supply to the local people. If foreign investors want to come in and invest in projects which are export oriented, anything is open," Mr Girma says. "It would be very hard to compete otherwise."
Diverse opportunities
Despite annual high inflation, some investors think the potential in Africa's second most populous nation has not been recognised.
Earlier this year, Shultze Global Investments launched a $100m equity fund aiming to invest in Ethiopian businesses.
Ethiopia ethnic tribesDozens of ethnic Ethiopian tribes do not generally benefit from the growth in the capital, Addis Ababa
In a nondescript building on a hillside overlooking Addis Ababa, Berhane Demissie decides where to put that money.
"Ethiopia offers significant opportunities for investors," she says, pointing out that agriculture is a strong growth sector.
"Anything grows in Ethiopia with the various climate and soil diversities that we have. That also follows through to the agricultural value-added chain with processing and exports," Ms Demissie says.
With 85% of the population dependent on the agricultural sector, she says the government is trying to ensure those farmers have access to finance and fertilisers that will allow them to grow more.
Ms Demissie says this will lift people out of poverty.
"If the programme was just about big farms I would have said no, but the smallholder farmers are being included in the overall growth of the economy," she says.
She also says there is a lot more demand for consumer goods and services within the country, but too few manufacturing companies.
Business concerns
In 2010, Transparency International, which rates countries according to perceived corruption, listed Ethiopia at 120th out of 183 countries and the Washington-based Global Financial Integrity research organisation concluded that illicit financial outflows between 2000 and 2009 totalled $11.7bn (£7.4bn) in 2009 - which was more than Ethiopia had earned through exports.
It is reports like those which deter some of the diaspora from returning to the country to look for business opportunities.

Start Quote

Berhanu Nega
The government has been pushing tens of thousands of people off their lands because of the land grabs by China, Saudi Arabia and India”
Berhanu NegaBucknell University
Berhanu Nega went back to Addis Ababa in 1994 after the change in government and was elected mayor in 2005 - only to find himself imprisoned for life on the day he was elected on charges of treason, because he had called for the overthrow of the president.
He was released after 21 months and returned to the US where he is now an economics professor at Bucknell University. He is also the co-founder of Ginbot 7, an Ethiopian opposition party, and he does not believe the country is a good place to invest in for the medium or long term.
"If you want to make big bucks and get out then it is good for the short term," he says.
Apart from concerns about corruption, he is also worried about the uncertainty of inflation: "The government has been printing money since 2005 and inflation, depending on which figures you look at, ranges between 40-60%."
He says many businesses have closed down because of the taxation the government has imposed to pay for its expanded security forces.
He adds: "The government has been pushing tens of thousands of people off their lands because of the land grabs by China, Saudi Arabia and India among others, which has caused serious conflict in many areas."
Mr Nega does not feel there will be any changes soon and is pessimistic about the country's future business environment

Saturday, November 17, 2012

Ethiopia Permits Mobile Banking and Money Services at Tadias Magazine

Ethiopia is one of the last countries in Africa to permit mobile banking.
Mobile banking has proved to be profitable in the developing world, where many people still do not use banks. Earlier this year, the World Bank reported that seventy-five percent of the world’s poor are “unbanked.” That is about two point five billion people. Banking through mobile telephones lets people take part in financial services even if they are not near a bank office.
In Africa, only Ethiopia and Zimbabwe do not provide mobile money services. Now, that will change for Ethiopia.
BelCash and M-Birr are mobile banking technology providers. They have been setting up mobile banking and mobile money services in Ethiopia for the past three years.
Dutch company BelCash is working in partnership with banks to provide easier access to financing through bank accounts. Ireland-based M-Birr is a mobile money service that works with micro finance groups where no registration at a bank is needed.
Ethiopia’s mobile industry is young. And wireless service coverage in the country is not well developed. The pressure on the wireless network is expected to increase.
In the past four years, the number of mobile users grew from three to seventeen million. And Ethiopia’s telecommunications provider, Ethio Telecom, expects that number to grow to forty million in the next three years.
The government closely controls Ethiopia’s telecommunications market. That means there is only one provider. Competition is not permitted.
M-Birr General Manager Thierry Artaud says Ethiopia’s neighbors have several mobile providers.
“If you look at your neighbors, Kenya, Tanzania Uganda, they all have multiple mobile operators and they all have mobile money services and even multiple mobile money services.”
He says, if Ethiopia had no restrictions, his company would have to compete with larger companies.
Ethiopia has looked at other developing countries with mobile banking. National Bank of Ethiopia officials visited Kenya, Pakistan and Brazil.
Frezer Ayalew is with the National Bank of Ethiopia. He says mobile banking services will help the country.
“For the economy it has great contribution in terms of mobilizing domestic savings with these services.”
The National Bank of Ethiopia recently finished a draft order on how mobile banking services should be structured. This comes as more companies have shown interest in starting mobile banking services.

Thursday, November 15, 2012

Ethiopia: A single digit inflation by all means disproving the inflated growth preached in time of Zenawi

Ethiopian PM, Desalegn Hailemariam has debunked a lower growth projections from the IMF and World Bank
Ethiopia has recorded an impressive drop in its inflation rate from 19 percent in September to 15.8 per cent in October, after new Ethiopian Prime Minister Desalegn Hailemariam promised to slice inflation to a single digit.
In October, Hailemariam debunked a projection from the International Monetary Fund (IMF) and World Bank that Ethiopia's GDP would grow at 7 per cent in the 2012/2013 fiscal year, insisting that his government's 11 per cent forecast was achievable.
Shortly after taking over the helm of affairs in the East African country in September, Hailemariam argued that after "registering double digit economic growth for the past seven years" the country was capable of hitting its economic targets.
The new prime minister's arguments jarred with the failure of the National Bank of Ethiopia's (NBE) to reduce inflation to single digits by mid 2012. Year-on-year inflation edged up to 20.2 per cent in August, from 20.0 per cent a month earlier, following the rise of non-food inflation from 19 per cent in June to 19.8 per cent in July.
In June 2012 the Breton Woods institutions revised its growth forecast for Ethiopia down from 5.5 percent to 7 percent, despite a constant decline in inflation since July 2011 when it soared past 38 percent.
"Single digit-inflation projections in the plan appear unrealistic as long as there is a loose monetary policy and a heavy dependence on public-sector financing on bank credit continue," the IMF said in a statement in October 2011. It also urged Addis Ababa to review monetary restrictions that were driving up inflation.
Ethiopia has been steadfast in its determination to attain its set growth levels, set out in a five year Growth and Transformation Plan between 2010 and 2015. Desalegn said last month that his plan was to increase agricultural productivity in order to stabilise price hikes and "increase our savings and other measures to tackle the inflation".
The Ethiopian government says it lowered "inflation by subsidising oil and wheat" in its bid to stabilise inflationary pressures. The action saw a drop in inflation for an eighth consecutive month from 17.6 percent in September to 13.2 percent in October. The non-food inflation rate slowed to 20.1 percent.
The new rates follow projections made by the IMF in its World Economic Outlook in October 2012 that GDP in Sub-Saharan Africa would grow from 5.3 percent to 5.7 percent in 2013, as domestic demand, oil discoveries and investment rises.
Ethiopia is mainly supported by its coffee earnings, with gold, oilseed and livestock exports also contributing to the country's economy. The country in the horn of Africa has embarked on a multi-billion dollar energy sector development programme to become one of Africa's major exporters of electricity.

Read the original article on : Ethiopia: A single digit inflation by all means [501821452] | The Africa 
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Tuesday, November 6, 2012

Ethiopia Set to Approve Gold Mining License for Nyota Minerals

Ethiopia Set to Approve Gold Mining License for Nyota Minerals

Ethiopia Set to Approve Gold Mining License for Nyota Minerals

By William Davison

Nov. 5 (Bloomberg)
 -- Ethiopia is set to approve a mining license for Nyota Minerals Ltd. to develop the Tulu Kapi gold deposit, Mines Minister Sinknesh Ejigu said.
“We have agreed on the technical and environment terms and we are finalizing the economics,” Sinknesh said in a phone interview from the capital, Addis Ababa, today. “At the end of the day, they will get the mining license.” There is no date set for approval, she said.
The project in western Ethiopia 500 kilometers (310 miles) west of Addis Ababa, contains an estimated 1.87 million ounces of gold, according to the website of Nyota, whose shares trade on exchanges in the U.K. and Australia. Nyota Chief Executive Officer Richard Chase didn’t immediately respond today to an e-mailed request for comment.
Ethiopia, Africa’s largest coffee producer, is diversifying its economy away from a reliance on agriculture by encouraging investment in mining and manufacturing. Revenue from gold exports jumped 32 percent to $602 million in the 2011-12 fiscal year from the same period a year earlier, according to Access Capital, an Addis Ababa-based research company. Midroc Gold, which is owned by Saudi billionaire Mohamed al-Amoudi, is the only company mining gold in the Horn of Africa nation.
Nyota is exploring for the precious metal around Tulu Kapi in Oromia region and in the north of the country, according to its website.

Wednesday, October 31, 2012

Etihad Airways has been grounded in its attempts to jet into the Ethiopian capital of Addis Ababa | 7 Days Dubai

Etihad Airways has been grounded in its attempts to jet into the Ethiopian capital of Addis Ababa.

The snub comes after the African nation’s Civil Aviation Authority rejected the airline’s application for the required operating permit.
The Abu-Dhabi based carrier, which on Tuesday agreed to purchase two more Airbus A330-200 planes for its fleet in a deal worth $418 million, was due to begin a five times per week service to Addis on Friday. The permit refusal is despite the existence of a Memorandum of Understanding between the governments of Ethiopia and Abu Dhabi inked back in June 2007.
  1. Etihad Airways has been grounded in its attempts to jet into the Ethiopian capital of Addis Ababa
    Etihad Airways has been grounded in its attempts to jet into the Ethiopian capital of Addis Ababa
An Etihad Airways statement said: “The actions of the Ethiopian CAA ignore the Memorandum of Understanding between Abu Dhabi and Ethiopia. They are also very much against the best interests of consumers.”
The flights have been postponed until further notice, it added.

Ethiopia in Global prosperity index 2012 is 133th Eritrea is not indexed

The latest global prosperity index is out and the US has dropped out of the top ten for the first time. See how countries compare by economy, governance, health, personal freedom, safety and security
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The US have dropped out of the top ten of the latest prosperity index with the economy rank falling to 20th place. Royalty-Free/CORBIS
The US have dropped out of the top ten of the global prosperity rankings for the first time with the latest findings recording a weakening performance across five of the index's eight sub-categories.
Legatum Institute's prosperity index, now in its sixth year, assesses global wealth and wellbeing and benchmarks 142 countries around the world in eight categories: economy, education, entrepreneurship and opportunity, governance, health, personal freedom, safety and security and social capital.
So what do the latest prosperity rankings show us? Scandinavian countries NorwayDenmark and Sweden take first, second and third on the index with Australia and New Zealand coming in fourth and fifth respectively.
Global prosperity index 2012 interactive. Click on a country to get ranking details by category
Overall prosperity in Europe has increased - the Netherlands, Ireland and Germany have seen their positions rise and are now ranked at eighth, tenth and 14th place respectively. Despite overall prosperity increasing, more than two thirds of European countries have recorded a decline in the score for the economy sub-category since 2009.
The drop for the US in the rankings has come at a crucial time according to Jeffrey Gedmin, President and CEO of the Legatum Institute:
"As the US struggles to reclaim the building blocks of the American Dream, now is a good time to consider who is best placed to lead the country back to prosperity and compete with the more agile countries that have pushed the US out of the top ten."
A drop in the economy sub-index has put the US at 20th place - far behind many of Asia's leading economies and Eurozone countries such as Germany. The UK economy is placed at 26th place coming in behind behind Kuwait and Ireland.
The rankings have placed:
• Norway top for the overall prosperity index
• Switzerland is number one for the economy sub-category
• Denmark have scored highest for entrepreneurship and opportunity
• Top spot for the governance sub-category goes to Switzerland
• Luxembourg is ranked number one for health
• The highest ranking country for safety and security is Iceland
• Canada score highest for the personal freedom sub-category
• Norway rank highest for social capital
Below is the table showing the overall prosperity index rankings by country from 2009 to 2012. Please note that the number of countries ranked has increased from 110 to 142 so there may not be data for all countries. The spreadsheet which you can download shows the rankings by sub-categories also.

Data summary

Global prosperity index, 2009-2012

Click heading to sort table. Download this data
New Zealand3545
United States10101012
United Kingdom13131313
Hong Kong21201918
South Korea29272427
Czech Republic24242628
United Arab Emirates27302729
Slovak Republic37373236
Costa Rica30333437
Trinidad & Tobago46444751
Saudi Arabia57494952
Sri Lanka68596358
South Africa67666974
Dominican Rep71687281
El Salvador81787790
Burkina Faso112
Republic of Congo120
Cote d'Ivoire126
Sierra Leone128
Democratic Republic of the Congo141
Central African Republic109108110142

Download the data