Tuesday, December 10, 2013

Tullow shares slide on dry Ethiopian well | City A.M.

Tullow Oil PLC
FTSE 100-listed Tullow Oil’s share price slumped over three per cent yesterday, after the energy explorer said it would plug and abandon a dry well in Ethiopia.
The company said it would now analyse the results of both the Tultule-1 well and the neighbouring Sabisa well in the South Omo block, to determine the future exploration plan for the area.
“This is a disappointing well result from the point of view that it hasn’t proved beyond doubt the commercial viability of the Omo basin; however, this is only the second well of the programme in this basin,” said Canaccord Genuity.
Tullow is the operator of the Tultule-1 well with a 50 per cent interest, along with partners Africa Oil and Marathon.
Shares closed down 3.3 per cent.
- See more at: http://www.cityam.com/article/1386638596/tullow-shares-slide-dry-ethiopian-well#sthash.CS0KvOga.dpuf

Thursday, December 5, 2013

Ethiopia hailed as 'African lion' with fastest creation of millionaires | World news | The Guardian

Michael Buerk's famished Ethiopia of 1984 has become a nation achieving 93% GDP growth in six years, finds study

Ethiopia's capital Addis Ababa, office block construction
Office blocks under construction in Ethiopia's capital, Addis Ababa. But the reality is also many very poor neighbourhoods. Photograph: Thomas Mukoya/Reuters
"Dawn. And as the sun breaks through the piercing chill of night on the plain outside Korem it lights up a biblical famine, now, in the 20th century. This place, say workers here, is the closest thing to hell on earth."
That television news report by the BBC's Michael Buerk in 1984 framedEthiopia for a generation as a place of famine and in need of salvation.
Almost 30 years later the country is hailed by pundits as an "African lion" after a decade of stellar economic growth.
Now further evidence of its turnaround has arrived with research showing that Ethiopia is creating millionaires at a faster rate than any other country on the continent.
The number of dollar millionaires in the east African nation rose from 1,300 in 2007 to 2,700 by September this year, according to New World Wealth, a consultancy based in the UK and South Africa.
That figure puts the country well ahead of Angola, up by 68%, andTanzania, which had a 51% increase. Zambia and Ghana completed the top five.
The study finds that the rise in millionaires has been closely tied to GDP growth, in which Ethiopia has also fared best over the past six years achieving 93%, followed by Egypt (81%) and Angola (61%).
The authors note, however, that Ethiopia started from a very low base, and its per capital wealth is still just $470 (£287), compared to $3,187 (£1,948) in Egypt and $7,508 (£4,588) in South Africa.
African millionaires
Andrew Amoils, a senior analyst at New World Wealth, said: "The economic and wealth growth in Ethiopia over the last five or six years has been really strong. There has been a lot of privatisation and certain sectors are growing well. It's a huge upswing but it started from a low base."
As in other parts of Africa, however, the growth is not necessarily shared.
"The millionaires are growing at a faster rate than the middle class, which doesn't really exist in a lot of African countries, including Ethiopia," Amoils said. "Angola, for example, has had massive millionaire growth in the last 10 years but that hasn't spilled through to the average Angolan."
But whereas much of Africa's boom has been driven by mineral resources, leading sectors for millionaires in Ethiopia include agriculture, manufacturing and transport.
The richest Ethiopian is said to be the businessman Mohammed Al Amoudi, who divides his time between Ethiopia and Saudi Arabia, where he now has citizenship.
A construction boom is underway in the capital, Addis Ababa, but Amare Abebaw, a social entrepreneur, said the rest of the world does still did not appreciate the country's extraordinary transformation.
"When I go home and watch TV I still see the famine from the 80s and I wonder how do they still show this on the BBC when things have improved here? It is painful for us. We know it is part of our history but we want to focus on the present."
Nevertheless, while the number of millionaires is definitely increasing, they remain a fraction of the population.
"There are a few at the top but the majority of people are at the bottom, like in other countries," Abebaw said. "There are self-made millionaires and people are proud to know them. There are others where you don't know where they got the money from, and suspicions may arise from the population."
South Africa is the top African country for millionaires with 48,700 in 2013, followed by Egypt with 22,800 and Nigeria with 15,700.
Richard Dowden, director of the Royal African Society, said he had witnessed the rise of tower blocks, traffic jams and people now "walking with a purpose" in Addis Ababa.
He added: "You don't see many Ethiopians in flashy cars, like you do with Luanda or Lagos [citizens in their respective countries]. Flaunting your wealth is not part of the culture."
The Ethiopian government claims credit for the growth but is criticised as authoritarian by human rights groups; there is only one opposition MP.
In a recent blog post, Dowden noted that the former prime minister Meles Zenawi once observed: "There is no connection between democracy and development."

Tuesday, December 3, 2013

Ethiopia Earned US$121 Million from gold and other Minerals

goldEthiopia has earned over US$121 million in revenue from various minerals supplied to the National Bank of Ethiopia and overseas markets in the first quarter of the current Ethiopian fiscal year.

Ministry of Mines public relations told Walta Information Center, the revenue was collected from 2, 541.3 kg of gold supplied to the National Bank of Ethiopia by tradition gold miners as well as 1,264.2 kg of raw and 12.98 kg of value added gemstones exported to foreign countries.
Some 101.2 million of the income was earned from gold produced traditionally and supplied to National Bank of Ethiopia, while the remaining 20.5 million US dollars was generated from gemstones exported by different companies, according to Walta.
Source: Walta Information Center

Thursday, November 21, 2013

Chasing tax from Ethiopia's small, medium and micro enterprises | Adam Smith International partner zone | Guardian Professional

Adam Smith International is helping the government to tackle low levels of tax-paying from SMMEs in Ethiopia. This could be a model for other developing countries
Merkato market in Addis Ababa, Ethiopia
Merkato market in Addis Ababa, Ethiopia: the largest open air market in Africa where taxpayer compliance is thought to be as low as 25%. (IMF, 2011). Credit: nazret.com Photograph: nazret.com
Economic conditions across much of sub-Saharan Africa have remained generally robust against the backdrop of a sluggish global economy. In 2012, the region held five of the world's 10 fastest growing economies and continues to power ahead, with the World Bank forecasting regional growth of 5% in 2014. However, despite such impressive growth, most sub-Saharan African countries still struggle to increase their tax revenues as a proportion of GDP.
This is partly due to the limited capacity of tax administration systems to tax small, medium and micro enterprises (SMMEs) which often account for the majority of economic output while operating largely within the informal sector, out of the reach of tax administrators. In addition, many countries provide concessions or exemptions for SMMEs, with a large number of sub-Saharan African countries taking this route as a means of helping fuel growth and employment.
There are strong arguments however, for tax design and enforcement that facilitates widespread inclusion of SMMEs in the tax net. For example, many would argue that it is simply 'fair' that SMMEs, despite their smaller incomes and workforce, should contribute financially to the public services they benefit from. More broadly, increasing tax revenues of course has the potential to improve people's economic and social welfare through improved public service provision.
Tax administrations in sub-Saharan Africa which do include SMMEs in the tax net are often ill-equipped to enforce compliance among the often very large number of SMMEs operating in their countries. Tax authorities often perceive it to be inefficient to enforce the tax liabilities of individual SMMEs, preferring to utilise scarce tax administration resources in pursuit of larger taxpayers.
This weak motivation on the tax administration side is often compounded by tax-related issues affecting SMMEs directly. Many SMMEs lack the capacity to maintain accurate accounts and calculate their tax liabilities correctly. SMMEs are also often faced with cumbersome tax assessment and payment procedures, which can take up precious time. Finally, SMME taxpayers are often demotivated by perceptions of corruption or a lack of understanding as to how their taxes are being used.
In Ethiopia, Adam Smith International is working with the Ethiopian Revenue and Customs Authority (ERCA) to identify the country's tax gap and to forecast future revenue streams. This work involves undertaking a detailed data collection assessment to provide a complete picture of current revenue streams, and generate recommendations on how to raise compliance levels among all taxpayers, including SMMEs. The project is playing an important role in assisting the government of Ethiopia's efforts to increase domestic revenues and help finance the country's ambitious Growth and Transformation Plan.
The project has identified that SMMEs are significantly less compliant than large corporations, paying approximately 20% of their theoretical tax liabilities in comparison with 70% for large businesses. These results are due to a combination of reasons, including the limited resources available to regional tax authorities to register and monitor the high number of SMMEs, limited SMME awareness of tax obligations and the tax system at large and inaccuracies of 'presumptive taxation' which sees tax officials calculating presumed SMME taxpayer liabilities due to limited taxpayer capacity to do so.
To help improve compliance among all taxpayers, especially SMMEs, we have provided ERCA with recommendations across their six strategic goals including human resource management, information systems and revenue collection. Recommendations in these areas thus far include transfer of ERCA employees between branches and regions to allow sharing of best practice and increased information exchange; the introduction of a comprehensive data management system to ensure consistent data is held across the different departments and directorates, and the development of record-keeping requirements appropriate to the size/sector of taxpayers. These measures will assist the Ethiopian tax authorities to build the capacity of their staff to administer taxes effectively, manage the vast information flows from SMME taxpayers, and support taxpayers to comply voluntarily.
Understanding the tax gap will help to improve SMME compliance and increase overall tax revenues in Ethiopia. This could be a model for other countries which have untapped SMME tax revenue resources in the informal sector that could boost overall tax revenue.
This content is produced and controlled by Adam Smith International

Wednesday, October 30, 2013

Indian Company To Invest $116m In Ethiopia’s Delbi Coal Mine |

Mumbai-based miner, May Flower Mining Enterprise Ltd is set to invest $116 million in Ethiopia’s Delbi Mining S.C.’s coal mine over a three-year period.
Delbi, a mining company majorly (53 percent) owned by the Endowment Fund for the Rehabilitation of Tigray (EEFORT) has been looking for a strategic partner to jointly develop the coal mine.
The Delbi coal mine is located in Oromia regional state, Jimma Zone, 400 km from Ethiopia’s capital, Addis Ababa while its mining concession covers a 39.2 square kilometer lot with an estimated coal deposit of 11.4 billion tonnes.
Delbi Coal Mining is set to extract 30,000 tonnes of coal in Ethiopia. It plans to increase its production of coal to 200,000 tonnes of coal over the years.
Delbi General Manager, Alemayehu Deressa told IANS, a news agency, the deal will see May Flower own 70 percent of the company shares while Delbi retains 30 percent.
“We will be responsible for all payable accounts and they will bring the necessary technology, know-how and financing required for the exploration and mining activity,” he added.
May Flower will import mining machinery, mining experts as well as the required finance for exploration and mining works.
A joint management team comprising officials drawn from both companies will also be set up.
According to data from the Ministry of Mines, Ethiopia‘s coal reserves ranging from lignite to bituminous deposits, are estimated at around 376 million tonnes.

Thursday, October 24, 2013

Ethiopia: One Of Africa’s Best Kept Secrets-Wildcats & Black Sheep »

About Ethiopia infographic
In this edition of Silk Invest’s Frontier Market Insights we take a close look at what we believe is one of Africa’s great treasures: Ethiopia.
At the bottom of this article we also feature a short BBC documentary that we helped make a couple years ago. It provides an interesting perspective of what will possibly become one of Africa’s main growth engines.
We have been investing in Ethiopian private equity for some time now. What we especially find compelling is the B2C opportunity that will result from a rising society of millions of consumers. Our main focus there is on household food staples. Our first investment in this space was to help NAS Foods, a leading biscuits manufacturer, scale up it business in order to meet the rapidly expanding local demand.
Discovering Ethiopia
Upon first visiting Addis Ababa, you will be in for a number of positive surprises. Don’t rush to judge the place by its airport because just like many of its African peers, it needs an upgrade. The experience starts when you take your first breath of Ethiopian air, you will quickly gasp for more because Addis (what insiders like to call it) is at an altitude of no less than 2,300 meters (7,500 feet).
Ethiopia in the worldIf you land during the daytime, you’ll be amazed by how grassy and green the Addis landscape is. Arrive at night you won’t have that visual reference but as soon as you step out of the airport terminal the you will notice a peculiar countryside aroma. You could almost imagine you are somewhere in rural Ireland during a chilly spring evening, not in a country that you were made to believe was a desert.
Ethiopia is fertile! Just over 1/3 of Ethiopia’s territory is arable. The same goes for demographics. Ethiopia is the second most populous country in Africa. Combine these features and add some investment and we may be looking at one of the world’s future leading food producers.
A New Reality
Ethiopia in its ancient alphabet with its colourful flag.
Ethiopia in its ancient alphabet with its colourful flag.
This is stands in stark contrast with all the images we saw on TV during the 1980?s. The famine and human tragedy we witnessed back then was dreadful and arguably happened under a political regime that now belongs to history, fortunately. The fact is that these visuals installed within us a perception that needs to be corrected. The thing is that you simply don’t often hear about this place so we never really got an update on all the progress that was made since those difficult days.
A typical Addis street scene
A typical Addis street scene
Getting to know Ethiopia is an unforgettable experience on many counts. Personally I think it must be a bit like going to China in the early 1980?s. It doesn’t take much thinking to figure out that it is a place of underestimated potential, with an ancient culture and enough patience to re-build a nation that can live up to re-claim its historical standing in the world’s economy.
Is This Like China in the 1980?s?
China sees the opportunity and invests in power and influence in Ethiopia
China sees the opportunity and invests in power and influence in Ethiopia
Interestingly enough, China must see it in the same way because Ethiopia has a close working relationship with the Asian giant. In many ways it seems like Ethiopia’s government took a few pages from China’s political playbook as it is faced with similar challenge to build an economy for a large population. But China is not alone. Other major investors in Ethiopia are India, Sudan, Germany, Italy, Turkey, Saudi Arabia, Yemen, the United Kingdom, Israel, Canada and the United States.
Since 1994 Ethiopia is governed as a federal democratic republic. The nation is made up of nine ethnically-based semi-autonomous administrative states. All have the power to raise their own revenues, can establish their own government and democracy according to the federal government’s constitution. Public service delivery, including health care, has to a large extent fallen under the jurisdiction of the regions. The approach has been to promote decentralisation and participation of the population in local development activities. Ethiopia is one of the most table political systems in Africa.
A Regional Force.
Ethiopians are very proud of the fact they were never colonised. This makes this nation rather assertive on the regional political scene. Ethiopia has one of Africa’s largest armed forces and has a history of using it to keep the peace in its region. Add to that Addis Ababa is a bit like the Brussels of Africa as it is the home of the African Union which it more of a worldly city than many would believe it to be.
AU building
Watch short BBC Documentary that we helped make a couple years ago. It offers visuals that could make you more familiar with Ethiopia. It also features NAS Foods, the business we invested in.
BBC Ethiopia

Ethiopian inquiry points to illegal imports, possible corruption in Huawei deal - PC Advisor

Customs authority alleges that Huawei avoided taxes

Government investigators say that Huawei Technologies illegally imported $13 million worth of telecom equipment into Ethiopia, adding to the number of cases involving allegedly corrupt activities by Chinese telecom companies in Africa.
The equipment was allegedly imported into the country in the name of Ethio Telecom, a state-owned telecom company, without Ethio's knowledge, according to the Ethiopia Revenue & Customs Authority (ERCA). This was done to avoid paying taxes, ERCA said.
ERCA has said it will confiscate the equipment and is likely to slap the company with tax avoidance charges. The equipment has been stuck at the country's port since last year.
Ethio Telecom signed an $800 million telecom equipment deal with Huawei and another $800 million contract with China-based ZTE to expand its mobile phone network only three months ago. The equipment under investigation, however, was imported into the country toward the end of last year.
Questions are being asked regarding the timing of the imports. Industry are asking how Huawei Technologies knew it should start importing the equipment about nine months before the Ethio tender was actually awarded to the company.
Huawei declined to comment on the matter.
Huawei imported a total of 235 items including energy storage units, various types of batteries and microwave telecom communication products. Ethio has told ERCA that it never told Huawei Technologies to import any telecom equipment on its behalf.
The projects with Huawei and ZTE aim to introduce 4G broadband internet in the capital, Addis Ababa, and increase mobile phone and 3G Internet access across the country.
Less than 1 percent of Ethiopia's 85 million people have access to the Internet on mobile phones, according to the International Telecommunications Union. Ethio Telecom is the only operator in the East African country that is still under tight state control and the government wants it to expand its coverage to meet the growing demand in the communications market.
"China's growing influence in Africa is one that is now turning into a heap of unprecedented embarrassment due to underhanded methods being used to win tenders by Chinese companies," said Edith Mwale, telecom analyst at Africa Center for ICT Development.
In Zambia, the Anti-Corruption Commission is still investigating China's Star Software Technologies and ZTE over corruption allegations. The ACC is investigating how Star Software Technologies was irregularly awarded a $220 million digital migration tender, which has since been cancelled. ZTE is being investigated over the manner in which the company was awarded a $210 million circuit television (CCTV) camera contract, which has also been terminated.
Chinese telecom companies have also been facing numerous corruption allegations around Africa because of the manner in which telecom contracts are awarded to them.
In Algeria, Kenya, Uganda and Nigeria, Chinese companies have faced investigations over corruption related to telecom tenders. In Algeria, Huawei and ZTE are banned from bidding for telecom tenders for two years following convictions for corruption charges.

Read more: http://www.pcadvisor.co.uk/news/network-wifi/3475316/ethiopian-inquiry-points-to-illegal-imports-possible-corruption-in-huawei-deal/#ixzz2ie8rpOxR

Nyota Minerals to sell 75% of Tulu Kapi gold project in Ethiopia - Proactiveinvestors (UK)

Tulu Kapi hosts 1.8mln ounces of gold resources and a definitive feasibility study confirmed the project’s technical and economic viability last December. Tulu Kapi hosts 1.8mln ounces of gold resources and a definitive feasibility study confirmed the project’s technical and economic viability last December.
Nyota Minerals (LON:NYO) has confirmed a plan to sell 75% of the flagship Tulu Kapi gold mine project in Ethiopia.
In return the AIM quoted gold firm will receive £1mln of cash and £3.5mln in shares, and it will retain a paying 25% interest in the project.
The identity of the buyer, described by Nyota as a “junior exploration and development company listed on a regulated stock market”, still remains a closely guarded secret. Nyota says this is for commercial confidence and to mitigate the risk of the sale not proceeding.
It is envisaged that the new partner will manage the work programmes at Tulu Kapi.
A new update to the project’s resource estimate is planned for the first six months following the deal’s completion - and Nyota’s obligation to continue funding the project doesn’t kick in until this milestone is achieved.
The proposed work programme was submitted to the Ethiopian authorities last week, and the government’s approval is one of the conditions of the deal being completed.
A completion of a fundraising by the buyer is also a requirement.
Tulu Kapi hosts 1.8mln ounces of gold resources and a definitive feasibility study confirmed the project’s technical and economic viability last December. For a mine development to get underway the project has to be approved by the Ethiopian government.

Sunday, October 6, 2013

Oil production from the established sub-Saharan future production from Chad and Ethiopia

Despite high above-ground risks, oil explorers keen to tap into Africa’s new fields - As oil production from the established sub-Saharan producers increases, areas less known for their hydrocarbons potential are receiving more attention, Business Monitor International (BMI) has reported in its October 2013 monthly market intelligence, trend analysis and forecasts for the oil and gas industry across the Middle East and Africa.

“Despite high political risk and difficult business environments, under explored regions of onshore middle Africa are seeing growing exploratory interest,” said the BMI report, which was made available to PANA here Friday.

The report highlights Chad and Ethiopia as countries where the business and political environments remain challenging, yet the below-ground potential for oil and gas exploration and production outweighs the above-ground risks.

Chad is sandwiched between Sudan on the east and Nigeria and Cameroon on the west, all of which are proven oil producers.

Ethiopia has no history of oil production and thus remains an area of particular interest as companies move in to test its potential.

Interest in sub-Saharan Africa is growing as the exploration success in nearby central African countries such as Uganda dissipates throughout the wider central African region.

Oil and gas independents are increasingly carrying out exploration and drilling work in under explored high risk, high reward onshore areas.

BMI’s short term political ratings for Chad saw it struggling against neighbouring central African nations, with a score of 47.3 out of 100; while its overall business environment rated among the worst in the region at just 19.6 out of 100.

“Despite the high above-ground risks present, exploration and production interest in Chad is increasing as small independents take on the higher-risk environment,” BMI noted.

“Oil output from the country has also fallen considerably, over 72,000 barrels per day (b/d) since 2005, and remains a critical source of revenue for the government.

“The majority of recent exploration has taken place in the southeast of the country along the border with Central African Republic and Cameroon, where much of the country's 104,000b/d (2012) of oil is produced,” said the report.

A few small Canadian exploration and production companies hope to survive Chad’s political difficulties.

Caracal Energy recently spud two wells in the Badila field where it hopes to soon bring online 14,000b/d, and also drilled the Krim prospect which is estimated to hold up to 64mn barrels (bbl) of unrisked oil.

The company's next move is to drill in the Bitanda prospect which is considered even more prospective with initial estimates of unrisked resources set between 277mn and 648mn bbl.

In June this year, Simba Energy was awarded production sharing contracts on three separate sites in Chad in the Erdis Basin in the north of the country and Chari Sud Block I and II in the south of the country.

While the political rating of 47.5 and the business environment rating of 32.9 in Ethiopia fared slightly better than that of Chad, there were higher risks due to the unproven nature of the country's oil prospects, the BMI report observed.

After discovering oil in Kenya for the first time in 2012, Tullow Oil has moved its operations cross-border to the South Omo Block in Ethiopia.

With partners Africa Oil and Marathon, the company drilled the Sabisa-1 well earlier in the year, encountering traces of hydrocarbons. Results are still being analysed, though Tullow has announced the area is oil prone.

This area is thought to be a continuation of the oil bearing structures found in Uganda and Kenya, which are also seeing increasing exploration and production activity.

In the Ethiopian region bordering Djibouti, General Energy and New Age (Africa Global Energy Limited) are working in the 27,000sq km Adigala Block.

According to the companies, 2D seismic data reprocessed in 2012 and augmented with a Full Tensor Gravity survey showed evidence of working petroleum systems.

The northern part of the country is thought to be analogous with the producing Jurassic Rift Basins in Yemen.

“The prospects for oil in Ethiopia remain strong and could go some way towards reducing the country's 100 percent reliance on imports. Consumption reached a record 54,100b/d in 2012,” said the BMI study.

The report went on: “While it remains too early to tell the full potential of the oil and gas industry in the country, first mover advantage in this unproven oil producing country will provide high rewards.

“In spite of the high potential in both Chad and Ethiopia, warnings should be heeded from the difficulties nearby Uganda has experienced in tapping its 3.5bn bbl oil reserves.

“The large political influence imposed by President Yoweri Museveni, who is entitled to a final decision before any oil deals are signed, has slowed the development of an export pipeline, a refinery and the start up of oil production.

“Along with allegations of bribery, the deteriorating political environment is now damaging interest in the country.

“Our short-term political rating for Uganda has dropped from 60.4 in 2010, to 51.7 in 2013. This fall in confidence, in one of the better performing countries in the region, further highlights the high risk faced by oil and gas companies.”

Pana 05/10/2013