ADDIS ABABA (Reuters) - Ethiopia plans to expand industry, sugar factories and power production using proceeds from its oversubscribed debut Eurobond that raised $1 billion, the finance minister said on Tuesday.
Ethiopia is the latest African state to receive a strong response on its first foray into the international debt markets. Investors have been eyeing Africa's sturdy growth rates and Ethiopia's economy is now expanding by about 9 percent a year.
"This amount will be spent on industry zones planned for construction across the country soon. They will attract investment and generate foreign currency," Finance Minister Sufian Ahmed told reporters.
Offering cheap labour and power supply, as well as improving transport and other infrastructure, Ethiopia aims to be a hub for textiles and other industries by attracting investors who are moving some manufacturing plants from China and other Asian markets, where costs are rising.
Ethiopia's government is setting up a new industrial park and expanding another at a total cost of $250 million as part of efforts to shift away from farming.
Another three manufacturing hubs are planned across the country in the next decade, including a Special Economic Zone in the eastern town of Dire Dawa of 3,000 to 20,000 hectares.
Plagued by power cuts, Ethiopia's bid to becoming a hub for manufacturing will depend on raising power production. The country plans to boost generating capacity to 10,000 megawatts from 2,000 MW now within three to five years.
Much of the additional power would be generated from the 6,000 MW Grand Renaissance Dam under construction on the Nile.
Sufian said some of the proceeds from the Eurobond will be used to construct transmission lines connecting Ethiopia with Djibouti, as well as building two sugar factories in the country's eastern and southern regions.
Despite strong growth, Ethiopia has limited hard currency earnings, making its debt-servicing capacity weaker than some African states. Analysts believe it will also be more difficult for Ethiopia to build foreign reserves, which now cover little more than two months of imports.
Ethiopia, like many of Africa’s new growing economies, began achieving high growth rates from a low base, writes William Gumede.
Thirty years ago, in 1984, Ethiopia was plunged into a terrifying famine, with hundreds of thousands starving to death and the economy in freefall.
For aboutt 10 years, the country has notched up double-digit economic growth rates. The average annual rate in the past 10 years has been 10.9 percent, according to figures from the African Development Bank.
By contrast, other sub-Saharan African economies grew 5.4 percent on average in the same period.
By the end of the 2012-13 fiscal year, Ethiopia’s economy had grown by 9.7 percent, according to the 2014 Economic Report on Africa from the UN Economic Commission for Africa. This year it will probably show bumper growth.
Ethiopia, like many of Africa’s new growing economies, began achieving high growth rates from a low base. Of course, in spite of its stellar growth, Ethiopia remains one of the poorest countries in the world.
It wants to become a middle-income country by 2025. This is defined by the World Bank as a country with a gross national income for each person of about $1 430 (about R16 500) a year. Ethiopia’s figure is low: $470 compared with $3 187 in Egypt and $7 508 in South Africa.
What is fuelling Ethiopia’s high growth rates? The large services sector and agricultural production have been significant factors. The country’s main exports include coffee, horticultural products and livestock.
Agriculture has been increasingly commercialised. Services are the largest sector because of the rapid increases in the size of the public sector, in financial intermediation, public administration and in retail business activities.
Ethiopia’s public investment has been driven mostly by the state. For example, two thirds of Ethiopia’s 8.5 percent GDP growth in 2011-12 were due to public investment, according to the World Bank.
Public investment in Ethiopia is the third highest in the world as a percentage of GDP and private investment is the sixth lowest, according to World Bank figures.
A large sum has been injected into a massive infrastructure drive that includes a multibillion-dollar plan to build a hydro-power dam on the Nile.
Ethiopia has spent more than $3.6 billion on road construction in the past 10 years. There has also been a dedicated effort to improve access to basic public services.
Remittances by Ethiopians living abroad to relatives and investment have risen considerably, contributing to the growth spurt. The World Bank estimates that Ethiopia gets about $3.5bn a year from its diaspora. It is reckoned that 14 percent of adult Ethiopians receive on average $600 in remittances from relatives – in five transfers a year on average.
About 20 percent of the national budget is from foreign aid and loans.
Ethiopia has made significant progress in slashing red tape, trying to make it easier for residents to set up businesses. To stimulate Ethiopian industry, the country has closed major sectors, including retail, transport, banking and telecoms to foreigners.
Importantly, it is one African country that has built a manufacturing industry from an almost zero base, as part of a dedicated strategy.
The country has used its large cattle stocks to produce leather products and is exporting leather shoes to the US and the EU.
Can Ethiopia sustain the growth and make it more inclusive?
Its high growth rate mimics a classical economic take-off phase. Many African countries experience such growth after decades of economic stagnation and political instability. The challenge is to make such economic take-offs sustainable.
Initial state investment-led growth reaches a point where it needs to pull in the private sector by creating a critical mass of new industries or by forging partnerships with foreign companies. Over the past 50 years, many African countries have been unable to replace initial growth with growth in the private sector.
Ethiopia’s Growth and Transformation Plan is not giving attention to this. Sadly, almost every African country has yet to learn this painful lesson from 50 years of post-independence development.
As the African Development Bank points out, Ethiopia’s economy is vulnerable to exogenous shocks because of its dependence on primary commodities and rain-fed agriculture. Any slight global changes in the prices of coffee or fuel can destabilise the economy.
Agriculture has been expanded by extending the area of cultivated land, not by increasing production.
Ethiopia is one of the few African countries that have genuinely focused on building a manufacturing base that can create a sizeable number of jobs and substantially undo poverty and inequality. However, the manufacturing sector is contributing less than 5 percent of GDP growth. Ethiopia needs a well thought-out industrial policy to diversify its economy.
Growth, as in many African countries, is benefiting only small elites. According to a survey by the consultancy New World Health, between 2007 and last year, Ethiopia had the most new dollar millionaires in Africa. Most of the beneficiaries are the elites linked to the ruling Ethiopian People’s Revolutionary Democratic Front.
The lack of genuine democracy and the crushing of critical voices is undermining the potential for higher economic growth rates.
*Gumede is chairman of the Democracy Works Foundation. His latest book is: South Africa in Brics: Salvation or Ruination, Tafelberg (http:// www.amazon.com/Tafelberg-Short-Africa-Salvation-ruination-ebook/ dp/B00FRHV7LC)
** The views expressed here are not necessarily those of Independent Media.
Ethiopia, like many of Africa’s new growing economies, began achieving high growth rates from a low base, writes William Gumede.
Thirty years ago, in 1984, Ethiopia was plunged into a terrifying famine, with hundreds of thousands starving to death and the economy in freefall.
For aboutt 10 years, the country has notched up double-digit economic growth rates. The average annual rate in the past 10 years has been 10.9 percent, according to figures from the African Development Bank.
By contrast, other sub-Saharan African economies grew 5.4 percent on average in the same period.
By the end of the 2012-13 fiscal year, Ethiopia’s economy had grown by 9.7 percent, according to the 2014 Economic Report on Africa from the UN Economic Commission for Africa. This year it will probably show bumper growth.
Ethiopia, like many of Africa’s new growing economies, began achieving high growth rates from a low base. Of course, in spite of its stellar growth, Ethiopia remains one of the poorest countries in the world.
It wants to become a middle-income country by 2025. This is defined by the World Bank as a country with a gross national income for each person of about $1 430 (about R16 500) a year. Ethiopia’s figure is low: $470 compared with $3 187 in Egypt and $7 508 in South Africa.
What is fuelling Ethiopia’s high growth rates? The large services sector and agricultural production have been significant factors. The country’s main exports include coffee, horticultural products and livestock.
Agriculture has been increasingly commercialised. Services are the largest sector because of the rapid increases in the size of the public sector, in financial intermediation, public administration and in retail business activities.
Ethiopia’s public investment has been driven mostly by the state. For example, two thirds of Ethiopia’s 8.5 percent GDP growth in 2011-12 were due to public investment, according to the World Bank.
Public investment in Ethiopia is the third highest in the world as a percentage of GDP and private investment is the sixth lowest, according to World Bank figures.
A large sum has been injected into a massive infrastructure drive that includes a multibillion-dollar plan to build a hydro-power dam on the Nile.
Ethiopia has spent more than $3.6 billion on road construction in the past 10 years. There has also been a dedicated effort to improve access to basic public services.
Remittances by Ethiopians living abroad to relatives and investment have risen considerably, contributing to the growth spurt. The World Bank estimates that Ethiopia gets about $3.5bn a year from its diaspora. It is reckoned that 14 percent of adult Ethiopians receive on average $600 in remittances from relatives – in five transfers a year on average.
About 20 percent of the national budget is from foreign aid and loans.
Ethiopia has made significant progress in slashing red tape, trying to make it easier for residents to set up businesses. To stimulate Ethiopian industry, the country has closed major sectors, including retail, transport, banking and telecoms to foreigners.
Importantly, it is one African country that has built a manufacturing industry from an almost zero base, as part of a dedicated strategy.
The country has used its large cattle stocks to produce leather products and is exporting leather shoes to the US and the EU.
Can Ethiopia sustain the growth and make it more inclusive?
Its high growth rate mimics a classical economic take-off phase. Many African countries experience such growth after decades of economic stagnation and political instability. The challenge is to make such economic take-offs sustainable.
Initial state investment-led growth reaches a point where it needs to pull in the private sector by creating a critical mass of new industries or by forging partnerships with foreign companies. Over the past 50 years, many African countries have been unable to replace initial growth with growth in the private sector.
Ethiopia’s Growth and Transformation Plan is not giving attention to this. Sadly, almost every African country has yet to learn this painful lesson from 50 years of post-independence development.
As the African Development Bank points out, Ethiopia’s economy is vulnerable to exogenous shocks because of its dependence on primary commodities and rain-fed agriculture. Any slight global changes in the prices of coffee or fuel can destabilise the economy.
Agriculture has been expanded by extending the area of cultivated land, not by increasing production.
Ethiopia is one of the few African countries that have genuinely focused on building a manufacturing base that can create a sizeable number of jobs and substantially undo poverty and inequality. However, the manufacturing sector is contributing less than 5 percent of GDP growth. Ethiopia needs a well thought-out industrial policy to diversify its economy.
Growth, as in many African countries, is benefiting only small elites. According to a survey by the consultancy New World Health, between 2007 and last year, Ethiopia had the most new dollar millionaires in Africa. Most of the beneficiaries are the elites linked to the ruling Ethiopian People’s Revolutionary Democratic Front.
The lack of genuine democracy and the crushing of critical voices is undermining the potential for higher economic growth rates.
*Gumede is chairman of the Democracy Works Foundation. His latest book is: South Africa in Brics: Salvation or Ruination, Tafelberg (http:// www.amazon.com/Tafelberg-Short-Africa-Salvation-ruination-ebook/ dp/B00FRHV7LC)
** The views expressed here are not necessarily those of Independent Media.
GUNCHIRE, Ethiopia — President Barack Obama is counting on an unusual mix of taxpayer dollars and investments from profit-hunting agribusiness giants such as DuPont to feed the globe's growing population.
For the plan to work, small-scale Ethiopian farmers like Tekalgna Abebe will need to greatly increase their paltry yields of corn and other crops. That will be no small achievement in a country where farmers typically plow by hand or with oxen and still plant their crops by tossing the seed willy-nilly out on the ground instead of placing it in rows.
Abebe, 38, a participant in DuPont's program, harvested about 4 tons of corn from just over an acre of land last year, four times what he produced the year before. The extra corn will help him pay for schooling for his four children, the oldest of whom is 8. "I am confident that my children will have a bright future," he said through an interpreter.
His village of Gunchire has a long history of food shortages, and it is one of the places that DuPont's Iowa-based seed business, DuPont Pioneer, and the U.S. Agency for International Development are testing a new approach to improve the production of corn among the millions of poor, small-scale farmers who dominate African agriculture.
The plan, part of the Obama administration's Feed the Future initiative, is to give farmers bags of nonbiotech hybrid seed and train them on how to properly plant the seeds and apply chemical fertilizers. Only 1 in 10 Ethiopian farmers who grows corn typically uses improved seeds.
Under Feed the Future, the administration is spending more than $1 billion a year to increase food production in 19 target countries. And in a novel approach to international agricultural assistance, the taxpayer funding now is being supplemented in some countries by commitments from corporations such as DuPont, Cargill and beverage giant Diageo.
The administration launched Feed the Future in the wake of the 2008 food-price spikes that sparked civil unrest in some countries and brought global criticism to U.S. biofuel policies that were seen as contributing to the soaring prices.
"Feed the Future demonstrates a new model of development, one working alongside partner governments, the private sector, civil society and innovators to help the world's most vulnerable communities progress from dependency to self-sufficiency," said USAID Administrator Rajiv Shah. "This is a true expression of American values."
The initiative also is providing a modest counterweight to the billions of dollars that China is investing in Africa though the financing and construction of major infrastructure projects.
Critics say the administration had no business enlisting the private sector. "Corporations are accountable to their shareholders, obliged to make a profit. They are not charities. They are bound by law, but not by the public interest," wrote Sophia Murphy of the Institute for Agriculture and Trade Policy.
Under the program, farmers are given seeds the first year. After that, they have to buy them.
Early results from DuPont's project in Ethiopia have shown some promise. Some of the 20 farmers say they harvested as much as four times more corn in 2013 from the same amount of land as they did the year before. They were among 320 farmers in 16 districts around central Ethiopia who received training in 2013. More than 3,000 farmers were added this year, and that is scheduled to jump to more than 30,000 in 2015.
Farmers only recently started harvesting this year's crop, but DuPont officials say the yields should be improved again this year and that the project remains on track.
Abebe doubled his acreage this year and trained 20 to 30 farmers in the methods he learned, including the use of hybrid seed.
An farmer near Gunchire, Gifty Jemal, said she learned from the project to plant the hybrid seed in rows. She also used twice as much fertilizer as she did before, and made it more effective by applying it near the seeds. The extra corn meant that she had more than she needed and could sell some in the local market.
A 2010 study by the International Food Policy Research Institute estimated that Ethiopian farmers could increase corn production by more than 60 percent just by adopting commercial seeds and improving their practices on one-quarter of the nation's cropland.
But the study found in part that government control of the public-sector seed price was making it very difficult for private-sector companies like DuPont to compete.
Tekalign Mamo, a top adviser in the Ethiopian agriculture ministry, likes the competition that DuPont can provide to the local seed sector. Even though the Pioneer seed can cost three times as much as locally produced varieties, farmers will buy it because of the results, he said. He said the commercial competition creates a "check-and-balance system. This will make the locals work hard."
DuPont is expanding the project to Ghana and Zambia, two other Feed the Future countries.
Paul Schickler, president of Johnston-based DuPont Pioneer, insists the Ethiopian project is neither a public relations stunt nor an attempt to exploit African farmers and coax them into adopting American-style farming practices.
"Our goal is to improve farmer livelihoods, and that's in Iowa, and in China, and in Ethiopia," Schickler said.
He said improving food production in Ethiopia has to be done "farm by farm, providing them the inputs that they need, the financing that they need, but then equally important is the knowledge."
Whether Feed the Future has a long-lasting effect remains to be seen. The initiative is designed to promote a series of demonstration projects — DuPont's is one — that can be shown to increase food production and reduce hunger. But it will then be up to the countries themselves to see that successful ideas are carried out.
Ethiopia has so far been slow to act on 15 promised policy and legal changes the government made to entice the investment from DuPont, Diageo, DuPont rival Syngenta and other multinational companies. All of the changes were to have been made by April 2014; as of this summer only one had been completed.
The government implemented a new policy for regulating seeds, a critical move for DuPont. But it has so far failed, for example, to lift an export ban on grains, which would encourage private investment in farming.
Ethiopia also is hamstrung at least temporarily by the steep cost of the Chinese-driven infrastructure program. The Ethiopian government required banks to buy bonds worth 27 percent of their annual loans, a move that has made private financing harder to get for agriculture and other sectors.
Still, Jonathan Shrier, the State Department's top diplomat for food-security issues, says that relying on host governments makes it more likely Feed the Future will ultimately deliver long-lasting results.
"The old style of development was criticized in the past for creating a perpetual dependency on assistance. That's not the idea here," he said.
. Recent oil and gas finds across the East Africa region has positioned it as a lucrative investment destination in Africa. Research has shown that discoveries in the last few years are more than that of any other region in the world, and the boom is expected to continue for the next five years. This impressive position is however becoming less significant as global oil prices continue to fall. A continued decline threatens the region’s economic prospects.
Multiple Oil and gas discoveries, better economic prospects
The ongoing market integration by the East African Community (EAC), which comprises Burundi, Kenya, Rwanda, Tanzania and Uganda, has contributed to the region becoming an attractive investment destination. But the recent oil and gas finds in Kenya and Tanzania have also made its prospects even better.
British exploration firm, Tullow Oil and its partner, Africa Oil have found more than 600 million barrels of oil in Kenya, and has discovered over 8 commercially viable oil wells since the first oil find in 2012. Uganda also has 6.5 billion barrels of oil deposits discovered over the last eight years. Tanzania’s natural gas discovery has topped 50.5 trillion cubic feet. Albeit not a member of the EAC, Mozambique is another country in the East African region that has found gas. It has a reserve of about 200 billion cubic feet. The natural gas finds in Tanzania and Mozambique are among the largest in the world.
Uganda and Kenya are expected to commence commercial oil production by 2017, while Mozambique and Tanzania’s natural gas projects are expected to come online in 2019. The discoveries are very important to the region, as they have the potential of hastening economic growth via investments in road, rail and other infrastructure. Whatever bright hopes the region may have before as regards economic growth from oil revenue, has now been lulled by the falling oil prices. Production has not even begun.
Recouping its massive investments in infrastructure just got harder for East Africa
Kenya, Uganda and Tanzania are particularly hopeful to lure investors to key infrastructure to further exploit their oil and natural gas. The region is already investing in infrastructure. Several projects have commenced, one of them is the LAPSETT projectvalued at $23 billion. It includes the construction of a network of roads, railways and pipelines linking Kenya, Ethiopia and South Sudan.
Kenya is expected to increase its spending on infrastructure by 15 percent by 2015. The government also plans to fast-track the construction of a pipeline to export crude.
Uganda has signed an agreement with France’s Total, Britain’s Tullow Oil and China National Offshore Oil Corporation (CNOOC) to develop oil fields and a pipeline linking them to the coastal port of Lamu in Kenya for export. The country is also considering bids from companies including Japan’s Marubeni Corp. and a group of investors led by China Petroleum Pipeline Bureau to build a 60,000-barrel-per-day refinery.
With a loan from the Export-Import Bank of China, Tanzania hopes to complete construction in 2014 of the $1.2-billion Mtwara gas-pipeline project stretching to Dar es Salaam on the coast. Norway-based Statoil and London-based BG Group are also considering a liquefied natural gas (LNG) export plant on the Tanzanian coast.
However, the free fall of global oil prices is beginning to raise fears on whether the region will be able to recoup its massive investments on infrastructure, as investors have become less optimistic. Toronto-listed explorer Africa Oil, whose interests span across several African states such as Kenya and Ethiopia, said this month that its plans in Kenya might be brought into question if the long-term outlook saw prices dropping below $70 a barrel. The company has already put up part of its stake in Kenya up for sale.
Oil legislation
The region’s future economic growth seem to have been tied to its oil boom, as legislations aimed at milking the new found cash cow is being effected across East Africa.Even Rwanda whose hope of striking oil is just being kept alive by the success of its neighbours, have put an exploration policy in place ahead of its anticipated discovery. The upstream petroleum law is also currently being drafted.
Kenya has raised the capital gains tax for oil and gas related transactions to 37.5 percent. Analysts have however said it will have a negative impact on the development of the exploration industry still in its early stage. This will include potential barriers to entry for new investors and erosion of present investor confidence. When Kenya announced its capital gains tax plans in September, the shares of Canadian firm Africa Oil, one of the major exploration companies working in the country, dropped. This shows how far-reaching the effect of the new tax regime can be.
Kenya has licensed 41 out of its 46 oil and gas blocks to 21 companies, showing the country’s eagerness to start making money from oil. Its Petroleum Bill is also expected to be passed by Parliament this month. The bill proposes, among other things that petroleum production be managed under the Energy Regulatory Authority; it stipulates how the revenues from future oil and gas extraction should be shared.
There also contains in the bill, a proposal to establish the Kenya National Sovereign Wealth Fund. The fund would build a portfolio of investment in Kenya and abroad, and it will consist of a stabilization fund, a future generation fund and an infrastructure and development fund. However, with the continued decline in oil prices, Kenya may have to wait close to a decade to actualize these plans.
East Africa gets a wake-up call
The multiple oil finds in the region may be good news for East Africa, but it is coming at a bad time. The present oil glut which is making prices fall seem set to continue, as the much awaited meeting of OPEC ended with the cartel maintaining its output at 30 million barrels per day. Some analysts have said that oil prices could fall to as low as $60 per barrel if OPEC does not agree to a significant output cut.
With oil-based economies struggling under the impact of the price fall, it is unlikely that prospective oil producers will get any new investments in the mean time, as investors hold back to see where the oil market heads in the coming months.
Although the current trend in the oil market is not expected to play on for too long, East Africa might have just gotten a wake-up call. It has to ensure it does not get carried away by the natural resources boom and fall into the Dutch disease risk. The region should continue its market integration and focus on strengthening its manufacturing and agricultural sectors.
VENTURES AFRICA
- See more at: http://www.geeskaafrika.com/ethiopia-should-east-africa-worry-about-the-oil-crisis/6812/#sthash.xqxBUUpr.dpuf
London - Ethiopia plans to sell its first dollar bond as Africa’s fastest-growing economy exploits record demand for the continent’s debt.
Ethiopia picked Deutsche Bank and JPMorgan Chase & Co for fixed-income investor meetings in Europe and the US beginning tomorrow, according to a person familiar with the matter, who asked not to be identified as the information is private.
The proceeds of the sale will be used to fund electricity, railway and sugar-industry projects, Finance Minister Sufian Ahmed said October 8.
The Horn of Africa nation is joining issuers, including Ghana, Kenya, Senegal and Ivory Coast, who sold what Standard Bank says is a record $15 billion (R165 billion) of Eurobonds this year.
Government and corporate issuers are seeking to benefit from investor appetite for higher returns before the Federal Reserve raises interest rates as soon as next year.
“There is an incentive to issue before US rates start to gradually edge up from next year,” Samir Gadio, head of African strategy at Standard Chartered in London, said today by e-mail.
“The market seems to expect that Ethiopia will price among the highest-yielding African sovereigns.”
African government and corporate Eurobonds sales this year beat 2014’s record $14 billion, Standard Bank said on November 13.
Sovereigns accounted for about 71 percent of issuance, according to the Johannesburg-based lender.
The yield on Kenyan dollar bonds due June 2024 was at 5.91 percent today, down from 6.88 percent when it was sold in June.
Zambian dollar bonds returned almost 17 percent this year, while Ghanaian debt earned 9.5 percent, according to the Bloomberg USD Emerging Market Sovereign Bond Index.
Ivory Coast returned 1.3 percent as neighboring countries battled an outbreak of Ebola, while Gabon earned about 11 percent.
Fed Policy
Emerging-market assets have benefited from record-low interest rates in developed nations that pushed investors to seek out higher returns elsewhere.
The end of quantitative easing by the Fed and the prospect of its first interest-rate increase since 2006 is drawing some of that money back to the US.
Almost 30 years after pictures of Ethiopian children with distended stomachs were used to raise money by Bob Geldof and Live Aid, the country is growing faster than any other African economy, at an average of 10.9 percent over the past decade, International Monetary Fund data shows.
Ethiopia’s planned issue could be assisted by technical factors, such as scarcity, as the Eurobond will be the only tradable asset for international investors wanting access to the African nation, Standard Chartered’s Gadio said.
Nile Dam
State Minister of Finance Abraham Tekeste and Haji Ibsa, a spokesman for the Finance Ministry, didn’t answer their mobile phones when Bloomberg called each of them seeking comment today.
Ethiopia is building the continent’s biggest hydropower plant on the Blue Nile River, known as the Grand Ethiopian Renaissance Dam, that will probably increase electricity supply five-fold by 2020.
It may need to invest about $50 billion in infrastructure over the next five years, of which $10 billion to $15 billion may come from foreign investors, the finance minister said last month. - Bloomberg News
Women do an estimated 70 per cent of the farm work in Ethiopia, but because men do the ploughing it is they who are considered to be the farmers. This means men control the family income. Gorta-Self Help Africa is involved in a drive to encourage women to join credit unions and share control of the family finances.
With the support of the Irish credit-union movement it established Yenetsanet Credit Union, in Butajira, an umbrella group for 109 rural savings and credit co-operatives.
About 15,000 people are saving and borrowing from these co-operatives. They must save at least 20 birr (about 80c) a week; after six months of saving they can take out one-year loans. These are for as little as €40 or for as much as almost €20,000, and they are used for everything from setting up beauty salons and cafes to buying fertiliser.
We visit one of the savings co-operatives, where women with babies are queuing to lodge wads of notes. The agency’s inclusion adviser, Mary Sweeney, says it is making a real and practical difference to the lives of women, because they finally have a say in how the household income is spent.
Gete Kerala, who is 38, has received several loans from her co-operative, the most recent being for 33,000 birr (about €1,310), last year, to build a retail unit that she is now renting as a clothes shop. Her four children, aged five to 15, are also members of the savings co-operative. “My life is much better now,” she says. “Before I joined the savings co-operative I didn’t have a job. I had nothing. Now I have built this,” she says, gesturing to the shop, “and I have also a small restaurant.”
Yibeltal Asmare, manager of the Rural Savings and Credit Co-operative programme, says women initially made up 100 per cent of members; then men began to get interested, and they now make up 30 per cent of savers. Co-operative members must vouch for someone seeking a loan, which may explain why the default rate is just 5 per cent.
Sweeney says evidence shows that when women control more household income, children get a greater benefit, as mothers are more likely than men to spend money on food and education.
Less than half the population has access to an improved water supply; in 2011 less than a quarter of the population had access to electricity. Next year the government aims to begin generating electricity from the Grand Ethiopian Renaissance Dam hydropower project, which is expected to be Africa’s largest power plant. It says it will have reached 75 per cent of towns and villages within five years.
