Press Review, September 7, 2011
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1. The Reporter
COMESA introduces new business opportunity for Ethiopian businesses
Representatives of the Common Market for Eastern and Southern (COMESA) this week introduced new business opportunities that provide preferential treatment for businesses in Ethiopian and COMESA states at a half-day seminar. Businesses in COMESA states will now be able to participate in tenders issued in one another’s countries with a fifteen percent preferential treatment against international bidders, according to seminar chair Gashaw Debebe, secretary general of the Ethiopian Chamber of Commerce and Sectoral Associations.
“Unlike previously, a prospective company in any one of the COMESA states could now participate in tenders issued by governments or public agencies in any one of those countries,” Gashaw said. “And companies within that region will be given a fifteen percent preferential treatment over international bidders outside the region for supply of goods, while they will have a ten percent preferential treatment for rendering services against international rivals.”
While still only nationals are allowed to participate in micro and medium level tenders, companies in the region will have a fifteen and ten percent special treatment on international tenders issued by governments and public agencies in the region, according to Gashaw.
“This is a new business opportunity in the region,” he said. “For the supply of goods, tenders worth less than USD 500,000 shall be treated domestically. Similarly, bids for consultations and other services worth less than USD 100,000 will be reserved for domestic companies.”
However, some professionals are saying that the fact that Ethiopia has not yet signed the COMESA Free Trade Agreement (FTA) will minimize the opportunities expected to be gained from the initiative.
All the same, Gashaw said that companies in Ethiopia will enjoy the preferential treatment although tariffs will be levied on their exports to COMESA states as the country has not signed the FTA.
Following a procurement reform taken by almost all COMESA states, the seminar was organized by COMESA in collaboration with the Ethiopian Chamber of Commerce and Sectoral Associations at the Sheraton Addis.
The COMESA procurement reform initiative is grounded in the belief that the strengthening of public procurement system in member states is a fundamental ingredient promoting economic development and competitiveness in the region. Established in 1994, COMESA has now put on the table new business opportunities for companies in COMESA states with 400 million people. Established in 1994, COMESA comprises nineteen Eastern and Southern African countries, of which fourteen has sign the FTA.
Ethiopian set to buy four B777 freighters
The Ethiopian Airlines is concluding a deal with the US aircraft manufacturer, Boeing, for the purchase of four state-of-the art Boeing 777 freighter aircraft.
A senior official of Ethiopian told The Reporter that the management of Ethiopian and executives of Boeing have been negotiating for almost a year for the purchase of the new aircraft. The official said the two parties will announce the deal soon.
A representative of Boeing has confirmed the new deal. The representative said the agreement will be signed in the coming few weeks. The growing demand for cargo flight services prompted Ethiopian to place orders for the new B777 jetliners. Recently Ethiopian signed a lease agreement with GECAS for two B777 aircraft to be delivered in September 2012. The lease agreement for the two B777 is ten years.
The B777 freighter aircraft has the capacity to haul 100 tons of cargo at a time. The catalogue price of the aircraft is 260 million dollars. Boeing will deliver the four aircraft after three years.
With six freighter aircraft (two B757-200F, two B747s and two MD 11s) Ethiopian has the largest cargo fleet in Africa. When the two leased B777 arrive, Ethiopian will sell one of the MD 11 it owns and return the other leased MD11. And when the first two B777 are delivered after three years Ethiopian will return the two leased B747s to Southern Air, the American leasing company.
In the 2010-2011 fiscal year, Ethiopian cargo traffic has grown by 20 percent to 160,000 tons when compared to the previous fiscal year. The growing horticulture and meat exports have significantly contributed to the surge in cargo traffic.
At the 17th the African Aviation and Allied Business Conference held from August 28 to 30 in Darses Salaam, aviation authorirties, airline executives and representatives of IATA (International Air Transport Association) and ICAO International Civil Aviation Organisation, Boeing and Bombardier have expressed their appreciation to the fast-growing airline.
Mesfin Tasew, chief operating officer of Ethiopian, who made a presentation at the meeting, explained the growth the national flag carrier is registering. Mesfin was asked by participants if Ethiopian was receiving support from the Ethiopian government. Mesfin outrightly said that the airline does not get any financial support from the government. “Our government has priorities like schools, hospitals and other basic social services and does not have the luxury to invest in the airline. I want to stress this. We do not get a penny from the government. The airline generates revenue from its operations and invests in itself,” Mesfin said. Mesfin received a round of applause from the audience. The 17th Aviation and Allied business conference held at the Kilimanjaro Hotel Kembeski attracted more than 200 delegates.
The African Airline Association (AFRAA) took advantage of the aviation conference in Dar es Salaam to expose once again the lack of implementation of the Yamoussoukro Declaration, besides highlighting on behalf of their members, the pressing issues of investments in the aviation infrastructure and the brain-drain of highly-qualified professionals to particularly the Gulf region.
The Yamoussoukro agreement, signed in 1999, was due to have been fully operationalized by 2002, but now, nine years later, several African Union (AU) member states still have not made an effort to implement its provisions. AFRAA’s Secretary General Elijah Chingosho also spoke on taxation, another deterrent to the growth of aviation.
The conference was officially opened by Tanzanian President Mr. Jakaya Mrisho Kikwete and brought together over 200 participants, mainly from the region, but also further abroad. Regulatory staff had come alongside government delegations, representatives of a number of African airlines, and from ICAO, IATA, and the FAA. The theme of the meeting, "Air Transport in Africa – Strengthening Leadership, Sustaining Growth," discussed since Monday this week a range of pressing issues, among them the failure of governments to promote inter-Africa air traffic, while opening their skies to foreign airlines.
Arik Air asks permission to fly to Addis
The Nigerian private airline, Arik Air, has asked the Ethiopian Civil Aviation Authority (ECAA) for permission to start flight services to Addis Ababa. At the 17th Aviation and Allied Leadership Conference held in Dare es Salaam, Tanzania, this week, the director general of the Nigerian Civil Aviation, Dr. Harol de Muren, said that Arik Air asked permission for traffic rights nine months ago. However, he said the Ethiopian authorities did not give the green light to Arik Air to start operation. “Ethiopian Airlines has 14 weekly flights to Nigeria. But when one Nigerian airline asks permission to fly to Addis Ababa it has been nine months but they did not yet give the permission,” De Muren lamented. “Ethiopian generates 40 percent of its revenue from Nigeria,” he added.
A representative of Arik Air who attended the conference told The Reporter that Arik Air’s delegation was in Addis last week to discuss the issue with officials of ECAA. “They are working on it,” he said.
A senior official at ECAA told The Reporter that Ethiopia and Nigeria have a bilateral air service agreement, adding that Ethiopia will not deny traffic rights to a Nigerian airline which fulfills the requirements of ECAA. However, there are certain issues that need to be assessed and we are holding talks with the management of Arik Air, the official said.
Mesfin Tasew, Ethiopian chief operating officer, told The Reporter that the management of Ethiopian has no objection if Arik Air starts flights to Addis Ababa. “The two countries have a bilateral air service agreement on which basis they would get the traffic right. It might be a matter of procedure. We believe in open skies agreements. Ethiopian has been at the forefront in promoting the Yamoussoukro Declaration, an agreement that has been endorsed by African states to liberalise African skies for African carriers.” Arik Air was established in 2002 by a renowned Nigerian businessman, Sir Arumemi-Ikhide .
Developing countries require USD 1.1 tln for great green tech-transformation, UN report says
United Nations 2011 report on World Economic and Social Survey says that 1.1 trillion dollars per year is required for major investment in new technologies to build green technologies in developing countries. The report, which was disclosed last week at the United Nations Economic Commission for Africa (UNECA) stated that over the next 40 years 1.9 trillion dollars will be needed for incremental investment in green technologies.
At least, one-half of the stated amount of the required investment should be made in developing countries to meet their rapidly increasing food and energy demands through the application of green technologies, Bartholomew Armah, Senior Economic Affairs Officer with Economic Development and NEPAD Division (EDND) said during the press briefing held at the UNECA.
According to the report, about 40 percent of people (numbering 2.7 billion) rely on traditional biomass, such as wood, dung and charcoal, for their energy needs. Armah in his presentation, made clear that 20 percent of the people, mainly in sub-Saharan Africa and South Asia, have no access to electricity.
To achieve a decent living standard for people in developing countries, especially the 1.4 billion people still living in extreme poverty, and the additional 2 billion people expected worldwide by 2050, much greater economic progress is needed, the report says.
2. Capital
Indian investors eyes Ethiopian Agriculture
A delegation of more than 30 Indian investors interested in farming visited Addis this past week to expand India’s foothold in the fast growing agricultural sector.
Subhash Chandan, second secretary of the Indian embassy in Ethiopia said India is a leading nation in innovation.
‘Indian technology is appropriate, affordable and valuable and this can help Ethiopia accelerate its development. Indian investment in Ethiopia currently stands at 4.5 billion USD and is dominated mostly by floriculture and agriculture,’ Subhash said.
Sheila Sudhakaran assistant secretary general of the Federation of Indian Chambers of Commerce and Industry (FICCI) explained that the visiting delegation comes from a diverse area and includes machinery, agriculture, and health, but all related to farming. They [the visitors] hope to share ideas and business opportunities related to farming.
She said, “Our relationship with Ethiopia is primarily related to agricultural development,’ she said.”
Eyesuswork Zafu president of the Ethiopian Chamber and Sectoral Associations evoked the long ties of Ethiopia and India with a reference to ‘Banyans’ the Hindu Indian traders of Gujarati (Indian province) origin who were present in Ethiopia during the imperial time and the Indian teachers who started to come at around the same period.
‘If it wasn’t for the period when Ethiopia was under the communist military junta regime and when India had its period of introspection, business ties between the two countries would have been much larger than its already is today,’ he said.
Ethiopia’s exports to India are mainly agricultural exports with the bulk of them consisting of pulses and gum. The most lucrative of Ethiopia’s exported produce is coffee. India’s biggest exports to Ethiopia come from the fields of construction, education and electronics.
The two countries relationship however has diversified to other sectors, as the Indian Prime Minister Manmohan Singh noted in May during the India-Africa summit held in Addis Ababa. He announced India would support the development of a new Ethio-Djibouti Railway line by offering 300 million US dollars. India also provided loans for sugar projects in the country through the Export-import bank of India (EXIM) which opened its offices in Addis Ababa last year.
The race for Meta brewery continues
The biggest global and local breweries and companies have entered the bidding competition to own Meta brewery, the second largest brewery, submitted their bids for Meta in a competition that is expected to end in the coming week.
About six companies participated on the previous Meta bid that was cancelled by Privatization and Public Enterprises Supervisory Agency (PPESA) in May this year.
The Privatization and Public Enterprises Supervisory Agency (PPESA) cancelled the previous Meta bid which had six companies participate. According to sources, almost all previous bid participants like Heineken, Diageo and Sab Miller with South West Development have submitted their bid proposals to take total ownership of the brewery.
At the Hilton Hotel on Thursday August 11, Heineken officially concluded its acquisition of Harar and Bedele breweries in the presence of PPESA. Still, the Dutch company also has a strong interest to participate in the Meta bid.
Heineken has paid 85 million dollars for Bedele and 78 million for Harar. The brewery also has plans to introduce production of the internationally popular Heineken beers in the two breweries in addition to their usual brands, although they have declined to say when this will commence.
Lifan says no more waiting for 620
The wait is over for Lifan’s model 620. The assembly company which is mostly known for car models; 620, 520, 520i, Foison and the popular 320 is now producing more 620 models to satisfy the increasing demand of the model.
Previously it took over a month for the company to assemble the 620 after payment, depending on how long it took to ship in parts from China and customs documents for components clearance.
The company also assembles other models of cars but they are not available on immediate delivery basis. It takes Lifan two months to give out the 520 and four months for the 320 to customers. Only the 620 model will be launched immediately due to the increase number of production.
Lifan is also planning to surprise its users by launching new models. Roger Pial, Lifan’s marketing manager, told Capital that new vehicles with improved technology will be assembled in Ethiopia shortly. The new cars are targeting the middle class market.
Lifan is also producing a 320 model with a different roof color and beginning next month customers will have the option of changing the color of their roof for three hundred birr which is only 30 percent of the total payment.
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Ethiopian, Eritrean FMs in New York as sanctions loom against Asmara
Ambassador Berhane Gebre-Christos, Minister of State for Foreign Affairs, had a meeting with the UN Sanctions Committee to discuss Eritrean activities and Eritrea’s failure to respond to previous UN Resolutions,” a statement by the Ministry of Foreign Affairs (MoFA) announced on Friday.
The report said the Eritrean Government [in January] conceived, planned, organized and directed a failed plot to disrupt the African Union in Addis Ababa by bombing a variety of civilian and governmental targets.
“The Security Council needs to focus on what Eritrea is doing in Somalia with Al-Shabaab, and what it tried to do in Addis Ababa last January;” Ambassador Berhane told the international body. “No sane people would do what the Eritrean leadership did in May 1998; nor would they indulge in state-sponsored terror as the Eritrean leadership did last January.”
New roads for 17.4bln birr
Nearly two thousand kilometers of new road work at a cost of seventeen and a half billion birr is on the making by the Ethiopian Roads Authority. Construction, reinforcements, rehabilitation and connections will be undertaken under the plan.
‘We plan to reinforce 10 high use roads with Asphalt measuring 155km, on the outskirts of Addis Ababa. Three are expected to be finished this year while six others will continue. Next year the Dejen- Debre Markos project is set to begin, according to Tewoddaj Melkamu lead communicator at the Ethiopian Roads Authority.
Twenty one roads will be rehabilitated and all but three are ongoing projects. Three will begin construction next year. Connecting streets will also see upgrades as 55 rural, gravel roads will be worked on; 34 are ongoing and 21 are new.
Mekele- Serte, Woregeje, Menebegena- Lemlem Bereha, Yabelo- MetuGefersa (part of the Addis Ababa-Mombasa highway) and Dejen-Tit-Felegeberhan are major road projects in the 237 endeavors totaling 564km in length. Among these, fourteen areas will be getting road access for the first time.
The authority plans to get the 17.4 billion birr needed for the project from the government coffers as well as foreign financial assistance. The government will cover 13.7 billion birr and the 3.56 billion birr are expected to come through loans and 118 million from foreign donations.
Last fiscal year, the authority budgeted 15.3 billion birr while it actually spent 16.3 billion birr. The additional funds came from both domestic and foreign sources. The authority was able to achieve 93pct of the total road it hoped to develop, building 1624km out of the planned 1747km of roads.
Planned leather exports: 206 million dollar
Ethiopia plans to export 206 million USD worth of leather goods in the 2011/12 fiscal year almost twice the amount of money it received last year, when it earned only 104.1 million of the 180.4 million dollars it hoped to get from leather exports. To meet the new goal, the institute hopes to make a lot more shoes; 54,000 per day instead of the current 19,000.
Wondu Legesse director general of the Leather industry development institute (LIDI) said Ethiopia’s export target this fiscal year achieved only 73pc of what they had hoped. He said factories need more accessories, modern structures, and better business plans to produce more. He also said there was a lull in demand between November and March. He feels factories also need to improve their professionalism as only eight out of 24 factories are staffed by people with experience in the field. If factories do not address the shortage of accessories new companies will have a difficult time starting and they will face still competition from Chinese imports, he said.
Because Ethiopia has cheap labor the climate for leather is still favorable and he expects the government’s plan for fully finished leather exports to be successful.
“We have made twining agreements with two Indian leather schools; Central Leather Research Institute (CLRI) and Footwear design and Development Institute (FDDI), to boost our exports and transfer our products into finished products,” he told the assembled journalists.
Leather experts from the two institutes will come in four phases and will have their merit evaluated based on their performances and be paid 5000 dollars a month although the cost will be compensated by the technical expertise and technological transfer that the experts will bring to the sector . (The number of experts who come in phases)
However he acknowledged that the quality of leather supplied to manufacturers has gone down from 40% of hides and skins supplied a couple of years ago to less than 15% now.
The institute in order to achieve its next year targets has partly pinned its hopes on new leather companies such as the Chinese New Wings Company, which has a manufacturing capacity of 8,000 pairs of shoes a day and a German company called Ara which is expected to eventually reach 7,500 pairs of shoes daily.
Yet more capital will be required if new factories are to develop in the industry.
A surtax is being collected to help pay the cost of cleanup in order to protect the environment. Currently Indian investors are setting up a treatment plant in Modjo city in Oromia regional state Leather factories could be producing more skins as well; as much as 44 million a year. Currently they supply only 8.5 million. The institute hopes to increase the amount to 21 million skins and hides. They are planning to import some to extension programs in the region if more are needed.
Wondu said Ethiopia will meet their targets because of the quality of its leather.
The Ethiopian government plans by the end of the Growth and Transformation plan to export 1 billion dollars worth of leather products.
Ethiopia counts down to host 16th ICASA
Only 100 days remain for Ethiopia until it hosts the sixteenth International Conference on AIDS and STI (Sexually Transmitted infections) in Africa (ICASA) which is planned to take place between the fourth and eighth of December this year. The global gathering which is the biggest of its kind in the history of Addis Ababa is expected to bring together 10 thousand delegates consisting of politicians, scientists, activists, and also people living with HIV/AIDS.
As the big occasion approaches the more the authorities are becoming concerned about working together to achieve a smooth operation and conclusion. Ethiopia can potentially benefit in terms of boosting its image and increasing confidence in conference tourism in the long run. So far, the Ethiopian authorities have been aggressively assessing the areas of accommodation, transportation, tourism and communication.
Until now, about 127 standard hotels and guest houses have been identified as places to be assessed for quality and efficiency. Out of the total, 75 of them with the capacity to host 1,900 delegates have already agreed to block their rooms for conference attendees. Addis Ababa has the capacity to host about five thousand delegates within the tourist class accommodations. Attendees are expected to be accommodated by those hotels and lodges in the nearby towns surrounding Addis Ababa within a 100 kilometer radius. There is also a plan to make use of government owned guest houses like that of Addis Ababa University’s training facility in Akaki.
About 2,900 abstracts in the area of science, leadership and community have already been submitted for the upcoming conference. Out of the total, about 800 abstracts are expected to be covered in the five day long conference. More than four thousand delegates from 160 countries have already registered so far to participate in the much anticipated conference.
The ‘Marathon Meeting’, a pre-conference meeting of stakeholders, will decide upon which abstracts will be presented how the conference will progress, and who should be entitled for a scholarship is currently underway as of last Friday. The meeting is scheduled to conclude this Monday. So far, the secretariat of the conference has organized a consultative meeting and a training session for members of the media, and hospitality business managers in a bid to ensure that the gathering succeeds both locally and internationally.
The event will take place in the Millennium Hall. Ethiopia’s international business tycoon, Sheik Mohammed Al Amoudi, has allotted 1.6 million dollar to help prepare the hall for the event.
The conference is the 16th in a series of conferences that have focused on AIDS in Africa for the past 25 years. It aims at putting all the necessary pressure upon the concerned bodies that deal with the disease so that they might perform more effectively with increased determination in sharing new scientific knowledge and practices. The conference aspires to create a debate about the most effective responses from leaders in governments, non-governmental organizations, private business entities, communities and from the very people living with HIV/ADIS. It also has the objective of identifying priority areas that need proper strategy, programs and policy responses to mitigate the aids scourge.
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