Agriculture: Slower growth, rising demand
NB: only covers commodities in the OECD-FAO report – BRICS include Brazil, Russia, India, China, South Africa
A new report on the future of food production says China’s food security will have a major impact on the future of the food industry.
OECD-FAO, The Organisation for Economic Cooperation and Development-Food and Agriculture Organisation’s ‘agricultural outlook 2013-2022′ forecasts that agricultural growth around the world will average 1.5 percent over the next 10 years, compared to 2.1 percent over the previous decade.
As part of a concerted policy push on food security, Chinese agricultural output had grown to 4.5 times its 1978 level by 2011.
Since 1990, the number of undernourished people in China has fallen by almost 100 million.
But the report predicts that consumption growth will outstrip production growth by 0.3 percent a year – which is good news for African farmers looking to export.
The report suggests that as agriculture becomes a market-driven rather than a policy-driven sector, developing countries will become big players in the demand and the supply chains as yields improve.
Cereal production is expected to increase 1.4 percent per year until 2022, with 57 percent of the growth expected from developing countries.
Meanwhile, 80 percent of the growth in meat production will come from developing countries
ThermoHelix Planning Waste-to-Energy Plant in Ethiopia
ThermoHelix, a Canadian company that manufactures power generation systems from solid waste and sludge, announced plans to finance and erect a Waste-to-Energy plant in Ethiopia.
The company has already submitted its proposal to the Ethiopian Electric Power Corporation (EEPCo) and Addis Ababa City Administration to engage in the waste energy project back in December 2012.
The plant which is proposed to produce 115 megawatt of power from 1,400 tons of Municipal Solid Waste and 1,000 cubic meter of Domestic Sewage Sludge per day. The plant is expected to cost US$ 177 million.
“The City Administration of Addis Ababa is interested and has been very cooperative, agreeing to provide us with seven hectares of land in the Kaliti area. We have also spoken to high level EEPCo officials about our plans and we are still waiting for them to get back to us,” said Daniel Ashagre, ThermoHelix Africa Regional Director.
The company’s proposal has been lauded by authorities for its potential of supporting Ethiopia’s Climate Resilient Green Economy Initiative (CRGE), the Growth and Transformation Plan (GTP), the National Electrification Plan and the city’s Green City Strategy.
ThermoHelix is awaiting the approval of the project by the Ethiopian Electric Power Corp.
Recently, Cambridge International Corporation, a UK based company has already concluded agreement to construct a waste-to-energy facility.
The city of Addis Ababa generates more than 2,000 tons of solid waste per day.
[2Merkato]
Ethiopia PM names new industry, revenue, justice ministers
Source: Reuters – Thu, 4 Jul 2013 – By Aaron Maasho
ADDIS ABABA, July 4 (Reuters) – Ethiopian Prime Minister Hailemariam Desalegn appointed 10 new ministers on Thursday in his second cabinet reshuffle since taking office last year, including a new head of customs whose predecessor was arrested on corruption charges in May.
Hailemariam, 47, became prime minister in September after the death of long-serving leader Meles Zenawi, one of Africa’s most influential political figures who ruled Ethiopia for 21 years and steered its economy into double-figure growth.
So far Hailemariam has shown no sign of a major shift in policy away from Zenawi, maintaining his predecessor’s tight grip on the opposition and focusing on business and the economy.
Ethiopia wants to boost its manufacturing sector and has been wooing Asian economic powerhouses China and South Korea. It has carved out large plots of land for construction of industrial centres.
In parliament, Hailemariam announced Beker Shale as director general of Ethiopia’s revenue and customs authority with the rank of minister, following the dismissal of Melaku Fenta.
Melaku’s arrest in May was the country’s most high-profile swoop against graft for more than a decade. He is one of dozens of revenue officials and businessmen now facing trial for corruption.
Businesses in the region regularly complain of corruption as an obstacle to their work. Transparency International ranks Ethiopia 113 out of 176 nations worldwide in its 2012 perception of corruption index, where No. 1 is considered least corrupt.
That ranking puts Ethiopia above most nations in the Horn of Africa and east Africa regions, although Rwanda is ranked 50.
Hailemariam also appointed Ahmed Abitew as minister of industry, replacing Mekonnen Manyazwel, who will now head a task force on economic planning.
“I have appointed the ministers because they have demonstrated sound political leadership in their work,” Hailemariam told parliament before lawmakers swore in the officials.
Getachew Ambaye was named minister of justice and Shiferaw Shigute education minister, while Belete Tafere took over the newly-established ministry of environment and forestry.
The ministers of foreign affairs, finance, defence, agriculture and federal affairs were all retained.
Hailemariam appointed two additional deputies and new foreign and trade ministers in November. (Reporting by Aaron Maasho; Editing by George Obulutsa and Raissa Kasolowsky)
Ethiopia Increases Spending as IMF Calls for More Private Loans
By William Davison – July 4, 2013
Ethiopian lawmakers approved a 12 percent spending increase in 2013-14 to help support infrastructure development as the International Monetary Fund urged the government to free up credit for private borrowers.
The state will boost spending to 159.4 billion birr ($8.5 billion) in the year from July 8 with about one-third allocated to upgrading roads, State Minister of Finance Abraham Tekeste said today by phone from the capital, Addis Ababa. External sources account for about one-fifth of the 2013-14 budget.
Expenditure is focused on “infrastructure development, human-resource development and basic services,” Abraham said.
The government is implementing a five-year economic development plan through mid-2015 in which it’s spending 569 billion birr on projects including construction of the $4.3 billion Grand Ethiopian Renaissance Dam, which it’s self-funding, supporting industry and laying down rail links.
The $43.1 billion economy of sub-Saharan Africa’s second-most populous nation grew a “robust” 7 percent in the 2012-13 fiscal year and inflation is expected to ease to 6.6 percent by year-end, the IMF said in an e-mailed statement today following a regular consultation. Consumer prices rose 6.3 percent in May from 6.1 percent in April, according to the country’s statistics agency.
Ethiopia’s government should substitute some domestic financing with external, concessional borrowing to ensure private borrowers have access to loans or else slow the pace of its public investments, the Washington-based IMF said.
Credit Absorption
“Sizeable investment spending of public enterprises continues to absorb a large share of domestic financing and constrain credit available to the private sector,” it said.
Ethiopia’s ratio of public investment to gross domestic product is 19 percent, the third-highest in the world, while its investment rate at 7 percent is the sixth-lowest, the World Bank said in a report last month.
The IMF also called on the government to boost the role of private companies in the economy.
Ethiopia runs a mixed economy in which state companies monopolize or dominate key industries including telecommunications, banking and power while it encourages private investment in manufacturing and agriculture.
“A vibrant private sector is essential to attain middle income status,” by the state’s goal of 2025, the IMF said. “It would be important to foster competition in areas where public enterprises enjoy monopolies, and gradually withdrawing from sectors where they crowd out the private sector.”
To contact the reporter on this story: William Davison in Addis Ababa at wdavison3@bloomberg.net
Investment Projects Worth 8.5 Bln. Birr Underway in Amhara Region
Written by Meraf Leykun Thursday, 04 July 2013
More than 550 foreign and domestic investors with over 8.5 billion Birr combined capital are undertaking various projects in North Shoa Zone, Amhara Regional State in Ethiopia during the current Ethiopian fiscal year, the zonal industry and urban development department said.
Department Head, Dawit Yeshitila told Ethiopian News Agency, the projects include, agro-industry, construction, metal work, hotel and tourism.
Dawit said the Regional Administration have transfered more than nine hectares of land for the projects.
Projects, which have already gone operational have created more than 20,000 jobs, he said, adding, the remaining project are expected to create over 56,000 jobs.
Source: Ethiopian News Agency
Ethiopia Approved US$ 8.5 Billion Budget for 2013-14
Written by Meraf Leykun Thursday, 04 July 2013
The Ethiopian House of Peoples Representatives approved 159.4 billion Ethiopian birr budget for fiscal year 2013-14.
The government will boost spending with 12 percent increase in its budget to support infrastructure development.
About one-third of the budget is allocated to upgrading roads, State Minister of Finance Abraham Tekeste told Bloomberg by phone from the capital, Addis Ababa. External sources account for about one-fifth of the 2013-14 budget.
The Ethiopian government is implementing the Growth and Transformation Plan, a five-year economic development plan through 2015 in which it’s spending 569 billion birr on government projects.
Source: Bloomberg
ERA to Launch 135km Asphalt Road Project
Written by Meraf Leykun
The Ethiopian Roads Authority has finalized Preparation to construct the 135km long Debreberhan-Ankober-Dulecha-Awash Arba asphalt road, which is part of the fourth road sector development program.
The Authority’s Communication Directorate told Ethiopian News Agency that the road will be constructed at a cost of 2.5 billion Ethiopian birr.
The project cost will be financed by the International Development Association and the Ethiopian government. The road, which links Ethiopia with neighboring Djibouti, is also said to help to further strengthen economic ties between Amhara and Afar regional States.
Source: Ethiopian News Agency
Ethiopia Airways buys 49% stake on Malawi Airlines, Ethiopian will supply two aircraft
Following the disbandment of the country’s airline, Air Malawi, government has unveiled a new airline Malawi Airline Limited to be run in partnership with strategic investors Ethiopian Airlines.
Public Private Partnership Chief Executive Officer (CEO), Jimmy Lipunga disclosed about the new airline during a news conference in Blantyre on Tuesday, saying the joint venture will inject about$20 million (approximately K7 billion) investment.
Lipunga said based on the agreement, Malawi will have 51 percent stake in the new airline with Ethiopian Airlines getting the remaining 49 per cent. He said of the 51 per cent Malawi’s shareholding, 31 will be given out to interested Malawians to be part of the company.
“The strategic partnership has also provided opportunity for the country’s citizens to invest in the country’s new airline. Out of the 51 percent Malawi’s shareholding, 31 will be given out to interested local investors,” said Lipunga.
Lipunga:Call it Malawi Airlines Limited
He added that Ethiopian Airlines would bring in two new aircrafts for Malawi Airline Limited.
Earlier this year, government through a private liquidator, disbanded troubled Air Malawi after years of struggling.
Introduction of the Malawi Airline Limited will easy challenges travellers have been facing when travelling in and out of the country.
The liquidator for Air Malawi recently disclosed that three aeroplanes for the defunct airline will be sold to any interested party.
The three planes are ATR 42 known as Shire, the Boeing 737-300 which was christened Kwacha and the Boeing 737-500 also popularly known as Sapitwa.
In an expression of interest notice published in press, the liquidator said the selling of the planes is part of his mandate to wind up Air Malawi’s operations and pay off all the parastatal’s debts.
The debts run in tens of millions of Kwacha.
Air Malawi for years saw delays, cancellation and suspension of scheduled flights. Currently there are no flights between Malawi’s major cities of Lilongwe and Blantyre.
“There is an additional concern that using the name Air Malawi could expose the new airline to predatory creditors who would wish to create embarrassment on the new airline,” Lipunga noted.
Lipunga said the new deal means the national flag carrier will be back on local, regional and international routes.
Ethiopian Airlines – Kenya Airways: Gap widens in East African skies
Source: The Africa Report
The top two East African carriers contemplated a merger last year, but Ethiopian thinks its prospects are strong enough for it to fly solo.
From labour relations and profitability to geographical balance, Ethiopian Airlines appears to have an advantage over Kenya Airways.
“From the numbers and global ambitions, one can certainly say that Ethiopian Airlines looks more confident and ready to face the future compared to KQ \[Kenya Airways],” says Eric Musau, an analyst at Standard Investment Bank.
Ethiopian Airlines became the first African carrier to start flying Boeing’s 787 Dreamliner, receiving its first of 10 aircraft in August 2012 as part of a plan to boost revenue five-fold by 2025.
When Kenya Airways mooted plans for a merger with Ethiopian last November to fight off foreign carriers, Addis Ababa was dismissive of the idea.
Casual observers read Ethiopian’s reactions as a cheeky shot from an arch-rival, but analysts viewed it as another sign of the growing gulf in the financial health and confidence of the two East African carriers.
Turbulence
Ethiopian Airlines is a well-managed state-owned company, and proud of it. “The fallacy is that whatever government owns is a failure. It is not,” chief executive Tewolde Gebremariam told the Africa CEO Forum last November in Geneva.
Both carriers struggled but remained in the black during a tough few years for the African airline industry.
Ethiopian recorded net profits of $40m for the year to June 2012, a drop of 40 percent, while Kenya Airways recorded a 53 percent drop in net profits to $19.6m in the year to March 2012.
Then in November KQ issued a profit warning for the year ending March 2013, reporting a net loss of $57m for the six months to September 2012.
Analysts attribute the widening gap between the two airlines to their wage bills and labour relations, choice of destinations, geographical segmentation of their revenue and Ethiopian’s government protection.
Airlines the world over have faced deteriorating labour relations, but Ethiopian has fared better than its African rivals.
Last year the airline convinced its employees to give up part of their salaries and reduce per diem rates in a cost-cutting drive to save $54m.
This was happening at a moment when KQ was locked in a vicious dispute with the Aviation and Allied Workers Union over a plan to slash 600 jobs.
The union secured a restraining order against the company. The case is still in court.
High Wages
KQ’s wage bill more than doubled over the past six years to $156.3m in the year to March 2012, while the total number of staff members rose by more than 16 percent to 4,834, meaning that on average each employee pocketed $32,322 a year.
In contrast, in the year to June 2011 the 6,286 employees on the Ethiopian Airlines payroll took home $16,255 on average.
“The difference between the two markets is that Kenya has a more liberal labour market \[but] with strong unions compared to Ethiopia,” says Sammy Onyango, chief executive of Deloitte East Africa.
Ethiopian Airlines, with a fleet of 49 passenger planes and 70 destinations, is making faster head- way in key growth markets such as Asia. Ethiopian Airlines draws 35 percent of its revenue from Asia and the Middle East, compared with 19 percent for KQ.
“Ethiopia has a balanced geographic representation and is benefiting from its huge presence in Asia,” explains Mbithe Muema, an analyst at Renaissance Capital.
Last September, Kenya Airways chief executive Titus Naikuni admitted that the company’s revenue is “not growing as fast as we had anticipated”.
KQ plans to spend $3.6bn over the next five years to increase its fleet and number of routes, including the purchase of 10 Embraer 190s, nine Dreamliners and one Boeing 777-300ER.
72 per cent of Gibe III construction completed
Addis Ababa, July 4, 2013 (WIC) – Some 72 per cent of construction of Gilgel Gibe III Hydroelectric Power Project is finalized, Project Civil Work Supervisor, Engineer Abayneh Getnet said.
During a recent visit of media professionals of South Ethiopia Peoples’ State to the project, Eng. Abayneh said construction of the project launched six years ago is being carried out successfully.
Eng. Abayneh said 1.47 billion Euro is allocated for implementation of the project.
According to ENA, he said upon going fully operational the project will have capacity to generate 1870MW electric power.
Over 338 mln. Birr worth investment projects underway
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