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Month: November 2020

Instability Casts Shadow on Sesame Market

Posted on by Web Master

He was a farmer who came to the city looking for international buyers for his crops. The plan was to come to Addis Abeba and sort out an export license and hopefully seal deals with interested buyers. As the head of his cooperative union, Desalegn Legese would also be representing 32,000 other farmers from his hometown, each with small plots of their own. The 40-year-old farmer has been growing sesame since his return home after graduating from Meqelle University in 2004.

Desalegn worked hard to make a living on his plot in Qafta Humera Wereda in West Tigray Zone and eventually was elected general manager of the Setit Humera Cooperative Union, a constellation of 20 primary farmers unions in Setit Kebele within the Wereda. He says his work ethic and modern education played a big role in that.

Qafta Humera is among the major areas of sesame production well known for its high-quality aromatic white Humera sesame. The area produces 100,000ql to 150,000ql of sesame a year with Setit, where Desalegn resides, generating up to 40,000ql of the lot. The farmers in Setit also grow sorghum, but the white Humera sesame is especially suitable for baking and has high demand in the market. It was with a plan to start exporting their sesame and get an even better value for it that Desalegn came to Addis Abeba.

“It was a Saturday when I left,” he said. “I left thinking that I would be back home soon. I didn’t prepare for anything.”

He arrived in Addis Abeba on a Saturday, and things started well. Talks with potential sesame buyers were bearing fruit, and he was making headway at getting the necessary grants for export at various public institutions. In fact, Desalegn had already talked to and signed contracts with potential buyers when all hell broke loose.

At midnight on Tuesday, November 4, Desalegn and the rest of the country woke up to the news of armed conflict that had broken out between the federal government and the Tigray regional administration, one of the 10 regions in the country and where Desalegn was born and raised. Communications were promptly shut off following what the government dubbed a law enforcement operation against the region’s leaders. Borders were militarised.

“I don’t know what is going on there,” he said.

He hasn’t been able to communicate with anyone for over two weeks. It is harvest season back home, and he is concerned about the fate of his crops and many others like him.

“Sesame isn’t like other crops. It’s susceptible and easily damaged,” explained Desalegn.

He spoke of his fear of fire damage to the crops as well, especially since the area around the farms are covered with dry grass.

“If we don’t sell our crops on time, we lose it to pests when we don’t have sufficient chemicals,” he said.

The option of storage, if one, is also not ideal for sesame crops. The seed loses moisture and, consequently, weight if it is stored in warehouses for long periods of time. In the past, farmers would store sesame in the hope of selling it for a higher price when the market supply ran low and demand shot up.

Now, however, there is no significant price variation across seasons and storing sesame in warehouses is not beneficial to the farmers, according to Desalegn.

“If you store a quintal of sesame for two months,” he said, “it will lose five to 10 kilograms. It has to be sold immediately.”

At the time of his departure for the capital, the farmers in Humera had already started collecting sesame to later supply to buyers.

Setit Cooperative Union has come a long way since its establishment in 2004. It had endured difficult circumstances and was starting to recuperate when the conflict began, according to Desalegn. The Union began small and then started offering market facilitation services to members by availing their produce to buyers through the Ethiopian Commodity Exchange (ECX). This enabled the farmers to export the sesame that they grew on their land.

The Union would either sell the sesame directly or for commission prices. At times, it would buy the product from its primary unions and present them for export itself or aid the farmers as a middleman. When acting as a middleman, Setit charges commission from the income in return.

As the Cooperative Union paid 50 Br or more above the market price a quintal, the primary unions who supply sesame preferred to sell or supply their products to Setit, according to Desalegn.

However, since 2014, Setit has been operating with heavy losses on its sesame export operations. The price of sesame in the domestic market was constantly increasing, while the product was being sold at lower prices in the international market. Exporters were buying the sesame for 5,000 Br a quintal and selling it for 4,000 Br in the international market.

Many sesame traders had been scrambling for the limited supply by offering higher prices, thereby driving up the local market price.

Although Setit earned 850,000 dollars from the export of sesame products in 2014, it was forced to cease all sesame export operations that year due to market price inflation issues.

Despite this, many in the sector have chosen to remain in the sesame export business. In fact, merchants were exporting sesame at a loss due to the limited availability of hard foreign currency in the country.

“Even though they operate with losses, it has still been essential [to export] for many traders, because they import commodities using the foreign currency generated from sesame exports,” said Desalegn.

In October 2019, the Ministry of Trade & Industry issued the Export Contract Registration & Performance Directive to avoid under-invoicing of agricultural goods in the international market by setting price caps. This enabled traders and exporters to get sesame products at lower prices than they had been previously. A quintal of sesame that was being sold for between 5,000 Br to 6,000 Br before the law was issued has since been lowered to 3,500 Br on average this year.

Following the regulatory measures taken by the Ministry, the Union has been undergoing preparations to resume sesame export activities.

The instability, however, has disrupted the sesame trade in the area, and traders and exporters are no longer being supplied with the white Humera sesame. Private exporters are also facing challenges due to the situation in Tigray. Sesame is no longer brought from Humera.

Tekhaf Trading Plc, a company engaged in the export of sesame and soybeans, used to buy sesame mainly from Humera. Last year, the company exported 600ql of sesame, and 70pc of it was supplied from Humera. Tekhaf is now turning to other areas to look for sesame products for export, according to Anteneh Zewdie, general manager at the firm.

“We’re also focusing on other pulse crops for export,” said Anteneh.

The instability comes in parallel to limited global sesame production this year. China and India, major sesame producers, have lower outputs due to heavy rainfall, according to the general manager.

“Therefore, higher demand and higher prices for sesame are trending in the international market,” he said. “Unfortunately, we don’t have much production.”

Another exporter, a namesake of Desalegn’s hometown, Setit Trading Plc, is among the major sesame buyers in the area and owns a warehouse for storing sesame.

“We’d been preparing to export if not for the situation,” said Kidane Mariam G. Tsadik, co-owner and general manager of the company. It has been unable to load the sesame that is being stored in its Humera warehouse, according to the co-owner.

The conflict has not only cast a shadow over the market in west Tigray but also over sesame production and sesame agriculture across the nation.

Farmers in Genda Wuha, located 40Km east of Metemma, have noticed a sesame market disruption in the area. Many are rushing to sell their sesame due to security concerns, according to Zeleke Mamo, a farmer who also serves as general manager of the Metemma Farmers Cooperative Union.

During previous busy seasons, there used to be 30 to 40 trucks loading sesame in the area, but now, unusually, one can see up to 70 trucks a day.

“There is heavy congestion,” said Zeleke.

Besides this, many farmers are also halting sesame production and growing sorghum instead. This could be hard for the sesame export business sector and the country in terms of foreign currency, according to Geremew Terefe (PhD), manager at the Sesame Business Network.

The country’s sesame production and revenues from its export is in an alarming decline. Just last year, Ethiopia received an export receipt of 347 million dollars after exporting 215,190tn, representing half the volume it had five years ago.

The numbers for the first quarter of this year are worrying. Shipping off close to 19,000tn, exporters have generated a mere 27 million dollars, signaling that the prospect for the whole year may not be pleasant.

In the kebelewhere Desalegn lives, 80pc of the land is covered with sorghum this year. Similarly, the 222,000ha of land that was covered by sesame in Genda Wuha Kebele last year has decreased to 145,000ha.

This has to do with the decline in the price for sesame last year, particularly in March and April, according to Geremew.

“Many new edible oil plants that use other oilseeds will turn to sesame if the decline in price continues,” he said. He explained that due to the high prices of sesame, edible oil factories have instead been utilising noug, soybean, cottonseed, sunflower seed and others.

The magnitude of the effect of the instability in the area could be massive as the West and Northwest zones of Tigray Regional State are the source of 35pc to 40pc of the country’s total sesame production, according to Geremew. Combined, the Amhara and Tigray regional states produce about 75pc of Ethiopia’s annual output.

Geremew urges farmers to use bags that guard against pests and desiccation to protect their products.

This season is crucial to sesame production, and the conflict may affect the farmers and people involved in the value chain, says the expert.

“Banks and cooperative unions should work together in availing revolving funds to farmers,” he said. “Many sesame farmers have challenges regarding access to finance since they’re asked for collateral.”

Desalegn believes the decline in sesame production is because people pay more for sorghum nowadays. Sorghum also has higher productivity. A hectare of sorghum can yield 25ql to 30ql, but a hectare of sesame yields less than two quintals.

“The cost of production of sesame is also far higher than sorghum,” he added.

Even so, this is far from what occupies Desalegn’s mind these days.

On Ethiopia’s Debacle, Washington Speaks in Multiple Voices

Posted on by Web Master

From American foreign policy bigwigs to legislators in the Senate, statements coming out of Washington, DC, on Ethiopia’s current conflict lack unanimity and in some cases are contradictory. It is a moment of uncertainty and confusion whereby members of the outgoing administration of Donald Trump speak in manners that are contrary to those in the transitional team of Joe Biden, the incoming president.

The latest in a series of statements made by American officials since the start of the conflict on November 3, 2020, came from two senior diplomats in the Trump administration. Tibor Nagy, a former ambassador to Ethiopia now serving as an assistant secretary of state for African affairs, and Michael Raynor, United States ambassador to Ethiopia, briefed the international media virtually last week. It was their first briefing on the matter; it could also be their last.

To the delight of those in Prime Minister Abiy Ahmed’s administration, the ambassadors put the blame squarely on the TPLF, accusing its leaders of “first attacking” the Northern Command and characterised the missile attacks on the Asmara airport as an “unacceptable and dangerous” attempt to internationalise the conflict.

The ambassadors who view Ethiopia as a “linchpin” in a troubled region would rather want to see the status quo as the only way forward, an African affairs analyst said following the briefing late last week.

“Ideologically, they seem to see no alternative to Abiy,” he told Fortune.

Perhaps his view is informed by the ambassadors contemplating the motivation of TPLF leaders in their preemptive move in neutralising the Northern Command from deployment against them. They believe the TPLF leaders have an agenda to depose Prime Minister Abiy from power and reassert themselves into “a prominent position that they had atop the Ethiopian political spectrum for the last 27 years.”

This was not a popular statement in some quarters. It is viewed as a deliberate attempt to skirt around the issues of the alleged involvement of the Eritrean government in the conflict, the relentless aerial bombardment of targets in Tigray with reported civilian casualties, and their silence on the jailing of political opponents. When they spoke about atrocities committed against civilians, they pointed their fingers squarely at TPLF forces.

“We condemn the November 12 massacre in Mai-Kadra, apparently perpetrated by the TPLF soldiers and militia as they retreated from the town,” said Assistant Secretary Nagy.

This has angered at least one TPLF leader, who denied involvement in a massacre of civilians estimated to number 500. Briefing the media based in Meqelle on Friday, Getachew Reda, political bureau member of the TPLF, has denied responsibility for the violence, which many human rights advocates believe will be considered a crime against humanity. But he called the Ambassador’s remark a “slip of the tongue.”

“It’s very unfortunate that people who should have known better squarely blame the TPLF and the government of Tigray for having committed something that was committed by people who are collaborating with Abiy Ahmed,” said Getachew, but remained short of saying who the collaborators might be. “It’s unfortunate that the international community, which should have been watching closely, is not paying attention to the humanitarian crisis.”

The international community has begun to raise its voice on the humanitarian toll the conflict has caused, although belatedly. An average of 4,000 people are running for their lives a day, taking refuge in Sudan. The numbers reached 40,000 last week and are swelling by the day. Authorities in Sudan have set up two reception centres and reopened camps that remained closed for over 20 years after Ethiopians had returned at the end of the civil war in the early 1990s. The alarming development in the growing military confrontation has compelled the United Nations High Commissioner for Human Rights to issue a statement warning the situation could spiral out of control.

In Washington, DC, one such concerned voice is Antony Blinken, deputy director at the National Security Council under the Obama Administration and now a foreign policy advisor for President-elect Biden.

“The TPLF and Ethiopian authorities should take urgent steps to end the conflict, enable humanitarian access, and protect civilians,” Blinken tweeted on November 18.

His call for a ceasefire, de-escalation, the protection of civilians, and access to humanitarian corridors was echoed by two senators, Chris Van Hollen and Cory Booker. Fifteen other senators have joined them in co-signing the petition to Secretary of State Michael Pompeo.

Getachew may say “peace has always been in our best interest,” however, pushing for an immediate ceasefire appears to have little chance at the moment, according to the Ambassadors. Both Nagy and Raynor saw a firm commitment from both sides to seeing the military conflict through.

“At this point, neither party, from everything we hear, is interested in mediation,” said Nagy.

Raynor adds: “I will tell you that at the time of my conversations, there was no receptivity to that approach.”

David Shinn served as the US Ambassador to Ethiopia during the height of the bloody war between Eritrea and Ethiopian in the late 1990s. He remains a close observer of the Horn of Africa region, actively analysing development. He sees the current US administration’s bias toward the federal government, but not its apportioning of the blame on the TPLF. The Ambassadors’ focus on immediate de-escalation of tension, cessation of hostilities, return to peace, and the protection and security of civilians may not be in tandem with the federal government’s position not to engage the TPLF.

“It sounds to me like the central government is determined to crush the TPLF militarily,” Shinn told Fortune.

While the militarised conflict is raging in the north to an intensity last seen in the region during the war with Eritrea, the door for its negotiated settlement appears remote. For now. Former Nigerian President Olusegun Obasanjo arrived in Addis Abeba a week ago, seeking an audience with Prime Minister Abiy, to no avail, according to individuals close to the effort.

The very efforts by various international bodies to broker a deal for a ceasefire and resumption of dialogue is being contested as Addis Abeba remains adamant there won’t be talks before the TPLF, and its government, are disarmed. Whether Addis Abeba has given in to the international pressure for dialogue has become a casualty of alternative facts.

South African President Cyril Ramaphosa, who also chairs the African Union, has sent three eminent personalities in the continent to Addis Abeba. His pronounced aim is to “contribute to a process that could lead to a dialogue and an end to the fighting that has cost many lives and extensive displacement of people.”

The understanding of the visit to Addis Abeba of the three envoys – Ellen Johnson Sirleaf, Joaquim Chissano, Kgalema Motlanthe – by Prime Minister Abiy’s administration may not be on the same page with the rest of the world as articulated by Josep B. Fontelles, high representative of the EU for foreign affairs. It is to help bring a peaceful resolution of the conflict in the Tigray region of Ethiopia.

“Military escalation and long-term instability in the country and the region must be avoided,” said Fontelles.

Yet Addis Abeba views the visit by the three former heads of state as no more than receiving a courtesy call, largely out of respect for the African Union. While the State of Emergency office called the news jamming the airwaves on the mediation effort as “fake news,” Ethiopia’s President Sahle-work Zewde remained on the official script.

“The federal government is engaged in a law and order enforcement operation, and the perpetrators of these atrocities will be brought to justice,” she tweeted last week, after her visit to South Africa.

But how the militarised engagement in Tigray will evolve in the coming week will determine the tenacity of the federal government to stick to its adamant position calling for surrender. Hence, facing global pressure mounting by the day for roundtable talks should its forces fail to make their advances to Meqelle, time is of the essence.

The voice from Washington, with the advent of a new administration in two months, may have coherence in due course. Whether it will have a different policy from its predecessor remains an open question. For a foreign policy expert such as Shinn, there could be a number of cases where the Biden administration will implement a different foreign policy than followed by Trump.

“Its position on the conflict in Ethiopia, however, may not be much different,” Shinn told Fortune.

Central Bank Suspends Accounts Opened in Tigray State

Posted on by Web Master

The National Bank of Ethiopia (NBE) has ordered all bank accounts that have been opened in Tigray Regional State frozen. With the new procedure, an individual living in any part of the country cannot withdraw cash from a bank account that was opened in one of the towns of the Regional State.

The freezing order was communicated to the presidents of all of the commercial banks via a text message early last week. No circular or directive was issued for the new order. Two weeks ago, the regulatory bank had commanded all of the banks operating in the Regional State to close doors and fully cease services.

The message from the central bank does not have much explanation, according to bank executives Fortunetalked to.

The new rule from the central bank coincided with the Office of the Attorney General’s announcement delisting 34 companies operating under Endowment Fund for the Rehabilitation of Tigray (EFFORT). The Attorney General also put out an order to freeze the assets and bank accounts of these business entities as of November 16, 2020, accusing them of attempting to transfer and hide their assets.

Established in the summer of 1995 with seed money contributed by the Tigray People’s Liberation Front (TPLF), EFFORT has subsidiary companies engaged in different business areas. Sur Construction, Trans Ethiopia, Mesfin Industrial Engineering, Sheba Tannery, Mega Printing,  Messebo Cement Factory and Meganet Corporation are among the companies whose accounts have been suspended. The Attorney General has also noted that an asset manager will be assigned to oversee the confiscated assets and resources of the companies.

For the past two weeks, all 616 bank branches across the Regional State have closed their doors following orders from the central bank, which claimed that it saw signs of looting of banks in the Regional State. The incident followed the military engagement between the federal government and the regional state administration that began early this month.

On the same date the conflict erupted, the central bank had delivered 1.3 billion Br worth of the new banknotes that were ready to be distributed across the Regional State loaded on two cargo aircraft. The aircraft were also supposed to bring back four billion Birr worth of the old notes.

Head offices of the banks do not have communications with the branches since there is no internet service in the Regional State connecting the branches with the core banking system.

Even though the central bank has ordered the banks to be closed, the regional government has made some banks open branches, as of the end of last week. And the banks had been serving customers with a withdrawal cap of 10,000 Br a person, according to sources close to the case.

Humanitarian Crisis Looming in North

Posted on by Web Master

Amidst a humanitarian crisis in Tigray Regional State, the federal government has deployed a fact-finding mission that will be looking for corridors of safe transit for humanitarian aid to the people affected by the ongoing conflict between the federal and regional governments.

The team, which is drawn from the ministries of Foreign Affairs and Peace, the Agency for Refugee & Returnee Affairs and the National Disaster Risk Management Commission, departed to the Regional State on November 17, 2020. The team travelled using two routes: through Gonder Zone and Afar Regional State, two areas that share administrative borders with Tigray Regional State.

“The fact-finding missions have already started sending reports,” Redwan Hussein, the spokesperson of the state of emergency task force, told Fortune. “We expect them to return in a few days with findings.”

After receiving the reports, the government will work on providing support to the people in the area in collaboration with humanitarian aid agencies and overseeing humanitarian relief operations. The United Nations Office for the Coordination of Humanitarian Affairs (UN-OCHA), International Committee of the Red Cross (ICRC), and the United Nations Resident Coordinator are the agencies working with the government.

A crisis is looming in the area and the UNHCR described the situation as a ”full-scale humanitarian crisis unfolding in Ethiopia.” The conflict erupted at the beginning of this month after Prime Ministry Abiy Ahmed (PhD) ordered a military offensive against forces in the Regional State, accusing them of attacking the Northern Command of the National Defense Forces.

Since then, basic services such as water, electricity and telephone lines have been cut, banks are closed, and over 31,000 Ethiopians from Tigray Regional State have fled to Sudan. Reports indicate that nearly two million people need life-saving support, including food, water, shelter, health and protection services.

Humanitarian agencies in the Regional State are also reporting a shortage of food, fuel and cash exposing about 96,000 refugees to a lack of access to water due to a looming shortage of fuel to run water pumps. UNHCR runs four refugee camps in the Regional State.

About 800 people were internally displaced from Medebey Zana District, Tigray to Addi Adekay District in Gonder. New internally displaced people were also reported in Midre Genet District, Gonder and in Dalul District, Kilbati Zone of Afar Regional State.

“We’ll come up with a plan before it becomes a crisis,” said Redwan.

The federal government plans to provide the support through two routes. In the unfettered areas, the government itself will provide support. In the areas that are not controlled by federal forces, there has to be a safe corridor whereby UN agencies and other partners can supply humanitarian items like food and drugs for the people in the area, according to the spokesperson.

“This committee will also work … to return and reintegrate back into their locales all citizens that have fled over the past days,” posted Prime Minister Abiy on his Facebook page.

However, humanitarian agencies find the situation unraveling, since it is hard to get access to the area because of movement restrictions, safety issues and a communications cut-off.

Communications were only coming from the UN hubs in Meqelle and Shire, according to Malda Nadew, the strategic communications analyst at the UN-OCHA.

Yet the agencies and local NGOs are still trying to assist with the stock they have at hand, although no supply is going to the area for restocking. This has pushed them to renew calls for access to humanitarian aid.

“In some places, the stock is depleting,” she said, “while it has already depleted in other areas.”

The agencies are advocating for the opening of banks so that people can withdraw money to buy what they need. They also urged for the restoration of basic public services such as healthcare, telecommunications, water and electricity.

UN-OCHA is also currently recruiting conflict emergency response experts locally and overseas to replace the natural disaster experts that have been stationed in the area. It is returning natural disaster experts to Addis Abeba through Afar Regional State.

“In the meantime, we’re mobilising resources and getting ready to enter the area when the corridors are opened,” said Malda. “We’ll also wait for the reports from the fact-finding mission.”

There should be three scenarios to support the affected people with humanitarian support: helping people in free areas, those in the conflict areas and refugees that cross the border, according to Adane Tesfaye (PhD), director of the Institute of Disaster Risk Management & Food Security at Bahir Dar University.

In the areas that are free from war, the team should identify the level of the impact on the community, such as water and food, to assess how much the people are affected and estimate needs, according to Adane. After identifying the need, the agencies and the government can help people in non-war zone areas in the traditional way as long as there is a supply.

“However, in the areas where there is war, the two parties should respect international convention to let in aid agencies,” he said. “They should respect the convention for the sake of their people.”

If they do not do that, the place will not be safe for humanitarian agencies, according to him.

Two types of aid are needed in these areas, said Adane. The first one is humanitarian aid, including food along with the utensils to cook and eat the food, and the second one is healthcare along with hygiene and sanitary products, according to him.

Before returning the refugees to the country, there should be a well-organised plan by the government regarding where to settle them and how to provide them with food and water, as well as properly identifying the locations from where they fled, according to Adane.

“Returning them without addressing these needs could make the crisis worse for the refugees,” said Adane.

Recovery and rehabilitation work should follow then, according to him.

There are people whose families have died, who have sustained physical injuries, whose properties have been damaged, and whose farmlands are ashes. They all need psychosocial support to help them get over the trauma they went through, according to the expert.

Roads should be rebuilt, water, electric and telephone lines need to be recovered, he stated.

“To move this process fast,” he said, “incident command posts have to be formed and stationed in the areas, and the government should help this process by providing sufficient logistical support.”

Nile Insurance Registers Modest Growth

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The net profit of Nile Insurance, a 25-year-old firm, marginally increased by one percent to 112.1 million Br in the last fiscal year. The profit rise of Nile is lower compared to the preceding year’s significant growth of 74pc.

During the reporting period, Nile sustained the growth it achieved two years ago after springing back from a slow performance where the profit and earnings per share (EPS) had plunged by more than half due to massive expense claims.

Computed by dividing the net profit by the number of shares owned by the firm’s 149 shareholders, the EPS of Nile fell by 58 Br to 269 Br. The massive injection of capital over the past couple of years resulted in the reduction in EPS.

This must have sent disappointing news to shareholders, according to Abdulmenan Mohammed, a financial statement analyst with two decades of experience.

Even though EPS sunk and profit growth slowed, the financial performance of the firm is still good, according to Ephrem Ketema, a shareholder for the past decade. Ephrem says that the firm has good management and a board who can take the credit for the good performance.

Ephrem, who also works as a sales agent for the company, originally bought 385 shares a decade ago after his friend, who also delegated him as a representative, wanted to sell his shares. Since then Ephrem boosted the number of his shares but refrained from disclosing the amount.

“The insurance business is compounded by uncertainty,” said Ephrem. “An insurance firm performs well when situations go well too.”

Despite a harsh business environment last year, Nile has achieved decent financial performance, according to Mekdes Aklilu, a chairperson of the board directors of Nile, which was established in 1995 with 12.5 million Br in capital.

“The year was a notable one,” Mekdes said, “marked by several challenges, including the worldwide outbreak of COVID-19, that threatened the survival of mankind and the continued political violence and instability that repeatedly interrupted economic activities across the country.”

Nigus Anteneh, CEO of Nile, says that performance in the core business area was excellent, mentioning Nile’s ranking as the fourth and sixth insurance firm in the industry in terms of life and non-life insurance business lines, respectively.

The increase in gross written premium and reasonable retention rate accompanied by a small increase in claims helped Nile to achieve positive performance and maintain profit level.

Gross written premium increased by 13pc to 494.6 million Br. Out of this, 80pc was retained, which is two percent lower than the preceding year’s rate, which is still higher than the industry average of 77pc recorded two years ago. Claims paid and provided for increased by five percent to 212.8 million Br.

“We were selective in choosing a class of business,” said Nigus.

Increased growth in written premium, modest growth of claims and a significant increase in commission income resulted in underwriting surplus of 172.7 million Br, an increase of 13pc. The firm received a commission of 35.1 million Br, an increase of 27pc.

However, the decent performance of the insurance business was undermined by poor performance in saving activities. Interest income decreased by 15pc to 40.7 million Br, whereas dividend income surged by 46pc to 30.5 million Br.

Nigus affirms that the withdrawal of 90 million Br that was kept at banks as a time deposit. Nile withdrew the money to pay contractors that are undertaking the finishing work of its headquarters. Rama Construction and China Jiangsu International Economic & Technical Cooperation are working on completing the finishing work on the 25-storey building that features three underground parking areas resting on a total of 2,400Sqm of land.

“We’re alsobuilding warehouses requiring a considerable amount of investment from us,” said Nigus.

On top of the reduction in time deposits, there is a significant build up in receivables with reinsurers that surged by 25pc to 253 million Br, according to Abdulmenan.

“The management should collect these receivables and invest it in income-generating activities,” he said.

Salaries and other operating costs of Nile, which runs with 51 full-fledged branches and 387 employees, went up by 16pc to 126.1 million Br.

The growth needs the attention of management, according to Abdulmenan.

The total assets of Nile increased by 12pc to 1.6 billion Br. Out of this, 18pc was invested in interest-earning time deposits, which is significantly lower than the industry average of 30pc in the 2018/19 fiscal year. Nile increased its investment in shares by 40pc to 262 million Br.

Liquidity analysis indicates that the liquidity level of Nile went up considerably in value and relative terms. Cash and bank balances increased by 37pc to 55.7 million Br, while the ratio of cash and bank balances to total assets increased by a percentage point to four percent.

Despite the increase in the liquidity level, it is still small, says the expert, advising the management to take extra caution when operating with such tight liquid resources.

Nigus says that the firm is in the process of securing a loan from Bank of Abyssinia for the finishing work of the headquarters to solve its current liquidity strain.

“It’ll give us some relief,” he said.

The paid-up capital of Nile increased by 22pc to 448 million Br. It had capital and non-distributable reserves of 521.9 million Br. The paid-up capital and the non-distributable reserves of Nile represent 33.6pc of its total assets.

This figure indicates that Nile has strong capital, so it should use its capital efficiently, according to Abdulmenan.

Nile’s peer firms United and Awash shored up their paid-up capital to 528.6 million Br and 436.2 million Br, respectively. The former also netted 124.3 million Br, while United amassed 209.8 million Br as net profit.

Assembler Launches Dual-Purpose Three-Wheeler

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Horra Adama Automotive Assembly Arena (H4A), a local vehicle assembler, has launched a new three-wheel model dubbed Maxima Z with an engine capacity of 236cc. The new model can be used for dual-purpose operations such as transporting passengers or cargo.

Launched last week, the model is assembled at the plant located in Adama, Oromia Regional State. The plant has a capacity of assembling 70 to 80 Maxima Z three-wheel models a day. Boasting an engine capacity of 236cc, the new model allows the passenger seating to be converted to cargo.

The plant was inaugurated in May 2018 with an investment of 1.5 billion Br. It assembles the three-wheel Maxima Bajaj, the four-wheel Qute Bajaj and the three-wheel Cargo Maxima Bajaj. It has a capacity of assembling 25,000 to 30,000 four-wheel and three-wheel Bajajs a year. The plant, which rests on 50,000Sqm of land located close to Belay Ab Motors plant in Adama, created employment opportunities for 150 individuals.

The automotive firm operates under the umbrella of Horra Group, which was established in 2005 and exports coffee, provides logistical services and engages in the real estate business. It operates Horra Real Estate, which is expected to start selling housing units this coming January, and Ethio Gabana, a specialty coffee company.

The company imports spare parts from India. A year and a half ago, it signed a memorandum of understanding (MoU) with Horizon Addis Tyre S.C., which was founded in 1972 as  the first tyre production company in the country, to source the tyres.

“We’re waiting to receive an approval from our supplier to use the locally-sourced tyres,” Mintesinot Tezera, motor director at the company, told Fortune.

It plans to work in tandem with 250 dealers throughout the country to distribute its goods. The retail price tag for one Maxima Z model, whose engine operates on benzene, is set at 220,000 Br to 225,000 Br.

Before jumping into the assembly business, the company had been importing the three-wheel vehicles after signing a distribution agreement with Indian firm Bajaj Auto Ltd, the world’s largest manufacturer and exporter of three-wheeled vehicles, in February 2015.

While building the plant, the company secured 35pc of the total budget from banks, including Abyssinia, Hibret, Awash, Debub Global, the Cooperative Bank of Oromia, as a loan that is set to be fully repaid in three to seven years, according to Adem Kedir, CEO and founder of Horra Trading Plc.

In addition to the banks, government organisations were a big help in getting the project off the ground, according to Adem.

The Oromia Investment Commission facilitated a land grant for the plant, and the Ethiopian Customs Commission offered bonded warehouse and tax incentives for the import of body and spare parts. The Chemical & Construction Inputs Industry Development Institute and the Construction Works Regulatory Authority also assisted the project, according to Adem.

The new model has brought a great advantage for consumers in its combined passenger and cargo functionality, according to Tsegaye Teferi, an automotive engineering expert with 10 years of experience. He cited a lack of spare parts as a possible problem and running on benzene as a disadvantage when compared with other three-wheeler that operate on diesel, which has a lower price.

“The vehicle’s centre of gravity is higher, which is good for roads, but higher ground clearance could also lead to more accidents,” he added.

Most of the three-wheelers in the country have no more than a 205cc engine, and the 236cc [Maxima Z] engine is an upgrade. Still, it means that it will have higher fuel consumption and could be a disadvantage to the project, according to Tsegaye, who also teaches at Adama Science & Technology Institute.

Horra plans to begin producing body and spare parts for three-wheelers at its plant in Adama in the coming year. This project will take from six to eight months to finish, according to Adem.

“The warehouse is completed, the foreign currency has been authorised, and we’re going to begin this project in six months,” said Adem. “The project will also benefit when local steel manufacturers begin full capacity production,” he added.

Leather for chairs will be sourced from local producers, and the entire vehicle body could be produced at the plant, he said.

“We could’ve begun this project earlier, but COVID-19 forced us to postpone,” he said.

The total number of three-wheeled vehicles operating in Ethiopia is 88,015 as of June 2020, according to statistics from the Federal Transport Authority.

Delay in Digitisation Disrupts Third-Party Insurance Scheme

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The sluggish digitisation process at the Insurance Fund Administration Agency has resulted in a scarcity of vehicle insurance policies against third-party risks. Insurance companies have now run out of stock and are not serving customers seeking to buy policy coverage for risks that occur to third parties by an insured individual.

Initially planned to be launched at the beginning of November, the digitisation project was aimed at enabling insurance companies to work on a web-based system while selling policies. The Agency decided to take the service online, hoping to manage data and information using a centralised system. During the digitisation process, the Agency significantly cut the number of stickers and corresponding certificates of insurance it issues to insurance companies.

“We’re almost getting no stickers or certificates,” said a senior executive at one of the oldest insurance firms who requested anonymity. “We’ve collected the stickers from the regional states since we’ve run out of stock. Now, we’ve finished all of them and stopped providing the service.”

A proclamation that was issued seven years ago criminalised driving cars without third-party insurance. Anyone who offends the law is subjected to a fine between 3,000 Br to 5,000 Br or imprisonment from one year to two years. A certificate of insurance is valid for one year from the date of issuance. And whenever a vehicle gets a new owner, the Agency requires the buyer to purchase a new policy.

Under a third-party insurance policy, an insurer pays compensation and the cost of emergency medical treatment to any third party for death, bodily injury or damage to property caused by the vehicle of an insured person.

The Agency also fully covers the medical expenses of individuals who suffered from road traffic accidents caused by uninsured and unknown drivers. Last year, it spent 13.6 million Br for medical treatment provided by 158 health centres to 27,730 people.

The delay in digitisation has occurred due to issues in getting the server on time, according to Shimelis Tamirat, deputy director at the Agency, which has distributed 777,617 insurance certificates in the last fiscal year. During the year, the Agency covered 1.5 million Br for accidents involving 44 people under the third-party insurance policy, while insurance companies paid 448.1 million Br for accidents involving 3,454 individuals and 16,235 vehicles.

The Agency has been negotiating with Ethio telecom to rent a server. And it is on the final stage to ink a rental deal with the company with an annual fee of 65,324 Br.

“We’re waiting until Ethio telecom finalises the security checks,” he told Fortune. “A two-week pilot test will follow before fully operationalising the system.”

Upon being functional, the web-based system will enable the Agency to remotely detect who bought an insurance policy, from which insurance firm and specific branch, and how many policies each insurance firm has sold.

Before deciding to digitise the process, the Agency conducted an assessment that recommended it roll out a deep reform of the service, according to Shimelis.

“We found many vehicles on the roads without third-party insurance policies,” he said, “there were even vehicles with forged stickers.”

The Agency, which was formed in 2013 under the Ministry of Transport, holds continuous consultations with stakeholders to discuss how to address the problems and embark on the digitisation process, according to Shimelis.

As part of the reform process, the Agency introduced a triangular sticker as of the new fiscal year with new security features including bar codes. The stickers are printed at the state printer, Berhanena Selam Printing Enterprise.

“After launching the system,” said Shimelis, “we’ll then work out how to proceed with equipping traffic police members with smartphones to check the authenticity of the stickers.”

Even though the Agency has ceased the regular printing of the stickers, it is issuing stickers to the firms that filed letters to get the certificates, according to the deputy director of the Agency, which covered 103,000 Br during the first quarter of this fiscal year, while the insurance companies covered 188.2 million Br for the accidents that occurred on 3,822 properties and 797 individuals.

A veteran expert working in the insurance industry for the past two decades, argues that third-party insurance policies should be handled by insurers associations instead of a government agency. The expert stated that there is efficiency when the industry operators administer the service.

“Even in neighbouring Kenya, the service is provided by the Insurers Association,” said the expert. “The Association can use the revenues generated from the service to conduct research and development activities to help the sector grow.”

Ethiopia’s Silicon Valley Adds Four Data Centres

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Four new data centre companies have secured land to make their home at Ethio ICT Park, Ethiopia’s Silicon Valley. Raxio Data Plc, RedFox Web Solution, ScutiX and Wingu.africa have signed a memorandum of understanding (MoU) with the Ethiopian Investment Commission and have initiated preliminary steps to commence construction at the Park.

The biggest lot has been allotted to Wingu.africa at 15,000Sqm, while RedFox, Scutix and Raxio have been granted 4,000Sqm, 6,386Sqm, and 10,000Sqm of land, respectively. The companies will be providing storage, infrastructure solutions for cloud computing, webspace and domain hosting, virtual private centres and collocation services.

The data centres, which are expected to create employment opportunities for over 250 people, will also avail customised applications to industries like telecom, banking and insurance, among others.

The construction of these data centres is in line with the country’s ambition toward nurturing a digital economy, according to Mekonnen Hailu, public relations director at the Ethiopian Investment Commission.

“This will be especially beneficial for industrial parks, which are now increasing in number,” he said. “By the time this becomes operational, it’ll be very relevant.”

American-based Raxio Data Plc has already constructed its first data centre investment in Africa, Raxio Data Centre Ltd in Uganda, and plans to open over 10 additional similar facilities, likely in Mozambique and the Democratic Republic of Congo. Upon final phase completion, Raxio will be able to house around 400 racks and offer 1.5MW of IT capacity.

The company expects to finalise the construction of its Tier III carrier-neutral facility in the Park within nine months, according to Welela Haileselassie, country manager for Raxio. Drawing on the best practice models from Uganda, it will be using a modular design that enables it to expand as demand grows. In Uganda, the company had used a brick and mortar design, which doesn’t offer as much flexibility.

“Cooling, power and connectivity are the elements that Raxio will ensure in its services,” said Welela. “We remove that headache for users.”

The opportunities for this service are many in Ethiopia, according to her, stating that Raxio has received interest from multinational companies during its preliminary assessment.

The construction of the data centres will commence as soon as the companies complete design and other pre-construction procedures. This will entail a site survey and soil investigation process, as well as submission of construction permit requests and final design approval by the Industrial Parks Development Corporation.

The data centres will also relieve IT firms in the country from expenditures in foreign currency. Companies like ZalaTech Plc, an IT consultancy firm that has been working in the city for over three years, pay external data centres in other countries for the use of cloud servers.

“The introduction of local data centres will help reduce these costs for the IT firm,” says the company’s managing partner, Amha Wondimu. “It will also encourage small businesses and startups by providing accessible storage services.”

“It’ll relieve a lot of costs for small companies that cannot afford to buy expensive servers,” he said. “This is without taking into account costs for the accessories that the servers require.”

But the quality of the servers should be given due attention, according to him. The bandwidth of Ethio telecom, the country’s sole telecom operator at present, is also significant.

“Internet shutoffs also discourage such strides,” he added.

The government is also in the process of establishing a national data centre, where the fundamental information, data and statistics of all federal institutions and citizens will be stored securely. The centre, to be built by the Ministry of Innovation & Technology, will also offer cloud services, making it the first nationally hosted cloud facility. The bids for the construction of the data centre were announced last week.

Oromia Insurance Picks Chinese Firm to Build HQs

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A Chinese state-owned firm that is constructing major buildings in the country has just secured another project to build Oromia Insurance’s head office for 1.1 billion Br. Jiangxi Corporation for International Economic & Technical Cooperation will construct the 35-storey building at the heart of Mexico Square.

Pan Weigas, on behalf of Jiangxi, signed the contractual agreement with Tegistu Shiferaw, acting CEO of Oromia, early last week. Jiangxi Corporation was hired after winning a bid that was floated at the end of last year. The bid initially drew the attention of nine contractors, but only five of them submitted their price offer.

China State Construction & Engineering Corporation, which is building the headquarters of the Commercial Bank of Ethiopia; China Communications Construction Company (CCCC); Rama Construction Plc; and Dugda Construction Plc all made offers along with the winner. Jiangxi Corporation, which will work on the structural work of the building, won the bid by offering the lowest price of 1.1 billion Br.

The firm has previously secured deals to build Wegagen Bank’s headquarters for one billion Birr, the Embassy of Equatorial Guinea in Addis Abeba, and the headquarters of the Private Organisations Employees’ Social Security Agency for 682 million Br. It is expected to finalise Oromia’s headquarters in three years.

Expected to rest on 3,004Sqm of land near Mexico Square, the building is estimated to cost the insurance firm somewhere between 1.5 billion Br and two billion Birr. The building is slated to be completed in three phases: shoring and excavation; structural work; and finishing.

The shoring and excavation work was awarded to Anchor Foundation Specialist Plc a year ago. The first stage has been completed by the contractor that was hired for 70 million Br. Anchor had also worked on the foundation construction for the headquarters of United and Nib banks, Marriot International Hotel, and the Addis Abeba Light Railway Transit Qality Terminal.

Zeleke Belay Architects designed the building after winning the design bid floated in 2018. It will also supervise the construction of the building.

This is a long-term investment, according to Tegistu. Oromia Insurance has been paying seven million Birr annually to Oromia International Bank in rental fees for its current headquarters. The insurance company occupies a fifth of the 13-floor building on Africa Avenue.

Oromia, which was established 11 years back with 25 million Br in paid-up capital and 540 shareholders, operates with 49 outlets, of which 43 are branches. In the last fiscal year, the firm elevated its paid-up capital and number of shareholders to 414 million Br and 1,014, respectively.

Financial institutions are rushing to claim territory in the fast-changing Financial District of Addis Abeba. Along with Oromia, Zemen Bank, Nile Insurance, United Bank and Nib Bank are among the financial firms building head offices in the neighbourhoode.

The firms are investing money in buildings and other fixed assets due to the galloping inflation in the country, according to Tenahun Mekonnen, general manager at TAHB Engineering & Consultants, a local construction consultancy firm.

Tegistu also agrees with this, saying that the project is aimed at tackling inflation and other factors that affect the cash assets of his company.

“The inflation and the unstable economy is harming the liquid assets of the companies as the value of the local currency is seriously declining,” said Tenahun. “Thus, they’re aggressively changing their liquid assets into fixed assets.”

Tenahun also added that higher costs for renting offices could not be the main reason for the companies embarking on investments in buildings.

“The investment isn’t feasible in terms of returns and profit as the period for return on investment would be long,” said Tenahun. “The payback period on the Oromia Insurance headquarters could reach 70 years.”

Even if it is difficult to predict due to economic instability, the firms should conduct studies on the payback periods of their major investments to make viable choices, urged Tenahun.

Pandemic Pushes Activate Button for Innovation

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Abel Hailu was a second-year student when the Novel Coronavirus (COVID-19) pandemic set foot in Ethiopia in early 2020. He was studying at the machine department at Misrak Polytechnic College, one of the 15 Technical, Vocational Education & Training (TVET) schools across the country that reports to the TVET Institute. Soon after COVID-19 became this year’s game changer, the government ordered a nationwide shutdown of schools in an attempt to curb and contain transmission of the virus.

Over 30 million students across the country, including Abel, were told to stay home.

The pandemic has been disruptive, to say the least, but it has also brought about much innovation. Youngsters who were forced to stay at home with fewer school activities have started to come up with innovative ideas  to explore their skills.

From the early days of the pandemic up to June, over 500 innovations have been registered under the Ministry of Innovation & Technology.

For Abel, the lockdown was an opportunity to use his skills to help the community in battling the virus. It was a time to consider the paths of transmission of the virus, to think about how to use innovation to help people keep themselves safe, and to imagine what COVID-19 preventive appliances could be invented with readily available materials.

He met for discussions with three of his peers who are students of the electric, information technology, and garment departments at the polytechnic school. They shared their ideas.

Abel and his friends understood that the virus spreads mainly through physical contact between people, and they then started to think about how and what to work on to minimise contact between members of the community. They also took into consideration what tools they had at their disposal to execute their ideas.

Two weeks into the shutdown, Abel and his mates had solidified their objectives and collected the necessary materials and inputs for the inventions they had planned. They decided to create a motion-sensing hand washing machine using photo-sensor equipment from the polytechnic college.

They asked the school to cede them the sensors and the college obliged. Within a short couple of weeks, the resourceful group of students had successfully created their contraption. The machine automatically senses movement and spouts water so that people can wash their hands without touching the machine.

“This was to avoid physical contact,” said Abel.

Abel has also invented an electric control box that can be used to start, stop or adjust other electric devices remotely. The machine has a timer with a range from a microsecond to an hour and was created for use by those who are bed-ridden or too ill to move around. It can be used to charge mobile phones, for example, or to heat a pot of food.

In addition to these contraptions, Abel and his friends have created a massaging backpack, a traffic light with new features, and over 10 other innovations.

Other groups of entrepreneurial individuals have also been working on innovations to fight the spread of COVID-19.

“Handwashing alone isn’t a guarantee for safety from the virus; it can also be spread via our clothes and accessories that we wear,” remarked Melese Yigzaw, dean of Nefas Silk Polytechnic College.

When the College was shut down, it organised instructors from the manufacturing, metal, construction, electrical and garment departments to come up with innovations to combat the pandemic.

The instructors have since delivered several appliances, including a body-disinfecting machine. The apparatus is fixed on either side of a doorway, and it sprays vaporised disinfectant over people when they pass through it. The instructors used nozzles and dynamos from vehicles that are kaputto build the machine.

The body-disinfecting machine has the capacity to spray four people at a time.

It has become common throughout the capital to see public and private institutions put hand-washing machines at entrances so that people have their hands clean before entering the premises. Most of these hand-washing stations are not automated and work manually. Users press a pedal with their foot to pour water so that they can wash their hands without the need to touch anything.

Lemmi Yadeta, instructor and department head of electrical electronics at Nefas Silk Polytechnic College, had begun to think about what could be innovated other than these pedal-operated, hand-washing contraptions.

“There are already pedal hand-washing machines in many places,” he said.

He and his friend devised four inventions: an automated sanitiser machine, the motion-sensing hand-washing machine, an automatic pool body device, and a smart school gate device.

Among the innovations, the school gate device was aimed at avoiding contact between students and guards at entrances of educational institutions. The device reads student identification cards and automatically opens the gate when it detects a valid ID.

“I thought of the idea two years ago when there was instability in universities but only had the chance to materialise it recently,” said Lemmi.

He and his colleagues have already planned to commercialise the smart school gate device. They hope to start mass production soon and sell them to education centres.

In explaining the factors for the spike in the amount of innovation in the country, he says that before the pandemic, polytechnic colleges and faculty were mostly focused on theory and not practical skills.

“The pandemic has pushed us to apply the theory in practice,” he remarked.

Yeka Industrial College is also planning to give training to micro and small enterprises regarding the innovations, to allow them to be mass produced and commercialised, according to Yirgalem Mehari, industry extension & technology transfer dean at the College.

Many innovations such as pedal-operated hand-washing stations, motion-sensor hand-washing machines that work with solar power, as well as medical beds, have so far been produced at Yeka.

Assefa Garbi, an assistant professor of entrepreneurship & business management at Kotebe Metropolitan University, argues that necessity brings about innovation as Ester Boserup, the Danish demographer, had said centuries ago when arguing that problems force people to look for solutions and engage in innovation to sustain themselves.

Assefa said that more innovations are coming out due to the problems confronting people during the pandemic.

“People usually think, imagine and create innovations to tackle the challenges,” he said.

The expert urges that the entrepreneurs mass produce and commercialise their products in order that they become viable in terms of marketability and utility to consumers.

Assefa was critical of most of the innovations other than sanitation products that can always be used by hotels and restaurants. Many other were designed and made for momentary utility and will be rendered obsolete when COVID-19 passes. He said that innovators should take this into account and consider producing innovations with multiple functionalities to be able to market them for a longer period of time.

By this idea, Abel and his mates have invented the machine that sanitises air via ultraviolet light and doubles as an air conditioner. This device has the capability of sanitising the air in a 36Sqm room within 10 minutes.

The air conditioning feature was added to the device so that the machine could also be utilised in the post-COVID-19 period, according to Abel.

Assefa also argued that the underdeveloped patent rights system might challenge the innovators when they opt for commercialisation.

He argues these innovations are vital factors for entrepreneurship and can create many jobs. He also says that entrepreneurs struggle with limited access to financial package services.

Financial institutions demand collateral and financial background information from the potential entrepreneurs to give them loans, according to Assefa.

High loan interest rates are also another roadblock to innovation commercialisation efforts, argued the expert.

To tackle this, he urges the government, particularly the Jobs Creation Commission, to allocate credit to innovators.

“There are no angel investment firms and incubation centres with complete ICT facilities,” says Assefa, citing other impediments to the development of innovations and entrepreneurship. He recommended that the government establish such centres with prototypes to help innovators efficiently commercialise their inventions.

The Jobs Creation Commission has already crafted a programme dubbed the Innovative Challenge Fund to help innovators and entrepreneurs financially.

Alemtsehay Dersolign, director of innovative jobs & projects at the Commission, says that they will soon start registering anyone with innovations to get funding.

“After getting through their proposals,” said Alemtsehay,  “We’ll pick 50 of them to receive support to scale their ideas into businesses.”

The project will provide the winning innovators with incubation and entrepreneurship training, as well as financial support. The top three inventors will also be awarded gold, silver and bronze medals.

A few months ago, the United Nations Development Programme (UNDP) had granted one million dollars in funding to the Ministry of Innovation & Technology to be channeled to tech-savvy and innovative youth who will develop homegrown solutions helpful in the fight against the pandemic.

Time to Jump on the Circular Economy Bandwagon

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The present “linear” economy operates by taking, using and disposing of raw materials. This is acceptable only as far as resources do not have limitations. But as the post-Industrial age has shown us, this results in resource scarcity, and it will create unsustainable economic development going forward. Due to this, our policymakers ought to orient their focus toward the proposal and implementation of an alternate economic principle –”circular” economies.

The concept of a circular economy was conceived in the 1970s with the intension of promoting a world where the absolute minimum goes to waste. Although not attributed to a single work or author, the concept gained momentum in the 1970s when it could be applied to modern economic systems and industrial processes. It has evolved over the past five decades.

Making this matter all the more urgent is that the global population has risen from approximately one billion in the early 1800s to over seven billion today. It is expected to reach close to 10 billion by the mid-2000s, according to several projections.

Application of the circular economy thus will have critical importance. It can contribute to climate adaptation and resilience, including more efficient use of water and energy resources, improved management of land ecosystems to mitigate climate-induced yield losses, and innovative approaches to disaster-ready buildings and infrastructure construction. With middle and lower-income countries expected to experience the worst effects of climate change in the short to medium term, they will be the beneficiaries of the fruits of a circular economy.

Such an economy must give special attention to urbanisation. Globally, three million people become residents of urban areas every week, while over half of the world’s population is believed to live in urban areas. Wealth is also concentrated in cities, accounting for 85pc of global GDP generation, according to the World Bank.

Here it will change from “simple recycling of post-consumer products to whole value chain circularity; from single industry to cross-industry development; and from focusing primarily on production to considering the entire life cycle of products,” as the Centre for Sustainable Consumption & Production, a think tank co-funded by the United Nations Environment Programme (UNEP), elucidates.

Some countries have already taken initiatives toward circular economies. New York aims for zero waste by 2030; Denmark plans to recycle half of all household waste within the next two years; and London aims to have no recyclable waste sent to landfills by 2026.

True, the policymakers in these cities would be challenged by the fact that many companies, above all in resource-intensive ones, will be disincentivised to invest. But it is telling of how attitudes and understanding are changing when countries such as China, the United Kingdom, Italy, the Netherlands and Germany are jumping on the bandwagon. China, in fact, passed a law for the promotion of a circular economy in 2008.

Some African countries have also proven that they are willing to rise to the challenge. For instance, the proportion of waste that was collected in Dar es Salaam, Tanzania, was five percent in the early 1990s. Initiatives by the UN Sustainable Cities Programme brought this up to an estimated 32pc within just over a decade.

Implementing such initiatives for the world, and indeed Ethiopia, is not a choice. It is an obligation for a planet with limited resources. This was why it was important for Ethiopia to participate in different international and governmental conferences to take important lessons and sign agreements to achieve development goals (sustainable production and consumption is the 12th point on the UN’s Sustainable Development Goals).

In 2016, the Paris Climate Agreement also gave opportunities for countries to think of other ways for growth and development. They placed sustainable production and consumption at the forefront of global efforts to achieve equitable economic growth and tackle climate change.

Unfortunately, circular economy as an economic system is not given the level of attention it deserves. There have been policies from as far back as 2011, such as the Climate Resilient Green Economy, to reduce the impact of climate change through renewable energy. But there is a glaring gap in bringing forth a circular economy. The good news is that it is not late to reorient focus.

Existing and future economic policies must be aligned with the circular economy. This should be true of Ethiopia’s coming 10-year economic plan. It will entail the integration of sectors so that raw materials are not wasted and can serve several purposes without being thrown out. Higher government officials and policy strategists should give high emphasis to a circular economy for resilient growth in sustainable development.

Like any plan, it would require funding and knowledge-sharing. Developmental projects and infrastructure ought to be designed in consideration of a circular economy, which requires know-how and capital. Fortunately, given the attention currently being afforded to climate resilience, the government would receive support from bilateral partners and multilateral institution.

Culture will undoubtedly complicate whether or not there is an uptake of a circular economy. But by creating strong collaboration between government and non-government institutes, multinational businesses and entrepreneurs, and international development agencies and international coordinating bodies, it is possible to cross the bridge.

An inclusive approach to such an economy requires examination not only of national strategies but also of the cross-border effects of alternative development strategies. It also requires scrutiny of the role of regional and international circular value chain development in delivering the transition away from a linear economy to scale.

The Non-Local Politics of Addis Abeba

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If the soul of a nation thrives beneath its metaphorical founding stone long laid by its founders, the heart of a nation ought to pump the lifeblood from its capital. From the ancient city-state era to the emergence of nation-states in medieval times and all through the period of modern republics, capital cities held sway in the power of body politics for millennia.

Set upon a high elevation at its centre, this city is Addis Abeba for Ethiopia, founded in the late 19th century. In its more than century-old existence, the city evolved through different demographic compositions, geographic sizes, shapes and expanses. From just about a settlement that began with mere camps, it has grown to become a city that houses millions of residents.

Because of its political significance, it is one of the most visited and recognised capitals in Africa. It is a diplomatic hub, housing the headquarters of the African Union and the UN’s Economic Commission for Africa (ECA). It has the highest literacy rate in the country, is a commercial hub for Ethiopia, and has a thriving financial street.

Evidently, this makes the city important to the politics of Ethiopia. Addis Abeba has the privilege of being the capital of not just the central government, which historically wields the most power in Ethiopia, but also Oromia Regional State, the most populous of the regional constitutes of the federation that makes up Ethiopia.

The city’s governing bodies are headed by the mayor and the city council. Currently, the City Administration is responsible for the federal government. The city’s residents have a “full measure of self-government,” as enshrined in the Constitution. They elect legislators to parliament and also their city councillors in local elections.

To date, except for a brief period of Italian occupation, there have been 33 mayors ushered in and out at the helm, including the current one, Deputy Mayor Adanech Abiebie. Like it has been the case with the rest of Ethiopia, it has arguably never seen free and fair elections that led to popular legitimacy.

Capitals are cautiously and suspiciously looked at by incumbent politicians. This is true today, considering the complex politics of Addis Abeba and contention for ownership over the city. It is a truism expressed most vividly during the 2005 elections when demonstrations brought the city to heel, and one of the liveliest contentions for electoral control was carried out.

Politicians in Ethiopia, like those before them, understand that gaining the political upper hand over Addis Abeba resonates across the country. The nation’s heartbeat, through its economic, cultural and political significance, influences the rest of the country in myriad ways. Though it is true that not all initiatives come from Addis Abeba, such change is given significance once it reaches the capital.

The intellectual energy, drive and political consciousness in Ethiopia’s capital city create influence to be reckoned with in body politics. This seems to be in the negation of the popular considerations of politics.

“All politics are local,” Thomas O’Neill, the former US House Speaker, once said.

It was a principle drawn from a politician’s success as entangled to the ability to fathom and influence the interest of their constituents.

Perhaps, in 2011, Andrew Gelman, a political scientist and statistician, accurately described the discrepancy of the view that “all politics are local.”

“Appealing to the simple, mundane and everyday concerns of the rural constituents among those who vote might have more likely been easier to buying-in than convincing urban constituents of those who vote on the merit of big and intangible ideas,” Gelman wrote.

What he is trying to say is that the small issue having to deal with local governance are not the only considerations in big cities such as Addis Abeba. Residents have more idealistic and abstract issues to contemplate. Their politics has a more universalised approach than less urbanised cities.

It is why the coming elections in Addis Abeba, for local governments as well as representatives in parliament, will most likely be interesting. It will doubtless be the most contested during the sixth general election in a few more months. For any party running, it should be clear that the residents of the city will endorse the political party that runs on the merits of diverse issues far beyond local politics.