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Month: June 2021

When the Rain Makes or Breaks the Economy

Posted on by Web Master

The rainy season has begun. In Addis Abeba, it elicits mild disappointment as the season means more mud, colder weather (especially as air conditioning systems are virtually non-existent in households), and flooded streets though, of course, roasted corn by street vendors is a plus.

For subsistence farmers, it means the difference between feeding themselves or relying on safety nets because, like our ancestors centuries or millennia ago, we have to rely on the rain to provide for livelihoods. For the country as a whole, any hint of drought means massive levels of food insecurity. Fortunately, it will be an adequately rainy season this year, and all things equal, agricultural output is expected to hold up.

There is a certain irony when it comes to food security. The countries whose economies are most reliant on agriculture are the likes of Liberia, Somalia, Central African Republic, and Ethiopia. All poor sub-Saharan African countries that nonetheless are highly food insecure, rely on food imports and aid. This is because although most of the labour force is engaged in agriculture, much of them are subsistence farmers. Their productive force is spent tilling the land or raising cattle for consumption by themselves.

On the other hand, most developed countries’ share of their agricultural sector is below five percent. And these few engaged in crop or livestock farming, fishing and poultry are doing it for commercial purposes—to sell to the domestic market or for export purposes— rather than for self-consumption.

No wonder then that Ethiopia wants to wean its reliance on the agriculture sector, which is highly unproductive. They have come up with sensible policies to ensure a structural economic transformation to productive areas of the economy, such as manufacturing. They have built roads, industrial parks, hydroelectric dams and invested heavily in education and public health to create the skilled workforce necessary for a healthy industry, construction and services sector. Indeed, now in Ethiopia, services contribute more to the economy than does agriculture.

But all of this can only go so far. Not enough rain in any given year, then investments in other sectors have to be held back to import food. Otherwise, people will go hungry. Agriculture is a stubborn sector that can not be neglected. It is possible to survive without major industry or services, as has been the case for humanity for millennia, but too low of an agricultural output is a drain on the economy, not to mention a cause of food insecurity.

There are institutions such as the Ministry of Agriculture and the Agricultural Transformation Agency set up to change this reality. Emphasis has been put on the provision of fertilisers and improved seeds; building irrigation systems; and better integrating farmers with domestic markets. One piece of the puzzle remains sadly unaddressed: access to finance for farmers and agri-business.

Farmers are unable to get credit in order to scale up their production through means such as adopting modern farming techniques. This is because they lack collateral—the land they till is not their land per se but belongs to the “public.” It is a scenario that will not change anytime soon.

Coupled with general underdevelopment of the financial sector, this means that less than a fifth of smallholder farmers have access to banking services and only about five percent of loans have gone to the agriculture sector in Ethiopia in 2018.

But there is hope for this gloomy set of circumstances. Instruments such as inventory financing, where a lender holds a farmers post-harvest inventory as collateral, could help scale up, according to the Brookings Institution. The service sector can also help make up for the financial gaps businesses and smallholders are faced with, such as ‘Uber for farming.’

Recently featured by the World Economic Forum, the app Hello Tractor connects farmers with tractor owners, the former renting out the equipment for a fee. It is a service that helps make each farmer that could not afford a tractor be more productive through mechanised farming techniques while helping create a business opportunity for those that happen to have idle tractors sitting around.

The Structure’s Imposing, but What’s Its Story?

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Francisco Álvares, half a millennia ago, told of the tales of Lalibela’s rock-hewn churches with a memorable introduction.

“It wearied me to write more of these works, because it seemed to me that they will not believe me if I write more, and because as to what I have already written they will accuse me of untruth,” wrote the Portuguese explorer. “Therefore I swear by God, in whose power I am, that all that is written is the truth, and there is much more than I have written, and I have left it that they may not tax me with its being falsehood.”

Indeed, that uphill, elegant turns and twists within stones that are rock-hewn churches are marks of excellence in engineering and, of course, showed the heights of architecture. I discussed this as much with an architect I encountered in a hotel not long ago, where I was in a bar, watching TV.

Next to me sat an older gentleman. The two of us got to talking after a Malian joined us, laying the first stone among us for conversing in French. After exchanging a few palavers, the Malian left, and I continued to chat with the senior gentleman.

He started lamenting first what he missed—not speaking French. He had worked and lived in Paris for three years after completing his PhD in Civil Engineering in the United States. It was a time he was unable to enjoy fully as he could not mix with the society there as he would have liked.

Then he started to dish out names of the bridges in Addis he has designed and their stories. These were bridges I cross at least once or twice a day. It got me to wonder why I never bothered to learn who designed them. Then we discussed a number of road projects with the engineer that failed to be envisaged in the city’s rapid expansion.

In great cities worldwide, the story and history of their architectural marvels are well known, unlike that of Addis Abeba. Take, for instance, the bridge joining Brooklyn and Manhattan in New York, considered the “Eighth Wonder of the World” in its opening days. It was then the longest bridge to use steel and was designed by Augustus Roebling in the 19th century. He was the inventor of wire cable, and died in a ferry accident while its construction was underway. It was also reported that 12 people were trampled to death in the crowd that rushed to cross the bridge during its opening.

I had these in my mind when I passed by the under-construction headquarters of the Commercial Bank of Ethiopia (CBE) and decided to have a closer look. Its juggernaut presence—it will be the largest building in Ethiopia when completed—demonstrates the bank’s ambition, though I was a bit perplexed with my first impression of it.

The emphasis seemed to be more on the art of its building than the art of its looks, as it is more rectangular in shape with almost non-present curves. Although it is undeniably graceful and has given colour to Addis Abeba’s skyline even under construction, my lay analysis leads me to believe that its design is more functional than an architectural statement.

But how much more enjoyable would it be to look at it had we had its full story, as in who designed it and his or her thoughts on the building?

Let us hope that the fervour of what a new structure or building may fetch reverberates anew to replicate, if not Lalibela, if not Brooklyn Bridge, then Addis Abeba’s architecture of the 1960s. Perhaps a lesson could be received here from football. Steve Sabol, documentarian, said a football field is like a big movie screen.

It “combines the strategy of chess. It’s part ballet. It’s part battleground, part playground. We clarify, amplify and glorify the game with our footage, the narration and that music,” he wrote.

A building is the same. It could be imposing by itself, but it is the “narration,” the stories told about it and those it tells, that make it an integral part of the city’s life.

How to Feed ‘Ourselves’

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Humanity is drifting into increasing danger. Climate change is accelerating; biodiversity is plummeting; hunger and extreme poverty are rising; and the gap between rich and poor is widening. These trends threaten not only human health and livelihoods but also global peace and stability. Reversing them will require a shared effort to rebuild, and even upgrade, the systems on which we all depend—beginning with the global food system.

Even before the pandemic, our food systems were being disrupted by increasingly severe and frequent extreme weather, such as droughts, and by declining biodiversity. But they were also contributing to these disruptions, because the way we produce and distribute food accounts for more than 30pc of global greenhouse-gas (GHG) emissions. While the 2015 Paris climate agreement includes targets for reducing these emissions, the world is currently not on track to meet them.

Likewise, in 2015, United Nations member states agreed to the Sustainable Development Goal to end hunger, improve nutrition, and achieve food security (SDG 2) by 2030. Yet hunger has been on the rise for five years—a trend that the COVID-19 pandemic has accelerated significantly. In 2019, an estimated 690 million people were hungry, up by ten million from 2018 and by 60 million since SDG 2 was adopted. And at least three billion people cannot afford healthy diets. Today, 41 million people are on the brink of famine.

Rural livelihoods have also been under severe strain. Small-scale farmers generate half of the world’s food calories and are critical to household and community food security. Yet millions of small-scale producers and rural workers in the developing world are living in poverty.

The pandemic affords us a valuable opportunity to rethink the world’s food systems so that they can nourish the world’s population—which is expected to reach 9.7 billion people in 2050—and provide smallholder farmers with a decent living now and in the future. Any blueprint for such systems must place sustainability and equity at its foundation, and rural populations at its centre.

According to the Food and Land Use Coalition, established in 2017 by leading NGOs and advocacy organisations, the world could make considerable progress within just a decade. A concerted reform agenda to transform food systems could deliver up to 30pc of the emissions reductions needed to achieve the Paris climate agreement’s targets, while largely eliminating undernutrition, accelerating income growth for the bottom 20pc of the rural population, and significantly increasing food security (among many other objectives).

Of course, all of this would cost money: an estimated 300-350 billion dollars a year until 2030. But there is no doubt that it would be money well spent; an investment of less than 0.5pc of global GDP would generate a social return of around 5.7 trillion dollars annually.

Estimates by Ceres2030, an international research project working to advance progress toward SDG 2, paint a similar picture. They show that ending hunger, doubling the incomes of small-scale farmers, and limiting agricultural emissions in line with the Paris climate agreement will demand that donor governments double the amount they currently provide for food security and nutrition—an additional 14 billion dollars a year, on average—until 2030. Low-and middle-income countries would also have to contribute an additional 19 billion dollars a year from their own budgets.

To maximise the impact of these funds, they should flow directly to rural populations. And they should be complemented by efforts to enable the rural poor to seize economic opportunities not only in food production, but throughout food value chains, such as in processing, packaging, marketing, and services to the rural economy.

Beyond official assistance, public development banks must better align their financing, which represents 10pc of all global investment, with the Paris climate agreement and the SDGs. And the private sector, for its part, must invest more in sustainable and equitable food systems. Meaningful partnerships between small-scale farmers and bigger agribusinesses will be essential.

Innovative financial solutions should also be developed, with the goal of driving investment toward rural areas. Booming demand for impact-investment vehicles proves that such solutions can make a difference.

At the same time, rural populations need far easier access to targeted financial services, so that they can save, invest, and empower themselves to improve their livelihoods. This will require a major push from financial institutions: as it stands, only about 60pc of rural people have access to a bank account, but this does not necessarily translate into the use of savings or credit services.

The good news is that the world is waking up to the importance of investing in sustainability. Governments have already begun to “green” their public expenditures, and companies are slowly adjusting their business models, including their sourcing decisions, to align with sustainability imperatives. Now, we must capitalise on these trends to direct far more investment toward building knowledge-based, climate-resilient, diversified, and equitable agricultural systems in developing countries.

The upcoming Food Systems Summit, convened by UN Secretary-General António Guterres, presents a critical opportunity to kick-start this process. For the first time ever, governments, farmers, companies, and civil society from around the world are coming together to discuss ways to transform the way we grow, process, and consume food. At the summit, these discussions should culminate in concrete commitments by all relevant actors in every step of this process, from farm to fork.

We can build food systems that feed a global population of 9.7 billion. We can build systems that work for those who make them work, from the small-scale farmer to the supermarket employee. And we can build systems that are environmentally sustainable. The sooner we take up the challenge, the sooner humanity can start steering in a safer direction.

The Winds of Political Change Offer Opportunity for Firms, If There’s Strategy

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Some business leaders and CEOs argue that they should go for market share against competitors by focusing on a single portfolio. However, 20th-century business performances indicate that new ways ought to be employed. It should be no different in Ethiopia, where an election has just taken place. Change of policies, a mix of the new and the old, or a continuation of what has been should inspire business leaders to be smarter to benefit from the changes in the political system.

When political changes challenge the existing social arrangement, business organisations should balance the persuasive ideological power with conservative traditional goings-about and rethink their growth.

In Ethiopia, in all sectors, moving to enhance market share in the short-term on whatever good or service is the dominant thinking. Now is the time to check it, especially in a post-election period where a new government sets agendas and priorities. Companies react to political adjustments either as a threat or an opportunity to build on. The latter is often a driving force since no other choice but to adjust and be profitable could be offered. As a result, they should raise their telescopes to see beyond the horizon, check the heartbeat of their core business and find a way to build on the opportunities that could be provided.

This concept of growth allows companies to maintain their strategic position, settle their short-term and long-term obligations, and distribute dividends from the net cash income they generate. It is a plus to the business, should they remain in a political and social environment that remains unchanged.

One of these coping mechanisms is the adequacy of capital for a business, as it is for personal finances or a national economy facing the winds of change. With effective strategy, it will help companies thrive through change.

What size of capital is adequate? And to what scale and magnitude should the companies adjust following political changes?

This is a tough assignment that demands them to scrutinise every variable. Whatever contingency plan they already developed, it is not a guarantee in uncertain economies, as the degree of predictability is not at arm’s length. Hence, the special need for capital adequacy as a hedge.

The 21st century and changes in our country require us to “rethink growth” from every business dimension. For instance, we should gain market share without consuming a disproportionate amount of net cash in the form of more inventory or having large account receivables. If not, it is a null and void strategy that will gradually close the business.

The strategy should be based on a conscious, integrated transformational plan, mainly on an inevitable force of external parameters that would affect existing resources. Without it, we fail to exist further as a business.

Look no further for proof of this than the global crises brought on by the COVID-19 pandemic. It has overnight closed economies and nearly mortally wounded sectors such as retail, tourism and entertainment. The burden it has unloaded on businesses globally, for those large firms unable to manage it wisely, has been devastating. Rethinking growth has become the only antidote.

Profitability, increasing market share, and cash efficiency all come from giving value to customers, having an effective business process and integrating ICT and human asset development. In that regard, it is crucial to rethink growth by giving special attention to valuing customers and their actual preference following changes in the political landscape. If businesses, industries and sectors manage their way through it strategically, it could offer a winning cocktail that boosts economic output and unleashes the productive force of the country.

Asseged Gebremedhin is the deputy CEO of Global Insurance.

Residential Moving: An Offer that Can’t be Refused

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Last week, my family was informed to vacate the house by the landlord as he would be moving into it two months later. It was a dose of headaches our way as moving involves a lot of planning and saving, not to mention finding a place to move within our price range.

It is no secret that rent and property prices have exploded in the city, even in neighbourhoods that were not known for being close to the city centre. For instance, when we moved in two years ago into our three-bedroom condominium, rent for every month was seven to nine thousand Birr in most places. It has since doubled. We can thank inflationary pressure and high rates of urbanisation for this.

But there was also an issue I had never considered imaginable: bullies. Back when we moved into our current home, my husband took care of most things as I was pregnant. One of his main costs was paying off the neighbourhood bullies that held our property hostage until he paid them a sum to unload the stuff.

Since I never experienced this firsthand at the time, I did not understand why we could not just tell them we did not need their labour. Friends or some other person of our choosing will do it for us. But it is not that easy. Either we pay them to unload it for us or we pay them in any case.

Are they above the law?

They seem to be. When he encountered this problem, my husband did call the police, who then basically told him he had to pay. Their justification was that this—what amounts to extortion—was a source of income for the youth and that others should not be making a living in their neighbourhood. The police did not mention that aside from the amount they force movers to pay, they also steal stuff from the truck, as they did to us the last time we moved.

It is baffling but also a common phenomenon these days. I have recently witnessed this extortionist activity first hand. A neighbour recently bought a fridge and unloaded it with his brother from a pickup truck at the entrance of our condominium gate. He did not know that a group of youth had seen the pickup and were circling his place like vultures.

They said that for 8,000 Br, they will take it up to his apartment on the fourth floor. The neighbour explained that the service was not needed and that he would move it himself. The bullies looked at each other and explained that it was not “an offer he can refuse,” or something along those lines. A fight broke out, and area residents came and calmed the mob down. Even the weight of other neighbours did not help, and he paid 3,000 Br more than he intended to spend on a fridge.

This is a shakedown—the law of the strong. It is also a known revenue generation method of the Sicilian mafia in their protection rackets. It goes like this: street-level thugs will approach a small business and tell them they must pay and the Mafia will protect them.

Protect them from who?

If they opt out, they will find out that it is the same thugs that will destroy their shop or business; basically, they pay them for protection against them.

How is it different from what the neighbourhood bullies do?

Nobody should be above the law. This is also not a way of giving the local bullies something to do—it is a crime, like thievery. Just because it pays, it does not make it a morally and ethically acceptable vocation.

The Forgivers, Superheroes Amongst Society

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In an era when personal, political, and social upheaval is common, tolerance and forgiveness are necessary mental exercises that can keep us healthy physically and emotionally. We can find inspiration in this from our loved ones, as I do from my father.

Growing up, one of the things I witnessed in my father was his ability to forgive and respect others, including those that profoundly changed his life for the worst. They unjustly took his businesses, money and even threatened his life and that of his family. His offence was being from a particular place where people were not fond of at the time.

Not only did he forgive them, but he offered his helping hand when they needed it and continued to have an active social life in the community with them. As a teenager, these actions used to riddle me.

One of the main reasons I went to study law was to bring justice to victims such as my father, who have endured pain at the hands of others. There were many times when I thought that his initiative to forgive them was an act of disrespect to himself. Little did I know that it was these efforts that brought him inner peace.

Often unexpected violence erupts, changing our lives for the worse. The problem gets worse when the egotism of individuals, politicians and society goes unchecked and continues to cause harm. Most of the time, those that wronged us get defensive instead of being remorseful. But the power is in our hands to forgive them, finding catharsis in the process.

The level of mental maturity and stamina we can gain from ‘forgivers’ can help us get past events with people who even refuse to take responsibility for their wrong actions, finding a way to blame us or shift it to others. Making peace with the fact that hurt can come even from an unlikely individual or those close to us gives us the grace and compassion to let go of resentment. Whether we like it or not, experiencing pain is an inevitable part of life.

If we care enough about our mental and physical wellbeing, we have to be grounded in a belief that holding bitterness only ends up hurting us the most. Tolerance and forgiveness are the main interwoven aspects of personal and social accountability that reveal that conscious and unconscious violence against others is birthed from a selfish stance that disregards them.

We all possess a caring and uncaring nature. Thus, if we choose to occupy ourselves with our suffering and pain, not as fuel to rise beyond our challenges but as energy to bolster rage, we can inspire the worst in ourselves. In these, the most cynical periods that our nation has ever known, the way toward a more forgiving, hopeful, and compassionate route can build the fracture within society.

We live in a country where simple questions often turn into complex, difficult ones with no easy answer. The result of this is that it produces further tension and violence that is even more destructive. The catastrophic difficulties we continue to live with, the scope and scale of damages the nation has to rectify should be used to shine a light on tolerance and forgiveness.

After all, caring for others and forgiving their transgression is simple, when we make it out to be. If we do not make it hard with our anger and the need to take revenge, nothing is limiting us. The restrictions and conditions we put on ourselves in forgiving others further complicate situations for us, pulling us deeper into resentment. Indeed, forgiveness is a super-giant bitter pill we have to swallow. But once it is done, healing is immediate and paramount. As with everything else, the choice is ours.

Eden Sahle is founder and CEO of Yada Technology Plc. She has studied law with a focus on international economic law. She can be reached at edensah2000@gmail.com.

 

161,500,000

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investment capital, in Birr, of projects that became operational in the second quarter of the concluding fiscal year, according to the National Bank of Ethiopia (NBE). Compared to the same period in the previous year, the number of projects dropped by half but the aggregate investment capital was 62pc higher this year.

“A lot better.”

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Olusegun Obasanjo, former Nigerian president and head of the African Union Election Observation Mission, told Fana BCthat the election process was better than earlier ones. He admitted that there were “understandable” handicaps. The EU declined to send observers because its officials believed the pre-poll process failed to meet “standards.”

CUSTOMER ACQUISITION, STREET VENDOR STYLE

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Part of the job description of a street vendor is having to carry a lot of goods around as they move about the city. Customer retention is not in the cards thus have to be as loud and as visible to acquire new ones every time. This street vendor near Mexico Square is no different as he approaches a shop to ask the people inside if they have any need for cleaning materials.

OLD OLD AIRPORT HOUSE

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A makeshift shelter made of corrugated steel lays vertical near a bridge around Old Airport. Shabby and neglected, it is at risk of being destroyed by a flood. If not that, the wet muddy ground it is built on will eventually give way and take the house with it.

WOODEN CAR

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A Toyota sedan with an unusual look stops at a traffic light near the National Theatre. It has been customised to boast wooden features and carry on top of it what resembles to be a tiny garden. The car is a moving advert for Smart Furniture & Design, a furniture company.

Ministry, Mastercard Look to Bolster Leather Industry

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The Ministry of Trade & Industry and the Mastercard Foundation have signed an agreement to enhance the competitiveness and growth of Ethiopia’s leather industry by establishing a platform for job creation and supporting existing small and medium enterprises.

The initiative, being carried out through the Foundation’s BRIDGES programme, will focus on employment linkage, enterprise development, competitiveness, and access to finance. The programme will also look to support small and medium enterprises supplying schools with leather bags and shoes, with an emphasis on encouraging women to join the workforce.

Around 1,000 small and medium enterprises are currently engaged in the leather industry, with most producing goods for the local market.

The project aims to create employment opportunities for 1,000 people during the first round of implementation.