With the growing popularity of street food made from fried fish, the industry experiences a boom during the main fasting season for Ethiopian Orthodox followers, during which restaurants and hotels in the capital stock up on supplies. However, the Ethiopian fishing industry has struggled to grow, with annual fish production estimated at just 50,000tns, contributing less than one percent to the gross domestic product (GDP) and less than 0.5kg per capita consumption. Experts blame overfishing, lack of awareness, and inadequate infrastructure and technologies as the main challenges to the sector’s development. Researchers point to costly waste materials dumped into water bodies. Fishermen are untrained, and their nets are outdated, catching small fish before they have the time to reproduce. But Officials argue the neglected fishery and aquaculture sectors are slowly but surely receiving more attention.
Month: February 2023
What Internet Shutdown Posit about Ethiopia’s World Standing?
Millions of people in Ethiopia have continued to be deprived of access to information. For weeks, they have been unable to access their social networks through digital platforms like Facebook, Tik Tok and YouTube. These platforms have become vital tools for the media to share information, for individuals to keep up with family and friends and for businesses to promote their services and products.
However, the authorities see them as a threat to power and have taken measures to control their use.
The latest move by Prime Minister Abiy Ahmed’s (PhD) Administration to censor and control access to these platforms was prompted by a call from leaders of a major religious institution a few weeks ago rallying their followers. Although the rally was called off after the religious leaders candidly talked with the Prime Minister and his senior officials, the shutdown continued.
Old habits die hard.
The authorities have developed the habit of shutting down social media platform slowing down the Internet or putting subscribers in the cyber darkness for nearly a decade. One of the most notable instances was in 2016 when the government blocked internet access for several months after widespread protests intensified in the Oromia and Amhara regional states. The authorities had claimed that social media platforms were used to incite violence and spread false information.
This shutdown was estimated to have cost the economy up to 123 million dollars, with businesses unable to operate and essential services disrupted. It had significant economic ramifications, as companies could not operate without internet access. The shutdown also affected banks, hospitals, and other essential services, causing widespread disruption and inconvenience. The latest move could perhaps be the 14th, causing not only much inconvenience to users. The cost to the economy is estimated to reach an enormous amount.
It also highlighted the vulnerability of Ethiopia’s internet infrastructure and the need for greater investment in the sector. Its technology sector has proliferated recently, but lacking internet freedom has hindered innovation and investment. Foreign investors are wary of putting their money into a country where internet access can be shut down anytime. Local entrepreneurs face significant challenges accessing the tools and resources they need to grow their businesses.
The lack of internet freedom has hindered Ethiopia’s ability to participate in the global digital economy. Online marketplaces, e-commerce platforms, and digital payment systems have become essential components of the worldwide economy. Ethiopia’s restrictions on internet access and social media have prevented it from fully participating in these markets, limiting economic growth and development.
Last year alone, Ethiopia’s economy was made to bear a loss of 145.8 million dollars (close to eight billion Birr in the current exchange rate) from Internet service interruptions for 8,760 hours. Over a million people are believed to have been directly affected, earning Ethiopia an unpopular place alongside Russia, Iran and Myanmar.
It is not the first for Ethiopian authorities to impose a blanket shutdown of the Internet or censor access to several websites and platforms. Neither are they lone wolves in doing so.
No less than 23 countries had imposed internet blackouts, shut social media platforms down or exercised throttling (dumping internet speed to a sufficient level allowing only voice calls and SMS) last year. Affecting 710 million people and lasting over 50,000 hours, the cost to these countries is estimated to reach 24 billion dollars.
Many of these countries take such measures during electoral tensions, political unrest resulting in protests, and curtailing freedom of expression.
According to a report by Top10vpn, which monitors internet shutdowns, Ethiopia is one of four countries that impose restrictions on cyberspace to censor press freedom and control information during protests.
However, the Ethiopian government justifies its actions on the grounds of national security, arguing that it is necessary to prevent the spread of information that could further destabilize the country. In legal justifications Ethiopia’s Attorney General’s Office submitted to the UN Special Rapporteur on Freedom of Opinion and Expression, it argued that the state is duty bound to “keep the country safe from any threats against national security.”
Using national security as a ground for state action in censoring the Internet is one of the few reasons countries use to justify their actions. Maintaining public order, policing intellectual property rights and ensuring cyber security are often the justifications these governments make to defend their unpopular measures. However, in the large community of states in the world, not every country is known to take these drastic measures at the expense of their economies or populations. Those who do, despite their claims, employ the instruments to suppress dissent and control the flow of information, particularly during political unrest.
Ethiopia’s actions should not be lost on its envoys at the United Nations, who might have voted affirming that Internet shutdowns are an unjustifiable violation of the right to freedom of expression. UN officials have repeatedly called on member states to respect these rights even during unrest or threats to national security.
For Ethiopian authorities to continue using these reasons to legitimise their actions puts the country in a category of states that have gained notoriety for their practice of shutting down the Internet and blocking social media platforms. Countries that regularly employ internet shutdowns and censorship share specific characteristics, such as authoritarianism, centralized political power, and strict limits on media and the Internet. These countries prioritize military and security concerns over political freedoms and free speech and prioritize nationalism over international cooperation.
Russia, for one, has been shaped by the legacy of the Soviet era, while the Islamic Revolution transformed Iran. China, North Korea, and Turkey also employ similar tactics to suppress dissent and control the flow of information, often citing national security concerns as a justification for their actions.
The state’s role in the economy is pervasive in these countries, with state-owned enterprises entrenched and strict regulations on private enterprises imposed. The ideology of illiberalism is also prominent, often having large military and security presences, with the interests of the ruling party or a few leaders taking precedence over political freedoms and free speech. It will be tragic if Ethiopia’s leaders think these countries can serve as a source of inspiration to govern a country as large and diverse as Ethiopia. Doing so can only tarnish Ethiopia’s standing in the face of the rest of the world, where the majority do not resort to such measures whether they face the same troubles.
It is important to note, however, that not all countries resort to such extreme measures during times of crisis. Many countries prioritize a rule-based approach, where the rule of law prevails over the interests of those in power. These countries strive to nurture an environment where political freedoms and free speech are respected, even during unrests.
Ethiopia’s leaders must avoid using these illiberal countries as a model for governance, as it can harm the country’s reputation and standing in the international community. Instead, they should prioritize the rule of law and respect for human rights. The international community should also continue to hold Ethiopia’s authorities accountable for their actions in violation of their international obligations.
Despite Wane Production Fish Market Blooms in the Capital
As the sun sets and the cold wind starts to breeze, Birhanu Shambel, 29, goes out to work where he makes a living selling whole fried fish from his four-wheeled cart with a large frying pan instilled in it. He works on the streets of Ras Mekonnen Avenue in the Mexico area.
He moved to the capital a couple of years ago from Wolayta Sodo in the Southern Regional State in search of better opportunities. However, Birhanu did not expect the unfolding after he arrived as deep-frying fish in the streets was never the life he envisioned.
“I didn’t choose this line of work,” he said with a displeased look on his face as he flipped the fish around making sure it was well done.
The pungent smell coming from the cart is hard to go unnoticed with the oil on the frying pan looking darker than usual from repeated use. The pan is half covered with boiling oil giving Birhanu a hard time while moving his cart. He explained that the hot oil is the one thing he could not get accustomed to, showing the tiny dark spots on his hands that appear like nets of a jersey.
The junction route hosts residents of Addis Abeba from several directions returning home rubbing their palms from the cold weather while Birhanu sells his street food wearing a t-shirt that lost its originality from oil splashes. He claims to not mind the weather or ungroomed appearance as it is part of the hustle.
“My jacket is the heat from the pan,” he told Fortune.
Birhanu gets his fish from distributors around the Piassa area for 150 Br a kilo and sells one piece from 70-100 Br depending on the sizes. He prefers to buy the ones making their way from Zeway and Arba Minch towns, known for their fish production.
Fried fish has gained popularity as street food in the capital over the years similar to the practice on the lakes lest the views. The former hub for the vegetable market, Atikilt Tera around the Piassa area, is only left with residues of its name now turned into a full-blown fishmongers spot.
Daniel Barega works at one of the distributors in the area, Tsige Fish. His daily routine for the past two years revolves around separating the unwanted skin from the fish holding a huge knife and selling a kilo of fish fillet (Filleto) for 200 Br.
“We use refrigerated trucks to transport the fish,” he said. Restaurants are among his customers as Daniel observes the place becoming popular through the years.
The major fasting season for Ethiopian Orthodox followers, Abiy Tsom, which lasts for nearly two months, is a flourishing time for the fish industry, with restaurants and hotels in the capital stalking up their supplies.
In business for over six years, Nile Fish House on Roosevelt Street near Mexico in front of the Kuriftu Apartment Building. The Manager, Yoannes Getachew, said this is the season when customers come flooding through the door.
According to Yohannes, the price of tilapia (Ambaza) fish spiked from 40 Br a couple of years ago to 110-130 Br from the distributors. He believes the decreased supplies contribute to the rising prices and may challenge customers to come by as often as they would like.
The financial importance is not lost on consumers as is the nutritional value.
Ayalkebet Kassaye is a musician with a well-built body posture. He frequently visits the Nile Fish House, with the fasting season being one of the prominent times. He ordered the Nile special for 600 Br with his friend.
“The price is fairly equivalent to the meal,” he said.
Ayalkebet observes the restaurant gets crowded over the fasting season. He claims the nutritional value compels him to frequent the restaurant even at other times.
The notion is somehow misleading for Zelalem Debebe (MD), a nutritionist who believes fish produced in Ethiopia has limited benefits compared to the ones in the ocean. According to her, the types used to produce fish oils containing nutrients such as Omega3 and vitamins are mainly found in cold temperate like Canada and the US.
Zelalem said it is still wise for people to substitute fish with meat at least twice a week as it has less fat and is relatively packed with more nutrients.
Landlocked Ethiopia is endowed with several water bodies with a fishery potential of over 94,500 tons annually, meeting about 10pc of the animal protein requirement of the population. The country has 12 major lakes, nine major river basins, and over 200 reservoirs that cover about seven percent of its land area.
However, the actual fish production is estimated to be around 50,000tns a year, which accounts for less than one percent of the gross domestic product (GDP) and less than 0.5kg per capita consumption.
Experts attribute the challenges to overfishing, lack of awareness and lack of infrastructure and technologies.
Alemayehu Abebe, a researcher at the Batu Fish & Other Aquatic Centre says overfishing and pollution of the rivers are attributed as the major problems for the underdevelopment.
“Waste materials dumped on waterbodies come at a high cost,” he said.
According to Alemayehu, fishermen are untrained and nets are outdated leaving the big fish and catching the little ones before they get a chance to reproduce.
Although the low figure indicates that fishing is an undeveloped sector with much less contribution to the economy and livelihoods, officials mention the neglected fishery and aquaculture are slowly but surely getting attention.
According to the State Minister for Agriculture, Fikru Regassa, one of the largest reservoirs under study lies in Denbi Mini Hydro Electric Power plants in Bench Maji zone, in the Southwestern Regional State. It is estimated to have an area of 72 square kilometres and a fishery potential of 383tns a year.
The reservoir is hoped to support a small-scale fishery with 300 fishermen that use traditional fishing gear such as gill nets, hooks and lines, with species caught from the reservoir being Ambaza and catfish (Qoroso).
Fikru said they are utilising resources to ensure local demand and export to IGAD member states.
“We’re partnering with member states,” Fikru said.
The distribution of fish species and overall diversity is extremely uneven. Although there are over 200 fish species in freshwater bodies, with 40 endemic, up to six types of fish are offered to the local market for consumption. Nile perch (NechAsa) and Qoroso are the most consumed species both in private and commercial settings.
More than 75pc of the fish produced in Ethiopia makes their way from Tana, Zeway, Langano, Awassa, Abaya and Chamo lakes. The remaining are from dams such as Finchaa, Qoqa and Tekeze.
While most of the fish comes from Oromia, Amhara and Southern regional states, riverine fishing activities are mostly performed on the Baro River in Gambela Regional State and the Omo River in the Southern Regional State near the border with Kenya.
The transportation issue and informal tax during checkpoints are a challenge for exporters in the business.
Birhanu Mebrhatu Fish Export, registered under a high-level taxpayer has been in business for over 15 years with 30 employees. The Manager Birhanu Mebrhatu has been recognised by the Addis Abeba City Administration, exporting 3,000 quintals of fish last year. He gets the Ambaza and Qoroso for 30-40 Br from the fishermen bringing up to 60 quintals a week. Yet the informal tax on the checkpoints until reaching the capital has been a headache, he said.
Birhanu said the rising prices and transportation issues coupled with the decreased demand in the international market are challenges faced by exporters and urges authorities to turn their heads to the sub-sector.
“The informal tax is killing the business,” Birhanu told Fortune.
While low production, transportation headache and the inflationary price that comes with export ambitions grip the market, it has become a means to an end for many including street vendors like Birhanu on the streets of the capital.
Ambitious Plan to Train Thousands of Contractors Amid Hurdles
Federal authorities are banking on a new wave of contractors to meet the country’s infrastructure needs. However, the plan has its sceptics, considering that the sector faces significant challenges, including inflation, a lack of short-term credit options, and an unreliable labour market.
The authorities intend to train and graduate tens of thousands of contractors in three years under a new initiative to boost the construction industry. Under the Ministry of Urban Development & Construction, a program for capacity building of the construction industry is underway, with support from the Ethiopian Construction Works Corporation.
Mesfin Tadesse, a project manager for a team of up to a dozen people under CONSOL, conducted surveys across multiple regional states to identify gaps in the sector. He considers that 40,000 contractors are a small number given the country’s demand for professionals in the industry.
Nearly 13,760 medium and small enterprises will be upgraded to contractors, while 18,240 new ones will be created, working with higher learning institutions and mobilising technical and vocational education and training (TVET) graduates in three years. The authorities plan to set aside a revolving fund of 24 billion Br they hope will address the capital issues that may arise during the project’s implementation. The project is a remake of a previous attempt by the former Ministry of Construction which had a budget of 122.7 billion Br that failed to materialise.
The federal government aims to build 2.4 million homes by 2025, with each unit projected to cost an average of half a million Birr. The document availed late January proposes the creation of a construction development office under a board comprised of higher officials from the finance, revenues, and ministries in the urban and infrastructure sectors to steer it with a little over 61 million Br budgeted.
However, experts have differing views on the feasibility of the latest project. Project delays and underfunding have already hampered the country’s public sector. The government’s plan to train thousands of contractors may be ambitious, but its success will depend on overcoming the sector’s current challenges.
Kalewold Fantaye, a grade four contractor with 25 years in the business, is sceptical, recalling a similar endeavour 15 years ago by the then Urban Development Bureau. It had upgraded about 3,000 contractors from enterprises, many of whom have since gone bankrupt or served extended periods in correctional facilities. He argued that if so many fail as contractors, it must indicate a systemic glitch, not individual ineptitude.
However, Tesfaye Hailu, a lecturer at the Ethiopian Institute of Architecture Building Construction & City Development (EIABC), applauded the move to upgrade enterprises to contractor status while suggesting careful calibration of contributing factors in the construction sector. He attributed the failure of prior attempts to the unwillingness of the enterprises as they would lose benefits such as tax exemptions, subsidies and micro-credits.
“It’s a tall order,” he noted, pointing out that the shortage of working capital will continue to trouble new contractors.
Tesfaye urged banks to redefine their relationships with contractors.
Etsub Dinku, a senior expert at the institute’s research directorate with over a decade of experience, stressed the importance of practical experience and continuous education in building capacity and improving the sector. He believes a culture of sub-contracting and expanding field experience is essential to building a qualified workforce.
Despite the optimistic assumptions of both Tadesse and Etsub, the construction sub-sector saw its least growth rate in the last five years standing at 4.9pc, and the central bank data shows year-on-year headline inflation for January this year at 33.8pc. The negative real interest rates for lending and deposit remained at 19.79pc and 26pc, respectively.
According to Mesfin Tadesse, the project manager at CONSOL, shunned the impact of inflation on the project.
“You don’t stop farming because a drought is on the horizon,” he told Fortune.
Challenges faced by local contractors, such as delayed payments from clients, lack of short-term credit options, and unreliability of labour, are the main impediments to the development of the sector, according to a document outlining the problems.
Teferi Seyoum, who has been working in the construction sector for nearly 15 years, views the goal of infusing new contractors in the current inflation of the economy as a rather unrealistic prospect. He has a grade three construction license and is expected to have a yearly turnover of 140 million Br. Seyoum believes that obtaining bank loans has become increasingly difficult, even against collaterals, compounded by the declining number of clients willing to pay advances due to the liquidity squeeze.
“The construction sector is frozen,” he told Fortune. “We are barely keeping up with payments.”
Seyoum suggests that a culture of sub-contracting, continued refreshment courses, and expanding field experience is essential in building capacity.
“All of the education in universities is theoretical,” he told Fortune.
A lecturer with over a decade of experience emphasises that qualification means more than just a degree.
Ethiopia’s construction industry, which has seen significant growth in recent years, faces several challenges that threaten to hinder its progress. According to a report by the central bank, the sector’s growth rate has shrunk to 4.9pc, the lowest in the past five years. This, coupled with galloping inflation, delayed client payments, and a lack of short-term credit options, has made it increasingly difficult for contractors to operate in the industry.
Controversy Erupts as Businessman Wins Bid for Public Buses in Addis Abeba
A businessman recently came to the public attention after his company won a third bid to deliver 200 buses for public transportation to Addis Abeba City Administration, based on invitations for suppliers city authorities believed to be capable of meeting technical and financially restricted bid requirements. Brighton Trading Plc won the bid for 3.6 billion Br.
Yadeta Juneydi Bekri, a major khat exporter, is a significant shareholder of Brighton Trading. A resident of the United Kingdom for many years, Yadeta has been bestowed the platinum taxpayer status awarded by President Sahleworq Zewde in 2022. His company ranked 20th highest taxpayer in the country, outperforming corporates such as Derba Cement and top private commercial banks such as Cooperative Bank of Oromia (COOP) and Hibret Bank.
Yadeta holds a vehicle import license registered under the Public Procurement & Property Authority. He is also in the property development market, with Brighton Real Estate building homes in Adama town, 90Km east of the capital. Notably, a now-dissolved company in Brighton, UK, named ‘Laga Kosum Beauty Products’, has the name “Yadeta Juneydi Bekri” registered as secretary between 2008-2010.
Three weeks ago, Yadeta was awarded a plaque of appreciation by Mayor Adanech Abiebie, who expressed gratitude to Brighton Trading on her Twitter posts.
However, the procurement of the 200 buses has stirred controversy, with the price of each bus close to 19 million Br, raising eyebrows. The bureaus responsible for the procurement have attempted to curb public fury through public relations charm-offensive in state-owned media outlets.
The inclusion of these buses into the city’s fleet by Sheger Bus company was preceded by three auction bids over two years, disclosed Mengistu Atnafu, manager of the Public Procurement Authority. The Addis Abeba Transport Bureau has been working to deliver up to 2,000 buses from the state-owned Bishoftu Automotive Engineering, according to the Bureau’s head, Mitiku Asmare.
The new buses are fitted with 10 cameras each and are expected to be integrated into the Intelligent Transportation System (ITS) on which the transport bureaus work.
Despite a fleet of 650 Anbessa buses and over 8,000 minibuses operating in the capital, long queues for transportation are a common sight in the streets. With the gradual removal of fuel subsidies, increasing population numbers and the 30-year ambition of the Ministry of Transport & Logistics, federal authorities have set the stage for further investment in public buses. Over 3,000 more buses are needed to meet the capital’s demand for public transport which stands at 54pc.
Nonetheless, Ethiopia’s foreign currency squeeze has been a major cause of the prolonged bidding process, with bus suppliers demanding to be paid in foreign currency.
An international bid two years ago, which saw one company emerge as the winner for 17 million Br for a bus, was suspended due to its high offer. A year later, another bid was floated, this time a national bid, due to the inability of the City Administration to find the foreign currency to pay international companies that may win and require payment in foreign currency.
Nine domestic companies bought the bid documents; Woreta Trading Plc met the technical requirements for 13.8 million Br. However, Woreta Trading managers also wanted the City Administration to facilitate foreign currency for the procurement, leading to the termination of the bid, according to officials of the Procurement Authority.
A final restricted bid was offered late last year. Eight domestic companies received invitation letters advising them that payment would be paid in the local currency if they met the technical standards. Three companies responded to the invitation letter, with Yadeta Juneydi Bekri’s company, Brighton Trading, winning against Belayneh Kindie and Elias Sani Omer, bagging the contract for 18.9 million Br and the runner-up putting up 22 million Br.
Lion Insurance Steady Profit Growth Amid Declining Share Earnings
Lion Insurance’s steady growth in net profit from last year’s operation, slightly exceeding half of the industry’s average of the 17 private insurance firms, comes amidst a continued decline in earnings per share.
The company`s senior executives characterised the drop in earnings per share as “not significant,” and capital and profits are on growth trajectories.
While the modest increase in profit was driven by the reduction in claims and increased incomes from commission and investments, Lion’s Insurance earnings per share (EPS) has been declining in the past few years, down by 0.52 Br last year to 8.52 Br the previous year. This has been attributed to an injection of capital not matched by the profit after tax.
Lion Insurance’s net profit grew by 7.4pc to 61.3 million Br, representing over half the industry’s average of 105.8 million Br.
“This calls for the attention of the management,” said Abdulmenan Mohammed, a financial statement analyst based in London.
The firm reported this result after writing a gross premium of 436.4 million Br, an increase of 9.6pc, accounting for 74.2pc of the industry’s average. The insurance companies retained 61pc of the total non-life gross written premium. Lion’s retention rate dropped by seven percentage points to 69pc, as Lion ceded 30.4pc to reinsurers. It is a trend the financial statement analyst cautions the firm’s executives that the decline undermines the gross written premium.
“The management should consider growing the retention rate,” he said.
Lion Insurance, incorporated in 2007 with 16 million Br paid-up capital, changed guards over a month ago, replacing the former CEO, Negasi Yoseph (PhD), with Aberham Mersha. The acting CEO, Kahsay Gebremicheal, has been running the company since Negasi left. Although the duration was not disclosed, the vacant position took a long time to fill with a thorough screening process, according to the Board Chairman, Abraham Gebreamlak.
Lion Insurance’s Board Chairman told Fortune the firm is optimising its retention capacity. He told shareholders met in October 2022 at the Elilly Hotel in the Casanchis neighbourhood that security concerns, the global pandemic, and the industry’s cut-throat competition were some of the year’s challenges. The insurance industry faces more profound challenges, such as low penetration, limited distribution channels, a weak regulatory framework, and constrained reinsurance capacity.
However, opportunities exist for the industry, with a largely untapped market of over 110 million people. The expanding middle class, rising disposable income, and increased awareness of insurance products provide opportunities for insurance companies to expand their customer base. The industry has experienced significant growth, with an aggregate premium reaching 10 billion Br in 2022. Motor insurance dominates the market, accounting for approximately 60pc of the total premium volume, while life insurance accounts for only five percent. Health insurance is gaining popularity, and property and casualty insurance is also growing, driven by increased demand from the construction and manufacturing industries.
A second-generation insurance firm, Lion saw a decline in net claims by 13.7pc in the reported year, showing that the company could control its claims well. The Board Chairman attributed the positive development to the firm’s adopting a strategy. The CEO credited “exhaustive and proper assessment of damage, a fair determination of claim costs and their timely settlement” as a prudent strategy his managment followed.
Lion’s revenue grew as it experienced expenses paid to employees’ benefits (99.1 million Br) and administrative costs (56.4 million Br), registering a 30.2pc and 20.3pc jump, respectively.
Abraham stated that inflation and salary adjustments were the factors behind the spike in total administrative costs. By investing in its employees, the company aims to improve overall performance and remain competitive in the market. Lion Insurance executives plan to implement strategic performance management tools, such as salary scale adjustments, in favour of employees.
Lion Insurance’s total assets increased by 35pc to 1.32 billion Br, mainly from the expansion of cash bank balances and reinsurance assets, representing a little over half of the industry average of 2.2 billion Br. The company’s capital and non-distributable reserves to total assets ratio fell by 3.1 percentage points to 19pc. However, the paid-up capital increased by 17pc to 194.9 million Br, still short of the 306 million Br threshold set by regulators at the National Bank of Ethiopia (NBE).
To meet the regulatory requirement, the company plans to propose raising capital at the next general assembly, the Board Chairman disclosed. The company’s subscribed capital, 300 million Br, would allow it to expand its operations further and improve its financial performance.
While Lion Insurance has seen some positive developments in its financial performance, there is still room for improvement. One of the 500 shareholders, who wish to remain anonymous, wants to see the company diversify its portfolio, particularly in life insurance, to become one of the “reliable and preferred insurance service providers in the market.”
Abreham says that is what he will prioritise in his tenure as a CEO.
“Building a strong human capital, focusing on service excellence, enhancing operational efficiency, and making the company a composite insurer through life assurance business are major interventions I will work on to add value,” he told Fortune.
Ministry Proposes Commercializing Public Transport
All public transport associations and service providers will need to reestablish under commercial entities if they are to continue in the public transport business. A new draft directive signed off by the previous Minister of Transport & Logistics, Damgmawit Moges aims to reform public road transport setting qualification standards.
Officials claim it is part of a series of reformations introduced by the Ministry this year to treat transport associations and service providers as commercial entities delineating the powers of the Ministry and its ambitions.
It stipulates that service providers will need to put colour-palleted stickers on the back of their vehicles reflecting the class of services they are authorised to perform, from special operators to level three service providers. These stickers will reflect the class of services permitted by the Ministry with minimum standards set on the type and number of vehicles a company is required to have.
Special public transport operators will be allowed to cross international borders without restrictions on maximum distance. A white sticker is issued to entail vehicles that are less than seven years old. Sole proprietors need a single vehicle with a GPS tracker and 45 passenger seats while share companies and private limited companies will need five and 10 cars respectively.
Level three service providers will be confined to a 300km radius on international roads. The required number of minimum vehicles increases with rising levels reaching 50 for level three operators organized under share companies, with a concomitant waning in the permitted number of services.
All levels are prohibited from charging fees for luggage that weigh less than 25kgs, for children under the age of seven while also expected to begin provision of services at 3:30 AM.
The implementation of the directive pertaining to the freight truck associations suffered backlash when it was announced in late 2022 within a few months of the proclamation.
Mustafa Jemal, head of public transport management at the Ministry conceded that the time gap between the ratification of a proclamation and the issuance of a directive could serve as a source of “misunderstanding”. However, he believes the new draft came into existence with a lot more tact.
“50 associations were consulted within three days of drafting the document,” Mustafa told Fortune.
He also indicated that certain stipulations within the draft were in lieu of the Tripartite Transport & Transit Facilitation Programme (TTTFP) to which Ethiopia is a signatory.
TTTFP entails the integration of transport systems between the Southern African Development Community (SADC), Common Market for Eastern & South Africa (COMESA), and East African Community (EAC) countries aimed at facilitating smooth cross-boundary travel between the 26 countries.
As a part of this effort, the World Bank financed the TRANSIP project in Ethiopia with 300 million dollars six years ago while the project headed by Bahru Mossa is currently working to upgrade driving licenses through digitisation and biometric data.
The European transportation infrastructure should be taken as a model in any attempt to integrate transport mechanisms between African countries suggests Birhanu Zeleke (PhD). The Transport Management Lecturer at Kotebe Metropolitan University was surprised to learn that the associations were still not organized as commercial entities.
He emphasised the importance of reorienting priorities in transportation to trains and railway systems.
“Expecting road transport to solve public demand is far-fetched,” says Birhanu.
Efforts to recreate transport associations as commercial entities were attempted back in 2021 through a directive by the Ministry only to be dropped by a federal high court judge. Things are different this time around as the legal framework to bolster the new series of drafts have already passed through the legislative gears and was signed off by President Sahlework Zewde in June of last year.
President of the Ethiopian Transport Employers’ Federation, Birhane Zeru believes despite the benefits of reestablishing transport associations as commercial entities the execution has been rushed.
He reasoned that the proclamation had already set a deadline for a year despite economic impasses arising from the war as most large transport vehicles were commandeered for military purposes.
“We had not worked for two years due to the war,” he said.
Birhane who heads the 9000-member strong federation suggests credit provision or tax exemption mechanisms to smoothen the transition while he acknowledged that this draft involving public transports got slightly more engagement from the Ministry.
“There’s still significant resistance to constructive input,” he told Fortune.
Got Milk? Need to Keep It Safe
Vigilance right from production is crucial yet the safety of milk in Ethiopia is found substandard, containing less amount of protein and fat than required, reveals four-year research.
The nutritional composition of milk is found to have an average of 2.56pc protein and 2.57pc fat revealing 27pc less protein and 25pc less fat than the quality standard, according to the study. It has also revealed that 85pc of raw milk and 90pc of pasteurized milk are found in poor hygienic conditions.
Most products in the market cannot be considered whole milk, explained Ashagrie Zewdu (PhD), the associate professor at the Centre for Food Science & Nutrition at Addis Abeba University.
“It might as well be referred to as fasting,” he said.
Ashagrie presented adulteration and scarcity of animal feed as the reasons for the low quality of raw milk. According to the study, 68.75pc of milk in Ethiopia has up to 10.4pc added water.
“Cows in the rural areas eat grass in the grazing field lacking the variety of nutritional ingredients for quality milk,” he said.
Conducted by experts from Addis Abeba University in partnership with the Ethiopian Institute of Agricultural Research (EIAR), Kansas and Penn state universities, the study covered Amhara, Oromia and Southern regional states, taking over 1500 samples from farmers, collectors and processors.
Lemma Gemeda, head of the Diary Products at the Ministry of Agriculture, said they are working on the production and distribution of concentrate feed not only to upgrade the content quality of raw milk but for poultry products as well.
The research is part of the 1.1 million dollar Ensure project funded by the Bill & Melinda Gates Foundation, UKAID and the British Foreign Commonwealth & Development Office. The safety of the production and preservation process of milk and dairy products is another area the study found concerning.
Ashagrie attributes post-pasteurisation contamination due to fluctuating electricity for poor hygienic status.
“There’ll be a conducive environment for exponential reproduction of microbes,” he said.
Access to clean water is a challenge for farmers who are the predominant source, with food-borne pathogens easily entering milk and reproducing if the milk handler, the cow and the cattle pen are not cleaned properly and timely. More than 98pc of milk in the country is produced traditionally, according to a study conducted by TRAIDE Foundation in 2021.
Dawit Abate (PhD), an associate professor of food microbiology at Addis Abeba University believes the figure is found low as most raw milk makes its way from households of farmers than large-scale commercial productions. He suggests attracting and encouraging the private sector to invest in dairy production and processing.
“The production system must change,” said Dawit.
Milk should have 3.5pc protein and 3.4pc fat content, with the research revealing pasteurised milk is found with an average of 2.42pc fat and 2.43pc protein content. There are more than 30 milk processing companies of which eight are closed due to unsettled debt with the policy bank.
The chief researcher of the Ensure project believes the extraction of dairy products is affecting the nutritional value of milk. He recommends processors label the product as “skimmed” if they extract dairy products from it.
Under MB Plc, Family Milk is the trade name for one of the processing plants near the Lebu area on the outskirts of the capital. The company produces 8,000Ltr of milk daily, operating at 17pc of its capacity due to scarce raw milk supply.
Abraham Mechal, deputy manager, said producing fat-reduced milk is a general trend among milk processors.
“We extract the cream and butter and to it for byproducts,” he told Fortune.
It reported that half of the Ethiopian children are malnourished attributing low-quality milk and dairy products as a factor.
Ethiopia has an estimated 10 million cows and produces 3.2 billion litres of milk in a year. Despite having the largest number of cattle in Africa, the nationwide milk consumption stands at an average of 19.8Ltr milk a year, 11pc of WHO’s recommendation. Kenya stands at 120Ltr annual consumption per person while Sudan meets the recommendation at 180Ltr in a year.
Another researcher on the Ensure project from Holeta Institute for Agricultural Research, Abdi Keba said milk contributes majorly to the cognitive development of children.
“Low quality and supply shortage are factors to the violence we’re witnessing,” he said.
Although pasteurised milk with poor hygienic status containing more than the average total bacterial count cannot qualify for export, Abdi throws a bone for consumers by saying it does not necessarily equate with health hazards.
“It depends on health status and immunity,” he said.
Amidst local supply scarcity, the country generated 180,800 dollars from more than 640 cubic meters of milk and dairy products exported in the past seven months of the fiscal year.
The agro economist Adane Tufa argues the overall trend of exporting products without fulfilling local demands is inflating the price in the market. He said exporting milk and dairy products while even a quarter of local demand is not met is not practical.
He also questions the profit of farmers in the dynamics although urbanisation and industrialisation are scrambling resources such as land from the primary sources. Adane emphasised farmers should be trained for awareness and to improve the quality and productivity of milk and dairy products.
Excellent hygienic practices for livestock and milk handlers, and cleanliness of the milk collection containers and storage areas is vital.
Electric Vehicle Drivers to Benefit from New $25m Charging Station Network
Ethiopia’s electric vehicle drivers could soon access a vast new charging station network, following a 25 million dollar deal signed between Ethiopian Electric Power (EEP) and Cardinal Industrial Plc to build 500 stations. The deal includes EEP supplying up to 1,000GW an hour of electricity for a year to the stations, potentially earning up to one billion Birr in revenues.
EEP currently operates 180 power substations, and the charging stations will be constructed at these locations, with separate high-voltage lines catering to the stations already prepared. Constructions of separate high-voltage lines catering to the stations are ready, according to Moges Mekonen, communication director of EEP.
“The current power supply won’t be affected,” he told Fortune.
Ashebir Balcha, CEO of EEP, said during the signing ceremony held at Skylight Hotel on Africa Avenue (Bole Road) on February 13, 2023, that the country is generating electricity, aspiring to meet its national ambition under the green energy policy.
Headquartered in Wengelawit Building on Ethio-China St., Cardinal Industrial Plc expects to complete construction within a year and expand to regional cities. CEO Lilia Hailu plans to implement financial system technology as part of the project.
Lilia’s journey in the industrial sector began two decades ago when she started her career as a production engineer at a manufacturing company. Her ability to manage complex projects caught the attention of a construction company in the UAE, where she worked as a project manager. She returned to join Cardinal Industrial Plc, taking on various roles, including production head and chief operating officer.
Lilia studied mechanical engineering at Addis Abeba University and followed her post-graduate studies in business administration at the University of Manchester in the United Kingdom (UK).
As the world increasingly transitions from petrol towards electric-powered transportation, many countries, including Ethiopia, are considering renewable energy sources. The government has plans to introduce 4,800 electric buses and 148,000 electric automobiles in the next decade.
The popularity of electric vehicles in Ethiopia has steadily increased, with almost 10,000 EVs imported for 44.3 billion Br in 2021, over double the number imported the previous year, for 15.9 billion Br. Nearly 90pc of these vehicles were imported from China, which accounts for 60pc of global electric car production. The federal government has exempted the import and sale of electric vehicles from value-added or excise taxes starting from mid-September, except for fully-assembled electric cars, which are still subject to a 15pc customs duty.
While electric vehicles have become more popular, charging infrastructure has not kept pace, with only 46 charging stations currently operating in the capital. The surge in demand for charging stations has left many EV owners with few options for quick charging. According to officials at the Ministry of Transport & Logistics, most charging stations are giving service free of charge, including the one at the Ministry’s headquarters.
Tewodros Birhanu, an electric car owner of ID6 Volkswagen, finds charging at home inconvenient and has to drag his car to one of the limited charging locations in the capital, taking nine hours to charge his vehicle fully. With more charging stations available, he is pleased to have more options.
“More charging stations provide alternatives,” he said.
He also welcomes the news that stations will be installed outside the capital, as he has hesitated to take road trips with his electric vehicle for fear of running out of charge.
Automotive engineer Moges Negash applauds the move and recommends that service providers, such as garages, train their employees to meet the growing demand for electric vehicle services. With a greater focus on renewable energy sources and a growing fleet of electric vehicles, Ethiopia is poised to transform its transportation sector in the coming years.
Time for Green Revolution’s Second Edition
One of humanity’s most significant achievements in the last century was increasing food production. In the 100 years to 2000, there was a six-fold increase in crop harvests. The global population increased less than four-fold; ordinary people today could have around 50pc more food available than their great, great grandparents.
Most of the increase in production came from farmers growing more food from each hectare of land. The extraordinary progress is due to the Green Revolution that turbo-charged modern inputs for farming.
The Nobel Peace Prize-winning agronomist Norman Borlaug, who spearheaded the intensification of modern farming methods, saved more than one billion lives from hunger. As well as feeding people, the Green Revolution made societies much richer. As agriculture becomes more efficient, people are freed from backbreaking labour and engaged in much broader productive activities.
The Green Revolution was an extraordinary achievement.
However, the world needs a second Green Revolution to extend the benefits to the world’s poorest and reduce global hunger. It is especially needed today as we fall behind on feeding the planet.
Since 2016, world leaders have made grand development promises for every country by 2030, called the Sustainable Development Goals (SDGs). One of the most crucial goals focuses on boosting agriculture − from ending hunger to ensuring better nutrition and more sustainable farming.
Unfortunately, we are failing our pledges, not just because Covid derailed progress. A tracker shows that even based on progress before the pandemic’s disruption, food promises by politicians would not be met by 2030 but more than 80 years later, in the early 2100s.
Indeed, the entire world will be late on all its major commitments. We are now at the halftime mark for our grand promises, but we are nowhere near halfway. The Copenhagen Consensus has been working with some of the world’s best economists to identify the most effective policies for the remaining time. If we cannot do everything, we should focus on the most effective solutions in every area, including agriculture and hunger.
Our researchers examined many agricultural policies, like subsidizing fertilizer and increasing irrigation. These all deliver moderate societal benefits, but the effects are not remarkable for every dollar invested. However, one clear opportunity for humanity is a big increase in investment in agricultural research and development (R&D).
There is still significant underspending on agricultural R&D for poorer countries. Big corporations understandably spend most in rich countries where large-scale farmers have deep pockets. That is why in 2015, 80pc of global agricultural R&D funding went to rich and upper-middle-income countries, while lower-middle-income countries got the remaining. The world’s poorest countries, including Ethiopia, got almost nothing.
This unequal investment has been persistent for more than half a century. It is a primary reason why the Green Revolution did not help the poorest as much as wealthier countries. Cereal yields in high-income countries almost tripled from 1961 to 2018, whereas low-income countries saw a much smaller increase of 50pc.
The untapped potential is enormous.
Research published this week by Copenhagen Consensus demonstrates that the world will only need to spend a small amount more each year to generate vast benefits. It estimates the additional cost of R&D this decade is about 5.5 billion dollars annually—a relatively small sum, less even than Americans spend on ice cream every year.
This investment will generate better seeds and high-yield crops that can also better handle weather changes like those we will see from climate change. Creating bigger and more resilient harvests will benefit farmers, and producing more food will help consumers with lower prices. The total net benefit over the next 35 years for farmers and consumers will exceed two trillion dollars. Every dollar spent delivers an astounding 33 dollars in social benefits, making this a spectacular investment.
By 2050, this additional funding will boost agricultural output by 10pc, reduce food prices by 16pc, and increase per capita incomes by four percent. The investment will increase GDP in developing countries by 2.2 trillion dollars by 2030 and 11.9 trillion dollars by 2050, a two percent and six percent increase in per capita incomes, respectively.
And more efficient agriculture will reduce global climate emissions by more than one percent.
Agricultural R&D is a phenomenal investment because not only do we make agrarian workers more productive, but we enable more people to be productive and innovative in other sectors, too. It leads to fewer people being hungry and lowers food costs for everyone.
We cannot deliver on all our promises for 2030. But we should deliver on agricultural research and development for the poorest half of the planet because it is one of humanity’s best investments.
Transforming Vulnerability to Opportunity
After being seated and avidly reading for a long while the whole afternoon one of the days last week, my mood swung from the I-can-not-wait-to-go-out scenario to that of deciding whether or not I should come out or not, and then slowly releasing a deep breath wondering whether that lackluster reaction was necessary in the first place.
The latest news I had that day on Chatbots powered by artificial intelligence that let internet users gather information through typed conversations was lingering in my thoughts. ChatGPT of OpenAI, reportedly by the end of this January, only two months after its launch was used by more than 100 million people, resulting as the fastest-growing consumer application in history. Its knowledge synthesis muscle poised to make search engines history left wistful strikes in my mind about how I fit into these changes.
A few hours later, what started as mixed feelings, tapping the index finger against my lip as well as looking downward ended up with refreshed thoughts, garnished with a pensive smile and I went out for a walk.
The cause of all the mood swings was a hurried dip into a letter written to me ages ago. An explicit message- a thank you note for taking the time to apply for a position with a company;a rejection letter. The general manager mentioned that he enjoyed learning about my past achievements as well as the skills I possessed along with the qualifications, and how he regretted informing me that I failed to pass the final phase of their selection process, in view of the applications they received from other experienced and qualified applicants. In the end, he listed what he thought was adrift from me.
Yearning that the change that I believed to come was likely out of reach, tinged with the bewildered, frustrated, defeated, and powerless mood I received feedback about the vacant position, I applied from soup to nuts, going through requirements, conducting an interview with own self. sadly, it was not enough.
It was Jumping from the frying pan to the fire, amidst the days we used to complain with my colleagues about why the authorities we used to work for did not have internal vacancies to cater for our ambitions, amidst brimming research enticing rife problems. We used to wonder why the books of accounts were six or more years behind, the materials management handwriting was sloppy, why the higher-ups in the institution were solely busy signing documents, as the list went on, while the latest computer system in town and the institution had was only busy with payroll preparation.
Nonetheless, thanks to the rejection letter, very unusual for those prior to e-mail days, it was time for reflection to work on the internal vacancy in myself. I had to work on the areas where the letter listed lacked. It was not just like returning to school but also continuously being attached to it.
Honoured, Exalted and Elevated are a few words that sum up how I felt when I showed the letter to my colleagues when I was accepted by a company I coveted to join after a year or so with such a far-off look.
What mattered most then was the change in attitude such as being more ambitious with technology to be more competitive and further, the desire to imitate one of my colleagues. We used to call him Meeraf, meaning a chapter in Amharic.
Postgraduate study opportunities were not easy to come by during those times and if not hard on their own the research used to be associated as a feature set aside to be picked after a post-graduate qualification.
It was not so with our indefatigable colleague. He used to win research grants from the then-Ethiopian Science & Technology Commission for exceptionally tackling his well thought proposals on practical problems he had encountered during his daily routine and responsibilities.
Andragogy assumes that adults are highly motivated, and self-directed, and have become used to learning by solving problems, and so far the struggle has been getting adults into the classroom and keeping them there.
The era demands adults that earn from efforts in the real world. This can be realized by making internal or external vacancies as demanding as schools with voids for opportunities to be filled with clear and up-to-date visions for organisations or individuals.
Google and Yahoo as startup companies were candidates for Microsoft’s vacancy whose future was unheeded through in-house incompetence or unfilled vacancy.
Gasping out a sigh that was a mixture of hope and fear I returned home amidst the cooling effect of the lovely breeze, pondering whether vacancies continue as virtues of an opportunity to change vulnerabilities into strengths heeded by the intense competition that is a hallmark of jobs that are never secure.
Dual Forex Regime to Overcome Economic Woes? Be Wary!
Ethiopia is facing a severe forex crisis, with its foreign exchange reserves at an all-time low and unable to pay even for a month’s worth of imports. A significant trade deficit, where the country spent 90 dollars in imports for every 30 dollars it exported, has caused this crisis. A huge external debt burden of nearly 27 billion dollars needs to be repaid along with interest in time.
With external debts maturing en-masse, the country’s foreign exchange reserves are dwindling, jeopardising its ability to repay its loans on time. According to the latest Ministry of Finance (MoF) debt analysis report, external debt service is expected to rise steadily over the next two years, exceeding 2.5 billion dollars in annual payment, four times larger than a few years ago.
The cost of living has become unbearable for many, with the consumer price index showing year-on-year inflation at 33.8pc for January this year. The past few years have been hit badly due to the COVID-19 pandemic, below-par agricultural produce due to natural calamities, and widespread insecurity.
These are challenges hardly new; they have been brewing for several years. They have no quick-fix solution but require foresight and a visionary mindset. With a strong will from all of us and determination to come together to make concerted efforts, we can address the severe forex problem.
Granted, the response will not be as simple as it may sound. It requires a comprehensive approach that involves changing the entire socio-economic fabric of the country, capitalising on its strengths and inviting foreign capital to make the country ready to gallop fast with the changing world.
The country needs to acknowledge its strengths and assets as much as it must recognise its weaknesses and requirements. Policymakers need to prepare a fact sheet and make a systematic plan to open the economy to participate in the global economy.
However, before moving into the long-term solution, Ethiopia must have its leaders focused on addressing the short-term problems of inadequate forex reserves. One potential solution could be introducing a dual exchange rate regime, where policymakers set different exchange rates for other transactions or various groups of people.
This system would involve marking a lower rate of exchange for the import of essential commodities such as drugs, petroleum, spare parts, and capital goods, as well as servicing external debts. A higher exchange rate goes for other imports of inessential and luxury products and remittances from abroad, exports, and tourism.
The dual forex regime would gradually move towards liberalisation of the exchange rate linked to the forex market, where the floating exchange rate system is prevalent. It is a system that could offer several benefits.
It would bolster the export industry by keeping the remittance rates high, creating more employment, and increasing liquidity. The preferential treatment of essential commodities would control local prices of the products, keeping inflation at bay in a country where 80pc of imports are crucial and thus strategic.
This way, the dual exchange rate system can use the theory of price discrimination to the country’s advantage, where a low exchange rate is applied to high-priority, and a high rate is applied to low-priority goals.
However, there are potential pitfalls to the dual exchange rate system. It could create market distortions, with businesses manipulating the system to their advantage, resulting in economic inefficiencies. The system would require constant monitoring and adjustments to function as intended.
We must also be wary of its drawbacks.
A dual forex regime could allow speculative market forces to take advantage of the arbitrage opportunities of the eco-system to generate large gains without contributing to productivity. Those who want to import raw materials and export value-added products would find the environment beyond their competitive edge. It may also incentivise official corruption and favouritism as the government is the only agency to set exchange rates.
Managing the exchange market is complex and cumbersome; it demands large administrative machinery and bureaucratic competence. It requires a highly complex system of trade and exchange controls to sustain it. Ultimately, the cost of imports would become high due to the increased demand for foreign currency, leading to volatile market conditions. Without adequate forex reserves to stabilise the market, the economy puts under inflationary pressure, discouraging foreign direct investments as the exchange rate is very unstable and repatriation of profits impossible to carry out.
However, a dual exchange rate regime could offer a respite if operated with diligence and care. A regulatory body should perform this function and regulate it systematically with a particular gateway for all essential products coming in at a special rate, conducting an auction to determine the exchange rate for the remaining transaction by maintaining a retention rate to ensure supply. This would also require regular and close watch, making necessary course corrections by policymakers.
Members of the federal macroeconomic team recently met in Bishoftu (Debrezeit) town to discuss the uphill task ahead. Hopefully, they bear in mind that Ethiopia needs to boost its export capacity and reduce import dependency, which will require a massive investment in infrastructure, skills development, and technology transfer. They must create an enabling environment for foreign investors, removing bureaucratic hurdles and addressing security concerns.
They may also want to take inspiration from Ghana’s experience in the early 1980s. Its political leaders and macroeconomic policymakers had effectively instituted a multiple official exchange rate, with each rate serving different transactions, promoting exports, surcharging imports and giving waivers for essentials.
They demonstrated that a better-managed forex reserve could reignite economic recovery and drive further growth through long-term capital investments. It can also help restructure long-term external debts and a better offering from the IMF.
Loading your updates...