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Month: February 2024

Beyond Profit: Embracing Corporate Social Responsibility as a Catalyst for Positive Change

Posted on by Kirabon

At Komari Beverage PLC, we believe that true success lies not only in our business accomplishments but also in our commitment to making a positive impact on society and the environment. As a forward-thinking beverage company, we have made Corporate Social Responsibility (CSR) an integral part of our operations, striving to create a sustainable and inclusive future for everyone.

One of our top priorities is environmental stewardship, by recognizing the urgent need to minimize our carbon footprint, we implemented various eco-friendly practices throughout our production process. From sourcing local ingredients to investing in renewable energy sources, we are fully dedicated to reducing greenhouse gas emissions and preserving natural resources. Join us in our mission to contribute to a greener planet.

 

Komari is also deeply committed to social empowerment. We believe in uplifting communities and creating opportunities for individuals from all walks of life. Through our CSR initiatives, we actively engage with local communities. By focusing on these essential pillars, we aim to enable individuals to reach their full potential and contribute to the overall growth of society.

 

Furthermore, we take immense pride in our ethical sourcing practices. Komari recognizes the importance of fair trade and the need to support farmers and workers across the globe. We work closely with our suppliers, ensuring that fair and equitable treatment is provided to all involved. By upholding these high standards, we not only create a positive impact on the lives of those involved but also guarantee the highest quality ingredients for our exceptional range of beverages.

 

As part of our commitment to transparency, we have established stringent quality control measures and ethical business practices. Our manufacturing facilities adhere to strict regulations to ensure the health and well-being of our consumers. We take great pride in nurturing a culture of responsibility and integrity, continuously striving for excellence in all aspects of our business operations.

Join us in our journey towards a sustainable and inclusive future. When you choose Komari’s products, you are not only indulging in a delicious and refreshing product but also supporting a company that genuinely cares about the environment, communities, and ethical business practices. Together, let’s raise our glasses to a better tomorrow with Komari.

DREAM HOMES DEFLATE IN DOWNTURN

Posted on by Kirabon

The once-booming real estate market faces a downturn, with developers struggling with declining demand and falling prices. Developers see demand for upscale apartments in the Bole District plummet to unprecedented lows, forcing them to slash prices significantly. However, the market’s stagnation persists, exacerbated by political uncertainty, a discouraged diaspora, and a credit squeeze that has left many potential buyers on the sidelines. The downturn marks a notable shift from previous years, where developers successfully sold apartment flats, before the central bank moved towards inflation-targeting monetary policies, which, while successful in abating inflation rates, severely restricted the flow of credit into the market. The credit squeeze has led to a decline in property values, and dampened demand, leaving developers struggling to complete projects. The situation is mirrored by homeowners who face difficulties finding buyers despite being willing to negotiate.

The combination of fluctuating property valuations, increased taxes, and the ongoing credit shortage has injected a high level of uncertainty into a market that was once thriving. The real estate market’s decline affects developers and individual homeowners and has broader implications for the economy. The construction sector’s growth rate dropped to five percent year-on-year in 2023, down from 20pc in the past. The sector, heavily reliant on continuous credit flow, is seized by the consequences of constrained lending practices, leading to a significant reduction in the asking prices for homes and apartments. Prices have dropped by nearly 15pc over the past six months, attributed to political instability in several parts of the country, further deterring diaspora homebuyers, traditionally a significant segment of the market for premium properties.

Real estate consultants and industry insiders point to an overinflated market, driven by high construction costs and developers seeking substantial profit margins, as a critical factor behind the mismatch between supply and demand. They note that the market is buyer-centric, with those able to make immediate payments taking advantage of the liquidity-strapped market for discounted offers. The shift signals broader economic ordeals, including illicit financial flows and a speculative bubble that had previously driven prices to higher levels. Despite the downturn, some developers remain hopeful, attributing their survival to targeted strategies and focusing on high-end apartments. Some real estate companies are attempting to cater to a specific customer base and adjusting their profit margins, suggesting that while demand is depressed, there are pathways to success for developers willing to adapt to the current economic climate. Experts advocate for establishing mortgage banks and introducing a national housing fund, urging that a more structured approach to financing could deal with some of the market’s current pressures. The government’s attempt to standardise property valuations and adjust banking policies could be a step in the right direction. Still, the real estate sector’s recovery will likely require a different approach, addressing immediate liquidity and long-term structural constraints.

Green Ambitions, Nordic Illusions Mark Officials Leap into the Policy Abyss

Posted on by Kirabon

The recent policy pronouncement by the Transport Minister, Alemu Sime (PhD), of a plan to ban the import of petroleum-powered vehicles for personal use has sparked a debate, if not anxiety. However, it touches upon the essence of governance, policymaking, and the marriage of ambitious policy goals with the socio-economic realities.

Alemu’s desire, ostensibly aimed at his administration’s resolve to promote a green economy and curtail foreign currency expenditure on fuel imports, uncovers a disjunction between high-reaching policy shifts and the practicalities. Ethiopia’s attempt to leap towards green transportation, inspired by European precedents like Norway’s impending ban on internal combustion vehicles by 2025, should raise critical questions about the feasibility and readiness of such a policy in the Ethiopian context.

Norway’s considerable electric power generation capacity, nearly 30-fold greater than Ethiopia’s less than 5,000mw, which serves a 20-time smaller population, provides a solid foundation for such a transition. In contrast, where over half the population lacks electricity access, Ethiopia faces a shortage of electric car charging stations and a broader scarcity of transportation options.

This policy shift, if pursued in full force, while noble in intent, appears to be more of a hopeful emulation than a pragmatic strategy, reflecting a broader trend of aspirational policymaking that overlooks the practical limitations inherent in Ethiopia.

The educational sector reforms, as described by Education Minister, Brehanu Nega (Prof), aiming to shift towards a “Scandinavian-esque” system, further exemplify this trend. Inspired by Finland’s success in education, the reforms attempt to replicate its play-based learning approach and increase leisure for school children. However, they overlook critical disparities in infrastructure, teacher qualifications, and resource availability between Finland and Ethiopia.

The discrepancy between the theoretical frameworks of policymaking and their practical application is not unique to Ethiopia but indicative of a broader issue in public administration. The attempts to embed evidence-based, inclusive, and participatory qualities in policymaking have often been impeded by structural incoherencies and political oversights.

The structural reforms to improve policy coherence and efficiency have been inconsistent, reflecting deeper problems in aligning policy development with implementation.

The chasm has become increasingly evident. Practitioners and policymakers alike steer through this divide often, armed with an understanding of what ought to be done, yet often find themselves hindered by the tangible application of these theories. The discrepancy uncovers the problems at the heart of governance, characterised by unrealistic process models, a lack of clarity on achieving desired policy qualities, structural incoherence amidst bureaucratic downsizing, and a tendency to sideline the political dimension of policy formulation.

The dominant models of policy formulation processes, revered in academic circles and policy manuals, often resemble shells — crafted for public consumption rather than practical application. Despite this, the government’s attempts to refine policymaking have largely fallen short of bridging the gap. This should be particularly puzzling given the persistent reliance on these models by significant entities like the two ministries, which continue to anchor policymaking guidance in an idealised cycle, seemingly divorced from the realities of enforcement.

Ministers and civil servants concur on the government’s proficiency in certain areas, yet acknowledge its shortcomings in others, like policy evaluation. The structural reforms undertaken, aiming at promoting a more strategic and evidence-based policy landscape, have yielded mixed results. While some initiatives have introduced fresh perspectives, the sustainability of these reforms is questionable.

Government offices often shift towards more flexible policymaking models during structural adjustments and budgetary constraints. However, the transition to such models has been marred by unresolved issues related to the inability to enforce. This introduces potential rifts between the policy developers and implementers, complicating the precarious situation.

The traditional approaches to policy reform have often neglected the link between policy and realism. While acknowledging the importance of the practicality dimension, the existing official attitude tends to portray it as a factor to be managed rather than as a core component of policymaking. A good illustration of this could be the abrupt and determined enforcement of a policy compelling gas stations to serve motorists only through digital payment platforms.

Nonetheless, such an oversight diminished the potential for a more nuanced understanding of the constraints and limitations the market experienced.

The exclusion of consumers and market forces from policy changes is a glaring omission, given their crucial role in the policymaking partnership with civil servants. The lack of formal evaluation mechanisms, alongside the absence of a framework outlining expected skills and behaviours, exacerbated the accountability and effectiveness issues within the policymaking process.

The quest for a more participatory policy process is both necessary and urgent. A reimagined approach that acknowledges governance’s inherent difficulties and messiness while striving for adaptability should be imperative. Such an approach would align more closely with the principles of fairness in governance and enhance the government’s capacity to respond to and shape policy in rapidly changing circumstances. The path forward requires a commitment to learning and adaptation, addressing systemic barriers, and embracing the relationship between policies – however well-meaning they may be – and the realities of citizens. Through such comprehensive reforms can the officials bridge the gap between the idealised visions of policymaking and the pragmatic demands of governing.

Adopting foreign policy models without adequate customisation and neglecting the dynamics in the policymaking process can only be a technocratic approach that overlooks the essential role of popular support and engagement. This has led to a gap between aspirational qualities and operational challenges.

By doing so, the authorities can enhance the effectiveness and sustainability of their reform efforts, ensuring that they truly reflect the unique context and capabilities of the country they run.

Realty Roulette

Posted on by Kirabon

Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slashing the asking price for upscale apartments in the Bole District Welo Sefer area from 194,000 Br to 154,000 Br a square metre, Abel laments the drastic drop in demand to an all-time low.

“Buyers are nowhere to be found,” he told Fortune.

The towering 17-storey Bella Apartments, with an estimated cost of 485 million Br, is now directly funded by the developers. Abel, a significant shareholder, has previously overseen successful apartment sales in four projects. However, he attributes the current market stagnation to political instability, discouraged diaspora buyers and a scarcity of loans for locals navigating a sluggish economy. With only four out of 24 semi-finished apartments sold, Abel’s apprehension deepens as he contemplates the fate of a dreary market.

“Real estate is highly sensitive to credit access,” he said.

Heavily dependent on continuous credit flow, the real estate sector faces difficulties following the National Bank of Ethiopia’s (NBE) shift towards inflation-targeting monetary policies, five months ago. While successful in reducing inflation rates by two percent, the constricted credit supply hampers funds flowing into the real estate sector, leading to declining property prices, diminished demand and developers struggling to complete projects.

The gloomy market extends its grip to homeowners like Ameleworq Tsegaye, who has been unsuccessful in finding a buyer for her 72sqm three-storey home in the Haile Garment area. With an asking price of 35 million Br a year ago, Ameleworq remained steadfast in her belief that the property is at a prime location, although larger properties at a similar price point were available. She is now open to settling for less to alleviate other debts.

“I’d be open to negotiation if there were sufficient offers,” she said.

The burdensome combination of fluctuating property valuations, heightened taxes and the ongoing credit squeeze has cast uncertainty over the once-thriving real estate market. Land holdings initially valued at 70 million Br last year find themselves in a state of neglect as they struggle to garner interest, with a substantial price reduction of 14pc in the Lideta District.

Minase Hailu, a lawyer with a decade of experience handling property disputes, notes a peculiar trend; price estimations decrease by millions when the property becomes available post-court ruling. Minase recalled an optimistic overtone over property prices when land auctions in the capital returned last year, attracting historic bids of 695,000 Br a square metre. Expectations of high returns and quick sales, however, are failing to materialise.

“Demand is surprisingly low,” he said, “Even at lower prices.”

This turn of events has sent ripples through the sector, prompting industry insiders to shed light on a concerning trend. The sector, which has predominantly focused on constructing high-end apartments for a select group of buyers, now faces a difficult reckoning. Traditional reliance on catering to an elite clientele is now met with resistance, signalling a potential shift in buyer preferences.

While costs for construction of a square metre waver between 40,000 Br to 60,000 Br, selling prices have tripled with a significant down payment of up to 30pc. Prices for homes and apartments have dropped by nearly  15pc over the past six months. Alongside the monetary pinch, the political instability in certain parts of the country has pushed off diaspora buyers.

“It’s now a buyer’s market,” said Enyew Tadesse, real estate consultant and managing partner of One Window Properties. He explains that the housing market in Ethiopia has been historically composed of businessmen looking to stave off inflationary headwinds by saving wealth through real estate and buyers, especially for premium apartments looking to do the same.

“The credit squeeze has impacted both,” Enyew told Fortune.

Enyew has participated in several real estate deals over the past few months where buyers bargain for significantly lower prices by dangling the prospect of immediate payments in the liquidity-strapped market. He believes part of the cause for the mismatch between housing demand and supply to have been an overly inflated market muddled by avaricious developers raking 300pc margins and illicit financial flows being cleansed through assets.

Industry insiders believe prices for real estate have gotten healthier over the past year rather than falling.

Remzi Hassen, marketing manager of the decade-old luxury apartment company Afrosweeden Realestate, said his company with five apartment projects across the capital, two of which have sold out, has historically catered to customers looking for high-end apartments. He said narrowing profit margin and increasing quality have helped the company stay afloat.

“Targeted customer base has helped us remain unscathed by the price lull,” he said.

However, others in the industry assert the crisis extends beyond the credit constraints.

For Brook Shimeles, the deputy general manager of development at Flintstone Homes, recent changes in property valuations and the imposition of property taxes have proven to be the final nail in the coffin for the real estate sector. Coupled with the prevailing scarcity of credit, these factors have contributed to a relentless market slowdown that has been progressively intensifying since the previous year.

“The sector has come to a standstill,” he told Fortune.

Flintstone had been in the public consciousness for the past 12 years, handing over a residential village, which consists of 40 villas, 60 townhouses and 467 condominium apartments. The developer, offering homes with a 300,000 Br down payment, is currently undertaking the construction of 3,000 homes. However, according to Brook, the intermittent suspension of services by land-related bureaus adds an element of unpredictability to the property market, dissuading potential buyers.

“It discourages investors from injecting capital,” he said.

The recent suspension of property transfer services at the Addis Abeba Land Development Administration Bureau, announced three weeks ago, further compounds the issue. Brook notes that the anticipation of substantial returns from real estate investments diminishes in the face of elevated levies on immovable property transfers and a simultaneous contraction in demand.

“Expecting larger tax revenues by simply increasing rates is a counterproductive strategy,” he said.

Around 300 real estate developers, predominantly selling semi-finished properties, are experiencing a substantial decline in property value. Average apartment prices have dropped from last year’s highs of over 120,000 Br a square metre to around 75,000 Br, with some realtors offering prices as low as 58,000 Br a square metre.

In the Lemi Kura District around Ayat area, broker Kibrom Bogale has experienced a stagnant market, facilitating only a single property sale in the past six months. Frustrated by the perceived lifelessness of the market, Kibrom, in his late 20s, reflects on the difficulties posed by an abundance of sellers and a scarcity of buyers.

“There are too many sellers and not enough buyers,” he lamented.

The absence of standards and well-defined real estate laws is identified as a cause of disputes and fraud. Berket Habtu, a real estate agent with a decade of experience, notes that a decrease in prices would lead to increased demand if there were sufficient cash flow and economic activity. However, he emphasises that buying property for quick profit resale is no longer viable.

Bereket points to the absence of a real estate law defining when a property is considered semi-finished, which contributed to the past inflated prices supported by excess credit.

“Most buyers don’t plan to live in the apartments they purchase,” he said.

Bereket highlights that buyers with liquidity and capital tend to opt for high-end properties for resale, attracting quick payments and benefiting developers. He observed that speculations around currency devaluation also have a say in property markets. He stresses the urgent need for hundreds of thousands of new homes annually, targeting an unaddressed majority in the housing market.

The Center for Affordable Housing Finance in Africa’s 2023 annual report estimates that meeting demand for housing in Ethiopia would require close to 486,000 new urban homes each year. Ethiopia has managed to complete around 50,000 homes during years of the highest levels of economic growth over the past two decades.

Due to the long payback period and risk associated with real estate loans during liquidity squeezes, both the demand and supply sides of the sector face financing challenges. Real estate developers are halting new projects and resorting to selling properties with a minimal 10pc down payment in a fiercely competitive, credit-tight market.

A vice president from one of the top eight commercial banks spoke anonymously to Fortune, explaining that even without a credit growth cap, there is insufficient liquidity to support the real estate sector. He said quick returns and foreign exchange capabilities are prioritised, making it equivalent to a halt in new loans. The industry expert attributes the liquidity shortage in banks to consecutive mandatory bond purchases by the government, including a 20pc treasury bond introduced in October 2022 and a one percent mandatory purchase from the Development Bank of Ethiopia (DBE).

“Interbank transfers are sharply declining as a result,” he told Fortune.

The banker recommends that homebuyers adjust expectations, shifting from the typical 70pc loan provision to a more realistic 30pc in the current financial landscape.

Officials plan to establish a base year for assessments during periods without extraordinary market fluctuations. The Ministry of Urban & Infrastructure has completed the drafting of a national standard as part of an effort to standardise property valuations nationwide.

Adane Egzie, head of the Real Property, Market & Valuation Permit Division at the Ministry, said the newly proposed standards aim to address this issue by being sensitive to price variations. According to Adane, establishing reliable metrics for property valuation will enhance the accuracy of valuations in sales agreements and rental transactions.

“The absence of standards has resulted in mispricing,” he told Fortune.

Financing remains crucial. The importance of updating banking policies to incorporate mortgage banks is recommended by experts, citing examples from developed countries where consumers can buy cars through long-term leases.

With a mortgage bank directive in limbo, several institutions have come and gone in the last five decades. Goh Mortgage Bank has been around for two years while a recent pickup surfaced with Ovid Mortgage Bank, which announced its entry into the market last year.

Mulugeta Asmare, former president of Goh Mortgage Bank, stressed the close relationship between credit institutions and private real estate developers. He notes that developers often lack internal capital for large projects and buyers struggle with insufficient liquidity for property purchases. According to Mulugeta, the recent slowdown is due to an artificially inflated market from excessive money circulation.

“As soon as the credit squeeze ends,” he said, “Prices will most likely rebound.”

To address the housing shortage, Mulugeta advocates revisiting land policies, coming up with mortgage banking laws, and introducing a national housing fund. He proposes a proclamation where a small percentage of monthly salaries funds affordable housing projects, providing long-term relief.

Rebranded Global Bank Ethiopia Doubles Profit in Liquidity Tussles

Posted on by Kirabon

In a move that marks a year of transformation, Global Bank Ethiopia, formerly known as Debub Global Bank, has embarked on an ambitious course to redefine its corporate identity and boost its market presence.

The plan includes a new headquarters in the capital’s financial district, hoping to enhance its stature in the banking industry. The announcement was made during the Bank’s general assembly at the Millennium Hall in December last year, where Board Chairman Bikila Hurissa (PhD) emphasised the Bank’s resolve to meet the central bank’s minimum paid-up capital requirement of five billion Birr by 2026.

“Meeting minimum capital threshold would remain a top priority,” he said.

Financial performance metrics from the past fiscal year paint picture of a Bank that is not only surviving but thriving despite an array of hardships, including liquidity constraints and foreign exchange losses. Global Bank Ethiopia reported an 88.7pc increase in net profits, reaching 523.6 million Br, which outstripped many of its peers, signalling a strategic foresight by its leaders. The performance placed it ahead of Berhan Bank by 15.3 million Br and more than double Addis International Bank’s 223 million Br, while trailing slightly behind Enat Bank’s 543 million Br.

The surge in net profits translated into an impressive increase in Earnings per Share (EPS), which more than doubled to 292 Br from the previous year. The marked improvement in EPS was significantly higher compared to its peers, including Addis International Bank (129 Br), Berhan Bank (156 Br), and Enat Bank (239 Br). Global Bank achieved this feat while increasing its paid-up capital by 25.7pc to a little over two billion Birr, a growth rate that, although commendable, did not match the profit growth, amplifying the EPS.

Abdulmenan Mohammed (PhD), a financial analyst based in London, lauded the Bank’s performance, noting the substantial growth in major revenue streams as a crucial factor behind the impressive profit surge while noting that it was still behind its height of 323 Br registered in 2019.

“There was a massive increase in profit after a surge in major revenue items,” said Abdulmenan.

Global Bank’s strategic emphasis on digital innovation and operational efficiency is underpinning these financial gains, according to Tesfaye Boru (PhD), president of the Bank. He emphasised the significant strides made in revamping the Bank’s digital capabilities, which have been instrumental in enhancing service delivery and customer engagement. Its commitment to strict oversight on resource mobilisation and cost management was considered vital to sustaining its growth path.

Tesfaye came to the helm of Global Bank owing to his vast experience in the banking industry. Embarking on his career journey at Hibret Bank as a loan officer, Tesfaye has accumulated over two decades of experience. A graduate of economics, management, and business administration from Addis Abeba University and doctoral studies in business leadership from the University of South Africa, he has navigated various roles within the banking industry, including Abyssinia and Zemen banks. He served as vice president of Debub Global Bank in 2019 before succeeding Addisu Habba as president.

The Bank’s operational performance was bolstered by a 32.6pc increase in interest on loans, advances, treasury bills, and bonds, which amounted to 2.28 billion Br. This was complemented by a significant recovery in service charges and commission revenues, which doubled to 397.34 million Br after a 41.4pc decline in 2021/22. Despite these revenue increases, the Bank also faced a substantial rise in expenses, particularly in interest on savings and general administration, demanding a strategic focus on cost management.

It saw the number of its branches grow by 19. Wages and benefits substantially increased by 72.2pc to 739.29 million Br. Although below Berhan’s 1.62 billion Br, it is higher than Enat’s and Addis International’s 678.8 million Br and 481.8 million Br, respectively. It aligns with the bank’s strategy over the year to “upskill and reskill” its 2,391 employees across 152 branches.

“The growth of total expenses, particularly salaries and benefits, should concern the management,” said Abdulmenan.

Yitbarek Tadese, branch manager at Popolare Branch, expressed contentment over the past year’s performance despite the difficulties presented by the liquidity crunch and political unrest. He pointed to the large number of corporate customers that his branch has the premier location for positive performance.

“Despite the risks of working with corporate customers, it is essential,” Yitbarek told Fortune.

Despite the upbeat tone, the Bank’s performance had its drawbacks. Some shareholders expressed concerns over the Bank’s spending on aesthetics and renovations, questioning their contributions to longterm growth.

“These are not helpful for sustainable growth,” said Kidane Lemlem, who joined Global Bank as a shareholder half a decade ago, buying 250,000 Br worth of shares.

Executives of Global Bank declined to comment.

Global Bank’s foreign exchange dealings experienced volatility, with a notable recovery in net gains by 44.5pc to 201.34 million Br despite previous declines of 36.3pc the previous year.

Although the net gain saw a significant improvement, this area of business needs serious attention, according to the financial analyst. He commended the growth in total assets by 33.8pc to 18.85 billion Br for the 12-year-old bank incorporated with 138.9 million Br paid capital, which grew by 25.7pc to 2.03 billion Br. Global Bank had a capital adequacy ratio (CAR) of 17.8pc, indicating that it has substantial capital higher than Berhan’s 15.4pc or Enat’s 14.6pc and two percent shy of Addis International’s.

The Bank disbursed loans and advances of 13.67 billion Br, an increase of 46.2pc, while it mobilised deposits of 14.25 billion Br, an increase of 29.8 pc. The loan-to-deposit ratio increased by about 11 percentage points to 95.9pc. Although the rise in the ratio brought in more interest income, it must have caused pressure on the liquidity position, according to Abdulmenan. The short-term borrowing of the Bank amounted to 667.48 million Br.

“This indicates the liquidity issue,” he told Fortune.

Global Ethiopia’s liquidity level decreased in value and relative terms. Cash and bank balances decreased by 6.7pc to 2.1 billion Br, equivalent to Addis International’s 2.1 billion Br and nearly half of Enat’s 4.1 Billion and 1.6 billion Br higher than Berhan banks. The cash and bank balances to total assets ratio decreased to 11.1pc from 15.97pc.

“Executives should install a better liquidity management mechanism rather than rely on short-term borrowing,” said Abdulmenan.

Fertile Grounds, Barren Hope

Posted on by Kirabon

A crisis looms over the fertile lands of Gambella and Benishangul Gumuz regional states, where the future of commercial farming was once in high hopes.

Faced with the spectre of foreclosure, burdensome tax demands, and a crippling lack of working capital, approximately 5,800 commercial farmers are seeking urgent intervention from regional and federal authorities. Last month, these farmers, represented by the Crop Producers & Exporters Multisectoral Association (CPEMA), conveyed their dire situation to senior officials of the Ministry of Agriculture, warning of an impending halt to their operations.

At the heart of their plea is a request to restructure loans provided by the Development Bank of Ethiopia (DBE), a state-owned policy bank that has provided 70pc of their financing. They are calling for tax relief from regional governments, citing the difficulties of operating amidst the unstable security situation. The political unrest of the past three years has led to widespread property losses due to robbery, deepening the financial crisis.

The absence of accessible loans from commercial banks for rain-fed agriculture exacerbated their plight, after they were unable to initiate new farming cycles under the current conditions.

Nonetheless, the Association leaders remain hopeful for a loan rescheduling agreement with the DBE. Melkamu Abraham, the head of the Association, spoke of the dilemma faced by many commercial farmers, who are puzzled over how to fulfil their tax obligations at a time of declining productivity.

“We need compensation for the damages,” Melkamu asserts, emphasising the critical need for support.

In response to the political unrest, the Benishangul Gumuz Regional State has initiated tax penalty waivers for 950 businesses, acknowledging the hardships faced by the community. The regional tax bureau has designated commercial farmers based on their proximity to conflict zones, offering some reprieve through waived interest and tax penalties. Despite these measures, the farmers contest the legitimacy of the initial tax demands, especially since many farms have been abandoned due to the ongoing conflict.

Ethiopia’s agricultural sector, predominantly comprised of smallholder farms, faces unprecedented pressure. With around 60pc of farm holdings measuring less than one hectare, and nearly 90pc of the cultivated area farmed by smallholders, the country struggles to meet its food demand. Traditional farming practices, climate change, and a growing population aggravate this struggle. Research conducted four years ago by Ibsa Dawud and Feyesi Mohammed advocated for a transition towards commercial agriculture, emphasising the need for improved incentives and infrastructure.

Alemu Bayisa, head of Tax Audit & Supervision in the Benishangul Revenues Bureau, revealed that 150 million Br was foregone through the waivers on interest and penalty.

“Few have reached out to settle their initial obligations,” he said.

Acknowledging the array of obstacles confronting commercial farmers, Dereje Abebe, team leader of out-growers and contract farming at the Ministry of Agriculture, disclosed plans to convene farm owners, and representatives of the DBE and the two regional states in an effort to find a resolution to the cocktail of crises faced by the businesses.

“We can’t go to every region and solve their problems,” said Dereje.

Yohannes Ayalew (PhD), president of the DBE, conceded the necessity for prompt action in response to the loans granted to farmers in the Gambella Regional State.

“The DBE remains committed to supporting commercial agriculture through financing models that help rainfed and irrigation projects, aligning with national food self-sufficiency goals,” said Yohannes.

According to him, the Bank is prepared to take strict measures against those unable to repay, indicating a firm approach towards loan defaulters. However, the individual stories of farmers like Hadush Gebrehiwot, who has been farming in the area for 11 years, bring the crisis into sharper focus.

Struggling to sell his stock of mungbeans (800Qtl) piled up in the 700hct farm, and facing the seizure of his farming equipment by the Bank, Hadush’s predicament reveals the risks wrought by political instability, which has disrupted agricultural activities and complicated the marketing of produce. He blamed last year’s political unrest in the region as one of the main hurdles to timely farming and delivery of the mungbeans to buyers.

While discussions have been ongoing between the commercial farmers and officials from the regional state, Hadush does not foresee his company’s ability to either pay the tax or service bank loans in a short time.

“Sales from this season are used to finance the next,” he said.

The Gambella Regional State Investment Commission has received loan obligation notices to 73 commercial farmers, with asset seizures looming for those who delay further.

“Most of the developers vanished decades ago,” Low Obup (PhD), head of the Commission, disclosed to Fortune.

He confirmed that three developers had appeared before the Commission to express their concern over the looting of harvests after the Bank had seized their assets over the past two weeks. According to Low, a path forward has been crafted following a meeting last week, with participants from the Bank and officials from the Ministry attending.

While the number of commercial farm developers in the regional state dropped by half, finding markets continues to be a serious challenge for those still around.

Getahun Hailu, head of the 60-member Gambella Crop Production Furtherance Sectoral Association, brought the issue of 22,000Qtl of unsold mung beans and cotton before the Ministry. He revealed that 29 commercial farmers across three weredas have been unable to find a market for their products while they concurrently face tax pressure and bank repayment issues.

With produce languishing for two years, the ability to restart operations is severely constrained, reflecting a systemic issue that impacted the financial viability of commercial farming in the region, reads a letter he addressed to the Ministry.

As commercial farmers seek government intervention amidst mounting pressures, the perspectives of agricultural economists like Shimeles Araya (PhD) shed light on the broader implications. Shimeles argues in favour of the necessity for a strategic shift away from an overreliance on rain-fed agriculture, pointing to the enduring challenges of climate change, traditional practices, and demographic pressures. According to him, there should be mutual interest between regional bureaus in securing tax revenues and the DBE in maintaining a healthy loan portfolio, advocating for a balanced approach that serves the needs of all involved.

“They are both right to ask for what they are owed,” Shimels told Fortune.

City’s Multibillion Birr Investment on Agri Hubs Aspires to Outsmart Inflation

Posted on by Kirabon

A major initiative by the Addis Abeba City Administration targeting food inflation and improving accessibility to agricultural products is gaining momentum. Establishing three vast agricultural market centres, built at the cost of 6.8 billion Br, is at the heart of this strategy. These centres sprawl across nine hectares, designed to serve as hubs for essential goods offering products at a 20pc discount in hopes of tackling the persistent issue of rising food prices.

The bids to allocate these shop spaces within these centres attracted 600 offers, resulting in 57 wholesalers and 143 retailers winning bids. The winners, set to operate under annual rental agreements, will occupy shops varying in size from 25Sqm to 83Sqm, with rental rates for a square metre ranging between 327 Br and 367 Br. Despite receiving bids as high as 40,000 Br for a square metre, the city administration opted for more moderate pricing to keep the commodities affordable, disclosed Deberie Deresa, the Bureau’s head of the market centre administration.

“We’re trying to cut the intermediaries off,” Deberie said, pointing to the broader aim of streamlining the agricultural supply chain to benefit producers and consumers.

Bereket Worku, a commercial farmer popular on social media platforms like TikTok where she has half a million following, expressed excitement about the opportunity, appreciating the cost savings compared to dealing with intermediaries.

“I wish I were a broker sometimes,” she told Fortune, viewing their role as more of a burden for her farms in Oromia, Afar and Southern regional states.

Known as “Bereket Geberewa”, she is excited over the prospects of selling horticultural products through the market centres after winning bids in all three of the places.

However, the enthusiasm is not shared among all the beneficiaries.

Eastern Agromart Share Company, a relatively new entrant formed by 102 farmers in Modjo town who raised 22 million Br equity, have concerns about the challenges faced during a trial period over the past five months, particularly about the impact of a 15pc Value Added Tax (VAT) on sales. The company secured a spot in Kolfe Qeranio District, after renting a square metre for 300 Br. It plans to sell 11 commodities, mainly cereals, through the shop as it looks to grow its market share as a recent entrant.

“We hope the new shop will be better,” said Mengstu Desta, general manager.

Ciyt officials say the initiative is beyond providing space for sellers.

“We’ve laid out plans to closely monitor market dynamics,” said Sewnet Ayele, communications director of the city’s Trade Bureau, disclosing plans to conduct thrice-weekly market surveys to ensure the vendors adhere to the mandated discount rates. “Our goal is to make it affordable to all.”

The operational model of the market centres is another area of interest, with the city administration planning to outsource their management to the private sector. Mesfin Assefa, deputy head of the Trade Bureau, believes the approach will enhance efficiency and ensure the centres run effectively. During an orientation session at the Bureau’s main offices, Mesfin provided insights into the expected workings of these centres, stressing the importance of maintaining an uninterrupted supply of affordable agricultural commodities.

The success of these market centres in addressing food supply and inflation in urban areas is subject to scrutiny, however. While the initiative represents a significant step towards modernising the agricultural supply chain and making food more accessible, experts caution about the complications. Agricultural economist Assefa Tilahun (PhD) pointed to the difficulties in ensuring a year-round supply, given the persistent mismatch between production and demand, questioning the long-term viability of such an initiative.

“Although a good initiative, market centres alone cannot bring sustainability,” he told Fortune.

The city’s efforts to tackle food inflation through these market centres come against the backdrop of broader shortcomings. Addis Abeba and Dire Dewa, being net food buyers, are particularly vulnerable to supply disruptions from regional states. The construction of these centres by Ovid Construction Group and their oversight by the Megaproject Office reflect an ambitious attempt to secure the cities’ food supply.

The largest of these centres, located in the Lemi Kura District, covers 3.88hct and houses 150 retail and 30 wholesale shops. The Akaki Qaliti Centre, spanning 1.4hct, connects to 485 farmers and accommodates 70 shops. The Kolfe Market Centre, with its 80 retail and 12 wholesale shops, occupies a 2.3hct space, showcasing the scale of this endeavour.

Farmers like Derara Fetisa, 36, a breadwinner for a family of three relying on his agricultural output, see the market as a preferable option compared to traditional channels, despite limitations.

“Traders offer 15 Br more a kilo,” he said.

Growing mainly tomatoes and onions from the four hectares of land harvested every year, he has one million Birr shares in the Company and cites being a shareholder as the only reason he continues to supply them.

Authority Takes on Regulatory Thrills

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A concerning picture of public health safety was painted by the Ethiopian Food & Drug Authority (EFDA) amid administrative and economic adversities. A surge in illicit pharmaceuticals and contaminated food was revealed during a half-year report with officials seizing a staggering 114tns of outdated, uncertified, adulterated and unlabelled food items, valued at over 66.5 million Br. This led to the closure of 98 companies, underlining the severity of the issue.

Negash Sime, the head of the Food Inspection Department at the Authority, reveals that contaminated food is flooding the markets, making it challenging to trace and monitor sources. He said adulteration, including the use of crude oil as an edible commodity, poses a significant hurdle and efforts to regulate this, including adjustments for oil refiners to meet fortified standards, have encountered significant obstacles.

Although the Authority stipulated mandatory infusion of Vitamin A and Vitamin D, essential for night vision and bone strength, manufacturers are struggling with finances to comply.

“We can’t just close them down,” he said.

An assessment of 200 retail shops over six months reveals widespread contamination of food, particularly in products like butter and untraceable items such as salt and palm oil, according to the report. The issue is compounded by factories operating without the required certification (COC) from the Authority, creating a significant tracing gap.

Heran Gerba, director of the Authority, notes that the current legal mechanisms lack the necessary strength to combat illicit activities related to contaminated food. A rising trend in cases occurred as a result, with over 118 cases pending for effective legal measures. She attributes this to a misalignment with the Ministry of Trade & Regional Integration, where licensing and renewing occur without certification.

Ministry officials concur. Teketel Geto, team leader of the Food Safety & Quality Control, acknowledges the issue, admitting that licenses have been issued and renewed without the necessary vigilance.

“There is a gap in that regard,” he said.

The situation calls for ensuring transparency and accountability. Hiwot Tadesse, former food inspection director at the Autority, highlights mandate overlap among federal agencies and a lack of synergy as major impediments to effective enforcement. Collaboration between the Authority and the Ministry is deemed critical, according to Hiwot, who emphasised the necessity for both institutions to align their vision for effective regulation.

“It all comes down to these two institutions seeing eye to eye,” she said.

Adequate market authorisation and registration aided by technology, such as barcoding alternatives is important to develop the capacity of manufacturers and maintain well-trained experts, according to Hiwot. She critiques the legal proceedings against flawed factories, noting that they are often far from enough.

“Meaningful action is taken only when there is a loss of life,” she said.

The Authority tasked with ensuring the safety of food and medicines, faces overlapping mandates and broken supply chains. Over 107 million Br worth of medicines were disposed of for being unauthorised, outdated, substandard, and illegally imported or stocked products. The report reveals that only five pharmaceutical manufacturers are certified for Good Manufacturing Practices (GMP), emphasising the need for urgent reforms.

Daniel Waktola, the president of the Ethiopian Pharmaceuticals Suppliers & Manufacturers Sectoral Association, acknowledges the industry’s efforts to align with international standards. However, compliance comes with a significant financial burden.

“It’s a difficult task to pull off,” he told Fortune.

Despite half of the medicines procured by the Ethiopian Pharmaceuticals Supply Service (EPSS) falling under the priority list, challenges persist due to importers failing to meet registration requirements.

As the largest pharmaceutical buyer in Ethiopia, EPSS distributed over 1,000 types of drugs and medical equipment to more than 5,000 public health institutions last year. Yet, weak follow-up and delays in reporting remain persistent issues, hampering the Authority’s ability to ensure compliance. Over the past six months, the Authority has only received 1,600 pharmacovigilance reports out of the planned 11,000, covering 28.9pc of the Adverse Drug Experience reports. Although eight pharmacovigilance centres are in university hospitals, Heran notes that most lack awareness of reporting procedures.

“We need to work closely with the institutions,” she said.

EPSS carried a substantial 17 billion Br import bill last year, representing a staggering 90pc of the imported drugs in the country. Tariku Belachew, deputy head, underscores the pressing need to enhance their integrated monitoring system to cope with growing demands. This imperative is rooted in the necessity to monitor the adverse effects of drugs once they reach consumers. Tariku also highlights a significant challenge in waste disposal in Adama, Awassa, Jimma and Desse towns, which are operating below capacity.

Blood product supplies also face critical gaps, with the National Blood Bank Service importing reagents crucial for testing 400,000 volumes of blood annually, as it is only sufficient for 21 days.

Ashenafi Tazebew, director of the National Blood Bank Service, brings delays in import permits and clearance procedures mandated by the Authority, to light.  He urgently calls for reconsidering changes in the clearance system for a timely and uninterrupted supply of essential medical resources.

The response was grim. A shortage of human resources complicates matters, with the Authority operating with only 35pc of required human capital. It amounts to 1,785 personnel in the city and worsens in other regional parts of the country as making new hires is not viable under the current economic circumstances.

Regulatory hurdles persist, not in the formulation of laws but in their implementation and enforceability. According to Yilma Megistu, deputy head of the Ethiopian Standards Institute, the difficulty in tracing products, especially in cases where distribution lines are unclear. He questions the effective implementation of technology-based regulations, such as barcoding, for the identification of food products and pharmaceutical supplies.

“Why has it been difficult to work on the systemic integration?” he inquired.

The urgent need for regulatory reforms, systemic integration, and effective collaboration between government agencies becomes apparent. A delicate balance between safeguarding public health and supporting the economic viability of manufacturers is at play.

Heran said a new strategy is in the works, including a potential extension of the prohibition of advertisements on social media platforms, particularly targeting alcohol promotions. However, ongoing discussions between the Authority and brewery companies have led to delays in implementing the law.

“We’ve to be trusted to do our job,” she said, during the panel at the Inter-luxury Hotel, on Tito St.

Transporters Tread Bumpy Road to Commercialisation

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Public transporters are facing financial constraints and organisational hurdles as they undergo a transition from associations to commercial entities, adhering to stringent standards set by the Ministry of Transport & Logistics. Officials believe the directive, ratified a month ago by Minister Alemu Sime (PhD), aims to develop stronger competition, transparency and improved services within the sector.

However, the transition is proving to be arduous, with difficulties exacerbated by the lasting impacts of the northern conflict. Berhane Zeru, president of the Ethiopian Transport Employers Federation for 9,000 members, disclosed that the transition is challenged by the ongoing economic downturn and further complicated by delayed compensation for services during the northern war.

“At least five more months are necessary,” Berhane told Fortune.

Under the directive, monthly reporting to the Ministry is mandatory, and entities formed under a share company must undergo asset auditing by a general assembly before the transfer to the new company. Stringent requirements, including GPS equipment, periodic registration of rented vehicles, minimum vehicle quotas, and tariff categories for different travel classes, have been established.

As part of the Ministry’s 10-year strategic overhaul of the sector, which includes plans to phase out petrol-powered automobiles for personal use and fuel subsidies, the commercialisation of transport modalities is deemed foundational.

Assefa Hadis, an advisor at the Ministry, defends the timeline, stating that transporters have had sufficient time for the transition. Drawing from experiences in the “Western world”, Assefa said their success nearly guarantees its effective implementation in Ethiopia. He believes the policy shift will enhance service delivery and kindle competition.

“They only have a few weeks left,” he told Fortune.

However, the policy shift has faced significant criticism from the private sector ever since the Proclamation that led to the change was ratified by Parliament, with minor extensions on the time required to meet the minimum vehicle quota over the two years.  Assefa acknowledges the comments but emphasises the need for the sector’s effective commercialisation.

“The government has been overly burdened supporting the transporters,” he said.

The Council of Ministers started phasing public transporters out of fuel subsidies last year. The latest bi-annual revision to fuel subsidies for public buses chipped away petroleum bumps by around four Birr to 19.16 Br a litre, while diesel refills were tapered off by around three Birr to 19.89 Br.

Transport lecturer Abiy Alene argues that public transporters have disproportionately benefited from fuel subsidies and their commercialisation should be expedited. He supports the Ministry’s shift, emphasising that associations have relied heavily on government support for too long. He raises concerns about affordability as the real challenge for effective implementation. With nearly 90pc of the population relying on subsidised public transportation, Abiy warns of the potential for operators to increase prices, posing a risk to the success of the commercialisation efforts.

“Affordability will be the real testing ground,” he told Fortune.

Transporters with special public licenses can operate on cross-border and international roads, while those categorised from levels one to three are expected to operate on domestic roads. Operators with vehicles that have fewer than 45 seats fall under regional transport bureaus’ oversight. The commercialisation of transporters, from colour-coded stickers to lower tariffs for children and designated stops, marks an inevitable shift.

Some associations express anxiety over the limited time for the transition. Alem Long Distance Bus Owners Association, struggling to incorporate into a share company, finds sourcing funds for its 15 vehicles a trying task. Genzeb Asema, the general manager, feels the implementation process is rushed and calls for an extension of about a year to manage a seamless transition.

“We need to figure out how to source funds,” he said.

Somalia’s Pact with the US New Geopolitical Chess?

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Recent developments in the Horn of Africa serve as a case in the interplay between local ambitions, regional politics, and global strategic interests.

Take Somalia, for instance. It has entered into a pact with the United States, permitting the latter to establish five military bases along its maritime coasts, the longest in the continent. Marked by a formal signing ceremony attended by Molly Phee, the assistant secretary of State for African Affairs, the pact represents strengthening military ties between the two countries against a backdrop of complex regional dynamics. It should be seen as a significant move with broader implications for the balance of power in the Horn of Africa.

The agreement also comes at a time when Ethiopia’s political terrain is swamped by controversies, particularly for signing a memorandum of understanding (MoU) with Somaliland. Lambasted by its critics for potentially breaching international law and undermining Somalia’s sovereignty, the overture could have paved the way for the U.S.-Somalia military collaboration. The intricacies of these regional relationships show the interconnected nature of politics, security, and diplomacy in the Horn of Africa.

The development took an unexpected turn with the arrival of Somalia’s President, Hassan S. Mohamud, in Addis Abeba two weeks ago to attend the AU Summit. A day before, he signed the military bases agreement. Given the strained relations between Ethiopia and Somalia and the omission of their issues from the summit’s agenda, his presence was not initially anticipated. It was perceived as a strategic manoeuvre, directing Mogadishu’s intent to assert its position on issues of sovereignty and territorial integrity amidst Ethiopia’s diplomatic prelude.

Somalia’s President’s visit to the AU Summit became an issue of interest, overshadowing other issues and capturing the international media attention. His political savvy was evident as he steered the summit’s corridors, putting the diplomatic tensions his country has with the host in the spotlight. Ethiopia’s subsequent allegations of protocol violation by the Somalia delegation further exacerbated the rift, illustrating the challenges of aligning national sovereignty with regional cooperation.

The AU Summit was not without controversy, notably the exclusion of six member countries due to governance concerns. This decision pointed to the continent’s persistent political and security crises, despite AU Commission Chairperson Moussa Faki’s call for African-led solutions. The influence of external powers, particularly from the West, continues to be contentious, shaping Africa’s geopolitical and security affairs.

The crisis in Sudan, where the possibility of a country divided into three separate states is in the open, exemplifies the extent of foreign involvement in African affairs. Similarly, the public support for military coups in Mali, Niger, and Burkina Faso reflects a broader disillusionment with the prevailing order, often attributed to the legacy of colonial exploitation and contemporary foreign interventions. In countries like Niger, public sentiment against former colonial powers, such as France, exposed the deep-seated frustrations with external economic and political influences.

The AU’s challenge in representing African interests against such a backdrop is further complicated by the inclusion of former colonial powers at the summit, contrasted against the exclusion of voices from West African countries.

This web of military pacts, diplomatic tensions, and regional aspirations tells of the delicate balance required between national interests within the broader context of regional stability and international relations. The developments in the Horn of Africa, particularly Somalia’s strategic moves and the wider context of the AU Summit, show the difficulties of managing sovereignty, security, and cooperation in an interconnected world.

As the continent continues to confront these challenges, the roles of external actors, the impacts of colonial legacies, and the pursuit of African-led solutions remain crucial. The situation in the Horn of Africa reflects the ongoing struggle to reconcile national ambitions with the demands of regional and international diplomacy, a task that is central to the future of the region and the continent as a whole.

Africa’s Exodus Breaking Chains, Building Recognition

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In my early days, my daily commute to school involved passing by a villa enclosed on three sides by the then-Organisation of African Unity (OAU) compound. Journeying with the venerable Bus Number 2 of Anbessa public transport from the Mekanissa area, the route navigated through the Vatican Embassy, Sarbet, Mexico Square, Lideta and culminated at the heart of Merkato. Occasionally, the bus’s engine succumbed to exhaustion, especially on the challenging ascent near the former OAU compound, prompting passengers to disembark and trek uphill.

Every time I passed by the villa, I observed the daily activities of a large family. Despite the absence of regular neighbours, their unique status left a lasting impression, as if the occupants were cradled in the embrace of the entire African continent.

As the political nucleus, OAU perpetuated Addis Abeba’s role as a melting pot of cultures, a beacon for anti-colonial struggles and a jewel of freedom. Its successor African Union (AU) eventually incorporated the villa into its compound, sealing off the wrought-iron gate that once served as its entrance. While the fate of the large family remains unknown, their sacrifice for the loftier cause of Africa resonates in the AU’s expanded premises, extending into the erstwhile Kerchele grounds.

Fast forward three decades, I found myself at a standstill multiple times due to the movement of dignitaries and security motorcades during the AU summit last weekend. However, I choose to perceive these inconveniences as a relatively small price to pay for Addis Abeba’s unique role as the diplomatic hub for the continent.

This mindset traces back to my early days when our house was rented to AU operational staff members at various times. It gave me a chance to get acquainted with various nationals. I remember a Kenyan girl who stayed for several years until the end of her mission. We shared memorable moments including her engagement occasion and the emotional departure was not easy.

During my stay in Togo six years ago, encounters with Togolese people reinforced the power of shared grief and the solace found in diverse companies. Togo, a nation etched in my memory as the only country I visited on the continent, encapsulates the essence of unspoiled nature, warm people, and a relaxed ambience. The diverse landscapes, from the Sahara to equatorial rainforests, the Ethiopian mountains to the Nile and Congo river basins, evoke a sense of awe. Positioned as a gateway between continents, Africa holds the promise of greatness, a potential awaiting realisation.

The ties between its people, despite linguistic and cultural diversity, fall short of the desired strength. When prompted, many of us can recount about distant regions like the West or the Middle East than our immediate neighbours. Hollywood and Bollywood overshadow cultural references of Nollywood and Riverwood. It is ironic. There is much to discover and appreciate about the continent—abundant natural resources, breathtaking landscapes, humble and nature-connected people and unparalleled diversity.

Africa’s historical narrative, marked by colonisation and a “dark continent” portrayal, has cast a shadow on its immense potential. While challenges persist, promising signs emerge—a tripling of the middle class, a youthful population of 400 million, improving literacy rates and a continent poised for technological advancements and economic development.

However, the untapped potential that could yield the highest return on investment lies in unification. Despite the vision of the founding fathers and the nomenclature of the continental organisation, true unity remains elusive. African countries, well-connected individually to the world, still lack substantial integration in infrastructure, commerce, and interpersonal interactions. While the continent boasts vast territories and resources, the fragmentation persists, hindering the realisation of its collective potential.

A notable concern is the limited involvement of member states in the budget-setting process. It heavily relies on donor funding for its programs and operations as over 40pc member states fail to fulfil their annual contributions. The absence of a robust oversight and accountability mechanism within the Commission also raises concerns about the effective and prudent use of resources.

Addressing financial challenges requires member states to play a more active role. In a recent address at the University of Pretoria’s Future Africa Campus, US Secretary of State Anthony Blinken emphasised the US perspective on Africa as equal partners in global challenges. Acknowledging Sub-Saharan as a major geopolitical force, Blinken highlighted a strategy focusing on collaboration rather than patronage.

The question that arises is whether we perceive ourselves as equal partners and are ready to assert their rightful place on the global stage. A significant step in this direction occurred during the 36th General Assembly, where Prime Minister Abiy Ahmed (PhD) advocated for representation in the UN Security Council. This resonates with the longstanding call for Africa to have a say in global affairs, rectifying historical injustices and amplifying its voice on issues directly affecting its interests.

Historical plea to the League of Nations during the Italian invasion met with indifference, the acknowledgement of our rightful place at the UN Security Council signifies progress. It symbolises the continent’s gradual awakening to assert itself globally, transcending the Security Council seat as a mere precursor to a more profound transformation.

To assert themselves as equal partners on the global stage, member states must play an active role in their unity. We must overcome previous wounds, unite and project a positive image to the world. As the legendary Bob Marley urged in his iconic lyrics, Africa must unite and move towards a promised land, shedding the shackles of the past.

WTO Accord to Spur Global Growth with Landmark Investment Facilitation Deal

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Every country is eager to attract foreign direct investment (FDI) – and for good reason. FDI facilitates capital inflows, creates jobs, drives skills development, and facilitates technology transfers, accelerating economic growth and enabling recipient countries to access global markets.

However, global competition for FDI is fierce. To attract it, governments around the world have liberalised their foreign investment policies, established investment promotion agencies, and provided multinational firms with numerous incentives. The World Trade Organization (WTO) is on the verge of introducing a new mechanism to facilitate FDI flows: the Investment Facilitation for Development Agreement (IFDA). Modeled after the WTO’s Trade Facilitation Agreement, the IFDA aims to provide developing countries with practical tools to improve their business climate and facilitate FDI inflows.

The concept of an investment facilitation mechanism was first proposed in 2015. After years of preparations, WTO members began negotiations in September 2020, with developing countries taking the lead. More than 120 member countries endorsed the IFDA’s text in November 2023 – an accelerated timeline underscoring developing countries’ urgent need to attract FDI to achieve the Sustainable Development Goals (SDGs).

The principal determinants of FDI can be broken down into three main categories.

The first includes crucial economic factors, such as the size of the domestic market, the pace of GDP growth, and the quality of local infrastructure. The second category comprises legislation and regulation, which must be sufficiently permissive to attract foreign firms while protecting host countries’ development interests. The third category includes efforts to promote investment opportunities and support international investors in managing their projects.

While improving economic conditions is often a long-term process, making the regulatory framework more efficient and strengthening investment promotion – the two FDI determinants the agreement aims to address – can be done relatively quickly. Crucially, the IFDA avoids sensitive issues like market access, protection, and investor-state dispute settlement procedures. Instead, it focuses on four key areas: transparency, administrative procedures, domestic regulation, and sustainability.

To improve transparency, for example, the agreement encourages participating countries to create a single information portal to publish FDI-related laws and regulations. This would make the information easily accessible to stakeholders and potential investors.

The agreement offers tools to streamline and expedite specific administrative procedures, such as regulatory authorisation processes, appeals, and periodic reviews. It encourages cooperation among competent domestic authorities and establishes a global forum to promote best practices, fostering cross-border cooperation. To encourage sustainable investment and help developing economies achieve the SDGs, the IFDA includes provisions focused on responsible business conduct and anti-corruption measures.

The IFDA offers flexibility to developing countries, enabling them to determine the pace at which they implement reforms, extend implementation deadlines, request grace periods, and access technical assistance, thereby accommodating their unique circumstances and needs. By adopting the IFDA, participating governments signal their commitment to pursuing domestic reforms and increasing their attractiveness as an investment location.

But, developing economies, particularly the world’s poorest countries, require international support to achieve these objectives. The agreement includes a needs assessment mechanism to identify and offer technical assistance. Several countries, including Dominica, Ecuador, and Grenada, have already begun this process with the support of the United Nations International Trade Centre and the Inter-American Development Bank. Since the IFDA would provide participating governments with significant competitive advantages, WTO members who have yet to join it should do so.

While the negotiations for the IFDA have concluded, a critical step remains: integrating the agreement into the WTO rulebook. This requires unanimous consent from all 164 WTO members. But since the IFDA does not impose any obligations on non-participants while enabling them to benefit from the investment-facilitation measures implemented by participating countries, there are no substantive reasons to oppose the agreement’s adoption.

Consequently, the WTO can and should endorse the agreement at the organisation’s Ministerial Meeting in Abu Dhabi this week. Member countries must seize this opportunity to adopt an instrument offering a broad range of practical and effective tools to help countries attract FDI and foster sustainable development. The IFDA also represents a crucial test for the WTO.

Can the global trade body meet the expectations of a majority of its members, particularly developing countries? Can it operate effectively at a time when the multilateral order is under increasing strain? The meeting in Abu Dhabi this week will provide answers to these questions, for better or worse.