Business
Addis Ababa, February 2, 2012 (Addis Ababa) - Ethiopia has a better opportunity to be a member of the World Trade Organization (WTO).
In a meeting held here on Tuesday, World Trade Organization Director General Pascal Lamy said population size is one of the requirements to be member of WTO in which Ethiopia is able to meet.
He said Ethiopia has managed to achieve fast economic growth in the past couple of years which would help her ascend to the WTO.
It would be possible to build the capacity of the private sector in the area of knowledge and technology transfer as well as finding market.
Speaking on her part, Chamber of Commerce and Sectoral Association President Mulu Solomon requested the Director General for WTO's support for addressing problems related to service and quality of products.
She said Ethiopia has also a capacity to export its various products to member countries of the Common Market for East and Southern Africa (COMESA).
Source:ENA
NAIROBI (Reuters) - The Kenyan shilling firmed 1.2 percent against the dollar to its highest level this year on Tuesday, supported by tight liquidity and inflows from tea exports, as inflation declined for a second straight month, while stocks inched down.
Year-on-year inflation in east Africa's biggest economy fell to 18.31 percent in January from 18.93 percent in December, but analysts said the drop was not steep enough to warrant a rate cut at a policy meeting on Wednesday.
At the 1300 GMT market close, commercial banks quoted the shilling at 83.90/84.10 against the dollar, stronger than Monday's close of 84.60/80.
It had earlier touched an intra-day high of 83.65 per dollar last hit on December 28, according to Thomson Reuters data.
"The shilling has strengthened, mainly due to the tight liquidity in the market forcing guys to sell dollars. There were also some tea inflows," said John Muli, a trader at African Banking Corporation.
Charts showed shilling resistance at 83.00 per dollar, but oil sector importers could weigh on the shilling if it strengthens to that level, traders said.
Since a dramatic collapse of the shilling in the middle of last year, the central bank has moved to support the currency with high interest rates and money market operations to keep a tight rein on supply of the domestic currency.
The bank stayed out of the repurchase agreement (repo) market on Tuesday after three straight days of unsuccessful offers.
In the money market, the weighted average interbank rate rose to 23.1 percent on Monday from 22.7 percent on Friday.
In equities, the key NSE-20 Share Index halted a five-day winning streak, losing just 0.02 percent to finish at 3,224.18 points.
"After the rally we saw in the last week, investors are now profit-taking. But we expect the rally to continue as inflationary pressures ease on local investors," said Ronald Lugalia, an analyst at Afrika Investment Bank.
"We're likely to see bourse activity pick up gradually as bond yields come down and the government rejects more bids at the auctions."
Shares in Kenya Commercial Bank, the biggest bank by assets, fell 1.8 percent to 19 shillings per share as investors sold to book profits on the 11 percent gain last week, Lugalia said.
In the debt market, government and corporate bonds worth 1.2 billion shillings were traded, up from 710 million shillings on Monday.
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NAIROBI (Reuters) - Kenya's economic growth will speed up to 5 percent or more in 2012 if rains vital to the key farm sector do not fail and other shocks do not materialise, a senior Treasury official said on Tuesday.
He also said high market interest rates should fall in the next six months as the government reduces borrowing on local markets with the help of a foreign loan.
Politics, drought, economic challenges and high commodity prices have kept growth in east Africa's largest economy below its long-term potential of 6 percent per annum in recent years.
"We expect to see 5 percent plus growth. This is dependent on rains. Other sectors are still strong. The investments that we are making in infrastructure have a huge impact on growth," Geoffrey Mwau, economic secretary at the Treasury told Reuters.
"The other economies around us are also growing at about 6 percent, meaning that our exports which go there are not likely to suffer much."
Mwau, the Treasury's second highest official confirmed revised projections for 2011 growth at 4.5 percent -from an initial 5.1 percent projection- following disappointing third quarter growth numbers.
Kenya's military incursion into Somalia against the al Shabaab rebels and increasingly unpredictable weather patterns posed the biggest threats to growth this year, Mwau said.
The shilling lurched from one record low against the dollar to another last year as inflation surged, driving up import costs like oil and stoking widespread anger.
After months of dithering that earned policymakers plenty of criticism, the central bank stepped up to the plate in October, raising the policy rate aggressively to 18 percent in a series of hikes over three meetings.
While the move to raise rates dampened inflationary expectations and helped the currency regain most of its losses against the dollar, it prompted concerns over the risk of loan defaults and potential impact to economic growth.
Mwau said the government expected rates to start falling in the next six months after it substituted nearly half of its planned borrowing from the local market with a foreign loan, which is expected to be finalised soon.
SINGLE DIGIT INFLATION?
"We had planned to borrow 119 billion shillings from the domestic market. Out of that we are going to borrow about 50 billion from outside. That will mean there is less pressure in the domestic market, forcing interest rates to come down," he said.
Last year's rate hikes and improved food supplies after the long rains season kicks off in March would drive inflation to single digits, he said, from 18.31 percent in January.
"I expect that by June, if rain does not fail, we will get to single digit levels," Mwau said.
After the shilling rebounded from a record low of 107 against the dollar in October last year, Mwau said the government's aim was to manage the exchange rate between 80-85 per dollar, roughly where it has been so far this year.
"That is a reasonable exchange rate," he said.
On the mind of some investors are the country's first general elections to be held since a disputed poll in late 2007 sparked widespread violence.
Mwau said the poll, to be held by March next year at the latest, was not likely to heighten political risk with most Kenyans determined to move on from the past violence.
Rather, the main risks to the economy arise out of Kenya's war in neighbouring Somalia, which has provoked threats of revenge attacks from Islamist militants, and the weather.
"We have the weather and Somalia. Somalia is a serious one but we are managing it well with support from the international community," said Mwau.
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Ethiopian products were dominate at the second ISE Construction and Housing Exhibition held from the 12th-16th of January in Ethiopia. Fifty local and international exhibitors were represented at the exhibition.
It took two months to organize the exhibition which aimed to correct mistakes made in the first one and to include a wide range of industries with a majority of participants being from the construction industry explained Mekdela Mekuria, Marketing and Outreach Executive at Lexicon Promotion Service plc.
The exhibition offered an opportunity to display a significant number of local products remarked Tadesse Haile State Minister of Industry.
The exhibition was an opportunity for those in the construction industry to network and discover new products according to Tewedros Fantahun from Adeb Engineering.
The local products and construction skills were impressive although differences in quality with imports are still visible said Tewedros.
Ethiopian construction companies that used to import materials are increasingly opting to use local products according to Demis Beyene Marketing Head with Art Metal and Wrought Iron Works.
Reliance on imported raw materials is a challenge that faces companies attempting to meet local demand said Kassa Assefa, senior market expert at Kaliti Metal Products Factory.
The exhibition can play a role in the national agenda to enhance import substitution according to Desalegn Ambaw, State Minister of Urban Construction and Development.
Source: Capital
Reuters
Wednesday, January 18, 2012
Canadian oil and gas exploration company Africa Oil Corp. began drilling an exploratory well in Somalia's semi-autonomous Puntland region on Tuesday, the first to be sunk in the country since civil war erupted two decades ago.
While there has been speculation about finding oil in the anarchic Horn of Africa country for decades, it has no proven hydrocarbon reserves. The prospect of oil beneath Dharoor's sandy, arid plains has excited officials of the impoverished region.
"Soon Puntland will be out of hunger and shall stop asking assistance from the international community. We shall never beg, we shall be begged if the fuel comes out," Puntland President Abdirahman Mohamud Farole said at the spudding ceremony.
"This fuel well is not only for Puntland. It will benefit all Somalis if Somalia becomes one with a common constitution," Farole said, while laying a foundation stone.
Somalia, mired in conflict since warlords in the early 1990s and then Islamist militants reduced the government to impotence, represents one of the final frontiers in Africa to be explored.
Africa Oil and its partners in the two Puntland licences, Australia's Red Emperor and Range Resources, target prospective resources of over 300 million barrels of recoverable oil.
Horn Petroleum, a newly created oil explorer focused on Puntland, is drilling the Shabeel-1 and Shabeel North-1 wells within the Dharoor Valley block. Africa Oil has a 51 percent stake in Horn Petroleum.
"The drilling of Shabeel-1 fuel well is not a one-day decision; it came after much effort and agreement with Puntland," David Grellman, Horn Petroleum's president and CEO, said.
Dozens of workers buzzed around the site under the gaze of heavily armed Puntland troops. Shabeel-1 was spudded on Tuesday, and drilling operations have also started at Shabeel North-1.
The drilling in the Dharoor valley is a milestone in evaluating Somalia's oil potential, Grellman said, adding that the drilling would last 90 days.
The site is a humid, barren area of about 2,600 sq km (1,004 sq miles) near Dharoor town, some 350 km (217 miles) from the port of Bosasso on the Gulf of Aden.
The Shabeel-1 and Shabeel North-1 prospects are located on a Jurassic aged rift system, which is part of the same system that has proven to be highly productive in Yemen.
Puntland's government signed a production-sharing deal in January 2007.
Puntland faced stiff opposition from the Western-backed interim government at the time, part of which refused to honour a 2005 deal reached with Australian independent Range Resources, giving it exclusive rights over all minerals and petroleum.
Relations between Mogadishu and the Puntland authorities are on the mend. A new U.N.-backed roadmap targets a new federal constitution that brings the semi-autonomous regions into a closer relationship with central government.
Africa Oil said last year it planned to drill up to eight wells in blocks it holds interests in across east Africa, including the two in Puntland.
Ethiopian mineral water company, Debre Birhan Natural Spring Water Private Limited Company, has bought back 75% of the company shares sold to Access Capital, Ethiopia two years ago.
Debre Birhan bought back the shares at a price significantly higher then that it received when it originally sold the shares to access two years ago said Gebeyaw Takele, General Manager and owner of Debre Birhan Natural Spring Water plc.
The actual sum that was paid for the 75% stake was undisclosed.
The company bought back the shares to implement an expansion project to enhance capacity said Gebeyaw.
Debre Birhan Natural Spring Water plc bottles the well known mineral water brand Aqua Safe. The company’s bottling plant is found in Debre Birhan where the natural spring for bottling is also to be found.
The Debre Birhan area was selected for the abundance of pure natural water springs in the area and temperate climate said Gebeyaw.
It is estimated that the plant was established with an initial capital of 50 million birr. The factory currently employees 160 workers with an increase in personnel expected with expansion.
The water plant currently supplies mineral water in bottle sizes ranging from half a liter to two liters.
Source: Capital
Addis Ababa, January 11, 2012 (Addis Ababa) - The Japan Government expressed its commitment to support Ethiopia’s industrial development endeavors.
The Japanese Ambassador to Ethiopia, Hiroyuki Kishino was made the conviction here on Wednesday at the discussion on the Second Phase of Industrial Development Policy Forum among various stakeholders.
The Ambassador said Japan is implementing a Kaizen Project that will make Ethiopia competitive at the global market.
Kaizen refers to a philosophy or methodology that focuses on eliminating waste or inefficiency by emphasizing continuous improvement in manufacturing, management and business practices.
The Ambassador said Japan will continue strengthening its assistance in providing technical support for the success of the industry sector set in the five-year Growth and Transformation Plan (GTP).
Industry State Minister Advisor, Ahmed Nur told journalists that the industry sector has grown to 15 percent in 2003EC from 10 percent previously.
The success attested the effective implementation of strategies set in GTP , he said, adding, the efforts would employed to register 20.1 percent growth a year on average in the coming years.
Similarly, foreign trade performance over the last five month exceeded last year same period by 95 percent, he said.
Representatives from trade and industry ministries, the Ethiopian Development Research Institute, Addis Ababa University and Japan International Cooperation Development (JICA) attended the event.
Source:ENA
By William Davison
Jan. 11 (Bloomberg) -- Ethiopia’s government would raise 132 billion birr ($7.6 billion) if it sold the country’s five biggest state-owned companies to private investors, Access Capital SC said.
The sale of Ethiopian Airlines Enterprises, sub-Saharan Africa’s second-biggest carrier, Ethiopian Shipping Lines, Ethio Telecom, the Ethiopian Insurance Corp. and Commercial Bank of Ethiopia would generate funds needed to finance infrastructure projects in the country, the Addis Ababa-based research company said in its annual economic report. Proceeds from 81 other public enterprises earmarked for sale by the government would raise more than $1.9 billion, it said Jan. 9.
“Ethiopia needs cash now and it makes perfect sense to liquidate the net worth held in long-accumulated assets for something as grand as ensuring a transformative change in the country’s economic history,” Access said.
A five-year growth plan unveiled by the government in 2010 calls for 569 billion birr to be invested in projects including roads, dams, sugar factories and railways by mid-2015. Privatization is necessary because Ethiopia doesn’t have the savings to finance the “needed, justified and on the whole appropriate” public spending, Access said. The sale of assets would also boost foreign investment in sub-Saharan Africa’s fourth-biggest economy, it said.
The government has no plans to sell its biggest state-owned companies, Communications Minister Bereket Simon said in a phone interview today from Addis Ababa.
‘Arms of Government’
“These are development arms of the government that definitely need to contribute to national development programs,” he said. “That is why the government wants to retain control.”
Privatization would also reduce inflationary pressures and “potentially dangerous external debt” that might result from the government’s need to borrow 422 billion birr, or 14 percent of annual gross domestic product, to finance investments, Access said. Ethiopia sold three state-owned breweries to international firms for $388 million last year.
Ethiopia’s annual inflation rate of 38.1 percent in June was the second-highest in the world last year, Access said. Prices surged partly as a result of a 10 billion-birr increase in central bank lending to the government, while external debt has also tripled in the past five years, it said.
Ethiopia will continue to see “rapid” economic expansion in “coming years” because of the benefits of public investment; transformations in small-holder and commercial agriculture; a “consumer goods revolution”; and the growth of exports including minerals and electricity, said Access.
The economy grew 7 percent to 8 percent annually in the five years to July 2010, according to the International Monetary Fund. Growth may slow to 5.5 percent this year, from 7.5 percent last year, before accelerating again to 6.5 percent in 2016, according to the IMF’s website.
--Editors: Paul Richardson, Karl Maier.
To contact the reporter on this story: William Davison in Addis Ababa via Nairobi at pmrichardson@bloomberg.net.
To contact the editor responsible for this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net.
The Ethiopian Ministry of Communications and Information Technology is considering a new bill to certify the competence of exporters, importers, wholesalers and retailers in the IT and electronic sector in Ethiopia.
The bill has been sent to the Ethiopian Information and Communications Technology group for review.
The new will bill require industry operators to hire a range of professionals from various fields including technicians to maintain and service electronic and IT equipment to receive accreditation.
Establishing standards will protect consumer said Balcha Reba, Director of the Communications and Information Technology, Standardization, and Regulation Directorate.
Many operators in the IT sector fall below standards of professional competence and are unable to provide proper specifications or maintenance support for the goods that they have on offer according to Balcha.
The demands put in place by the new bill could impede the development of the IT sector in Ethiopia according to sources in the industry.
Wholesalers in particular are expected to hire employees with diplomas in marketing and procurement as well as electronics as well as an electrical engineer or an employee with a background in telecommunication.
Retailers should employee information technology specialists and importers will be required to employee electrical engineers or telecommunications specialists.
Exporters of electronic goods would require an international standard quality certification to receive accreditation for export permits.
Centers providing training in database development and computer applications will need to hire instructors with first degrees in information technology and electrical engineering as well as supplying appropriate class room equipment including whit boards, reference books, projects and a minimum of 10 computers to receive accreditation.
Source: Addis Fortune