Haile Assegide: 58 years old, a father of two and a civil engineer serving his country since 1979. He graduated from the then Haile Selassie I University (the present day Addis Ababa University) in 1986 . Since graduation he has been working for various private and public organizations in different capacities. He is currently the CEO of Derba Group, a newly established holding company owned by Sheik Mohammed Hussein Ali Al Amoudi. Before taking up his current position, Haile was serving the Ethiopian government as Minister of Urban Development and Construction. Capital’s Pawlos Belete interviewed Haile Assegide about his career and experiences. Haile had many things to say, about the slums he grew up in, about the company he is leading, the massive project he is undertaking, and most passionately, about the development of the nation.
Capital: Please tell us about your experiences while working in both private and public institutions?
Haile Assegide: My first job was in the private sector. After seven years in the private sector, I joined Water Works Construction Enterprise. After that, I became a Minister in the present day Ministry of Urban Development and Construction in 2000. I have since worked for various organizations in different capacities, like Berta Construction, Norwegian Save the Children Water Works, and now at Derba MIDROC.
Capital: Tell us about your childhood and education?
Haile: I was born near Saint George’s Church here in Addis. I think the Church is probably the oldest church in Addis Ababa, next to the one on Entoto (the mountain to the north of Addis.) It’s in an area called Talian Sefer; along with the area around the National Palace, it’s one of the oldest neighborhoods in Addis. I was born in one of the poorer areas of the capital, and growing up amid the challenges and opportunities of life was like getting a college education. For my primary education, I went to a private school called the Nativity Boys School. It was a school in Piassa, near the old Post Office currently called the Lideta Nativity Cathedral Catholic School. Except for my freshman year where there was a single girl attending the program, throughout my school years, I went exclusively to all-boys schools. I graduated from the Technology Faculty at Addis Ababa University in Engineering in 1986 CE.
Capital: While serving as Minister of Urban Development and Construction, you had the opportunity to work with the late Prime Minister Meles Zenawi. What are your reflections about your work under his leadership?
Haile: The late Premier was a good leader, teacher and colleague. He was somebody you could look up to, somebody you could depend on. So, we have lost a very good leader.
Capital: Why did you leave the Ministry?
Haile: I worked for 15 years in the public sector. I am not a party member, but I was given the opportunity to work with members of the ruling party. Eventually, I felt like working in the private sector. That’s it. I haven’t left the public sector with exasperation or anything like that. I still believe that Ethiopia is making good progress with this government. Whenever there are issues that require my expertise, I still participate in all endeavors. Although I had many opportunities to work abroad, my wish is to serve my country either in the private or public sector. My ambition is to do my share in the development effort of this country. I believe as citizens we should contribute all we can. That is the objective of my life and that is what I am doing.
Capital: After serving as Minister in the public sector, how did you end up working for one of the world’s top 100 billionaires, Sheik Mohammed Hussein Ali Al Amoudi?
Haile: With a positive recommendation from the government. I was asked by Sheik Mohammed to work in MIDROC Ethiopia; I agreed to do so because Sheik Mohammed has a vision to help industrialize Ethiopia, which he unveiled, acted upon and is still contributing massively to, since the beginning of the third Ethiopian millennium. His vision is to participate in the construction of key industries that help the industrial development effort of Ethiopia on quite a large scale to eradicate the persistent and pervasive poverty that characterized the country for decades. It is this grand vision that led him to look for a person that can shoulder such responsibility. That is why I am here.
Capital: The biggest project launched by Sheik Mohammed, next to Derba Cement, is Toussa Steel. How do you compare the environmental impact of Toussa, in relation to Derba, which is currently in the process of acquiring the United Nation’s Carbon Credit Certificate?
Haile: Toussa Steel will be another milestone in the country’s effort to build a green economy. It will be one of the most environmental friendly projects in the world, not only when it comes to production, but also in terms of its organizational structure. We believe that with any development the benefit should far outweigh the negative impact. We are working on minimizing the environmental impact as much as possible by utilizing the best technologies available in the world.
Capital: When Derba Cement was officially inaugurated by the late Premier last year, you spoke about the bureaucratic hurdles you encountered while other private investors gave praise to government support. Can you describe the hurdles you had encountered and do you expect similar problems with this project?
Haile: I just wanted to send a clear message to the private sector that such misplaced praise will not help our development efforts. We have to inform the government about what is really on the ground. I think the government is putting a lot of effort into solving such problems, but if we don’t speak up and tell the truth, we won’t be aiding the government or doing service to our country. I understand that the ERCA [Ethiopian Custom and Revenue Authority] has been reviewing most of the customs guidelines related to the import of capital goods. My company had discussed the issues we faced with concerned government bodies right after the implementation of the project. I think the institutions that have revised their policies since then will give us better service this time around, because we import most of our machinery through the port of Djibouti, problems with processing incoming goods create delays; delays cause projects to become costlier and those costs are passed on to the consumer. The other major problem we encountered was power supply. After discussions with the Ethiopian Electric Power Corporation, the corporation is now doing a project at the factory site. If these two major obstacles are cleared, I don’t think we will have any major setbacks. Of course, there are other issues like land, but they are minor compared to what we have discussed. We are clearing the land issue with the Amhara Regional Government. I think there is a better consensus regarding custom, power and land in regards to Toussa. Once these issues are addressed properly, other issues will not affect the project implementation.
Capital: What about land compensation issues, since it was one of the major hurdles for Derba Cement?
Haile: Yes it was. This time around we have dealt and cleared all compensation issues with the Amhara Regional State, because we have gained a valuable lesson from Derba, where we had to deal with five different local administration heads to solve this issue. It was a very difficult and challenging experience.
Capital: In the speech you made at the signing ceremony of Toussa steel two weeks ago, you stated that completion of Toussa Steel will be a game changer in the pricing of steel; just as the completion of Derba did for cement. Can you elaborate on that?
Haile: The price of a ton of cement, on the retail market, was around 5,500 birr which was high. But as soon as we commenced production and distribution, the price went down to 2,300 birr per ton and it still has to come down from this. When Toussa steel begins operation, we expect the same thing to happen with steel. The price of steel worldwide went down following the 2009 global economic slowdown but the price of different steel products in the domestic market went up. Yes, the demand for steel has increased in Ethiopia due to the booming construction sector of the economy, but our objective is to produce enough steel so that supply will be greater than demand which will force prices down. Both companies have the same objective: stabilizing market prices which will automatically change the pricing game.
Capital: At the official inauguration of Derba Cement, you announced the formation of the Derba Group of Companies. Though the Ethiopian Commercial Code does not allow for the formation of a holding company, you went ahead and formed one, in what seems like a challenge to the code. How are these legal issues shaping up?
Haile: Yes, the legal issue is still there. We cannot legally form the Derba group, but we can form a group that can be recognized as a legal entity under this holding. Legally, we can’t exist as a single holding company. That is why each company under the group is formed as a separate Private Limited company with its own CEO. The CEOs of the various companies will be reporting to the Group’s CEO. The group’s CEO will issue policy, strategy and directives for companies under its umbrella and other services in a pool system. In Ethiopia a holding company cannot exist unless the commercial law is amended.
Capital: The group incorporates under its umbrella major projects like: the Saudi Star Agricultural Development in addition to projects in engineering, construction, hospitality and real estate among others. Can you tell us more about developments in these areas so far?
Haile: We plan to build the biggest holding company in the coming 10 years with an annual turnover of 100 billion birr and are working tirelessly to achieve this. We will participate in agriculture, real estate development and hospitals with special emphasis on construction and manufacturing of which Derba Cement and Toussa Steel are part. An electric cable company is also in the pipeline to augment the construction company where it will be able to satisfy the need for cable products which are currently imported from abroad. We hope that in the next ten years, the construction sector will lead Ethiopian economic growth. Therefore, participating in this sector of the economy is good not only for the country but also for our group, at least for the coming two decades. Our decision to participate in the construction manufacturing industry in a major way is to fill the domestic demand and supply gap and to reduce the imports for sector. We also want to establish a big textile manufacturing mill in the country. Generally speaking, I see a lot of business and employment opportunities with the Derba Group in the coming decades.
Capital: I know that Sheik Mohammed is going to cover about 45 percent of Toussa Steel Factory’s total cost, an estimated 800 million USD. Where is the rest of the financing coming from?
Haile: Probably between 50 to 60 percent of the financing will come from domestic and international financers. This is all I can say at this moment.
Capital: One of the major undertakings of the Derba Group apart from Derba Cement and Toussa Steel is agricultural development. What is the status of the Saudi Star Agricultural Development (SSAD)?
Haile: At present, SSAD farm area is being prepared for cultivation, while in tandem we are constructing irrigation canals and structures. Special care is being taken in leveling additional land for growing rice, which is a very delicate grain to grow and we are using machineries we have in Gambela for harvesting the rice we have grown, so far.
Capital: Sheik Mohammed’s projects are usually beset by delays. Since you came to the forefront of the Derba Group, it seems that project delays are becoming a thing of a past. What is the secret behind this improvement?
Haile: The reason behind the improvement is the way business use to be done with the direct intervention of Sheik Mohammed. In his millennium speech, he promised to move away from past practices on big investment projects. Previously, MIDROC used to participate mostly in the buying of privatized public business entities and then expanding them. That is why it is perceived as a delayed engagement. However, now he is engaged in new, big and green investment undertakings which will enhance the development capacity. Therefore, it can be said his investment strategy has moved away from the previous one. Besides, he is giving more time and money to the new endeavor. These changes coupled with a focused follow up in the new investments can explain the progress.
Capital: Expanding the hospitality industry across the country is a focus of the Derba Group. Is this move part of the Sheraton’s expansion project?
Haile: No, Sheraton is not part of the Derba Group; it is a separate business entity. What we want to build is a chain of locally branded hotels scattered all over the country. We want to build them for the middle class in areas like Dessie, Dila, Langano, Gambela, etc… so that an Ethiopian who wants to visit the country from one corner to the other will always have up-to- standard and consistent hotel service. This will benefit all; the traveler through convenience, the local community through job creation, and the public through business income. This will encourage young Ethiopians to discover the diverse beauty of their motherland. It is well known that foreigners tend to know more of Ethiopia and its natural attractions than its own citizens. We have tourist destinations in all four corners of the country with more than 80 nations and nationalities. If you travel from Shashemene (a town in the south) to Lake Turkana alone, you will encounter more than 45 of them. We also speak such a diverse variety of languages. Therefore, the aim is to make it easier for young Ethiopians to travel and see for themselves. Derba group would like to facilitate that. The hotels chains are named Derba Hotels and Spas, and the first one will open next year. In 10 years time, these hotels will be found in most parts of the country.
Capital: Last year, with the launching of Derba, an inspiring song called Ashara [fingerprint] and a poem was sung and read. And a new poem was read two weeks ago during the signing ceremony for Toussa Steel. What is the message behind both the music and the poems?
Haile: It’s no secret that in Ethiopia, whenever somebody does something great, nobody appreciates it while they’re alive. We only appreciate people for their good deeds after they’ve passed away. Therefore, the message is one of appreciation and dedication. We have to appreciate people who have contributed to the development effort of our country in one way or another while they’re still alive. The music and poem you listened to during the launching of Derba Cement was not for Sheik Mohammed alone, but for all those people who have made a positive impact on the development of the country in the past, present and even those who will do so in the future. It is called Ashara, meaning fingerprint. What I said in my speech at the time was, “let’s leave a positive fingerprint on the development effort of the country.” Our late Prime Minister Meles Zenawi is not alive today but he has left his fingerprint in the development history of the country, we have to recognize his contribution. That is the culture the Derba Group wants to develop; appreciating and recognizing those who have managed to leave their mark.
Capital: How do you describe the role steel and cement play in the economy of a given country?
Haile: There are a couple of ways to measure the development of a given nation. One way is by observing the per capita energy consumption; one can judge whether a given country is low, middle or high income, without even understanding GDP [Gross Domestic Product]. If the consumption of cement and steel is high, it signifies a higher level of development. A good example for this is to understand the trend of Ethiopia’s per capita power, in terms of cement and metal consumption over the year. Ethiopia’s cement consumption was 22 kg per person in 2006; it increased to 111 kg in 2011 which is a growth of more than fivefold. This tells us that some sort of change is happening within the economy. The same is true with steel. These are key industries that have changed the developmental course of our world.
Capital: Your Steel factory is planning to import 1.5 million tons of scrap metal from abroad to produce the envisioned 1.3 million tons of steel products. Why isn’t there a plan to extract iron- ore in Ethiopia and turn it into steel products?
Haile: The amount of raw iron-ore found in Ethiopia, so far, is not abundant. The available scrap in the country is around 50 thousand tons per annum. So, we have to import in order to fulfill the demand in the near future. However, we might not import scrap metal in the long term because we have a plan to search for iron-ore deposits here. The difficulty will be in extracting iron-ore which requires more than three times the current power demand of Toussa Steel (260 megawatt) or almost three times the electric power production capacity of the Tekeze, which is 300 megawatt. Although there are some indications regarding potential availability, there are few studies in Ethiopia about the iron-ore deposit capacity of the country. A comparative analysis must be made to know whether it’s economically viable to extract the ore (if found in abundance) or importing it.
Capital: How do you feel about the momentum of development in the country?
Haile: Ethiopia is one of the top three countries in the world that are fulfilling the Millennium Development Goals (MDGs). The GDP is registering double-digit growth; Growth like this is unheard of in a non-oil producing country and this record has been consistent for the past nine years, now. We have the Growth and Transformation plan in place to sustain this momentum at a rate of 14.9 percent average. If this trend continues, I think we can overcome poverty within one generation.
Capital: How do you want to be remembered after accomplishing the mega projects currently underway and those that are envisioned under your leadership?
Haile: I want to be remembered as someone who has contributed my share to my country’s development: as someone who wanted to see a prosperous Ethiopia through hard work. I think that is a good way to be remembered. Seeing a generation free from poverty, on its own, is something worth working for. That is how I feel. That is what I want to imprint in the minds of my kids. That should be what every aspiring parent who wants to see a prosperous Ethiopia needs to put in the minds of their kids. That is all I can say. I want to extend my sincere thanks to the late Prime Minister Meles Zenawi and Sheik Mohamed for helping me leave my fingerprint on the development effort of my country. You have to be a team player, think big and build institutions that last long. When you think big, you face challenges and you need to overcome those challenges to achieve change. I truly believe that everything is possible. There is nothing in this planet we can’t do if we put all our efforts and expertise together in a focused manner. Problems are an inherent part of development; we need to be focused to overcome it. I urge the young generation to read a lot, but these days, the young tend not to like reading, including my kids. They prefer watching movies, playing games, and surfing the net, mostly social media like face book. Though not totally harmful, they don’t give you the wisdom you get through reading. I think the game of life is leading a progressive life, throughout your existence. That is made possible by equipping yourself with the wisdom that arises from the accumulated knowledge of the world. I had no plan to be in this office when I was young but my continuous effort to equip myself with modern knowledge through reading helped me shoulder the responsibility that I am bearing now. I urge the new generation to get prepared, to shoulder such a responsibility by equipping themselves with the knowledge to do so, since the future of Ethiopia is in their hands. That is only possible through reading.