Prime Minister Abiy Ahmed announced that the nation is nearing the completion of talks with development partners that would enable it to secure an additional USD 10.5 billion in funding in the coming years.

Abiy stated that the proposed budget of 971.2 billion birr for the 2024/25 fiscal year, which begins today, is insufficient to meet the country’s development needs. He made this statement while appearing in parliament on Thursday, July 5, to defend his government’s budget proposal and address questions from lawmakers.

The prime minister emphasized that the majority of the budget is intended for social development initiatives, development projects, and poverty alleviation. However, the amount is not enough, and the deficit cannot exceed the projected amount.

The budget deficit for this year is 358.5 billion birr, or 2.1 percent of the GDP.

Abiy mentioned that the budget would be revised if additional funding is obtained through agreements reached in negotiations with the government’s foreign allies, the World Bank and the International Monetary Fund, regarding the reform program.

According to the prime minister, the negotiations have taken a long time due to the firm positions taken by both parties. He stated that over the past five years, several negotiations have been conducted within the framework of the reform agenda.

“It took five years to implement the reform agenda due to strong opposition from both parties. It seems that most of our requests are now being accepted with the help of our partner countries,” he added.

If the talks are successful, Ethiopia will receive an additional USD 10.5 billion in the coming years. “Therefore, the budget will be reviewed considering this new funding,” Abiy stated.

The prime minister explained that the difficulty in securing the funds arises from the government’s desire to immediately pursue certain reform agenda items, while other areas are to be implemented gradually.

“If our demands are accepted and we agree with our partners to secure the funds, we will revise the budget,” said the PM.

During his budget address, Finance Minister Ahmed Shide expressed optimism that the negotiations will soon come to an end. He emphasized that the discussions must conclude.

While partners, especially bilateral financiers, are pressuring the government to finalize negotiations on the reform agenda with international organizations, Ethiopia is seeking external financial assistance and debt restructuring from key financiers.

International partners expect significant fiscal and macroeconomic reforms from the administration, including increased tax collection and expansion of the tax base.

According to sources cited by Capital, most of the negotiations with partners have been concluded, with a few key areas remaining.

“For instance, the two sides have agreed on the liberalization of the financial sector and the reform of the state-owned Commercial Bank of Ethiopia (CBE),” the sources said.

Experts argue that the stability of the bank is affected by the large amount of credit that CBE provides to state-owned enterprises, noting that “this is one of the key areas where foreign partners have demanded significant reforms.”

Nevertheless, one of the reasons for the lack of consensus is the floating of the birr, even though concerns about potential devaluation have been discussed in recent weeks.

According to Abiy, the reform plan will bring significant changes to the economy, particularly by reducing the amount of debt, “but compromises on terms and conditions are required from both parties.”

“We have allocated the funds according to our resources until we reach an agreement,” he explained regarding the budget approved on the same day.

According to him, the economy has improved significantly over the past several years, with the GDP now standing at USD 205 billion.

In Ethiopia, rising security concerns are linked to the inconsistent quality of cable products. Despite the presence of several electric cable manufacturing companies in the country, the production of low-quality raw materials remains a persistent issue, impacting both the sector and overall safety.

F&T Electric Equipment Manufacturer highlighted the increasing demand for electricity consumption and electric power transmission cables driven by Ethiopia’s construction, transport, and infrastructure projects. However, supply has not kept pace with demand. The company aims to address problems caused by the poor quality of cables amid this surge in demand.

The primary reason for the substandard quality of cables is the low quality of raw materials used in their production, according to F&T. Ensuring the quality of cable products is crucial not only for industry standards but also for mitigating associated security risks.

F&T, based in Sebeta, is committed to providing high-quality cable products to the Ethiopian market. The company is currently producing up to 300 tons of cable per month and is actively working to supply electrical cables and related products that meet market demands.

Last Saturday, F&T organized a panel discussion at the Sky Light Hotel with manufacturers, distributors, electrical engineering contractors, and experts from government institutions specializing in the power sector. The goal was to establish F&T as a leading cable manufacturing company in Ethiopia.

Foo, Managing Director of F&T, stated that the purpose of the panel discussion was to gather information on issues related to the transmission of electricity, resistance, and other cable-related concerns. This feedback will help F&T provide high-quality electrical cables to the Ethiopian market, meeting user needs and enhancing product reliability.

F&T has begun producing a range of standardized, high-quality electrical cable products to meet the growing demand driven by Ethiopia’s comprehensive infrastructure development projects. The company’s critical objective is to ensure the production of high-quality cable products, supporting the country’s expanding infrastructure needs.

The groundwork for the much-anticipated cool chain logistics system will be laid in Mojo Green Logistics Hub very soon, Capital has learned.

A few years ago, a proposal was created to incorporate a new export category for agricultural products.

A national logistics initiative called Cool Port Addis aims to establish supply networks for perishable goods at a dry port facility located in Mojo, 74 kilometers east of Addis Ababa.

According to experts in the perishable industry, logistics account for 60% of the overall operation when delivering goods to the market. However, in Ethiopia, high costs are a result of a lack of coordination and developed facilities for shipping goods by vessel, as opposed to the currently used, highly expensive air cargo service.

The project was started a few years ago, and although it was expected to start fairly quickly, it has taken longer than expected.

The Ethiopian Maritime Authority’s (EMA) Ergana Buche, Coordinator for Cool Chain Logistics, acknowledged the assertion but countered that the project’s lengthier start date was caused by its complexity and being very new for the nation.

He told Capital, “We cannot say it is delayed because the project is undertaking from scratch as an ice-breaking initiative for the country,” adding that the private sector might not find it appealing at this point.

According to Ergana, the project’s groundwork, backed by the technological know-how of Flying Swans, a Dutch company, will begin in the upcoming months.

The project, projected to cost around USD 50 million, will be carried out in two phases and is funded by the governments of Ethiopia and the Netherlands.

“It may cost USD 26 million for the first phase, which will start in the next four months,” stated Ergana, the initiative’s focal person at the logistics industry regulating body, EMA.

In addition to a cutting-edge cooling system, the facility that would support the export of fresh fruit and vegetables at a competitive rate will feature a stacking area for full and empty reefer containers.

A comprehensive variety of value chain services, including automated staffing, grading, packaging, labeling, and sorting, are also provided by Cool Port Addis.

The Cool Chain Coordinator clarified, “The project would be built to a global standard, and its handling capacity would be 242,000 metric tons per annum. As a nation, it is a very huge capacity.” “It will happen in two stages because the facility has a large capacity,” he continued.

In addition to handling other fruit and vegetable goods and secondary flows like perishable medical imports and flower and meat exports that could interact with the cool port and its facilities, the project is primarily intended to manage the growing avocado production.

Based on the plan, the railway system that directly connects Addis-Djibouti will incorporate the new facility. As Ergana mentioned, the SGTD port in Djibouti is one of the most modern port facilities in the region. It already includes a cool cargo handling system that would allow the shipping of perishable goods in good condition.

The Netherlands’ Minister for Foreign Trade and Development Cooperation, through Invest International, recently signed a 10.6 million euro grant for the project’s first phase.

The Ethiopian government will pay the remaining amount to implement the much-anticipated project.

“When it becomes operational, the project will be handled by those who are leading the effort and will be transferred to Ethiopian Shipping and Logistics (ESL),” Ergana states.

He adds, “Skill transfer and other capacity building initiatives will be taken prior to the transfer of the facility to ESL, the state-owned logistics giant that also operates Mojo.”

Flying Swans, which is supporting the opening up of perishable export markets with sustainable momentum, is working on logistics initiatives in emerging nations.

Ethiopia hopes to replace its current air freight with a competitive transportation model for fruit and vegetable exports that are grown in the nation under favorable climatic conditions.

Experts, such as Tewodros Zewdie, Executive Director of the Ethiopian Horticulture Producer Exporters Association, support the idea that, with the right logistics infrastructure in place, the avocado industry in particular would surpass the hard currency revenues of the industry.

Beginning with a smallholder-driven avocado business, this planned facility has the potential to accelerate the creation of a large-scale fruit and vegetable export sector.