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Tanzania can significantly boost its livestock sector’s economic contribution with a bold and comprehensive plan that emphasizes climate-smart strategies and innovations. A new report published by the World Bank shows that while the country boasts a large livestock population, climate-related risks and insufficient investments from the public and private sectors have hindered sectoral growth and international competitiveness.

The newly released 21st Tanzania Economic Update, titled, ‘Harnessing the Opportunity for a Climate-Smart and Competitive Livestock Sector in Tanzania,’ recommends backing such a robust plan with at least $546 million in public investments over the next five years. This annual investment of approximately $109 million represents a fivefold increase over previous budgets and a 50 percent increase from the 2023/24 budget.

“The demand for livestock products has risen over the years as a result of urbanization, income growth, and changing lifestyles and diets. This has led to increased consumption which presents an important opportunity and risks for the sector,” said Nathan Belete, World Country Director. “There is a real opportunity to capitalize on the growing internal market while simultaneously exploring avenues for export expansion for sectoral growth and international competitiveness in a sustainable and climate-smart manner.”

Tanzania has one of the fastest growing livestock populations in Africa and the world. It is estimated that the country currently possesses 36.6 million heads of cattle, making it the second largest cattle population in Africa after Ethiopia. This represents 1.4 percent of the global cattle population and 11 percent of the African total. Tanzania also has a substantial population of sheep, goats, chickens, and pigs, ranking it among the top ten on the continent in terms of overall livestock size. The sector provides income-generating opportunities throughout the value chain, employing 33 percent of the population, or 4.6 million households. Despite this, the country’s exports remain below their potential, highlighting challenges in fully capitalizing on the sector’s economic potential to generate jobs and contribute to poverty reduction.

According to the report authors, Tanzania’s pasture-based livestock sector faces serious challenges due to climate change, including erratic rainfall and higher temperatures. Endemic livestock diseases further constrain the sector, impacting animal health, productivity, and market access. Structural and institutional challenges that intersect with climate risks hamper productivity and competitiveness, while the disproportionately low public funding for the sector hinders investment in essential research, extension services, and infrastructure.

Furthermore, the livestock sector, both globally and in Tanzania, is a major source of greenhouse gas emissions, particularly methane, which greatly contributes to climate change. Despite this impact, funding for methane reduction efforts is minimal, and the sector’s emissions present challenges to achieving climate change mitigation goals while ensuring food security.

“Despite the various challenges, the sector has strong growth potential and plays an important role for Tanzanian livelihoods,” said Ernest Ruzindaza, World Bank Senior Agricultural Economist, and co-author of the report. “The country’s strategic location with sea access and borders with seven countries makes it well suited to meet regional and global demand for livestock products. Its diverse indigenous livestock breeds cater to various consumer preferences domestically and internationally and support the export of livestock genetics and biotechnology products.”

The Update authors advocate for additional public investment, incorporating climate-smart interventions to reduce methane emissions by 13% and increase protein production by 29% over six years. The authors also recommend pursuing a series of policies and investments targeting productivity, trade and value addition, climate adaptation and mitigation, as well as sector governance with these resources.

Distributed by APO Group on behalf of The World Bank Group.

Democratic Republic of Congo (DRC): President Tshisekedi must use second term to tackle human rights crisis

AfricaNews

June 24, 2024

The Democratic Republic of Congo (DRC)’s President Felix Tshisekedi must use his second and final term in office to address the human rights crisis engulfing the country, Amnesty International said following the inauguration of the country’s new government on 11 June. The new government is led by Prime Minister Judith Suminwa Tuluka.

Amnesty International has presented the incoming government with a five-point agenda, which outlines the key steps the new administration must take to improve the human rights situation in the country.

“During his previous term, President Tshisekedi made numerous human rights pledges, but five years down the line, little to no progress has been made. Most of the measures taken to protect human rights have been superficial, ineffective or incomplete,” said Tigere Chagutah, Amnesty International’s Regional Director for East and Southern Africa.

“The next five years represent President Tshisekedi’s last chance to build a lasting legacy grounded in human rights. He — and the incoming new government — must urgently take steps to end restrictions on civic space, protect civilians in conflict zones, break the cycle of impunity for crimes under international law, fix the criminal justice system, and effectively manage resources to advance socioeconomic rights.”

A five-point agenda to respect human rights

With a deepening armed conflict and deteriorating humanitarian crisis sweeping the DRC in recent years, and against the backdrop of the ongoing withdrawal of the UN Peacekeeping Mission, MONUSCO, Amnesty International calls on President Tshisekedi to fully respect international humanitarian law — especially in the design, implementation and assessment of all military operations. President Tshisekedi must take concrete steps to protect civilians in conflict zones, investigate the underlying causes and drivers of armed conflicts and intercommunal violence, and address pervasive impunity for war crimes.

Amnesty International recommends that President Tshisekedi reforms the criminal justice system, which he has described as being “sick”. The country’s prisons must become more humane, systematic use of pre-trial detention and arbitrary detention must end, and the death penalty must be abolished.

In March 2024, after a hiatus of two decades, the government reinstated executions for people sentenced to death, claiming that punishment would deter “infiltration” and “treason” within the army. The government also said the measure would help quell gang violence, a move strongly denounced by human rights organizations, including Amnesty International.

“President Tshisekedi must reverse the government’s decision and enforce a new moratorium on executions, while the authorities consider abolishing the death penalty in its entirety during this legislature. It is also essential that the criminal justice system is independent and fair,” said Tigere Chagutah.

President Tshisekedi and the new government must also urgently lift the unlawful and prolonged “state of siege” in the North Kivu and Ituri provinces and ensure accountability and justice for human rights violations committed in the name of this measure. The authorities must also adopt human rights-friendly legislation that protects and promotes the rights to freedom of expression, peaceful assembly and association.

Despite President Tshisekedi’s pledge to eradicate corruption, alleged squandering of public resources has resulted in the state failing to adequately resource essential socio-economic services, and thereby realize fundamental rights, including the rights to adequate food, healthcare, water, sanitation, education, and housing.

The expansion of industrial copper and cobalt mining in response to growing global demand has also fuelled housing and health rights violations on a huge scale, including mass forced evictions and pollution. The government must therefore declare a moratorium on mass evictions in the mining sector until a commission of inquiry is established and completes a comprehensive review of existing legal protections against forced evictions, and relevant policy reforms are enacted.

The DRC government must also take steps to safeguard press and internet freedoms, including by revising the 2023 Press Bill and Digital Code, and bring them in line with international human rights standards.

“The human rights crisis engulfing the DRC has already gone on for far too long. The international community must put pressure on the DRC authorities to fully and effectively implement the proposed recommendations,” said Tigere Chagutah.

Distributed by APO Group on behalf of Amnesty International.

Strong cities

Doing Business

admin

June 24, 2024

Addis Abeba and other cities and towns in Ethiopia face serious challenges of growth and management. There are issues of potential overcrowding, congestion, insufficient infrastructure and inadequate provision of services, which if not handled adequately will negatively affect social-economic development. Urban planning is key, together with the capacity to organize the city and regional towns, manage their growth and make them more efficient and sustainable.

There are good developments in terms of providing housing for families of various income groups and in terms of widening major roads in the city. Effective and efficient infrastructure will provide for the quality of life and enhance social and economic development.

We also see climate change causing more heavy rains and a rise in temperature threaten city life, causing flooding and health hazards. The sprawling buildings need to be constructed in a way to withstand earthquakes and tremors, while the sewage and drainage systems must be able to allow a smooth outflow of storm water and liquid waste.

Cities endure shocks and stresses including but not limited to unprecedented growth, water scarcity, unemployment, floods, fires and traffic accidents. To be able to withstand such shocks, investing in some of the following would have priority:

Water supply.
Better managing river catchments and related networks of secondary drainage, stabilising eroding river banks and preventing encroachment in flood prone areas.
Upgrading the drainage systems of major roads.
Upgrading and expanding electricity sub-stations, which I believe is ongoing.
Introducing an effectively targeted productive safety net to support vulnerable groups and households, impacted by shocks.

Such improvements in Addis Abeba and other regional cities would make them better places to live in and making them more resilient to shocks and stresses that undoubtedly will continue to come our way.

In planning any investments and expansions though, it is important to understand the nature of any immediate threats to people and assets, as well as the dependencies and interdependencies of urban services and systems, which can cause disruption or failure or compound existing vulnerabilities.

A holistic rather than a sector approach is necessary to identify critical gaps or areas of weakness, followed by the planning and implementation of aligned actions and investments. Such approach will help prevent disasters in urban areas and make urban communities better able to withstand hazards that come their way.

I foresee a few challenges though, including coordination, capacity to deliver quality works and the need to include the people in the neighbourhood in the entire process. In terms of coordination we see a road being constructed, only to be broken up to lay down the sewage or water piping system. Closing it again leaves permanent marks in an otherwise new road. As far as the quality of public works is concerned we see roads made but without proper sidewalks endangering pedestrians and with gaping manholes on the side, which people fall in to and which get clogged by solid waste instead. As a result, we create health hazards instead of preventing them.

In planning, it is crucial we include the people who live in a neighbourhood in the risk assessment and the planning. Their opinion in the design of the neighbourhood matters, including green areas, playgrounds, location of schools and health centres, the kind of business and services, solid waste management etc.

Otherwise we will continue seeing the youngsters blocking the road on Sunday morning to play a game of football. Let us ensure inclusive urban development planning instead.

Meanwhile we currently endure major interruptions of utility services. Businesses and households are suffering unprecedented interruptions in power and water supply, days on end. Do I need to repeat and explain the hazards such interruptions create, not to mention the damages to business, their equipment, production lines and additional costs to keep production and services going? Uninterrupted supply of water, power and telecommunications, including internet are essential to doing business effectively and efficiently. With the economic and social ambitions, we have, attracting investors and developing domestic industries, we must match our vision with reliable services to realize our ambitions. Failure to do so will not allow us to become the middle-income country we want Ethiopia to be.

I appreciate some of the challenges faced by the authorities to develop, maintain and upgrade systems. It would help though if challenges and measures planned for are communicated timely and clearly to the public and the business community, so that they can take timely measures and prepare for hours, days or weeks during which services will be interrupted. This will prevent unnecessary damages and hazards that to come our way and help us build strong cities indeed.

Ton Haverkort

ton.haverkort@gmail.com

Genesis of capital markets, one pitfall investors to watch out and what is the approach Ethiopian Capital Market Authority is following?

Society

admin

June 24, 2024

Genesis of capital markets, one pitfall investors to watch out and what is the approach Ethiopian Capital Market Authority is following?

In my previous article, I have shared the optimism and excitement albeit with caution. The Ethiopian Capital market to thrive or at least to have a strong start needs all aspects of the ecosystem to function optimally (emphasizes collaboration among different stakeholders, including governments, regulators, financial institutions, investors, and businesses. By working together, they can address challenges and create synergies).

Before dissecting the one of potential pitfalls, it may be worth to look at the genesis of capital market and have a historical grasp.

The concept of capital markets has a rich history that dates to the 14th century in Europe, where the first examples of financial markets were banks and lenders. However, the modern form of capital markets, specifically the stock market, began to take shape much later. The history of the stock market dates back to the 1500s when it began taking shape in Antwerp and London. The modern stock trading began when the Amsterdam Stock Exchange was established in 1668. This exchange introduced certain concepts associated with modern stock markets such as initial public offerings or IPOs. By 1792, the stock market was also found in the newly formed United States on Wall Street in New York City. The initial trading activity mostly included government bonds and bank stocks until the official launch of the New York Stock Exchange in 1817, nineteen years before the New York Stock Exchange the London Stock Exchange was officially formed in

1773, However, the London Stock Exchange restricted shares, and the New York Stock Exchange immediately traded stocks.

Over time, more private stock exchanges joined hands, leading to the formation of more closely regulated and monitored stock exchanges. The efficiency of the stock market increased with the creation of the Dow Jones Industrial Average Index to measure industrial stocks that were being traded at the New York Stock Exchange.

The establishment of the Securities and Exchange Commission or the SEC in 1934 was a vital step toward making the stock market more well-regulated. Since then, stock markets around the world have witnessed significant growth due to global expansion, better regulations, increased public participation, and rapid technological advancements like electronic trading platform.

Notwithstanding, the crucial role the capital markets play they also face several challenges and pitfalls. If we look back over the last 100 years, we have seen five major financial crises since:

1929 Stock Market Crash (Great Depression), 1987 Black Monday Crash, Dotcom Bubble Crash (2001), 2008 Financial Crisis, and 2020 COVID-19 Crash. Each of this financial crisis has specific causes and similarities, however it suffices to say capital markets harbour a level of risk some that could be mitigated by ‘the ecosystem approach’ and some cannot be mitigated such as the financial crisis as the result of COVID 19.

Though Ethiopia’s Capital Market is its formulation stage, it would worth pointing out some of the pitfalls that investors/ market participants need to understand. Among many factors for this article, I focus on with what is known as market concentration and explain what it is and how it impacts market activities and return in another article to address other factors which negatively affects capital markets and possible mitigating strategies.

The term market concentration is used in economics to describe the degree to which small number of firms dominate a particular market. It is the function of the number of firms and their respective shares of the total production, capacity or reserve in a market. Further market concentration indicates few firms dominate the market, and oligopoly or monopolistic competition is likely to exist. This could lead to reduced competition and higher prices. While there is a call for some of the private banks in Ethiopia to merge and to consolidate the banking sector and enable liquidity (potential buffer from expected severe competition- if and when foreign financial institution come into the Ethiopian Market.

Banking sector consolidation refers to the process where banks merge with or acquire other banks, resulting in fewer but larger institutions in the banking sector. This move is often made to achieve scalability, expand client base, enhance competitive positioning, or improve financial strength and efficiencies. Larger banks can often operate more efficiently, reducing costs in technology, compliance, and administration.

it is important to bear in mind this call to consolidate might lead to market concentration as it may reduce the number of banks and potentially reducing competition, conversely from the financial sector perspective as alluded earlier it may give the banks a strong position to withstand foreign banks capital and market strength.

Another type of market concentration is, if we have excessive representation of the financial industry listed on the stock exchange than other sectors such as telecommunication, technology which restricts diversification- this would mean it would make the stock exchange less competitive (compared with others in the continent and elsewhere) and the retail and institutional investors less choice. Particularly as there is limited sectors to be listed and buy share in the Ethiopian Stock Exchange (ESX)- this is for at least two reasons: one, it is an emerging economy with no significant industry leader with the exception of Ethiopian Airlines and may be well run State owned Ethio Telecom. This will create lack of diversity dominated by the banking sector (Sector concentration risk). The very nature of financial market concentration influences asset prices and liquidity affecting capital allocation and decision making. Additionally, it gives the listed institutions excessive market power to dictate market terms and small and new companies often struggle to access capital markets. The primary market overseen by regulatory bodies (e.g. Capital Market Authority) can be challenging for them to enter. This is often the rigorous process, and go through complicated process and compliance, as a result established institution to benefit more particularly at the early stage of Ethiopian Capital Market formation.

There is instances market concentration by a firm happens because of business decision in innovation at the firm level, where a firm finds a way to deliver better value than their competitors in the marketplace and this could reflect change in their market size and power and dominate competition.

As a result of these, that is, increases due to efficiency gains or productivity differences it can lead to market concentration. Conversely, it can result from barriers to entry or predatory behaviour which could distort the market. This is not an easy challenge to deal with for policy makers and regulators. However, through time as the regional markets open up and the rest of the world start to invest in Africa competition might lead to better playing field.

In short context matters, and the impact of concentration varies across industries and regions. Analysing both sides helps policymakers and investors make informed decisions.

Some of the ways to deal market concentration at a macro level is ensuring level playing field, rigorous governance framework, market intelligence and the like. It would be insightful to hear from the Ethiopian Capital Market Authority, if they are anticipating market concentration (banking institution) and if so, how they intend to deal with it. Leaving the market to do its magic may not be a good start particularly if we have a long-term strategy to attract retail investors (mum and dad).

I want to finish from the excerpt that the Ethiopian Capital Market Authority CEO said in a public forum prepared by Meri Podcast in conjunction with Mastercard foundation: I am paraphrasing: He was questioned if there is a particular approach/ philosophy (US, European or Chinese) the Authority is adopting as they are formulating policies etc. The response has given me great confidence that that there is no template to copy from. Dr. Brook said our approach and philosophy is ‘pragmatism’ whether it is economic or social policies what works for Ethiopia will be implemented. He has given an example of the recent Telecom liberalisation where the government successfully sold Mobile Money Financial Services licence for 850 million USD which no other African government was able to do. Further, responding to other questions such as Collective Investment Scheme (CIS) he has assured participants his agency is working on directives as such to contact his team to ensure that future rules and regulations will not impact those who are working on CSI currently negatively – This in my view is pragmatism and a commitment to make the Capital Market work into the future.

In my next article I will return to address capital market pitfalls in general terms and will explain the importance of: Strengthening regulatory bodies to monitor and enforce rules. educating investors about risks, diversification, and long-term strategies. Research has shown time and again informed investors make better decisions. And lastly, implement robust surveillance systems to detect irregularities, insider trading, and market manipulation.

Mengistu Weldemariam is a senior consultant in business and finance. He was a lecturer in corporate finance and accounting. He currently works in consumer and investor protection. -Senior Program Manager

You can contact him via weldemariammengistu@gmail.com