The Ethiopian Sugar Industry Group (ESIG) opens yet another tender for the procurement of sugar despite the fate of its recent bid still being up in the air.

The Group which is responsible for matters sugar in the country has tapped into the local supply of the sweet but has also doubled down on imports to bridge the gap in the market. To this end, in the current financial year, the Group opened a bid early November 2022, to which a company relatively new to the Ethiopian market, Osirius Group, was selected to supply 200,000 metric tons of sugar owing to its lowest bid offer compared to other two bidders.

According to sources, ESIG has now opened an international tender on Wednesday May 10 for the procurement of 200,000 metric tons of sugar.

As per the information that Capital obtained, seven companies have submitted their interest to supply the basic commodity, which is highly scarce in the market at the moment.

Despite the name of the companies who have shown interest in the bid not being disclosed, experts who closely follow the sector described that more than half of the interested bidders are new to the market in Ethiopia.

As experts opine, this is a potential red flag waiting to burst the procurement process and traced such challenges to procurement failures of sugar and wheat in the recent past.

“At the time, two companies; Marthina Mertens Sampl Lebensmittel Handel Food Trading and Rosentreter Global Food Training, which claimed to be registered in Germany and Turkey respectively and new for such kind of huge procurement defaulted by not meeting their commitment despite offering highly competitive rates against other bidders,” experts who follow the public procurement closely recalled the burst of the process that the government faced in the pre COVID era.

The failure to procuring the wheat forced the country to pay very high amounts of foreign currency because of the delay on the procurement which was then hammered by the outbreak of COVID 19 which added salt to injury in addition to government’s urgent need of obtaining the commodity.

Experts drew comparisons between the scenarios of wheat to that of sugar citing that in the past over a one year the Group has been unable to buy sugar through the bid.

In the last 12 months, the Group has floated five bids to which four have failed while the fate of the fifth is yet to be known.

One of the first bids came from Millhouse International, a company pinned in South Africa which was successfully selected on the bidding process as per its competitive price to supply 200,000 metric tons of sugar but later fell short to come up with the performance bond.

At the current stage Osirius Group of USA, which was selected on the fifth bid to supply the same amount of sugar, did indeed provide the performance bond but there is no information at hand with regards to the product shipping.

Sources that closely follow the sector argued that the company has not started delivering the commodity despite the bidding process having taken more than five months.

“On this circumstance now the Group has opened another tender for the supply of the sweet which is now highly priced due to spikes in the global market,” experts claim, adding, “We fill that the government or ESIG board, which includes highly experienced and qualified individuals, ought to be vigilant.”

According to the global market, the sugar price skyrocketed due to different factors.

At the current stage, the price is more than USD 800 per ton which was lower than USD 500 about five months back.

Experts argued that the current bid offer will be very high compared with the bid that was opened late 2022, which was given to Osirius which coincidentally is not known on the global commodity trading scene and new for the Ethiopian market as well.

According to the latest bid document, the sugar will be shipped starting from June and the payment process is on a 12 month deferred letter of credit.

The group which manages about eight active farms with milling facilities stated that several external and internal challenges have hampered its activities making it to not attain its maximum potential.

For the current budget year that will end in July 7, ESIG is projected to fulfill the production of 2.27 million quintal of sugar, which is half of its capacity.

Early April Reta Demeke, Public Relations Head at ESIG, cited that the millers have so far produced 858,000 quintals of sugar this season, which mostly picked up pace at the end of the rainy season.

Ethiopian sugar millers have a capacity to produce over 4 million quintal per annum, while the actual demand is estimated at about six million quintal.

Regarding the supply of Osirius, Reta recently told Capital that the process to start shipment faced delays unlike the past experience owing to the US Company providing its performance bond later than expected,“At the moment, the Group has opened the letter of credit to proceed with the import that will be loaded from Brazil.”

“Regarding import such kind of obstacles was not seen in the past, but the process is currently ongoing,” Reta said about a month ago.

Sector experts opined that due to lower local production and delays on import, the market has been widely covered by francovaluta.

Sugar is a source of input for several industries besides basic commodity for the wider community.

Capital’s effort to get information from ESIG was unfruitful.

Goh Betoch Bank (GBB) and its subsidiary, Goh Property Development and Marketing SC (GPDM) pen a design and build contract with the emerging construction company, Ovid Group to construct residential houses at the cost of 1.45 billion birr.
The financial firm that was formed with the critical aim of anchoring the mortgage sector disclosed that it has rolled out various new schemes as a new actor on the housing industry, which over the past many years had been given the cold shoulder by the financial industry.
During the signing ceremony that was held on Friday May 12, Mulugeta Asmare, President of GBB, said that the new venture pertained a unique partnership that harness the prowess of a developer, financer and contractor which is a new step in the right direction for the housing scheme in Ethiopia.
As Mulugeta highlights, his bank will have multiple roles on the new operation including; providing finance to GPDM and also in facilitating long term loans for customers who are buying house from the developer.
“In addition to that, on behalf of the developer we have taken the responsibility to collect the advance payments from the home buyers and we will channel the funds to the developer as appropriate,” Mulugeta said.
For the new operation, the bank’s president stated that the National Bank of Ethiopia has expressed its unequivocal support towards the project and further explained that the government is closely working with the bank on the new initiative.
“The government has designed a ten year housing development plan to construct 4.4 million houses and of that 80 percent is expected to be developed by the private sector. So if such kinds of initiatives are spearheaded by government, it is more than evident that the government will render its support,” the president added.
As per the deal, the developer will construct 270 houses on 2,851 square meters plot of land that is located around Yoseph Church, Nifas Silk Lafto Sub City.
The contractor is expected to hit the ground running with new technologies and work practice, and is said to accomplish the construction in 18 months once it commences the ground work.
In the project referenced to as ‘project one’, the contractor will be responsible for the handling of the design, which technically has been approved and will supervise the construction of 270 units with one, two and three bedrooms.
Wubishet Jekale, Board Member of GBB and a prominent construction sector expert and professor at Addis Ababa University, said that the three stakeholders were in discussion for about four months to reach at final consensus to strike the deal.
He further explained that the contractor has fully prepared to break the ground and accomplish the project on time with the implantation of new technologies which will catalyze the activity.
Asmare Wale, CEO of Ovid Construction, which is one of the nine companies under the Ovid Group, said that his company has a good reputation when it comes to accomplishing projects on time by introducing new work practices and technologies for the construction industry in Ethiopia.
“We have successfully accomplished and are currently undertaking several projects but that will not fizzle our capacity to handle other big projects such as this one,” the Ovid Construction CEO confidently stated, adding, “We are programmed to carry out more huge projects in our line of work, so we have ample capacity to handle additional projects.”
Asmare said that to attain the project as per the timeframe, they agreed with clients that the contract will apply new technologies and work 24 hours a day, which is not common in the country.

Mulugeta said that the new technology that the project will use shall contribute to provide houses at lesser prices besides finishing projects on time.
Regarding the bank capacity to support such huge projects, the president underscored that despite the bank’s primary focus being in the mortgage scene it is also a commercial bank that can mobilize savings from customers, “We will also collect advance payments from home buyers that shall provide big inputs to beef projects.”
The bank has also floated additional two billion birr shares to boost its paid up capital by two folds from the current one billion birr of the fully paid capital amount.
“We started the initiative after taking ample preparation so as to have a capacity to mitigate the incoming demand from the market,” the President explained.
Currently, the bank through its subsidiary started the initiative for home buyers to deposit at least 30 percent of the total cost of the house at the construction stage as down payment with the remainder to be paid for up to 30 years.
At the current stage, over 406 home buyers have been registered and are now saving to utilize the new scheme.
Birhanu Assefa, General Manager of GPDM, said that his company is formed on the major pillar to provide houses at reasonable rates. He said that the new project will commence as soon as some paper works are done.
“We are ready on the materials and financial front, and our project is projected to be concluded with the expected cost,” he told Capital.
Birhanu said that the company will consider different approaches to possess plots and expand the housing scheme, “Land is one of the reasons for the price hike on the housing project so the government should also consider providing land at reasonable prices since we are aligned with government policy and supports its vision.”

Safaricom share talks with IFC nears end

Safaricom Group announces that negotiations with the International Finance Corporation (IFC) are on the brink of finalization to give some shares for the World Bank private sector wing. The telecommunications firm also expressed its preparedness to hit the ground running with its flagship M-Pesa service following the National Bank of Ethiopia’s go ahead after a USD 150 million financial service license fee payment paid on Tuesday May 9, 2023.
The new telecom entrant disclosed that it has anchored itself well in the first year of operation in the country and signaled that it will continue to invest massively to take significant share in the telecom and financial industry in Ethiopia.
The company leaders, who met with media through a webinar to explain their first year’s operation, indicated that the company is in continual negotiations with IFC to provide the financier with a share from the stake that Safaricom owns.
“We have been in discussion with them for long and we are currently at the last stage of negotiation. As it is well known they have expressed their interest to invest in equity as well as putting money on debt; equity on USD 157 million and a debt funding of USD 100 million from IFC upside. So we haven’t closed the deal yet, but we are hopeful that we can close it soon,” Dilip Pal, Chief Financial Officer at Safaricom PLC explained, adding, “They will come in as one of the minority shareholders. Of course all the other current consortium members will dilute a little bit but I wanted to confirm that Safaricom Group will still continue to hold the majority share and will consolidate in the group financials. So I think on the funding side we are quite okay since the entities are well-funded and well resourced.”
Regarding the operation in Ethiopia, Peter Ndegwa, CEO of Safaricom Group, pointed out that the telecom company hit 1,300 sites across 22 cities.
“We have 3 million customers who have joined our network of which just over 2 million are active on what we call a 90 day basis, which is fantastic. And now we are looking forward over the next few weeks to launch and start the journey of the much anticipated financial services,” he added.
On the same day that the company disclosed its operation in Ethiopia, the National Bank of Ethiopia issued a license to the east African mobile money giant for operation in Ethiopia through its popular brand M-PESA.
“We intend to be investing anywhere between USD 300 and 350 million annually in the rollout of our network to start creating a new mobile financial services business that will allow us to really enable digitization of ordinary lives of Ethiopians; to ensure that financial inclusion continues to be to be driven. We are excited about the future. We are equally happy with the progress that we’ve made since we launched the business in October last year,” Peter said.
To get the green light for the financial service, the company paid USD 150 million for the license fee.
“Of course from a Safaricom group perspective, as you know we are part of a consortium. So our proportionate share of 55 percent of USD 150 million is what we paid from the group as Safaricom,” Dilip disclosed.
He said in the coming one year the company expects to get a point of 3000 sites by end of March 2024 in addition to an investment capital expenditure (capex) of 40 to 45 billion Kenyan shilling, “Which is close to what we spent in Kenya. This is a large investment that we will be doing. There is no separate capex investment that you need to fund our services beyond what already is guided, which is available to see from the about 40 to 45 billion that includes everything relating to mobile financial services and rollout as well.”
“We have had a team that has been preparing for this for a long time. So we have the technology platform ready. We have a lot of the work around distribution recruitment of agents and so on, already underway. We have had numerous conversations with a lot of our partners, especially banks. All we were waiting for is registration and approval of a subsidiary and the payment of a license and approval of the license. When that unfolds, then we can go into contractual obligations with the various partners that will work with agents on the distribution side and banks on the commercial side,” Peter explained, adding, “We do have the suit of services, because we’ve come from a largely developed market. We tend to have the technology to be able to provide those, but the choice of where the timing or of when those will be provided is dependent on how quickly we can mobilize an infrastructure that allows customers to feel comfortable, that they can withdraw, deposit and send money, and that’s the way mobile financial services have grown in Kenya and other parts of the region.”
Regarding the hyperinflation, the International Accounting Standards Board has declared Ethiopia as a hyper-inflated economy in December, but as Dilip underscored, this will not deter the investments of the company.
“As a group, we have to comply and to make sure that the report that we provide to our stakeholders comply with the IFRS requirement, and that’s how we adopted the inflationary impact. As it shall be seen from the commentary, it is not a lot of impact that has gone into the financials. But we need to comply with the IFRS standards as a group,” he added.
As Peter underlined, of primary importance to the company is focus on the level of investment it needs to put in into that business, which is approximately USD 300 million as a sub set to USD 350 million over the next few years to reach a level of coverage that allows it to recruit the level of customers it wants to launch the mobile money, “We are aware that the Ethiopian government has a big reform program that is going to be undertaken that includes financial institutions, and probably a third player will be coming into the market.”
“We expect the Ethiopian foreign exchange regime to also benefit from a number of those financial services that the government is undertaking. So over time, we would see more stability but focus more on the investment profile and the commercial execution that we need to continue to drive over the next few years. Because that’s what will create the long term business that we want to have in Ethiopia,” he added.
According to Anwar Soussa, CEO of Safaricom Ethiopia, his company has less than 1,500 network sites and targets to this end to expand its infrastructure aggressively to get significant share in the market.
Safaricom Ethiopia also announced that it generated 223.03 million birr in revenue in its first year of operation. The telecom company has now about 3 million customers and operates in 22 cities. The company is also planning to roll out its services in Mekelle, Assosa and Nekemt.