The Chinese prominent brand, Jinan Sinotruk heavy duty trucks dominate the collection of Ethiopian Shipping and Logistics Services Enterprises’ (ESLSE) inland transport arm.
The public logistics enterprise board has approved the award for the procurement of 185 units of 6×4 track tractors with 3 axle cargo semi-trailer for Yemkab General Import and Export plc and Sinotruk International co. ltd.
Capital previously reported that the refloated bid which opened in April had attracted about six global manufacturers from the 32 who bought the bid document.
A preliminary evaluation of bidders has been conducted which led the two companies to pass for technical evaluation which was followed by financial document assessments.
According to the process, as per the technical team evaluation, one company of the two reached the next step, which is the financial assessment, and based on the final approval by the relevant higher body, it is going to provide the trucks.
The information Capital obtained from Wondimu Denbu, Deputy CEO for Corporate Service at ESLSE, said that the award was given at the unit price of USD 78, 755.
“The total cost of the 185 trucks is about USD 14.56 million,” he added.
The Deputy CEO said that the brand new trucks will be transported in four months time.
Besides the 185 trucks, the procurement of feed kits, recommended spare parts, and diagnostics laptops and software have been concluded at the cost of USD 665,123.
On its failed float, ESLSE had tried to buy the trucks on a differed letter of credit (LC) scheme, while it only managed to attract the Chinese company.
When the logistics firm refloated for the second time in March and opened the bid on April 8, the enterprise invited bidders to submit their offer on both; normal procurement procedure and or deferred LC alternatives.
“The latest bid was conducted under the direct LC,” the Deputy CEO disclosed.
Sinotruck International Co, which is known for its heavy-duty trucks, Sinotrucks, was the company that won last year’s bid to supply 150 Sinotruck vehicles at the cost of 11 USD million.
Besides that, 38 trucks have been directly bought from the Chinese manufacturer at the cost of the same winning price of last year’s bid and are now under ESLSE’s operation. According to the country procurement rule, the enterprise has a right to conduct up to 25 percent additional direct purchase from the bid winning supplier, “that is the advantage we capitalized on so as to procure additional 38 trucks, besides the 150 Sino trucks, which are already in operation,” officials of ESLSE recently told Capital. Based on the latest award the number of Sinotruk brands surpasses the collection of ESLSE’s inland fleets over the French prominent product, Renault Trucks.
The 215 Renault trucks that ESLSE has been operating have been in service for the last five years.
Currently, the logistics giant is administering about 450 heavy-duty trucks that are mainly in cargo operation in routes to ports in Djibouti.
Wondimu said that the incoming brand new heavy duty trucks will help the enterprise to improve its service and replace the old ones.
On the latest bid, ESLSE has also invested interested manufacturers to express their interest for the supply of 17 unit of 4X2 truck tractor, while no one has shown interest thus far.
Wondimu said that the bid for the truck tractors will help the logistics firm to operate its semi-trailer and will be refloated soon.
China’s Sinotruk gains dominance in ESLSE’s fleet
Tele partners with Dashen to serve the financially underserved
Ethio telecom launches telebirr digital financial services in partnership with Dashen Bank.
Telebirr has now expanded its horizon of services in the recent launch and now serves to economically impact digital financial services through: Micro loan, overdraft and micro saving services in partnership with Dashen Bank as per the permit given by the National Bank of Ethiopia with letter reference number FIS/PSSD/218/2022, dated August 01, 2022.
During the event that was held on Friday August 5, 2022 at the Skylight Hotel, in the presence of Yinager Dessie, governor of the central bank, Asfaw Alemu, CEO Dashen bank, and higher government officials; the telecommunications CEO, Frehiwot Tamru expressed that her firm is working to strength the digital economy in order to enable citizens to have an easy system whilst promoting financial inclusion.
This vital financial partnership with Dashen Bank offers three types of financial services namely telebirr mela (micro credit) a service that allows individual customers, agents and merchants to borrow money for any transaction or withdrawal and telebirr Endekise (credit pay/overdraft service) a service that enables customers to borrow money when they are short of balance in their telebirr account while making transaction and telebirr sanduq (Micro Saving service) a saving service which is available with interest free and interest rate based micro saving services.
The savings and loan scheme is said to play a pivotal financial inclusion role which help to strength digital financial inclusion.
Ethio-telecom launched the telebirr mobile money service solution, built by the Chinese tech giant Huawei, back in May 2021.
“Telebirr was introduced with the aim of meeting the country’s growing demand for digital financial services and has shown a tremendous growth surpassing the industries’ trend by acquiring more than 21.8 million subscribers within short period of time,” remarked the telecommunications CEO.
Ethio-Telecom has recently signed agreements with the Ethiopian Airlines to enable passengers purchase domestic flight tickets. Similarly, the firm has inked agreements with the Ethiopian electric utility and water and sewerage services by providing institutions access to collect the telebirr-based monthly service bill payments, among others.
Furthermore, Ethio-telecom and Ethiopia’s National Lottery Administration signed a strategic partnership agreement to launch digital lottery via telebirr. In addition to this, targeted fuel subsidy transactions are being handled through telebirr and several governmental and private organizations are integrating their system with telebirr as the platform expands its ecosystem.
The company has further iterated that it is strongly committed to implementing telebirr integrated service payments with other similar institutions making all payments possible in one place in the near future, thereby strengthening the initiatives of making digital Ethiopia’s set vision a reality.
“Enabling various business transaction payments ranging from making payments for small transaction to transferring large amount of money via telebirr, has significantly contributed to the adoption of digital payment system,” remarked the firm’s CEO in recent settings.
Ethio telecom is undertaking extensive telecom modernization services as part of the country’s aim of realizing digital inclusion and boosting the size of its digital economy, with the provision of reliable, high bandwidth and high-speed telecom services.
Within the last 14 months with a total transaction value of 30.3 billion birr has been made through telebirr. In order to ensure service coverage as well as benefit partners, more than 76,000 agents and over 21,600 merchants have been engaged so far. In addition, integration with banks has been completed enabling money transfer from banks to telebirr in 13 banks and from telebirr to banks in 11 banks.
Moreover, 974.3K USD was remitted through the international remittance service partnering with 37 counties within the last six months.
The recently launched services can be easily be accessed via telebirr App.
Tele-Safaricom deal up in the air
The infrastructure sharing agreement between Ethio telecom and Safaricom Ethiopia lags behind with the latter delaying to pay the agreed down payment.
After a period of negotiations on 13 April 2022, at a meeting convened by the Ethiopian Communication Authority (ECA), the two telecom operators reached agreements in principle on the key terms. As sources told Capital, Safaricom had selected 1000 towers from the total of 7100 towers Ethio telecom has, which is around 14 percent at a price point of 90 million dollars.
Even though there were concerns on the site selection, Safaricom hasn’t been able to pay the down payment of USD 3 million to start the sharing process with Ethio telcom.
According to source, it will take up to 4 to 5 months to kick start the sharing process after the down payment has been made.
Safaricom Ethiopia’s phased launch is expected to commence this August in the city of Dire Dawa and then accelerate to 24 other cities, including Addis Ababa in the months that follow. Of course the initial launch was slated for April but faced setbacks to which issues on infrastructure were set as one of the result to the delay.
To start its operation in Dire Dawa, Safaricom has rented a data center from Ethio telecom, however regarding tower sharing as the source indicated Safaricom is focusing on building its own infrastructure leaving the agreement behind.
The new operation of the telecom entrant has ambitions of achieving gross margins of 40 per cent in 10 years. The target is backed by heavy investments that the subsidiary will make in hiring staff and building infrastructure to acquire customers in the country with a population of more than 100 million.
On its latest report Safaricom PLC which has 55.71 percent share from the consortium has set Infrastructure as one of its investment risk in Ethiopia including political and regulatory and also currency required for identification and mitigation. “We are now working together with Ethio Telecom on the finalization of these important agreements and the implementation required for our commercial launch,” said Safaricom in its reports.
The agreement is said to last for 10 years on infrastructure sharing and interconnection. Severe disagreements had earlier arisen between the two companies regarding the price and currency of payment and under this agreement, the payment will be in both currencies, with varying ratios across the infrastructure type.
Ethio telecom has 7,100 towers and over 22,000Km of fiber optics all over the country. The agreement in principle with Ethio telecom was announced in April barely a month after the telecom operator signed an infrastructure-sharing agreement with the state-owned Ethiopian Electric Utility (EEU) to deploy its aerial fibers.
“Both agreements are really important because even though we are building our own network towers and transmissions at the same time in line with that it make sense to share infrastructure rather than to build two in the same area,” said Matthew Harrison Harvey, Safaricom Ethiopia’s Chief Regulatory and External Affairs Officer, on the company’s press release adding, “This will enable the company to have options and redundancy indicating that the agreement is now under implementation.”
In 2021, the Global Partnership consortium for Ethiopia, led by Safaricom, was awarded a license by the Ethiopia’s Ministry of Finance and the ECA to establish a new telecoms network and to operate in the country.
Safaricom, which paid 850 million dollars for a 15-year license, is building its infrastructure development project, having contracted Huawei and Nokia for its network development and also uses building-tops to its networking.
The company has so far invested 1 billion dollars including the license fee to the government of Ethiopia in addition to signing an infrastructure and interconnectivity agreement with Ethio telecom.
“Our expectation, based on feedback from the Government of Ethiopia, and with our break-even target set at year 4, is that forex availability will have been resolved by then, long before we will need to repatriate any dividends from the business,” read Safaricom’s report.
With regards to the recent delay in down payments, officials from Safaricom have refused to comment on the issue.
Agricultural export performance ‘not as rosy’, opine sector experts
Despite the coffee sector attaining an extraordinary performance in the ended budget year, sector actors argue that the performance of other agricultural exports is at an alarming condition to which government ought to emplace corrective measures swiftly. However, the Ministry of Trade and Regional Integration (MoTRI) ridicules the argument.
In the ended 2021/22 budget year, the country achieved USD 4.12 billion which is an increment of half a billion dollars. In the year, the export performance of the industry sector and horticulture was promising and over the target respectively. Both sectors attained an additional USD 100 million each compared with the same period of last budget year.
Similarly, coffee earnings rose by half a billion dollars compared to the budget year that ended July 7, 2021.
In the past years, the country had introduced different reforms to boost the export sector. Measures had been undertaken on policies, strategies and structural adjustment to improve the home grown economy to uplift the export volume and value, diversity and quality.
The ministry stated that these measures have shown success in the past and the just ended budget year.
However, exporters and sector actors argued that the year’s success was shaded by the shinning of few export products. They said that the year concluded with weak performances mainly on oilseeds and pluses export, which are some of the top hard currency sources for the country.
An exporter that Capital spoke to regarding the issue said that his performance for the year was not good on his business. He said that it was difficult to access oilseeds and pulses as the past.
“In my view, in the year the product was limited besides some other challenges like transporting commodities from production areas,” he said regarding the commodity he exports.
One of the biggest exporters told Capital that in the ended budget year the country was supposed to generate huge sums from oilseeds and pulses export, since the global demand was very huge.
“The trading of pluses in the global market is up to 2.6 million metric tons, worth billions of dollars, to which we have better chances in the market,” he said.
“But in my view, the country is not working on productivity to scale up its benefit, and secondly the market system has become distorted from time to time,” he argued.
Previously, there was a contract administration that was bandaged with regulation, weekly reference prices have also been emplaced to keep the market aligned with the global rate. Now there are distortion behaviors in the market.
Experts said that besides that contract farming, which is a very important concept, has become very dangerous and abused by traders who buy commodities against the trading system.
Experts claimed that some traders produce falsified documents as if they secured commodities through contract farming schemes, but in actual sense they bought it from primary markets at even higher rates from international market.
“The regularity body, MoTRI, should strengthen its controlling mechanism to tackle such illegal acts and keep the sector contribution for export earnings,” they said.
They recalled that the price reference that is uses as a reference for the global market in the trading at Ethiopian Commodity Exchange has become implemented as of a week ago, which they appreciated.
But they said it has affected the export earnings in the past season since the controlling was at a loss that allowed illegal actors to abuse the commodity market.
“Those who bought commodities from informal market mostly bought the commodity higher than the global market, which makes them and the country losers,” one of the exporters said, adding, “that is why they hoard commodities on the hope that the international market shall increase, but the country is not getting the foreign currency that it was suppose to get on time. I think the government is already informed that is why it is forcing exporters to export their commodity as soon as possible.”
Security issues have also been stated as one of the challenges by exporters and experts for lower performance for oilseeds and pulses.
“For example sesame that comes from Welega is not available unlike the past. It is similar for some other commodities as well,” an exporter said.
One of the spice exporters agreed that the security issue affects the sector in terms of production and productivity. He said that some spice commodities that are produced on the southwestern part of the country did not get harvested properly, “mostly daily labourers who collect the product were coming from other part of the country but the instability has affected their movement.”
He said that some of the long established and experienced suppliers, who provided products for exporters, in different corners of the country left their places due to security issues.
The other issue raised as a challenge for the weak export performance for agriculture sector is the access to finance.
They said that the government should enforce financial institutions to provide export finance like pre shipment export credit facility. “Banks’ appetite has eroded provision of such kinds of finance, rather collateral based approach is leading the access to finance, which is a major challenge for the export business.”
They added that the foreign currency retention directive is also the other challenge that affects the export. The National Bank of Ethiopia retention directive that was revised in January gives the government access to 70 percent of the hard currency earnings and 20 percent for exporters and 10 percent for banks.
“Some exporters prefer putting a hold on their shipment on the hopes that the government may revise and ease the directive,” experts said.
On the other hand, one of the major exporters on the pulses industry said that the country must focus on productivity to attain success which is being observed on the coffee sector.
“Agriculture is a simple resource in which any country can utilize the same to tap in to its full potential and as a result expand its export,” he said.
Most of the exporters insisted government to strengthen its controlling mechanism on the trading system.
Kassahun Gofe, State Minister of MoTRI, said that the government target was ambitious but regarding the performance of volume and value, the year was very good for the oilseeds and pulses, “unless otherwise why did they attain results beyond their target like coffee, horticulture and some other sector export items.”
He argued that ample production was performed in the past budget year and even transported properly, but he added that there were some sort of hoarding on some oilseeds and pluses commodities.
“For instance today 166,000 metric tons of oilseeds and pluses, which are a product of the past harvest season, have been stored in four towns; Adama, Gelan, Burayu and Aqaqi. So the issue is not production shortage or availability,” he explained, adding, “the main problem is that traders buy products without the consideration of global rates and exporters’ are similarly reluctant to ship commodities on time.”
Kassahun strongly said that the government is taking measures on those who are involved on such commodities hoarding.
