Ethiopia drafts a strategy for one of the major export earning items for the country, khat. After decades in waiting, the stimulant’s export tariff to Somalia market has also faced revision.
On his appearance in parliament whilst presenting his eight months performance, Gebremeskel Chala, Minister of Trade and Regional Integration, said that the ministry in tandem with relevant government bodies is working to improve the khat trading and export earnings.
He explained that changes emplaced in the budget year are improving the sector business.
According to the Minister, the khat trading directive has been in placed for about 41 years with out any change. He said that this made the stimulant leaf traders not to attain the full benefit of the export which consequently reduces the earnings that the country is supposed to secure from the export.
“Experts have since then gathered from different offices in order to identify the problem from the various studies drawing from the identified gaps as result the new trading directive has been developed to boost the khat trading,” he said.
He added that the export trading guideline and action plan have been developed, and it is on due process to be sent to the National Macro-Economic Committee for ratification.
As per the study conducted by experts, the minimum export rate to the Somalia market has been revised from the former and long established five dollar to double that amount.
Starting from January 23, 2022, the new price increments were officially introduced.
According to Gebremeskel, similar to other export commodities, khat is affected by contraband, “Owing to supply deficiency and the rise in contraband, government in conjunction with stakeholders are working to control the illegal activity and improve the benefit from the sector foreign trade.”
Similarly, the Oromia region has also embarked on an initiative to benefit the khat farmers, rather than the middlemen.
Recently, Shimelis Abdisa, President of Oromia region, told Capital that the region is also establishing four khat trading centers to modernize the stimulant leaf business.
He said that the region, which is the major source of khat export, is also working aggressively to change the market and productivity for the stimulant leaf, “We are giving the necessary attention to khat as like the coffee sector,” opined Shimelis.
“We are working to improve the khat market, which has been taken hold by the middlemen, rendering them to profit as opposed to the actual producers of the leaf,” he explains, adding, “we are strongly working to pushing out the illegal actors for the benefit of farmers.”
To improve the khat market; trading centers are developing at Awoday, which is the only and long established trading center for export khat. Likewise, Bedessa, Addis Ababa and Dire Dawa are similar trading centers.
The trading facilities will have standard storage area, packaging centre and other facilities on the aim to keep the export quality.
The productivity is also the focus area to expand the production and export.
According to Shimelis, the country is generating huge amounts of hard currency from khat.
The earnings from the stimulant that is mainly exported to neighboring countries takes almost a quarter from the total agricultural commodities export earnings within the first eight months of the budget year.
This makes the commodity the second largest exporting agricultural product after coffee and it stood at third position from the total export earning items in terms of earnings. From the total export earnings coffee and mineral exports stand a top respectively.
In the first eight months of the budget year that closed in early March, the country secured USD 280 million from khat export, which is a full accomplishment of the projection, while the volume has reduced by 10 percent when compared with the target.
In the stated period the country has exported over 44,400 tons of khat. Mostly the eastern Ethiopia, which is pioneer for the stimulant cultivation, khat product is highly promoted for export rather than other areas. However the production and local consumption has swiftly expanded in other parts of the country for the past few decades.
Most of the other areas of khat production are supplied to local consumers well known as khat chewers.
Khat gets a stimulating change in directive
Safaricom Ethiopia, Nokia strike 500 million USD infrastructure mega-deal
Safaricom Ethiopia PLC signs a 500 million dollar deal with Nokia for its infrastructure development and network expansion in Ethiopia. The agreement between the two companies is said to be a long-time agreement.
Accordingly, Nokia’s network expansion is said to be focused on the core network infrastructure in Addis Ababa and its surrounding areas.
Safaricom Ethiopia which was formed by the amalgamation of Safaricom, Sumitomo Corporation, CDC Group and Vodacom secured its operational license from the government in early June 2021 and is set to officially do business in Ethiopia as a second telecom company after the state-owned Ethio Telecom.
Additional to Nokia, previously the company shortlisted the Chinese global telecom giant Huawei to set up its infrastructure.
The company signed a deal with Huawei Technologies of the Chinese multinational technology corporation for the infrastructure development that it aspires to realize in a short period. To this end, Huawei will cover the rest of the country with its infrastructure development for Safaricom Ethiopia.
Both companies are not new to similar activity in Ethiopia. For instance, the Finnish company was engaged in the second massive mobile network development project in the country that ended in the early 2000s and other IT projects. Similarly, the Chinese company, which is leading the global telecom network development with Nokia, is engaged in the massive mobile network expansion with ZTE of China in the fourth and last phase of the major mobile network sector development. It has also recently concluded the national 4G network expansion and network upgrading for Ethio Telecom.
Safaricom- Ethiopia is expected to gear up for its commercially launch operations in a few days with the company planning to provide 4G and 5G internet service. It is also said that by 2023 a low orbit satellite will be put in place to provide nationwide 4G coverage by the firm.
To get the license Safaricom -Ethiopia paid USD 850 million to the government and promised to invest up to USD 8.5 billion in the coming decade.
The company is now starting engagements with Ethio Telecom, which is expected to provide rental service of its infrastructure for the new telecom operator.
As part of its network expansion, Safaricom is also working to build towers, fiber extensions, broadband connections and so on within the ICT Park, with expansions including site selections to establish towers for the 5G trail.
Hawassa Textile and Industrial Park eyes one year completion
During Zhao Zhiyuan’s, Chinese ambassador to Ethiopia, visit to the industry park located 258 km south of Addis Ababa at Hawassa town of Sidama region, Ahmed Abderuf, CEO and one of the three owners of the Hawassa Textile and Industry Park, said that although the project did not pan out as planned, in the past one year the project has accomplished its earthworks and footing.
Ahmed explained that the escalation in price of construction materials and shortage of cement and rebar primarily hampered the project, which is managed by the Chinese state giant, Sinoma International Engineering Co Ltd.
“So far the civil works of the project, which is the foundation structure, has been accomplished by 37 percent. The remaining works are steel structure and electrical installation which is very easy and will be done swiftly,” Ahmed explained.
The CEO added that a Chinese company has already been hired to manufacture the steel structure and expressed his hope that the project which includes the construction of 14 sheds will be finalized in a year’s time. The 14 sheds are to be erected in 11,000 square meter areas each.
As per senior staffs of the park, at the current stage,most of the construction works is financed by the company itself owing to the National Bank of Ethiopia sanctions for commercial banks to pause on fresh loan provision that was lifted few months ago.
Ahmed said that they are on process to access finance from the state owned financial enterprise to support the project with additional financial sources. When the project lunching ceremony was held about a year and half ago, Ahmed told Capital that they were expecting financial backing from the Commercial Bank of Ethiopia since the project demands huge resource in order for it to materialize.
The new project is expected to consume four billion birr. At this stage interested global textile and garment producers have been showing their interests to lease sheds at the compound.
Besides new sheds development, the company is renovating the existing facility that it bought few years ago at a cost of half a billion birr.
Now the old textile machines at the existing sheds are being replaced by brand new equipment to commence yarn production. The newly installed machines will have two production lines for acrylic yarn and nylon that will be provided as input for local and global textile industries.
“Most of the installation work for acrylic yarn line has been concluded to produce seven tons of acrylic yarn per day, while machinery procurement for nylon line is on process to produce ten tones of nylon yarn per day,” the CEO said.
The revamping work on the oldest facility has consumed 600 million birr. According to the information Capital obtained from the company, Hibret Bank is supporting the renovation works with undisclosed amount of finance.
Hawassa Textile and Industrial Park S.C is located on a 35 hectare piece of land at the southeast outskirt of the regional capital.
Sinoma which built the Dangote Cement factory and the expansion of Muger Cement now has involvements on the development of the Hawassa and Dire Dawa industrial parks.
The first Ethiopian owned Garment Park commenced the construction of 14 sheds at Hawassa at a cost of two billion birr.
On a ceremony held on the 6th of September, Hawassa Textile and Industry Park announced that it has commenced the construction of the garment sheds. The ceremony was graced with the presence of the President of the Sidama Region- Desta Ledamo and state Minister of Trade and Industry- Misganu Arega.
The former Awasa Textile, which changed its name to Hawassa Textile and Industry Park that commenced operation three decades ago has been one of the public enterprises that have passed different privatization scheme, which was introduced by the former ruling coalition, EPRDF, which controlled the political power in early 1990s.
During the early stages of the privatization process the company was leased to foreign investors and later on became fully privatized. At these stages when it was not performing accordingly it was controlled by banks as collateral until the current owners secured the facility. It is currently located at the South Eastern outskirt of Hawassa town.
CEO and one of three owners of the Hawassa Textile and Industry Park, Ahmed Abderuf affirmed that both him and his partners secured the facility three years ago and now the old textile machines at the existing sheds are being replaced by brand new equipment to commence production in the coming few months.
“To secure the factory, we paid half a billion birr. The purchase and installation of the new machines cost us 200 million birr and in the future an additional 200 million birr will be set for the additional equipment on the textile production at the port,” said Ahmed to the media at the press conference held in relation to the construction launch ceremony.
The factory will have a capacity to produce 14 tons of textiles per day when it commences operation in the coming four months.
He added that the new 14 shades will be erected in 11,000 square meter area each will be ready for production in less than a year.
The new project that is currently on a 35 hectare piece of land is being constructed by Sinoma International Engineering Co Ltd. “Prominent global brands like Gap have already shown their interests to invest in the sheds,” Ahmed said.
Most Textile and Garment industry parks in the country are controlled by the government. Furthermore, foreign investors are actively involved in the development of the industrial parks. However this is a first for Ethiopia investors to manage the ‘garment park’ and even fully invest on the parks. In addition Ahmed states that his company will expand similar facilities in other parts of the country.
The park in Hawassa is expected to accommodate up to 30,000 jobs. “In terms of size and job opportunity our park will be the second facility,” the CEO explained.
Currently the biggest park in the country is the state owned Hawassa Industry Park, which is located in a similar area just few kilometers from Hawassa Textile and Industry Park.
According to the CEO, most of the products from the existing textile factory and the future facility will be exported.
Misganu explained that the government has a target for this industry to contribute to the GDP from the current 17 percent to double this percentage. He adds that they will provide support to this investment which will contribute massively in job creation and urbanization.
Ahmed further informed Capital that United Bank was the financier for the textile factory investment. The Commercial Bank of Ethiopia is also expected to provide support for the project.
Desta, who leads the new region, said that his government will provide every support that is required in realizing the investment.
Purpose Black holds first annual Agri Innovation Conference
Purpose Black Ethiopia holds first annual Agri Innovation Conference. The conference was held at the venue of Purpose Black ETH headquarters in Mexico’s Sengatara on Friday April 8, 2022. Government agencies and stakeholders, including the Ministry of Agriculture, Innovation and Technology attended the event.
The conference which served as network to bring together experts in the field and individuals with sustainable solutions focused on ways to bring about economic change in agriculture through innovation.
Ermias Nasibu, Director of Purpose Black ETH Agriculture Department, said that the purpose of the conference was to develop agriculture with technology and innovation by establishing a center for agricultural communication and technology platform in Ethiopia.
It was mentioned at the forum that the Agri Innovation Conference will be held annually with the participation of governmental and non-governmental stakeholders as well as professionals and individuals who can bring sustainable solutions to the sector.
Purpose Black also plans to establish an agriculture-focused television station. It was stated that the TV station, which focused only on Ethiopia’s first agriculture, is to air in order to raise awareness about agriculture as a key development tool.
It is also said that various arrangements are being made to ensure that the site will be operational soon.
Purpose Black was founded with a goal of helping black farmers to produce globally competitive products and get fair prices for their products, and has also aims to reducing youth unemployment, promoting diaspora investment, selling products at a fair price and stabilizing the consumer market by promotion of export and increase of foreign currency earnings. Furthermore, it is keen on facilitating agricultural technology transfer.
Similarly, last week on April 2, 2022, Purpose Black officially launched an E-Commerce platform. “As part of creating a better market opportunity for farmers and a better quality of life for the community, the firm is now launching a new version of Purpose Black ETH, a new marketing platform to save the struggling section of the society,” said Dr. Fesseha Eshetu, CEO of the company.
