The Ethiopian Horticulture Producer Exporters Association (EHPEA) calls the government to be vigilant in light of joining the Economic Partnership Agreements (EPA) as government remains undecided on the matter.
It is recalled that the country’s horticulture industry registered massive success in the export market becoming the second largest hard currency earner in the agriculture sector after coffee. The major export destination being European countries, Ethiopia has been utilizing the Everything But Arms (EBA) duty free scheme initiated by EU to maintain its market in Europe.
The EBA preferential treatment which is accorded by EU provides the initiative to remove all quotas and tariffs on all products originated from the Least Developed Countries (LDCs) in African, Caribbean and Pacific (ACP) except arms.
However, EU and ACP have also agreed to put in place the EPAs which give reciprocity for all countries from both sides to open their markets. So far some countries from Africa, other LDCs, signed the EPAs to open some high percentage of their market for European countries gradually.
On the workshop called by EHPEA which was held on Tuesday December 28, the association expressed its concern by advising government to be prudent on taking to account the benefit of Ethiopia in general and the horticulture sector in particular.
“If the country inks on the EPAs at the current content of the agreement, the performance of our industry shall significantly be affected. Farms in the EU are strong and experienced besides betting different support from their governments, but on the other hand the industry in Ethiopia is immerging and running with several challenges,” 
, Executive Director, said.
At the current level, the trade balance is favoring Europe except very few countries like the Netherlands, which is the major destination for Ethiopian floriculture products. The latest figure shows that Ethiopia exports about USD 550 million worth of commodities that is mainly primary goods to Europe while on the other hand the import from the stated continent is USD 1.8 billion.
Experts said that if EPAs shall be in effect the trade balance shall be widened.
“Ethiopia might not be competitive after the EPAs especially in the horticulture, wheat, meat products poultry and other agricultural products. The European governments subsidize their agricultural sector and the enabling environment which are very dynamic,” Tewodros explained by referring the early assessment that was conducted by EHPEA on the effect of EPAs.
He said that EPAs shall crumble the Ethiopian industry if it is not properly articulated.
“The agriculture sector in general and the horticulture industry in particular is the major source of hard currency, so the strong negotiation pattern is required,” the Executive Director strongly stressed.
He also added the newly coming agro processing industries shall be paralyzed because of the coming of the opening up of the market through EPAs.
He said that the free market agreement has also different impacts in the revenue for the country that leads to diminishing the investment on social facilities, which houses job mostly managed by women.
“As an association we propose that under the current context the EPAs, ought not to be inked even though some ACP countries have signed to it. We have to continue to benefit from the EBA initiative,” he said by adding alternative configuration comprising of LDCs to be implemented.
The association stated that EHPEA will back further and detailed assessment regarding EPAs potential effect and benefit.
At the workshop Mussie Mindaye, Director General of Trade Relation and Negotiation at Ministry of Trade and Regional Integration (MoTRI), said that despite Ethiopia’s export to EU increasing when EBA was launched, it is not tapping the full opportunity.
“Ethiopia has not been efficiently utilizing and taking the advantages of this preferential market access due to supply side constraints as well as non tariff barriers such as the stringent rules of origin and the high product standard among others,” Mussie elaborated.
He said that the horticulture sector stands a high chance to benefit from EBA, “However, we have to ask ourselves as a country whether we are using the full potential in this position of exporting the product.”
“When we met with EU officials we stated that the country has not properly benefited from the duty free scheme,” he said, adding, “That is why Ethiopia is reluctant to push on the EPA negotiation.”
He said that as a nation the country is insisting for the continuation at least up to the period that the country graduates from the LDCs list.
He added that the country is yet to decide when and in which terms to sign the EPAs, “we need to undertake detail assessment regarding, the benefit and effect of EPAs.”
EHPEA advices gov’t to consider all contexts before penning the EPA
EIH becomes newest Sovereign Wealth Fund
Ethiopia joins African countries that have Sovereign Wealth Funds (SWF). The SWF, Ethiopian Investment Holdings (EIH) will take ownership of selected public enterprises.
It is recalled that Prime Minister Abiy Ahmed stated that the country would have SWF to harmonize the country’s resources and manage public enterprises on good hand.
Mid this week, the Council of Ministers has disclosed that the regulation to form EIH has been endorsed.
On the announcement, it said that the role of EIH will be mainly to bring together government resources under a single administration. It is also responsible to stipulate effective administration boosting the economic of scale of the public resources.
It added that EIH will also be expected to create a competitive economic growth of the state assets.
On its social media page EIH said that it is the strategic arm of the nation and sets out to maximize the value of state-owned assets through professional management, leveraging international best practices.
Reliable sources said that the SWF will take some public enterprises that are currently managed by Public Enterprises Holding and Administration Agency (PEHAA). Sources said that the state owned enterprises that will not be transferred to SWF shall be continued under PEHAA, while it is not confirmed from relevant government officials.
As the experience observed from countries, SWF institutions are normally formed to manage national surpluses with the aim of building wealth and providing a sound financial foundation on which governments can formulate ambitious development or diversification policies.
SWF is also a means to mobilizing national resources and using them to attract additional foreign capital is the only way to ensure our economies’ financial independence.
Experts said that by mobilizing and leveraging national savings, SWFs shall not only increase governments’ capacity to finance public policies, but also could help to attract more foreign capital.
Recently Djibouti has established SWF, while in the past decade several African countries have followed the same path to establish the institution to back their national policies in the economy.
Capital’s effort to get further information from relevant officials at Office of the Prime Minister, Ministry of Finance, and PEHAA was unsuccessful.
A sovereign wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally.
First digital based export nears operation on Alibaba
10 tons of coffee beans to be exported on the platform
Ethiopia is on gear to transform its international trade with a digitalization scheme as ten tons of coffee beans is set to be digitally exported via the Alibaba platform.
When the current top leadership came to power about four years ago, it was announced that it would be a government that pays huge focus to the tech space and digital economy on the aim to boost the dormant sector. The leaders often stated that the tech space would create a significant amount of opportunity and growth for the youth.
Following the decision, several initiatives have embarked and institutional legal formation has been taken. Similarly, one of the influential trading platform founder Jack Ma visited Ethiopia and showed his enthusiasm to support the digital economy for the transformation of the second most populous nation in Africa.
As per that process, Ethiopia is now on the way to introduce the first digital based export through Alibaba.
Mussie Mindaye, Director General of Trade Relation and Negotiation at Ministry of Trade and Regional Integration (MoTRI), said that government has selected five exporters to be part of the first batch of coffee export through the digital scheme.
Under the scheme that will come about in the coming couple of weeks, ten tons of coffee beans will be exported to China.
Mussie told Capital that the initiative will be expanded to avocado in the near future. Avocado is on the come up as a new export item since different initiatives have been embarked by relevant government offices in addition to the export standard production expansion in different parts of the country. Recently, exporting the fruit through vessel was also introduced.
Mussie reminds that some changes in the legal framework shall be expected to boost the initiative, “the new activity is at its initial stage, thus it needs some changes on the export rules from government bodies like National Bank of Ethiopia and Customs Commission.”
Adugna Debela, Director General of Ethiopia Coffee and Tea Authority, said that the latest initiative is a game changer for the coffee sector since it is mainly engaged with the value added commodity than the export of green coffee.
“Regarding the value added coffee export we did not work that much. However, when the ecommerce comes about it would boost the volume, value and destinations,” Adugna told Capital.
He stated that the ecommerce shall also greatly boost the export of Ethiopian coffee to every corner in the world.
The revenue from value added bean is stated as up to four folds from the green beans.
“Currently, selling Ethiopian coffee on a digital platform will be started by very few exporters and the number shall increase from there,” Adugna added.
Mussie said that 5 potential exporters have been selected in the initial stage.
Wild Coffee is one of the companies that will embark on the ecommerce of roasted coffee on the platform that is facilitated by Alibaba.
Gezahegn Mamo, CEO of Wild Coffee Ethiopia, said that in related with ‘Double 12 Shopping Festival’, the annual singles’ day shopping festival that is held on December 12 and launched by Alibaba’s e-commerce platform, his company has sent value added coffee to China.
“The initiative that was embarked by Jack Ma and Prime Minister Abiy is on a sharp trajectory to see the coming about of the new trading platform,” the CEO said.
He said that initially his company’s focus is on the export of value added coffee. “Roasted coffee accounts 90 percent of our export. It is preferable in terms of earnings compared with the green one besides creating significant number of jobs,” Gezahegn told Capital.
On the traditional trading, Wild Coffee exports its product to more than ten countries including four countries in Africa, Canada, Turkey, Saudi Arabia, Oman and the US.
“Our product is sold online on a spot payment instrument. The sales on Alibaba are different since it is after sales payment modality,” he explained.
“Now we are penetrating the Chinese market through the ecommerce platform,” he said that is promising since the product sale was good.
“Staffs at the Office of the Prime Minister and MoTRI have played a crucial role to sale our products on the new scheme,” he added.
Coffee export
Ethiopia has registered another record on coffee export in the first five months of the 2021/22 budget year.
According to the Director General, in the five months that ended in November the country has secured USD 515 million from the bean export, which is well known in quality.
He said that the vertical integration scheme that was aggressively put in place in the past budget year brew a success in terms of export earning.
The other alternative is trading through the electronic trading platform at Ethiopian Commodity Exchange.
The over half a billion dollar revenue is almost double compared with the same period of last year.
In the first five months of the 2020/21 budget year the earning was USD 274 million. For the current year five months, which is not the high season for the export of coffee over 133,113 tons of coffee has exported that has an increment of 51,546 tons compared with the preceding year.
The authority projection was that to earn USD 359 million by exporting 108 thousand tons of coffee. However, the actual performance is exceeded by 44 percent in terms of revenue and 23 percent higher in volume.
Adugna said that the initiative to expand the value added bean export shall benefit Ethiopia more, “We have to work strongly towards that.”
Misganu Arega takes helm at Ethio Engineering Group
The state industrial giant Ethio Engineering Group (EEG) the commercial wing of the previous Metal and Engineering Corporation (MetEC), gets a new CEO. The leadership change at the group becomes its second following the enterprise’s restructuring about two years ago.
The information Capital obtained from sources early this week shows that the Office of the Prime Minister has issued the appointment of Misganu Arega (Amb) to lead EEG which manages several industries that produce engineering related products starting from electric meter to industrial machinery parts.
Misganu has a great track record and reputation that stems from his time as State Minister for international trade at the former Ministry of Trade and Industry which is now split to Ministry of Trade and Regional Integration and Ministry of Industry.
In his latest senior government officials’ appointment, Prime Minister Abiy Ahmed did not include Amb Misganu.
In the period that Misganu led the export sector, the performance that the country attained was stated as changing, that is, from the dormancy to export earnings that were showing a growth path.
According to sources, Misganu has been assigned for the new post as of Tuesday December 28. EEG has also disclosed the appointment of the new CEO on Friday December 31.
Misganu replaced Hiwot Mossisa, who is the first CEO when the former Metal and Engineering Corporation aka MetEC split into two as defense and commercial.
As per the endorsement of the Council of Ministers, EEG formed to overlook the commercial wing of the manufacturing industries that is controlled by the infamous MetEC.
She served EEG as CEO starting from mid March 2020 until early this week.
Hiwot has also served as State Minister of Transport, first CEO of Ethiopian Toll Roads Enterprise, and former senior staff of Ethiopian Roads Authority that is now Ethiopian Roads Administration.
EEG manages about nine heavy and light manufacturing industries including agricultural machinery factory, basic metal and machine building, automotive, and power engineering.
