The Central Statistics Agency’s monthly inflation data report measured by the consumer price index showed that the annual inflation rate as of January 2021 increased to 19.2 percent higher than the same month last year.
According to the latest report from the Central Statistical Agency, the price index for January has shown increase when compared to last year which was 18.7 percent in January 2020. Likewise the figure has shown 1.6 percent increase when it compares with last month inflation rate.
As a result of the current situation the inflation stands at 19.2 percent. This main upward pressure came from both food and non-food components. On similar lines, food inflation in January 2021 stood at 23.1 percent showing increase in comparison with last year which was 22.0 percent.
During this month, price of most of the grains, vegetables and some grains has shown increase. Prices for sugar, cooking oil, spices, potatoes and coffee has shown increase contributing to inflation as the agency explained. Food component prices with a special focus on teff, maize, and sorghum have shown massive price increase in the market from previous times. Inflation was even higher in the current month, as the price of the same month last year was relatively low compared to the current year. On January 2020, the total food inflation rate was 22.0 percent. On a slight shed of light, the food components have shown increase from December 2020 through January that is from 21.3 to 22.0 to currently 23.1 percent.
On the food-items front, even if the government is working aggressively on the domestic production of items such teff and wheat, so that the public gets enough production at a lower cost the price in the market is going up from day to day. The recent re-imposition of tax and duties on edible oil has also disturbed the market.
0n the other hand, non-food index inflation in January 2020 stood at 14.5 percent. The non-food items have shown a considerable increase in comparison with last year same period. The rise in the price of nonfood products including Khat, Home Care and Energy (Fuel and Charcoal), Furniture, Medical, Transportation (Fuel) are the main reasons for the increase of the inflation rate over the same period last year. The price increase for jewelry has also played a role in the growth of the inflation rate as the agency stated.
The annual inflation rate from July 2018 – June 2019 and July 2019 – June 2020 stood at 12.6 and 19.9 percent respectively. On December 2020, the general inflation rate stood at 18.2 and it is currently at 19.2 percent.
It is worth noting that throughout the months of 2020 the inflation rate mostly stood above 20 percent. This sharp rise will continue to soar until drastic and effective implementations are undertaken, so it seems.
The streak of inflation
SANCTION STRENGTHENS?
It seems a number of countries are quite capable of surviving sanctions. Some of them not only survive sanctions but also tend to strengthen their overall domestic capacities. By and large, it is the smaller nations of the world system that disproportionately suffer from sanctions imposed on them by the powerful. Eritrea is one example. The larger countries of the world that operate under sanctions can potentially use this forced regime as an impetus to develop local capacity in various sectors. Sanction can also increase the resilience of a society. Importantly, the whole scheme of sanctions highlights the precarious and unpredictable nature of the reigning modern world order! We will look at four countries that are more than surviving sanctions!
The Iranian state has been under sanctions of one sort or another for a long time. This oil rich nation, not only managed to survive, but also accomplished its main objective of becoming an advanced military power. For example, Iran’s indigenously built missile technology is quite sophisticated. The country has developed long-range missile systems that can reach its potential adversaries, namely Saudi Arabia and Israel. This weapon system seems to have deterred provocation. Its naval power is also not to be underestimated. Sanction might have retarded the realization of potentials in other sectors of the economy, but it has not done much to make the country a military weakling, the very opposite of what the sanction imposers had in mind. The Islamic Republic of Iran doesn’t seem to like the whole idea of nuclear weaponry. Its nuclear weapons program was already in the process of being phased out when the west started probing the issue. Sanction or not, the Iranian tech sector is much more advanced compared to its nemesis, Saudi Arabia.
By the same token North Korea also seems to have achieved its main objective, the development of nuclear weaponry. North Korea is now a recognized nuclear power with a working ICBM (Inter Continental Ballistic Missile). Again, the sanction imposers’ main desire of halting its nuclear program has failed. No doubt, sanctions have caused some difficulties, both to the government as well as the citizenry. Practically sandwiched between China and Russia, the Korean peninsula is a very strategic region. Any major conflict there is bound to involve these two superpowers, most likely fighting on the same side, against outside adversaries. One has to study the history of the 1950s Korean war to appreciate the determination of the North Koreans to come up with meaningful deterrent (WMD) against real and potential adversaries!
Venezuela seems rather unprepared to the sanctions imposed on it by the powerful. Its oil revenue, on which it relies for most of its foreign exchange earnings, has dwindled significantly. The powerful nations also want ‘regime change’ in Venezuela. In this regard, the proven ‘color revolution’ might well be used as one options to dislodge the government in power! Amongst the sanctions, the unavailability of financial facilitation by western bankers is one. This imposition has led the Venezuelan government to develop a cryptocurrency backed by its oil and gold. The project is to help loosen the grip of western bankers that is creating havoc to Venezuela’s trade and investment. Like Iran, Venezuela is determined to sell most of its oil in other currencies, besides the dollar. It is also bartering its oil for goods/services with potential allies, like China! The ramification of using cryptocurrencies in the trading of essential commodities will be massive, to say the least. This scheme has a potential to derail the dominance of fictitious currencies in world trade!
Russia is probably the one country that has benefitted immensely from sanctions imposed on it by the west. Russia is now the number one wheat exporting country in the world. The systemic delinking of its fossil fuel’s sales from the mighty dollar has also undermined the dollar’s reserve status. Today China and Russia, the number one buyer and seller of fossil fuel respectively, are using their own currencies for the transactions! This is very significant as it creates less demand for the dollar in the world, thereby making it difficult to issue debts (US Treasury bills) without qualm! In the sphere of technology, Russia has always been amongst the leaders, particularly when it comes to military hard wares. See the articles on page 51. Since the sanctions, Russia’s weapons sales have skyrocketed. Some of the new military gadgets that can destroy missiles, (like the US cruise missiles) are being sold to friendly nations, whose numbers are increasing by the day! In the words of the US general, ‘… an increase in Russian surface-to-air missile systems in the region threatens our access and ability to dominate the airspace,’ Votel, Commander of the US Central Command.
Both Russia and China, are working to become independent of the SWIFT system (electronic international financial transactions, dominated by the west). Locally developed scheme are in the offing in both countries. Moreover, the BRICS, which include Russia and China, have embarked on the project of developing an alternative Internet system! Fitch, the rating agency, has raised Russia’s bond to a triple A status! All in all, sanctions don’t seem to work, perhaps the old adage might come here handy: “Necessity is the mother of invention.” Good Day!
AME proposes community based mining at Qenticha
African Mining and Energy (AME) has proposed to erect lithium battery facility under the scheme of community based mining at Qenticha.
Moreover, the government has asked the firm to come up with the technical capabilities and financial documentations required for the go ahead node of the project.
The company said that it is under discussion with the Ministry of Mining and Petroleum (MoMP) on its proposal about the operation of tantalum resource that was initially developed at the end of the Derg era which then commenced mines in 1994.
Sammy Million, Stakeholder Relationship Manager of AME, expressed his hope that the talk with MoMP will be closed in the near future.
The company has tabled the scheme that it implemented in other African countries like South Africa. The experience of the company is utilizing the natural resource with community based partnership.
According to its proposal for the government the company said that besides itself, the community at Qenticha and the regional and federal government will partner on the project at the tantalum mines. The mines present a globally important tantalite source in the Neoproterozoic Adola Belt, Qenticha locality in Seba Boru wereda, Guji zone, Oromia region, 600km of Addis Ababa at southern Ethiopia.
For the last almost three decades, the country has exported the ore of the mineral, which faced criticism from experts who claimed it would not benefit the country.
On its call for interested partners, MoMP has placed one of the criteria to be the development of the mining facility with a value addition scheme of the mineral which has several outputs for various industries.
AME has substantial records alongside major project developments in Africa and has been responsible for originating sponsored projects with more than a billion dollar investment throughout the continent.
“We have been here for the past two years on the aim to focus on two major sectors; the tantalum with lithium development and gold project,” the Stakeholder Relationship Manager expressed.
The company comes to Ethiopia on the international bid for the development of Qenticha Mines, which is currently closed with different issues including environmental concern, for the joint development.
The plan is to build refineries as well as new lithium batteries project.
“Currently, we have received a letter from MoMP showing our case has been reviewed. Following the letter, we need to fill the documentation that shows our technical capabilities and financial documentation after which we will be awarded to work on Qenticha. So that is still ongoing,” Sammy said.
“One of the major core values of AME is Community Based Mining. We firmly believe that the world is changing and so is the mining world. So as both these worlds grow the community has to grow as well. Therefore we have resonated with the community based mining,” he added.
He further explained that community uplifting is one of the major drivers to AME’s core value operations throughout the continent.
“Our seven major operations in Africa are based in the community, so the idea we brought in Ethiopia is to share the experience of community, who are directly linked to the resource geographically,”the Stakeholder Relationship Manager said.
The company disclosed that its approach has to be a structural chain geared towards a ‘win-win’ that makes the community have direct revenue share subject similar to that of the business modality.
The company has targeted to invest USD 20 million for redevelopment of Qenticha.
“The total projects for the coming five years will have a USD 250 million injection that also includes the construction of a world class plant to produce lithium batteries, which is on high demand on the modern world technological products by manufacturers,” Sammy said expressing his hope that the new mining policy, which is at its final stage, would have a key role in revitalizing the mining sector as well as expanding the involvement of foreign companies and their various partners.
The value additional project does not only expand the revenue from the resource but also creates job for the society in the area.
Further studies are still being undertaken by the company’s technical partner, DRA Global, at the area. The study is being undertaken to know the future perspective for the establishment of the factory at the locality.
The firm also wants to carry out programs to implement at the project as well as access to education, infrastructure, and a mining school. “One of the major things we want to do to Ethiopia is to open up a drilling school which will be the first for the country,” Sammy echoed.
The mining company has projects in countries that include South Africa, Mauritania, Tanzania, Kenya and DRC.
Under AME Foundation, it has donated water pumps and COVID 19 related materials at Qenticha besides establishing of a children-school that is expected to be finalized within six months at the cost of more than 6 million birr.
“We have seen that the community has lack of trust and mistreatment resulting from past experiences that we want to change. We want to show that AME is not just a mining company but it is uplifting communities by making the society a direct access on the resource. We have also evaluated that the area is very poor regarding basic infrastructures,” the Stakeholder Relationship Manager explained.
The company representatives said that it will follow the international mining guide line ‘environmental social and governance (ESG)’ on the project it put in Ethiopia.
AME Foundation had targeted to construct a school at the initial stage meanwhile the deal has not been finalized with the government.
The Ethiopian Minerals, Petroleum and Bio Fuel Corporation used mines tantalum concentrate for mainly exports to China.
The Qenticha mine has an installed capacity of producing 174 tons of tantalum concentrate, while the government has planned to expand the tantalum mine and build a tantalum processing plant that manufactures value added tantalum products than the ore export.
The horticulture sector to receive new policy
The Ministry of Agriculture (MoA) has mapped the road for the horticulture sector to develop the sector’s strategy and policy. The strategy was embedded to make the future bright for the sector and to increase the revenue that the country ought to deserve.
On similar lines the Ethiopian Horticulture Producers Exporters Association (EHPEA) has launched an accredited TVET Training Institute.
The horticulture sector has quickly risen to become the top hard currency earning commodity in the country with less than a decade and half worth of effort. However, the sector does not have a policy. To this regard the MoA has been engaged to come up with policy and strategy to boost the potential that country has on the sector.
Wondale Habtamu, State Minister of MoA, said that the roadmap which is a top priority with regards to the strategy and policy has been concluded after several months of preparation.
“The draft roadmap has been concluded and now needs final validation and accreditation and at the same time the strategy and policy are under process and we expected in the near future it will bear fruit,” he told Capital.
He said that the road map has detail analysis including knowing and understanding every single crop in the country and every document has been reviewed not only in the country but also internationally.
He added that the Ministry had mainly been involved in the undertaking of the roadmap development while EHPEA and Ethiopian Agriculture Council Secretariat have played vital role.
From the horticulture sector, the floriculture has a dominant role in terms of earning, while the fruit and vegetable sector is showing growth.
Regarding expanding the development of the fruit and vegetable sub sector, the roadmap has identified several ideal projects.
“Final right up for nine vegetable and fruits crops project document has already been done. For instance, avocado has become a national project that will increase the country’s production widely and others like banana, green peas, onion, tomato, potato, mango, and sugar snap have got specific project interventions,” the State Minister said.
Tewodros Zewdie, Executive Director of EHPEA, said that the fruit and vegetable sector will have a bright future since the business environment like available: land, infrastructure and logistics boost suitability for investors thus the country has a huge opportunity to generate in billions of dollars.
He said that the agriculture sector in general has major contributions to the country’s economy and it will have a good vision to solve problems that the association is working on for the past years. He said that the association has played its part on the new policy development.
“In general the agriculture policy that was ratified about two decades ago is now revised. We have also provided our input to expand the horticulture sector, which shall create huge labour and earnings,” he told Capital.
He showed that the floriculture sector so far has developed only on 1,600 hectare but it contributed significant jobs for non-skilled and skilled labour and foreign currency earnings, “If we can make it double, we shall reap more jobs,” he explained.
He emphasized that the fruit and vegetable sector should get more attention so as to tap the potential.
Capacity building
On the ceremony that was held on January 28 at Hilton Hotel EHPEA has launched its accredited Technical and Vocational Education Training (TVET) Institution.
Since 2007 the association has been providing trainings for members to enable them to be certified on international standards that allow local horticulture actors to sell their products in big markets all over the world.
The State Minister said that currently there are 45 universities and other higher education institutions that may have good expertise in theory but practical training is required that will be filled by the new facility that EHPEA has launched.
“Massive production does not mean higher revenue, sometime small but valuable revenue shall be earned. To that, knowledge based production is crucial,” he says, “We need to produce international standard based manners like globally accredited Good Agriculture Practice (GAP) for better revenue that will be supported by this kind of skill capacity building facilities.”
“We hope that similar accredited practical colleges shall be opened in the future,” he told Capital.
Wondale said that the TVET will play a big role to expand hard currency earnings from the horticulture sector, “It will help us to export products as per international standard and enable us to get additional reward. Furthermore, it will aid the farmers to produce more because of better earnings.”
Tewodros said that because of different reasons like climate, water, location, vast land, cost of doing business Ethiopia has better opportunities to compete on the horticulture sector globally.
“From our journey in the past, about 13 years, we understand that we shall generate massive hard currency, creating huge job and knowledge transfer from small investment land. There are several investors involved on the sector but due to lack of skilled labour several managers were coming from India, Israel, and Kenya or from the Netherlands,” he says.
“To this consideration several higher education institutions have opened new departments related with the horticulture sector, but so far adequate professionals mainly on practical sectors like standards, agronomy and perishable logistics are not available,” he explained reminded the bottleneck that the sector is facing for further growth.
“We have provided the trainings as per the industry demands, which is a good experience that the association accumulated and allows for the expansion of the skill development further,” Tewodros said.
To launch the TVET Training Institute a study that involved different actors including Bavaria Employers’ Associations from abroad was encompassed, the association contributed on the training manual development and experience sharing and other supports.
Some of the training packages will have an option for smallholders’ farmers to get capacity building for free.
Mikyas Bekele, Deputy Dean TVET Training Institute, said that the upgraded institute has been established at the end of the past budget year.
He said that the center will provide several trainings. “In the past we have been focused on flower, herbs, fruit and vegetable sector but now we have expanded our scope and addressed other industries across the value chain mainly on the export sector,” the Deputy Dean explained.
“Our trainings is extraordinary because it is practical that is given at farms,” he added
“The centre will deliver tailor made and practical trainings. This will contribute to further unlock the ample opportunities in the Ethiopian horticulture industry,” Mikyas told Capital.
He said that the sector is dynamic that needs frequent and timely capacity building and training to fit in the completion.
The centre has a capacity to provide training for close to 10,000 trainers per year.
EHPEA has, so far, delivered training to about 50,000 farm workers.
