Metals Industry Development Institute (MIDI) has proposed a USD 14.7 billion price tag for an iron ore processing plant, which is an investment three folds that of the Grand Ethiopian Renaissance Dam.
The project that would be undertaken with the public private partnership (PPP) scheme is expected to come to an actual realization in ten years.
According to the plan, the government would have 20 percent share and the remainder will be managed by foreign investors.
Tilahun Abay, Planning and Information Management Directorate Director at MIDI, said that the project is crucial to feed the growing local steel and engineering industry, which is running in critical resource scarcity.
He told Capital that the project is expected to come to a realization in five years’ time and be fully operational in ten years time.
The British company, MCI Group, undertook the inception report that was developed by Chinese consultants under pre-feasibility study.
The feasibility study would be undertaken in the near future and be operational in different phases as soon as possible, according to the proposal of MIDI.
“In this five year plan the feasibility study shall be undertaken and the first phase will be operation,” Tilahun said.
“The plan indicated that it has two phases and that the first phase may consume USD 7.05 billion,” Tilahun added.
According to the plan, the plant will be operational by using imported iron ore alongside the resources from local source.
Currently companies are working in the country to extract iron ore in different parts of the country. “Besides that we source our resources imports from African countries like South Africa and West Africa countries alongside Brazil,” Tilahun explained.
He said that at the first phase the plant shall have a capacity of 5 million metric ton per annum of input to the local industry.
According to the sector experts, such kind of plants have been tested in China and South Korea, both of which have become some of the top leaders in the sector but their ore is drastically approaching zero.
Tilahun also indicated that Egypt has become successful and leads the sector in the continent. “Egypt has created a capacity of producing 7.8 million metric ton crude steel by importing 5.6 million metric ton and extracting iron ore 1.5 million ton locally thus enabling it to expand its engineering sector,” he added.
The proposed project would be a sustainable resource in the supply for the growing industry in the country and export market.
MIDI is assessing a way to solve the input shortage for the steel industry. Currently, for the short term it is studying to solve the LC issue raised by local manufacturers.
“The resource at banks should be distributed fairly and Ministry of Trade and Industry should be involved in the foreign currency allocation to banks to provide short term solutions to support the manufacturing industry,” Tilahun added.
Posco, the South Korean global giant in crude steel production is expected to invest in Ethiopia and this is considered as a medium level solution for the steel industries in terms of input supply.
The company representatives have since then met with the prime Minister on his visit South Korea.
Currently, three miners have secured a license to produce iron ore extraction that shall be an input for Posco and it shall also import iron ore for the production of steel product that shall in turn offer their input to the basic metal industry, engineering and others in relation to the industry.
Scrap trading regulatory improvement has also been stated as another option for the sector to access input on reasonable price. Assessing regional scrap resources are also targeted to fill the steel industry demand. MIDI indicates this to be a medium level solution for the input shortage.
An iron processing plant worth $14.7 billion in the making
The intricacy of debt and debt Management
The external debt of Ethiopia has stood at 26.8 percent of the gross domestic product (GDP) in 2019/20 budget year with slight decrement in comparison to the precious year.
The document that was issued by the Ministry of Finance (MoF) indicated that the country’s external debt has stood at USD 28.6 billion.
In terms of value, the debt has increased in comparison to the previous year but in terms of GDP share it has dropped by one percent, that is, from 27.8 percent to 26.8 percent.
In the 2018/19 budget year the country external debt stood at USD 26.77 billion and has since then increased to USD 28.6 billion.
The total debt of the government in the budget year that ended on June 30, 2020 was USD 54.87 billion, which is up from USD 53.7 billion in the preceding year.
Although the total public debt has shown slight increment the share to GDP has dropped to 51.4 percent from 55.7 percent of a year ago.
According to MoF document, from the total public debt, domestic debt amounted to USD 26.2 billion.
The document that was prepared by the Debt Management Directorate of MoF indicated that during the last 12 months there has not been any non-concessional borrowing by state owned enterprises (SOE’s) except that of Ethiopian Airlines and all the central government borrowing which is only from concessional sources.
Out of the total outstanding Public sector debt (External plus Domestic) is USD 3.1 billion owned by central government and the remaining USD 24.7 billion is owed by SOE’s.
Out of the total public external debt, 62 percent is owed by central government while the remaining 38 percent is by SOE’s, while the share of the total public domestic debt that is taken by central government is about 47 percent while the remaining 53 percent is that of SOE’s.
Similar to the external debt increment in the stated period the external debt disbursement has also increased in comparison with the preceding year.
According to MoF document, the external debt disbursement during the last 12 months of 2019/20 was USD 3.1 billion up from the previous year’s USD 2.7 billion.
In the year 2019/20, the external debt service amounted to USD 1.9 billion, down from USD 2 billion on the 2018/19 budget year.
From the serviced amount USD 407 million is covered by the central government and the balance by public enterprises.
The central government’s external debt refers to all external loans contracted between external creditors and MoF; while the government-guaranteed external debt comprises of loans and suppliers credits contracted by public enterprises.
The Ethiopian Electric Power, Ethiopian Electric Utility, Ethiopian Sugar Corporation, Ethiopian Railways Corporation, and Ethiopian Shipping Lines are SOEs that are guaranteed by MoF as well as the state-owned bank- the Commercial Bank of Ethiopia.
Ethiopian Airlines and Ethio-Telecom are examples of a public enterprises that took external loan without a government guarantee.
Protecting currency across borders
Ethiopia has begun identification and verification of legal and illegal currency in neighboring countries as part of efforts to curb illegal trade activities, illicit financial flows, and illegal currency.
With a bid to manage the legal and illegal money the government has strengthened the control on borders and neighboring countries including that of Djibouti.
“We don’t believe all the money found in Djibouti is legal or illegal, taking this into account we have started the identification and verification process to identify the given currencies state,” said Fekadu Digafe, Vice Governor of the National Bank of Ethiopia (NBE).
According to Fekadu, the government is also in talks with the Djibouti government on effective ways of curbing and controlling illegal activities as well as illicit money trafficking.
According to NBE, billions of Ethiopian birr are illegally circulating in neighboring countries. In efforts to have strong control on the illegal entering of notes to the country, the government has said that it has put security measures in border areas to control the inflow of old notes from the neighboring countries.
The border between Djibouti and Ethiopia is known by its huge inter border trade activities and also notoriously characterized by contraband, corruption, and illicit money trafficking activities.
Two weeks ago the country began the demonetize process of the old currency notes with new currency notes that have enhanced security features and other distinctive elements in an attempt to curb cash holding, illicit financial flows, and illegal trade activities to the struggling economy and to boost the economy by stabilizing the macroeconomy by controlling illegal money transactions.
NBE Governor Yinager Dessie disclosed during the launching ceremony that the large amounts of money circulating outside banks exacerbated the problem and that huge amounts of Ethiopian Birr had been accumulating abroad, including in neighboring countries. He emphasized that strong controlling measures to be put in place to prevent the money from entering the country.
However, the Ethio- Djibouti corridor is the main import and export destination area which averages about 5,000 logistics trucks to and from the border on a daily basis and as a result, this possess a huge challenge to the identification process.
In accordance with this, the government has set a limit on cash holding on logistic service providers that travel to and from Ethiopia and Djibouti. Service providers traveling to Djibouti are allowed to hold 30,000 birr and travelers from Djibouti are allowed to hold only 10,000 birr. The objective of the decision is to prevent illegal money circulation thereby strengthening legal transactions.
Ministry of Education to give 450,000 tablets to Grade 12 students
The Ministry of Education has announced that for the first time 12-grade university entrance examinations will be given online and students will be given tablets. Based on the Ministry of Education data there are 450,000 grade 12 students that are expected to take the exam.
The exam will be given starting from December 7 up to December 10, 2020.
According to the decision of the ministry every student who has completed grade 11 and attended the first semester of the academic year can sit on the exam, yet registration will be done online.
Before the exam according to the ministry students will take 45 days of classes and technology guidance.
Despite the ministry’s decision a lot of people raise questions of access to the internet and digital materials, and weak connectivity of internet as challenges that students could face.
According to Hereguwa Mamo Communication Director at the Ministry, the ministry has prepared tablets for students “each and every student will get tablet to take the exam digitally in selected schools,” said Hareguwa, adding that by taking into account the internet connection the Ministry has prepared to facilitate networks to the selected schools from its own satellite.
Besides according to Hareguwa the Ministry has given 45 days of training to blind students on how to take the exam. The ministry has differentiated different subjects which should be focused on all grade starting from grade one up to grade 12 to finish the academic year as soon as possible.
The ministry has also decided to give grade 8 exam on December 1 and 2, 2020, and those who completed grade 7 classes and the first semester can sit on the exam.
According to the Ministry in the coming three weeks schools and education institutions will be prepared to start classes with an attempt to control the spread of the virus based on the Ministry of Health guidlines.
Schools are expected to clean and disinfect their class rooms, students should wear face masks, and the maximum number of students in a classroom to be 25 and one student per desk to keep social distance.
As disclosed by the Ministry, schools in Addis Ababa and around Addis Ababa will start on November 10, 2020; however, schools out of Addis Ababa will start class on October 19 and October 26.
The World Health Organization and UNICEF have been recommending countries to reopen schools.
On March 16, 2020, Prime Minister Abiy Ahmed ordered the closure all schools across the country and on March 27, 2020, the government decides to extend the closure for two more weeks and students from higher education to go back to their home, while the duration of the school closures remain uncertain.
At the beginning of the current academic year the ministry was planning to conduct the national entrance exam from June 1 up to June 3.
Ethiopia has around 20 million pupils in Ethiopian schools about 45,000 schools over the country and nearly a million in the 50 public universities and more than 250 private academic institutions, all of which represent high potential transmission sites.
