50% increase in electricity tariff looms

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The Reporter, Saturday, October 31, 2015

Vol. XX No. 999

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Vol. XX No. 999 | October 31, 2015 | ADDIS ABABA, ETHIOPIA www.thereporterethiopia.com

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The Ethiopia Summit:

Movers and Shakers

KFC to

open

outlets

in Addis

Ababa

KFC to ... page 42 By Kaleyesus Bekele

The global fast food chain, Kentucky Fried Chicken (KFC), is going to open fast food

restaurants in Addis Ababa next year,

it was learnt. A source close to the company told The Reporter that KFC is under preparation to open unspecific number of restaurants in Addis Ababa in 2016. The source said executives of KFC are holding talks to local

50% increase ... page 42

50% increase in electricity tariff looms

By Birhanu Fikade

Pressured by the existing power generation costs, the government is set to take a bold step and increase the existing tariffs with a possible 50 percent increase. Industries are

expressing concerns against the intended increment. During a panel discussion at the Ethiopia Summit, dubbed “Driving Continued Growth”, organized by The Economist Events and held at Sheraton

Addis on Wednesday and Thursday, Azeb Asnake (Eng.), Chief Executive Officer (CEO) of Ethiopia Electric Agency, made it clear that the new tariff are going to be introduced soon, though the dates are yet to be determined.

According to Azeb, the existing electric power generation costs are about nine US cents per kilowatt-hour (kWh). However, the current price of electricity or electric tariff is at US six cents per kWh; the remaining three US cents

have long been subsidized by the government. The rationale behind the introduction of new tariff, Azeb argued, is that the government can no longer endure subsidizing electric

restaura Ab i c t R K pr ope num rest

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The Reporter, Saturday, October 31, 2015

Vol. XX No. 999

Computer Secretaries

Birtukan Abate, Helen Yetayew,

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The number of Ethiopians requiring food assistance due to irregular kiremt (summer) rainfall has now topped 8.3 million. While the Government of Ethiopia has announced that it has allocated Birr 10 billion ( a little over USD 476 million) in emergency fund for the purpose of distributing both food and non-food assistance to the affected communities, the UN’s Office for the Coordination of Humanitarian Affairs (OCHA) has also disclosed that it too is doing its part. Though donors have pledged to provide assistance, the gap between what is needed and what has been delivered is still wide. There is a real possibility that the food shortage can induce a rise in inflation throughout the country.

Prime Minister told Parliament this Tuesday that his government has commenced large-scale food import with a view to avert a hike in inflation as a result of the drought. He also indicated that fast-growing food crops are being produced using underground water in drought-hit areas, particularly in pastoralist communities, with a view to forestall and withstand the food shortage that the absence of rainfall may engender. If the government is responding to the drought in this manner, it should indeed be commended. This said, it has to be more transparent in terms of the alacrity with which it is responding to the impacts of the drought and whether assistance is being duly provided to those who truly need it.

Based on the irregularity in the pattern of the preceding belg rains, it was projected that the kiremt rains too would be irregular. And it was known for over a year that the El Niño phenomenon would bring drought to parts of East Africa and other regions. The National Meteorology Agency of Ethiopia shared this forecast as well. Despite these predictions, though, not much has been revealed about the preparations undertaken both by national authorities and international partners. The Ethiopian government first declared that it was capable of mounting the necessary response on its own though it later asked for donors’ help. Unfortunately, the latter’s response has been lukewarm to say the least placing all the responsibility squarely on the government’s shoulders alone.

The fund the government has set aside for emergency purposes in its budget for the current fiscal year amounts to just Birr 1 billion (around USD 476 million). It’s difficult to imagine that this fund took into account the drought for the government allotted no more than Birr 700 million (just over USD 33 million) when the number of citizens seeking assistance was first put at 4.5 million and then revise to 7.5 million. It’s when the figure soared to 8.3 million and the response of donors turned out to be unsatisfactory that the governed announced that it has coughed up Birr 10 billion from its coffers. This sum was not budgeted for; in fact it was plucked from the country’s Birr 34 billion (close to USD 1.62 billion) earning in the 3 months from July through to September of this year. In a discussion he held with

members of the Ethiopian community in England during his recent visit to that country, Foreign Minister Dr. Tedros Adhanom confirmed that the Government of Ethiopia would divert the budget it has allocated for development activities to ensure that the drought did not prompt any sort of humanitarian crisis.

All this is indicative of the fact that the scale of the drought caught the government by surprise. Granted that it is doing whatever is in its power, the needed assistance has to reach those in need speedily and in the required amount. In this regard it is imperative to institute an oversight mechanism in order to deter and penalize anyone who embezzle food aid or use the aid to further political ends. Otherwise, a considerable humanitarian crisis is bound to unfold that leads to internal displacement. This in turn will strain the urban centers to which the migration takes place and provoke inflationary pressure.

Having climbed to double digits following the onset of the drought last June, the rate of inflation stood at 11.9 percent in September. Aside from ramping up its emergency assistance to the citizens impacted by the drought, it is incumbent up on the government to stabilize the price of basic food and other consumption items so as to prevent urban areas are from being hit by an escalation in inflation that the drought may induce. If the distribution of food aid is to be undertaken fairly, as Prime Minister Hailemariam acknowledged the government is obliged to put in place an effective food procurement and supply system. Towards this end it needs to see to it that its weak bureaucracy does not impedes life-saving endeavors.

The government’s response to the drought must be complimented by the efforts of the general public as well as donors and humanitarian organizations. However, as the latter are generally found wanting when it comes to delivering assistance rapidly, the size of the population looking for help can potentially increase if the situation does not improve in the next six months. The problem has been exacerbated by the above-average rainfall that the El Niño event has brought to parts of Ethiopia with the Wabe Shebelle river bursting its banks and flooding some districts of the Ethiopia Somali region. The flooding not only has swelled the number of affected individuals, but also made aid delivery more difficult.

Although there is no confirmed loss of human life attributable to the drought, thousands of livestock have perished. Given that the drought may worsen and thereby exacerbate the humanitarian crisis there is no alternative but to craft a prompt, coordinated and transparent response. It’s only then that its effects can be dealt with decisively and avert a rise in inflation.

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The Reporter, Saturday, October 31, 2015

Vol. XX No. 999

HEADLINES

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The Reporter, Saturday, October 31, 2015 Vol. XX No. 999

IN-DEPTH

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On the back drop of shattered dreams and

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Abai Schulze, 27, is the person behind ZAAF, one of the few high-end designer labels to come out of Ethiopia, which specializes in handcrafted leather luxury goods. Just two years in the market, the young entrepreneur and her label ZAAF are already going to internationally renowned fashion venues such as the New York Fashion Week. The high-end leather handbag she produces from her small workshop/ headquarters located behind Atlas Hotel and supplies exclusively to the US and European markets are already regulars in some of the online platforms which cater mostly to the designer labels and high-end products. Taken to the US at the age of 11 by her adaption parents, Abai studied economics and minored in fine arts before she decided to return to her birthplace and do something of a “business nature”. Then she immediately took notice of the untapped potential in the Ethiopian leather sector. “We had the raw material (the leather), the labor and it was only the logical thing to participate in leather value addition,” she says. For small establishments like hers, small volume and high quality leather articles were the only way to compete in the international market. Dominantly reliant on the domestic finished leather supply, ZAAF is increasing becoming the face of the Ethiopian leather sector together with the giant Chinese shoemaker, Huajian, which opened shop in Ethiopia in 2012. As far as Abai is concerned, the quality of Ethiopian leather is serving her right in the international market and that with exception of infrequent returns due to production defect, she has not faced major problems regarding the quality of the leather. True to form, traditionally, genuine Ethiopia leather is well accepted in the

global market for its fiber and hence strength. On top that, the local footwear market as well have come a long way in the past decade or so. Anecdotal evidence suggests that domestic shoes market, which was largely dominated by Chinese products, is now rapidly changing in favor of local producers. It appears that domestic shoemakers are now reviving in the domestic market both in quality and price. Nevertheless, the Ethiopian leather sector is far more problematic than what meets the eye. For starters, export revenue targets in the GTP I, USD 500 million, which largely hinged on finished leather and leather products was missed by miles. At the end of the plan period the total export intake was just shy of USD 140 million. This was highly unacceptable for the government considering the country’s ample endowment in terms of its livestock population and large labor force, two basic ingredients for leather manufacturing. However, recent investigations have shown that one of the fundamental problems lays downstream the leather value chain: the raw hide and skin trading sector.

Non-existent market

Hide and skin production and/or animal slaughter are very traditional in Ethiopia. Animal slaughter is a highly traditional and cultural practice, the majority of which is carried out in people’s backyards. According to data, close to 80 percent of the overall animal slaughter and the production of hide and skin by extension comes from rural areas, where the majority of Ethiopians live; in fact the bulk of the slaughter and the hide and skin production done in modern abattoirs and slaughter slabs is not more than 20 percent of the overall production. This gives the domestic raw hide and

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The Reporter, Saturday, October 31, 2015

Vol. XX No. 999

INTERVIEWMatar Al Neyadi (PhD), Undersecretary of the United Arab Emirates Ministry of Energy, holds a doctoral degree in international law from the University of Edinburgh (1997). He has professional experience in leadership, international cooperation, internati onal

maritime law, management of

international negotiations, climate change, rationalization of energy and water consumption, impact of the prices of unconventional sources on oil and gas prices. He is Chairperson of the Board of Directors of the Gulf Cooperation Council Interconnection Authority (GCCIA), the UAE’s Executive Member in the Gas Exporting Countries Forum

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of the National Emergency Crisis and Disaster Management Authority (NCEMA). He has authored a number of legal books which notably include ‘Maritime Zones of the UAE’, the ‘Rules of International Treaties in Public International Law’ and ‘Documents in Public International Law’. This week, Matar was is Addis Ababa to attend the World Energy Congress which was held from October 25-30 at the UNECA and Sheraton Addis. A huge UA

E delegation led by the undersecretary of the Ministry of Energy and vice chairman of the UAE National Committee to the World Energy Congress, participated at the conference.

Kaleyesus Bekele

of The Reporter sat

down with Al Neyadi to discuss UAE ‘s energy policy and possible investment ventures in the renewable energy sector in Ethiopia .

Excerpts:

The Reporter: What is the government of UAE doing to a

ddress energy demand in that co

untry? Matar Al Neyadi (PhD):

First of all I would like to mention that this i

s my first visit to Addis Ababa and I am really impressed by what I saw her e, the hospitality of the people, and the efforts being exerted by the g

overnment to develop the energy sector. T

his is my first visit to Ethiopia but I am

sure that it will not be the last. Ethiopia is a country with historical connections with the Middle East and there is a lot of commonality and trade going on with United Arab Emirates. More importantly, there is an opportunity to strengthen the ex

isting trade and diplomatic relationships through joint collaboration between Ethiopia and the UAE. Regarding, your question on wha

t the UAE is doing presently in the ener

gy sector and energy policyma

king, we believe that demand management is an important pillar in the energy sector. The country is now working on a national energy policy for 2035. A central pillar to this policy is dem

and management and energy efficiency. In the electricity sector, we are working now on three different initiatives: first, we are drafting a federal law f or electricity and water efficiency. As you know, the UAE a water scarce country; we do not have abundant water resources as Ethiopi

a. Water is a very important resource for

the UAE, therefore, enforcing polic

ies in water efficiency is a priority a

nd we are working on a federal law to encour

age efficiency in water and electricity consumption. We think this law will enable us to encourage water and elec

tricity consumers to make a more efficient use of resources. Another element we are working

on at the moment is electricity utilization in government buildings. The ministry is charged by the cabinet to look into the government buildings and tr

y to retrofit the electricity and make them more efficient in consumption. The ultimate goal is to reduce consumpti on in government buildings. By taki

ng this steps, the Government is leading b

y example to encourage private sec tor and individual consumers to take similar steps.

We also encourage commercial buildings to increase their efficienc

y and reduce electric and water consumption. We believe that that will reduce the demand for electricity in the country. The other elem

ent that we are working on at the mom

ent for the electricity is the introduction o f green codes for building. Municipalities across the country are introduc

ing green code building that will b

e crucial to new construction, ensuring tha

t each new building is energy efficient and more sustainable. Together, these three elements w

ill help us reduce energy consum

ption significantly. It will fit in the energ y policy that the government i

s forming. As I said earlier, demand management is a main pillar in the energy p

olicy. Another priority for the UAE is the transport sector and the introduction of energy policies that encour

age efficiency. Last July, the UAE government deregulated the price of gasoline and diesel. This is a si

gnificant step for an energy-producing

nation and the UAE is leading the region in the elimination of fuel subsidies.

Today, in the UAE the price of gasoline and

diesel is now linked to the international p

rice. We believe this step will help r

educe the demand. It will also introduce a new specification for cars that are imported to our country to be mor e efficient. This will help us reduc e our fuel consumption significantly. The second element in the transp

ort sector is that we are working on a project to enhance the public transportation. We have introduced ambitious projects to introduce public railways, trams and marine transportation. We also have a m odern and efficient bus transportation linking all the major local a

nd national routes. There are initiatives being taken to encourage the public to use public transportation. For example, we have designated lanes for buses to avoid traffic in the road that will hel p people to use buses. By doing so, we hope to reduce our gasoline and

diesel consumption.

Can you tell us about your electricity demand and gener ation capacity? And how it is growing?

Our economy is growing year to year. Our GDP is growing at a rate o

f four percent. This translates to a continued

Partnering

with Africa

Photo By: Reporter /Tamrat

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The Reporter, Saturday, October 31, 2015 Vol. XX No. 999

LIVING & THE ARTS

Ð

Ethiopia’s international ratings seem to have soared when the country launched its light rail system in the capital Addis Ababa. It

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in sub-Sahara Africa to do so. And the country is now being used as a shining example in infrastructure development for many African countries. Now, with the rail system serving the public for about a month, excitement and anxiety are what Ababans feel when talking about the LRT, discovers

Henok Reta.

On board the light rail

This week the compound of one of the newly inaugurated offices in as busy as ever. The brown-painted building in the Kality area houses the Addis

Ababa Light Rail Transit operations center, depot and offices. Both the Light Ra il Transit (LRT) system operation and electric power distribution centers are located inside. Unlike many oth er offices in the country, these offices are co-officiated by Chinese and Ethiopia n nationals. One can imagine how difficult it would be as noise erupts from a group of Chinese and Ethiopian

s entering a calm office in a prolon

ged conversation about an operational matter. They all look busy, maki ng sure the operation is going on well. “We are coping with a difficult working environment,” one local employee says. Apart from the language barrier, b

oth Ethiopians and Chinese employees face the huge gap in culture and mannerisms and that to some extent seem to be affecting their work

ing relationships. Nevertheless, they w ork in a coordinated manner as this

is one of the highly anticipated projects the country. Currently, they are taking

maximum care to make sure that it all runs smoothly. Angassa Negassa, 50, resides in Bhere Tsige, Saris, one of the mo st inconvenient parts of the city for pub lic transportation. He has suffered a

lot in the past because he was hardly able to catch the city bus or a minibus t

axi by the time he left home for work. Sinc e the beginning of October, he has starte d using the Addis Ababa LRT, the first LRT in Sub Saharan Africa, which a ims to significantly ease the transport

ation issues in the Africa’s diplomatic capital, Addis Ababa. “I am enjoying it. I see it as someth

ing much more important than anyt

hing else for people like me,” he says. Last Thursday morning, he stepped

up on the concrete stairs at the Stadium B terminal and waited for exactly

two minutes to catch the light train that starts from Menelik II Square and proceeds to Autobus Tera, Abinet , Lideta, Mexico, Legahar, Stadium , Meshualekia, Riche, Lancha, Temeng

ia Yaz, Nifas Silk 1&2, Saris and fin

ally makes it’s last stop at Kality. This

16km path of the LRT public transpo rt has been seen as a relief for the tens of thousands of the residents who ha ve come aboard regularly ever since it commenced partial operations about a month ago. The buzz of the much-awaited and much-anticipated Addis Ababa LRi s still fresh amongst the residents. The train is usually filled to capac

ity, and at times there is hardly enough room to stretch. Still, many of the resi

dents have not yet tested it; millions drea m of coming from outside of the city in pursuit of this special experience. Some seasoned citizens associate it with the start of the Anbessa City Bus, which started operation in the capital as

a share company in 1942. Particularly for those who are upset with the ser

vice of the blue and white minibus taxis,

the launch of the LRT transport is a drea m come true. “It’s just been the beginning of modernity for me. There has been n

o harassment and entanglements so far,” Angassa says, explaining why th

e arrival of the LRT matters in the daily lives of millions of Addis Ababans.

... ome the ch a rly for vice of s, the dream f been no nts so ng why the n the daily babans. www.thereporterethiopia.com 30|

The Reporter, Saturday, October 31, 2015

Vol. XX No. 999

#REPORTERBOOK

R

R

Meme count soars as US spy runaway #blimp crashes to ground

#FreeBacon topic sizzles on social media after WHO meat report

#Blimp

It was an event made for meming: an unmanned expensive ar my

surveillance blimp inexplicably going rogue over the United States on Wednesday. Within minutes of the craft, which carries the catchy name Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS), breaking loose in Maryland dragging cable as it drifted over Pennsylvania, tweets were flying and heads were being photoshopped onto the dirigible. The blimp reportedly disturbed power lines. Two F 16 fighter jets were summoned to track the 74-meter helium-filled balloon before it came to rest near Moreland Township, Pa with authorities aiming to recover the multi-million dollar sensor technology aboard the JLENS rather than shoot it down. The airborne radar has the ambitious objective of giving early warnings of low-flying missiles and planes.

The 17-year program has cost the Pentagon around USD 2.7 billion, according to a

recent feature in the Los Angeles T imes.

In the short time it drew an audience, the blimp saga trended on Twitter. Have a look at some of the funny memes…

Bacon lovers took to social media on Tuesday to express disdain over a World Health Organization report that said processed meat is likely to cause cancer. The hashtags #FreeBacon, #Bacongeddon and #J

eSuisBacon were

among the top-trending topics worldwide on Twitter for a second straight day. Celebrities, politicians and ordinary consumers were r

eacting to

Monday’s announcement by the WHO that eating processed mea ts

including hot dogs, sausages and bacon can cause colorectal cancer

in humans, and that red meat is also a likely cause of the disease. The review by WHO’s International Agency for Research on Cancer (IARC) also said there was some link between the consumption of red meat and pancreatic cancer and prostate cancer. The IARC examined some 800 studies during a meeting of 22 health exp

erts

earlier this month. An analysis of social media sentiment by Thomson Reuters found that social media participants were not happy about the WHO review. Negative tweets outnumbered positive ones by a ra

tio of nearly 7 to

1 on Monday and 6.5 to 1 on Tuesday, according to the ana lysis tool

that tracks and aggregates positive, neutral and negative tweets with hashtags #cancer and #bacon in order to generate a senti ment

score. (Reuters)

INSIDE

By Neamin Ashenafi

The African Union (AU) in its long awaited and delayed report has accused both the government of South Sudan and rebel forces of forced cannibalism, extreme violence and gang rapes since the conflict erupted at the end of 2013. In the report, the AU said the commission, formed last year under the chairmanship of Nigeria’s ex-president Olusegun Obasanjo, had identified perpetrators of violence from both sides. The report documented details of brutal killings, abductions of woman and sexual violence among other abuses, mostly committed against civilians who were not taking part in the fighting. A commission of inquiry found evidence of killings, torture, mutilations and rape, mostly against civilians, as well as episodes of forced

AU South Sudan report reveals

cannibalism, mass killing and gang rape

cannibalism.

“The commission believes that war crimes were committed in Juba, Bor, Bentiu and Malakal,” the report said in reference to the key conflict towns. Some witnesses in the capital, Juba, told commission members that they had seen people forced to drink the blood and eat the flesh of people who had just been killed.

The investigators found “evidence that some of the people who had been gathered were compelled to eat human flesh, while others were forced to drink human blood belonging to a victim who had been slaughtered and his blood collected on a plate,” it said.

One witness said “she saw SPLA (South Sudan army) soldiers burning dead bodies and compelling Nuer women to eat burnt flesh of burnt victims,” the report added.

The report also accused the forces loyal to President Salva Kiir, an ethnic Dinka, of recruiting an irregular tribal force before the outbreak of civil war in December 2013.

The report alleged that government troops carried out organized killings of ethnic Nuer in Juba, the capital. When the violence began, Machar became a rebel leader.

The African Union investigators found that the conflict began on December 15, 2013, when a skirmish broke out between Dinka and Nuer soldiers in the presidential guard following political tension between Kiir and Machar. The 315-page report dismissed the claims of Salva Kiir about the attempted coup. “From all the information available to the Commission, the evidence does not point to a coup,” it

By Tamiru Tsige

The Federal Supreme Court on Wednesday has suspended the lower court’s order for Andargachew Tsige to be brought before court as a defense witness.

The Supreme Court’s suspension came after federal prosecutors filed an appeal against the Federal High Court order of 14 July.

The court said the prosecution’s appeal asking the decision of the high court to be reversed has been accepted “for consideration” and ordered both sides to appear before it on November 18. The high court ruling will be suspended until the

Supreme Court

suspends

Andargachew

Tsige summon

By Birhanu Fikade

The Swedish telecom giant, Ericsson, is expected to handover most of the 3G networking project it has been installing for the past ten months in the southern part of the country. Andualem Admassie, Chief Executive Officer of Ethio Telecom, told The Reporter that by the end of December Ericsson is expected to handover the three circles it was awarded to develop when the Chinese telecom company, ZTE, failed to deliver. The latter was awarded the USD 800 million expansion project (half of the 1.6 billion dollars project which was awarded to Huawei and ZTE) to develop six circles with 3G networks. However, Ethio Telecom snatched three of the circles and handed them over to Ericsson.

Ericsson to handover network project by end of 2015

Supreme... page 42 AU South ... page 42

Andualem Admassie

Ethio Telecom hints a five-year huge expansion project

Rafiah Ibrahim, president and head of the Middle East and North Africa region at Ericsson told The Reporter that the handing over of the projects depends on the period Ethio Telecom has provided to Ericsson. She said that there some sites in the regions the telecom giant has so far handed over to the state monopoly.

Asked if the network disruption would be addressed after the delivery of all the sites Ericsson has been involved in, Ibrahim was confident issues will be resolved. But the overall network entirely depends on how Ethio Telecom launches the finalized projects.

According to Andualem, in the next five years’ time the government plans to embark on another huge expansion projects where the current 40 million Ericsson... page 42

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Vol. XX No. 999

HEADLINES

NEWS IN BRIEF

Ethiopian Prime Minister Hailemariam Dessalegn and Indian Prime Minister Narendra Modi pledged to step up their relations during talks held on the sidelines of the Third India-Africa Forum Summit. Ethiopian Ambassador to India, Genet Zewde, who attended the talks, told ENA in India that the two leaders exchanged views on ways of bolstering the longstanding diplomatic relations.

The talks also included increased trade and investment exchanges, technology transfer as well as expanding railway infrastructures in Ethiopia, the Ambassador said.

She also said the Indian side showed interest to import oil seeds from Ethiopia and engage in edible oil production.

The Indian Prime Minister confirmed that Ethiopia will be among the beneficiaries of the 10 billion dollars credit extended to African nations over the next five years.

According to Ambassador Genet, Modi also praised the fast economic growth in Ethiopia which serves as example to other nations. Prime Minister Hailemariam Dessalegn and other senior Ethiopian officials were in attendance of the third India-Africa forum. (FBC)

Black Rhino, owned by funds of U.S. investment company Blackstone Group, said on Wednesday it was looking at investments in Ethiopia’s power generation sector.

A foray into the country’s power industry would be Black Rhino’s second large-scale infrastructure involvement after it signed framework agreements last month to build a USD 1.55 billion fuel pipeline between Djibouti and Ethiopia. “We are currently assessing other opportunities in Ethiopia such as hydro and wind. That is something we are very interested in and engaged in,” Shilesh Muralidhara, a Johannesburg-based developer at Black Rhino, said. “We want to be here for the long term,” he told Reuters.

In addition to the array of power projects under construction, Ethiopia wants to add 12,000 additional megawatts of capacity through planned projects from hydropower, wind and geothermal sources under GTP II.

Azeb Asnake, Chief Executive of state-run Ethiopian Electric Power, told Reuters on Wednesday the body was in talks with 14 international firms for possible partnership deals. (Reuters)

Black Rhino looks at renewable power

investments in Ethiopia

Ð

By Birhanu Fikade

Following the recent announcement of South Africa’s colossal Standard Bank opening a representative office here, Taitu Wondwosen has been appointed to oversee the country office as senior vice president for corporate and investment tasks. Located off Cameroon Street, the representative office has rented a floor at Park Lane Tower around Bole

Standard

Bank appoints

Ethiopian banker

for Ethiopia

office

By Yohannes Anberbir

A draft proclamation which aims to re-establish the existing Document Registration and Authentication Office (DARO) with more powers and new structures was tabled to parliament on Thursday.

The bill cited as ‘Authentication and Registration Proclamation’ proposes to re-establish DARO as an institution both at federal and regional levels of government for “effective synchronization among all the institutions throughout the country.” The draft empowers both the federal and regional governments to establish their own Document Registration and Authentication Institutions (DRAI) applying similar standards. “It has become necessary to amend the

existing laws…to create transparent relations between authentication and registration institutions and supervising improperly certified documents and to enable to have efficient economic and social relations among persons as well as to make the procedures among persons as well as to make the procedures predictable and thereby to create one economic community,” the draft preamble stated. Thus, an appropriate federal institution shall be established by regulation of the Council of Ministers to nationally coordinate and support the authentication and registration activities, to organize and keep a national data base for authenticated and registered documents, according to article five of the draft bill.

Regional governments are also entitled to form Authentication and

Registration Institutions responsible to enforce the proclamation. Structure of these regional institutions shall be determined by respective regions based on their objective realities, the draft bill states.

However, these regional institutions are required to maintain the uniformity of national document authentication and registration system. Furthermore, they have a responsibility to send to the federal institution the necessary data of documents they authenticated and registered as well as to implement other collaborative activities.

Improperly authenticated and registered documents are one of the factors which prompted the government to amend the existing proclamation. The draft bill authorizes the institutions to suspend improperly authorized and registered documents,

made deliberately, by negligence of authenticating officers or through forgery.

“The institution may, if it is proved by adequate evidence, pass temporary order of suspension on improperly authenticated and registered documents when petition is lodged by concerned person or by its own initiative and when it is proved that failure to suspend may cause serious damage that may not be easily reversible,” article 25 of the draft bill says.

After making first round deliberations, the House of Peoples Representatives has sent the bill for further scrutiny to the Legal and Justice Administration Standing Committee, chaired by Gebregziaber Araya who was appointed the same day.

Bill proposes to re-establish Authentication Office

By Kaleyesus Bekele

One of the fledgling private airlines in Ethiopia, East African Aviation, imported the first air ambulance aircraft to Ethiopia.

The King Air350 air ambulance aircraft was bought from a US-based company at a cost of 2.5 million dollars. Managing director of MTDN, owner of East African Aviation, Mulat Lemlemayehu (Capt.), told The Reporter that more than 500,000 US dollars were spent to equip the aircraft with a state-of-the-art medical equipment required to give emergency medical services on board. Mulat flew the new aircraft all the way from Greenville, South Carolina to Addis Ababa three weeks ago. “It was a 28 hours flight or it took four and half days to reach here.”

According to Mulat, all modern medical equipment that enables a physician

East African Aviation imports first air ambulance aircraft

East African ... page 38 Standard ... page 7

Ethiopia, India agree to bolster development partnership

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HEADLINES

|

5

Foreign Minister Tedros Adhanom (PhD) said Tuesday Ethiopia has targeted to double its road expansion to 200,000kms by the end of GTP II in 2020.

Tedros made the remark in his address at a Plenary Session on

“Collaborating to Address Africa’s Infrastructure Needs” at the India-Africa Business Forum in New Delhi.

To foster intra-regional links in Africa, the foreign minister emphasized that Regional Economic Communities should play a vital role in realizing these goals and pave the way for gradual integration as stipulated in the African Union Agenda 2063.

“My country Ethiopia is a strong advocate of both national and regional infrastructure development,” Tedros said stating that Ethiopia is now connected by highways with all its neighbors and working integration through energy supply, railway and air transport.

Notwithstanding Africa’s weak infrastructure link and the financial gap in such regard, Tedros said Africa “should value the support of many bilateral and multilateral financial institutions in which Indian is also a part”. (The Ethiopian Herald)

President Mulatu Teshome (PhD) has extended calls for immediate action to develop and utilize Africa’s energy potential.

Africa needs to urgently address gaps in the energy sector to improve the lives of its citizens, the president said while addressing the closing session of the 2015 World Energy Council Executive Assembly and Energy Leaders Summit here in Addis Ababa on Thursday. “It is my belief that this gathering helps us commit to implement proper policy measures and institutional and regulatory frameworks,” President Mulatu stated.

Indicating the huge energy resource potential in Africa, the president said the continent’s energy sector is underdeveloped.

Referring best practices, developing modern and efficient energy technologies, building local capacity and the necessary finance are also among the points suggested by the president to make proper use of Africa’s energy sector.

President Mulatu said the Summit held in Ethiopia provided decision makers and stakeholders with a new momentum to define and recalibrate the countries’ policies and priorities. (ENA)

Ethiopia targets doubling road

expansion by 2020

President calls for urgent action in Africa’s

energy sector

ATA report reveals complex predicament amid success

By Yohannes Anberbir

Ethiopia exhibited a two level improvement in the 2016 Doing Business Report, yet it ranked 146 out of a total of 189 countries assessed by the World Bank.

The 2016 Doing Business Report released from Washington DC on Thursday emphasized a substantial room for improvement for Ethiopia. The World Bank annually assesses and releases its highly authoritative Doing Business Report. The Doing Business Report captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits,

getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Out of the aforementioned parameters,

Ethiopia has made an improvement only on two of the indicators: dealing with construction permits and enforcing contracts.

The report shows that Ethiopia is among the best performers in the sub-Saharan region on enforcing contacts, with a global ranking of 84th and 7th in the region.

“This is due, in part, to past efforts to ease the process of contract enforcement which has resulted in considerable time gains. For example, over a decade ago, it took an entrepreneur in Addis Ababa 690 days to resolve a commercial dispute. Today it takes only 530 days-less time than Canada,” the WB

Ethiopia shows slight improvement

in ease of doing business

Ethiopia shows... page 41

By Henok Reta

A report released by the Agricultural Transformation Agency (ATA) dubbed the “Transformation Agenda Progress Report” covering the period extending from 2011 to 2015 reveals that the transformation of the agricultural sector although largely successful also succumbed to challenges in three critical thematic areas: insufficient alignment with stakeholders, misunderstanding and weak-links to envisage the scope and magnitude of the agenda and broad loopholes in the capacity building process.

Khalid Bomba, CEO of ATA, told journalists that the environment that the new agency started its work was far more challenging since the overall agricultural sector landscape was highly complex and difficult. According to Khalid, getting all the stakeholders who have direct and indirect bearing

By Neamin Ashenafi

Anbessa City Bus Service Enterprise, in its endeavor to make their services more modern, is applying technological advanced transportation systems to repair and expand its current three garages and depots, as well as to build a new one in the Akaki Kality sub city. This endeavor financially supported by 18 million dollars from the World Bank, Bedlu Assefa General Manager of the Enterprise, told The Reporter.

WB extends

assistance to

modernize

Anbessa City Bus

WB ... page 41

ATA... page 41

on the success of the transformation agenda was one of the difficulties encountered in the period. On the other hand, the agency, which commenced its work one year into the first generation of the Growth and Transformation Plan (GTP I), has made it difficult to manage the stakeholder aspect, the CEO underscored. In general, the report highlighted the success story in the transformation agenda indicating 53 percent of the overall 84 deliverables in the agenda to be on track, 35 percent slightly delayed and the remaining 12 percent to be significantly sidetracked. According to Khalid, the agriculture sector is a very complex sector and that the scope and the magnitude of the agenda should be fully shared among

Wondirad Mandefro (L) and Khalid Bomba

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Standard...

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The well-established global policy influencer, The Economist Group, has concluded the day-and-a-half event dubbed “Ethiopia Summit” where intonation of the meeting was directed at the liberalization of monopolized sectors the Ethiopian government frequently resisted for long – banking and telecommunications.

Pratibha Thaker, regional director of the Middle East and Africa department at The Economist Group (her primary task is running The Economist Intelligence Unit), told The Reporter that the summit was mainly geared towards discussing investment potentials and challenges faced by investors and policymakers in the country.

She underscored the position of the government: that liberalization of monopolized sectors such as telecom and finance is clearly unlikely to happen regardless of the pressure put on the government to do so. During the opening of the event, Arkebe Oqubay (PhD), minister and senior advisor of the prime minister, affirmed that there is no intention to open the monopolized state-run firms.

Carlos Lopes (PhD), executive secretary of the United Nations Economic Commission for Africa (UNECA), warned that Ethiopia should sequence in striking the balance of economic growth. One basic action Ethiopia is urged to take is to open up of the sectors that are strategic in the dynamics of global economic and investment activities.

“Ethiopia is facing a difficult timing issue because of the monopoly of telecom and other public sectors,” Lopez argued.

“The huge influx of refugees and the ‘bad neighbors’ Ethiopia is surrounded by are what Ethiopia should recognize well,” Lopez noted.

There are about 830 thousand South Sudanese and Eritrean refugees harbored in Ethiopia. In addition to that, the country is one of the largest peace keeping mission contributors in the region. Lopez emphasized that Ethiopia is a country working to fix the bad neighborhood, and is also a generous nation, which provides free access to tertiary education. Thaker is hopeful that it doesn’t necessarily mean nothing will happen in those sectors in the future. She also argued that there is an urgent need for reform.

“There is very impressive economic growth over the past 15 years on the back of infrastructure development, agriculture, and education,” Thaker said. “This is one country in the

continent where I feel plans becomes a reality. If not 100 percent, it’s close to it. Human development indicators have improved. The interests are coming from the investors’ side, as well from domestic and international.” This fact, however, requires investors to come with a long-term perspective as the economy is treading in transition, Thaker advised foreign investors. She stressed that they always have to review strategies as conditions can change so quickly.

According to Thaker, the second five-year term of the economic plan of the country—the Growth and Transformation Plan (GTPII)—and the increasing presence of China shaped the conference. In the GTPII, among other things, industry and the intention to increase the share of manufacturing from the current five percent to 25 percent create a substantial number of jobs with certain skills. The role of China in areas of trade, investment and industrial parks development, private sector involvement in the manufacturing sectors, as well as in the financial elements have been well recognized, the renowned economist Thaker noted.

The event has been instrumental in ushering lively discussions in areas of investment and manufacturing that involved personalities like Helen Hai, one of the Chinese movers and shakers of the manufacturing sector in Ethiopia. Previously she was introduced to Ethiopia as vice president of Huajian Group, the shoemaker. She is currently managing her company Made in Africa. Hai bravely downplayed the negative narratives of the western media, specifically the BBC. Hai challenged Mary Harper, African Editor at the BBC World Service, who moderated the textile and garments panel among others. Harper admitted that the BBC has no appetite for talking about the industrialization of Africa or the Africa rising narrative as it has more interest in narrating war, conflicts or drought. This platform that The Economist staged may continue next year, but Thaker is unsure of it.

“Next year we are hoping to come back, but that depends on how things shape up here,” she told The Reporter.

The Ethiopia Summit:

Movers and Shakers

area.

The announcement was made during a sideline event at the Ethiopia Summit, which was organized by The Economist Events, and the country representative office has become officially operational since Wednesday.

Ben Kruger, Chief Executive of Standard Bank said that as Ethiopia emerges to be a major energy hub in east Africa; energy exports will become a major foreign exchange earner for the country in the future. Hence, Standard Bank’s representative office will act as an entry point for clients seeking to invest in Ethiopia, Kruger affirmed. Taitu also told The Reporter that Standard Bank has set priorities in areas of power projects, infrastructure development, agribusiness and consumer goods most investor clients are believed to have vast interests in. According to Taitu, the opening of the office is the result of clients’ push to know more about Ethiopia from the bank’s point of view. “We are here to tell folks about who we are, to understand the market, to build up our research capability and to understand how things work here and know more how the economy works better in terms of supporting our clients if they are looking to do business here”, she said. Standard bank, the largest bank by assets in Africa, is based in South Africa with clients from different parts

of the world. Currently, the total assets of Standard Bank stands at a staggering USD 163.8 billion. Taitu said that the bank works with companies from the US, Europe, Asia and South America. Born and raised in Ethiopia, Taitu – single and young – has been educated in the US where she has attended economics and finance schools. She has worked at the New York Federal Reserve Bank – one of the largest central banks in the US – and at JP Morgan Chase in the areas of corporate banking back in the day. She was in the central bank when the global financial crisis hard hit major financial institutions in the US which also led to the collapse of one major bank, the Lehman Brothers. It was the Federal Reserve of New York which was tasked with assessing the magnitude of the crisis during her time there. Apart from Standard Bank, major banks like Ecobank of Nigeria and HSBC of the UK have already opened their offices here.

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IN-DEPTH

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Abai Schulze, 27, is the person behind ZAAF, one of the few high-end designer labels to come out of Ethiopia, which specializes in handcrafted leather luxury goods. Just two years in the market, the young entrepreneur and her label ZAAF are already going to internationally renowned fashion venues such as the New York Fashion Week. The high-end leather handbag she produces from her small workshop/ headquarters located behind Atlas Hotel and supplies exclusively to the US and European markets are already regulars in some of the online platforms which cater mostly to the designer labels and high-end products.

Taken to the US at the age of 11 by her adaption parents, Abai studied economics and minored in fine arts before she decided to return to her birthplace and do something of a “business nature”.

Then she immediately took notice of the untapped potential in the Ethiopian leather sector. “We had the raw material (the leather), the labor and it was only the logical thing to participate in leather value addition,” she says. For small establishments like hers, small volume and high quality leather articles were the only way to compete in the international market. Dominantly reliant on the domestic finished leather supply, ZAAF is increasing becoming the face of the Ethiopian leather sector together with the giant Chinese shoemaker, Huajian, which opened shop in Ethiopia in 2012.

As far as Abai is concerned, the quality of Ethiopian leather is serving her right in the international market and that with exception of infrequent returns due to production defect, she has not faced major problems regarding the quality of the leather.

True to form, traditionally, genuine Ethiopia leather is well accepted in the

global market for its fiber and hence strength. On top that, the local footwear market as well have come a long way in the past decade or so. Anecdotal evidence suggests that domestic shoes market, which was largely dominated by Chinese products, is now rapidly changing in favor of local producers. It appears that domestic shoemakers are now reviving in the domestic market both in quality and price. Nevertheless, the Ethiopian leather sector is far more problematic than what meets the eye. For starters, export revenue targets in the GTP I, USD 500 million, which largely hinged on finished leather and leather products was missed by miles. At the end of the plan period the total export intake was just shy of USD 140 million. This was highly unacceptable for the government considering the country’s ample endowment in terms of its livestock population and large labor force, two basic ingredients for leather manufacturing. However, recent investigations have shown that one of the fundamental problems lays downstream the leather value chain: the raw hide and skin trading sector.

Non-existent market

Hide and skin production and/or animal slaughter are very traditional in Ethiopia. Animal slaughter is a highly traditional and cultural practice, the majority of which is carried out in people’s backyards. According to data, close to 80 percent of the overall animal slaughter and the production of hide and skin by extension comes from rural areas, where the majority of Ethiopians live; in fact the bulk of the slaughter and the hide and skin production done in modern abattoirs and slaughter slabs is not more than 20 percent of the overall production.

This gives the domestic raw hide and

Contradiction in the

leather value-chain

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Vol. XX No. 999

IN-DEPTH

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skin “market” a unique character, where a number of actors participate in the overall supply-chain between slaughtering and processing factories. According to Birkinesh Gonfa, director of the marketing directorate at the Leather Industry Development Institute (LIDI), the multiple layer of participants in the raw hides and skins market made the market vulnerable to side trading between the traders and contraband activities ending up in artificially increasing the price. To that end, the government issued a new proclamation in 2013 repealing the one that came out 2005.

If there is any take away from this proclamation, the law sought to slash a number of participants significantly there by shorting the distance between the hide and skin producers and tanneries. That it did with passion. Traditionally, the local hide and skin scene is marked by the door-to-door micro collectors who then pass on the skin to the medium/large regional collectors and suppliers. Further yet, the regional and medium collectors deal with large skin traders in Addis Ababa, who in turn directly supply the tanneries.

As to the new proclamation, this is to be no more. Now the law authorizes only two kinds of formal hide and skins transaction: at first level and second level “markets”. But, limits the middlemen just to hide and skin suppliers, who will trade with households and small slaughter slabs in rural areas at the primary market and then engage with the tanneries at the secondary markets.

Close to two years since its ratification, the formal primary and secondary “markets” are not yet existent, all stakeholders agree. For one, the task of the regional agricultural bureaus and Ministry of Trade (MoT), in structuring the primary market, both in terms of infrastructure and participants, is nowhere complete. Birkinesh argues that at this level the proclamation has not yet touched the ground. She says that all the small and micro collectors as well as medium and large collectors have two options: either to be re-registered as suppliers or become official agents of large suppliers. To be suppliers in their own right, they have to fulfill some criteria and prerequisites and the agricultural bureaus and the ministry has to make sure that they comply.

Poor quality

Primary intent of the proclamation, however, is to address the longstanding leather sector problem that is ensuring quality and adequate supply of raw hide and skin. Quality is of utmost concern for the leather sector for ages.

According to Yigzaw Assefa, chairman of the Ethiopian Leather Industries Association (ELIA) and CEO of Bahir Dar Tannery, the quality of raw skins and hides is nothing but declining by day. He says the most essential intervention in this regard should be on the regional and woreda levels where the hides and skins suffer the most damage.

As a matter of fact, the most damage to raw hide and skin in Ethiopia is done while it is in the back of the animals. For a long time, parasitic skin disease has been destroying raw hide and skin. Although not as damaging, the traditional practice of branding and flaying cattle is also known to be degrading the quality of hide and skins for long time.

For Yigzaw, this is where intervention would matter the most. He says the previous practice of agricultural workers educating and following up the cattle rearing in the countryside looks to be dwindling. Post-mortem skin handling nevertheless is as much

an issue as the former. Proper skin treatment and storage is another big problem currently, the chairman indicates.

But, the traditional skin collection and handling system is not something that can change overnight argues, Birhanu Abate, chairman of the Ethiopian Raw Hides and Skins Supply Association (ERHSSA), a recently formed association of 40 suppliers companies. He argues that the root of the collection system is embedded so deep in the way of life of the people, where households conduct animal slaughter rituals only around holiday times that it cannot change by issuing one or two proclamation. “I am not opposing the proclamation,’ he says, but the supply route of the raw hide and skins is highly scattered; and that is why it called for the services of the small/micro collectors who roam the deep corners of rural Ethiopia to get the hides and skins out to the market.

True to form, the majority of backyard slaughters and the storage system

afterwards are anti-quality to say the least. According to the hide and skin quality measurement standards, which according to informants has been there since the Emperor’s time, the damage to skin during slaughter (number of cuts for instance) and the size of the hide and skin define what is the quality of raw hide and skin.

Standardization

On the other hand, measuring the quality of raw hide and skin in the “market” is a bit of a controversy. For instance, the suppliers association is of the view that tanneries hold the exclusive right to assign quality grading to the raw hide and skin that is supplied to them. “It is a verbal quality grading system, which we call the ‘rejecting system’; the tanneries have personnel who just assign the quality of a raw hide and skin just by looking at the product,” Birhanu told The Rreporter in an exclusive interview. So, at the moment, tanneries holds the most power in determining what quality grade is assigned to raw hide and skin that is supplied to them. “If they say the quality is low, you accept,” Birhanu says. Sinkinesh as well acknowledged this fact and say quality determination is within the power of tanneries she says.

However, the problem looks to be far more than that. According to suppliers, the tendencies of tanneries to reject the quality of raw hide and skin supply even after they have started to process them into pickle and wet blue is another alarming trend. “For instance, some tanneries can tell you that your agreed upon price has been slashed since they have come to realize the poor quality of your (hide and skin) delivery after they started processing,” Birhanu says. And this is absurd because these quality issues might not even have appeared during the delivery and quality inspection phases. How can one be liable to something he has already sold and delivered to customers, Birhanu asks; what if the quality problem was caused by mishandling in tanneries. Yigzaw counters this saying that the quality problem is in fact harsher on the tanneries. For one, the real quality of the raw hides and skins is not something that is reliable; the real quality becomes apparent once processing starts; that is when leather reaches the pickle or wet blue levels. “Usually, tanneries incur cost due to poor quality raw skin because we have no way of determining for sure what quality we are buying except when we entered processing phases,” he argues further. Nevertheless, a basic feature of the proclamation is having an

Contradiction ... page 40

Birkinesh Gonfa

Birhanu Abate

Photo By: Reporter /

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INVITING TENDERS FOR SALES

OF VEHICLE

Registration Number : AA – 3/41283 Model : REXTON RX290 Year of Manufacturing : 2006 Origin : Korea Color : Black Horse Power : 129 No. of Cylinder : 5 Engine Capacity CC : 2874 Tyre Size : 235/70/16 7LWOH&HUWL¿FDWH Mileage : 240,000 kms

Current Condition : Vehicle is not in working condition.

Vehicle Inspection : Mon – Friday between 01:30 pm to 03:30 pm by calling the below numbers for appointment.

Interested bidders may submit their bids in writing to the below address with their name, address, mobile numbers and the bidding amount.

Addis International Catering – Technical P. O. Box: 121 Code 1250, Addis Ababa The Last date to bid is 15th November 2015 before 03:00 pm.

For appointment and more information, please contact: Tel No.: 0116-620035/ 0936-043681

e-mail : s.weldetensay@addiscatering.com.et Website: www.addiscatering.com

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www.thereporterethiopia.com

The Reporter, Saturday, October 31, 2015

Vol. XX No. 999

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