2merkato

Monday, 13 June 2011

The annual rate of inflation in Ethiopia rose to 34.7 percent in May from 25.6 percent in April as food prices climbed, the Central Statistical Agency (CSA) said today.

Food prices increased 41 percent in the year, compared with a 32.2 percent increase in April, it said.

According to IMF, one of the major causes of inflation in Ethiopia is "excessive" growth in the supply of money, which expanded 35 percent at the end of March. The IMF had previously predicted an increase of 22 percent in money supply in the current fiscal year.

The government, however, says that high international prices of commodity are responsible for the increase in inflation. Global food prices hiked in nine of the last 11 months, reaching a record in February, amid decreasing grain supplies and rising demand, according to the United Nations.

The price of oil has hiked due to unrest in the Middle East, but after the region stabilizes, prices in Ethiopia will drop, Hailemariam Desalegn, Deputy Prime Minister said on June.

The negative real interest rates that have resulted from rising inflation are discouraging a necessary boost to Ethiopia's national savings rate, the country director of the World Bank in Ethiopia, Ken Ohashi, said on June 7.

Ethiopia may find it difficult to sustainably finance its five year growth plan unless it increases its savings from the current official rate of 5 percent of gross domestic product, Ohashi said.

The IMF predicted on May 31 that Ethiopia’s growth rate might fallfrom 7.5 this year to 6 percent in the fiscal year to July 7, 2012, partly due to inflation. The government's forecast for the current fiscal year is 11.4 percent. However, Hailemariam said that the government would achieve its growth targets, Hailemariam said.

Source: Bloomberg

Roads Authority Requests 20 bln birr

Monday, 13 June 2011

The budget earmarked for the 2011/12 fiscal year is over 100 billion birr, sources at the Ministry of Finance and Economic Development (MoFED) said. The draft budget proposal was scheduled for submission to the council of ministers last week.

The 2011/2012 budget is 20 billion birr more than the current fiscal year's budget.

About 45 billion birr of the total is set aside for regional states as a budget subsidy which was allocated by Prime Minister Meles Zenawi. The regional states will use 70 percent of their share of the budget for road construction projects to connect 18,000 districts throughout the country except those in Dire Dawa and Addis Ababa.
The road construction in the districts is estimated to cover about 76,000 kilometres, the Ethiopian Roads Authority, which was entrusted to survey the projects, has in and of itself requested a budget of 20 billion birr from the federal government. If the request is granted, about 50 billion birr will be spent on road construction alone in the coming fiscal year.

About 35.9 billion out of the current fiscal year's budget of 77.2 billion birr went to capital projects while 24.2 billion was allotted as budget subsidy for regional states, and 17.6 billion was set aside for ordinary expenses. However, an additional seven billion birr was approved when finances ran short in the middle of the year.

Source: The Reporter

Monday, 13 June 2011

According Prime Minister Meles Zenawi, the country has planned to produce about 8,000 megawatts of extra electricity from hydropower sources in the coming five years. He had announced on 2 April 2011 the construction of a 5,250-megawatt project at a cost of $4.76 billion dollars close to the Sudanese border.

According to the Wold Bank, Ethiopia's hydropower potential of 45,000 megawatts is second in Africa only to the Democratic Republic of Congo.

Transmission line to Sudan, financed by the World Bank, could be completed this year, Raihan Elahi, the World Bank's senior energy specialist in Ethiopia, said last month. And, according to Elahi, an agreement has been concluded for Ethiopia to supply about 200 megawatts to Sudan.

The African Development Bank supplied 95 million dollars to Ethiopia and Djibouti to support the project that links the two countries, Ethiopia Resident Representative Lamin Barrow said on Friday.

Ethiopia is expected to make 10 million dollars from the first year of the connection, according to Barrow. The foreign exchange Ethiopia earns the connection can be used to support the country's Universal Electrification Access Program, Elahi said.

Ethiopia has a plan to provide electricity to 75 percent of its population in July 2015. Currently, 41 percent of the population has access to electricity.

Source: Bloomberg

Targets Exporting 1 mln tonnes of Potash a Year

Friday, 10 June 2011

Ethiopia has planned to achieve its target of more than doubling mining exports to 1 billion dollars a year ahead of time, Sinkenesh Ejigu, Minister of Mines, said yesterday.

The country expects to gross about 500 million dollars from mining exports in the current fiscal year, Sinkenesh said. Ethiopia had planned to double that over the coming five years with exploring for potash being its key aim.

Ethiopia is going to start mining potash within two years and is planning to export 1 million tonnes a year over the coming five years, Sinkenesh aid. That would amount to a small but growing portion of global demand, estimated by Potash Corp at 55 to 60 million tonnes for this year.

Nyota, London-listed company, had applied two weeks ago for large-scale gold mining on Tulu Kapi, 500 km west of Addis Ababa. The total inferred resource of Tulu Kapi is estimated at about 1.2 million ounces of gold.

Ethiopia takes 5 percent of free equity and levies 35 percent tax on taxable income generated from mining.

Increasing numbers of investors and mining companies are attracted to the country's large deposits of gold, silver, copper, platinum, potash and tantalum. Chinese investors are looking for opportunities in the region, as have some of the major mining companies.

Sinkenesh said small-scale prospectors currently account for about 50 percent of output.

Ethiopia has around 80 active mining companies, but expects that to rise sharply. Midroc has been the only gold miner until now, but Nyota, now focused on Ethiopia, is set to follow.

Source: Reuters

Thursday, 9 June 2011

The Ministry of Culture and Tourism said Tuesday that it had finalized preparations to apply a new classification for tourist facilities.

Manpower, quality of utensils, interior and exterior scenery, and care for customers' security are among the classifying criteria, Tadelech Dalecho, Minister of State for Culture and Tourism, said. And it will be revised at the interval of three years.

Tadelech said that the former classification had to be changed for it was no longer compatible with international standards. She said new classification would be given to hotels from one to five stars level, including deluxe, restaurants, lodges and pensions from 13 June 2011 onwards. Implementation of the new classification will start throughout the country before the current fiscal year ends in collaboration with regional bureaus of tourism, Tadelech said.

She called upon tourist facilities to provide all relevant information to pertinent bodies.

Source: Ethiopian News Agency

It may Exceed 10 Percent - Deputy Prime Minister

Thursday, 9 June 2011

Ethiopian economic growth may exceed 10 percent contrary to the International Monetary Fund's prediction on May 31 that it would fall from 7.5 percent this year to 6 percent in the 2011/2012 fiscal year, Hailemariam Desalegn, deputy prime minister of Ethiopia, said yesterday. IMF had said that the country's monetary policy was pushing up inflation which, combined with restrictions on bank lending, would in turn bring about a slower economic growth.

Hailemariam said that expansion would not drop below 9 percent in the fiscal year to 7 July 2012, from 11.4 percent this year. The economy has expanded an average of 11 percent over the past seven years according to IMF data.

According to the deputy prime minister, this year's sharp increase in inflation is the result of global food and fuel price hike and not loose monetary policy. He said that the price of oil had risen due to the current unrest in the Middle East and when that problem is solved, the price would go down. Therefore, he said, the problem Ethiopia is facing is only temporary.

The inflation rate jumped to 29.5 percent in April from 25 percent a month earlier as food prices increased, the Central Statistical Agency said on May 10. And according to IMF, broad money-supply growth was 35 percent at the end of March, which had previously projected growth of 22 percent in money supply this fiscal year.

Source: Bloomberg.com

Ten African entrepreneurs to be honoured

Thursday, 9 June 2011

For the first time this year, since its foundation in 2007, Africa Awards for Entrepreneurship, is open to applicants from countries all over the continent, Omidyar Network, a philanthropic investment firm and Legatum, a private international investment group, said Wednesday.

Profitable, growing enterprises whose earnings are about one million dollars to 15 million dollars a year are expected to win 100,000 dollars and five other companies will receive awards of 50,000 dollars each.

In its fourth successful year, the Africa Awards for Entrepreneurship honours and rewards African business leaders who have demonstrated the entrepreneurial spirit and embodied the qualities needed to be successful in business. The Award evaluates applicants on important points like profitability, return on investment and growth; investment in employees; long-term business strategy; culture, values and leadership; innovation to address market needs and contribution to the community.

This year's award follows on the success of last year's programme which accepted more than 2,700 applications from 15 countries as well as 18 different industry sectors. The 2010 awards event was attended by 250 business leaders and influencers. And it saw ten finalists selected from Ethiopia, Botswana, Kenya, Ghana, Uganda and South Africa.

When it was founded four years ago, the Africa wards for Entrepreneurship programme had accepted only five countries but it has now grown to including all countries of the continent. The announcement of this year's Africa Awards coincides with the publication of a report on entrepreneurship in sub-Saharan Africa by the Legatum Institute, the publishers of the 110-country Global Prosperity Index. The report says that entrepreneurs are the "enablers of growth" who break down economic barriers and social constraints and that entrepreneurship and access to opportunity are by far the most highly correlated indicators of a nation's overall prosperity. The Gala Awards banquet on December 8 in Nairobi will be preceded by an inaugural high-profile, one-day conference on entrepreneurship, Convergence: Africa, headlined by a globally-recognised champion of entrepreneurship.

This year's Africa Awards will honour ten finalists and winners in the presence of an international audience of leading business people, investors, policymakers, and entrepreneurs.

Source: The Botswana Gazette

Thursday, 9 June 2011

Ashegoda Wind Farm, the first of its kind in Ethiopia, is going to start projection of the first megawatt of electricity in July according to Jean-Christophe Belliard, the Ambassador of France to Ethiopia, who has been closely following the project.

The wind farm will have an installed capacity to generate 120 megawatt of electricity.

Believed to be the biggest wind farm in sub-Saharan Africa, the wind farm project is to be completed in three phases. The first of the project's three phases, according to the ambassador, will be fully completed by September and connected to the national grid with an installed capacity of 30 megawatt of electricity.

The construction of the wind farm project is in progress in Ashegoda, 20 km south west of Mekelle, the capital of the Tigray Regional State. Vergnet Group, the French turbine manufacturer and developer of wind farm, is commissioned to undertake the construction of the farm project at a cost of 210 million euro.

For various reasons, the project had been going slow when it started but now it is moving fast, the ambassador said.

The ambassador said that the wind farm was equipped with the kind of technology that makes it possible to tone down the wind mill just by pressing a button when a bad storm is coming.

By the time the project is fully completed in February 2013, it will have 120 GEV-HP 1 megawatt twin-blade tilting rotor turbines installed.

Source: Walta Information Centre

A factory which manufactures PP Bags, built by the Becho-Weliso Farmers' Cooperative Union at a cost of 21.7 million birr, was inaugurated on Sunday, 5 June 2011 in Tulu-Bolo. The Factory has created job opportunity for 179 people.

Speaking at the inauguration ceremony President Girma Wolde-Giorgis urged members of union and the surrounding community to exploit the natural potential of the area. The President also underlined the importance of the PP Bags factory in meeting the needs of the farmers and the demands of other agro-processing unions for bags.  

The president noted that the area was more suitable for wheat production (which had not yet been exploited properly) than other kinds of crop. Farm lands in the area are divided into small plots which, when merged and worked on with mechanized farming, could produce greater yield.

Yaregal Ayisheshum, director general of the Federal Cooperative Agency, said strengthening cooperatives was one of the development strategies being implemented to reduce poverty. The number of cooperative unions all over the country taking pat in developmet activities has now reached about 245.    

Dejene Hirpha, manager of the union said that the unionwhose capital was 140,000 birr when it was founded in 2000, had now grown to 33 million birr.  

It has been participating in the provision of agricultural inputs and credit, purchase and sale of crops, distribution of basic commodities, social services and other activities. The union has earned more than 1.8 million birr in the current fiscal year.  

Moreover, Dejene pointed out that the union was planning to run mechanized irrigation development to utilize underground and surface water in the area.  

Source: Ethiopian Press Agency

Fails to reach the original target

Ethiopia has earned about 78 million dollars from leather and leather products exported over the last ten months of the current fiscal year. And as this fiscal year comes to an end, the total earnings are expected to be 100 million birr. About the beginning of the current fiscal year, the government had planned to earn 200 million dollars from the export of leather and leather products. Half way through the fiscal year, however, the government lowered its projection to 120 million dollars as the entrance into the export market of new leather producers was delayed. This has brought about the failure of the Ethiopian leather industry to meet its second target for 2010/11.

Short supplies of skin and raw hide and rising prices are blamed for the failure to meet targets according to Brhanu Sergebo, corporate communication head of Leather Industry Development Institute (LIDI). The government is offering to solve the shortage problem by allowing a duty free import of raw hide and skin. Experts in the leather industry, however, think that under performance is due to falling demand in the international market while local tanneries say that the price of raw hide and skin are skyrocketing because of demand by large foreign owned tanneries which started production over the last few months. Moreover, they say that the either the country has to switch from crust products to finished leather products or its export profits may go on failing to meet targets.

The government has targeted to earn half a billion dollars from leather and leather products exports by 2015 and it is planning to impose a heavy tax on crust export in the 2011/2012 fiscal year to stimulate an increase in the more profitable export of finished leather and leather products. In addition, the government has banned new investors from joining the industry with the intention of controlling the supply shortage. At present there are 25 tanneries in operation in the country.

Source: Capital