Undisclosed amounts of oilseeds that were transported to China change course for a voyage back to the country owing to the new law imposed by the most populous nation in the world and the major trading partner of Ethiopia.
During his performance report in parliament, Gebremeskel Chala, Minister of Trade and Regional Integration (MoTRI) on Tuesday April 5 explained that as per the declaration that China issued late last year, the agricultural products that enter the country through its borders from different countries ought to have the pass requirement that it introduced.
He said that the declaration of the fast growing economy country had designed agricultural commodities like oilseeds and pulses, which are Ethiopia’s major export commodities to China, to have certain requirements in which need to fulfill. The requirements highlighted that exporters should have their own processing facilities and required standards registration number to get a permit.
“We have a significant number of exporters, while those who meet the criteria are very few. Those who have their own processing facilities are not more than 40,” he explained.
“Without our knowledge of the new standard set by the Far East country, the sesame seeds started the voyage to China, but when the new declaration was received, the consignment was made to return to Ethiopia,” he explained how the scenario unfolded.
According to Gebremeskel, the registration process for exporters that shall align with the precondition is ongoing and others who do not have the capacity to meet the criteria may use the registration number of other exporters.
On his eight month report of the 2021/22 budget year, Gebremeskel said that because of the new import standard that has come in effect in December last year, the volume of sesame seeds, which is one of the major export earning agricultural commodity for the country and the major destination for the Ethiopian seeds being China, exported to the second biggest economy in the world has declined by 74 in volume for January 2022 alone.
“The volume has declined by 3,477 tons and in terms of value it has reduced by 73 percent in the month of January when compared with the same period of last year,” he said.
“To improve the situation, we are working closely with the Chinese embassy,” he added.
The instability in the northwestern part of the country, which is the major source of the oilseeds, has also been stated as the challenge for the reduction of the export earnings from the sector.
He said that the volume of other export commodities that are traded through Ethiopian Commodity Exchange have reduced the impact of the export earnings.
Meanwhile the export sector is facing different challenges, the eight month performance has spiked by 20 percentage compared with the same period of last year.
He revealed that in the stated period MoTRI has been projected to generate USD 2.77 billion from commodity export, while the actual success is USD 2.52 billion or 92 percent.
As usual, the agriculture sector continued on its leading position in terms of earnings and even surpassed the target by seven percentages. In the period, USD 1.75 billion was secured from agricultural product commodity and USD 389 million and USD 320 million from mining and manufacturing industry sectors.
Mining met about 57 percent of its target, while the manufacturing sector attained 85 percentages, which is a big success for the sector since it is now on its low performance in the past when compared with the projection.
From the total export earnings coffee took the lion share by almost 43 percent followed by khat and flower that contributed 25 and 19 percent respectively.
He said that in the sated period the government and other importers, who allowed supply by using the diaspora account or franco-valuta schemes, imported 481 million liters of edible oil, 8.37 million quintal of sugar, 4.98 million quintal of rice, and 687,500 quintal pasta and macaroni.
On his report, the Minister said that legal measures have been taken on over 100 thousand actors to tackle the artificial price hike.
During the session, members of the parliament blasted MoTRI for its inability to control the skyrocketing inflation.
China’s rules leave shipment stranded
Meta Abo staff still in the dark
Federation of food, beverage, tobacco and allied trade union raises concerns that employees of Meta Abo Brewery are not receiving the right information even though BGI Ethiopia started managing the factory without the approval of the Ethiopian trade competition and consumer protection authority on the transition.
Employees of Meta Abo Brewery have also piled their complaints as the company remains silent about its transition and their future.
Due to continued complaints of Meta employees, the federation has held several meetings with top managements of Meta and government bodies and as Dereje waktola, president of the federation said, there is no clear information given to the federation.
“Even if we ask to see legal agreement of sale and minutes the Diego management team at the time told us that they didn’t have any information as the agreement was made only between the owners of the two companies,” said Dereje.
As Dereje pointed out, the federation has been trying to find these documents from the authority but has failed to obtain it as the two companies did not submit the sale agreement and documents to the authority.
Girmachew Mandefro, chairman of the trade union of Meta which has about 340 members from the total of 500 employees informed Capital that the management teams of Meta from Diageo has left the company without giving clear information about the new owners and their agenda for its employees.
As he explains, the employees have not received any information whatsoever on the matter. “Both Diageo and BGI Ethiopia have stayed silent after making agreement on the acquisitions of the company,” Girmachew stated, adding, “we have concerns about our future, on whether they are going to let us continue our job or make us leave.”
However BGI refuted the allegation. Gebre Selassie Sifer, Commercial PR Manager of BGI in a written response to Capital said, “the statement couldn’t be any further from the truth. BGI Ethiopia has submitted all the necessary documents on time and in full to the Trade Competition and Consumer Protection Authority (TCCPA) and it is now waiting for the necessary approvals to commence the takeover process. TCCPA and all involved government stakeholders have been exceptionally supportive and speedy in their support. It is our firm belief that we will be granted with the necessary approval once the review process is complete.”
The statement further reads, “BGI Ethiopia remains committed to the process and hasn’t been and will not be involved in the operation of Meta Abo Brewery until all the proper approvals are secured. Meanwhile, BGI is working on plans to channel its expertise and experience to keep and rejuvenate the brand Meta and rekindle the passion of the staff at Meta.”
Recently, BGI Ethiopia which has plans to rejuvenate the brand, in its statement sent to Capital disclosed that after having concluded the agreement to procure Meta Abo Brewery S.C. from Diageo, BGI Ethiopia is now waiting for the approval of the ETCCPA.
According to the Trade Competition and Consumers Protection Proclamation No. 813/2013, no agreement or arrangement of merger may come into effect before obtaining approval from the Authority pursuant to Article 11 of this Proclamation.
To this end, the federation requested the two companies to give clear information on the matter and to decide the future of employees.
The brewery which is based out of Sebeta, Oromia region has about 3.7 billion birr in government tax debt starting from 2017.
Diageo thus entered into an agreement for the sale of Meta Abo Brewery, to BGI, which is part of the Castel Group. The sale was subject to approval by the conditions of ETCCPA with everything set to completion by early 2022; however this has faced a slight delay.
Following the acquisition, Meta Abo joins BGI’s other five breweries i.e., St. George Brewery in Addis Ababa, Kombolcha Brewery, Hawassa Brewery, Zebidar Brewery and Maychew Northern Brewery with a combined production capacity of 3.6 million Hectoliters of beer annually.
Khat gets a stimulating change in directive
Ethiopia drafts a strategy for one of the major export earning items for the country, khat. After decades in waiting, the stimulant’s export tariff to Somalia market has also faced revision.
On his appearance in parliament whilst presenting his eight months performance, Gebremeskel Chala, Minister of Trade and Regional Integration, said that the ministry in tandem with relevant government bodies is working to improve the khat trading and export earnings.
He explained that changes emplaced in the budget year are improving the sector business.
According to the Minister, the khat trading directive has been in placed for about 41 years with out any change. He said that this made the stimulant leaf traders not to attain the full benefit of the export which consequently reduces the earnings that the country is supposed to secure from the export.
“Experts have since then gathered from different offices in order to identify the problem from the various studies drawing from the identified gaps as result the new trading directive has been developed to boost the khat trading,” he said.
He added that the export trading guideline and action plan have been developed, and it is on due process to be sent to the National Macro-Economic Committee for ratification.
As per the study conducted by experts, the minimum export rate to the Somalia market has been revised from the former and long established five dollar to double that amount.
Starting from January 23, 2022, the new price increments were officially introduced.
According to Gebremeskel, similar to other export commodities, khat is affected by contraband, “Owing to supply deficiency and the rise in contraband, government in conjunction with stakeholders are working to control the illegal activity and improve the benefit from the sector foreign trade.”
Similarly, the Oromia region has also embarked on an initiative to benefit the khat farmers, rather than the middlemen.
Recently, Shimelis Abdisa, President of Oromia region, told Capital that the region is also establishing four khat trading centers to modernize the stimulant leaf business.
He said that the region, which is the major source of khat export, is also working aggressively to change the market and productivity for the stimulant leaf, “We are giving the necessary attention to khat as like the coffee sector,” opined Shimelis.
“We are working to improve the khat market, which has been taken hold by the middlemen, rendering them to profit as opposed to the actual producers of the leaf,” he explains, adding, “we are strongly working to pushing out the illegal actors for the benefit of farmers.”
To improve the khat market; trading centers are developing at Awoday, which is the only and long established trading center for export khat. Likewise, Bedessa, Addis Ababa and Dire Dawa are similar trading centers.
The trading facilities will have standard storage area, packaging centre and other facilities on the aim to keep the export quality.
The productivity is also the focus area to expand the production and export.
According to Shimelis, the country is generating huge amounts of hard currency from khat.
The earnings from the stimulant that is mainly exported to neighboring countries takes almost a quarter from the total agricultural commodities export earnings within the first eight months of the budget year.
This makes the commodity the second largest exporting agricultural product after coffee and it stood at third position from the total export earning items in terms of earnings. From the total export earnings coffee and mineral exports stand a top respectively.
In the first eight months of the budget year that closed in early March, the country secured USD 280 million from khat export, which is a full accomplishment of the projection, while the volume has reduced by 10 percent when compared with the target.
In the stated period the country has exported over 44,400 tons of khat. Mostly the eastern Ethiopia, which is pioneer for the stimulant cultivation, khat product is highly promoted for export rather than other areas. However the production and local consumption has swiftly expanded in other parts of the country for the past few decades.
Most of the other areas of khat production are supplied to local consumers well known as khat chewers.
Safaricom Ethiopia, Nokia strike 500 million USD infrastructure mega-deal
Safaricom Ethiopia PLC signs a 500 million dollar deal with Nokia for its infrastructure development and network expansion in Ethiopia. The agreement between the two companies is said to be a long-time agreement.
Accordingly, Nokia’s network expansion is said to be focused on the core network infrastructure in Addis Ababa and its surrounding areas.
Safaricom Ethiopia which was formed by the amalgamation of Safaricom, Sumitomo Corporation, CDC Group and Vodacom secured its operational license from the government in early June 2021 and is set to officially do business in Ethiopia as a second telecom company after the state-owned Ethio Telecom.
Additional to Nokia, previously the company shortlisted the Chinese global telecom giant Huawei to set up its infrastructure.
The company signed a deal with Huawei Technologies of the Chinese multinational technology corporation for the infrastructure development that it aspires to realize in a short period. To this end, Huawei will cover the rest of the country with its infrastructure development for Safaricom Ethiopia.
Both companies are not new to similar activity in Ethiopia. For instance, the Finnish company was engaged in the second massive mobile network development project in the country that ended in the early 2000s and other IT projects. Similarly, the Chinese company, which is leading the global telecom network development with Nokia, is engaged in the massive mobile network expansion with ZTE of China in the fourth and last phase of the major mobile network sector development. It has also recently concluded the national 4G network expansion and network upgrading for Ethio Telecom.
Safaricom- Ethiopia is expected to gear up for its commercially launch operations in a few days with the company planning to provide 4G and 5G internet service. It is also said that by 2023 a low orbit satellite will be put in place to provide nationwide 4G coverage by the firm.
To get the license Safaricom -Ethiopia paid USD 850 million to the government and promised to invest up to USD 8.5 billion in the coming decade.
The company is now starting engagements with Ethio Telecom, which is expected to provide rental service of its infrastructure for the new telecom operator.
As part of its network expansion, Safaricom is also working to build towers, fiber extensions, broadband connections and so on within the ICT Park, with expansions including site selections to establish towers for the 5G trail.
