October 1, 2021 – Ethiopian Business Review

China is having an eventful month, marked by proliferating power-supply disruptions and the debt crisis of the country’s second-largest property developer, Evergrande. What does this mean for China’s post-pandemic economic recovery and growth prospects?

Begin with the energy crisis, which started when a rapid increase in exports – driven by the global recovery – fueled a sharp increase in demand for electricity. China remains dependent on coal for 56.8Pct of its total electricity supply. And yet, in an effort to meet mandatory targets for reducing energy consumption, local governments have shut down many coal mines in recent years.

Michael Teshome, is Director of the Ethiopian Mediation & Arbitration Center, Attorney and Consultant at Law, as well as Co-author of the book Arbitration in Ethiopia.
Michael specializes in handling business arbitration cases, which is a leading alternative model to settle business disputes. However, Ethiopia was not on the international business arbitration map until this year when it ratified both the international 1958 New York Convention and the local Arbitration and Conciliation Working Procedure Proclamation, in which Michael participated at the drafting level.

Now, arbitration awards rendered in Ethiopia can directly be implemented in the 167 signatory countries, with reciprocity. Michael stresses this has an immense and multidimensional benefit in making Ethiopia business-friendly and Addis Ababa an international arbitration seat.

The unheralded actor in the Ethiopian economy is the woman doing free work in the home or elsewhere. Established institutional and patriarchal norms in our society means that at best, the woman is paid in-kind for her work.

Experts say that this manner of work needs to be quantified to show the true worth of free labor as well as lead to a system where government provides subsidized goods and services to these women, and sometimes men, that are the backbone of the nation’s economic movement. EBR’s Trualem Asmare looks into the topic.

Globalization and free trade have now become the axiom of countries worldwide. This is because western countries and institutions that promote globalization and free trade, like the World Bank Group (WBG) and the International Monetary Fund (IMF), have been promoting and pushing the idea relentlessly ever since the end of World War II.

Especially after the 1980s, the notion that globalization is inevitable and free trade benefits everyone has been elevated to high status to become the major global economic philosophy.

When the Ethiopian Premier League SC was established and began commercializing the televising of local football matches as of last year, many bet that Ethiopian football dependence on municipality budgets would end, with abundant commercial revenue now coming from DSTv.

Now, the league company is on another march to end its governmental dependency for good. The league company is currently conducting a study—the Ethiopian Premier League Development Plan—by hiring a consulting firm in a bid to build its own capacity and be able to attract more sponsors and partners and work in an ever-sustainable way and to never look for handouts again. EBR’s Abiy Wendifraw explores.

Ewnetu Taye is Deputy Director of the Logistics Transformation Office (LTO), established to transform and solve lingering sectorial problems which have long hampered Ethiopia’s development. He sees Djibouti still holding the key position going forward even with its numerous military bases which are incomparable to benefits bestowed by economic relations with Ethiopia. Alongside developing sea outlets, liberalizing the sector within Ethiopia is registering heavy developments. EBR sat down with Ewnetu to learn about the current status of the logistics sector in Ethiopia.

Ethiopia used to rule all ports on the western side of the Red Sea, until it lost its last one to Eritrea in 1991, joining the pack of landlocked African economies. Over 90Pct of Ethiopia’s international trade—forecasted to almost double from the current 17.1 million tons to 30 million metric tons by 2030—has been utilizing the Port of Djibouti.

However, Ethiopia is currently exploiting additional ports in Kenya, Somalia, Djibouti, Sudan, and Eritrea. Following the opening of the Ethiopian logistics sector to foreign investors, these ports are planned to be linked with dry ports and economic and logistics facilities across Ethiopia. To that end, the Logistics Transformation Office, is currently finalizing the first Ethiopian logistics masterplan, which envisages interconnecting the nation through infrastructure including ports, roads, rail, aviation, pipelines, and transboundary rivers. Ashenafi Endale explores.

In the period leading up to the 2008 global financial crisis, a few prescient voices warned of potentially catastrophic systemic instability. In a famous 2005 speech, Raghuram G. Rajan explicitly cautioned that although structural and technological changes meant that the financial system was theoretically diversifying risk better than ever before, it might in practice be concentrating risk. At the time, Rajan was mocked; former US Treasury Secretary Larry Summers was not alone in thinking him a “Luddite.”

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Legal friction amongst businesses is a naturally occurring phenomenon. However, if there is no equally-dynamic venue and avenue to solve those frictions, business activity will get stuck. The normal court system which handles criminal cases and takes months and years to conclude, is too slow for business.

Though arbitration is globally preferred as the best business dispute settlement mechanism, Ethiopia has not had the necessary legal frameworks in place. Usually, business arbitration awards rendered in any country across the world are acceptable by the highest courts. However, this was missing in Ethiopia until the nation signed the 1958 New York Convention in 2021.

Until now, most business conflicts arising from contracts between Ethiopian businesses and foreign partners, have been arbitrated outside of Ethiopia. This has its costs in terms of undue foreign currency consumption, inability to receive fair arbitration, and misconception of Ethiopia as business unfriendly. Ashenafi Endale explores the new changes after the ratification of the convention, as well as the new local arbitration proclamation.

Muluneh Lema, is a founding member and General Manager of Mintu Investment Group (MIG) as well as President of the Ethiopian Millers Association. Educated in the US, he took the initiative to turn his family’s legacy of a candy factory and flour wholesaling into a gigantic group of factories. Under the group, companies engaged in the manufacturing, food processing, real estate, import, export, and pharmaceutical sectors, operate. Wakene Food Complex, Mintu Plast, Menoria Real Estate, Mintu Export, and Mintu Pharma are his leading companies. With ETB800 million in annual turnover, the group has doubled its investment capital to ETB1 billion over the last six years. Formed by four brothers, MIG succeeded mainly because the siblings specialized in different sectors.

The plastic factory has especially managed to substitute imports of plastic bottles and caps for water bottlers in Ethiopia. It has also substituted the import of PVCs and other plastic products used as construction and agricultural inputs. Wakene Food Complex, on the other hand, has the lion’s share in Ethiopia’s wheat and flour market.

China Must Restore Growth

“Addis Ababa is now Ready to be the Arbitral Seat for International Businesses.”

Work for Virtue

Free Trade is Old-Fashion Economic Thought

Remodeling Football Business

“Djibouti will remain the main artery for Ethiopia’s import-export.”

Ethiopia Searches for Alternative Outlets

The Great Supply-Chain Massacre

Arbitration: Commercial Dispute Settlement Mechanism

“Government Must Trust the Domestic Private Sector”