Ashenafi Endale – Page 26 – Ethiopian Business Review

For developing countries, foreign currency is a necessary component to the success of manufacturing, overall industrialisation and greater inclusion into the global economy. Specifically, manufacturers, the purported backbone of what the Ethiopian government hopes to be a robust industrial sector, need foreign currency to import materials that are central to their enterprises. However, the country is facing a severe shortage of these funds, a dynamic that isn’t likely to change soon. To put the demand in perspective, the Commercial Bank of Ethiopia approved USD3 billion in foreign currency requests in two months, whereas the Bank earned that amount in the first six months of the current fiscal year. Furthermore, the government has meagre foreign currency reserves. So what’s being done to mitigate the situation? EBR’s Ashenafi Endale spoke with key insiders to learn more about the implications of the shortage and its potential solutions.

Ethiopia’s export performance falls short of the government’s plans. The country hoped to earn USD5.04 billion by the end of last fiscal year, but made less than 60Pct of that amount. For this year, the plan is USD6.5 billion and so far the six-month performance is less than the nation received last year during the same period. A number of structural issues have hindered the sector’s performance, but one has become more prevalent in recent years: exporters not honouring trade agreements with foreign countries. Exporters say that there are systemic reasons why they’re unable to honour trade agreements that have largely to do with the cost and quality of local products. Others, however, argue that this isn’t a sufficient excuse and that breaching contracts will create a negative image of the country’s already struggling export sector. EBR’s Asehenafi Endale spoke with key stakeholders to learn more about the intricacies of the issue and what’s being done to address the underlying problems.

Mekelle is Ethiopia’s second largest city and is the seat of the Tigray Regional State. Over the last two decades, the city has witnessed an impressive amount of investment, especially in the service and construction sectors, which has brought in ETB5.7 and ETB6.6 billion in registered capital, respectively. In this way, the town is perhaps the most promising location for business outside of the nation’s capital. Still, local investors say that they face issues like a lack of finance and a dearth of quality raw materials, which hinder their abilities to operate their companies at full capacity. EBR’s Ashenafi Endale visited Mekelle and spoke with local business owners and regional government officials to better understand the issues plaguing investors and what’s being done to mitigate these problems.

Insurers in Ethiopia recently launched crop insurance policies for smallholder farmers. Crop insurance is an umbrella term used to refer to a series of policies designed to help farmers avoid or recover from risks associated with farming. In a country like Ethiopia, where smallholder farmers are especially susceptible to shocks like drought and cyclical poverty, many say that these insurance policies are a welcomed change. Still, others argue that there is more work to be done to improve the lives of smallholder farmers beyond offering crop insurance services. EBR’s Ashenafi Endale met with key stakeholders to learn more about the details of the policies that many hope will bolster the lives of small-scale farmers.

Leasing – an agreement by which one party conveys an asset to another for a specific amount of time in exchange for periodic payments – may help small manufacturing enterprises better access machineries and other goods. In order to finance leasing contracts, many micro and small enterprises (MSEs) have turned to newly formed companies that provide funding options to these institutions. According to the International Finance Corporation (IFC), lease financing benefits not only MSEs, but can strengthen the overall economy as well. EBR’s Ashenafi Endale spoke with key individuals in the financial and manufacturing sector to learn more about the issue and its promises in boosting productivity.

Value addition refers to a process whereby manufacturers make a product more useful or sophisticated for consumers. These goods earn more money in the market – an appealing prospect for developing countries looking to increase revenue and develop their economies. A key factor in assessing value addition is the manufacturing data itself and the formula used to calculate it. In Ethiopia, however, a new metric has been proposed to determine value addition among industries. This has many manufacturers up in arms over the decision. The government, however, thinks it will be useful and ultimately quell corruption in the private sector. EBR’s Ashenafi Endale spoke with key stakeholders to learn more about the issue’s complexity and the on-going debate surrounding it.

Eyeing the Stars Ethiopia’s Space Programme

Astronomers have made great strides in understanding and accessing space within the last century. In particular, the development of satellite technology has helped in the growth of technologically and economically advanced countries. This is because satellite technology assists in the development of telecommunications infrastructure and disaster preparedness, among other things. Now, Ethiopia is hoping to benefit from satellite technology through the advancement of its own space programme. The government says that this will aid the country’s aspiration towards development. However, critics say that it’s too soon for Ethiopia to pursue such an ambitious plan and that the country has other pressing concerns to manage. EBR’s Ashenafi Endale spoke to key stakeholders on either side of the debate to learn more about the country’s nascent efforts to develop a space programme – and the potential challenges and benefits that lie ahead.

Be it in business, social or politics, ICT plays a significant role. That’s why several nations are putting in place policies to guide its development. Countries such as India have benefited from a prudent ICT policy. In fact, the Asian country has earned a name for itself as a global power of ICT earning approximately 67Pct of the USD124-130 billion global market for ICT in 2015.
Though much remains to be seen, Ethiopia has been trying to emulate the success of India. It established an ICT park at a cost of ETB2 billion and expanded technology education in several universities.
However, local ICT companies couldn’t function successfully due to challenges related to access to finance, lack of supportive policy framework and users, such as financial institutions, lower interest to buy their software. EBR’s Ashenafi Endale spoke with company CEO’s and consulted government policies to understand what the nation is doing to help local ICT companies grow.

“Ethiopians have been engaged in space science for [millennia]; we are trying to reclaim that.”

Tefera Waluwa has had an illustrious career in government: he’s served as Mayor of Addis Ababa, Minster of Defence, Minister of Capacity Building, and Deputy Prime Minister at different times. Despite his high profile, decades-long service in public offices, Tefera says space science has been a big passion of his since childhood; even during the period of armed struggle prior to the EPRDF’s ascent to power.
Now the veteran statesman has his eyes set on space. Since 2004, he has been serving as the Chairman of the Ethiopian Space Science Society (ESSS). According to its website, the Society aims “to build a society with a highly-developed scientific culture that enables Ethiopia to reap the benefits accruing from space science and technology.” To that end, the Society established the Entoto Observatory and Research Centre, which is the first of its kind in East Africa.

Government Hopes Diversified ‘Green’ Energy Will Mitigate Outages

Despite the government’s plans to improve the performance of the manufacturing sector, many factories still face considerable power outages that hinder their operations. Power outages aren’t new in Ethiopia, but the current drought has further hampered the country’s attempts to improve the electricity shortage facing factories that are so crucial to building a manufacturing-based economy. To that end, there are plans to better harness Ethiopia’s potential to produce hydroelectric, solar, and geothermal power, among others. The hope is that the country will produce 17,347MW of power, up from its current capacity of slightly over 2,000MW, in five years. Yet some experts say the government has a long way to go before it can reach its full potential and are sceptical if it can meet the demands of the growing manufacturing sector. EBR’s Ashenafi Endale spoke with manufacturers and government representatives to understand the efforts being made to reduce power outages.

Newer Posts

Older Posts

Foreign Currency Shortage Deepens, Government Reconsiders Franco Valuta

Broken Agreements, Poor Quality Products Further Harm Export Performance

Despite Impressive Growth, Investors in Mekelle Still Face Hurdles

Crop Insurance Aims to Reduce Drought Vulnerability

Will Lease Financing Boost Productive Capacity of MSEs?

Will ‘New’ Value Addition Formula Help Manufacturing?

Eyeing the Stars Ethiopia’s Space Programme

Eyeing the Stars Ethiopia’s Space Programme

Local ICT Companies, Their Struggle to Survive, Thrive

Tefera Waluwa Retired, but not tired

“Ethiopians have been engaged in space science for [millennia]; we are trying to reclaim that.”

Powerful Solution?

Government Hopes Diversified ‘Green’ Energy Will Mitigate Outages