Semera Wealth of Dormant Potential

Semera, the capital city of Afar regional state is a microcosm of the region. Growing construction and rising populations are propelling the young capital into the modern age. Investment potential, natural history and other assets are pushing people towards Semera. However, there are still roadblocks ahead for the young city. The reluctance of investors, lack of foreign currency and (growth notwithstanding) a small population, threaten to slow the massive potential that the city, and the regional state as a whole, have. EBR’s Ashenafi Endale was on the scene to explore this growing hub.

 The journey to Semera, the capital city of the state of Afar has an almost romantic feel, more so than any of the other regional states. Landing in Semera, one might question whether it is a ghost town, or massive construction site in the middle of the desert. There are no residents, shops, or business Olympiads. Buildings gaze at the empty roads, silent, save for the few employees who can be heard chatting from inside in Afarigna, the official language of the state.

Of course, in Semera, most visible are the many buildings and road constructions underway. At 11am, daily laborers struggle with temperatures climbing to 37 degrees centigrade in February, the coolest month of the year. The temperature can reach up to 52 degrees in May.

Despite its strategic location, Semera only became the capital city of Afar in 2007, following a decision by the council of the state of Afar. Located 100 kilometers south east of Semera, the previous capital Assaita, is a relatively populous town that fulfils at least the minimum amenities that are emblematic of a city. Semera however, has still not evolved into a typical capital city. Buildings occupy the vast and treeless space,but less than three thousand people live there. In fact, there are more hotels in Semera, than there are residential houses.

The administration of the state of Afar has been building infrastructure in Semera for the last ten years. However, Semera only got a city administration five years ago. The administration is also responsible for Logia, a more lively and active town located seven kilometers from Semera.

“Semera is just a symbol. People prefer to live in Logia. They come to Semera only to work,” explains Biniam Teshome, a tour vehicle driver. Minibus taxis and three-wheeled auto-rickshaws known commonly as bajaj transport the public between the two towns at peak hours.

The combined population of Semera and Logia is around 94,000 people; more than two thirds of which, live in Logia. Ten years ago, the population was 25,000. Public employees, traders, and laborers have been adding to that figure in recent years. The total population of the regional state of Afar stands at 1.8 million, according to information obtained from the administration.

Simple observation is enough to conclude that Semera is under construction with appropriate urban planning techniques; with hotels, shops and businesses springing up in an organized fashion.  Logia on the other hand, is growing haphazardly, with lodging, cafes, rentals and shops scattered about the town.

The cheapest hotel room in Logia costs about ETB100, while a room in Semera will go for about ETB250. Semera hotels accommodate, for the most part, business delegates, officials, and tourists. “We are turning Semera into a modern capital city. The infrastructure and institutions are already there. But the locals are not accustomed to urban life,” explains Hussein Yimer, infrastructure and building construction core process expert at the Logia/Semera City Administration.  “Urban land acquisition is very small in Semera because the city came before the people.”

According to Hussein, there is still no council at the city administration, and this impacts the service provision and growth of the capital city. “Before the establishment of the administration, there was no rule or control mechanism to regulate business activities,” said Abera Hailu, communication expert at the Administration’s Trade, Industry and Transport Bureau.

Over the last five years, the construction and hotel industries have begun to catch up to trade, wholesale, and retail businesses. According to data from the Logia/Semera city administration, close to 1,000 licenses have been issued in the construction sector. Half of these licenses went to female contractors.

However, Zenebech Abreha, one the few self-made local contractors argues that construction has been at a standstill for the last two years due to a lack of foreign currency, and construction materials. “Building projects, including my own hotel construction have been dragged out for a long time,” she explains. “There is a lack of rebar and other materials, all of which need foreign currency. You cannot build a hotel without air conditioners and ventilators.”

Zenebech owns Nazret Hotel (which has two banches), and Zenebech Abreha Building Construction. She is a grade one contractor, who started in the retail business with ETB3,000 twenty years ago, and moved to building wooden houses a decade ago. She is now building a third branch of the hotel with ETB50 million.

Zenebech is not the only one in Semera affected by the foreign currency shortage. “A power distribution project awarded four months ago failed to commence, because of a lack of foreign currency, which is needed to import cables and transformers. The contractor asked to be paid 30Pct of the seven million birr in foreign currency, because most of the materials must be imported. But the federal government minimized that to 15Pct,”says Hussein.

Other companies are being forced to divert funds from other projects. “We are keeping construction going by transferring money from projects in other states,” said an engineer at Afro-Tsion Construction, who asked to remain anonymous. Afro-Tsion has been the major contractor in the region for the last fifteen years. One of its current projects, is upgrading Semera Airport.

While construction projects are struggling, trade and investment in Afar have increased over the last five years. This is especially true for towns such as Logia, Semera, Dubti, Mile, Assaita, Awash Arba, and Awash Sebat, the last two of which are nationally recognized for supplying fruit to Addis Ababa.

It is difficult to find the exact figure that indicates the level of trade and investment in Afar due to problems related with record-keeping in public institutions. However, the civil servants are more than willing to provide anything in their capacity. “Trade licenses can be given by the Mayor or by our bureau,” explains Abera from the Trade, Industry and Transport Bureau. “There are many individuals engaged in trade, wholesale, retail, hotel and tourism. Many started from small businesses and grew from there. Still, a significant number of businesses have left.”

The Investment Bureau was established as a separate office from the Trade, Industry and Transport Bureau just two months ago. However, the Bureau has very few employees, and many of them have only been working for about a week—a normal situation in Afar. “We have no organized investment records,” says a staff member who spoke to EBR on the phone.

Afar, where the skeletons of Lucy, Selam, and Hadar were found, has fostered life since the earliest history of modern man.  Up to 800 tourists visit the skeletal finds in the Semera/Logia Museum during cooler months. The Ertale live volcano and Awash National Park are also key tourist destinations.

Manufacturing is still an infant sector, even below the level observed at the national scale. At a plant that sits on the road between Semera and Assaita, a Turkish company produces iodine. The only other notable project is headed by the federal government, which is constructing two sugar factories Tendaho and Kesem.

Even many Micro and Small enterprises (MSEs), which work in livestock related activities, are inactive due to lack of financing, according to Hussein. There are 1.3 million cattle in Afar, which makes up 2.2Pct of the total population found in Ethiopia, according to a report on livestock and their characteristics published by the Central Statistical Agency (CSA) in April 2017. Furthermore, 1.7 million sheep and 3.5 million goats, which constitute 5.5Pct and 11.6Pct of the total population, respectively, can be found here.

However, due to the El Niño-driven drought that hit in 2014/15, some 546,339 livestock have been lost. Unlike previous droughts, the animals could not flee to neighboring regional states, since the phenomenon affected most parts of the country, especially in the north and the east. “Rearing only livestock is no longer viable. There is no grazing land and the weed rich areas are expanding,” says Abdu Ali, crop development extension core process expert at Agriculture, Livestock and Natural Resources Bureau.

“Investors shy away from here because they think they will not find skilled manpower in Afar,” argues Abera. “There are also problems with the structure of public institutions. Trade and construction are handled together, and all SMEs and investment are together. They have to be restructured after conducting concrete research.”

Abera says implementing the federal government’s economic agendas, such as the five-year economic plan, is unthinkable with Afar’s existing institutional structure, and scarce expertise. The flaws stem from the plan itself. Most of the economic plans and strategies introduced in the past—including the first and second phase of the Growth and Transformation Plan (GTPI & II)—aim to transform the economy from agrarian to industrial. However, there is no agriculture to transform in Afar.

The region is home to close to 8,000 small farmers who cultivate 4,782 hectare of land, according to the Agricultural Sample Survey published by the CSA in May 2017. In total, 15.2 million small-scale farmers cultivate 12.5 million hectares of land in Ethiopia. Maize and root crops are the major agricultural product produced in Afar, and these, reach a maximum of 72,000 quintals.

Although small-scale farming is insignificant, Afar does have land that is highly suited for various crops, including cotton and sesame, according to Abdu. “There is huge potential for large scale commercial farming in middle and lower Awash areas, and up to Dalol in the north. There is enough surface and ground water. However, there is limited investment,” he explained.

 “With irrigation we can grow anything, even wheat,” explains Abdu. “Despite the potential and necessity, there are some obstacles to shifting the regional economy from pastoralist to agricultural. The first is lack of improved seed and technology. Different seeds are required to withstand the weather changes in the region.”

According to Abdu, his office has given some farmers around Awash seeds it received from AfricaRice, a leading pan-African rice research institution.  The office has also made 40 tractors available for rent. However, Abdu argues, mechanization is behind where it needs to be; “the government needs to introduce an institutionally supported mechanization strategy. It would be highly productive on this type of land. The agriculture and the youth could highly benefit.”

The second obstacle is the absence of an effective agricultural extension program. The Agriculture, Livestock and Natural Resources Bureau submitted a study to the regional government for an extension program to effectively support lowland agriculture.

“An extension program must be put in place as quickly as possible. The normal highland extension has failed here, so we use it only in irrigation areas,” Abdu explains. “Training is critically needed.”

Another hurdle to stimulating agricultural transformation, according to Abdu, is the lack of large-scale investment in the sector. “There are only a few large scale farms in the region, they used to be state-owned. Since the local farmers drove their cattle into large private farms some years ago, new investors are concerned. Investors want to come but they want a guarantee of security for their farms from the locals. The locals’ cattle graze on farms during droughts, since there is no feed.”

“I went to the agriculture bureau two years ago, and asked for land for large scale farming.  I am still waiting. The region is highly suitable for cotton, which we can also export,” says Zenebech, the contractor who is waiting to finish her hotel.

Fishery is another sector whose potential has been left unexploited in Afar. According to Abera, the Awash dam, which was constructed for the Tendaho sugar factory farm, and many areas of the Awash River, offer great opportunities. “Yet, there is limited investment in the area.”

Identifying key areas, and consolidating similar ones appropriately, is a consistent theme in the solutions offered by businesspeople and experts. They echo that such action is necessary in order to utilize the full potential of Afar. “The governance system and the infrastructure are inadequate. In Afar, everything is starting from scratch,” explains Getachew Wale, head of the economics department at Semera University.

Getachew says Semera University has not been able to do much because it is facing high turnover of teachers and students. “While the number of engineering students is slightly increasing, social science students seem to prefer private colleges.”

Nevertheless, the shortage of expertise has given opportunities to young graduates like Getachew himself. He was able to become department head just three years after he graduated and started to work at the University.

Of course, Semera has become more vibrant since the opening of the University.However, according to Abdu, the University needs to maximize its capacity and ability to engage if it is to provide solutions for the bottlenecks hampering economic growth in Afar.

6th Year . March 16  – April 15 2018 . No.59


Leave a Reply

Your email address will not be published. Required fields are marked *

Ethiopian Business Review | EBR is a first-class and high-quality monthly business magazine offering enlightenment to readers and a platform for partners.

2Q69+2MM, Jomo Kenyatta St, Addis Ababa

Tsehay Messay Building

Contact Us

+251 961 41 41 41