Despite difficulties, Ethiopia is working to face its challenges, ensure its development and deepen the mutually-beneficial partnerships with its international partners.
Recent developments described and analyzed in this magazine underline these endeavors. First about the country’s internal issues: after two decades of fast economic growth and development, the government launched a set of political and economical reforms to satisfy the demands of the people. Secondly, Ethiopia and its African partners are working closer than ever with the European Union to tackle the issue of forced migration, but also to ensure refugees hosted in Ethiopia have future perspectives through jobs and education.
Furthermore, Ethiopia is increasingly recognized as a destination for investments bringing jobs to the population and economic development for all. Real progress in infrastructure development is supporting these investments: in the current magazine, you can read an article about the advancement of the construction of the Grand Ethiopian Renaissance Dam, as well as about the official inauguration of the Gilgel Gibe III hydroelectric dam which doubled Ethiopia’s electric production.
As always, we also offer you a few insights and pictures about the touristic opportunities of Ethiopia − a country you would not regret visiting.
We wish you a pleasant reading, and we would be very happy to receive your feedback or contribution for our next issue.
This article was originally published in the 4th issue (October 2016) of The Ethiopian Messenger, the quarterly magazine of the Embassy of Ethiopia in Brussels.
While home to one of the highest deposits of natural gas in Africa, Ethiopia did not take full advantage of this natural resource yet. But the government recently set the strategic goal of increasing the exploitation of this formidable mineral resources potential and turn the sector into a backbone of the country’s industry by 2020-2023
A new beginning for Oil and Natural gas exploitation in Ethiopia
Logo of the Ethiopian Petroleum Supply Enterprise
Ethiopia is home to one of the highest deposits of natural gas in Africa. Some parts of the country’s geological structure resemble the oil and gas fields of the Middle East, particularly in the Ogaden basin. However, despite the commercially viable volumes of gas present in the country’s soil, Ethiopian regimes before 1991 have been unable to put together an arrangement to extract the gas, in part due to the consecutive regimes changes the country experienced. In 1972, natural gas fields were discovered by an American company, Tenneco, which was expelled in 1977 by the Derg. Following this expulsion, a former USSR company, Soviet Petroleum Exploration Expedition (SPEE), started exploring Ethiopia’s gas fields, but the company’s contractual agreement was also terminated in 1994 after the fall of the military regime. As a consequence, most of the country’s potential in oil and gas is still untouched.
This is why, in order to increase its foreign currency earnings, the government of Ethiopia set the strategic goal of increasing the exploitation of its formidable mineral resources potential ten-fold by 2023 and turn the sector into a backbone of the industry by 2020-2023. The strategies to reach this objective include delivering basic geological data to the civil and business sectors, attracting private investors in the development of the mining sector and issuing licenses to those engaged in mineral and petroleum operations. In addition, the development of mineral and geological energy resources of Ethiopia has to take place in an environmentally friendly manner and in collaboration with different stakeholders to regulate the market.
In addition, the Ethiopian government established in 2012 the Ethiopian Petroleum Development Enterprise that will engage in developing the gas fields in partnership with private companies.
Exploration and pipeline constructions
Several firms have already acquired licenses to explore more than 40 blocks throughout Ethiopia in the past four years, the vast majority of them in the south-eastern Somali Region. The country is planning to start producing and exporting natural gas from untapped reserves in the Calub and Hilala fields in its southeast region by next year. Studies reveal the Calub and Hilala fields have deposits of 4.7 trillion cubic feet of gas and 13.6 million barrels of associated liquids, both discovered in the 1970s but not yet exploited. According to Ethiopian Mines Minister Tolossa Shagi, the country expects to make an excess of 1 billion USD in annual foreign exchange earnings from gas exports thanks to these 4.7 trillion cubic feet natural gas reserves.
The company POLY-GCL Petroleum Group Holdings Ltd, a joint venture between the state-owned China POLY Group Corporation and the privately owned Hong Kong-based Golden Concord Group, has finished drilling two appraisal wells and will soon know the actual size of gas deposits in the south-eastern Somali Region. POLY-GCL plans to drill five wells in Ethiopia’s southeast, including three wildcat exploration wells. The project involves developing the fields and building a 700 km pipeline to transport up to 12 million cubic meters of gas from the Ethiopian hinterland to the coast of neighboring Djibouti, where it will build a 3 Metric Tonnes Per Annum (mtpa) liquefied natural gas (LNG) plant and export terminal. Initial construction is expected to take three years to complete. The plant’s capacity could eventually be extended to 10 mtpa. POLY-GCL estimates the cost of this construction at 4 billion USD and initially expected to start LNG production by mid-to-late 2018 at 3 million tons a year at first, rising to 10 million tons later. Another vast natural gas reserve recently found in Arbaminch could transform Ethiopia into a major natural gas producer.
In a recent remark, Prime Minister Hailemariam Desalegn said the nation would be ready to join the global natural gas market after two years. The Premier said that his administration is undertaking projects meant to sell the resource domestically and export it. This is a substantial step for Ethiopia. In fact, since the beginning of the millennium, the country has been building a diversified economy by improving productivity in the agricultural sector and supporting the rise of agro-processing, light manufacturing and infrastructure development. Additional foreign currency earned through natural resources could reveal itself to be an important support in the country’s endeavors to reach the status of middle-income country by 2025.
The Embassy of Ethiopia in Brussels organized an Ethiopian roadshow on the 10th of January 2017 at the major tourism fair Vakantiebeurs in Utrecht (The Netherlands) in collaboration with the Ethiopian Tourism Organization and Ethiopian Airlines’ Benelux office. The roadshow included a press conference for tour operators, journalists and the business community.
The Ethiopian stand was inaugurated by H.E. Teshome Toga, Ambassador Extraordinary and Plenipotentiary to the Benelux, Baltic countries and EU and by Mr. Jemal Kidir, Deputy CEO of the Ethiopian Tourism Organization. During the press conference that followed, H.E. Teshome Toga said the Government of Ethiopia has re-organized the tourism sector based on the Ethiopian tourism policy. A new tourism brand called “Land of Origins” was also established. This new brand and tourism policy will support the promotion of the Ethiopian tourism sector and contribute to the economic and social development of the country.
The Ambassador also briefed the participants on the current situation of Ethiopia. In the wake of last year’s unrests, the flow of tourism had temporarily decreased. However, after the state of emergency entered into force on the 8th of October 2016, the inflow of tourists increased again. Moreover, the FDI and international and regional engagements of the country were fully maintained. This is the sign that Ethiopia is peaceful and that the situation is convenient for tourism. Accordingly, the Embassy has organized this tourism roadshow with the Ethiopian Tourism Organization, an institution mandated to promote the Ethiopian tourism industry, and with the Benelux office of Ethiopian Airlines.
Mr. Jemal Kidir, Deputy CEO of the Ethiopian Tourism Organization on his part said the government has taken the political decision of re-organizing the tourism sector with better capacity to develop the tourism industry. It is allocating significant budgets to develop the tourism infrastructure and attractions of the country. Mr. Jemal Kidir also mentioned the natural, cultural and historic attractions of the country, which already counts 28 tangible and intangible heritage sites. He invited the participants to visit Ethiopia, the origin of human kind, and requested them to convey the message to other potential visitors.
Mr. Bisrat Tedla, Ethiopian Airlines Manager for Benelux countries, and Mr. Dejan Petrovic, Ethiopian Airlines Sales and Marketing Manager for the Netherlands, further informed the participants about the airlines in general: 93 international destinations, among which above 12 destinations are in Europe and North America. In addition, the airline is flying to more than 20 local destinations. He also mentioned that Ethiopian Airlines is the largest and fastest-growing national carrier in Africa. Taking this opportunity, he invited the participants to fly Ethiopian, and assured them the airline is ready to serve them.
Tourists and tour operators which have recently visited Ethiopia confirmed that the country is peaceful, convenient for tourism and has numerous tourism destinations and attractions. They invited the participants to visit the country independently or in group. The press conference was concluded by a Q&A and a business networking session between the Ethiopian delegation and participants.
The Utrecht tourism fair, open from the 10th to the 15th of January 2017, is one of the largest tourism event in the Benelux with about 1,000 exhibitors and more than 120,000 expected visitors. Ethiopian coffee ceremony, national cuisine and folkloric music presented during the event inspired many exhibitors and visitors. Thus, the Ethiopian tourism roadshow at the fair was effective to promote Ethiopia’s image to the Benelux communities and could contribute to increase the inflow of tourists to the country.
Lonely Planet, the largest travel guide-book publisher, named Ethiopia among the top ten 2017 world tourist destinations.
The travel publisher added a vivid depiction of the country’s breathtaking attractions and advised tourists to trek in the Semien Mountains “to watch wildlife that roams nowhere else on Earth”, climb to a church carved into a remote cliff face in Tigray or boat across “the serene waters of Lake Tana to visit an age-old monastery.”
Ethiopia was the only African nation to make it through the esteemed list and join Canada, Colombia, Finland, Dominica, Nepal, Bermuda, Mongolia, Oman and Myanmar.
Ethiopia, the home of ancient African civilizations, the origin of human kind, and the land of literatures which passed the trail of the millenniums, the house of people with untapped and well-off cultural experiences is no surprise to be found on such lists much of the time.
The fifth edition of the Africa Business Forum will be held in Addis Ababa, Ethiopia, on March 1, 2017. This will be the second time the event would hold in Ethiopia, under the Patronage of Sheikh Mohammed Al Amoudi, one of the largest investors in Africa, Forbes ranked billionaire and Ethiopia’s biggest employer.
Prior to the conference, the Africa Business Forum’s B2B Investment Meeting will be held on the 25th January 2017 at the Dubai World Trade Center Tower, to welcome potential investors to Africa.
Since its creation in 2014, the forum has become one of the most important bi-annual gatherings in Africa and the Middle East.
A statement from the organisers stressed that the Africa Business Forum presents an invaluable opportunity for investors to connect with clients from across industries and from around the world.
“An opportunity to maximise market share by building connections with African customers and partners. The conference will host distinguished panelists and speakers, including ambassadors, high government officials, business leaders, investors and CEOs,” it added.
Keynote speakers and conference panelists include: Fitsum Arega – Director General of the Ethiopian Investment Commission – Ethiopia Government; Belachew Fikre – Deputy Commissioner – Ethiopian Investment Commission – Ethiopia Government; Yohannes Tilahun – Former CEO to General Electric (Ethiopia) and Adviser to the commissioner at Ethiopian Investment Commission; Zemedeneh Negatu Country Managing Partner for EY (Ernest & Young) Ethiopia, and among “The Top 15 CEOs of Africa to watch in 2015ˮ by the London-based African Business magazine.
Others include Johnny Muteba – CEO, Pan African Chamber of Commerce; Craig Bridgman – Former Global Head of Investment Banking for Clarkson Capital Markets, currently Executive Chairman of East Africa Oil Field Services and Founder of Adamantine Energy and who sits on a number of advisory boards; Seyoum Bereded – CEO Consopia Consulting Services and President of the ICT Association of Ethiopia, among others.
“We are very excited about the level of enthusiasm we have received from speakers, sponsors and attendees for this unique conference,” the founder and Chairman of Africa Business Forum, Rashed Ahmed said.
“We look forward to bringing together the many business leaders and offering international companies considerable opportunities to enter and become successful in one of the fastest growing economies in the world. The 5th Africa Business Forum in Addis Ababa, Ethiopia is an incredible convening center for global stakeholders and an opportunity to share perspectives on the issues facing global business and beyond,” Ahmed added.
An Institutional University Cooperation (IUC) programme funded by the Flemish Inter-university Council -University Cooperation for Development (VLIR-UOS) has been approved between Bahir Dar University (BDU) in Ethiopia and the five Flemish Universities coordinated by Ghent University.
To achieve its overall academic objective, the IUC will be engaged in joint implementation of research projects on Land Resilience, Hydro(geo)logy, Post-harvest and food processing, Aquatic ecology and waterborne diseases, and Socio-economic development. A Transversal Institutional Strengthening Project (TISP) is included.
The overall development objective is to contribute to the Climate Resilient Green Economy (CRGE) strategy in Northwest Ethiopia through research geared towards the solution of bottlenecks related to environment, water, food security, health and economical and social development. The study areas of the IUC programme are the Tana and Beles basins in Ethiopia.
The official launching workshop of the IUC will be held from 16-20 January 2017, with the participation of Prof. Dr. Freddy Mortier (vice-rector of Ghent University), Prof. Dr. Guido Van Huylenbroeck (Academic Director for International relations), and Prof. Dr. Jan Nyssen (coordinator of BDU-IUC). They will be hosted by Dr. Baylie Damte (president of Bahir Dar University), Dr. Enyew Adgo and Dr. Firew Tegegne (coorndinator and manager of the BDU-IUC programme at BDU).
While issuing a press conference on current affairs on Monday (January 09), Prime Minister Hailemariam Dessalegn noted, “Ongoing deep reform of the government will be effective through public participation.” Prime Minister Hailemariam said the reform program has created fertile ground to committed leaderships at various posts.
The Premier said an investigation bureau was established under the auspices of the Ethiopian Federal Police to fight against corruption and to hold accountable those involved in corruption and rent seeking. The bureau was also tasked to make public the wealth of government officials. He also indicated that an institution called “Democratic Center” was established in order to allow the public to give tips on corrupt leaderships.
According to the Premier, a tough investigation will be held on leaderships who were singled out as corrupt by the public, adding the government will take the necessary measure if it is supported with evidence.
The Premier further said that on the basis of the inputs gained from the reform program conducted so far, arrests were made on suspicion of corruption and rent seeking. Prime Minister Hailemariam also made remarks on other regional and continental issues.
Minister of Foreign Affairs, Dr. Workneh Gebeyehu conferred with Ms. Margot Wallstrom, Minister for Foreign Affairs of Sweden in New York, On 9 January 2017 ahead of the High-Level UNSC Debate on Conflict Prevention and Sustaining Peace.
Given that both countries have already assumed their roles as non-permanent members of the United Nations Security Council (UNSC), the ministers discussed on ways of exploring cooperation on regional and international issues of common concern.
Foreign Minister Dr. Workneh Gebeyehu noted that the High-Level UNSC Debate on Conflict Prevention and Sustaining Peace which is due to unfold on Tuesday 10 January would be instrumental in the prospect of dealing with conflicts across the world, and particularly in the Horn of Africa Region.
Dr. Workneh further pledged that his country is keen to do all it can to make sure that the upcoming forum remains to be as productive as possible. Noting that the Swedish Prime Minister, Stefan Lofven had visited Ethiopia three times in 2015/16, Dr. Workneh further said the Premier’s visit has reinvigorated the bilateral relations between the two countries.
As Sweden takes over the January presidency of the UNSC, Minister for Foreign Affairs of Sweden, Ms. Margot Wallstrom on her part said her country is keen to work in close concert with Ethiopia and other members of the UNSC on a range of global issues. She also hoped that members of the UNSC would work in a cooperative spirit in the next couple of years.
This article was originally published in the 4th issue (October 2016) of The Ethiopian Messenger, the quarterly magazine of the Embassy of Ethiopia in Brussels.
After three years of uninterrupted construction works, the Addis Ababa- Djibouti railway officially started operations. It is one of the eight new railway projects planned to be constructed in the country. As a very cost- effective means of transport over long distances, the Ethiopian railway infrastructure development projects are expected to significantly stimulate the national economy and accelerate regional integration.
« By all standards, the Ethio-Djibouti project will change the way things work for any investor, particularly one who wants to get involved in manufacturing. The transportation cost will be low and it will be very reliable” Transport Minister Workineh Gebeyehu said at the 8th Ethio-Djibouti Railway Project Joint Commission meeting. « It is difficult to think of rapid economic development, industrialization and international competitiveness without efficient, high quality and modern transport infrastructure ».
Ambitious railway policy to support national growth
Thanks to the implementation of three national development plans (The Agricultural Development Led Industrialization then the Growth and Transformation Plans I & II), Ethiopia is increasingly being recognized as an attractive country for local and foreign investors. Between 2008 and 2015, the country has witnessed a more than tenfold increase of foreign direct investments, which grew from USD 100 million to USD 1.5 billion. Sectors such as light industry and agro-processing, that were practically inexistent two decades ago, are now in the focus thanks to cheap and trainable labor force, affordable electricity and huge availability of raw agriculture goods. This attractiveness is set to further increase in the next years. According to consultancy firm Ernst & Young, the country will rank among Africa’s top four manufacturing hubs by 2025.
To achieve the status of regional manufacture and agricultural hub, Ethiopia needs to take advantage of its unique location, close to the Middle East, Europe and Asia. Though the world-class national airline Ethiopian Airlines already provides great transportation of fast consumption goods like horticulture and floriculture, the country still has to develop its transport capacity for non-perishable goods. This need is particularly acute because the country is landlocked. Road infrastructure has been developing fast in Ethiopia during the past years, but it cannot cover by itself the even faster-growing needs of the economy on the very large territory of Ethiopia (1,1 million km2). “We are a niche market in a good geographical position,” said CEO of the Ethiopian Railways Corporation (ERC) Dr Getachew Betru in an interview with The Worldfolio. “This is why the railway mode of transport is called a game changer.”
In 2007, Ethiopia’s Council of Ministers established the Ethiopian Railway Corporation (ERC), with a mandate to develop an integrated and high-capacity railway providing competitive and affordable passenger and freight transport services. The aim for the National Railway Network of Ethiopia is to build eight new railway lines for freight and passengers covering a total distance of 5,000 kilometers working across the country by 2020, in addition to an innovative 32-km light railway in the capital. Five of these eight projects are already in early or advanced stages of construction, while the Addis Ababa light railway already started operations in 2015.
Major Projects
LIGHT RAILWAY ADDIS ABABA
The light railway of Ethiopia is the first urban metro light rail scheme to be built in sub-Sahara, South Africa excluded. Since September 2015, up to 60,000 passengers can travel each hour on the two lines, across 39 stations and 32 kilometers. Thanks to subsidies from the government, the tickets are very cheap, allowing all the city inhabitants to use the innovative tramway. This new transportation system plays an effective part in solving the problems affecting Addis Ababa transport: an aged fleet, the chaotic and dangerous movement of mini-bus taxis and environmentally unacceptable levels of CO2 emissions. Eighty-five percent of the USD 475 million cost of the Addis Ababa Rail Transit project were covered by the Chinese Exim Bank, an agreement which came with significant technology transfer to train Ethiopian engineers and maintenance personal.
ADDIS ABABA-DJIBOUTI
Built by the French in the 1890s, the initial Addis Ababa-Djibouti railway line deteriorated over the decades due to lack of maintenance, cutting Ethiopia’s direct railway access to the port of Djibouti. The construction works of the new line, which runs parallel to the old one-meter gauge railway, started anew in 2012, with a total construction budget of USD 4.5 billion, financed by the Ethiopian government and in loans from the Exim Bank of China. The 320 kilometers stretch from Addis Ababa to Mieso was built by the China Railway Group, while the 339 kilometers section from Mieso to the Djibouti border was built by the China Civil Engineering Construction Corporation. Italferr, the engineering subsidiary of Italian State Railways, provides consultancy services for maintenance and operations. The first freight on the line was carried on 20 November 2015 along the partially completed line to Merebe Mermersa and the line was inaugurated on 5 October 2016.
According to Transportation minister Workineh Gebeyehu, the Addis Ababa-Djibouti railway line will allow Ethiopia to compete efficiently on the international market. In fact, it will provide a fast, efficient and cheap freight and passenger transportation from the capital city to the port of Djibouti, where most of Ethiopia’s export and import items transit. With this new line, the travel distance is cut from several days to less than 10 hours, with passenger trains transiting as fast as 160 km/h and freight trains at 120 km/h. The line is East Africa’s most important standard gauge railway and will carry 750,000 passengers and 8.5 million tons of freight annually. It will create more than five thousand job opportunities.
On the other hand, the completion of the Addis Ababa- Djibouti railway will certainly expedite the economic integration efforts of the Eastern Africa region. It is to be recalled that Ethiopia is linked by standard road with Djibouti, Kenya, Sudan, South Sudan and Somalia. Electricity is also exported to Djibouti and Sudan.
MEKELE-WELDIYA
The construction of the 268 kilometers Mekele-Weldiya line began in February 2015. It is funded by a loan from Exim Bank ($1,5 billion) and several other lenders ($1.7 billion). CCCC (China) and Yapı Merkezi (Turkey) are managing the project.
Connected to the Weldiya-Mekele line, the Awash-Weldiya line will ultimately connect Mekele to the Addis Ababa- Djibouti line. The 375 km project line is constructed by a consortium led by Yapi Merkezi (Turkey). The financing package comprises a USD 450 million seven-year loan from a consortium of lenders from Europe, Africa, the Middle East, and North America, and a USD 415 million 13-year loan backed by Sweden’s EKN and EKF and Swiss Export Risk Insurance. The terrain is particularly challenging for railway construction as Awash, at the southern end of the line, is 986 meters above sea level, and the line then climbs to Kombolcha at 1842 meters and finally reaches Hara Gebeya, close to Weldiya, at 2122 meters above sea level. This railway section achieved a major milestone in August 2016 with the holing through of a 1530 meters tunnel after one year of work. Three of the six tunnels on the line are now holed through.
WELDIYA-TADJOURA
This 280 kilometers project will give access to the port of Tadjoura in Djibouti, connecting the Ethiopian hinterland to another port facility in addition to the Djibouti port. It could be particularly useful to exploit the potash deposit in this region of Ethiopia.
ADDIS ABABA-BEDELE
The 439 kilometers line will connect Addis Ababa with Jimma, Bedele and in the future with South Sudan. Andrade Gutierrez Participacoes (Brazil) is in charge of the construction which started after prime minister Mr Hailemariam Desalegn laid the foundation stone for the project in May 2015. “The railway line which will ultimately connect to their neighbor Sudan, will play a major role in enhancing social, political and economic activities of the areas it crosses as well as the nation” according to Ethiopian Railways Corporation CEO Getachew Betru.
Long-term development and regional integration
Beyond the construction of the different railway lines throughout the country, Ethiopia is investing in long-term capacity-building to continue planning, maintaining and building its railway network. In April 2015, Ethiopia put forward the plan to establish the Railway Academy of Ethiopia for skilled railroad professionals, where railway professionals would be trained as managers, engineers, technicians, and researchers. The goal is to develop the competencies at national level to be able to manage the whole rail network with Ethiopian engineers and staff by 2020. “Hopefully, by the end of 2020 all the railways will be made in Ethiopia by Ethiopians,” Betru said. “My generation is trying, but it is the next generation, the youth, that will transform Africa, and we will see the real impact on education, health and economy in the 2020s.”
In 2015, the country also drafted its first National Logistics Strategy, which is expected to improve Ethiopia’s maritime, air and road connectivity, which in turn will greatly enhance multi and unimodal logistics operating systems, Ethio- Djibouti Corridor Management, customs, maritime and transit administration structures.
Railway development in Ethiopia is first and foremost focused on economic development, but it will also have a positive impact on the building of a climate-resilient economy and regional integration. As a very cost-effective means of transport over long distances, the Ethiopian railway infrastructure development projects are expected to significantly reduce transport costs, increase the safety and reliability of transport services, facilitate the import-export trade of the country, increase the inflow foreign direct investment, strengthen socio-cultural cohesion, technical knowledge in the country and stimulate trade and peace in the whole region.
The fifth edition of the Africa Business Forum will be held in Addis Ababa, Ethiopia, on March 1, 2017. This will be the second time the event would hold in Ethiopia, under the Patronage of Sheikh Mohammed Al Amoudi, one of the largest investors in Africa, Forbes ranked billionaire and Ethiopia’s biggest employer.
