Japanese company monopoly of NTE questioned

http://capitalethiopia.com By Muluken Yewondwossen

Legal issues have erupted related to the monopolization of the National Tobacco Enterprise (NTE) by private companies related to the full privatization process.
A couple of weeks ago the Ministry of Private Enterprises (MoPE), agreed to the second biggest deal in the country with Japan Tobacco International (JTI), to sell the remaining share of the government business of NTE at a cost of USD 434 million.
According to the deal the company took the remaining 30 percent of NTE which means that JTI owns over 70 percent of the tobacco company including a record 40 percent purchase a year ago at USD 510 million. The balance is managed by the Yemeni firm, Sheba Group, who initially joined the monopoly in 1999. Their share gradually increased to about 30 percent.
Wondafrash Assefa, Public Relations head of MoPE, told Capital that the company also took a ten year monopoly right on the privatization agreement which was signed some weeks back.
He said that the agreement stated that the monopoly right will be extended for a decade.
“It is a sensitive sector that has to be strictly controlled unlike other investments or privatization,” Wondafrash said. “It is not encouraged for other private actors to engage in the sector since it is a dangerous business,” he explained.
“The monopoly is given because it needs close follow up by the government,” he added.
Experts in the sector argued that the monopoly for the private actor is against the market economy policy and strategy adopted by the government.
Wondafrash defended this saying that there is a right to transfer an enterprise with the monopoly rights. When we sold to Sheba we talked with the board about the legality of the monopoly.
An expert at the Trade Competition and Consumers’ Protection Authority argued that the sector will be opened to other private actors since it is the issue of competition and consumer protection. “It shall be applied in a strict manner,” he argued.
Daniel Getnet, head of Dabe Investment and Consulting and Conveyance PLC, a legal consultancy firm for businesses mainly for FDIs’, told Capital that the issue will be settled by the constitution and depends on a proclamation amended by parliament.
“As far as I know there is not a law in the country that allows the right to monopolies besides the National Lottery,” the legal expert said.
In some cases there are compromises by the government for some sectors, according to experts.
“It is all about the interpretation issue. If it was necessary to give a monopoly right the constitution shall give a monopoly right for tobacco like national lotteries,” Dabe’s head said.
“There is also an antimonopoly law that prevents monopolization and anticompetitive activities by the companies,” Daniel said.
The investment law allows for a monopoly for locals and is open to the overseas actors but does not mention trading excluding some selected sectors that are monopolized by the government or the finance sector.
But he agreed that it is sensitive to allow many actors on the sector. “But previously an enterprise that the government has also share but currently it is fully privatized that may against the policy of the government,” experts added.
Proclamation no. 181/1999 ‘Transfer of the Monopoly Right of the National Tobacco Enterprise to the National Tobacco Enterprise (Ethiopia) Share Company’ issued when Sheba joined the sector in 1999 stated in its preamble that the National Tobacco Enterprise has been partially privatized and converted into a share company.
It added that it has become necessary to transfer the monopoly right of the National Tobacco Enterprise, as stipulated by its establishment proclamation, to the National Tobacco Enterprise (Ethiopia) Share Company. However, there is not an additional law that supports the full acquisition of the enterprise via private actors.
The enterprise has been given an exclusive right to produce, process, manufacture, distribute, import and export tobacco and tobacco products in Ethiopia. The enterprise also has tobacco farms at Shewa Robit, Hawassa, Bilatie and Wolaita.

Global economic growth offering new opportunities

http://capitalethiopia.com By Eskedar Kifle

Africa’s eastern countries are experiencing the most rapid economic growth on the continent.Djibouti, Ethiopia,Rwanda and the United Republic of Tanzania, underpinned by infrastructure investments, resilient services and the recovery of agricultural production are growing the fastest, according to the Economic Situation and Prospects (WESP) 2018 report that was launched in Ethiopia on Tuesday, January 16, 2018.
In other African regions, the report states that Senegal in West Africa has joined this group of rapidly growing economies, spurred by greater competitiveness, progress in structural reforms and favorable external conditions, such as positive terms of trade, favorable climatic conditions and a stable security environment.
The report shows that Africa’s aggregate GDP masks considerable variation among its sub regions. The less resource-dependent countries in East Africa, such as Djibouti, Ethiopia and the United Republic of Tanzania, and in West Africa, including Côte d’Ivoire, Ghana and Senegal, will continue to witness above average growth, supported by vigorous infrastructure investment, strong service sectors and a recovery in agricultural production.
By contrast, many oil and minerals exporters will witness weak growth, as commodity prices remain well below their 2014 levels and fiscal consolidation efforts constrain public investment.
Some Least Developed Countries (LDCs) of the world face prominent growth challenges, the publication also shows. Conflict-afflicted Yemen has been in recession for the past several years. The ongoing armed conflict has inflicted significant damage to the agriculture sector and itscrumbling institutional infrastructure is expected to prevent a significant rebound in the near future.
After an estimated growth of only 1.3 per cent in 2017, Haiti is forecast to see a moderate pickup in economic activity by 2019, amid continued reconstruction of infrastructure and recovery in the agricultural sector. However, severe macroeconomic imbalances, political unrest and natural disasters threaten to derail the recovery.
Findings also show that strong public and private investment is a common feature among those LDCs that are growing at over 7 per cent per year. As explained in the State of the Least Developed Countries 2017 (UN-OHRLLS,2017), another significant publication, an additional investment of USD 24 billion per year would suffice to bring the group, on average, to 7 percent GDP growth between 2016 and 2020.
Looking at other parts of the world, the report states that the recent pickup in global growth stems predominantly from firmer growth in several developed economies, although East and South Asia remain the world most dynamic regions. In 2017, East and South Asia accounted for nearly half of global growth, with China alone contributing about one-third.

UNCTAD’s trade statistics handbook looks into Africa’s trading advantages and disadvantages

http://capitalethiopia.com By Eskedar Kifle

The past couple of years have been tough for African countries in the business of trade, a statistics report by United Nations Conference on Trade and Development shows. According to the report, a slowdown in trade was particularly evident in merchandise exports, which fell by 10.5 percent. Decreasing volumes of goods loaded in seaports for international shipment and falling foreign direct investment receipts also illustrated the challenges, the findings show. Nevertheless, for the region, GDP grew by a modest 1.7 percent.
Other factors for Africa’s less than satisfactory trade sector includes the fact that the sector remains characterized by low product diversification and high dependency on raw materials compared with other regions of the world.
The report also shows that decreasing commodity prices in recent years have led to deteriorating terms of trade. This deterioration was reflected in large trade deficits for manufactured goods, which were not outweighed by trade surpluses for primary products. Consequently, Africa ran a merchandise trade deficit, as their percentage of exports, was much higher than other developing regions.
Other statistics, available in the report, indicate some favorable trends for African economies. Since June 2016, for example, the UNCTAD commodity price index has been increasing year-on-year. The current account deficit of many African economies stabilized in 2016 and stopped rising. Looking at demographic trends, the proportion of people of working age in Africa is expected to grow rapidly, yielding a demographic dividend and a positive effect on labor supply. The same favorable trends have been seen in 2017.
The report also illustrates the importance of trans-continental and intra-region trade and how they vary across continents. In 2016, the exchange of goods between China, the United States of America and Germany amounted to almost USD 1 trillion – 6 percent of world merchandise trade.
In the same year, 69 percent of the European exports remained within Europe and 59 percent of the Asian exports, in Asia. By contrast, for Northern America, Latin America and the Caribbean and for Africa, most exports were delivered to economies in other continents than that of the exporter.
UNCTAD’s report referred to as a Statistics Handbook provides a coherent overview of trends worldwide and novel summary analyses of countries, regions and sectors.
According to UNCTAD’s Deputy Secretary-General Isabelle Durant “Reliable statistical information is essential to support, evaluate and guide policy choices for all nations, and notably developing countries, providing them with tools that are not always easy for them to produce. Such tools are indispensable, both for their national economies and development, and to better integrate them into the global economy.”

Another group of Access home buyers ask gov’t for their homes

http://capitalethiopia.com By Muluken Yewondwossen

A group of people who bought homes from Access Real Estate, a developer who has been in turmoil for the past decade, are insisting that the government help them obtain their homes as opposed to considering other options.
The petition, signed by 325 home buyers, asked the government to intervene so they could obtain a home at the actual cost they paid years ago to Access Real Estate.
Access, who was able to amass a huge amount of money from over 2,500 home buyers within a limited time frame failed to transfer a single house.
In the past five years the company has experienced more difficulties since the company’s founder, former board head and CEO, Ermias Amelga left the country after he was unable to transfer houses or refund the money to clients. He also sent checks to some of the home buyers which then bounced.
In the meantime the government has gotten involved in the chaotic situation at the request of the home buyers some of whom are out of the country. The government has played a crucial role in getting Ermias to return. He is believed to be a key to a solution while the case is still in limbo.
When Ermias returned from Dubai after the main committee, which is formed by the order of the PM and includes top government officials, intervened, the company and representatives of home buyers, proposed that Access Real Estate construct houses for all home buyers via partnerships with other international companies without any additional funding from clients.
However, the founder disagreed on various issues including settling the balance payment for the former owner of Imperial Hotel, who sold the property to Access and transferred it to Metal and Engineering Corporation (METEC), a military affiliated engineering firm.
According to the information Capital obtained a week ago some home buyers, who recently signed a petition pleaded with PM Hailemariam Desalegn to have the government to establish an independent caretaker/trustee board overseeing construction of their homes.
Bekele Woldemichael, who legally represents 168 home buyers under the contractual agreement with Access/Pacific Link and Demekirstos Zemene, two of the four individuals that signed the cover letter of the petition that was sent to the PM told Capital that they want their homes built without spending an additional penny.
“We know that the audit report stated that the company’s assets are positive which means the company has the capacity to construct the homes,” Demekirstos, who came to Capital office to express the home buyers’ position, said.
Sources close to the issue said that most of the home buyers who paid the entire price of the home prefer that they get a home without any additional cost.
The audit report carried out by the Audit Services Corporation and submitted to the Ministry of Trade on April 7, 2017 indicated that the company had collected 1.3 billion birr. The major share or 1.16 billion birr came from home buyers.
The company states that the amount the home buyers paid five to ten years ago is now not enough to construct the house they agreed to in the contract, which means they need to pay more because the value of the money is not the same now. However, Bekele counters that contractual agreement has to be honored. “We have a right to get the benefit as per the verdict,” Bekele, whose represents a group of home buyers who purchased homes at a site called Pacific Link and obtained a verdict in the courts, told Capital.
The 325 individuals demanded to receive their houses without any more funding.
“The number of home buyers who signed the petition will be increased if we get the others involved,” Demekirstos argued. He also said that the individuals who paid the full amount would take the majority of the money collected from home buyers.
They claim the main committee of home buyers is not representing them and argue that this will help the housing debacle get resolved.
“We disclosed to the government that we don’t agree with the decision of the main committee and it does not represent us,” Demekirstos said.
Two weeks ago the main committee of Access home buyers visited the Ministry of Trade office to discuss why it has taken so long to find a solution to their problem. Since they appeared without an appointment they did not have enough time to express their concerns, but Bekele Bulado (PhD), Minister of Trade, agreed to meet them on Wednesday January 10 at the MoT Hall. The committee and Bekele met that Wednesday. Sources told Capital that in the meeting the minister promised to solve the problem as soon as possible.

Adwa Pan Africa University awaits completion

http://capitalethiopia.com By Tesfaye Getnet

The completed design and the full cost of the of Adwa Pan Africa University has not been finalized yet despite the fact that PM Hailemariam Desalegn and Uganda’s President Yoweri Museveni laid the foundation nine months ago.
The Tigray Administration gave 150 hectares of land for the school but some houses in the given area needed to be relocated to begin the construction.
The committee, made a temporary design after getting feedback from religious leaders, historians, foreign and local scholars, politicians and other concerned bodies.
The draft design which was shown at a meeting in the presence of Hailemariam Desalegn on January 15 at Sheraton Addis Hotel included a building for Natural and Social Studies including Pan Africa studies and a wall which has a picture of patriots in the Adwa war, and nine arch shapes which symbolize the nine regions of the country .
Betew Belay who is head of the committee working to build the university, said they will have an international conference in a few months to obtain valuable feedback from local and foreign stakeholders. pan-africa-university
“We sincerely thank Prime Minister Hailemariam Desalegn for his commitment to help us build the university and we are tirelessly working to involve stakeholders in the project and we will try our best to start the construction after we have completed the necessary steps.”
The PM has pledged 200 million birr from the government. He says the university will be effective on a global scale.
“Adwa is the victory of the our past generation the university will belong to the Ethiopian people, we will also have a museum that showing our bravery against foreign aggression and my government will do more to put this idea in to action.’’
Adwa Pan Africa University is the first of its kind in Ethiopia. It is being built to commemorate the Adwa victory.
Construction of the Adwa Pan African University was officially launched in the city of Adwa, Tigrai State in northern Ethiopia on April 23, 2017. The cornerstone laying ceremony was attended by many African leaders including the Nigerian, South African, Malawian, Liberian, and Burundian former presidents. In addition the current Vice President of Botswana, the Puntland administration president and other dignitaries from all over Africa attended the cornerstone laying ceremony
The Battle of Adwa was fought on March 2, 1896/Yekatit 23, 1889 according to the Ethiopian calendar between the Ethiopian Empire and the Kingdom of Italy near the town of Adwa, Ethiopia, in Tigray. This climactic battle of the first Italo-Ethiopian War, was a decisive defeat for Italy and secured Ethiopian sovereignty.

Nearly half a million SNNPR students dropout from school annually

http://capitalethiopia.com By Tesfaye Getnet

A recent drought, poor economic conditions, massive migration to cities like Addis Ababa, Hawassa and Nazareth, along with parents who place a low priority on education have contributed to over 493,000 students from Southern Nations Nationalities and Peoples’ Region (SNNPR) dropping out of school this fiscal year.
According to information that Capital obtained from the SNNPR Education Bureau 436,000 primary and 56,943 high school students dropped out or did not come to school at all.Benchi Magi and South Omo zones had some of the highest dropout rates as 4.6 million students between first and eighth grade or 9.7 percent of the youth population did not attend school when it began in the middle of September. From this figure 625,754 high school students or 9.2 percent of the student population left their schools.
Sixty percent of the students who dropped out of primary school were girls. Among high school age students 60 percent of the dropouts were males.
There is a school feeding program which provides breakfast and lunch to students. This is funded by the World Food Program, the federal government and the SNNPR Educational Bureau. The budget for this program is 78 million birr. This has helped slightly decrease the dropout rate to 13 percent in 2016/17.
Some say that regions should offer free education during the evening hours and more economic assistance for parents to reduce the dropout rate.
One expert who requested anonymity said:
“Many of these students have parents who are farmers or have tough economic situations so their children are expected to help work during the day and it is hard for them to attend school. If there were classes at night it could help alleviate the situation or if parents were able to earn more money from farming and side jobs they wouldn’t feel the need to use their children as a means of economic assistance and would instead send them to school which would bring them more long term benefits.”
Meseret Bezu, SNNPR Education Bureau Development Plan Director disagrees with this, she says the night shift is not a major solution to reducing school dropout rates.
“We are working on school feeding to assist parents in providing food for their children. We are opening schools near their home which are equipped with libraries and laboratories so as a government we need encourage students to attend school every day to give them a better education. Night school is not our top priority agenda,” she said.

Unibra sells off shares at Zebidar to Castel

http://capitalethiopia.com By Staff Reporter

Belgian brewery, Unibra Group and Castel Group, which owns BGI Ethiopia sealed a deal to transfer Unibra’s share of the recently joined brewery Zebidar, to Castel on Thursday January 18.
It has been rumored that the two bodies were negotiating to sell shares of Unibra to the leading brewery in Ethiopia.
Details have not been given but official information obtained from BGI indicated the two companies have agreed to transfer the shares of Zebidar to Castel Group.
Unibra is the major shareholder at Zebidar with an ownership of 60 percent, while the balance is managed by about 1,100 shareholders.
The brewery commenced production just a year ago with a unique pull-off cap bottle and an investment of 1.3 billion birr. The factory that has a production capacity of 350,000 hectoliters per year is located around Wolqite, Gubre zone, SNNP, 136km west of Addis Ababa.
Recently BGI agreed with shareholders of Raya Brewery to buy the balance of the factory which is the only one in Tirgay region. BGI already has a 42 percent share of Raya, while the share transfer has not yet concluded, according to sources.