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Volume 1 Number 42

February 18 - 25, 2001

 

Construction Delay Costs National Bank Additional 12.4 Mil Br
The three years delay that has slowed down the completion of the would be headquarters of the National Bank of Ethiopia (NBE), started some six years ago, has led the Bank to an additional cost of 12.4 million Br from its initial projections.

 

PM Office to Decide on Sugar Auction for Export
National Bank to Quit Auctioning Forex
Local Manufacturers Start Receiving Offers from US Importers
Fourth European Film Festival Launched
Addis Pharmaceutical to Start Export of Drugs
Birr Depreciates by 20 Per Cent in Three Years
M-Net to Premier Ethiopian Produced Film at the National Theater
MPs Outrageous About Sale of Nation's Oldest and Antique Hotel
Vestel TV Sets to Boost Production
Meriting Trade Fair Participants Awarded
Tyre Factory Amasses 10 Mil Br Profit in Six Months
Kokeb Restaurant Shut Down
World Bank Grants $473 Mill Loan to Ethiopia
Butane Gas Made Available
Ambo Narrows Retailers Profit Margin
Coca Cola Launches Simba Kiosks
Addis Witnesses the "Land Rush"
Lufthansa Says New Schedule Stays Valid for Couple of Weeks
African Economies Record Slow Growth in Late 1990s

 

 

 

EDITORIAL
A better deal was possible.
Be civic conscious Businessperson.
OPINION
At last, Parliamentarians lambaste Privatization Agency.
VIEW FROM ARADA
Merkato's contextual parlance.
RESTAURANT REVIEW
Salayish Bar & Restaurant.
TREND
Tantalem Production.

 

 

TENDAR MART
ECONOMIC COMMENTARY
BUSINESS OPPORTUNITY
VIEW POINT
EXECUTIVE CALENDARS

TRAVEL NOTES
Abyssinian Chronicles.

 

Construction Delay Costs National Bank Additional 12.4 Mil Br
BY YIBEKAL GETAHUN AND DAWIT TAYE
Fortune Staff Writers
The three years delay that has slowed down the completion of the would be headquarters of the National Bank of Ethiopia (NBE), started some six years ago, has led the Bank to an additional cost of 12.4 million Br from its initial projections.
The additional cost was due to inflated prices that occurred during the time of delay.
The construction of the 12-storey building, planned to be completed by 1998, is being carried out by a private construction company, Berta Construction Plc, which won the contract for 27.6 million Br.
NBE officials say that the cost of the building under construction has so far reached some 40 million Br, having an increase of about 45pc.
Officials claim that the delay has occurred due to changes made on the building's initial design (intended to house a banking and insurance training institute) and differences between the construction company and the consultant.
The plan of training institution had to be altered following the Commercial Bank of Ethiopia's ownership claim of the current NBE's headquarters registering it as its own asset, which requires NBE to evacuate the premises to relocate itself at the new building.
Delay of imported equipment and legal procedures to acquire additional space from the compounds of the Ministry of Information and Culture have also contributed to the backdrop, according to NBE officials.
Now experiencing space constraints at existing situations, the Bank is pressuring the construction company to speed up the construction, expecting the building to be completed by the end of this year.
Meanwhile, NBE, persistent to its need of finding a place to house its training institute for banking and insurance industry, has signed an agreement with another private construction company, Akir Plc., on Friday, February 16.
The Bank has acquired a 165,067 Sq.m land in Akaki town, 23Km south of Addis, to construct a 61.9 million Br complex planned to be completed in 2004.
The agreement was signed between Governor Teklewold Atnafu and Awetahegn Kiros, who has represented the construction company that has track records of constructions in projects such as Lalibela Airport terminal, depot and ring road in Mekelle and Bahir Dar Airport.
Universal Consultants, a private consulting firm that has designed the complex, is now given the job of supervision and consultancy to Akir Plc., disclosed Desta Alem H. Sellasie, general manager of Universal Consultants.
The complex will accommodate three main buildings, dormitory, conference halls, sport's fields, clinics and other entertainment outlets. Top

 

 

 

 

 

PM Office to Decide on Sugar Auction for Export
Local Prices on the Pitch
BY DAWIT TAYE
Fortune Staff Writer
The Ethiopian Sugar Support Industry Center (ESSIC) has forwarded the decision on the awarding of a tender on sugar to the Prime Minister's Office for decision, disclosed sources at the Center.
The Center had tendered 100,000 quintals of sugar for export where 13 foreign purchasers attended the bid opening on January 22.
Traditionally, ESSIC would disclose offer by the highest bidder at the opening date. This time, however, all the bid offers are sent to the PM office for further evaluations before the announcement is made public.
"We will soon make public the results of this tender after evaluations on bidders offer and track records of the winning bidder are verified by the Economic Affairs Office of the Prime Minister," said one official of the ESSIC.
Bidders from Kenya, Djibouti and Bidders from Kenya, Djibouti and Yemeni have participated in this tender whose earnings are believed to contribute to the country's economy, generating foreign exchange.
Seeking for more foreign exchange to the country, the Center takes a much lower rate per quintal than what it has been tendering for the local consumption. According to analysis of the industry, the Center would have earned about 60 million Br had it put 10,000 tons of sugar to local buyers, if we go by the average rate of what local companies are offering at the bi-weekly auction held by ESSIC.
"Our interest in this tender is to get foreign exchange, in spite of the lower prices compared to the local market," argues this official.
Maintaining a better quality than the sugar supplied to the local market, the sugar that was offered for export last year was sold at $145 per quintal. Industry analysts say, the country could get at least $1.4 million (12 million Br) if it secures prices commensurate with what it was offered last year, though ESSIC officials anticipate to earn more foreign exchange this time.
However, the price disparities between the type of sugar offered for export and what are being supplied to the local market is wide apart. It has an average difference of 435 Br per quintal, according to last year's experience.
Not only are the disparities a concern to the industry, but the bouncing trend of sugar intended for export being smuggled to the country, hence creating price distortion at the local market has been a major state of solicitude to local businesses engaged in the sector, observing their recent experience.
"We will include a clause in our agreement that would legally commit the purchaser from avoiding sending back the sugar that he buys from us," said the official, though pointing out that it is the responsibility of the Customs Authorities to introduce stricter ways of controlling mechanisms.
"That is what we are trying to do," agree officials of the Authority.
They claim to introduce an organized and integrated system of control particularly around Nazareth town where the problem was more evident last time.
In the meantime, Mina Trading and Tis Abay Trading have purchased 72,000 quintals of what the Center has offered at the 58th round auction opened on February 6. The Center had offered a total of 100,000 quintals, the highest put on tender this year.
The two companies have paid a total of 41.4 million Br, offering 575.27 Br per quintal. On the other hand, the state owned Merchandise Wholesale and Import Trading Enterprise (MEWIT), which has been observed inactive for the past two months, having no stocks in its regional warehouse, is now back to business taking 25,000 quintals offering eight various price tags, but paying 14.4 million Br in total.
The highest price it had offered, however, was 582.29 Br per quintal.
Among the 22 participants, three other participants, Meseret Plc, East African Trading House and Ato Suliman Hassen, took 1,000 quintals each offering 577.19, 576.37 and 575.30, respectively.
This round's highest offer, 582.29 Br per quintal, was much lower than what it had been offered on the 57th round auction (606.46 Br), mitigating the concern of the industry that the price of sugar both on the wholesale as well as retail level were on the stride. The increasing trends of retail prices in Addis and Nazareth (between 25-50 cents per kilo) had been the major concerns of businesses in the industry.
The Center is believed to earn more than 57.5 million Br from the latest auctioning of sugar supplied from the three state - owned factories.Top

 

 

 

 

 

National Bank to Quit Auctioning Forex
BY YIBEKAL GETAHUN
Fortune Staff Writer
The National Bank of Ethiopia (NBE) is contemplating to quit its six years practice of conducting the weekly foreign exchange auctions to commercial banks and investors in a bid to increase the flow of foreign currency and stabilize the exchange rates.
The Bank, according to the governor, Teklewold Atnafu, is studying the implementation of a policy measure to realize its plan of abandoning the traditional wholesale foreign exchange auctions in the coming few months.
Governor Teklewold said that his Bank foresees replacing the weekly auctions by introducing a regulation that would allow banks to tap from their foreign exchange deposits to supply their clients.
The Bank also plans to activate a system that enables banks to trade hard currencies among themselves in inter-bank sales.
"The new system is expected to facilitate further liberalization of the current forex market," hopes the Governor.
The forex law to be introduced would narrow the exchange rate gap between the official and black market rate, while reducing illegal activities such as trading on currency speculation by individuals, NBE believes.
Plans to create favorable conditions to encourage Ethiopians in the Diaspora to open forex accounts here and to stem their participation in government treasury bills and bond auctions, are also in the making.
During the past six months, NBE has supplied some 207 million Dollars through the weekly wholesale auctions. According to data from the Bank, the average official rate during the specified period was 8.26 Br against the Dollar, while the rates in the black market had surged by 6.6pc to reach 8.81 Br for the Dollar, according to study made by the National Bank.Top

 

 

 

 

 

 

 

Ethiopia Submits Qualification Documents for AGOA

Local Manufacturers Start Receiving Offers from US Importers
BY MIKIAS WORKU
Fortune Staff Writer
Following the enactment of the African Growth and Opportunity Act (AGOA), that allows products from eligible sub-Saharan African countries a duty free entry into the U.S. market, Ethiopia has submitted the required qualification documents to the US government, looking forward to start shipping apparel and textile materials.
Ethiopia is one among the 35 countries below the Sahara that has been enlisted as eligible for AGOA, which was signed into law by former US president Bill Clinton in May 2000.
The new law is designed aiming at increasing commerce between the US and African countries, encourage US investment in Africa and stimulate engagement into light manufacturing, while spurring the economy of these countries by allowing access to their products, in the huge American market quota-free and under zero tariff.
The compiled report submitted through the Ministry of Trade and Industry two weeks ago outlays the government's plan on visa and customs system, issuance of certificates of origin for the goods to be exported and action plans to prevent transshipments ruled illegal under the trade Act.
The initiative also targets at pushing eligible countries to introduce reforms to eliminate barriers that exist in areas closely linked with foreign trade in order to create smooth overseas business relations.
According to information obtained from the Ministry of Trade and Industry, local manufacturers may begin supplying their products to the US market once the US trade office nods its approval after reviewing the submitted documents.
Transshipments are categorized as illegal under AGOA to make sure that the benefits from the trade Act accrue only to eligible African countries and effective customs verification procedures and enforcement mechanism to combat illegal shipments should be put in place for qualification.
An official responsible for foreign trade in the ministry told Fortune that the government would pass a regulation that outlaws re-exporting products to the US under the scheme of AGOA.
Sources say that to date two local textile manufacturers have received offers worth more than 10 million Br from US importers and are currently awaiting green light from the US authorities to start shipping their goods.
Embassy officials could not be specific on the exact date the response is likely to come.
Some 4,600 products have been listed eligible for the duty-free entry into the American market and additional 1900 items are being considered to be added to the list.
Assistant US Trade Representative for Africa, Rosa Withaker, explained that AGOA would help African countries to have greater share in the American import market estimated at 70 billion Dollars a year.
"African countries account only one percent of the US import market," said Mrs. Withaker, speaking at a live satellite discussion that linked-up participants from Ethiopia, Eritrea and Benin with Washington.
She said her office has conducted country review programs and intensive consultations with governments of eligible countries and American embassies for implementing the legislation.
The trade law gives trade preferences to the textile industry due to its importance in African countries, its labor intensiveness and the enormous demand in the American market.
Americans import 85pc of their textile needs from other countries and the new legislation is speculated to increase the current level of 250 million Dollars of textile imports from African countries to 4.5 billion by 2008, which is the year the bill is mandated to stay active. An 18pc tax had been imposed on garment imports prior to the enactment of the bill.
"There would be a continued process to sustain the eligibility of the countries," she said.
The US would provide technical assistance to familiarize eligible countries with the Act and sequential meetings at ministerial level would be held to plan on deriving mutual benefits from the initiative, according to the trade representative.
To that end, a trade expert would arrive from the US next month for a five-day visit to explain the benefits of AGOA and the US customs services to government officials and the business community.
According to Stuart Zimmer, commercial officer at the US Embassy, the expert will meet with officials of the trade ministry and customs and the embassy is working with the Addis Chamber to organize a workshop for members of the business community.
The commercial officer says that Ethiopian exporters will have to compete with other African countries over high quality, low price and on-time delivery of shipments, which he said would put them in a better competitive edge.
He believes Ethiopian manufacturers should take advantage of their national carrier, which is one of the few airlines in Africa that have direct air routes to the US, and the abundant labor existing in the country. Top

 

 

 

 

 

Fourth European Film Festival Launched
M-Net to Premier Ethiopian Produced Film at the National Theatre
BY MARY DEJENE
Fortune Staff Writer
The South African TV channel, M-Net, is now to premier an Ethiopian produced and directed film, The Father, at the National Theatre on February 20.
At a press conference held on Wednesday, February 14, Ermias Woldeamlak, the director, said that the pre-production of the 27 minutes film took three to four weeks, while site shooting was completed in eight days.
The film, selected with other two African movies - "Surrender" from Tanzania and "A Barber's Wisdom" from Nigeria - will be screened on TV through the South African M-Net channel on March 3, and will also be featured in Berlin and Rotterdam film festivals, respectively.
Even though the overall production cost is not yet known, Wondwossen Kebede, production manager estimates 90,000 Br, of the money, funded by M-Net, has been spent to pay actors and crewmembers that ranged between 49 and 56 in number, along with other expenses.
However, in her previous interview with Fortune, Magida (Magi) Abdi, producer of the film, had said that M-Net has had extended up to 150,000 Br to help cover the expenses for producing the movie.
Wondwossen also had said that they were forced to spend three-fourth of the budget on equipment rental from South Africa.
The Father, directed by Ermias Woldeamlak, a director at the Ethiopian Television Agency; written by Manyezewal Endeshaw and produced by Magi Abdi, is an Amharic movie but displays English subtitles for international screenings.
The Father tells a story of an Ethiopian returnee who "revisits a chain of horrific events that led to her brother's death" during the 1970s Red Terror and personal sacrifices paid by his artist friend.
The film was premiered at the African film festival SITHENGI late last year and has garnered critical acclaim, claims the organizers.
The team involved in making this film began working on the production at a New Directions film workshop in Goree Island early last year, and was selected from a group that included delegates from Kenya, Ghana, Zimbabwe and South Africa.
Meanwhile, the Forth European Film Festival, organized by Cineaction, kicked off on Wednesday, February 14, 2001, in the ballroom of the Addis Ababa Hilton.
The festival, which was opened with the projection of the film "Lumumba" in the presence of a wide audience, will stay open until February 21, with projections at the Hilton, in addition to some screenings in the City Hall.
According to a news release by Ciniaction, similar to the three preceding festivals, the 2001 European Film Festival aims at reaching as wide an audience as possible "to promote cinema and the quality of the European technology".
"Besides reactivating creative mechanisms for film-making in Ethiopia, EFF 2001 can serve as a precursor of a cine-club working with digital films and attracting a certain type of public who have deserted the cinemas of Addis for the last two decades," hopes the release.
"The event could also signal the birth of a new network of cinemas in East Africa." Top

 

 

 

 

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Addis Pharmaceutical to Start Export of Drugs
BY DAWIT TAYE
Fortune Staff Writer
Addis Pharmaceutical Factory S.C. (APF) is preparing to export its products to three countries in the East and South African region.
The marketing division head of the factory, Tsigereda G. Medhin, disclosed that the company has struck deals to supply Sudan, Uganda and Zambia with drugs it is manufacturing and would commence exports anytime this year.
An affiliate to the vast business empire of Endowment Fund for the Rehabilitation of Tigray (EFFORT), APF was established in 1992 with a current fixed asset value of 280 million Br.
It came at the forefront of the country's pharmaceutical business, setting up a manufacturing plant in Adigrat town, Tigray Region, that kicked off production five years ago.
The plant was built with machinery brought in from Great Britain, Italy and Germany.
The marketing head said that they would start export as soon as they receive orders from their clients in the neighboring countries and the volume and type of drugs to be supplied are to be determined in due course when the orders are placed.
"We are also exploring possibilities to export to additional foreign markets," she said.
According to her, the manufacturing plant has a full-throttle capacity to produce drugs worth 200 million Br a year and meet more than 50pc of the local demand.
The factory manufactures 50 different types of drugs in the form of tablets, capsules, ampoules, syrups and eye ointments.
The production line has capacities of producing 5800, 125 ml bottles of syrup an hour, up to 3600 tubes of eye ointments, and 12,000, one milliliter ampoules as well as 48,000 Ampicillin capsules per hour.
"All our products have received standard and quality certifications from international organizations such as the World Health Organization (WHO), while the countries to which we are planning to export have been assured to that end," the marketing head said.Top

 

 

 

 

 

Birr Depreciates by 20 Per Cent in Three Years
Governor Teklewold Warns Trade Deficit May Reach 1.2 billion Dollars
BY YIBEKAL GETAHUN
Fortune Staff Writer
The value of Birr against the US Dollar continues to depreciate with the latest figure of 20pc observed at the weekly foreign exchange auctions of the National Bank of Ethiopia (NBE), which has been conducting it since 1995.
The 20pc depreciation was observed in the past three years. For instance, the average exchange rate for the first half of the current budget year was 8.306 Br -showing a fall of 1.426 Br against the Dollar from that of 1997/98, whereas in six months, the average rate that stood at 8.14 Br during the past year slumped 2.7pc.
Governor Teklewold Atnafu of the NBE, in his report to the Parliament, attributed the accelerating depreciation rate to the increase in the value of the Dollar against currencies of other countries, which are trade partners of Ethiopia, and the decline in the export earnings against growing import expenditures.
Teklewold said that the country's trade balance increased from 775 million Dollars in 1997/98 to 1.12 billion Dollars in 1999/00 and coverage of import expenditures were only between 44pc and 29pc onwards since the past three years.
NBE has supplied a total of 2.1 billion Dollars to the weekly auction it has been conducting in the last three years on wholesale basis to commercial banks and to those who wish to buy more than 500,000 Dollars.
Governor Teklewold was also honest in telling parliamentarians that the national foreign exchange reserve is alarmingly declining from covering three-month import expenditures three years ago to two months in 1999/00.
Around 231 million Dollars in external credit is anticipated, while settlement is expected to be with grants, loans, debt relief and extension. In that respect, the reserve is expected to cover 2.4 months (72 days) of import expenditures in the current budget year, the Governor disclosed.
NBE's chief also anticipates imports of different commodities worth 1.76 billion Dollars for this year, against an anticipated earnings of 476 million Dollars, close to half of it (209 million Dollars) from the export of coffee.
Governor Teklewold warns that trade deficit may reach 1.28 billion Dollars in the current fiscal year.Top

 

 

 

 

 

M-Net to Premier Ethiopian Produced Film at the National Theatre
Fourth European Film Festival Launched
BY MARY DEJENE
Fortune Staff Writer
The South African TV channel, M-Net, is now to premier an Ethiopian produced and directed film, The Father, at the National Theatre on February 20.
At a press conference held on Wednesday, February 14, Ermias Woldeamlak, the director, said that the pre-production of the 27 minutes film took three to four weeks, while site shooting was completed in eight days.
The film, selected with other two African movies - "Surrender" from Tanzania and "A Barber's Wisdom" from Nigeria - will be aired on TV through the South African M-Net channel on March 3, and will also be featured in Berlin and Rotterdam film festivals, respectively.
Wondwossen Kebede, production manager estimates the production to cost around 90,000 Br, though the precise overall production cost is not yet known. The money, funded by M-Net, has been spent to pay actors and crewmembers that ranged between 49 and 56 in number, along with other expenses.
However, in her previous interview with Fortune, Magida (Magi) Abdi, producer of the film, had said that M-Net has had extended up to 150,000 Br to help cover the expenses for producing the movie.
Wondwossen also had said that they were forced to spend three-fourth of the budget on equipment rental from South Africa.
The Father, directed by Ermias Woldeamlak, a director at the Ethiopian Television Agency; written by Manyezewal Endeshaw and produced by Magi Abdi, is an Amharic movie but displays subtitles for international screenings.
The Father tells a story of an Ethiopian returnee who "revisit chain of horrific events that led to her brother's death" during the 1970s Red Terror and personal sacrifices paid by his artist friend.
The film premiered at the African film festival SITHENGI late last year and has garnered critical acclaim, claims the organizers.
The team involved in making this film began working on the production at a New Directions film workshop in Goree Island early last year, and was selected from a group that included delegates from Kenya, Ghana, Zimbabwe and South Africa.
Meanwhile, the Forth European Film Festival, organized by Cineaction, kicked off on Wednesday, February 14, 2001 in the ballroom of the Addis Ababa Hilton Hotel.
The festival, which was opened with the projection of the film "Lumumba" in the presence of a wide audience, will stay open until February 21, with projections at the Hilton, in addition to some screenings in the City Hall.
According to a news release by Ciniaction, similar to the three preceding festivals, the 2001 European Film Festival aims at reaching as wide an audience as possible "to promote cinema and the quality of the European technology".
"Besides reactivating creative mechanisms for film-making in Ethiopia, EFF 2001 can serve as a precursor of a cine-club working with digital films and attracting a certain type of public who have deserted the cinemas of Addis for the last two decades," hopes the release.
"The event could also signal the birth of a new network of cinemas in East Africa." Top

 

 

 

 

 

MPs Outrageous About Sale of Nation's Oldest and Antique Hotel
BY YIBEKAL GETAHUN
Fortune Staff Writer
Although one and half years have elapsed since the sale of Ethiopia's first and oldest hotel, Taitu Hotel, some members of parliament (MPs) have stirred opposition to the report by Beshah Azmetie, general manager of the Privatization Agency, to the Federal Parliament at the 17th ordinary meeting.
The 94-year old hotel was sold to a private company called Yellow Pages for 5.2 million Br as part of the privatization process, after City Hall officials had explicitly pledged to assign the Ethiopian Heritage Trust (EHT) as a caretaker of the historical hotel, according to close sources.
Beshah has faced criticism from MPs, who argued that the location of the hotel and its goodwill makes it worth more than the price the Agency sold it for.
"The historical value of the hotel alone is worth more than 5.2 million Br," blasted one member in a high tone.
The general manger replied that the decision came from the Agency's Board of Directors after his office sought instructions whether to keep the hotel under government control or offer it for privatization.
Beshah said that the Board passed the decision to transfer the establishment to private ownership but under commitments to preserve the historical value and antiquity of the site.
He also explained that asset valuation of the hotel was made according to the current exchanges and the buyer has signed a contract with the Ministry of Information and Culture as well as the concerned regional bureau committing himself to maintain the hotel's identity, including renovation terms.
Beshah defended himself that his Agency is mandated to only sell the business and assets of every enterprise it divests and buyers sign another contract with responsible regional governments, which determine the value of the land and collect the fees.
However, an MP recalled that the Parliament in the previous term had instructed the Agency to abort the sale of the hotel but to no avail.Top

 

 

 

 

 

Vestel TV Sets to Boost Production
By DAWIT TAYE
Fortune Staff Writer
United Tebarek Plc, the private company that is at the forefront of the country's electronics industry with its Vestel television sets assembly line, is envisaging to increase its production capacity to 50,000 units a year within the next five months from the current 15,000 sets.
The company targets to achieve the more than 200pc production surge when launching assembly at its new manufacturing line that is being built at a cost of 30 million Br in Alemgena town, Oromia region. The factory is fledged on a 25,000 Sq. meters plot and construction is expected to conclude in three months.
Tebarek Hassen, general manager of United, said that his company is also ready to start producing a technology that would incorporate both Internet and television services in one set.
Tebarek said that they have already made a test production of the new Internet-TV assortment and regular production would start in seven months time at the new manufacturing plant.
"We would make available the Internet-TV for prices half that of a computer," the manager said. The new technology is capable of providing Internet and e-mail services as well as regular television transmissions.
On the other hand, the company has reached agreements with three local manufacturers to supply it with their produces for its inputs and packaging material in order to cut on foreign currency spent to import the materials from abroad.
Thermoplastic, Ecafco and a card box factory called Burayu are the local manufacturers with whom the television assembly line concluded deals. The factories would supply the packing material and the inner and outer dressings (stroform) of the sets.
"We spend more than 3,000 Dollars in transportation for a single container to import these materials from Europe," Tebarek said.
According to him, the manufacturers are capable to produce standard products comparable to the European ones and have offered 10pc to 15pc less prices.
These materials will increase the factory's usage of locally manufactured inputs to 25pc.
United currently employs75 workers and this figure is expected to increase to 200 when production is launched at the new manufacturing line, Tebarek said.
United has also plans to assemble Vestel refrigerators in the future. Top

 

 

 

 

 

Meriting Trade Fair Participants Awarded
BY MARY DEJENE
Fortune Staff Writer
The Addis Chamber of Commerce has crowned the Sudan's maiden participation at its 5th International Trade Fair by awarding the group of 16 companies the best stand award under the category of foreign participants.
Djibouti, which was represented by a single company (COMAD), while other companies boycotted participation over unmet demands, came second followed by the Iranian delegation.
The award ceremony was held at a cocktail party thrown on Monday, February 12, at the Ghion Hotel, one day after the official closure of the 10-day trade fair.
The Chamber has also awarded the British Embassy from participating embassies and Commercial Bank of Ethiopia from service providers.
Maru Metal Industry Plc got the best outdoor stand award whereas Hayel Seid Anam Plc, African Lakes Ethiopia Plc, and Petram Plc received the first to third places, respectively, under the indoor best stand award category.
The awardees were nominated by members of the jury elected by the chamber. The jury included Habte Sillasie Tafesse, managing director of IB International, popularly known as a father of Ethiopian Tourism; Amde AkaleWork, managing director of Habtewold International; Habtamu Bekele, arts and literature team leader at the Ethiopian Tourism Commission; Berhanu Kaba, technical and sales department head of Ethiopia Amalgamated Ltd.; Samuel Hailu, project senior expert at Ethiopian Investment Authority and Galal Abbas Ramadan, regional advisor for the Economic Commission for Africa (ECA).
Sponsors of the Trade Fair, Ethiopian Airlines, Nib International Bank, SGS, Wegagen Bank, National Motors Corporation and Total Ethiopia also received gifts from the Chamber.Top

 

 

 

 

 

Tyre Factory Amasses 10 Mil Br Profit in Six Months
YIBEKAL GETAHUN
Fortune staff Writer
The state-owned Addis Tyre Factory has obtained a gross profit of more than 10 million Br during the first half of the current budget year, sources close to the Factory disclosed.
The Factory's profit results from supplying 70pc of the demand in the local market.
Addis Tyre, the first local tyre manufacturing plant, maintains its position of being the sole local manufacturer for 29 years now.
The Factory so far manufactures 36 different types of thread carcass tyres and is preparing to launch a feasibility study to start producing wire-carcass tyres in the near future, disclosed our sources. Well seasoned and impregnated Addis tyres have made names for their durable quality having an edge over imported ones, observers claim.Top

 

 

 

 

 

Kokeb Restaurant Shut Down
BY YIBEKAL GETAHUN
Fortune Staff Writer
Kokeb Restaurant, one of the chain establishments administered by the state owned Ghion Hotels Enterprise, is out of business as of February 7, after repeated attempts to privatize the restaurant failed to attract interested buyers.
The Restaurant, which is located on the tenth floor of Kokeb Building, behind the headquarters of the Development Bank of Ethiopia, had been put up on the auction block by the Ethiopian Privatization Agency in two consecutive tenders.
According to sources close to Fortune, the Restaurant has been operating during the last couple of years incurring heavy losses. Following its closure, the enterprise has re-deployed employees of the Restaurant to its other branches and the administration is awaiting clearance from the Agency for the Administration of Rental Houses to take out its goods from the building. Top

 

 

 

 

 

World Bank Grants $473 Mill Loan to Ethiopia
The World Bank has provided Ethiopia with a loan of $473 million, the Ministry of Finance announced last week. The loan will be used for war reconstruction programs and rehabilitation efforts in areas affected by a two-year border war with Eritrea.
Of the total loan, which was obtained through IDA, $234 million would be used for the reconstruction of basic infrastructure destroyed by the war and $174 million would be set aside to demobilize some members of the Ethiopian army and for land-mine clearing activities.
The remaining $65 million go towards efforts to fighting HIV/AIDS in the country. Some three million Ethiopians are HIV positive or have full-blown AIDS, making Ethiopia one of the worst affected countries on the African continent, the story notes. Top

 

 

 

 

 

Butane Gas Made Available
Price Unbearable
BY ABEBE TADESSE
Fortune Staff Writer
Ethiopian Petroleum Enterprise (EPE) has recently started importing and supplying LPG to the three local oil companies after severe scarcity that persisted for the past one year.
Amidst confusion among consumers whether to continue using LPG in their households or not due to its scaring prices, EPE recently revised the price of a kilogram of LPG and set the price of one kilogram of LPG at 10 Br, an increase by 11.1pc from nine Birr in August 2000. And the current price shows an 1011pc upsurge compared to 0.90 Br per kilogram a decade ago, one among the highest price hike in recent times.
Although the affordability of LPG is unimaginable by most city residents, EPE is promising that supply would be sustainable in the long run.Top

 

 

 

 

 

Ambo Narrows Retailers Profit Margin
BY ABEBE TADESSE
Fortune Staff Writer
Ambo Mineral Water Factory has made price adjustments on its product by introducing a 12.5pc rise on the 500ml bottled mineral water now distributed at 0.90 Br, up from the previous 0.80Br.
The Factory opted for the price increment as the only option to gain a wider profit margin, sources in the company said.
Ambo's profitability has been declining as a result of increase in the operational costs, particularly fuel.
Ambo registered last year more than 16 million Br profit before tax, bottling and supplying 34.2 million liters of mineral water. However, the profit margin left board members of the Factory unsatisfied and led them to the decision of price increment, it appears.
Seyoum Mesfin, minister of Foreign Affairs, chairs the board.
The 12.5pc addition would boost the Factory's income, helping it get more than seven million Birr than under the previous rates, according to Fortune's reckoning based on the Factory's annual production of 35 million liters.
However, the increase would pressure retailers by diminishing their profit margins because they have not yet transferred the price increase to retail prices.
Ambo's manufacturing plant is found in a town called Senkelle, located 130Kms west of Addis, on the road to Lekempt.Top

 

 

 

 

 

Coca Cola Launches Simba Kiosks
BY MELAKU DEMISSIE
Fortune Staff Writer
The East Africa Bottling Plc is placing 'bottle kiosks', an up-sized simulation of one of its bottled products, Coca-Cola, in the streets of Addis in an innovative effort to "create work opportunities for the jobless," company officials said.
The company names the outlets "Simba Kiosks", which are manufactured in Uganda.
One such kiosk, that sells exclusively the bottler's products, has in its debut become a landmark on Bole Road, at the turn to Wollo Sefer, since a month ago. And additional two similar shops will be erected at selected sites of the city in the coming few weeks.
An official in the company, East African Bottling S.C., who preferred to remain anonymous, told Fortune that they are planning to bring in several such outlets as part of Adey Project, named after a 16-year-old girl who led a "miserable street life" before starting to run the first outlet (not the newly introduced simulations) in the city three years ago.
"The kiosk gave Adey a new lease for life and her success has inspired the name of the project," the company says.
Coca-Cola company is executing the project in collaboration with the city administration to offer small-scale jobs to the needy youth in the capital.
The official has declined to disclose the amount the company is spending to import and erect the new shops.
He said, however, that there are already 18 ordinary shop outlets in Addis provided by Coca-Cola, of which ten have been in existence since 1997 while the remaining were opened recently.
To date 74 people, who had suffered long overdue unemployment, have been provided with self- employment opportunity in the shop outlets, claims company officials. Women are granted with 70pc of the available opportunity preference. Top

 

 

 

 

 

Addis Witnesses the "Land Rush"
BY MELAKU DEMISSIE
Fortune Staff Writer
Applicants dying to get free plots of land that are distributed by the Addis Ababa City Administration Lease Office are flooding the office's desk for registration.
The Lease Office started registration of the 10th round a month ago.
Over 560 hopefuls came to the office on Friday, February 16, to apply for a scanty nine plots made available in Woreda 17 Kebele 21, according to the office.
Plots in Woreda 20 and 25, numbering 45 in total, have attracted over 950 applicants.
The office anticipates that the 1648 plots available in 15 different locations of the city slated for distribution in this round may attract over 25,000 applicants.
The majority of the plots offered (726) are located in Keranio area, while 438 and 110 plots are located in the vicinities of Bole, Kotebe and Mekanisa, respectively.
All the plots, measuring between 105 and 175 Sq. meters, would serve for the construction of residential houses.
Based on the least area offered (105 Sq. meters) and its lowest lease rate (600 Br per square meter), the plots are reckoned to be worth more than 100 million Br. Top

 

 

 

 

 

Lufthansa Says New Schedule Stays Valid for Couple of Weeks
German Airlines, Lufthansa's Addis Abeba office, has advised its passengers that the new temporary flight schedule, departing Addis at 08:55 on Wednesdays Fridays and Sunday, will stay effective for two more weeks.
The new schedule went on practice as of February 7th due to the nighttime closure of Bole International Airport, as essential construction work is being carried out on the runway.
As a result, not only Lufthansa has revised its timetable, but also reduced its four times a week flight to three non-stop flights, operating at new departure and arrival times.
Lufthansa says it plans to resume its normal schedule to and from Addis Abeba as of Saturday, March 3rd, with flights once again departing Addis at 23:35 on Mondays, Tuesdays, Thursdays and Saturdays arriving Frankfurt the following morning at 06:50. Top

 

 

 

 

 

Economic Commentary
Keeping the Balance on the Highway
By ABEBE TADESSE
Unlike the past two decades, where the centralized government had been keen on building new roads than maintaining the limited number of the nations highway - which is believed to lead the country incur repair cost from 200pc to 300pc that it should - this government is being aggressive in the areas of highway maintenance.
At least, the responsible institution, Ethiopian Roads Authority (ERA), has spent about four billion Br on the upgrading of highways and the construction of rural roads during the first three years of its ten-year Road Sector Development Program (RSDP), kicked off in 1997.
With 23,812Km long classified roads, Ethiopia has a very low road density of 24Km/1000Km and 0.43Km/1000 persons, one of the lowest in sub-Saharan African countries, averaging 50Km and 0.61Km, respectively.
But the ten-year program plans to rectify the inadequacy of the road network, foresees the rehabilitation of more than 10,000Kms, while intending to upgrade more than 6000Kms and opening another 18,000Kms of new roads.
Designed to reduce transport cost, extend road access and develop institutional capacity, the Program has a two-phase life: the first one given a life span of five years (1997-2002), while the second is given the years between 2003-2007.
By the end of 2007, the Program will only be considered as a success story if it brings the road density to 0.54Km/1000 persons and 38Km/1000Km, still a far cry from what is true in other sub-Saharan African countries.
Nevertheless, this is not to under estimate the flow of investment in the road constructions sector that is growing rapidly, although it has so far managed to sustain the trend through massive borrowing from abroad accumulating external debt as a result.
The higher reliance on external finance sources to fund the expensively conducted road construction and maintenance has sometimes created the problem of transfer of fund from the financier to the contractors.
And we could not find any better government official than Tesfa Michael Nahusenay himself, General Manager of ERA, to confirm that. At a mid-term review meeting held in Addis Abeba Hilton recently, he admitted that the first three-year performance was low attributing, among others, to the delayed release of pledged-money on the part of donors and longer times taken in some project formulations.
It is true that financial uncertainty has added to the problems of planning and maintaining the road sector. In some cases, lack of flow in funds are blamed since they lead officials at the Ministry of Finance to divert funds to seemingly more pressuring sectors.
This has been a dear mistake on their part because it encourages future demands on government funds and slows economic growth. There, in fact, should not be any doubt that timely and reliable funding is essential.
For instance, the gulf between current spending for road in Ethiopia compared to the amount actually needed to develop and maintain a system to support economic growth is so wide that Ethiopia can not achieve sustainable development unless it is bridged by a long term commitment of public funds.
It appears that the realization of this importune matter has led the government to come up with this idea of establishing a Road Fund, in a bid to fill the gap. Subsequently, the Road Fund was established in 1997 with the basic objective of raising the finance required for road maintenance making road users, which are the direct beneficiaries of road maintenance and expansion, contribute according to their vehicles categories.
Thus, the Fund is raised from different revenue sources to finance the maintenance of roads and road safety project, which are clearly stipulated on its objectives.
Budget allocated by the Fed, from fuel levys, annual vehicle license renewal fee, over loading fines and any other road tariff levied as may be necessary, are some of the ways put up in place in order to allay the financial shortcomings.
On the other hand, building institutional capacity for road maintenance has proved to be far more difficult than building the roads themselves. Obviously, establishing a successful maintenance program requires a comprehensive approach, often through a series of projects over a number of years.
Among the issues to be addressed through such projects are securing an adequate and timely flow of maintenance funds, designing and implementing an appropriate and efficient organization as well as services and ensuring an adequate supply of spare parts.
One of the pressing problems in road transport is the inability to secure an adequate and timely flow of maintenance funds in the annual public budget which is normally short of what the Road Fund needs.
In addition to the issue of accessing the required funding, the inadequate maintenance and operating inefficiency have reduced the value of much of the investment that has already been carried out.
A major and persistent problem in the transport sector is the over emphasis put on new construction against the inadequate attention accorded to maintenance.
Despite the numerous problems encountered in implementing comprehensive highway maintenance projects, its importance is evidenced by the fact that completed maintenance projects show rates of return often several times greater than the opportunity cost of capital.
Economic rates of return on road maintenance are typically higher than capital investment on new road construction, which reflect the profitability of relatively small expenditures to preserve the economic value of much larger investments made earlier in new construction.
The Fed, therefore, would be better off by adapting a parallel approach in maintaining and rehabilitating of the existing road network, while attending new constructions of highways.Top

 

 

 

 

 

 

 

Restaurant Review
Salayish Bar & Restaurant
* *
LOCATION: Haile Gebreselassie Road, Salayish Bldg., close to Megenanga.
SERVICE **
The attendants, whose uniforms should have been replaced long time ago since it is pooped, lack skill of communication. One can easily read on their face: "I'm just doing my job, so I need no talk, no fun" kind of attitude. There is no effort what so ever to make customers feel at ease. However, they, all are women, are polite, if not too much, and shy as well as aloof. They need to be more presentable, friendly and engaging. Their number is quite enough for the small restaurant, but they do not always offer menus to customers. Even if one asks for it, they tend to tell what is available rather than providing it. They do not also follow up customers and attend attentively. They just serve the food and disappear down stairs at the bar. Neither do they greet you when you enter in the first place. We could not find any other word than "terrible" to describe their billing system, which only gets you an invalid receipt without a logo and a stamp. Any one can buy any kind of receipt from any stationary and claim to get it from them. We do not believe the owners or the managers fully grasp the purpose of having a legitimate, pre numbered and officially stamped or printed receipts. What the place lacks most is a vibrant manager who could make a dynamic change.
FOOD ****
If there is one good thing about this restaurant, it is the food. The dishes served are fresh and delicious with variety. The fasting food, for instance, is very rich and diverse in content and color. The quantity is also quite enough for a single meal. The taste of food at this place is incredibly luscious. However, the presentation was not that appealing and there should be an effort to make it look more attractive. It won't take much to pull some minor things, had they seriously thought about it.
ENVIRONMENT **
To begin with, the place does not have its own compound. Everything in the interior is old, dull and unattractive. The floor is covered with a worn out carpet that cries for replacement. Even the flowers on the stairs leading to the gate tell a story of carelessness. The tables are dressed with a boring red-piece of clothes that are totally conspiring to make customers feel depressed. Red carpet against red table clothes create a sense of boredom in the small dinning room, to say the least, while the pinkish color on the wall, though attempts to balance the dismal mood, needs to be repainted. Moreover, the attendants do not change or clean table clothes frequently after meals are served, hence other customers are served on unclean tables. As the restaurant has its own bar downstairs, the place is not very quite, but neither too noisy. The location is very convenient for transportation from or to any place in town. The place requires a major refurbishment and a good management that is detail - sensitive.
PRICE ***
Even though the price is fair (10 Br for a fasting food or 12 Br for a steak and bill bikiata), considering the poor service and not-so-attractive environment, the price is not worth it. One could have a decent food with similar environment and service for a cheaper price.
PARKING **
The parking area is too small to accommodate many vehicles, while customers of the gas station and of the building are seen sharing it. This leaves customers of the restaurant with a very little space to park their cars. However, the place is well guarded and secured.
SANITATION *
Nothing special here too. We have found the sanitation to be dreadfully poor. Even though there is a separate restroom for ladies and gents, it is difficult to say they are separately located since the whole room is so congested. Both the ladies' and gents' restrooms were filthy and especially the gents' room was stinky, up on our visits. Moreover, there was no light in the ladies' room.
The baskets were full of used tissue papers and the sinks were not properly flushed, while the sink itself has no top cover and one has to dip his/her hands in the water to pull the flusher work. Besides, there was no tissue paper available in both rooms. Towels? Well, ironically, there was only one hanging by the mirror, but was very dirty and worn out. The soap trey was also grubby and the pipes were half-functional. Top

 

 

 

 

 

 

 

EDITORIALS

A Better Deal was Possible
The negotiation between the Ethiopian and Djibouti authorities over the recent port tariff increase is now over and the deal is finally made, at least that is what we have been told from Djibouti's side.
Ironically, but not surprisingly, our officials opted to leave us in the dark about the agreement, since they have not told us yet anything officially. The notorious state media, which had demonstrated its aggressiveness in reporting the start of the tariff negotiation between the two officials, is so far quite from telling the public the decisions made.
What a pity, indeed!
Coming to the issue on the tariff deal, it would, however, be instructive to look back at the process and the outcome of the negotiations to see whether the final deal is in Ethiopia's long term interest regarding its use of the port.
If we look critically at the roster or the details of the final tariff adjustment for Ethiopia's traffic, we realize that both Ethiopia and Djibouti have tried to clinch benefits from the deal. The Ethiopian negotiating team has, for instance, made positive gains by securing a flat rate of the former one dollar per ton on the importation of fertilizer and fuel, two of the most strategic items whose prices in the world market tend to rise more often than not.
This is a clear gain by the Ethiopian side.
But on balance, the Djibouti side has secured more advantages than its Ethiopian counterpart. It has secured tariff increases on almost all other items, although it agreed to lower some of them contrary to what Dubai Port International (DPI) had had proposed prior to the negotiations and the deal.
The Ethiopian negotiators could not make a better deal mainly for two reasons.
First, the controversy over the tariffs was so sudden, it appears that Ethiopian officials had little time to study the matter adequately and prepare for the negotiations. Second, the Ethiopian team negotiated from a relatively weak bargaining position, since the Djibouti side had already imposed the terms of negotiation, while the Ethiopian side had no alternative other than negotiating within that breathing framework.
But this does not in any way indicate that the present deal will prevail forever. There will certainly be ups and downs regarding tariffs in the future. The Ethiopian authorities should take care not to be caught with their pants down next time around, while the Djibouti authorities should not try to take advantage of Ethiopia's position to further their interests.
The Ethiopian authorities should not only be taken off guard but they should also press ahead with their plan to look for alternative port outlets. This issue should deserve greater attention and rhetoric will have to be translated in to action to terminate Ethiopia's lopsided dependence on a single port.
This should, with no doubt, be the most important lesson they should learn from the deal that has left room for possible arm twisting by the Djibouti side in the future.Top

Be Civic Conscious Businessperson
Corruption is a big deal in Ethiopia and the major culprit is often the government. But experience shows that not only the government but businesspeople too sometimes fall to this evil temptation.
Corruption has the same devastating effect on the economy, society and morality, whether it is committed by the government or by members of the business community.
Let us take one instance. Businesspeople have the duty to renew their business licenses every year. Most of you might do so in time, but as the deadline approaches, some of you might be tempted to get things done quickly with the help of what else, other than exposing yourself to bribes.
By doing so you create a favorable condition for bribe takers in the government bureaucracy to collect money they did not sweat for.
In this sense, you are also responsible in encouraging the culture of bribe giving and taking. You should know that bribe giving is also an offense punishable by law, although it may be hard to catch perpetrators in their acts.
You, the businessperson, should rather back the rhetoric against government corruption by setting a good precedence. If you are not clean of corruption, you, certainly, may not have the moral high ground to accuse the government of committing a similar act.
You should, therefore, set a good example by refusing to collaborate with bribe takers and there is only one way to stop this: refuse to pay any bribe for services you are legally and constitutionally entitled to.
Businesspeople like yourself must realize that government alone cannot be responsible for the spread of the culture of corruption in this country. You also share the blame, so long as you find an easy way out for your business or you simply give up for requests of bribe.
As we came to realize, a great number of businesspeople often bribe their way through the bureaucracy not only at the licensing office but also at other public offices. This may only be the tip of the iceberg as the practice is widespread in almost all government institutions.
As a businessperson who has a moral high ground and conscious of your civic rights and responsibilities, you should rather be strong and socially responsible and refrain from such a practice. You should set an example to the broader community by doing clean business and having your rights respected by the bureaucracy without resorting to the fatal practice of bribing your way through any deal.
You cannot accuse the authorities of corruption if you indulge yourself in the vice. And unless you prove to be clean, there is no way of cleaning up the entire national mess.
Believe us, you also share the blame if you are one of those Mr./s back-door-fixers.Top

 

 

 

 

 

OPINION
At Last, Parliamentarians Lambaste Privatization Agency
Tuesday, February 13, 2001 - It was the day when the Ethiopian parliament looked like the British House of Commons, feels Yosef B., our regular columnist. He tells us the reasons why it was so.

For at least a single day, the Ethiopian Parliament looked like an institution with biting teeth and not just a paper tiger as it used to be for most of its existence.
Beshah Azmete, general manager of the not-so famous Privatization Agency, had barely finished reading his written report last Tuesday, than he was bombarded with questions from a usually sleepy Parliament.
The nominal boss of the Agency, a smooth talking and bespectacled man who looks more a parish priest than the head of an agency mandated to sell off public assets, looked on with hardly disguised surprise as the questions after questions assailed him like missiles fired from different directions.
He was accused of all the alleged failures his Agency was being criticized by the media and the larger public for the greater part of the last six years.
Beshah's earlier proud announcement that his Agency sold assets worth more than 3.3 billion Br was nipped in the bud as parliamentarians confronted him with a long list of lapses and exposed the gaps in his assertions.
According to Beshah, the Privatization Agency has transferred 198 public enterprises to private owners. With the exception of St. George's Beer, the Coca Cola plant, the Tana Department Store and the tobacco enterprise, all the other companies were sold off to the giant Midroc Ethiopia Group and its affiliates at the head of which presides one tycoon: Sheik Mohamed Al Amoudi.
It was quite evident from his report that state monopoly has in the process been replaced with private monopoly and Al Amoudi has virtually become another state within the state, economically speaking.
Smaller businesspeople have been criticizing this process that gave virtual monopoly control of the biggest share of the privatized assets to one person, suggesting other alternatives of privatization. But cash-strapped as it was, the government was in a hurry to sell the assets to whoever first comes with precious hard currency and Al Amoudi was regarded by the state as a real savior.
Beshah has touched upon the problems that accompanied the privatization process, such as the layoffs, the closing of unprofitable enterprises and the shortage of local capital.
But this did not deter the parliamentarians from pressing Beshah for more explanations.
They challenged him with a list of complaints: thousands of appeals by former owners of illegally privatized properties are not settled by the Agency; only 324 out of 25, 825 cases of illegally confiscated properties were finally settled and the assets returned to their rightful owners; thousands of laid off workers from privatized companies are in a state of absolute pauperism; the Privatization Agency has ignored the plights of thousands of former workers of the privatized enterprises who are now unemployed and live in destitution; the Agency has failed to address the case of residential houses confiscated by the Derg regime; it has been promoting the interests of big businesses, while ignoring the suffering majority of small owners whose properties have been illegally confiscated by the previous government; and the Agency has even sold off the country's history transferring the ownership of the century-old Taitu Hotel to a private owner at an incredibly low price.
Beshah looked obviously amazed in the face of these avalanche of questions from the angry-looking parliamentarians. He might have expected that he could have read the report, like other government officials or as he has been doing the pat couple of years, and got away with it quietly.
He must have been disappointed.
Public and media complaints against the Privatization Agency for alleged corruption, nepotism and inefficiency have grown to such an extent that even parliamentarians, most of whom are members of the ruling party and were usually silent, were emboldened and reacted with uncharacteristic verve.
For at least one day, the Ethiopian parliament looked like the British House of Commons.
Beshah Azmete cannot get away with it. The matter is bound to generate more controversies and the public is expecting convincing answers to so many unanswered questions.
The Privatization Agency is led by a board chaired by Assefa Abraha, brother of Seye Abraha, former minister of defense and now head of EFFORT, perhaps the biggest conglomerate in the country owned by the TPLF. The board is believed to be the real power behind Beshah Azmete and this was partially evident as the manager could not have clear and straightforward answers to so many questions.
The ball might keep on rolling if parliamentarians, the public and the media, keep on demanding for answers to so many unanswered questions regarding the Privatization Agency and the national responsibilities it is bestowed.
The government might intervene to silence the voices of dissent with pseudo explanations or simply keep silent and let the matter die out.
In any ways, the genie is now out of the bottle and it is the responsibility of parliamentarians, the media and the public to press on for a complete exposure and investigation of the Agency that was rumored for a long time to be one of the government institutions where corruption, nepotism and abuse of power are believed to be quite rampant.Top

 

 

 

 

 

View from Arada
Merkato's contextual Parlance
BY GIRMA FEYISSA
The superlative "The Biggest Open Market in Africa" had long gained economic currency for Merkato, which has been one of the few tourist attractions of the capital.
Whether this magnanimity is a parlance expressing text or context could be a matter for contention. But that the place is a conglomeration of small duplicates of markets is a statement beyond any reasonable doubt.
I will come to that in a moment.
Quite a lot has been said and written about Merkato by both the rife and the refined. Poet-laureate Tsegaye Gebre Medhin's verse, Ay Merkato, which is a monumental case in point. Every time one goes to that place one can not but appreciate and feel every shade of meaning of every word and diction in that popular poetic description of essence about Merkato.
The outstretch of the market covers at least three woredas, starting from Habte Georgis Bridge in the east and describing a rough circle around Aba Koran, Kolfe, Sebategna, Tekle Haimanot and American Gibi, to mention but a few of the major landmarks.
There are two or three main roads, which circumvent Merkato and crossing it at its edges and a few others terminating somewhere in the circle.
Every nook and cranny bordering the network of labyrinth and alley is a business place. Every door opens to offer something for sale - be it something to eat, drink or wear.
Of course, Merkato envelops residential areas as well. I would not be surprised if many of the kebeles embracing the most densely populated area in the country are bothered to discern a business store from a residence, a village clinic from a hostel. The houses are simply multifunctional in some backyard areas.
I think this could as well constitute the grandeur of Merkato.
Let me now come back to the duplicate or even triplicate small markets concept as I said I would describe.
Right in the middle of a stand where they sell vegetables like onions, potatoes, carrots, runner beans, cabbages, lettuce, tomatoes, cauliflowers etc, you can find these items behind the Addis Ketema Bank besides Mearab Hotel or elsewhere further north, if you can manage to drop by at day break. This is not to mention Atkilt Terra proper.
Butter is sold in that same place, although the style of presentation is unique and typical to that stand where the traders are predominantly women from the Gurague ethnic group.
No scales are used here. The traders beckon signs and utter calling words to attract attention of potential buyers stretching their hands offering at their fingertips bits of butter for 'quality test' by way of smelling. The butter brought from places like Chelia or Wolayta, which are renowned for their taste and freshness, although these are a bit expensive, smells fresh milk some say or odorless like water according to others.
If one agrees to buy the type, the woman trader then starts making balls of butter, a time consuming routine, and offers the buyer to hand-weigh or feel the weight by hand. A lot of give-and-take bargain takes place before money changes hands.
If, however, the buyer for some reason or other changes her mind and rejects the purchase, the trader bashes at her with demeaning words and bawdy expressions best left to the subject person alone.
Butter is also sold in bulk and fraction at Godjam Berenda from big stores where honey is also traded. Scales are used here and there is the usual male dominance in the operation. Butter and other diary products are also sold at hundreds of shops that are recently mushrooming into mini supermarkets, proliferating into our villages.
There are other important factors contributing to the elasticity of Merkato, chief of which is the lack or absence of multi-story buildings that could have vertically accommodated quite a number of stores and shops. They are now horizontally lined up in almost every direction. This is abuse of space utilization.
There is also another major cause for the grandeur of the market, which is very much related to our valuation of time as an economic asset.
There are unnecessary luggages we carry on in our life style. For instance, most of our food is prepared at home from materials bought raw in the market. We buy live chicken in the market and take all pains to undertake the routines necessary, including and up to laying the table.
The very exercise of chicken transaction is ridiculous. You start from color choice of feather, then closely scrutinize the age and weight before you strike a deal after repeating the process at each dealer's stand. Even eggs are carefully handpicked, and "seen" to test their transparency when held up and looked at through their shell against sunlight!
Sometimes this process goes as far as dipping them in a basin filled with water to see if they float or sink. They would be acceptable in the later case. All these actions consume much time and effort which most of us are unaware of the asset we are wasting.
The same can be said about many of our drinks. The preparation of Tella or Tej, the two popular traditional beverages, leaves much to be desired. The location of the ingredients themselves is haphazard. You may find Gesho and Bikil close by. But you have to walk quite a distance to trace the barley or maize or other cereals required for brewing. Semi-processing all these ingredients would have made life easier.
Another factor is the unsuitable layout of the market itself.
Unless you are familiar with the place you can not easily locate the stands where you can get certain items. This confusion gives traders an edge to open up a shop or store of almost any selling material anywhere so long as it is within Merkato.
I would not be surprised if the market expands like a balloon day by day out of these duplications and mess. The magnitude of Merkato could be unnecessarily exaggerated when seen in the light of the contents embraced in it.
And it is, indeed, content that matters for us here at FORTUNE! Top

 

 

 

 

 

View Point
The Causes behind the East Asian Crisis: Lessons for Us
BY HABTAMU ALEMAYEHU

Since the summer of 1997, the East Asian "tiger" nations have suffered an unprecedented fallback, plunging what had once been vigorously expanding economies into deep crisis. A number of domestic economic problems joined forces with turbulence on the foreign exchanges to generate a crisis of confidence on a grand scale.
This crisis was triggered by fundamental imbalances, with a key role being played by the "moral hazard effect": domestic enterprises had been backed by implicit state guarantees, always assuming that the IMF would assist if necessary.
Then a destabilizing wave of speculation ran through the financial markets, pushing even countries with sound economic structures into difficulties.
UNCONTROLLED CAPITAL INFLOW, UNSUPERVISED LENDINGS
The south-east Asian countries of Thailand, Malaysia, Singapore, Indonesia and the Philippines had been enjoying a veritable economic upsurge for over ten years, with high real rates of growth. The foundations for the East Asian economic miracle had been laid by low wages, highly motivated people and liberal economic policies, which also opened up domestic financial and capital markets to foreign investors.
For many years, Thailand, with its liberal legal environment for investors and its idea of making the exporting sector the driving engine of economic development, was widely regarded as a model for other developing countries to follow.
In light of an impressive economic performance and high rates of growth, an ever-increasing flow of foreign capital came into Bangkok once its financial markets had been deregulated in the early 1990s.
That inflow of funds was further spurred on by both relatively high interest rates and the Thai Baht to the US dollar, allowing the currency to be judged as stable. However, these substantial volumes of capital imports were increasingly made up not so much by the long-term portfolio investment, which responds sensitively to new information but also by the major inflow of foreign exchange led to pronounced domestic credit expansion, some of which ended up in the property sector. Financial institutions that lend long while doing a lot of their borrowing on a short-term basis are liable to run to liquidity problems of their creditors, and start to pull out their money due to distrust.
There were more than 90 financing companies operating in Thailand, more than half of which have now had to be liquidated. These companies, which had been inadequately supervised by government authorities, had been particularly careless in their lendings to the property sector.
Similarly, a large amount of borrowing went into funding private consumption, without enough financial resources going into capital investment to enhance productivity.
Thailand's balance of payments soon showed a drastic increase in the current account deficit, as a high level of imports and the interest payments on foreign debt outweighed stagnating exports. Recessionary tendencies and slack growth in many of the main industrial countries (especially European countries and Japan) damped down the demand for export goods.
At the same time, rising wage level in Thailand led to intensified competition with low wage countries such as China and Vietnam. Thailand's exports chiefly include textile products, electronics and computer components.
The serious financial crisis in Thailand, which began in the property sector, reached its peak in the spring of 1997, proliferating to the rest of the economy. Massive speculation against the Thai Baht was met at first by a major support drive by the Bank of Thailand, which injected more than four billion Dollars into the market in a bid to stave off the attacks being mounted by hedge funds and other market players.
The "de facto" peg to the US Dollar finally had to be abandoned and the Baht immediately was depreciated by 17pc against the Dollar.
CRISIS WAVE SPREADS OUT
The rapid increase in foreign debt, which had reached 90 billion Dollars by July 1997, increasing lendings to the property sector, the use of borrowing to finance consumer spending, while productive investment in industry was neglected, coupled with the intensified competition from the low wage producers and a falling demand for export products, all fuelled the current account deficit.
The speculation against the Baht on the foreign exchanges was thus based on the fundamentals and not, in the first instance, the speculation of a destabilizing nature.
Other aspects, which need to be borne in mind when judging this crisis, are the numerous changes that were taking place among the country's political leadership and the widespread prevalence of corruption.
The Thailand crisis quickly spread to other south east Asian countries such as Malaysia, Indonesia and the Philippines, all of whose currencies came under pressure and fell sharply in value.
Like Thailand, these countries were running high current deficits, had high levels of foreign debts and were the scene of unhealthy speculation in construction projects and real estate.
In Hong Kong too, considerable capital flow from abroad generated an increase in the domestic credit base and pulled interest rates down. Apart from infrastructure improvements, the foreign funds were also used to finance private consumption and, to a considerable degree, real estate and related construction.
These trends fuelled speculation and property prices. Given that the banking system had plenty of liquidity and that a real property was considered a secure investment, and also given some strong personal connections and corruption in this sector. The credit risk thus accumulated had been ignored.
On top of that, there was an increased willingness to enter into risky ventures due to the "moral hazard" effect, because firms thought that they were to be bailed out by the government in case of failure.
Singapore, by contrast, had recognized the risk of property crisis and taken a number of measures in 1996, following price slump.
The excesses in property market, feelings of insecurity following Hong Kong's reversion to Chinese sovereignty, the south east Asian currency crisis and the sheer heights the stock market had reached since 1995, all conspired to produce the Hong Kong crash.
The various stock exchanges and financial centers around the world are now very strongly inter-linked and heavily interdependent.
As financial markets have now been deregulated and opened up to foreign investors, transaction costs have come down, new derivative financial instruments have been created, computer aided trading systems have been developed and telecommunications technology has improved.
Therefore, what used to be separate market segments have now merged into just one "world market." One of the results of this is that disruptions occurring in certain countries can rapidly spread to other regions without there necessarily being any causal relationship between the original disruption and the effects elsewhere.
This is underlined, for example, by the rapid knock on effect that spilled over from the Hong Kong crash to other financial centers, though with varying degrees of intensity. The mobility of capital has accelerated the speed at which turbulence on foreign exchange markets is transmitted onward internationally.
The south east Asian crisis could easily jump to South Korea. Over the past 30 years, South Korea's economy has achieved average annual growth of 8.6pc and at one time ranked 11th in the world in terms of GDP. South Korea is known for its major industrial conglomerates (the chaebol) operating in areas such as shipbuilding, automobiles, chemicals and semi-conductors.
For some years, however, South Korea has been in deficit on its current account, partly because its export volume fell back during the world recession, while imports rose substantially.
As strong flow of capital came form abroad, Korean commercial banks had boosted their lending activities without paying sufficient attention to the credit standing of the debtors. The bulk of this lending went into unproductive areas, and the complex interlacing among the chaebo and networks of informal relationships impaired transparency.
A lot of Korean firms and banks took to borrowing in US Dollars, to take advantage of the lower interest rates. In anticipation of repayments they would need to make on this Dollar-dominated debt, they began to step up the trading of the Korean Won for Dollars once the Won showed a weakening trend from 1997 onwards. That further increased the pressure on Won, which had depreciated by 35pc against the Dollar by mid - 1997.
RECKLESS SPECULATIONS AND RISKS
Generally, in south east Asian countries whose economies had been growing rapidly for many years, various problems that were of their own making were manifested, such as increasing current account deficits, property crises, high levels of short-term foreign debts, rapid expansion of domestic credit, lack of efficient risk management and inadequate supervision by commercial banks. These problems can even today be manifested in most of the developing and least developed countries everywhere in the world.
In Ethiopia, of course, the economy is far less sophisticated to entertain such huge financial difficulties. However, it would be wise for financial institutions and investors (the government too) in the country to take note of the Asian experience.
In conclusion, a significant underlying reason for the east Asian crisis is the "moral hazard" effect. The structure of these countries' economies involved an intricate network of cross shareholdings and personal contacts. A lot of firms had undertaken unduly high risks, in the hope that the state would back them if they faced the threat of bankruptcy (implicit government guarantee).
Under these circumstances, firms were able to pocket the profits they earned on risky ventures, while saddling the general public with any substantial loss they incurred. This risk "asymmetry" brought with it the danger of a systematic crisis as greater risks were taken.
On the next level up, both governments and large companies assumed that international organizations, particularly the IMF and the World Bank, would be quick to "bail them out" with bridging loans as they already have done in Mexico's case. That raised the willingness to accept risks far beyond the maximum acceptable level.
Implicit government guarantees and international program's distort risk patterns, ought therefore to be implemented with great restraint, to keep the moral hazard as low as possible. The tremendous loss of confidence in east Asian countries generated turbulence on the foreign exchanges and pushed up their interest rates strongly. Speculations against their domestic currencies were further fuelled as their own nationals with Dollar- dominated debts took flight in hard currencies.
The crisis that set in economies of east Asian "tigers" in 1997 did more harm to their economies showing a signs of recovery only recently. Top

 

 

 

 

 

Travel Notes
Abssynian Chronicles
By Timothy Kalyegira
In the year 2000, I spent much of the year trying to unravel the codes built into the Bible which, when understood, show that God the Eternal laid out the entire span of human history down to the 21st century with amazing accuracy.
At the centre of this history are the Children of Israel, God's Chosen People, to whom were deeded and granted the crown jewels of human civilization and achievement. The Jews and the other 10 tribes of the House of Israel contributed over 80pc of the scientific, economic, artistic, and entertainment progress of the world, and shaped the 19th and 20th centuries, far more than any other people on earth.
However, there were some questions still unresolved.
In the Bible, a curse was pronounced on the descendants of Ham, the third son of Noah, and who was the fore bearer of the Black people of the world: they would always be in a subordinate position relative to the descendants of Shemand Japheth.
Yet in this same Bible, a certain nation called Ethiopia is described in Isaiah 18:2 as "a nation tall and smooth-skinned a people feared near and far, a nation mighty and conquering."
So to Ethiopia I went to observe the only Black nation in history to have never succumbed to slavery or colonial rule. The Italians, British, Dutch, Portuguese, Turks, Spanish, Arabs, and French tried 27 times to conquer Ethiopia but failed each time. Yet they easily defeated all other African tribes and empires.
What makes Ethiopia so special, among all African countries? My journey began at Entebbe International Airport on February 1 aboard a compact Boeing 737 Ethiopian Airlines plane, one of the truly successful African companies. It survived the misrule of former military strongman, Colonel Mengistu Haile Mariam, and the general economic decline across Africa during the 1970s and 1980s.
The welcome announcements by the aircraft's Captain and the female head of the cabin crew begin off in Amharic - Ethiopia's working language - and later are repeated in English.
What strikes one first is the Ethiopians' reluctance to mingle with foreigners. They are polite, business-like, but never as effusively friendly as Ugandans. When Alliance Air was still operational, most of the cabin crew were Ugandans, and it took only a few minutes to sense this extraordinary Ugandan friendliness. It sometimes took on the mood of a mid-air party.
It is different aboard Ethiopian Airlines. Polite, a little distant but helpful only when required to be, are the flight stewardess. Just before take-off from Entebbe, Ethiopian traditional music came through the speakers. A British passenger loudly groaned, "Is this what we are going to have to sit through until Addis?"
The stewardesses ignored her comments. An elderly American man also began to grumble and gripe. Somehow, British and Americans are used to being treated with deference and awe by most other Africans. They were quickly put in their place by the Ethiopians, much to my delight!
Aboard that flight to Addis Ababa were two West African men, a Nigerian and a Ghanaian, who had been attending a conference in Kampala. They seemed unable to restrain themselves from making friends with anybody in sight. They were seated across from the aisle opposite me and began chatting with a Ugandan teenage girl, asking her about her school and family. At a stopover at Nairobi's Jomo Kenyatta International Airport, another Ghanaian who too was attending a conference joined them. Boisterous laughter erupted on the plane all the way to Addis Ababa.
Yet, when the West Africans tried to make small, friendly talk with the Ethiopian stewardesses, they would receive polite and somewhat curt replies. If you do not understand Ethiopians and realize what it means to have never been colonized, you can easily hate them when you get to know them!
We eventually landed at Addis Ababa airport just before midday.
Strangely, although the sun was shining brightly, the air was cold. I later learnt that this is because Addis Ababa is at the high altitude of 2,500 meters, and is Africa's highest capital city. The contrast between the bright sunshine and cool weather (rarely over 24 degrees Centigrade), would prove to be an appropriate metaphor for the Ethiopian national character - it appears bright and welcoming on the outside, yet is reserved on the inside.
I have always wanted to see and observe Black people who do not have the inferiority complex of Africans and the twisted mixture of an identity crisis and rage against the white world and deep urge to be accepted as people by the Black Americans.
In Ethiopia, that evidence appeared shortly after we arrived inside the airport terminal building, where we had our passports examined and stamped. This is a land ruled by a strange superiority complex.
Women manned many of the counters and visa booths. Not a single one offered a greeting. If you never bothered to greet them, they never bothered to initiate a "welcome to Ethiopia" expression. Rarely did they bother to look the arriving passenger in the face. It was business-like briskness and then they turned to another person in the queue.
At the counter of the Commercial Bank of Ethiopia, where we exchanged dollars for the national currency, the Birr (One U.S dollar is equivalent to 8.20Birr), a British traveler, when he was handed the Birr at this official exchange rate, sarcastically wondered if there was "no free market here." The woman attending to him made no apology and quietly ignored his complaint. I think the tourists who get the greatest cultural shock while in Ethiopia are the White people, so used are they to receiving royalty treatment in Uganda. In Kenya and Tanzania it is worse. Whites are still treated with almost worshipful respect.
In Ethiopia, I could see the shock on their faces, unfamiliar with this degree of indifference. It was not that the Ethiopians at the airport were being intentionally rude or cold. From what I could observe, it appears that it never occurred to them that Whites are supposed to be a special, superior people.
Timothy Kalyegira, a Ugandan journalist, was visiting Addis Abeba for nine days of a holiday starting February 1, 2001.Top

 

 

 

 

 

African Economies Record Slow Growth in Late 1990s
African economies, which returned to growth in the early 1990s, recorded a significantly slowed growth after 1998, with the continent's average Gross Domestic Product (GDP) per capita falling by almost one percent in 1998-99, a World Bank report has said
The report, "African Development Indicators 2001," which was released Thursday, February 15, ahead of a trip to Africa by heads of the Bank and the IMF, attributes the slow down to regional and civil wars, poor governance in some countries and serious external shocks, such as rapid oil price hikes coupled with the collapse of earnings from primary commodities.
The report also showed a decline in both foreign direct investment and official aid to Africa during the period, with the latter falling from 32 US Dollars per head in 1990 to 19 Dollars per head by 1998.
A review of the various social indicators showed progress in literacy and school enrolments for girls but declining immunization for children and a widening HIV/AIDS epidemic across the region.
Even though growth trends for the whole region remained depressed for the period 1990-1999 covered by the report, some countries did better than others.
Fourteen countries grew on average of four percent a year, with rising incomes of two to three percent and higher, while another 10 countries followed closely with growth rates of three percent.
This was still lower than the five percent minimum annual rate of growth needed to reduce poverty on the continent.
But Uganda and Mozambique even grew at exceptionally higher rate of 7.1pc and seven percent, respectively.
The report also showed that war-affected countries recorded negative growth, including Sierra Leone, -4.6pc, DR Congo -4.6pc, Burundi -2.4pc, Rwanda -2.1pc and Angola -0.2pc.
Countries beset by war generally had very bleak statistics, such as higher infant mortality rates and shorter life expectancy.
Life expectancy in Sierra Leone, for instance, is reported to have declined to 37 years while its infant mortality rate stood at 169 deaths per 1,000 births, one of the highest in the world.
Showing a decline in resource flows to Africa in the 1990s, African Development Indicators 2001 reports that foreign direct investment flows to Africa stood at only 2.52 billion dollars during the decade.
Even then, only three countries with lucrative mining and oil industries accounted for most of it.
Among them Nigeria, with 876 million Dollars, Angola, 626 million Dollars and Lesotho, 170 million Dollars.
Four other countries, DR Congo, Cote d'Ivoire, Equatorial Guinea, Namibia and Sudan received a total of 576 million Dollars while the remaining 275 million Dollars was shared among the other 40 countries.
Official aid, another source of foreign resource flows, also fell during the period, standing at 10.8 billion Dollars in 1999 compared to 17.9 billion Dollars in 1992.
The average annual aid to Africa was 15.8 billion Dollars during the decade.
The main destinations for the foreign assistance were a small number of countries which donors considered to have reformed their economic and social policies, the World Bank said.
Such aid recipients included Cameroon, Cote d'Ivoire, Ethiopia,