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ADDIS BUSINESS

3

Potato Business Low Awareness Said Obstacle

in Required ServicesLack of awareness about potato business on the part of government bodies is one obstacle in getting services required from the start up of potato business all the way down the chain, it was said at an event organized by Agri-Busi-ness Support Facility (ABSF) of the Chamber, at Harmony Hotel on June 11, 2014.

ABSF project of the Addis Ababa Chamber of Commerce and Sectoral Associations organized its 2nd discussion with stakeholders on spice, herbs, and aromatic plants. There is no healthy ginger seed in Ethiopia and the soil is infected making planting healthy seeds pointless, it was reiterated in the panel discussions held at Jupiter Hotel, on June 19, 2014.

4

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No Healthy Ginger Seed in the Country: ABSF Platform

Ethio-Israel Business Summit Ponders Enhancing

Cooperation

DANIDA Project Training Provided to AACCSA Staff

5

Access to Finance Still a Problem in Ethiopia : World Bank

Gov’t Monopoly of Multi-Modal Operation Causes Ineffectiveness: Luncheon

By Mesfin Zegeye

By Mesfin Zegeye

(Cont’d on page 4)

E-mail: sourceawash@ethionet.etawashcarrent@yahoo.com

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P.O.Box 110631Addis Ababa Ethiopia

It is difficult to expect efficiency from a monopoly system – participant

Danish International Development Agency (DANIDA) funded training was provided to Addis Ababa Chamber of Commerce and Sec-toral Associations (AACCSA) staff under its “Strengthening the Private Sector in Ethio-pia” project which the Agency signed with the Chamber.

The government has a monopoly over multi-modal operation. The opportunity for the Ethiopian business community to engage in it is stifled. With the coming of WTO, the situation is going to be harder, a member of the

business community said at Chamber fo-rum on ‘trade logistics and its impact on Ethiopia’s competitiveness’ held at Hilton Addis on June 12, 2014.

Addis Ababa Chamber of Commerce and Sectoral Associations organized the

discussion in which government officials, members of the business community and other invited guests attended. The discus-sion is the Chamber’s monthly platform in which themes on issues of concern to the business community are identified and research is undertaken to find out the situ-

ation on the ground regarding members of the business community operating within it. One participant, who said had once worked as an official at the Ethiopian Revenue and Customs Authority (ERCA) said, the problem in multimodal operation

Ethiopian business companies suffer from access to finance the worst compared to any part of the globe, according to a researcher quoting a World Bank study. Let alone pri-vate banks in general if one private bank faces a crisis, it will bring down all the rest in-cluding the huge Commercial Bank of Ethiopia, Governor of National Bank of Ethiopia (NBE) said. The event was a public-private consultation on access to finance challenges in Ethiopia and recommended directions organized at Sher-aton Addis on June 6, 2014.

Ato Eyob Tekalign the public-private consultation forum coordinator presented a study on the theme. The study is based on real problems Ethiopian business companies have been facing rather than being an academic presenta-tion, he said. In addition to that he had cited a study by World Bank to buttress his point.

Ethio-Israel Business Summit takes place in which more than 40 Israeli business companies from 11 major sectors were involved. Israe-li Foreign Minister led the delegation, and his Ethiopian counterpart, made the opening official remark. Senior Ethiopian government officials attended the event organized at Sheraton Addis on June 17, 2014.

(Cont’d on page 6)

June 2014 ADDIS BUSINESS PAGE 2

EDITORIAL

ADDIS BUSINESS

Addis Ababa Chamber of Commerce & Sectoral Associations External Relations and Media Department

Monthly NewspaperJune 2014 Volume XII No 10

011-5518055 ፣ 011-5519713, 0115-155221

Fax፡ 011-5511479 2458

Editor-in-Chief - Mesfin Zegeye Designer - Tenaye KebedePhotographer - Anduamlak Tamiremariam

Reporters - Roman Tegegne Editorial Board Ato Yayehyirad Abate - Chair Ato Yohannes Weldegebriel - Member Ato Mengistu Dargie - “ Ato Mesfin Zegeye - “ Ato Tekeste Girma - “ Ato Kassahun Mamo - “

Is Ethiopia Transforming?Consorted efforts for

addressing challenges of accessing credits

Ethiopia’s National Business Agenda published by the Secretariat for Ethiopian Pubic Private Consultative Forum in July 2014 puts access to finance at the top of business environment constraints in Ethiopia.

Statistical facts related with access to bank loans are also strengthening this claim. The two state owned banks, Commercial Bank of Ethiopia and Development Bank of Ethiopia are the giant financial institutions in the country with over 75% of the financial resources in the market.

Private sector borrowers are required to avail Birr 2.40 as col-lateral to get one Birr loan from banks. For every one thousand loan applicant, only two are actually getting access to the credit; according to study made by the Secretariat of the Ethiopian Pub-lic Private Consultative Forums.

The financial sector is not lending in accordance with its deposit mobilization. Thus far, the ratio of new loan disbursement by the private banks to their total deposit in 2013 stood at 27% and public banks at 21%

Twenty billion Birr has been given out to borrowers in the manufac-turing sector by the Development Bank of Ethiopia in just one year, nevertheless, virtually all of the borrowers were foreign companies. If the private sector is considered as engine of economic growth and the only way to sustain economic development, access to credit is therefore one of the most vital issues needed to be addressed in time.

The aforementioned facts suggest that addressing the challeng-es require the collective efforts and dedication of multiple stake-holders. Policy makers are required to deal with challenges facing the manufacturing sector to make it more attractive to the private sector, particularly, those of local investors. Availability of credit for the manufacturing sector does not attract potential investors to the sector by its own. The business climate needs to be adjusted to enhance the attractiveness of the sector. It is therefore vital to address bottlenecks that have been undermining the competitive-ness of the sector. It is also necessary to create conducive climate that encourage the emergence of share companies to invest in manufacturing business. Issues related with governance of share companies should be dealt with to provide confidence of the public to pool resources required for investment.

Chambers of Commerce and Sectoral Associations are expected to strengthen their advocacy works through bringing alternative solutions for addressing the challenges related with access to finance to the attention of the policy makers. They need to cap-italize on the positive gestures being shown by the government in engaging the private sector for policy dialogues. It is high time for the Ethiopian Public Private Secretariat to focus on issues that impact on private sector development through sound policy researches.

Although the share of private banks in the countries financial markets remains less significant, they need to rethink about their lending policies and practices to avail more loans to business and the manufacturing sector in particular.

Last but not least, the private sector players also need to under-stand the development priorities of the government and redirect their business and investment ventures to enhance their chances of accessing finance.

by Yesuf Ademnur,

ANALYSIS

IntroductionA policy research working paper published by the World bank in Jan-uary 2014 under the title “Structural Change in Ethiopia, An Employment Perspective.” defines structural change as the relocation of labour from low productivity sectors to more dynamic (high productivity) economic activi-ties. In developing countries, this will usually require shifting labour from subsistence agriculture to commercial agriculture, manufacturing and ser-vices.

According to Timmer and Akkus (2008), structural transformation entails four interrelated processes. These are:

i) A declining share of agriculture in to-tal output and employment

ii) A rapid urbanization as people migrate from rural to urban areas

iii) The rise of modern industrial and service economy

iv) A demographic transition that leads to a spurt in population growth

Hence structural transformation has implications that go beyond the econom-ic sphere. Ethiopia has been implement-ing a five year Growth and Transforma-tion Plan (GTP) which covers the periods 2010/11-2014/15 with the following major objectives.

i) Maintain at least an average real GDP rate of 11.2 percent and attain MDGs

ii) Expand and ensure the qualities of education and health services and achieve MDGs in the social sector

iii) Establish suitable conditions for sustainable nation building through creation of a stable democratic and developmental state

iv) Ensure the sustainability of growth by realizing all the above objectives with a stable macro economic framework

Now we are left with one year to com-plete the first five year Growth and Transformation Plan. So how is Ethiopia working? Below attempt is made to share information from the research conduct-ed by the World Bank and the annual progress report prepared by Ministry of Finance and Economic Development (MOFED).

1. How is Ethiopia Transforming?

According to the research made by the World Bank, agriculture continues to be a very large sector in the Ethiopian Economy.

Currently agriculture is accounting for 45 percent of the Gross Value Added (GVA). However, agriculture has experienced a steady decline through the years from 66 percent registered in 1991. Trade and services each represent about 20 percent of Gross Value Added, with their relative shares nearly doubling since 1991. The remaining sectors account for less than 5 percent of Gross value Added each.

Agricultural output suffered in the late 1990s – especially during the civil war years – but it has picked up momentum since then. Mining & quarrying regis-tered strong growth in the late 2000s, albeit from a low level. Manufacturing growth also declined in the late 1990s, but has now accelerated to over 10 per-cent. Electricity & water only represents a small share of GVA, although growth has been fairly strong since the mid-1990s. Construction and transport & commu-nications experienced strong growth for most of the period – from similar initial levels. Finally, trade and other services posted respectable growth rates through-out the entire period – especially in the late 2000s.

The Annual Progress Report for Fiscal Year 2012/13 prepared by MOFED also revealed the Gross Domestic Product (GDP) grew by 9.7 percent in 2012/13 against the target of 11.3 percent set for the fiscal year. During the same period, agriculture, industry and services grew by 7.1 percent, 18.5 percent and 9.9 percent respectively. The rate of GDP growth registered in 2012/13 is rapid, broad-based and well above the average growth rate of about 5 percent registered by Sub-Saharan African countries for the same period. In the last three years (2010/11-2012/13) of GTP implemen-tation, real GDP on average grew by 10 percent per annum. During the same pe-riod, value added in agriculture, industry and services on average grew by 7 per-cent, 17 percent and 11 percent per an-num respectively. Furthermore, the rate of real GDP growth registered in 2012/13 has enabled the economy to sustain the high growth trajectory for the last ten years.

Real GDP on average grew at about 11 percent per annum over the last ten years between 2003/04 and 2012/13. The con-tribution of agriculture to GDP which was 42.9 percent in 2012/13 is less by 3.6 percent compared to 46.5 percent of GDP in 2009/10. The share of the industrial sector in GDP increased to 12.4 percent in 2012/13 compared to 10.3 percent in 2009/10. The service sector accounted for 45.2 percent of GDP in 2012/13 com-pared to 44.1 percent in 2009/10. Hence we can observe that the share of agricul-ture is declining from time to time while the share of manufacturing and services is increasing.

With regard to urbanization, the World Bank survey says that Ethiopia’s popula-tion remains predominantly rural. How-ever, its weight is slowly declining from 86 percent in 1996 to 83 percent in 2011. According to the Annual Progress Report of MOFED, a total of 95, 000 houses were under construction in the first three GTP periods. Out of these a total of 24,068 housing units have been transferred to users both in Addis Aba-ba and the regions. As part of the Urban Infrastructure Development Program a total of 829 kilometers of cobble stone roads, 1462 kilometers drainage network, 5 solid waste landfill sites, 71 market areas, 66 market centers and 33 industry zones have been constructed in the year 2011/12.

With regard to the rise of modern indus-tries and service economy, the Annu-al Progress Report of MOFED reveals that large scale modern agriculture, im-port substituting industries, especially cement, industrial zone developments, expansion and construction of educa-tional and health centers are among the measures being taken to modernize the economy. With regard to medium and large scale irrigation; design works were undertaken for 540,520 hectares of irri-gable land. In addition, 170,913 hect-ares of irrigation land was developed, while 4,100 hectares of irrigation land were rehabilitated between 2010/11 and 2012/13. Furthermore, a total of 1.8 mil-lion hectares of land were developed un-der small scale irrigation schemes during the same period.

The World Bank survey has also indi-cated that progresses are observed in the sectors. However, the survey indicat-ed that the manufacturing sector which is typically associated with structural transformation and productivity gains, remains relatively small, especially com-pared to other countries in the Sub-Saha-ran Africa region.

Looking at the fourth criterion which is a demographic transition, the World Bank survey describes that Ethiopia’s popula-tion is very young with about 65 percent of the population below 25 years of age. The proportion of the population in the 10-65 age groups has recently increased which led to a falling dependency ratio. This is partly due to the fact that the pro-portion of 10-14 year-olds is increasing, while the 0-9 age group is declining in relative terms. In conclusion, there are some signs that Ethiopia might be under-going a period of demographic transition, and thus it is crucial to seize this oppor-tunity.

ConclusionOverall, the Ethiopian Economy appears to have gained an important momen-tum, increasing Gross Value Added per capita and increasing labour productiv-ity. There are also some signs of demo-graphic transition by falling dependency ratios and also urbanization at slower rate. A declining share of agriculture to Gross Domestic Product and an increas-ing share of manufacturing and the ser-vice sector is also observed. Although these signs can be taken as positive factors that show that Ethiopia is under structural transformation, the pace of transformation is slow. Compared to the republic of Koreas’s golden periods of the 1970s and 1980s, we note that Ethio-pia’s pace of structural transformation is significantly slower. The contribution of structural transformation of Korea was 1.8 percentage points of Gross Value Added per capita but that of Ethiopia is estimated at 0.5 percent. Hence by strengthening the positive changes and correcting the weaknesses, Ethiopia has to speed up the transforma-tion process so that it can have a better economy and improved living standard of its people.

PAGE 3 ADDIS BUSINESS June 2014

Potato Business Low Awareness Said Obstacle in Required Services

By Mesfin Zegeye

Lack of awareness about potato business on the part of government bodies is one obstacle in getting services required from the start up of potato business all the way down the chain, it was said at an event or-ganized by Agri-Business Support Facil-ity (ABSF) of the Chamber, at Harmony Hotel on June 11, 2014.

Deputy Secretary General of Addis Ababa Chamber of Commerce and Sectoral As-sociations (AACCSA), Ato Shibeshi Be-temaryam, made opening remarks on the occasion. He said, purpose of the event was to discuss problems in implmentation and investment, with the government, and help them with Chamber advocacy effort. The Chamber is there to assist with land authority, investment authority, and with other bodies. He expressed his hope that the coming together of all those minds on the day would result in useful ideas and discussion that would be crucial inputs for measures the Chamber takes.

He went on to add that the ABSF project has been possible thanks to the real arm of assistance of the government of the King-dom of the Netherlands, which provided 3 million Euros for the project.

One of the presenters was a Dutch investor from SOLAGROW PLC. Talking about lessons learnt from their Bishoftu farm, he stressed the need for daily supervision and follow up; the importance of nucleus farm in each region; the need for providing seeds of rotation crops to support balanced crop rotation scheme; and the need for pro-viding mechanized farming and seed cleaning.

He categorized the challenges as those faced to get started and second stage. Found in the former are: variety selec-tion and registration; getting land at two altitudes, as some seasons are unsuited for potato. This is too complicated for re-gional administrations. It took them a lot of efforts to convince the Ethiopian gov-ernment that potato is different, he said.

Finding basic seed is the other, from im-port to minitubers. East Africa is blessed to have missed a lot of the diseases. While lack of awareness of timing of potato seed business at government levels is men-tioned as another of the challenges. Ever-year at lincese renewing, they are asked, ‘you are not exporting yet?’, not aware

that it takes so many years to reach that stage, he said. Lack of understaning of ef-fects of crop rotation at government level is problematic.

Coming to what he called second stage challenges, the presenter mentioned cre-ating awareness on the necessity of crops rotation and soil fertiity; getting support from government; the need for collabo-ration of farms to ensure the continuous supply of quality potatoes of demanded variety; and the need to convince farm-ers to establish a sound crop rotation with good crops, are gaps in this regard.

A study was presented on potato vari-ety development/breading strategies and methods in Ethiopia by Ato Gebremed-hin W/Giyorgis. There is chronic food insecurity and malnutrition with 5.23 million people requiring emergence food assistance, 7.5 million chronically in-secure people receiving assistance, and

44% of children between 6 to 59 months old being undernurished [1 in 10 of whom dying before 5th birth day], he said.

Going into the underlying causes for food insecurity the presenter menioned, big population, environmental degradation, drought, low productivity of agriculture, limited market, and unsuccessful grain-led approval.

Explaing why root and tuber crops de-serve focus, he indicated their wide ac-ceptance, big potential, high financial re-turn, role in hunger combating in critical periods, as less labour intensive energy source, and highly complemantary qual-ity, for example potato for highland and SP for lowland.

Potato is of short duration crop [ 3 to 5 months], can yield as high as 30 to 35 tons per hactar, and has an average yield of eight tons per hectar.

Gaps to close include lack of quality seed, poor facility, poor linkage, and high transport cost. While the low productivity (8t/ha) is explained by low quality seed, low adaptable and disease tolerant vari-ety, and distribution problem and pest.

In summary the presenter said, it may take eight years to have one variety. Some varieties are of wide adaptation while others could be for specific adaptation. In the last 15-20 years more than 30 variet-ies have been released. Most yield more than three fold of the national average. Clean seed can be multiplied using differ-ent technologies, for example aeroponics, which has no contact with the soil, avoid-ing soil borne disease, at 25% of the cost.Another Dutch presenter advised the need to have correct potato statistics, compare potato to other foods in Ethiopia, transac-tion of potato [grower, broker, consumer, transparency], use of potato and process-ing opportunities, potato storage, applied

research for ware and processing, and training between businesses.

Exchange of ideas took place with the participants.Consumption options of potato and cooking processes should be considered as there is lack of aware-ness in this regard, one participant said. Another brought to attention nutritional grading of potato. Nutritional value is missing in the presentation, he said. It is poor for Zinc, Vitamin, Iron, and as such fortification should be considered, he said.

Following that there was group discussion which the project advisor, Mr. Gertjan Becx, suggested be focused on what they want of the government, value chain work and how to go about it, and new ideas and what ABSF should do. There is money available as long as the participants come up with something practical, the project advisor said.

June 2014 ADDIS BUSINESS PAGE 4

By Mesfin Zegeye

By Mesfin Zegeye

No Healthy Ginger Seed in the Country: ABSF PlatformABSF project of the Addis Ababa Cham-ber of Commerce and Sectoral Associa-tions organized its 2nd discussion with stakeholders on spice, herbs, and aromat-ic plants. There is no healthy ginger seed in Ethiopia and the soil is infected making planting healthy seeds pointless, it was reiterated in the panel discussions held at Jupiter Hotel, on June 19, 2014. Mr. Gertja Becx, the Agri-Business Sup-port Facility (ABSF) project advisor, in his opening remark to the participants said, the project expects a lot of inputs and ideas from investors on the ground. So far efforts were focused on setting the scene. It is important that the private sec-tor articulate what it requires. Is it knowl-edge, new varieties or other, the project adviser asked. And there are funds for any plausible ideas that come forward, he added.

Different panel discussions on various is-sues took place on the day with selected panelists speaking on respective issues followed by exchange of ideas with par-ticipants. The panel themes are: spice, herbs, aromatic plants; commercialization and investment; seed supply and exten-sion; and market and trade development.

Research coordinator at TNSRC, Tepi, Ato Habteweld Kifelew, said, there is no seed in Ethiopia free of bacteria and the conclusion reached is ‘there is no healthy seed.’ He went on to add that there are clean seeds, but it is pointless to pass them on for planting as the soil is infected already. Farmers need so much knowl-edge and inculcating that knowledge among farmers is an important task in this regard.

Regarding the ginger supply at the mo-ment he said, the currently available gin-

ger is a previous production. There may not be any ginger next year, he spelt out the situation as he knows it.

One investor in south nations said he had been engaged in ginger business for the last 20 years and he has been studying it with a view to get around the problem. The obstacles are many and a lot of capacity limitations complicated the problem further. Ginger spread to Gondar with its problems. He went on more specifically.

Recently people brought a new un-healthy variety of ginger into the market and nobody did anything to stop that. Some exporters profit from the business in this unhealthy variety, he said.

Director of quality research laboratory at EIAR, Ato Solomon Abate, who was facilitating the discussion on spices on the day, said investors do not have the patience to wait until what they im-ported is tested by research labs. They import, plant and produce, and market/export it without being concerned about tests on the products. Besides, the ge-netic resource is limited. Nobody is doing the seed multiplication work. He went on to add, the current situation is the problem is ahead of the research to handle it instead of being the other way round.

Director at agriculture investment land administration agency, Dr. Werkafese Weldetsadik, said four million hectares of land has been identified for invest-ment but this does not mean it is ready for use as verification and other tasks remain to be done. Until then the exact amount of land that could be available cannot be determined.

More pressing a consideration men-tioned by Dr. Werkafese is the fact that the government as of yet does not con-sider spice a product that could be grown independently. Furthermore, the item does not constitute part of the govern-ment priority list. He went on to stress what the private sector needs to do about the situation. That investors need to con-vince the government that spice can be grown independently. Without doing that it would be difficult to get the support they look forward to from the govern-ment.

The fact that there appears to be no body responsible for spice is the other problem that came out in the course of the panel discussions, although it could be argued that spice fall within one or the other

body’s mandate. Nor does there seem to be a body undertaking the awareness task, which the sector needs so badly. Problem of volume big enough for buyers is also another shortcoming faced. Quality of the product, the other gap raised, is also lacking and does not have the context that allows to rectify it. Ethiopia exports to 46 countries and 43% of this to Sudan; but of poor quality. Technology, and finance shortages are other problems raised.

Ato Solomon said, the problem in ginger occurred because people engage in the business without the knowledge. Expe-rience is also lacking. There is spice re-search but there is lack of experience as it is not practically oriented. Good Agricul-ture Practice (GAP) could have been use-ful in this regard. Ethiopian agriculture

research is ready but it is important that just like the problem in ginger came out in the discussions, other areas in spices busi-ness should be dealt with and the gaps on the ground be expressed so that research could be undertaken on the issue.

Mr. Gertja Becx, the project advisor, said in the next meeting, the project needs to hear and see what the participants of the platform have done so far. Next time cannot be just another meeting, he un-derlined. This meeting cannot continue indefinitely. There is a need to see chang-es on the ground. He encouraged them to forward any ideas they want to share in the course of the discussion or afterwards or in the office or in any way that suits them.

Access to Finance (cont’d from page 1)

Danish International Development Agency (DANIDA) funded training was provided to Addis Ababa Chamber of Commerce and Sectoral Associations (AACCSA) staff under its “Strengthen-ing the Private Sector in Ethiopia” project which the Agency signed with the Cham-ber. The project is a twinning program between AACCSA and the Confedera-tion of Danish Industries (DI) and covers three years from February 2014 – January 2016. The training took place at Harmony Hotel from May 28 to 30, 2014.

AACCSA Project Coordinator, Ato Sisay Werku, said the Chamber is responsible for the overall implementation of the project while DI will provide technical assistance in the form of trainings, inter-

national best practices on selected policy issues, contribute with proposals for im-provements in the business environment, and participate in relevant workshops and joint project reviews.

Objectives of the project include increas-ing knowledge on the manufacturing sec-tor in Ethiopia, developing services of AACCSA so as to enhance its support for the members, enhancing its capacity in policy influencing, and establishing it as a key knowledge provider for all issues of industry framework conditions.

The project has two main components: conducting evidence based policy advo-cacy to improve the business environ-ment, and establishing a manufacturing

DANIDA Project Training Provided to AACCSA Staff

advisory unit to provide information on opportunities in the manufacturing sector and provide advisory services to member companies of AACCSA.

Two professionals from DI with a lot of experience in Africa and elsewhere in the sector provided the three training to staff members of the Chamber.

This partnership aims at enhancing the voice of industry and creating an enabling private sector environment for it. The training is part of AACCSA’s current stra-tegic move towards laying a foundation for enhancing AACCSA’s evidence-based policy influencing measures, Chamber project coordinator, Ato Sisay underlined.

The discussion was jointly chaired by NBE Governor, Ato Teklewold Atinafu, and Ethiopian Chamber of Commerce and Sectoral Associations President, Ato Solomon Afewerk.

World Bank in a study it undertook identi-fied 10 major problems Ethiopia has been facing and at the top of these is problem of finance. Ethiopia is found at very low level of performance compared with its neighbours. Some 70% of small and mi-cro enterprises claim that issue of finance is a very serious problem to them, the presenter said and went on to explain his point in further detail.

Getting loan is problematic in that there is discrimination, and there is no trans-parency as to why one’s loan request is accepted while another’s is rejected. In addition, the loan given is very small, the collateral required is huge, direct and indirect service payments are high, risk evaluation capacity is inadequate, access to foreign exchange is problematic and there is problem of access to finance for small and medium enterprises, the pre-senter enumerated.

Explaining the problem faced in short term loans, he said, because short term loan covers only one year it is difficult to carry out all the work needed at the Ethiopian Revenue and Customs Author-ity (ERCA), spend it on business, make available goods and services, and make profit within just one year.

Governor of the National Bank of Ethi-opia (NBE), Ato Teklewold Atnafu, has reacted to the issues raised in the pre-sentation. Today’s meeting is good. It is a good opportunity to explain issues that need clarification and share other ideas as

well, he said before moving on to the crux of the matter.

It is not debatable that there is problem in making finance available. This is obvious. Problem of finance is a major bottleneck for investment. We all know this. That is why participants of this discussion raise the issue. We are not making available required by the economy. No study is needed to tell us this.

However, efforts of the government in this regard should not be forgotten. A lot has been done to improve the investment environment, he said and went on to cor-roborate his point with some figures. Sav-ing rose from 5% of the GDP at the end of 2005 (Eth. Cal.) to 17 % of the GDP in March 2006 (Eth. Cal.); number of bank branches in the same period rose from 680 to 2108; number of bank accounts rose from 4.5 million to 12.5 million; de-posit of private banks rose from around 70 billion birr to 112 billion; loan given by private banks rose from 84 billion birr to 263 billion and that meant 43% of the loan provided.

The assertion by the presenter that be-cause of the situation created due to some government policies the deposits of pri-vate banks is dwindling is inappropriate, the NBE Governor said. Claiming that policies are put in place by National Bank of Ethiopia that do harm to the capacity of private banks is unacceptable, he added.

NBE does not prepare policies that harm private banks. NBE realizes well that let alone endangering16 private banks, put-ting in place a policy that creates problem just to one bank will have serious reper-cussions. It is the fall of one bank in the US that caused the global crisis. A body (cont’d on page 8)

PAGE 5 ADDIS BUSINESS June 2014

By Mesfin Zegeye

By Mesfin Zegeye

Ethio-Israel Business Summit Ponders Enhancing CooperationCorruption level in Ethiopia is low – IFC official

Ethio-Israel Business Summit takes place in which more than 40 Israeli business companies from 11 major sectors were involved. Israeli Foreign Minister led the delegation, and his Ethiopian counterpart, made the opening official remark. Senior Ethiopian government officials attended the event organized at Sheraton Addis on June 17, 2014.

H.E. Dr. Tewodros Adhanom in his open-ing remark said, this summit has a criti-cal role to play in strengthening the col-laboration between Ethiopia and Israel. It helps create a robust platform for the public-private bond. Israel new policy is deepening relations with Africa.

The Ethiopian government and the busi-ness community are looking forward to strengthening trade and investment with Israel, for deeper promotion of trade and investment. However, despite long his-toric relations between the two countries, trade is very low. He expressed his hope that the delegation would turn the tide.

Israeli Foreign Minister, H.E. Mr. Avigd or Liberman on his part said, Israel has long historical relations with Ethiopia and Israel has a prominent Jewish communi-ty. High rank delegation came with him. There are many challenges and a major concern is security in the Middle East, East Africa, and so on, he said.

Very important companies are interested in investing in Ethiopia. He said, Israel

has, among others, the best ICT, high tech industry, high tech agriculture, and good water management expertise. Some70% of the water Israel uses is waste water.

“We transformed the desert into agricul-ture with big export to Europe and Amer-ica. We hope to see positive results from this engagement,” he said.

Investment agency director, Ato Fitsum Arega, had a presentation on investment opportunities in Ethiopia. Ethiopia regis-tered 11% GDP growth over the last de-cade. Ethiopia’s growth is not like other nations growth. It is sustainable the like of which is seen only in China and oth-er Tiger economies. That is why saying Ethiopia is growing will not be appro-

priate. Instead we say it is transforming, he said. Ethiopia is 3rd biggest investor in infrastructure in the world compared to its GDP.

It is true that there are problems in logis-tics and the cost is high. But that would be history when the railway project is com-plete. The Ethiopian Airlines, the biggest

cargo carrier in Africa, connects Africa with Israel. It is a 4 hours travel between Addis Ababa and Tel Aviv.

For the Israelis he recommended that they have an Israeli industry zone, and went on to say that the minimum investment requirement is200 000 USD. The ratio-nale behind that being protecting small businesses.

From the World Bank, IFC, Adamu Labara, shared his thoughts on why invest in Ethiopia. 1.7 billion USD is committed for Ethiopia by World Bank. While 1.1 billion USD; and 1.2 billion USD was committed last year and the year before last year. This is the largest in sub-Sa-haran Africa. Nigeria performs better in making use of the money made available. A private equity firm invested 200 million USD. This is a big sum and says a lot about the investment situation in the country.

The corruption level too is low in Ethiopia. He said that because he was sta-tioned in Dakar, Johannesburg, and other places and corruption there is worse.

Based on the strategic location of Addis Ababa, he provided his advice to the Israeli investors. As seat of the AU, all African countries are represented here in Addis Ababa. It will be a showcase to show what you do and what you have for the whole of Africa. Tomorrow could be late, he warned.

Ethiopia Lags in Access to Finance by Global Standards, by GTP target: Study

Only two people out of 1000 get their loan requests approved, a study indicat-ed. Addis Ababa Chamber of Commerce and Sectoral Associations organized a luncheon discussion in which a study on ‘Access to credit for PSD in Ethiopia’ was presented. The event took place at Hilton Hotel on June 27, 2014.

Ato Awet Tekie, who presented the study, said the participation of the private sector in the economy is growing, which in turn has driven the country to register accel-erated economic growth. And manufac-turing sector is growing in contribution. In terms of approved investment capital manufacturing constitutes the largest share of 32%.

However, the private has been facing many challenges. According to the World bank ‘’Ease of Doing Business’’ the most constraint of private sector in Ethiopia are access to finance, starting a business and protecting investors in 2014, he said and went on to add.

From the supply side, unreached large rural savings, and the fact that more than 80% of the population do not have bank account are gaps. While on demand side, the fact that financial literacy is at low levels, and high level of informal saving groups and savings via livestock and gold outside of the banking sector, are men-tioned by the presenter.

Underdeveloped ICT services, weak regulator and weak training institutions for finance institutions are indicated as infrastructural weaknesses. On the other hand, the fact that the capital account is closed, and the work traditions legacy of the state owned bank permeating in the private sector, are indicated as other chal-lenges for the sector.

Quoting EPPCF study of 2013 the presenter said, “Only 2 in every 1000 appli-cations for a loan in private sector are successful,” point-ing to the magnitude of the problem.

Following the presentation, discussion took place in which members of the busi-ness community present on the day raised ideas.

One member of the business community said, he has had a feeling that the economy is facing problems. When the presenter depicted this situa-tion supporting it with facts and figures it became clearer. The presenter told us that out of 1000 credit requests only two get accepted. It is easier to say there is no private sec-tor financing.

Would it better when WTO comes and everything is opened up, he asked. That brings with it a forced change weather the sector is ready for it or not. Then, some will be destroyed and the better ones will survive and change with it, he said.

Moving on to the collateral based lending of banks he said, what does it really mean to require collateral 2.4 times of the loan as collateral? It is only Buna bank that pro-vides credit based on a proj-ect business idea. When will banks start to be innovative and change this traditional system?

Coming to hard currency provision service, he said when a request for foreign currency is made it takes 3 or 4 months to get it. This could push some members of the business community to resort to an unhealthy way of acquiring it.

Presenter of the study said, the Ethiopian bank-ing industry is characterized by Collateral-based lending system. He went on to say that finance is

so lacking and quoted EPPCF study of 2014, “it is easy to say that the private sector in Ethiopia is accessing financial resources from alternative societal finan-cial sources like equb, a traditional instru-ment of saving, than it is getting from the formal financial institutions like banks.”

Comparing Ethiopia with other countries, he had this to say, access to finance in Ethiopia is improving but remains low by world standards. Ethiopia lags behind oth-er countries and significant gap remains to meet the government set GTP’s target of 67%; reaching only 24% in 2012.

June 2014 ADDIS BUSINESS PAGE 6

is a national problem, not just a problem belonging to the Ethiopian Shipping and Logistics Service Enterprise (ESLSE). As such it is better to focus on the problem and put aside sharing of the blame. She said she does not think there is problem of policy either. “People are the prob-lems,” she said. The problems occur be-cause people do not have the good will to do what is right and to do what is in their power.

To government officials attending the discussion she said, “please pass on this concern to the government” so as it gets proper attention for the sake of the na-tion. Dealing with the situation in only one or the other government office is not enough. Comprehensive action should be taken. For example without addressing the problem at the Ethiopian Revenue and Customs Authority logistics problem can-not be solved.

The presenter of the theme on the day said, Ethiopia’s score under the World Economic Forum’s Global Competitive-ness Index (GCI) have improved over the period 2007/08 to 2012/13 from 3.28 to 3.55. He had touched upon areas for im-provement on the day.

Global indicators of logistics perfor-mance show many weaknesses. Ethio-pia’s relative ranking in the World Bank Logistics Performance Index dropped from 123 in 2010 to 141 in 2012 (out of

155 countries surveyed. In facilitation of trade across borders (trade logistics) Ethi-opia ranks 161st out of 185 economies under the World Bank’s Doing Business calculus.

Regarding dry ports, their being limit-ed in number and limitation in capacity is another area the presenter mentioned. Overstock of containers at dry port due to lack of expertise and capacity as well as lack of finance on the part of importers, are other problems. Instances of contain-ers staying for 60 days in Djibouti was mentioned by the participant of the dis-cussion referred to earlier. This incurs all sorts of pressure on business as everyone knows, she said.

Describing the situation of the Ethiopian logistics system the presenter of the study had the following to say. The system is characterized by poor logistics manage-ment system , lack of coordination of goods transport, low level of develop-ment of logistics infrastructure, inade-quate fleets of freight vehicles in number and age, damage and quality deterioration of goods during transporting and storage, ups and downs in customs procedures, documentary requirements, inspections as well as general security issues.

An official from ESLSE, Chief Engineer Alemu, said the situation is not as bad as the presenter described. The system was only in pilot in 2001 – 2004 (Eth Cal).

Only since 2005 (Eth. Cal.) has the imple-mentation begun. “I don’t think that the study has looked into the real situation on the ground very well.” The multimodal system in implementation is linked with the inland facility of the country. It is not debatable that there are limitations in logistics system. The appropriate thing would have been to have a logistic sys-tem that is ahead of the economy or at the very least that is compatible with it, he underlined.

Another participant of the discussion on the day said, the government has a mo-nopoly of operation of the multimod-al system. And it is difficult to expect growth or efficiency from a monopoly system. Such a situation causes many kinds of problems down the line in opera-tions of the system, he said and went on to add, the Addis Ababa Chamber of Com-merce and Sectoral Associations should pass this message on to the government appropriately.

Secretary General of the Chamber, Ato Getachew Regassa on the occasion said, without the involvement of the private sector sustainability of development will be in danger. This is not something we can close our doors to now and try to come back to in the future.

Gov’t Monopoly... ( cont’d from page 1)

Crown Agents Says Offers Value for Money

Crown Agents offers value for money in procurement, transportation, warehous-ing, and other services. And it backs its claim with track record and govern-ments across the globe including Africa and Ethiopia as its customers, Crown Agents officials said at a workshop it or-ganized in partnership with Addis Aba-ba Chamber of Commerce and Sectoral Associations at Ghion Hotel on July 2, 2014.

Crown Agents has permanent offices in 22 countries and presence in another 18

through its project offices and represen-tatives. It works in over 100 countries across Africa, Asia, Europe and Latin America, and is a stakeholder in the development and progress of its client countries.

Crown Agents has done projects for the Ministry of Finance and Economic De-velopment, the Ministry of Health, and Road Authority in Ethiopia and also has been involved with many African govern-ments as well as nations across the world. When goods fail to meet required stan-

dards and payments are unusually high-er than what it is fair Crown Agents had helped governments rectify the situation. An important service provided by Crowns Agents is procurements as well as trans-portation, warehousing and all that for a reasonable cost, according to its officials.Crown Agents Asia Director, Mr. Mike Byfield, in his presentation on the day said, there have been instances in which governments were charged 200% higher than the right price, in which massive volume of goods were recalled because

the goods are substandard, as well as mentioning other instances of unethical business dealings globally. Crown Agents could play a decisive role in filling up such and other gaps, the Director said. Some organizations supply substandard medicines just to increase their profit margin and as a consequence of which many people died and far more suffered health complications, he added.

One of the activities Crowns Agents car-ry out to ensure the goods they procure and supply are of the right standard is by

undertaking prequalification test which includes production site visits and ran-dom checks of products.

Engaging with Crown Agents avoids a lot of problems which include, quality fade, dumping of substandard goods, late delivery, ordinary cancellation by vendor, risk of default on payment, and cultural/language misunderstanding.

The other service it provides is financing global procurements. Head of Business Development Trading Operations, Sup-ply Chain Services, Mr. Gareth Sinnett, described problems with financing, which by working with Crown Agents could be avoided. Financial services obtained be-ing of limited availability, restrictive in nature, sector specific, expensive, com-plex, not directly linked to procurement needs in value, timing, and multiple contracts/agreements are some common problems.

Consultancy is the other service it offers, it was indicated. In this regard, Crown Agents has been involved in Angola in which it managed the customs authori-ty for five years in the course of which it re-organized the office and rectified the situation, Ato Fanta Tola, Advisor to Crown Agents, said. It had done similar task in Bulgaria and currently it is in-volved in Albania for similar services.

The Asian Director of Crown Agents, Mr. Mike Byfield, in his elaboration of service gaps the organization could fill one of the areas he touched on is in Africa. He said, one sees China everywhere in Africa and it is a leading trade partner in Africa and it is here to stay. The supply chain from Africa to China is very long and a lot of things could go wrong. Hence, services of Crown Agents would be appropriate.

By Mesfin Zegeye

PAGE 7 ADDIS BUSINESS June 2014

Toward providing Arbitration and other ADR services close to

customers!By Mesfin Zegeye

BUSINESS AND LAW

(By Yohannes Woldegebriel)

Demands for alternative resolution of disputes in general and commercial disputes in particular has been on the rise all over the country with the in-creased involvement of public and private office for the procurement of goods, services and works. Government bodies at federal and regional levels are carrying out various development projects fi-nanced by local sources or funding obtained from international multilateral financial organizations, bilateral agreements in the form of loan or grants.

The procurement of goods, services and works acquired from international financial sources are required to abide with the terms and conditions stipulated in the agreements signed with such inter-national financial institutions or countries that pre-vails over all national or regional laws. For example although the type of contract signed by govern-ment administrative offices is generally described as administrative contract and hence not amenable to arbitration under Ethiopian law, these institutions are required to submit to arbitration where the fund-ing for the procurement of goods, services or works of certain project is provided by a multilateral fi-nancial organization of foreign state.

Under such circumstances, notwithstanding the requirement of national laws to defy arbitration public offices are forced to submit their contractual controversies to private dispute resolution bodies by way of arbitration and other alternative dispute resolution mechanisms most notably adjudication. The various conditions of contracts adopted by the federal and regional public procurement agencies particularly on the procurement of works provide arbitration and adjudication chosen dispute resolu-tion mechanisms. In most of such contract forms, ad hoc arbitration are mentioned although in some cases the Addis Ababa Chamber of Commerce and Sectoral Associations is designated as an arbitration body and arbitrator as well as adjudicator appoint-ing bodies.

The scope of involvement of the Addis Ababa Chamber of Commerce and Sectoral Associations Arbitration Institute (AACCSA AI), is however geographically limited to the capital of the feder-al government and although the institute can still provide its services to all parties that has designated it as arbitration body from anywhere in the coun-try or even abroad, the availability such services within geographic proximity and close ranges of its customers is highly desirable. The salient features of Arbitration and other ADR mechanism is their flexibility, proximity as well as convenience to the parties. Therefore parties should not travel days to seek justice to as far place as to Addis Ababa from such distant area as Nazret or Bahirdar.

The same or at least similar facilities and institutions should be available in those areas as AACCSA AI to provide highly needed services. The existence of such facilities and institutions can ease undue costs of travel and inconveniences to the parties and even popularize such services in those areas. The estab-lishment of arbitration bodies throughout the country or even in major cities may not be necessary since these are private dispute resolution mechanisms do not operate with sustainable budgetary sources as federal and regional courts. Their existence and operation is dependable on the quality of services provide and customers confidence. As a result, if the service provided is poor and could not earn the trust and credibility of users, customers are likely to drift away from using such institutions.

While ad hoc arbitration is recognized under the Ethiopian legal system and widely practised throughout the country, Institutional arbitration has been confined to Addis Ababa with the sole service provider AACCSA AI. In a country with a fast growing economy, vast and diverse geography and a population of nearly ninety million, a single arbitration body can not address all commercial disputes satisfactorily. There is therefore a press-ing need for the introduction of the same or simi-lar arbitration services elsewhere in the country to respond the demands of private and public bodies.

No other institution can lend and share its huge enormous experience on providing the highly demanding service of Arbitration and other ADR mechanism than AACCSA AI. Fully recognizing the rising demands of regional customers, the AACCSA AI has recently embarked awareness creation and sensitization of providing arbitration services close to customers. The need for such un-dertaking has become highly demanding in view of various isolated and uncoordinated efforts to set up “arbitration centers” attached with higher learn-ing public institutions and government offices.

AACCSA AI must take the initiative to create prop-er awareness that arbitration and other ADR services are private means of dispute resolution mechanisms that are alternative from the formal and convention-al court system. AACCSA AI must familiarize that such service should commence with clear legal ba-sis, guidelines, manuals that its sustainability can be ensured with the quality of service provided, integ-rity and credibility. That any plan to establish such bodies must focus on providing genuine service to the customers and maintaining the good will and name of the institution concerned. Finally, AACC-SA AI must involve in sharing all failure and suc-cesses that it has encountered for more the last 13 years of its existence.

(Cont’d on page 8 )

7th Special Int’l AgriFex Concludes in

Symposium

The Trade and Investment Promotion Department of the Addis Ababa Chamber of Commerce and Sectoral Associations undertook the 7th Special International Agrifex fair from June 20 to 22, 2014 at Exhibition Centre.The event was opened by Min-istry of Trade State Minister. And was attended by government officials, foreign dignitaries, and busi-ness people from abroad and Ethiopia.

In his opening speech the State Minister said the recognition given to the private sector as engine of economic growth and the public sector’s focus on creating an enabling environment is an indication of government’s belief in the vital and irreplaceable role of the private sector in the nation’s economic devel-opment.

A symposium took place as the closing event of the fair in which a studywas presented under the motto ‘Research and Modern Technology for Agricultural Transformation.’Presenter of the study said the ag-riculture sector has been making a huge contribution to the economy of the country. Since recently an en-couraging direction has been pursued focusing on industry and agro-processing. But the results are not as good as desired.

Agriculture accounts for 43% of the national GDP, contributes 60% of the foreign earning, and employs 80% of the workforce. But it is a sector where small-holder farmers living on hand to mouth basis domi-nate. Then, the presenter moved on to manufacturing.Manufacturing has a 40% share of industry and out of which agro-processing takes a bigger share. How-ever, agro-industry covers only 3 to 4% of the nation-al GDP. It accounts for 6% of the export income and operates at 50% of its capacity.

Agro-processing industry is facing difficulty in meet-ing international standard. The presenter said, if the nation is able to exploit the existing potential it could play an important role in the economy, for in-stance,Ethiopia is a major barley producer in Africa. Although the government wants the sector to play an import substitution role, at the moment the sector is able to satisfy only 12.7% of the domestic demand.

Regarding the distribution of the sector throughout Ethiopia, he said most agro-processing industries are concentrated in Addis Ababa. Addis Ababa has 58%, Oromiya 20%, Amara 9%, and Tigray 4% of the agro-processing industries. Such variation in distri-bution came about because of differences in creating access to power, road and other infrastructures.

Discussion and exchange of ideas followed the pre-sentation. A participant said, in agro-processing sec-tor the problems due to power stoppages are more than what these words can describe.

The availability of raw materials was mentioned as opportunities. However, the truth is accessing the required standard of raw material is very difficult. In a situation whereby theright quality and the right volume of raw materials are not available at the right time it is not understandable how this can be consid-ered an opportunity.

Another participant of the discussion, who said that he represented many others said, they received land far from Addis Ababa. But there is no infrastructure and consequently they are facing many problems. He said that the Chamber should talk to the appropriate government body for them.

Spokesperson for Ministry of Foreign Affairs, Am-bassador Dina Mufti, was present at the closing cer-emony of the event and said, the Chamber has a key role in the business diplomacy of the nation.

Finally, there was prize award ceremony for compa-nies that showed superior presentation performance at the exhibition. The selection was done through a panel of judges and it was chaired by the Director of the Chamber’s Litigation Institute. Members of the panel visited the stands of the competitors and did the evaluation in secrete. They evaluated the space they allocated and its use, manpower deployed and presentation, materials used for promotion, set up of the stands, and decoration and presentation. Accord-ingly, Club Italia Expo, ACME Engineering, Hori-zon Plantation Plc, Ethiopian Institute of Agriculture Research and RANGVET Plc have been selected for prize and were awarded accordingly.

June 2014 ADDIS BUSINESS PAGE 8

Trade and investment between Ethiopia and Sweden have shown to have great potential.

A number of both well-established as well as younger Swedish companies are represented in Ethiopia, including Volvo, Scania, Ericsson, Tylö (steam and sauna bath equipment), Solna Offset, Electrolux, Dynapac, Atlas Copco, ABB, SKF, AstraZeneca, Scancoin, Pallmax as well as, recently, the fashion brand and retailer H&M. Swedish products and invest-ments have been recognised for their high quality standards and comparative advantages in providing environmen-tally friendly, sustainable, long term, efficient as well as cost-efficient solutions that can mutually benefit Ethiopia and Sweden. Trade between Sweden and Ethiopia has significantly increased on both sides over the last couple of years and there is potential for further expansion..

The Ethio-Swedish Diaspora, together with the Swedish and Ethiopian business communities have significantly contributed in promoting the two countries’ trade and investment.

The Embassy is engaged in assisting local and Swedish companies in facilitating their business and in promoting trade and investments which are essential for Ethiopia to reach its ambitious Growth and Transformation Plan in the near future. We welcome enquiries and contacts from the Ethiopian business community.

All Ethiopian and foreign citizens as well as interested companies that are engaged in Ethiopia, are encouraged to contact the Embassy if you have any business-related enquiries. Companies that are interested to establish business contacts are encouraged to register their company on the website www.chambertrade.com free of charge. You can also find Swedish companies on the website www.kompass.com. Companies seeking consultancy help can contact Business Sweden in Nairobi on +254 733 525250For more information, you can visit our website www.swedenabroad/addisabeba or www.business-sweden.se or contact us on +251-11-5180000, fax +251-11-5180030 or e-mail address ambassaden.addis-abeba@gov.se Follow the Embassy’s activities in our facebook page www.facebook.com/embassyofswedenaddis and twitter www.twitter.com/SweinEthiopia

Trade and investment promotion between Sweden and Ethiopia

Accordingly upon the invitation of the Nazret (Adama) Chamber of Commerce and Sectoral Associations (ACCSA)and in collaboration with AACCSA AI a half day seminar on the estab-lishment and operation of an arbitration body and service was held at Nazret. The seminar was con-ducted on 12th June 2014 at the hall of ACCSA.

More than 30 participants drawn from private and public offices and members of the Chamber took part in the seminar. The participants include members of the board of Directors of ACCSA, the president of the Zonal high court, head of the Zonal revenue office and Law Instructors from the Adama Universities. The seminar was officially inaugu-rated by the newly elected president of ACCSA Mr. Feyisa Ararsa, who has always been keen to in-troduce chamber services including arbitration and many other services provided by AACCSA. Feyisa underscored in his key note address that the time has come for ACCSA to introduce and provide such service to its customers and requested for close collaboration and support with AACCSA AI. The Director of AACCSA AI made a power point pre-sentations followed by a lively discussions involv-ing all participants. The seminar was concluded with enormous enthusiasm and satisfactions.

In a similar development, on the 16th of June 2014, following discussions with coordinator of the newly established Arbitration Center of Bahrdar Univer-sity School of law, Mr. Atkilt Woldeabezgi, a half day seminar was organized at Bahir dar under the theme “Toward the establishment of an Arbitration Body: the Experience of Addis chamber.” This high profile seminar was made possible by the Office of the Head of Government in the Amhara National Regional State in collaboration with Bahirdar Uni-versity School of Law. The seminar was held and conducted at Azwa Hotel involving 24 participants of relevant regional public offices, enterprises, pri-vate companies, representative of the bar associa-tion, private businesses and academicians.

The seminar was inaugurated by the guest of honour, Mr. Merihatsidk Mekonnen, Chief Legal Advisor to the Head f Government, with the rank of Bureau Head. His Excellency Mr. Merihatsidik, in his open-ing address, greatly emphasized the importance of arbitration and other ADR mechanisms not merely to the business community but also to public offices. He underscored the importance of introducing such services for its merit in significantly to ease the enor-mous burdens of courts and the increased demand for specialization on procurement contracts. He con-fessed the gap in the region even for a responsible body that could provide organized, independent and reliable data base enumerating list of arbitrators to serve in arbitration proceedings.

A power point presentation on the theories, concepts, advantages of arbitration and ADR and the experiences of AACCSA AI was made to participants by the Director of AACCSA AI. The presentation was also followed by several considerations in planning the establishment of arbitration body and practical suggestions and recommendations was also put forward. Follow-ing the presentation, discussions were held pay participants. The seminar and lively discussion, moderated initially by Mr. Merihatisidk and af-ter a tea break, by Mr. Atkilt was successfully completed culminating in an exotic buffet lunch served to all participants.

It is unfortunate that right now, AACCSA AI is the only arbitration body providing institutional arbi-tration as well as other ADR services in present day Ethiopia. This is not sufficient to the demands of the growing economy of country and the numerous customers that are in need of such services through-out the country. Therefore, AACCSA AI will con-tinue to share its experiences and provide support in its bid to lobby for the establishment of similar arbitration bodies in commencing to provide these highly demanding services.

Toward providing ...(Cont’d from page 7)

that entrusted with the task of safety of banks does not take measures to cause crisis. The withdrawal of an investor supplying sheets from the market creates market opportunity for others. This is not the case in banks. If one bank goes out of the system, it will bring down all the others with it, including the huge Commercial Bank of Ethiopia, the Governor under-lined.

The other issue raised by the presenter was private banks contribution 27% of the loans they extended. This government policy is doing harm to the capac-ity of private banks. It harms their profitability and the confidence of stakeholders, the presenter said and went on to forward his suggestion in that regard. Withdrawing the 27% requirement or reducing it, and freeing priority sectors from it.

NBE Governor in responding to this said, the deposit sitting idle was once 17%. At the moment there is eight billion birr laying idle without interest being paid on it. If the 27% bond purchase has not come the situation would have continued. Saying that the 27% be lifted is to say that the Development Bank of Ethiopia stop providing loans. This in turn means disrupting the transformation efforts the nation is en-gaged in. This is not acceptable. Instead it is better to work more on saving tradition of the society to close the gap. We are in this finance problem because saving is so little.

Other problems raised by the presenter included: the directive that forces importers to make available 100% of their contract worth when they open LC; the directive that puts a maximum ceiling of 5000 USD for import of goods; lack of coordination among ERCA, NBE, and banks; absence of a just system for determining collateral and its evaluation; directive that prevents microfinance institutions from provid-ing foreign exchange services, and limiting the loan

they give out not to go beyond 1% of their capital; and the absence of credit policy and strategy regard-ing small and medium institutions.

Capital, manpower, and land are decisive factors. To be able to get the maximum value of money it is a must that there is access to finance, the presenter said.Finally declaration was read that listed foreign exchange; credit availability; collateral evaluation; the working and capacity of microfinance insti-tutions; loan for small and medium enterprises; lease finance procedure; quality and accessibility of mobile finance; capital market; and investment fund procedure problems. Presenter of the declara-tion indicated that these and other issues raised on the day have been responded to and consensus has been reached that the issue of access to finance is a serious handicap to the investment needs of the nation. It is indicated that the 27% bond purchase is of strategic importance to the nation and that there will be no changes in the near future in that regard, he said. The 40/60 composition is linked with the 27% bond purchase and hence cannot get solution independently.

Development Bank of Ethiopia is studying the possi-bility of accepting contributions other than cash. For small enterprises a special loan service would be put in place; and it was agreed that the 5000 USD ceiling for imports would be revised.

It was announced that there will be a committee to ponder over measures regarding issues and ideas raised on the day together.

Access to Finance (cont’d from page 4)

PAGE 9 ADDIS BUSINESS June 2014

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1.EgyptSackCompanyHeadOffice:6thofOctCity-5thindustrialZone,El-WahatHighway-PlotNo.18-Egypt

Tel:202-38164210Mobile:+201227436792Fax:202-38164211Email:sales@egyptsack-egypt.comWebsite:http//:www.egyptsack-egypt.comCompanyStatus:EgyptianJointventureOrganizationDateofestablishment:1997EstablishedCapital:EGP25.00MillionWorkingCapital:9.25MillionContactName:AmrMostafaEltahlawyIndustrial/Sector:

• KraftPaperbagsofcement/Gyspumandbuildingmaterials(50Kg)

• Kraftpaperbagsofcarbonate&Chemicals

TargetClient:• CementPlants• GypsumProducersBuildingMaterialsProducers

2. NationalBagCompanyHeadOffice:6thofOctCity-5thindustrialZone,El-WaHighway-PlotNo.18-EgyptTel:202-38164011-4Mobile:+201227436792Fax:+20238164017Email:sales@nbc-egypt.com–nationalbagcompany@gmail.comWebsite:http//:www.nbc-egypt.comCompanyStatus:EgyptianJointventureOrganizationDateofestablishment:1997EstablishedCapital:EGP50MillionWorkingCapital:14MillionContactName:AmrMounirSolimanIndustrial/Sector:• Paperbagsofcement/Gyspumandbuildingmaterials

(50kg)• Agricultural&grainspaperbags• Chemicalsandpowderpaperbags• Seedsandfertilizerspaperbags• Shopping&fastfoodbags• Smallflowerandsugarpaperbags(1&2kgs)

TargetClient:• CementPlants• GypsumProducers• PlantsofChemicals,powder,seed

AsiaContent&EntertainmentIndustryFairinGwangju/KoreaSouthSept.01-30,2014Organizers:KimdaejungConventionCenterKoreaSouthTel:+8262-611-2000Fax:+8262-611-2009Website:http://www.kdjcenter.or.kr

AtlanticCanada’slargestAgriculturalFairInFredericton,NB/CanadaSept.01-07,2014Organizers:FrederictonExhibitionLtd.CanadaTel:+1(506)458-8819Fax;+1(506)458-9294Website:http://www.frex.caE-mail:frex@nbnet.nb.ca

BEXAsia-ThemostcomprehensiveBuildingandConstructionExpoinSingaporeSept.01-03,2014Organizers:ReedExhibitionsSingaporeSingaporeTel:+6567898800Fax:+6567897711Website:http://www.reedexpo.com.sgE-mail:ask@reedexpo.com.sg

ChinaInternationalGarment&TextileFairinDalian/ChinaSept.01-30,2014Organizers:China(Dalian)InternationalGarment&TextileFairOrganizationOfficeChinaTel:+8641182640727Fax:+8641182640400WebSite:http://www.cigf.com.cn/englishE-mail:andy@cigf.com.cn

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CashbuildRustenburgCofromSouthAfricawantstosellbuildingmaterials.Formoreinformationpleasecontact:Mr.HenryJaquesTel:014-5974222Fax:014-5971277Website:www.cashbuild.co.za

ControlInstrumentsCo.fromSouthAfricawantstosellMotorVehicleBodies&Parts.Formoreinformationpleasecontact:ChrissiedeVilliersTel:014-5965936/40Fax:014-596-5937Email:chrissie.ci@telkomsa.netWebsite:www.ci.co.za

Foreign Companies Seeking Importer

TRADE FAIR

Chamber’s Memory ETHIO-ITALIAN TRADE

A meeting between a representative committee made up of members from various government departments and business interests in Addis Ababa and an Italian delegation led by Hon-orable Prof. Antigono Donati, President of the Italian National Institute for Foreign Trade was held at the Addis Ababa Chamber of Commerce on Friday, October 7, 1966, under the president ship of Ato Gebre Selassie Oda, President of the Chamber, to study ways and means of in-creasing economic and trade relation between Ethiopia and Italy.

After welcoming the members of the delegation Ato Gebre Selassie thnked Prof. Donati on his behalf and on behalf of the committee for the deep interest he took to study the trade relation between Ethiopia and Italy.

Documents showing the trend of the trade between the two countries had already been prepared and they were distributed to those who were present at the meeting. In the peri-od between 1962 and 1965 the trade deficit against Ethiopia rose from Eth.$20,204,000 to Eth $48,807,000. During this period the value of Italian exports to Ethiopia rose from Eth. $40,053,000 to Eth.$67,454,000 and the value of Ethiopian exports to Italy declined from Eth. $19,849,000 to Eth. $18,647,000. Referring to the deficit, Ato Gebre Selassie told the leader of the Italian delegation to help to remove them. He hoped that the trade relation between the two countries would improve for the benefit of both.

Continuing he said that Ethiopia has many nat-ural resources and she can supply necessary products and clear the trade deficit. Ethiopia can also supply raw materials which Italy can-not get elsewhere.

Prof. Donati, leader of the Italian delegation, speaking next thanked the Chamber of Com-merce for giving him an opportunity to meet the representatives of the various trade interests in Ethiopia. He said that he did not come to Ethio-

SourceThe Ethiopian Trade Journal 1965Chamber of Commerce

pia officially to make contracts. His delegation could study together with Ethiopian represen-tative ways and means to improve the trade be-tween the two countries. After looking into the trade statistics he said: “There is a big trade balance against Ethiopia.”

Continuing he said that there were two ways by which Italy could remove the trade deficit namely:

1. To increase imports and not to increase ex-ports.

2. To reduce the percentage Between exports and imports

“we are a free economy and we have public and private economy and public and private enter-prise” he said.

The first problem is how to make the Ethiopian products competitive. The Italian public enter-prise can give preference to Ethiopian market, he added.

He told the Ethiopian representatives at the meeting that it is necessary that Ethiopian products should be known better in Italy. The Italian Trade Mission which visited Ethiopia some time back had submitted a very favour-able report.

Prof. Donati suggested that Ethiopian exporters should visit Italy more frequently and exhibit products and also speak about Ethiopian products available for export.

He said: “We have an industrial economy. We need raw materials.” He thought that it would be possible to increase Italian imports from Ethiopia. He added that Italy could give technical and financial cooperation for indus-trial development in Ethiopia. New factories could be built and Italy would buy the prod-ucts of these factories.

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