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Election EPRDF Ethiopia featured News Opposition politics

Minister Redwan: No Earthly Reason for Electoral Violence

Minister Redwan Hussein, head of Government Communications Affairs Office, gave a press conference to the media on the 14th of May, 2015.

The press conference mainly focused on the government’s assessment of the campaigning phase of the election, the readiness of security forces to preserve peace and the forthcoming 24th anniversary of Ginbot 20 celebrations marking the fall of the Dergue regime.

Here are Take aways from the Press conference:

“Progress in collaboration between parties”

Parties are collaborating better in solving problems that occurred in the campaigning phase unlike the non-stop claims and false charges used to be seen in previous elections, Redwan claimed.

“Progress in the quality of debates”Photo - Minister Redwan Hussein press conference to the media

There is a significant progress on the quality of televised debates as there is an increase in parties focusing on policy issues than their old custom of throwing false charges and labels, he said. The minister also added that this focus on issues has improved the quality and importance of the debates in the election process.

Public participation

The participation level of the public in the voter registration and campaigning phases of the election was higher than ever, according to Redwan. It’s even better than the participation levels of developed democracies, he emphasized. This fact, Redwan stressed, shows public confidence in the electoral process since citizens won’t register to vote in an election that they have no confidence in.

“There is no earthly reason for violence”

According to Redwan, the public has seen the fair opportunity parties got to campaign and no party quit campaigning complaining of being denied of access and opportunity. Hence, there is no fertile ground among the public for violence. Therefore, Redwan said, there is no earthly reason for anyone to resort to violence.

However, Redwan added, as always there will be groups and individuals who would try to use elections as an opportunity to create chaos that furthers their interests. Hence, the police and security forces are made ready to scuttle such attempts if these groups manage in creating incidents in certain places, the minister ascertained. The police are now more equipped than ever in modern riot dispersal gears and trainings in riot handling. Hence, the public have nothing to fear and should continue its active participation in the process, Redwan reassured.

“Ginbot 20 should be celebrated on the shared success the nation achieved”

The motto of this year’s Ginbot 20 celebration will be one that expresses Ethiopia’s transformation from “a nation expected to disintegrate to one that is mentioned as a success story and positive example”, Minister Redwan said. Even though we can disagree on the state of the nation and the 24 year journey we had, Redwan said, the one achievement we all could agree is that Ginbot 20 has enabled us to freely express our ideas and discuss our differences without fear. And we should celebrate the day focusing on what we have achieved and discussing our shortcomings, he stressed.

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Economy & Business Ethiopia featured News

Sino Ethiopia, Luna Export and Ecas Chemico won Quality Excellence Award

Ethiopian Quality Award organization (EQA) has awarded three Companies for Quality Excellence in an event held at the Hilton, Addis Ababa.

Sino Ethiopia Associate Factory is this year’s “High distinction” awardee while Luna Export p.l.c. and Ecas Chemico p.l.c were awarded as the “distinction” quality awardees.

The award was attended by Tadesse Haile, State Minister of Industry.Photo - Ethiopian Quality Award

Dr. Admasu Tsegaye, president of AAU and board chairman of EQA gave trophies and certificates to the winners and participants of the competition.

The companies were awarded for winning the fourth ‘quality excellence’ competition that was conducted among the registered 16 companies engaged in commodity export.

EQA was founded seven years ago by a joint collaboration of Walta Information Centre and Addis Ababa University. It managed to hold four quality excellence competitions since.

The first, the second and the third award events had been attended by the then President Girma WoldeGiorgis, the then deputy Prime Minister Hailemariam Desalegn and President Mulatu Teshome, respectively.

The organization evaluates companies in four categories such as manufacturing, service providers, non-profit service providers and construction.

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Articles Ethiopia featured History Tigrai

8 facts you may not know about Yohannes IV

This list is an extract of a study by the renowned Ethiopian scholar Richard Pankhurst titled “Innovation and Misoneism during the Reign of Emperor Yohannes IV (1872.1889)”, you are invited to read the study in it’s entirety.

1. Urban Development

Dabra Tabor – The Emperor, on assuming the throne, travelled to Dabra Tabor,Tewodros’s former capital in Bagemder, and established a new palace and other buildings at nearby Samara. He also ordered the construction nearby of the modern-style church of Hiruy Giyorgis, which was erected with the help of an Italian craftsman Giacomo Naretti.

Desse – Yohannes had one other notable urban achievement to his credit: the founding of the town of Desse, soon to emerge as the capital of Wallo. The settlement was established in 1882, and commemorated that year’s Great Comet.

2. Medicine

Physician – The second field of traditional innovation in which Yohannes played a prominent role was medicine. He accepted the presence at his court in 1885.86 of a Greek physician, Dr. Nicholas Parisis, lent by King George I of the Hellenes. Yohannes was thus the first Ethiopian ruler to have his personal physician.Image - Emperor Yohannes VI

Vaccination – Parisis was, however, more than a mere court physician. He introduced European-style vaccination, based on a serum imported from France, to a moderately wide section of the population. This arrived during the great smallpox epidemic in 1886, and resulted in the vaccination of many prominent figures. They included Emperor Yohannes himself, the Abun, or head of the church, King Minilik of Shawa, King Takla Haymanot of Gojjam, and Ras Alula, as well as many generals, officials, soldiers, and numerous children. Yohannes was so convinced of the superiority of modern vaccination over traditional Ethiopian variation that he issued a decree forbidding his subjects from practicing the latter. The force of this decree is confirmed by Harrison Smith, who declares that the old practice was declared a heinous. offence; and that great efforts were made to replace it by European-style vaccination.

Orthotic & Prosthesis – Other medical developments took place in this period throughout much of northern Ethiopia. One of the most remarkable innovations was due to the arrival in Adwa of the aforementioned Hungarian armourer, Andre, who made artificial limbs for thieves and other persons amputated in accordance with the traditional Ethiopian legal code. He reportedly charged ten Maria Theresa dollars per limb, in addition to being given presents of grain, meat, honey, etc. The French traveler Alex Girard reported that when Yohannes first saw Andre’s artificial limbs he “could not believe his eyes”.

Clinics – The establishment of clinics in Adwa and Gondar, New medicines were also imported in the course of trade, or brought in by foreign travelers. This resulted in a significant expansion in the use of mercury sulphate preparations in the treatment of syphilis. This cure was by then replacing the older sarsaparilla treatment, and by the early 1880s was commonly used, Rohlfs says, in much of northern Ethiopia.

3. Slave Trade

>> Yohannes was significantly influenced by the nineteenth century European, and more specifically English, agitation against slavery and the slave trade, and was virtually the first Ethiopian ruler to take an official stand against them. Both institutions were then long established in the country. Hallowed by time, they were accepted, albeit with some qualifications, in the Ethiopia’s traditional legal code, the Fitha Nagast, or Law of the Kings.

>> The question of the slavery and the slave trade came to the fore early in Yohannes reign. The matter was apparently first brought to the Emperor’s attention in 1873 by the British traveller de Cosson, who shared his countrymen’s passionate hatred of slavery. Yohannes, according to the traveler, listened attentively to his interpreter’s translation of the arguments against the institution, after which he declared that he had thought gravely over these matters, and that it was true that slavery was distasteful to him as a Christian sovereign.

“I had his promise that he would take immediate measures to enforce the punishment of death against all traders, Mahomedan or Christian, who should in future attempt to buy, sell, or kidnap slaves in his country, or attempt to pass them through it. I begged his Majesty, while he is doing so much, to complete the work by declaring free the slaves then existing in Abyssinia, as those who were contented with their lot would be no worse, while those who pined for liberty would be able to enjoy it like their fellow creatures…..” De Cosson

>> The Emperor duly instructed Kirkham, his English aide, to write to Granville under the imperial seal. The letter declared that the Emperor, as a Christian sovereign, found slavery .distasteful., and promised .to put an end to all traffic in slaves in his kingdom, and to declare all slaves now existing in Abyssinian territory free men. He also announced his intention of issuing a proclamation that if any of his subjects shall buy or sell a slave, they will be punished by death without mercy. Yohannes shortly afterwards committed himself by international treaty to the abolition of both slavery and the slave trade. In the short-lived Tri-partite Treaty of 3 June 1884 he undertook .to prohibit and to prevent, to the best of his ability, the buying and selling of slaves., as well as .the import or export of slaves to or from his dominions.. He agreed also .to protect, to the utmost of his power, all liberated slaves, and to punish severely any attempts to molest them, or to reduce them again to slavery.

>> Wylde, who as British Vice-Consul for the Red Sea was relatively well informed, commented that the Emperor faithfully carried out this treaty, and that there was no known case of slaves passing through his dominions from the time when it was signed until his death, in 1889.

4. Opening of diplomatic relations – Though rulers of Ethiopia had despatched diplomatic-cum-commercial missions to Europe since early medieval times, Yohannes was the first Ethiopian monarch to appoint a permanent representative abroad. The latter was an Englishman based in London, a certain Henry Seymour King, who was accorded the title of Ethiopian Honorary Consul.

5. Repatriation of artifacts & Restitution of the Kibra Nagast – Yohannes was likewise the first Ethiopian monarch to request the repatriation of artifacts looted from the country. He was grieved in particular at the loss of two items seized by the British expedition to Maqdala in 1868. One was a manuscript of the Kibra Nagast, or Glory of Kings, the marginalia of which contained important data on land holdings in the Aksum area; the other was an icon of the Christ with the Crown of Thorns, which had for centuries been carried by the Ethiopian soldiers on campaign. Deeply concerned at the loss of these two irreplaceable items he despatched two letters to London: one to Queen Victoria; and the other to the British Foreign Secretary, Earl Granville.

As a result of this intervention the British Government returned the manuscript, which, it transpired, had been acquired by the British Museum (now British Library). The volume was subsequently transferred to Emperor Minilk’s custody, and is currently in the possession of St. Raguel’s church in the market area of Addis Ababa.

6. Introduction of a national flag – Yohannes meanwhile had the distinction of being the first Ethiopian ruler to introduce a national flag. Two designs were produced, both entirely different from the one later inaugurated by Minilik. The first, according to Winstanley, was a gorgeous production of silk, a tricolour, the coloured divisions running laterally. The highest portion was crimson, the centre white, and the lowest ametyth blue. The whole was surrounded by a rich gold fringe. On the white ground was a gilt and painted representation of the Lion of Judah, with a defiant tail, and a crucifix in his right paw..90 The second version, described by the French traveler Gabriel Simon, consisted of two bands of red silk divided by a blue band on which was embroidered the Ethiopian lion merchant. The shaft was surmounted by a double cross.

7. Founding of a church at Jerusalem – The one other achievement of Emperor Yohannes deserves mention: founding of the Church of Dabra Gannat at Jerusalem. This place of worship was initially funded with gold he had captured from the Egyptians at the battle of Gura in 1876. He subsequently made the church many further payments, to a total value of 328,500 Maria Theresa dollars, of which 141,500 dollars were for construction purposes.

8. Standard of living – In this connection the considered opinion of A.B. Wylde may be quoted. Having travelled across the country in the 1880s . and again in the 1890s, he emphatically observed:

“The country that King Johannes ruled over at his death had greatly improved during the time he was on the throne. The leading men were more enlightened than their predecessors, and took more interest in the welfare of their subjects. There were more rich merchants than formerly, and owing to the brigandage being nearly put down, internal trade in the county had greatly increased and more foreign goods were imported . The peasant and cultivator were also better off and less molested by the soldiery.”

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*Richard Pankhurst, Institute of Ethiopian Studies, Addis Ababa, Innovation and Misoneism during the Reign of Emperor Yohannes IV (1872.1889), Aethiopica 8 (2005), International Journal of Ethiopian and Eritrean Studies, 48–71 ISSN: 1430–1938

Categories
Economy & Business Ethiopia featured News

Irish Stock Exchange to list Ethiopia’s Eurobond, Prospectus document shows

Highlight:
* The London branch of Deutsche Bank AG and J.P. Morgan Securities are joint lead managers and bookrunners of the debut. Ethiopia also hired the French firm Lazard Frères as a financial advisor, according to the preliminary Prospectus document HornAffairs has obtained.

Yes you read it right, Ethiopia, the country many Europeans were introduced to through those distressing famine images three decades ago, is now on a roadshow offering Eurobonds.

An Ethiopian delegation is out on a tour across Europe and the US for a series of fixed income investor meetings organized by Deutsche Bank and JP Morgan.

The delegation is slated to hold a series of meetings for a week starting from November 26.Photo - Irish Stock Exchange

Ethiopia’s announcement of a maiden debut dollar bond roadshow on Tuesday follows the first credit ratings it received in May, in preparation for a potential debut.

Moody’s, Standard & Poor’s and Fitch Ratings rated Ethiopia B1, B and B, respectively. Moody’s at the time said its rating reflects Ethiopia’s strong economic growth in the past decade.

Ethiopia’s GDP grew on average by 10.9% from 2003 – 2013 compared to the 6.1% growth forecast for Sub-Saharan African countries.

The London branch of Deutsche Bank AG and J.P. Morgan Securities are joint lead managers and bookrunners of the debut.

Ethiopia also hired the French firm Lazard Frères as a financial advisor, according to the preliminary Prospectus document HornAffairs has obtained.

It is anticipated that Ethiopia is to issue a 10-year note looking to raise about US$1bln and intends “to fund planned Government capital expenditure in priority areas including industrial zone development and the development of the sugar and energy industries” according to the document.

Frontier-market countries like Ethiopia, Kenya, and Pakistan have all announced bond debut plans the same day before the window of issuing new debt closes in mid-December for weeks.

The year-end rush is common for small borrowers as to avoid the risk of getting swamped out by a lot of issuances in January.

Ethiopia’s Notes are expected to be traded on the Irish Stock Exchange Main Securities Market on which they will be listed on or around the debut date. Ethiopia is projected to achieve similar success due to its low external debt to GDP ratio of 20% and IMF’s estimation that puts her in the top ten fastest growing economies of the world.

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Africa - General Aid and Loan Articles Djibouti Economy & Business Egypt Eritrea Ethiopia featured Kenya Rwanda South Sudan Sudan Uganda

List | Top Aid recipients in Africa per capita

Which African countries are big recipients of Official Development Assistance (ODA)[1]?

There are a number of ways to compare. One way is to compare the nominal amount of aid received by each country. That puts Ethiopia as the 2nd top aid recipient of ODA, next to Côte d’Ivoire – with USD 1,839 bil and USD 2,102, respectively – according to WB MDG report of 2014.

A more sensible way is Per capita comparison – the amount of the aid divided by the population of the recipient country.

The list below shows the top aid receiving countries in Africa in 2013.[2]

* Ethiopia received US $ 41.6 and $US 41.2 per person in 2012 and in 2013 respectively.

* Ethiopia is placed 32nd in terms of aid it receives per person ($41.2) while Kenya is 13th receiving $ 130.1 and Botswana 33rd receiving $ 39.8.

The data in the table was calculated on the basis of USD Per Capita ODA. That is – the dollar amount of aid per person a country received. (The previous year data is also provided for a reference).

 

Country

Per-Capita (US$) 2012

Per-Capita (US$) 2013

1.

Libya

7440.3

553 623.7

2.

Sao Tome and Principe

665.9

995.3

3.

Somalia

246.5

530

4.

Mauritius

222.9

338.8

5.

Cabo Verde

364.3

270.4

6.

Swaziland

150.8

210.8

7.

Congo, Dem. Republic

118.8

198

8.

Côte d’Ivoire

123.6

187.6

9.

Djibouti

164.4

172.7

10.

Rwanda

140.4

168.8

11.

Togo

117.9

153.6

12.

Namibia

133.5

145.6

13.

Kenya

88

130.1

14.

Lesotho

123.3

126

15.

Zambia

90.7

103.4

16.

Mali

90.9

103

17.

Senegal

91

100.5

18.

Mauritania

101

97.6

19.

Gambia

83.3

91.1

20.

Mozambique

87.7

89.9

21.

Tunisia

73.3

86.7

22.

Ghana

76.2

79.9

23.

Benin

71.1

68

24.

Central African Republic

61.9

63.3

25.

Morocco

47.3

58.4

26.

Sierra Leone

64.2

57.7

27.

Burundi

60.7

54.5

28.

Guinea-Bissau

64.1

53.5

29.

Zimbabwe

54.4

52.6

30.

Liberia

96.7

50.5

31.

Burkina Faso

52.8

47.7

32.

Ethiopia

41.6

41.2

33.

Botswana

49.8

39.8

34.

Cameroon

35.1

39.6

35.

Comoros

51.2

38.3

36.

South Africa

31

38.1

37.

Seychelles

95.3

37.2

38.

Chad

38.6

36.4

39.

Uganda

40.7

36.1

40.

Tanzania

42.4

34

41.

Malawi

39.2

29.7

42.

Eritrea

29.7

29.4

43.

Niger

34

28.6

44.

Gabon

35.2

25.1

45.

Guinea

19

17.7

46.

Madagascar

16.2

13.7

47.

Nigeria

9.6

8.2

48.

Sudan

13.6

7.3

49.

Angola

8.3

6.8

50.

Algeria

6

6.2

51.

Equatorial Guinea

9.3

2.6

52.

Egypt

3.4

2.3

53.

Congo

11.6

2.2

Notes:-

[1] Official development assistance ODA: relates to grants or concessional loans (i.e. with a grant element of at least 25 percent), undertaken by the official sector, whose main objective is the promotion of economic development and welfare.

[2] Data source: The African Statistical Yearbook 2014 produced jointly by the three pan-African institutions: the African Development Bank (AfDB), the African Union Commission, (AUC), and the United Nations Economic Commission for Africa (ECA).

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Africa - General Aid and Loan Articles Djibouti Economy & Business Ethiopia featured Kenya Rwanda Sudan Uganda

List: How indebted are African economies?

Which African countries are highly indebted? How do Horn of African economies fare in this regard? Where does Ethiopia rank compared to her peers?Map - African nations with flag

A Debt-to-GDP ratio is the common tool used to measure the level of indebtedness of a country. Though there is no consensus on an optimal level, a debt-to-GDP ratio of 60% is often cited as a prudential limit for developed countries. For developing and emerging economies, 40% is the suggested debt-to-GDP ratio that should be sustained on a long-term.

Here below are two lists: The data for African nations in general and for East Africa in particular based 2013 data. [You may read brief explanations on technical terms at the bottom]

Highlight:

* Ethiopia is at 40th place with a an external debt to GDP ratio of 18.3 at 2013.

* Countries with comparable GDP size to Ethiopia such as Kenya (30.5%), Côte d’Ivoire (45.6%), Sudan (63.9%), Tunisia(55.9) and Ghana(29.3); all have higher external debt as a percentage of their GDP.

No.

East Africa

%of GDP

1.

Sudan

63.9

2.

Djibouti

48.4

3.

Seychelles

38.7

4.

Tanzania

36.4

5.

Kenya

30.5

6.

Uganda

26.7

7.

Eritrea

25.7

8.

Burundi

20.5

9.

Ethiopia

18.3

10.

Rwanda

17.6

11.

Comoros

17.5

12.

Somalia

13.

South Sudan

* Ethiopia’s Debt to GDP ratio for 2014 is estimated to be 20%.

The country with a higher external Debt to GDP is at the top of the list (Mauritania 101.9%) and the least debtor is placed at the bottom (Algeria 1.6%)

No.

Africa

%of GDP

No.

Africa

%of GDP

1.

Mauritania

101.9

27.

Malawi

25.5

2.

Cabo Verde

91.8

28.

Guinea

23.7

3.

Zimbabwe

87.5

29.

GuineaBissau

22.7

4.

Senegal

68.5

30.

Botswana

22.6

5.

Sao Tome

65

31.

Burkina Faso

22.5

6.

Sudan

63.9

32.

Mauritius

22.5

7.

Tunisia

55.9

33.

Congo

21.4

8.

Niger

55.3

34.

Sierra Leone

21.3

9.

Mozambique

53.4

35.

Angola

21.1

10.

Lesotho

49.1

36.

Gabon

20.7

11.

Djibouti

48.4

37.

Chad

20.6

12.

Madagascar

46.2

38.

Burundi

20.5

13.

Côte d’Ivoire

45.6

39.

Congo, DR

20.3

14.

Gambia

42.2

40.

Ethiopia

18.3

15.

Namibia

41.9

41.

Rwanda

17.6

16.

Seychelles

38.7

42.

Comoros

17.5

17.

South Africa

36.9

43.

Togo

17.4

18.

Tanzania

36.4

44.

Egypt

17.3

19.

CAR

34.7

45.

Benin

16.2

20.

Zambia

34.4

46.

Swaziland

13.5

21.

Kenya

30.5

47.

Liberia

10.8

22.

Morocco

30.4

48.

Cameroon

9.3

23.

Ghana

29.3

49.

Libya

6.8

24.

Mali

26.8

50.

Equ. Guinea

5.5

25.

Uganda

26.7

51.

Nigeria

3.2

26.

Eritrea

25.7

52.

Algeria

1.6

—–

Technical terms and notes

*External Debt: External Debt (total outstanding debt) is the amount, at any given time, of disbursed and outstanding contractual liabilities of residents of a country to non-residents to repay principal, with or without interest, or to pay interest with or without principal. It is the sum of public and publicly- guaranteed short and long-term debt, private non-guaranteed short and long-term debt and the use of IMF credit.

*The data is calculated by level of external debt As a percentage (%) of GDP (Debt-GDP-Ratio)

*The data used here is of 2013 and sourced from African Statistical Yearbook 2014 published by the African Statistical Coordination Committee (AfDB, AU, ECA).

*Ethiopia’s peer/comparable economies are selected based on their GDP (at current market prices size and PPP valuation)

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Africa - General Articles Economy & Business featured United Nations

UNECA report: Neo-liberal diktat cost Africa decades

United Nations’ Economic Commission for Africa (ECA) has published it’s 2014 MDG Report 2014: “Assessing Progress in Africa toward the Millennium Development Goals: Analysis of the Common African Position on the post-2015 Development Agenda”.

The report provides insight on how to measure the performance of the continent in achieving the Millennium Development Goals (MDGs) and the historical context that we should take into account.

Read below extracts from the document.

Africa’s progress towards achieving the MDGs is gaining momentum, and the continent continues to make steady progress on most of the goals including primary school enrolment, gender parity in primary school enrolment, the proportion of seats held by women in national parliament, and reversing HIV/AIDS prevalence, incidence and death rates. Indeed, in some cases, Africa’s performance exceeds some regions such as South- East Asia, Latin America and the Caribbean, and Western Asia. This is both remarkable and commendable given the starting point of most African countries.Real GDP Growth (percent) in Africa excluding North Africa

Notwithstanding these achievements, the continent is considered off-track on most of the MDGs targets. This view is based on an assessment methodology that only tracks the level of performance on an indicator in relation to the 2015 target for that indicator. A typical illustration of this way is as follows: the proportion of people living on less than US$1.25 a day in Southern, East, Central and West Africa as a group decreased from 56.5 percent in 1990 to 48.5 percent in 2010. As a result, the region is approximately 20.25 percentage points off the 2015 target compared to 4.1 for South Asia; hence, the target will not likely be met should current trends continue….

….It is interesting to note, however, that all MDG performance assessments that measure distance away from the starting point find that African countries are among the top performers towards achieving the MDGs. Indeed, these methodologies yield strikingly different results than the traditional method of measuring progress, which is based exclusively on distance from the target.

Africa’s current performance on the MDGs cannot be separated from its initial conditions. The continent’s experience illustrates the challenges that regions or countries at low levels of development face in making progress on the MDGs and the importance of taking into account of such constraints in assessments of their MDG performance. As the final year of the MDGs approaches, it is important not to lose sight of the historical context that framed the continent’s MDG performance.

After almost two decades of low growth, since the early 1990s, Africa has witnessed remarkable real GDP growth (around 5 percent), driven by rising commodity prices, stable macro-economic stability and good governance. The positive performance was buoyed by a decline in the incidence of conflict and growing domestic investments, particularly in infrastructure …

…… The continent’s recent economic performance was preceded by what has been dubbed ‘the lost decade’. Indeed, the lackluster performance led the Economist magazine to describe Africa as the “hopeless continent” in May 2000. It was not until 2011 that the same magazine referred to Africa as the “rising continent”. This was followed by a March 2013 special report of the magazine, which referred to Africa as the “hopeful continent”. The period prior to the growth acceleration in Africa was characterized by low per capita incomes and lackluster real GDP growth.Trends in GDP per capita levels (in $) for developing regions, 1980-2010

Indeed, the continent’s per capita incomes levels began to diverge from the other regions after 1980, a period that coincided with the adoption of Structural Adjustment Programmes in Africa. By curtailing the role of the state in economic activities and opening up Africa’s nascent economies to competition from more mature economies, Structural Adjustment Programmes not only undermined the delivery of social services, but also contributed to low growth, de-industrialization and heightened dependence on primary commodities.

Real GDP growth averaged 1.32 percent during the 1980-1989 period, and by 1990, per capita incomes in Africa were almost half of the level in Asia and a quarter of the level in Latin America.

Africa’s performance on the MDGs has also been constrained by limited access to financing. ODA and concessional lending have contributed to expanding the fiscal envelope, but at the same time, conditionalities and tied aid have closed the policy space for several African countries to implement bold policies and initiatives. Furthermore, the volume of aid has fallen short of commitments. Although ODA to Africa reached unprecedented levels in 2006, it was still well below the 0.7 percent of GNI commitments made by Development Assistance Committee (DAC) members.

……….. In the backdrop of these initial conditions, it is therefore not surprising that, by the MDG benchmark year of 1990, Africa excluding North Africa had the worst performance on all the MDG indicators, with the exception of the following indicators: prevalence of underweight children under five years of age; gender parity in primary enrolment; the share of women in wage employment in the non-agricultural sector; and a few obvious environment indicators, such as the proportion of land area covered by forests; the proportion of terrestrial and marine areas protected; and carbon dioxide emissions. Indeed, the positive performance on the environmental indicators is a reflection of the low level of development of the continent.

…The implications of this assessment methodology are far-reaching, i.e. countries such as Ethiopia, Uganda and Mozambique are expected to achieve the same targets as countries with much lower poverty rates. But more importantly, the low level of development and growth in most developing countries in Africa suggests that they had to overcome a higher level of development ‘inertia’ than countries that enjoyed more sophisticated infrastructure a more productive workforce and well established institutions.

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Doing Business: Easier in Ethiopia than Kenya, except for start-ups

Highlights:
– Ethiopia’s is 132nd of the 189 economies, 4 points above the 136th Kenya, in the overall global ranking of ease of doing business.

– Ethiopia also ranks 14th of the 47 Sub-Saharan Africa economies while Kenya is right next her at 15th.

– Ethiopia has slipped 3 points from the 2014 ranking while Kenya improved its ranking by 1 point.

– Ethiopia has got a better ranking than Kenya in five indicators: Dealing with Construction Permits, Getting Electricity, Registering Property, Enforcing Contracts and Resolving Insolvency.

– Kenya ranks better in five indicators: Starting a Business, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading across Borders.

The time of reports has now arrived. “Doing Business 2015”, the flagship report of The World Bank, compares business regulations for domestic small to medium sized firms in 189 economies. Economies are ranked from 1 to 189 by the ease of doing business and are evaluated based on how business regulations are to the best global practices.Image - Global Doing Business 2015 rank

The “Doing Business” report aims to illustrate the ease or difficulty of opening and running a small to medium-size business with respect to relevant regulations. The report provides an aggregate ranking on the ease of doing business based on indicator sets that measure and benchmark regulations relevant to domestic small to medium-size businesses.

The ten indicators used in this ranking are: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The report emphasizes that the ranking and the indicators “do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business”.

The report also presents the indicators and rankings of Ethiopia in comparison with the indicators of a good practice economy, or those of comparator economies in the region.

Six economies were selected by the report as comparator economies. These are (with global and regional ranks, respectively): Eritrea (189, 47), Kenya (136, 15), Rwanda (46, 3), Uganda (150, 22), South Africa (43, 2) and Egypt (112).

In light of their comparable GDP and ranking level, HornAffairs opted to provide you a comparison table of these two nations of the Horn. The full list of the ranking and the report can be found here and here.

 

Indicator

Global Rank
[
Ethiopia]

Global Rank
[
Kenya]

Regional Rank
[Ethiopia]

Regional Rank
[Kenya]

Starting a Business

168

143

33

24

Dealing with Construction Permits

28

95

2

19

Getting Electricity

82

151

8

23

Registering Property

104

136

16

25

Getting Credit

165

116

38

15

Protecting Minority Investors

154

122

38

20

Paying Taxes

112

102

18

14

Trading Across Borders

168

153

35

25

Enforcing Contracts

50

137

6

25

Resolving Insolvency

74

134

5

28

Aggregate Global Rank

132

136

Aggregate Regional Rank (SSA)

14

15

Indicators measure the ease of:

*Starting a Business – all procedures (officially required or commonly done in practice) to start up and operate —as well as the time and cost required to complete these procedures. Image - Ethiopia and comparator economies rank on the ease of doing business

*Dealing with Construction Permits – the procedures, time and cost for a business in the construction industry to build a warehouse in the largest business city, connect it to basic utilities and register it so that it can be used as collateral or transferred to another entity.

*Getting Electricity – All procedures to obtain a permanent electricity connection and supply for a standardized warehouse, as well as the time and cost to complete them.

*Registering Property – procedures necessary for a business to purchase property from another business and transfer the property title to the buyer’s name.

*Getting Credit – assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions

Protecting Minority Investors – measures the protection of minority investors from conflicts of interest through one set of indicators and shareholders’ rights in corporate governance through another.

*Paying Taxes – measures the taxes and mandatory contributions that a medium-size company must pay in a given year as well as the administrative burden of paying taxes and contributions.

*Trading Across Borders – the time and cost (excluding tariffs and the time and cost for sea transport) associated with exporting and importing a standard shipment of goods by sea transport, and the number of documents necessary to complete the transaction.

*Enforcing Contracts – the efficiency of the judicial system in resolving a commercial dispute before local courts.

* Resolving Insolvency – the time, cost and outcome of insolvency (bankruptcy) proceedings involving domestic legal entities.

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Categories
Africa - General Articles Economy & Business Ethiopia featured United Nations

5 Facts No One Tells You About Africa

The power of media is so great that it can tell you a different reality about yourself and make you believe it. You probably got many “facts” wrong about Africa. Whether you are an African or not doesn’t make much of a difference. Your twitter feed only reinforces your long held misperceptions about Africa that do not match the reality.

You may think Africa is the worst in terms of peace and inequality. You may also believe it to be a black hole of aid and unfriendly for business that only China is attracted enough to invest (and only in mineral extraction, off course). You are not to blame, that is what you were led to believe by the media. Well, here are 5 facts that may surprise you and maybe lead you to find more.

1. The most conflict-prone continent? Not really

Contrary to what you are forced to believe, there are in fact more conflicts in Asia than in Africa. For example, the average annual number of armed conflicts from 2006-2012 was 11 and 14 in Africa and Asia, respectively. Yet by focusing more attention and coverage than in other regions, the media conspicuously accord a higher “risk premium” to the conflicts in Africa.

Pic 1 Africa Asia conflict

2. Africa gives back every cent it gets in “Aid”

The established thinking is that the West has been incessantly pouring money into Africa through aid and other private-sector flows without getting much in return. However, this perception does not take into account the huge sums of money that flow illegally out of Africa by Western firms financial institutions with the complicity of African officials.

Estimates of illicit financial outflows, conservative at best, put the annual outflow through trade mispricing alone close to $60 billion. in illicit financial flows over the 39 year period (–2008), which corresponds to a yearly average of about $22 billion. Cumulatively, total outflows of the last four decades, between 1970 and 2008, amounted to $854 billion and were equivalent to nearly all the official development assistance (ODA) received by Africa in the same period.

Pic 2 Illicit financial flows from Africa over the 1970-2009 period, $ billion.bmp

3. Not business friendly? To the contrary

Contrary to perceptions, the business environment is rapidly improving, with many African countries ranked among the world’s best. Seventeen out of the 50 countries that have made the greatest progress in their business environment are from Africa, higher than in any other region. Eight of these countries were ranked ahead of mainland China, 11 ahead of Russia, 16 ahead of Brazil and 17 were ranked ahead of India.

Pic 3 Africa business environment 

4. Not just China, half of the 20 top countries attracting western corporations are in Africa

The positive business environment in Africa has not gone unnoticed by private investors across the globe. African countries make up half of the 20 top global frontier markets that American and European multinational corporations are most interested in investing in. Asia and the Middle East each only have three countries in this ranking, while Latin America has two. Nigeria tops the list of the global frontier markets, while other countries, Angola, Ethiopia, Ghana and Kenya, are in the top 10.

Pic 4 Africa market sentiment

5. Investment to Africa is not mainly for mineral extraction

New investments are diversifying largely into the services and manufacturing sectors, diluting the dominance of resource-rich destinations. Only 65% of total FDI flows in 2013 went to resource-rich countries— down from 78% in 2008. In the meantime, non-resource-rich countries’ have doubled the contribution of FDI to their GDP to 4.5% since the early 2000s, reflecting their rising share.

Pic 5 Africa FDI

Data Sources: UNECA, UNCTAD.

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Categories
Aid and Loan Articles Economy & Business Ethiopia featured

Ethiopia: Sinking In Debt? Far from it

Recent news on the size of Ethiopia’s external debt has shocked many and stoked a debate on debt among Ethiopian netizens. If we make a list of issues that routinely popup in the fast changing social media cycle, the concern over Ethiopia’s “burgeoning debt” would be one of them.

Ethiopians’ concern over the debt burden is bipartisan, a rare scene in a polarized political climate. Partisan lines start to emerge on the scale of the concern and the manner in which it is expressed. The level of trust on the economic leadership of the government, the source of information and understanding of the debt data explain much of the difference. However, it is hard to miss an overblown rhetoric, one that smells more of a political fear-mongering intended to pile on existing misconceptions. It is about time for an informed dialogue as we gear up to Ethiopia’s maiden bond issue (i.e. more debt) on international capital markets next January.

How indebted are we?

Our external debt (owed to foreign creditors) is about 12 to 14 billion USD (depending on ongoing debt relief negotiations) of which 6 billion USD is owed to multilateral creditors such as AfDB, IMF and WB while 4 billion USD is owed to bilateral creditors such as governments and official export credit agencies. In contrary to perception the staggering figure creates, it only amounts to about 23 percent of Ethiopia’s GDP that is considered as “low risk of external debt distress” by the WB and IMF. The total public debt, which includes domestic debt (from domestic sources), stands at 36 % of GDP.Africa - Ethiopia - Patterns and Dynamics of Public Debt

One indicator of debt sustainability of a country is a credit rating value given by rating agencies that make an analysis taking various variables and projections into account. A concern about the sustainability of public finance is usually reflected in credit ratings (downgrades) and higher sovereign borrowing costs.

Ethiopia credit ratings, its first ever, done by S&P, Moody’s and Fitch, rates her B and B+ (stable) a fairly good position that led to expectation of a successful bond issuance and lower borrowing costs. This serves as a comparative tool with our African peers like Kenya and Ghana.

What is the limit to watch for?

An optimal level/limit of debt for an economy and even the relationship between external debt and economic growth, interest rate or inflation is an issue yet to be settled.

Many studies have attempted to investigate the effects of debt on economic growth only to reach conflicting results in their conclusions. The main point of contention being the level of debt to be considered as “optimal” marking the line where the amount of debt starts to pose risk to the economy.

A Debt-to-GDP ratio is the common tool used to measure the level of indebtedness of a country.However, there is no consensus on an optimal level of debt, if there is any, which a country should maintain. Several studies suggest various figures as a debt threshold.

A debt-to-GDP ratio of 60% is often cited as a prudential limit for developed countries. This suggests that passing this threshold will threaten fiscal sustainability. For developing and emerging economies, 40% is the suggested debt-to-GDP ratio that should be sustained on a long-term.

A 2010 IMF study on fiscal space emphasizes that the debt limit found in its research “is not an absolute and immutable barrier … Nor should the limit be interpreted as being the optimal level of public debt.” According to this study of 23 advanced countries, the estimated debt limits range from about 150 to 260% of GDP, with a median of 192%. The study assumes that the median long-run debt ratio to be 63% of GDP and the median maximum debt ratio to be 183% of GDP.

However, it concludes, “prudence dictates that countries target a debt level well below the limit as it delineates the point at which fiscal solvency is called into question.” The assumption is that when debt gets hefty, it may be hard to generate a primary balance (i.e., the budget balance net of interest payments on the debt) sufficient to guarantee sustainability, and economic shocks can push countries beyond their debt limit. Therefore, the advice is to stay well under the limit for prudence sake.

In “Growth in Time of Debt,” Reinhart and Rogoff claim that public debt loads greater than 90 percent of GDP consistently reduces GDP growth. A World Bank study puts a 77% of debt-to-GDP ratio for longer period to worry investors resulting in growing interest rate.

Not “how much?” but “For what?”

Most studies from either side of the debate agree on one point. As long as there is additional capacity in the economy or unemployment, higher fiscal deficits add to purchasing power and do not exert any uphill pressure on interest rates or inflation, nor do they cause large current account deficits. It is assumed that as long as the interest on the debt is less than the annual increase in nominal GDP, the debt need not be repaid because it will be a shrinking fraction of GDP.

A July 2010 IMF study of 38 developed and developing economies for the 1970-2007 period found that the effects on growth with respect to debt is only -0.02 while it is much higher with respect to other variables such as initial years of schooling (which contributes positively to growth). Hence, the growth-hindering effects of an increase in debt-to-GDP ratio can be overcome by a proportional increase in growth-fostering variables attained through public spending. This is why examining the composition of debt, instead of focusing on the total value of debt is of vital importance.

Evsey Domar has put it 1944 as “the problem of the burden of debt is essentially a problem of achieving a growing national income”. He emphasized that half a century later as, “the proper solution of the debt problem lies not in tying ourselves into a financial straightjacket, but in achieving faster growth…’.

Hence, informed priority order in applying the loan to projects and sectors with higher prospects of return, capacity building and multiplier effect have been usually advocated.

Ethiopia’s public external debt of about 5.6 Billion USD is owed by public enterprises such as Ethiopian Electric Power Corporation (EEPCO) that embarked on a dam revolution and Sugar Corporation which is building ten sugar manufacturing & refining factories in a bid to make Ethiopia among the top sugar exporters. Ethiopian Railways Corporation that aims to build 5,000 kms of national railway network and Ethiopian Shipping Lines that now holds the largest commercial fleet in Africa, are other public enterprises that make up the government guaranteed external debt stock. Ethiopian Airlines and Ethio-Telecom account for the 2.9 billion USD non-government guaranteed borrowings in the external debt stock.

Transport & communication infrastructure, electricity production and Agriculture are among the leading sectors for government borrowing. These sectors measure high on the scale of their return on investment and contribution to economic growth. The loans Ethiopia obtained so far also rank at top in the necessity scale as most of the projects conducted are infrastructure and capacity building, a prerequisite if the nation is to break off poverty and achieve an economic miracle.

The bottom line is that all the indicators of debt overhang we discussed reveal that Ethiopia is in a good shape. Our external debt is only 23 % of GDP which the WB and IMF called it low risk. Even the total public debt, which includes borrowing from domestic sources stands at 36 % of GDP. Even though there is no consensus on an optimal debt level, our debt to GDP ratio is still under the most prudent suggestion of 40%. Ethiopia’s credit ratings of B and B+ reinforce this point. The sectors the debt is invested on rank at the top of the necessity and return scale, and that’s what matters most.

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