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Leather declared a neglected industry of huge potential

Ethiopian leather industry has enormous potential investment and business opportunities and yet the country has made so little of it so far. Ethiopian investors suffer from dependence on imports for most of their inputs and export unfinished products other countries use as raw materials, tied up operation capital, as well as from lack of modern animal husbandry in the country. The event took place at Hilton Addis on January 24, 2017.

Addis Ababa Chamber of Commerce and Sectoral Associations organized its monthly forum on ‘opportunities and challenges of investment in the Ethiopian leather industry’ in which operators of the sector and related government bodies took part. A professional of extensive experience presented a study on the theme.

There are about 65 major companies of all sizes in the sector and these have created a 22 000 direct jobs. Companies come, among others, from China, Canada, India, and Germany. The sector is considered one strategic area by the government and a priority for 2013 to 25 plan, the presenter of the study said.

Ethiopian leather is composed of four sub-industries: tanning, footwear, glove, and leather garment and goods. However, development of the sector is found at a very low level. Export for the sector in 2011/12, 2012/13, 2013/14, and 2014/15 is USD 112, 123, 132, and 116, respectively. Contribution to the economy is third place after coffee and oilseeds with a GDP contribution of 9 billion birr [0.7% of manufacturing].

All these occur despite the huge potential the sector presents. Ethiopia has 56 million heads of cattle, 26 million sheep, 25 million goats and stands first in Africa and has a high place globally too.  Ethiopia has huge global market opportunities as well: COMESA, AGOA, EBA, China, India, Japan, etc. The global leather market is worth USD 160 billion, with shoe alone claiming 200 billion USD. A lot remains to be done before all these opportunities could produce the benefits to the nation.

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Import Promotion Desk (IPD) Conduct Training for AACCSA members

Based on the MOU signed with Import Promotion Desk (IPD) a project financed by Germany Government on July,13,2015 to upgrade the capacity of exporters engaged in natural ingredients, the first IPD capacity building training has given to 26 participants from natural ingredient sectors  on January 24, 2016.

The specialty of the program  is companies who are part of the program will be assessed their readiness to  EU – Germany market, upgrade their capacity on information related with Germany – Eu market, help to attend in one of Germany – Eu trade fair and link with potential buyers.

The purpose of the cooperation is to contribute to the creation of mutual economic prosperity and sustainability through:

  • Export development of selected Ethiopian SMEs onto the German and European export markets in the sectors of Natural Ingredients, Cut Flowers and Fresh Fruits & Vegetables;
  • Organization of joint Study Tours of Ethiopian exporters to Germany in winter of 2015 (natural ingredients);
  • Support the participation of Ethiopian natural ingredients exporters in trade fairs in Germany and Europe (Biofach, In-Cosmetics, ANUGA/SIAL and/or FIE/HIE). IPD supports the Ethiopian exporters by organizing B2B-meetings based on its networks with German importers;
  • IPD supports AACCSA in building up own country pavilions at the trade fairs in Germany and Europe (Biofach, In-Cosmetics, ANUGA/SIAL and/or FIE/HIE as an interim arrangement till the benefits are realized by members of the chamber.
  • Networking activities with AACCSA at selected international trade fairs in Germany (and Europe);
  • Provision of demand-oriented training modules and workshops in joint collaboration between IPD and AACCSA;
  • Partnership aiming at creating synergies between the two organizations for the benefit of their clients and program partners (e.g. German sector organizations). It is built on the joint mission of the two organizations to contribute to trade-LED (local economic development);
  • Provision of information in the field of Economy and Trade of Germany, if possible of the EU.
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Wheat Value Chain Needs Fundamental Transformation

As part of the ongoing efforts in place and to contribute in addressing to the challenges the manufacturing sector face, Addis Ababa chamber of commerce and sectoral Associations has initiated a wheat value chain study with a view to manufacturing sector in Ethiopia.

On welcoming speech of the workshop, Secretary General of AACCSA, Ato Getachew Regassa said that such type of value chain studies have crucial contribution for the improvement of wheat production in Ethiopia. Since wheat is among the most nutritious cereal crop, it has to be produced widely. Moreover, to ensure high level production and productivity of wheat and satisfy the whole wheat value chain actors and consumers there is a need to utilize improved wheat manufacturing technology, he stressed.

Wheat is an important staple food in the diets of many Ethiopians. Its production and marketing becomes the means of livelihood for millions of small holder households. It is also a critical raw material for the domestic wheat industry, which provides an important contribution to employment opportunity and value creation activities in the agri-food sector.

In the workshop, consultant of the study, Ato Assefa Hagos presented an overview of wheat value chain analysis in Ethiopia. According to him the strategic importance of wheat production has resulted in a strong involvement of the State and many other stakeholders at all levels of the wheat value chain.

The survey result investigates wheat value chain actors and their value addition roles, analyze major constraints facing manufacturing industries and determine possible strategies for economic actors superior value creation activity.

During the survey, manufacturing industry participants were asked about what really?  The survey result also found in rank order that determines most the quality of their wheat products include; quality of raw material, efficiency and factory plant type, employees work knowledge and Company Leadership.

According to Assefa Hagos, the consultant believes that effective wheat value chain industry in Ethiopia could be made possible through a Fundamental Transformation – Meaning adding meaningful value to a wheat value chain.He added that marketing exchange doesn’t rely on the maximum of learning about customer needs and designing new product offerings to suite those needs.   The study pinpoints that linkage among chain participants is very weak.

Participants in the work shop pointed that traditional way of transaction is one of the challenges in the wheat value chain. So, they stressed to focus on the value creating system, where growers, suppliers, milling industries and customers work together to create value.

The study recommends to the needs of reconfiguration of roles and relationships among actors.Agricultural machineries can be acquired   through different means; via cooperatives,  farmer’s unions and association or close relatives and interested groups coming together,  etc… Growers and milling industries should make a close relationship to create value way beyond focusing on economic value creation only, the study indicated.

Manufacturing industries must actively involve in improving organizational leadership by focusing on    a supply chain activities. Economic Power is still in the hands of growers not consumers, hence company owners should work for an environment of abundance so that they may see economic power shift to consumers.

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ICT Industry Park Benefits, Gaps Discussed

Addis Ababa Chamber of Commerce and Sectoral Associations organized discussion on the benefits of newly established ICT Industry Park to local business for its members. Incentives the government identified for companies joining the park are not implemented; it was indicated on the occasion. The event took place at Hilton Addis on December 22, 2016.

A CEO of Africom technology, which is one of the companies in the park, had a presentation on the advantages of working in the park as well as the challenges faced.

There is fast internet connectivity within the park, power supply is good, land lease price is very low, the CEO, Ato Baheru Zeyenu, said. Moving on to challenges he said, government incentives are not implemented yet, funding for knowledge and ideas is problematic.

Participants have also expressed their part. Although internet connectivity within the park is good, interface with outside is difficult. The government plans 300 000 jobs to be created within the park and yet it is not explained how that is possible. Problems of park facility management, transport, and security were also raised.

The park helps for networking and sharing badly needed infrastructure, Ato Beheru said. While a government official responding to a question regarding requirement to enter park said that being export oriented, creating jobs, and import substitution are important considerations for the government.

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1st Information Technology Value Chain Networking took place

Addis Ababa Chamber of Commerce & Sectoral Association (AACCSA) conducted the first Information Technology System (IT) Sector Value Chain Networking on Thursday December 1, 2016 at Maria Hotel.

The Networking Event was part of the manufacturing advisory service network establishment activities and prepared for the purpose of unleash the potential of IT sector to manufacturing sector.

Members engaged in IT sector, Government and non-Government bodies and It Users attended the networking.The event discussed the opportunities and challenges of the sector with the presence of relevant stakeholders for further easing of doing IT business in Ethiopia

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የፋርማሲ የንግድ ትስስር ክለብ አባላት ምክክር አደረጉ

የጉምሩክ አሰራር በታሪፍ አወሳሰንና ስራዎች ከመጓተት ጋር ያሉ ችግሮች፣ ባንኮች የውጭ ምንዛሪ የሚያቀርቡበት ሂደትና አሰራር፣ መንግስት በፖሊሲና በማበረታቻነት ያስቀመጣቸውን ወደ በስራ ላይ ከማዋል ረገድ ያሉ ችግሮች የፋርማሴውቲካል ዘርፍን አንቀው ከያዙት ውስጥ ይገኙበታል፡፡ በፋርማሲና ተያያዥነት ባላቸው የስራ መስኮች የተሰማሩ የግልና የህዝብ ተቋማት የተካፈሉበት 3ኛ የምክክር መድረክ ታህሳስ 6፣ 2009 ዓ.ም. በኢሊሊ ሆቴል ተካሄደ፡፡

የእለቱ የውይይት መድረክ በአዲስ አበባ ንግድና ዘርፍ ማህበራት ምክር ቤት የተዘጋጀ ሲሆን የምክር ቤቱ ምክትል ዋና ጸሃፊ የሆኑት አቶ ያየህይራድ አባተ ስነ ስርዓቱን በመክፈቻ ንግግር ከፍተው በመጨረሻም የማጠቃለያ መልእክትና በቀጣይ ምን እንደሚከተል ጠቁመዋል፡፡

የፋርማሲውቲካል ዘርፍ በዓለም ደረጃ የ1.3 ትሪሊየን ዶላር ገበያ እንዳለውና ይህም በየዓመቱ ከ 3 ‐ 6% እድገት እንደሚያሳይ አወያዩ ጠቅሰው፤ አፍሪካ በበኩሉ የ30 ቢሊዮን ዶላር ገበያና በየዓመቱ የ10% እድገት እንዲሁም በኢትዮጵያ ደግሞ የ800 ሚሊዮን ዶላር ገበያና 25% ዓመታዊ እድገት እንደሚታይበት ጠቁመዋል፡፡ ይህም ትልቅ ገበያ ለባለሃብቶች ሰፊ እድል እንደሆነ ተሰምሮበታል፡፡

ዘርፉ በፖሊሲ ደረጃ ከፍተኛ ትኩረት የተሰጠው ቢሆንም ጉምሩክ አካባቢ ባለው የተጓተተ ሂደት፣ ለዘርፉ መለዋወጫዎች የተቀመጠው የታሪፍ መጠን ትግበራ ላይ ችግር የታየበት መሆኑ እንዲሁም የባንክ አገልግሎትን በተመለከተ የውጭ ምንዛሪ አቅርቦት ላይ የሚታየው ክፍተት አጽእኖት የተሰጣቸው የዘርፉ አንገብጋቢ ጉዳዮች ነበሩ፡፡

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Int’l Financial Reporting Standards (IFRS) Training Provided

Half day training on International Financial Reporting Standards (IFRS) was provided to heads of finance coming from various organizations. The goal behind Financial Reporting Standards is to achieve uniformity globally. Addis Chamber organized the training at Harmony Hotel, on April 12, 2016.

The system makes accounting system simple and provides guide as to what to include and not to include in the financial statement.  More than 100 nations have implemented it and gradually all countries are expected to adopt IFRS. It believed that US companies may be required to subscribe to it.

Ethiopia put in place the financial reporting proclamation 847/2014 and has established accounting and auditing board of Ethiopia (AABE).

The effective date of the proclamation is December 5, 2014 and it may not exceed five years. It is possible to design a local version of the system but it cannot be called IFRS.

Nations have their own respective financial reporting system, and this has been one of the challenges faced by International Financial Reporting System, the trainer indicated.

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Validation Workshop on Land Lease Law Takes Place

Land was declared a critical factor for private sector investment and yet access to it has been faced with enduring problems, it was reiterated at a validation workshop on “Land Lease Law”. The study focuses on provisions of the 2004 proclamation and makes also occasional references to the two others before it. The event took place at Harmony Hotel on April 13, 2016.

The enduring problem in accessing land despite the legal provisions, the astronomic cost that kept steadily growing, the insurmountable bureaucracy and corruption in acquiring it, are some issues raised on the day. A handful of investors have managed to monopolize the land and the participation of the rest in bids has become a mere formality in view of the huge financial capacity between them.

Some 57% of companies surveyed claim they were unable to have land and hence were forced to rent offices, which has its own adverse impact on their business performance. They also said that although the government organized discussion with the private sector before the law came into effect, it failed to incorporate the comments and suggests of the private sector even though the officials declared they have accepted almost all of the ideas forwarded.

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Consultative meeting held with foreign member companies

AACCSA conducted a consultative meeting with foreign owned member companies at Hilton Addis on April 14, 2016.  The Chamber, led by the board of directors, discussed on the possibilities of enhancing member companies’ engagement in chamber’s activities and obtained valuable feedback from members as regarding to the improvement of existing services and introduction of new ones.

Consultative meeting was held with the aim of gauging the satisfaction of its services, the Chamber organizes different platforms to consult with member companies and receive inputs on how to improve its services to better serve its members moving forward

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Chamber Organizes Discussion on Joint Venture Possibilities

The absence of a comprehensive legal framework in Ethiopia made it difficult for joint venture partnerships to mushroom. There are a few instances of joint venture operations in Ethiopia. However, the references to joint venture in the Ethiopian commercial code proclamation is unlike the one expressed in the discussion or the practice in other countries. The discussion took place at Hilton Addis on July 4, 2016.

Addis Ababa Chamber of Commerce and Sectoral Associations organized the discussion to look into how much the legal framework allows operation in joint venture and the potential in joint venture for Ethiopia. There was a presentation titled prospects and challenges of pursuing business on joint venture arrangement with foreign partners.

The lack of sufficient legal protection for the partners of joint venture as well as the secrecy and limitations in legal recognition prevented joint venture from being a tool of business and an instrument of attraction business, it was indicated.