Sunday, November 30, 2014
Wednesday, November 26, 2014
London - Ethiopia plans to sell its first dollar bond as Africa’s fastest-growing economy exploits record demand for the continent’s debt.
Ethiopia picked Deutsche Bank and JPMorgan Chase & Co for fixed-income investor meetings in Europe and the US beginning tomorrow, according to a person familiar with the matter, who asked not to be identified as the information is private.
The proceeds of the sale will be used to fund electricity, railway and sugar-industry projects, Finance Minister Sufian Ahmed said October 8.
The Horn of Africa nation is joining issuers, including Ghana, Kenya, Senegal and Ivory Coast, who sold what Standard Bank says is a record $15 billion (R165 billion) of Eurobonds this year.
Government and corporate issuers are seeking to benefit from investor appetite for higher returns before the Federal Reserve raises interest rates as soon as next year.
“There is an incentive to issue before US rates start to gradually edge up from next year,” Samir Gadio, head of African strategy at Standard Chartered in London, said today by e-mail.
“The market seems to expect that Ethiopia will price among the highest-yielding African sovereigns.”
African government and corporate Eurobonds sales this year beat 2014’s record $14 billion, Standard Bank said on November 13.
Sovereigns accounted for about 71 percent of issuance, according to the Johannesburg-based lender.
The yield on Kenyan dollar bonds due June 2024 was at 5.91 percent today, down from 6.88 percent when it was sold in June.
Zambian dollar bonds returned almost 17 percent this year, while Ghanaian debt earned 9.5 percent, according to the Bloomberg USD Emerging Market Sovereign Bond Index.
Ivory Coast returned 1.3 percent as neighboring countries battled an outbreak of Ebola, while Gabon earned about 11 percent.
Emerging-market assets have benefited from record-low interest rates in developed nations that pushed investors to seek out higher returns elsewhere.
The end of quantitative easing by the Fed and the prospect of its first interest-rate increase since 2006 is drawing some of that money back to the US.
Almost 30 years after pictures of Ethiopian children with distended stomachs were used to raise money by Bob Geldof and Live Aid, the country is growing faster than any other African economy, at an average of 10.9 percent over the past decade, International Monetary Fund data shows.
Ethiopia’s planned issue could be assisted by technical factors, such as scarcity, as the Eurobond will be the only tradable asset for international investors wanting access to the African nation, Standard Chartered’s Gadio said.
State Minister of Finance Abraham Tekeste and Haji Ibsa, a spokesman for the Finance Ministry, didn’t answer their mobile phones when Bloomberg called each of them seeking comment today.
Ethiopia is building the continent’s biggest hydropower plant on the Blue Nile River, known as the Grand Ethiopian Renaissance Dam, that will probably increase electricity supply five-fold by 2020.
It may need to invest about $50 billion in infrastructure over the next five years, of which $10 billion to $15 billion may come from foreign investors, the finance minister said last month. - Bloomberg News
Saturday, November 22, 2014
Loans to women are used for everything from setting up beauty salons and cafes to buying fertiliser
Women do an estimated 70 per cent of the farm work in Ethiopia, but because men do the ploughing it is they who are considered to be the farmers. This means men control the family income. Gorta-Self Help Africa is involved in a drive to encourage women to join credit unions and share control of the family finances.
With the support of the Irish credit-union movement it established Yenetsanet Credit Union, in Butajira, an umbrella group for 109 rural savings and credit co-operatives.
About 15,000 people are saving and borrowing from these co-operatives. They must save at least 20 birr (about 80c) a week; after six months of saving they can take out one-year loans. These are for as little as €40 or for as much as almost €20,000, and they are used for everything from setting up beauty salons and cafes to buying fertiliser.
We visit one of the savings co-operatives, where women with babies are queuing to lodge wads of notes. The agency’s inclusion adviser, Mary Sweeney, says it is making a real and practical difference to the lives of women, because they finally have a say in how the household income is spent.
Gete Kerala, who is 38, has received several loans from her co-operative, the most recent being for 33,000 birr (about €1,310), last year, to build a retail unit that she is now renting as a clothes shop. Her four children, aged five to 15, are also members of the savings co-operative. “My life is much better now,” she says. “Before I joined the savings co-operative I didn’t have a job. I had nothing. Now I have built this,” she says, gesturing to the shop, “and I have also a small restaurant.”
Yibeltal Asmare, manager of the Rural Savings and Credit Co-operative programme, says women initially made up 100 per cent of members; then men began to get interested, and they now make up 30 per cent of savers. Co-operative members must vouch for someone seeking a loan, which may explain why the default rate is just 5 per cent.
Sweeney says evidence shows that when women control more household income, children get a greater benefit, as mothers are more likely than men to spend money on food and education.
Less than half the population has access to an improved water supply; in 2011 less than a quarter of the population had access to electricity. Next year the government aims to begin generating electricity from the Grand Ethiopian Renaissance Dam hydropower project, which is expected to be Africa’s largest power plant. It says it will have reached 75 per cent of towns and villages within five years.
Thursday, November 13, 2014
Posted on November 12, 2014 by Angela Velasquez
Swedish retailer H&M said it makes every effort to ensure its cotton does not come from appropriated land, however, the company admitted that it cannot provide an absolute guarantee.
The statement from the world’s second-largest retailer is in response to a Swedish television show’s accusation that H&M was using cotton from areas in Ethiopia that are vulnerable to land-grabbing. Land-grabbing is used to describe the buying or leasing of land in developing countries without the consent of the surrounding local communities. Governments of developing countries often sell the land to foreign companies as an attempt to boost agriculture, but in some cases local farmers are forced off their property.
According to a company statement, “H&M does not accept appropriation of land, so-called land-grabbing. Because of that we demand that our suppliers ensure that they do not use cotton from the Omo Valley region where there is a higher risk for land-grabbing.”
H&M said its risk assessment showed that land-grabbing did not take place where its direct suppliers are located and that it was not possible to trace any land-grabbing further down its cotton delivery chain. “The cotton used in our products come from different regions and we therefore cannot guarantee that the cotton fiber is not from the affected areas. Today we can only trace organic cotton and sustainable cotton from the Better Cotton Initiative. Our goal is to use 100 percent of the cotton by the year 2020, which will allow for better control. We are already the world’s biggest buyer of organic cotton,” H&M noted.
The Swedish retailer has been at the forefront of promoting Ethiopia’s garment industry since it began sourcing from the African country in 2013. It noted that its experiences in dealing with other global textile industry issues, like wage talks in Bangladesh, are lessons it takes with them as the company begins to form partnerships with Ethiopian suppliers.
H&M said it welcomes the review of its operations and a discussion of how the industry as a whole can work to affect the textile industry in a positive way. “Together with other stakeholders, we have a responsibility to deal with the problem of land-grabbing. By attending in the country work preventively, we see that we can influence in a positive direction,” the retailer shared.
The company added that it has also discussed the issue of land-grabbing with representatives of the Ethiopian government while also keeping an ongoing dialogue between aid agencies and the Ethiopian government. H&M said, “Key issues are how local people are involved and compensated properly when the state leases land.”