Friday, February 13, 2015

Farming may be key to Ethiopia’s industrial goals - The Western Producer





Agency tasked with increasing productivity and efficiency in a sector that employs 85 percent of the country’s workforce

ADDIS ABABA, Ethiopia (Reuters) — Ethiopia’s ambition to become a manufacturing hub may hinge on Khalid Bomba’s ability to transform small-scale farming just as much as it relies on new railways and roads.

The 46-year-old one-time investment banker is chief executive officer of Ethiopia’s Agricultural Transformation Agency. His task is to increase production from a sector that employs 85 percent of the country’s workforce, most of them tilling plots of less than five acres.

“The cheap labour for industrial manufacturing is going to come from the rural areas,” he said.

“You are not going to have people coming off the farm if productivity levels don’t increase.”

Ethiopia boasts some of the highest economic growth in Africa, at eight percent or more a year. Much of it is fuelled by a huge state infrastructure program, which includes a new railway to Djibouti’s port, a city metro in the capital and vast hydro-electric dams, all aimed at attracting industrial investment.

However, agriculture still accounts for more than 42 percent of gross domestic product, high even in Africa. 

The level is about 30 percent in next-door Kenya, yet Ethiopia still has to import basic foods to feed its population of 96 million.

The challenge for Bomba and his team at the agency, which was launched in 2011, has been to work out better planting, fertilizing and harvesting techniques while ensuring adoption by farmers, whose practices have sometimes barely changed since biblical times.

One of the first areas targeted by the agency was production of tef, a grain that is the main ingredient in Ethiopia’s national dish, njera, a kind of sour flat bread. Yields of 500 kilograms per acre were half or less of other grains in Ethiopia.

“The way that tef has been planted and grown has not changed for hundreds, if not thousands, of years,” Bomba said. 

“The fact of the matter is that Ethiopia’s farmers had been planting too much seed.”

Farmers typically scatter 12 to 20 kg of seed per acre, but using just 1.5 to two kg, as well as planting in rows and using a particular seed variety, increased production by 50 to 70 percent, said Bomba, who was born in Ethiopia, studied in the United States and Britain, and spent 10 years with JPMorgan investment bank.

Only two farmers were initially willing to work with the agency, but adoption of the new practices has steadily increased. More than two million farmers adopted the techniques last year, although the rest of five million that were trained were still too wary to use them.

Rising production has driven down market prices of tef to the equivalent of $75 to $95 per 100 kg from $105 to $125. Higher yields also mean farmers can switch some of their land to other crops or even grow a second crop of pulses on the same tef land.

Bomba said tef exports, which are banned to avoid domestic shortages, could start on a small scale by the end of 2015 or 2016, although safeguards would be in place to protect local supplies.

Yields of wheat and corn have also improved. Wheat production has climbed almost eight percent a year since 2006 and reached 3.9 million tonnes in 2013-14, which met more than 85 percent of domestic needs. 

The transformation agency is also studying the nation’s soil to improve fertilizer use.

Promoting better practices has relied on a government network of 60,000 “extension workers”, who help with training. This reflects the strong hand of state in other areas of the economy.

The agency is also spreading ideas by mobile phone.

Just as Ethiopia’s industrial drive has drawn heavily on Asia’s experience, the transformation agency was created after studying how nations such as Malaysia and South Korea grew. 

Bomba led that study when he was working at the Bill & Melinda Gates Foundation, a philanthropic organization that still partly funds the agency.

He said roads and railways are the “shiny objects” that often capture the world’s attention, “but at the end of the day the backbone of this country remains the agricultural sector.”

Farming may be key to Ethiopia’s industrial goals - The Western Producer





Agency tasked with increasing productivity and efficiency in a sector that employs 85 percent of the country’s workforce

ADDIS ABABA, Ethiopia (Reuters) — Ethiopia’s ambition to become a manufacturing hub may hinge on Khalid Bomba’s ability to transform small-scale farming just as much as it relies on new railways and roads.

The 46-year-old one-time investment banker is chief executive officer of Ethiopia’s Agricultural Transformation Agency. His task is to increase production from a sector that employs 85 percent of the country’s workforce, most of them tilling plots of less than five acres.

“The cheap labour for industrial manufacturing is going to come from the rural areas,” he said.

“You are not going to have people coming off the farm if productivity levels don’t increase.”

Ethiopia boasts some of the highest economic growth in Africa, at eight percent or more a year. Much of it is fuelled by a huge state infrastructure program, which includes a new railway to Djibouti’s port, a city metro in the capital and vast hydro-electric dams, all aimed at attracting industrial investment.

However, agriculture still accounts for more than 42 percent of gross domestic product, high even in Africa. 

The level is about 30 percent in next-door Kenya, yet Ethiopia still has to import basic foods to feed its population of 96 million.

The challenge for Bomba and his team at the agency, which was launched in 2011, has been to work out better planting, fertilizing and harvesting techniques while ensuring adoption by farmers, whose practices have sometimes barely changed since biblical times.

One of the first areas targeted by the agency was production of tef, a grain that is the main ingredient in Ethiopia’s national dish, njera, a kind of sour flat bread. Yields of 500 kilograms per acre were half or less of other grains in Ethiopia.

“The way that tef has been planted and grown has not changed for hundreds, if not thousands, of years,” Bomba said. 

“The fact of the matter is that Ethiopia’s farmers had been planting too much seed.”

Farmers typically scatter 12 to 20 kg of seed per acre, but using just 1.5 to two kg, as well as planting in rows and using a particular seed variety, increased production by 50 to 70 percent, said Bomba, who was born in Ethiopia, studied in the United States and Britain, and spent 10 years with JPMorgan investment bank.

Only two farmers were initially willing to work with the agency, but adoption of the new practices has steadily increased. More than two million farmers adopted the techniques last year, although the rest of five million that were trained were still too wary to use them.

Rising production has driven down market prices of tef to the equivalent of $75 to $95 per 100 kg from $105 to $125. Higher yields also mean farmers can switch some of their land to other crops or even grow a second crop of pulses on the same tef land.

Bomba said tef exports, which are banned to avoid domestic shortages, could start on a small scale by the end of 2015 or 2016, although safeguards would be in place to protect local supplies.

Yields of wheat and corn have also improved. Wheat production has climbed almost eight percent a year since 2006 and reached 3.9 million tonnes in 2013-14, which met more than 85 percent of domestic needs. 

The transformation agency is also studying the nation’s soil to improve fertilizer use.

Promoting better practices has relied on a government network of 60,000 “extension workers”, who help with training. This reflects the strong hand of state in other areas of the economy.

The agency is also spreading ideas by mobile phone.

Just as Ethiopia’s industrial drive has drawn heavily on Asia’s experience, the transformation agency was created after studying how nations such as Malaysia and South Korea grew. 

Bomba led that study when he was working at the Bill & Melinda Gates Foundation, a philanthropic organization that still partly funds the agency.

He said roads and railways are the “shiny objects” that often capture the world’s attention, “but at the end of the day the backbone of this country remains the agricultural sector.”

Wednesday, February 4, 2015

Can Ethiopia’s Resource Wealth Contribute to its Growth and Transformation?

January 26, 2015




Women artisanal miner in Ethiopia´s Benishangul-Gumaz Región.

STORY HIGHLIGHTS
  • Ethiopia’s resource wealth can be a key driver of the country’s growth
  • A recent study of the mineral industry developed by the World Bank Group (WBG) and other development partners offers recommendations to help the country develop its unrealized geological potential
  • The WBG is supporting the government with technical assistance to help build a competitive, predictable, and responsible strategy, legislative and institutional framework for the Oil, Natural Gas and Mining industry
ADDIS ABABA, January 26, 2015 – Ethiopia has averaged a 10.7% economic growth rate over the last 10 years, more than double the annual average of countries in Sub-Saharan Africa, which was around 5.2%. However, despite having a huge potential to contribute to Ethiopia’s economy, the development of oil, gas, and mineral resources are not among the key drivers of the country’s growth. 
Although the country has geological potential for the discovery of new, sizeable oil, gas and mineral deposits, most of its extractive industry is still in its infancy stage. Currently, there is one large-scale gold mine in operation, while a growing number of large mining projects are under development and exploration for oil and natural gas is intensifying after significant discoveries in neighboring countries. Ethiopia also has an extensive and unique artisanal mining sector; the government estimates there are around 1 million miners, making it an important source of job creation, and an important source of foreign currency. 
Although the industry is in its infancy stage, the contribution to the country’s exports is already significant. In 2012, mining was responsible more than 19% of the total value of exports, and up to 10% of foreign exchange earnings. Gold makes close to 100% of mining exports and most of it, about 2/3, comes from artisanal mining, according to a recent World Bank Group (WBG) partner study, Strategic Assessment of the Ethiopian Mineral Sector.  
Open Quotes
In 2012, the Ethiopian mining sector accounted for 19% of the country’s exports revenues- mainly from artisanally mined gold- while in comparison, coffee, Ethiopia’s largest export commodity, generated 26% in export revenues. Close Quotes
World Bank Group Washington, DC, 2014

Strategic Assessment of the Ethiopian Mineral Sector
The report notes that resource wealth can potentially have a positive impact on the social and economic development of Ethiopia if the industry is developed and managed in a sustainable and transparent manner, following international good practices.
What can Ethiopia do to ensure that its resource wealth contributes to sustainable development? The report highlights the following recommendations:
  • Obtain good-quality geo-data and put in place an effective data management system: To to manage and plan for the industry, the government needs to know what is actually in the ground. Effective acquisition, maintenance and dissemination of geo-data can help to attract investment and can help governments to make informed decisions and negotiate more effectively. Currently, only 74% of Ethiopia is mapped at a low-quality scale.
  • Put in place an effective management system and a governance framework: This will ensure that the benefits are distributed as fair and widely as possible, and social and environmental risks are minimized:Ethiopia was admitted as a candidate country to the Global Extractive Industries Transparency Initiative (EITI) in  March 2014,one step towards that goal.
  • Diversification of Ethiopia’s economy and facilitation of economic linkages to avoid heavy dependency on the resource wealth: The linkages that are being created between the potash and agricultural industries in the Afar Region is just one example of potential economic partnerships; supporting the production of potash fertilizers in order to increase small holder farmer’s crop production.
  • Balance short-term and long-term development priorities, and reinvest the resource wealth into productive investments including high-quality health and education
Past experiences of other resource-rich countries provide a roadmap that can inform Ethiopia’s decision-making as the government start to put institutions, policies and laws in place to ensure that resource wealth contributes to sustainable development. 
Developing the untapped potential of the extractive industry is not without its challenges, which include the possibility of increased corruption and the need to manage the potentially significant social and environmental impacts. Recognizing this, the WBG, along with other development partners, have joined together to support Ethiopia’s efforts to develop the industry in a clear and viable way.
 “As highlighted in the study, if well managed and well supported, the Ethiopian mineral sector has the potential to make a difference in the economic development of Ethiopia and to contribute to the poverty reduction agenda,” said Christian Moller, WBG lead economist. “This will require a strong public sector. As the World Bank Group, we are committed to contribute to this process.”
In October 2014, the WBG and the Ministry of Mines jointly organized the 2014 Ethiopia Extractive Industries Forum, one of the major recent initiatives. It was organized with support from other key partners such as the UNDP, the Australian Government, Department of Foreign Affairs, Trade and Development (Canada), UK Department for International Development (DFID), and the African Minerals Development Center (AMDC). The event, the first of its kind, was held to help raise awareness about opportunities and challenges in the extractive industry, as well as to share good practices for its sustainable management. It included a broad-based representation of stakeholders with about 120 participants from industry, government, development partners, and civil society.
 The forum also provided the opportunity to discuss the findings of the “Strategic Assessment of the Ethiopian Mineral Sector” study, which was jointly published by the Ministry of Mines and other development partners. The report represents the first comprehensive assessment of the Ethiopian mining industry, examining the primary opportunities and challenges for growth and transformation in mining, while also providing an initial analysis of policy options for Ethiopian decision makers.  
“In today’s global village the Ethiopian government by itself cannot overcome the challenges facing the mining sector,” said His Excellency Ato Tolosa Shagi, Minister of the Ministry of Mines, in his opening speech during the forum. “Therefore, we would like to underpin our co-operation with development partners and best performing countries in the areas of building up the indigenous expertise with more emphasis in regulating the mineral and oil and gas resources to properly administer contracts as we are dealing with nonrenewable natural resources.” 
The WBG is providing technical assistance to the Ethiopian government to support them in translating the recommendations of the report to build a competitive, predictable, and responsible strategy, legislative and institutional framework for the Oil, Natural Gas and Mining industry. This will allow the Ethiopian government to conclude better deals for the extraction on their oil and mineral resources in a way that maximizes the benefits to the country, reducing the risk of costly or politically difficult remediation at later stages. It is supported by the Extractive Industries Technical Advisory Facility (EI-TAF), a demand driven multi-donor trust fund. The EI-TAF will be launched in the beginning of 2015 and will help to structure extractive industry development projects and related policies.