Economy

  • MIDROC Seeks Additional Year at Lege Dembi


     

    MIDROC Gold Mine Plc, one of the 21 subsidiaries of Midroc Ethiopia Technologies Group, has requested the Ministry of Mines, Petroleum & Natural Gas (MoMPNG) for an extension of a contract to continue extracting gold in Lege Dembi, Oromia Regional State.

    The Company has requested the extension before the 20-year concession expires in 2018, according to a senior manager at the Company.

    The Ministry is reviewing the request, confirmed Motuma Mekassa, minister of MoMPNG, to Fortune. Since two weeks ago, the case has been pending on the desk of Tewodros Gebregziabher, state minister of MoMPNG, responsible for mineral licensing and administration, according to a source close to the case.

    MIDROC Gold was established in the late 1990s by Sheik Mohammed Al-Amoudi and his wife Sofia Salah Al-Amoudi together contributing 98 percent of the share, and the government owning a two percent share through the then Ministry of Finance & Economic Development (MoFED).

    The Company took a 20-year concession with the license name ‘Midroc Lege Dembi Gold Mining’ from the government for 172 million dollars when privatized in 1997, and commenced production in August 1998.

    During the first ten years, MIDROC Gold extracted 34,000kg of gold from the site, earning close to half a billion dollars.

    The largest gold producer in the country, Lega Dembi deposit is located 500km southwest of Addis Abeba in Guji Zone Oromia Regional State.

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  • Ethio-Telecom to Restart Distributing Disappeared 10, 15 Birr Mobile Cards

     

     

    (DireTube News, Addis Ababa) — Ethio-Telecom, a state-giant and monopoly provider of all forms of telecommunications of the nation, said it will restart distributing the already disappeared 10 and 15 Birr pre-paid mobile cards.

    Distribution of the 10 and 15 Birr pre-paid mobile air times will soon be launched within three or four days, according to Ethio-Telecom.

    Identifying, engulfing-out and decreasing many market retailers in the large value-chain market is the primary rationale the state giant company has put forward for why the 10 and 15 Birr mobile cards have disappeared from the market.

    “There exists creating artificial inflation among the retailers through hoarding of those cards,” as Ethio-Telecom puts it.

    Not long ago, the Ethiopian Broadcasting Corporation (EBC) channel reported that five and ten Birr mobile credits have disappeared and that lower income users were feeling the brunt as they could not afford to buy 15 Birr in credit every time.

    Only a couple of days passed when, one after the other, shopkeepers informed that they are out of 15 Birr credits and we all have to buy 25 Birr mobile credit. This was not at all surprising given that more people than was the norm were now forced to buy the same minimum of mobile credit.

    In a bid to resolve that problem, Ethio-Telecom has announced that “140 million air time for each 10 and 15 Birr, which printed abroad, will be disbursed out to the market soon, even within 3 to 4 days”.

    Although the problem was pledged to be solved, critics says that the problem does expose a certain undeniable truth that Ethio Telecom has become too comfortable with its position of exclusivity.

    Ethio Telecom, previously known as the Ethiopian Telecommunications Corporation (ETC), is an integrated telecommunications services provider in Ethiopia, providing internet and telephone services.

    Ethio Telecom was managed, on a management contract arrangement from 2010 to 2013 June, by France Télécom, and was required to comply with Ethiopian Government orders.

    The government said it outsourced the management as ETC was not able to meet the demands of the fast-growing country. It also stated that telecommunications services would not be privatized, at least not shortly. It generates a revenue of over 300 million USD for the Ethiopian government and was dubbed a "cash cow" by Prime Minister Hailemariam Desalegn.

     

     

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  • Trump Says He Doesn't Want a 'Poor Person' to be in Charge of U.S. Economy

     

     

    Defending his appointment of a billionaire to promote the country’s economic growth, Donald Trump has said that he does not want poor people to hold financial roles in his administration.

    Speaking at a rally in Iowa, the President declared: “Somebody said why you appointed an affluent person to be in charge of the economy? No, it’s true. And Wilbur’s [commerce secretary Wilbur Ross], a wealthy person in charge of commerce. I said: ‘Because that’s the kind of thinking we want.’”

    Mr. Ross, an investor, has a net worth of about $2.5bn.
    The president explained that Mr. Ross and White House economic adviser Gary Cohn “had to give up a lot to take these jobs” and that Cohn in particular, a former president of investment bank Goldman Sachs, “went from massive pay days to peanuts”.
    Trump added: “And I love all people, rich or poor, but in those particular positions I just don’t want a poor person. Does that make sense?”
    “If you insist, I’ll do it. But I like it better this way, right?”
    Mr. Trump has frequently touted himself as a champion of the “forgotten men and women” across the country.
    During his inauguration speech in January, he said, “For too long, a small group in our nation's Capital has reaped the rewards of government while the people have borne the cost.”
    Mr. Trump proceeded to appoint millionaires and billionaires to fill cabinet positions, making his administration the wealthiest in US history.
    Paul Waldman, a senior writer with The American Prospect and a blogger for The Washington Post, wrote his opinion: “What's really behind Trump's 'poor person' comment” on CNN that:-

    He's certainly been true to his word on that, assembling what is probably the wealthiest group of advisers in history, full of billionaires and near-billionaires. But why exactly wouldn't Trump want a poor person advising him?

    When they're (Republicans) in charge -- however differently they may frame it for the base -- the wealthy will be hired, catered to, indulged and pampered, while the poor will be the target of vicious budget cuts and stern lectures about pulling on those bootstraps. It doesn't come from any notion of what makes for effective policies -- it's about values.

    Trump is just a little more willing to say it.

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  • Dangote May Quit Ethiopia over Mining Dispute


    Dangote Cement PLC, controlled by Africa’s richest man, Aliko Dangote, said it might shut its operations in Ethiopia if authorities in the central state of Oromia don’t reverse an order to cement makers to hand over control of some parts of their businesses to local young people.

    Oromia state’s East Shewa Zone administration wants the Nigerian company to outsource its pumice, sand and clay mines to youth groups or be responsible for “any problems” that may arise, according to a letter from the authority to Dangote that was seen by Bloomberg and verified with a representative of East Shewa’s administration.

    The regional government sees the transfer of jobs in pumice production as a way to ease youth unemployment and quell unrest, according to the document.

    Any mismanagement of mining infrastructure including buildings and excavators could “lead to total breakdown of our business,” Dangote Executive Director Edwin Devakumar said in an interview at the company’s headquarters in Lagos, Nigeria’s commercial hub, last week.

    The cement maker will write to the federal government this week to ask it to intervene and will consider shutting the plant in Mugher, about 90 kilometers (56 miles) north of Addis Ababa, as a “last option” if this fails, he said. The company listed Ethiopia as one of its three “key” markets, along with Nigeria and South Africa, in a presentation in May.

    But that statement doesn’t hold a drop of water for some region’s official.

    There’s “no intention to displace any investment,” so long as Dangote is “working by the laws and regulations in our region and country,” Tekele Uma, head of Oromia’s transport authority, said by phone. “If anyone’s complaining about Oromia, we’re ready to talk with them. Any investment can come. Any investment can go.”

    Motuma Mekassa, Ethiopia’s minister of mining, petroleum and natural gas, said on the phone he wasn’t aware of an attempt by Dangote to reach his office. An official at the federal ministry said Dangote should make an approach through “appropriate channels,” as opposed to through the media, asking for his name to be withheld, citing the sensitivity of the issue.

    The Ethiopian government is searching for ways to reduce youth unemployment after violent protests by Oromo communities over alleged land dispossession, political marginalization and repression led the government to declare a state of emergency last year.

    Dangote Cement was among several businesses attacked during the unrest. The protests triggered a 20 percent slump in foreign investment to $1.2 billion in the six months through December compared with the same period a year earlier, according to the government.

    Foreign Investment in Ethiopia Slumps after Business Attacks

    The order to outsource mining is “a violation of our rights because the government has given us a mining license,’’ said Devakumar, who was Dangote Cement’s chief executive officer until 2015. “If I don’t have limestone and additives my cement plant is useless.”

    Mr. Lemma Megersa, President of the Oromia region earlier announced that it is committed to taking firm action to tackle the challenges domestic investors encounter at various levels.

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  • Massive Reshuffle Approaches DBE Again

    Six weeks after removing its four long-serving vice presidents, the Development Bank of Ethiopia (DBE) has introduced another major reform at the levels of directorates and branches.

    Two weeks ago, in a letter announced on a notice board of the Bank, all employees, including the current directors and branch managers were told to apply to head directorates and departments as a first step in the implementation of the restructuring. Upon this, any directors or department level managers who failed to pass the screening will be removed from their post, according to the Management of the Bank.

    “Upon approval of the Board of Directors, we have called for applications from all employees who would like to compete for the post of directorship and branch manager and fulfill all the criteria,” said Hailu Misganaw, acting communications director of the Bank.

    Educational background, performance, and experiences were the primary criteria to apply for the post, according to the new structure of the Bank.

    Four and six years of experience is mandatory for masters and bachelor degree holders, respectively.

    “Anyone deemed to fulfill the criteria can be a director or a branch manager,” Hailu said.

    A committee, which is tasked to screen the applicants informed a week ago. The committee is composed of human resources departments and executives of the Bank including the vice presidents (VPs) and the President.

    The restructuring is implemented based on a study done by the new management of the Bank, which is led by Getahun Nana, the president of the Bank. Getahun came to the scene after the removal of the former President of the Bank, Essayas Bahire, who gave up his post after the order of the Prime Minister, Hailemariam Desalegn.

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  • Youth unemployment, inflation & poverty

     

     

     

    (DireTube Article, Addis Ababa) — Among widespread problems of our nation, today are youth unemployment on the one hand, and the recurrent inflation on the other. Especially, the latter would be worse if the former could not address well. Job creation is a pivotal homework to be discharged, if so, it leads to the creation of wealth and fair distribution of country’s resources, more importantly to youths, the turbine of economic growth, according to government’s policy.

    These days, especially in cities like Addis Ababa, you see an overwhelming amount of youths unemployed, seeing for vacant positions on billboards, newspapers in areas like Arat Kilo, Piassa, and Legehar, just to mention a few.

    One of the most divisive issues for politicians vying for office across the world is the question of jobs. The point of creating well-paying jobs has been a primary concern for those in economic management as well. With fast and sustainable economic growth for the past dozens of years mainly in the agricultural sector, poverty and unemployment are increasingly becoming an urban problem in Ethiopia. And with that, a well-functioning labor market in urban areas is becoming a necessity to the second most populous nation in Africa. Accounting for 18 percent of the overall urban population, Addis Ababa is at the forefront of most of the challenges in urban Ethiopia. Recent studies, however, are founding out that the city’s labor market is highly inefficient to accommodate the growing work force.

    Ethiopia at large is seeing a soaring rise in the number of its educated youth that it had not witnessed 20 years ago. 

    Ethiopian universities are over 30 with an annual alumnae’s of over hundreds of thousands, every year; despite the absence of vast fresh vacancies to host those new active job lookers. Where do all they have gone so far, then? That should be a major question the government is expected to address it well for the reason that high youth unemployment rate has both economic and political implications in a young-dominated country like us. It could be the source of a recurrent nightmare for anyone who chooses to hold the mantra of leadership.

    The country, predominantly agricultural country with over 85 percent of people are residing, though it is more at a subsistence level with the increase in family size and pressure from ever enlarging population, the family land size is shrinking, unable to support millions of youth desperate to find a means of livelihood. Neither is the national aspiration for the structural transformation of the economy to industrial-led has reached its momentum. Despite encouraging signs of growth in the manufacturing sector, whatever is there on the ground is too insignificant to absorb the workforce in the youth population.

    With an aim that seems to curb last year’s unrest in Oromia, Lemma Megersa’s administration has given a land for youngsters in the region, but without adding any value to it. How could youths manage to exploit that as their source of income? What should be the role of a region in particular and the government? No clear cut leeway has installed so far. Amhara and Tigray regions too did likewise.
    Given the current unemployment in the country, youths are forced to be dependent on their families and guardians despite the ever-skyrocketing cost of living.

    High and persistent unemployment has presented a major challenge for the welfare state from two directions, wrote Peter Saunders in his “Direct and Indirect Effects of Unemployment on Poverty and Equality”.

    First, he argued that it has eroded the funding base and second, it has increased the demands on welfare programs because of the consequences for poverty and inequality resulting from high unemployment.

    He explored the latter effects of using a range of national and international evidence. He argued that the effects, while basically presumed to exist, are complicated by how poverty and inequality are measured (by the economic status of families) and the growth in dual-earner families that has weakened the link between the economic situation of families and individual family members.
    Despite this, there is strong evidence that unemployment increases the risk of poverty and contributes to inequality, and that it also gives rise to a series of debilitating social effects on unemployed people themselves, their families and the communities in which they live. This suggests a need for welfare reform give emphasis to employment generation, but this should not be the only outcome by which the welfare system should be evaluated.

    For instance, the World Bank’s report on Ethiopia stipulated that Addis Ababa’s labor market is suffering from wage inflexibility and lacking the ability to absorb the excess supply of labor in the market.

    According to the report, wages in low-skill requiring jobs are already too small to decline any further to clear the excess labor force supply and thus resulting in high level of unemployment. That could be observed among the disproportionate low-skill workers in the city, the report claims. And what is driving this is the extremely low productivity of low-skill workers in Ethiopia.

    The provision of an adequate and secure safety net that does not unduly distort incentive structures is also an important welfare objective.

    The government has adopted various initiatives in the past two decades to address youth unemployment, which has been a concern for any administration. Over ten years ago, the federal government adopted a strategy aimed at providing financial supports to micro and small enterprises, whose officials reported they had created over 10.5 million jobs in the first Growth and Transformation Plan period.

    Little should this be surprising if this fact consumes the political elite with constant worries on the absence of schemes that keep the youth busy, if not engaged in a meaningful way. An army of unemployed youth is nothing but a political time bomb.

    Meanwhile, the perspective of the ever-growing youth population focuses on the life quality of the individual and other opportunity structures that influence the development as well as life chance of individuals, which should be the basis of urban development planning and policy choices. The problems and challenges of youth bulge cities and towns require a holistic view that crosses the border of sectors youth bulge effects cover different life domains (health, education, employment, housing, and transportation). Youth population life moves between the various sectors and spheres which require an integrated approach.

    The fundamental of urban area study planning is difficult to go away of. Sectorization and specialization are old related to the society’s division of labor and need for accountability. The drawback is that a too far driven sectoral approach impedes actors to cooperate on a holistic solution to youth bulge effects.

    Sustainability of youth bulge cities and towns requires holistic view in addition to the traditional sectoral approaches to urban development.

    Comprehensive view explores ways of developing the sound governance structure which enhances co-operation between the key stakeholders from the public and private sectors youth and professionals in the building sustain bale youth bulge urban centers the question is do we have an attempt to break the sectoral approach and initiate long-term integrated vision that crosses the border of sectors?

    An important policy strategy question concerning youth bulge cities and towns is on measures aimed at controlling and stemming rural-urban migration, which is the primary source of youth bulge explosion in urban centers. The pattern, trend, and characteristics of migration-led urbanization in Ethiopia calls for program & strategy that are focused on rural industrialization. To absorb the surplus rural labor into a wage based productive economy and to avoid uneven and unbalanced growth of towns, there’s a need for rural industrialization in Ethiopia.

    Rural industrialization is concerned with the spreads and growth of small-scale and cottage industries in the countryside, according to Chris Brammal (PhD), Professor of Economics at University of London.

    Chris, in his study entitled “The Industrialization of Rural China” revealed that the experiences of high population density countries such as China and India show that small-scale industrial sector has vast potential concerning creating employment & output. Small-scale manufacturing industries have the capacity to absorb surplus labor and provide productive employment owing to their growth character.

    There are two approaches to rural industrialization. The first, rural-industrialization is the spread of manufacturing jobs and enterprise management from the main cities to rural towns, which is called “Exogenous Model of Rural Industrialization”.

    The second approach emphasizes settling-up of industries based on agricultural local resources and skills since economic capacities of a given country may not ensure the expansion of urban industries to rural areas. This model, which emphasizes the unique rural character, is called “Endogenous model of rural industrialization.”

    To me, it doesn’t matter whether industries spread from urban to rural areas or be based on countryside local resources catering local demands. What is important is the creation of productive employment for the surplus rural labor in the nearby towns as well as supply of consumption goods to the rural households.

    The conditions of youth bulge in the country require industries as decentralization (relocation of manufacturing industries to medium and small towns) to bring about balance growth and absorb the rural surplus labor in its proximate location (to curb long-distance migration).

    There are two policy strategies as well as tools that matter most for sustainable development of youth bulge issue in cities and towns; first, thinking of holistic view that crosses the border of urban sectors, that needs to be a plan that enhances co-operation between stakeholders including the youth.

    Second, there need to be a program for the promotion of rural town based small-scale manufacturing industries, which are not only more labor-intensive but also more productive per unit of scare capital than their large-scale counterparts in capital cities.

     

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