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  • Dangote plans portfolio expansion in Ethiopia beyond cement

    The richest man in Africa, Aliko Dangote, is contemplating to invest in the Sugar industry in Ethiopia.

    The Ethiopian government has invited the Nigerian business tycoon to invest in the sugar manufacturing sector. Dangote Industries has built the biggest cement factory in East Africa in Ethiopia that started production in June 2015.

    Deep Kamara, managing director Dangote Industries Ethiopia, told The Reporter that in a recent discussion between Prime Minister Hailemaraim Dessalegn and Aliko Dangote investment in the sugar sector was a point of discussion. “While they were discussing the yield of sugar and the capacity Ethiopia is building Mr. Dangote took up a position that he would like to see the opportunity to invest in the sugar capabilities in Ethiopia. It is still in the conceptual stage I should say,” Kamara said. 

    The Ethiopian government through the state-owned the Ethiopian Sugar Corporation is making hefty investments on sugar industries development. Aiming to become one of the top ten sugar producing countries in the world by 2023, ESC is building ten sugar factories in different parts of the country. The ambitious plan aims at boosting annual production capacity from the existing 300,000 metric tons to a staggering four million.

    However, the government is facing budget constraint to finance the completion of the ongoing construction of the sugar factories. In addition to looking for loans, the government is trying to attract foreign companies to partner with ESC.

    Kamara said Dangote expressed his interest to invest in the Sugar sector. “Within the group we have capability for sugar manufacturing.” However, he said it is yet to be decided whether to buy stake in the existing sugar factories or set up an independent sugar manufacturing plant. “Both options are open for discussion but as I said the discussion is at an early stage and the details have to be worked out,” Kamara said.

    Kamara said that Dangote is very optimistic about Ethiopia and wants to continue investing in Ethiopia.  

    Dangote has set up a cement factory in Ethiopia at a cost of 600 million dollars. The factory, which has an annual production capacity of 2.5 million tons of cement, began running in June 2015. The factory lies on 134 hectares plot of land in West Shoa Zone, Adaberga Wereda, near Muger town, 85 km west of Addis Ababa and employs 1,500 workers.

    “Dangote Cement is well established in Ethiopia and it is doing very well. We are one of the market leaders in the Ethiopian cement market. We have customer acceptance based on product quality and service.  We could have done better unfortunately due to some circumstances the trend has not really gone to where we have expected it to be. Going forward things are improving and we will be doing much better,” Kamara said.

    Dangote Cement is currently building a third silo and PP Bag manufacturing plant. The PP Bag manufacturing plant, which is being constructed at a cost of 19 million dollars, will have an annual production capacity of 120 million cement bags. 

    “We are building a PP Bag factory almost double the capacity of our requirement. Not only for us but we would like to export and service the local market with our PP Bag capability,” Kamara said.

    It will take six to eight months to complete the construction of the third silo. The factory also hopes to finalize the PP Bag manufacturing plant by July this year.

    Dangote Cement has a plan to build a second cement manufacturing plant. “It is not immediately on the chart because we have not yet reached our full capacity. We are looking at some technological improvements which would help us enhance our capability by 15-20 percent to optimize our cost. Once that is done we will look at the second line.”

    The road to investment in Ethiopia has not been a bed of roses. There are obstacles hindering the progress of Dangote’s investment in Ethiopia.  Some equipment and machineries of Dangote Cement have been vandalized during the recent political unrest.  “We have some challenges but we are on the right track. We hope to achieve the planned capacity and export to other countries.”

    Kamara said that fluctuation in electric power supply and shortage of foreign currency are some of the challenges facing his company. Particularly, unavailability of foreign currency has become a critical challenge.  

    According to Kamara, his company is not able to procure spare parts. “Our plant is not new anymore. It has been a year and a half since it started running and it now needs parts for regular maintenance. It has been close to eight month since we requested forex.”

    Spare parts for cement industry are not manufactured in Ethiopia. And it is not readily available on the shelves in the international market. Orders have to be placed for production. It takes three to six months to get delivered.

    “This has affected our productivity to some extent. We are in the critical zone. That is a major constraint we have at the moment and we are expecting help from the government,” Kamara said.

    According to him, his company needs 10-15 million dollars for the procurement of spare parts to service the cement manufacturing plant.


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  • Bunna Bank to Get New CEO

    Bunna Bank S.C is set to endorse Negusu G.Egziabher as its new CEO after the board of directors selected him from three potential candidates. The Bank announced Negusu’s appointment on Tuesday, February 7, 2017. Negusu, the former president of Lion International Bank S.C, was selected out of three candidates who applied for the position. The other candidates were senior bankers from Awash International Bank and Nib Bank.

    “All we have left to do is negotiate benefits with the new CEO,” Tibebu Eshetu (Eng.), chairperson of Bunna’s Board told Fortune. “Then the selection will be endorsed by the board and sent to the National Bank of Ethiopia.”

    Negusu will be Bunna’s third CEO, following Negede Abebe and Eshetu Fanatye, who were the founding and second CEOs of the Bank respectively.

    Sources close to the selection process told Fortune that Negusu’s appointment was not unanimously decided.

    CEOs in the banking industry need to fulfill the criteria set by the National Bank, which directs that all people nominated to be CEOs should have at least eight years of banking experience, with half that time spent in a managerial position. Negusu has close to two decades of experience in the banking industry.

    He spent 15 years at the Commercial Bank of Ethiopia (CBE) in different positions, including vice president. He has a Bachelor’s Degree in economics from Addis Abeba University (AAU) and a Master’s Degree in Business Administration from Greenwich University, England. His latest post was as president of Lion Bank, where he worked for three years. He was then replaced by Getachew Solomon, Lion’s current president, in 2014.

    During Nigusu’s tenure, Lion saw its profits shoot up from 75.4 million Br to 127 million Br. He left the Bank for personal reasons. Bunna’s former CEO Eshetu, resigned from his position as of October 28, 2016, citing health concerns. His assumption of the position at Bunna came following the resignation of the former CEO, Eshetu. However, some sources who work at the Bank connected his departure to his contentious relationship with the board

    Prior to his resignation Eshetu was on sick leave for almost five months following a car accident that put him in hospital.

    At the time, Tadesse Chinkel took over as acting CEO. Tadesse has worked for Bunna for the past eight years and has almost four decades of experience in the industry. He has served as interim CEO three times: during the departure of Bunna’s first CEO, while Eshetu was on sick leave after the car accident, and after Eshetu’s departure.

    “I don’t know why the board took so much time choosing someone,” said a senior manager at Bunna. “It would be better for Bunna to look at recruiting from within instead of looking outwards.”

    “There are people who are capable of filling the post,” the manager added.

    Established in 2009, Bunna currently has over 107 branches. Bunna controls around four percent of the total income of all the private banks. The Bank currently has around 11,000 shareholders and a paid up capital of 760 million Br.As of June, 2016 the Bank reported a profit after tax of 187 million Br, a 40pc growth from the preceding year.

    Source: addisfortune

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  • EthiopianAirlines bags record high profit of 6 bln birr

    Africa’s largest and fastest growing airline, Ethiopian Airlines, has made a record high net profit of six billion birr (273 million dollars) in the 2015-2016 fiscal year ending June 2016.

    Ethiopian Airlines Group CEO Tewolde Gebremariam told The Reporter in an exclusive interview that the airline registered record high operating revenue of 55 billion birr and a net profit of six billion birr. The revenue increased by 10.3 percent while net profit has shown a whopping increase of 70 percent.  In the 2014-2015 fiscal year, the airline made 49.4 billion birr revenue and a net profit of 3.5 billion birr.

    In the 2015-2016 fiscal year Ethiopian transported 7.6 million passengers and 270,000 tons of cargo. “It was a very good year for Ethiopian,” Tewolde said.

    The CEO said that the 2015-2016 was a challenging year for the African airline industry. “Because of the decline in oil price, demand for air travel has decreased. Our revenue from oil exporting countries was less,” he said.  The economies of oil producing countries like Nigeria, Angola, Cameroon, Gabon, Equatorial Guinea, Chad, Congo-Brazzaville, Sudan and Egypt were seriously affected by the sudden decline of oil price in the global market.

    Tewolde said the more difficult challenge was the shortage of foreign currency created in those countries particularly in Nigeria, Angola, Sudan and Egypt as a result of the oil price decline.   

    “Right now we have more than 220 million dollars in local currencies in those countries. Mainly, in Nigeria, Angola, and Sudan and we have a small amount in Egypt. We have in total 220 million dollars in local currency trapped there for more than a year. You can imagine what that means on our liquidity, cash flow because more than 70 percent of our expanses are in US dollars. So that has created a very strong challenge for the airline,” Tewolde said. 

    Ethiopian is not the only airline which is unable to remit its sales from these countries. Several other African and foreign carriers are unable to repatriate their funds.  According to the International Air Transport Association (IATA), 18 African governments have a total of 1.4 billion US dollars blocked funds. Nigeria has 339 million, Egypt 310 million, Angola 190 million, Sudan 250 million and Algeria 125 million dollars in blocked funds. The new director general and CEO of IATA Alexander de Juniac told The Reporter that IATA is pushing governments to release blocked funds due to the shortage of foreign currency caused by commodity market crash.  “We are pushing governments to organize the repatriation of airlines blocked funds. We are trying to be able to negotiate plans to repatriate funds,” Juniac told The Reporter.

    Junica said that IATA, in collaboration with member airlines, was able to reduce the amount of blocked funds in Nigeria and Egypt. He said IATA is closely working with the governments of Nigeria, Egypt, Angola and Sudan, the four countries which hold the majority of the blocked funds.  The African Airlines Association (AFRAA) is also lobbying with the African governments to release the airlines blocked funds.     

    Tewolde told The Reporter that the recent political unrest in Ethiopia did not that a significant effect on the airline. “We are talking about 2016 and the fiscal year ended in June 2016 and by then we have not felt the impact of the unrest.”

    Tewolde said that since the airline’s 70 percent traffic is transit the impact of the political unrest was minimal. “Of course it had an impact but not that big. Because as you can see our revenue grew, profit grew, because 70-75 percent of our traffic is transit. And I think the effect is on this year than on last year. This year we have seen slight reduction but it is not that big. We have noted a small reduction on our traffic to Ethiopia. But overall I would not say it has affected us very much.”

    The competition coming from non-African carriers particularly that of Turkish and mega Gulf carriers is becoming stronger than ever before. “We have never seen such a fierce competition. We are at a price war. It is very frustrating.”    

    According to Tewolde, despite all the challenges, Ethiopian managed to register a remarkable financial performance in the reported period. He attributed the success to the dedication, hard work and commitment of the airline’s employees and strong strategic and operational leadership by the management team and the board of directors.

    Last December IATA disclosed that African carriers made a loss of 900 million dollars in 2015 and close to 800 million dollars loss in 2016. According to IATA, 2017 is going to be another year of loss for African airlines. IATA‘s latest market forecast indicates that African airlines would lose 800 million US dollars in 2017.

    Zemedeneh Negatu, a leading African aviation transaction adviser, lauded Ethiopian’s financial performance.  “This is a remarkable performance,” Zemedeneh said.

    Zemedeneh, who advised airlines across Africa including RwandAir, Ethiopian Airlines, Virgin Atlantic’s Nigerian Subsidiary, Virgin Nigeria, said that the overall African airline industry is in a bad shape. “The Government of Nigeria this week took over Arik Air (a private airline in Nigeria) because of mounting debt.  South African Airways (SAA) has been making loss for many years now. They have changed CEO and board chairman several times in the past five years. Kenya Airways (KQ) has not made money in the last three years. SAA and KQ would have been out of business by now has it not been for the millions of dollars subside they receive from their governments,” he said.

    “By contrast Ethiopian Airlines has grown rapidly with a very strong balance sheet. They are acquiring state-of-the-art aircraft like Dreamliners and Airbus A350, the first in Africa. They have a very young fleet of 82 aircraft with an average age of five years operating to more than 90 international destinations. It continues to be a pioneer,” he said.

    Zemedeneh said Ethiopian is a well managed airline. “It has a capable and focused management with a clear vision, more importantly capable of executing its vision.”

    He went on to say that Ethiopian has a solid management and dedicated staff that can deliver. He also attributed the success of the airline to the management independence the government granted. “The government does not intervene in the day-to-day operations of the airline. Though the airline is wholly owned by the state, it is purely run commercially. It is managed as an independent business entity.”

    He also said that Ethiopian is benefiting from its strong operation to Asia, which was launched many years ago a head of many other international airlines. He mentioned that Ethiopian is one of the only two airlines from Sub-Saharan Africa allowed by the United States Federal Aviation Administration (FAA) to fly to the United States. 

    Source: The Ethiopian Reporter

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  • Definition of Entrepreneur

    Definitions by different scholars, sources and their views is described below for your reference.

    Entrepreneur is one who assumes the risk and management of business. Webster dictionary

    Entrepreneur is a person bearing risks of profits (loss) in fixed price contract with the government. The 17th century concept.

    Entrepreneur is a person bearing risks is different from one supplying capital. Richard Cantillon, 1725.

    Entrepreneur is a person bearing risks, planning, supervising, organizing and owning. Beaudeau, 1797.

    Entrepreneur is separated profits of an entrepreneur from profits of capital. Jean Baptiste Say, 1803.

    Entrepreneur is distinguished between those who supplied funds and received interest and those who received profit from managerial capabilities. Francis Walker, 1876.

    Entrepreneur is an innovator and develops untried technology. Joseph Schumpeter, 1934.

    Entrepreneur is an economic man who tries to maximize his profits by innovations. Haggen, 1958.

    Entrepreneur is an energetic moderate risk taker. David McClelland, 1961.

    Entrepreneur maximizes opportunities through systematic innovations. Peter Drucker, 1964.

    Entrepreneur takes initiative, organizes some socio-economic mechanisms, and accepts risk of failure. Albert Shapero, 1775.

    Entrepreneur seen differently by economists, psychologist, business person and politicians. Karl Vesper, 1980.

    Intrapreneur is an entrepreneur with an already established organization. Gifford Pinchot, 1983.

    Entrepreneur is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks and receiving the results- rewards of monetary and personal satisfaction. Robert Hisrich, 1985.

    Entrepreneur is a person starting a new company who takes on the risks associated with starting the enterprise, which may require venture capital to cover start-up costs. Indigo Dictionary of Business, 2002.

    Entrepreneur is an individual who undertakes (from the French entreprendre to undertake) to supply a good or service to the market for profit. Entrepreneurs will usually invest their own capital in a business and take on the risks associated with the investment. The view of capitalist is that the initiative of entrepreneurs creates a society’s wealth and that governments should therefore establish conditions in which their activities are encouraged. Oxford Dictionary of Business, 2002.


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