Monday, November 25, 2013


South Africa National Treasury: 10 September 2013

The Republic of South Africa has priced a US$2 billion 12-year global bond in the
international capital markets. The bond was priced at a coupon (interest) rate of 5.875 per
cent, 315 basis points above the 10- year US Treasury’s benchmark bond.

 The transaction attracted bids to the value of US$7.4 billion, more than 3.5 times
oversubscribed. The demand was mainly from investors out of Europe and the United
States. This deal is printed against a difficult global backdrop characterised by rising yields
and widening spreads.

Thursday, November 21, 2013

Investment Opportunities in Ethiopia

Privatisation Programme
The Ethiopian Government launched a programme for the privatisation of state owned enterprises in early 1995. Accordingly, the Ethiopian Privatization Agency (EPA) was established to implement the privatisation programme in the same year. The Government has laid the ground to privatise most of the state owned enterprises to the private sector. Accordingly, EPA has received a stock of 113 state owned enterprises from the government for privatisation in the years ahead. As indicated in EPA's work schedule, out of these enterprises, a total of 43 state owned enterprises are in the pipeline for privatisation in the near future. Most of these enterprises fall under manufacturing, construction, agriculture and agro-industry, hotels, transport, trade, and mining sectors. There is a strong commitment from the Government side to fully privatise state enterprises in the coming in few years. Detailed information on the process of privatisation can be obtained from the Ethiopian Privatization Agency. 
Agriculture is the main stay of Ethiopia's economy providing employment to 85 per cent of the population. The sector contributes about 45 per cent of the GDP and 62 per cent of total exports with coffee alone accounting 39. 4 per cent of total exports in 2001/2002. Furthermore, agriculture plays a crucial role in providing raw material inputs for the local industry. Endowed with wide ranging agro-ecological zones and diversified resources, Ethiopia grows all types of cereals, fiber crops, oil seeds, coffee, tea, flowers, fruits and vegetables. The potentially irrigable land is estimated at 10 million hectares. Ethiopia has the largest livestock population in Africa. Fishery and forestry resources are also significant. Considerable opportunities exist for new private investment in the production and processing of the above agricultural crops and resources. The following areas in particular, have been identified to offer plenty of opportunities to private investors. 
Food Crops
The food crops grown include teff, wheat, maize, beans, peas, lentils, soyabeans, chickpeas etc. In 1992/2000, Ethiopia produced 11.4 million tons of these food crops on about 8.9 million hectares of land. This is far short of the country's demand for these crops. Great opportunities, therefore, exist for commercial production and processing of these food crops. Some pulses can also be produced or processed for the export market. Oil crops such as rapeseed, linseed, groundnuts, sunflower, ginger seed and cottonseed serve as raw material inputs for the edible oil industry. Some oilseeds, including sesame, are important export crops. Favorable agro- climatic conditions also exist in the south-western parts of the country for introducing coconut for the production and processing of palm oil and ghee. Besides, Ethiopia has a huge potential for producing and processing of maize. It is widely grown in various agro-ecological zones. The total annual average production is 250 thousand metric tones in an area of about 1.4 million hectares. As part of the government's initiative to efficiently tap the available potential, detailed project profiles have already been prepared for the processing of coffee and corn. 
Beverage Crops
Coffee is Ethiopia's gift to the world. The country is Africa's leading producer of Coffee Arabica. Coffee remains the single most important cash crop. The volume of coffee export was just over 110 thousand tons in 2001/2002. The potential for private production and processing of coffee is significant. Tea is also another potential for production, processing and export. Ethiopia's tea is of an excellent quality. The total tea export for the year 2001/02 was 153 tons. The favourable agro-climatic conditions in the country offer excellent opportunities for production and processing of tea for both export and domestic consumption.
Cotton provides significant opportunities for export. A portion of existing textile industry demand of lint cotton is met from domestic production, the remaining being met through imports. In addition, there are good prospects for exporting lint. Opportunities for production and processing of cotton in Ethiopia are significant. 
Ethiopia's diversified agro-climatic conditions makes it suitable for the production of a broad range of fruits, vegetables and flowers, including citrus, banana, mango, papaya, avocado, guava, grapes, pineapple, passion fruit, apples, potatoes, cabbages cauliflower, okra, egg plant, tomato, celery, cucumber, pepper, onion, asparagus, water melon, sweet melon, carrots, green beans and cut flowers. Ethiopia is believed to be center of diversity and center of origin for various flowering plants. Cut flower and vegetable production are fast growing export businesses; in 2001/02-production year over 29,000 tons of fruits and vegetables and 10 tons of flowers were exported. The agro-processing of fruits and vegetables can be vertically integrated with production. There are already some integrated agro-industrial processing plants run by a state enterprise. The horticulture sub-sector in general holds great potential for private investment.  
Ethiopia is one of the top ranking countries in Africa and among the first ten in the world in terms of livestock resource. The livestock resources of the country include 35 million cattle, 11.4 million sheep and 9.6 million goats. Traditional methods of animal husbandry render current output per unit of domestic breed of livestock too low. Therefore, investment opportunities are potentially attractive for modern commercial livestock breeding, production and processing of meat, milk and eggs. Investment opportunities of significance potential are also available in ostrich, civet cat and crocodile farming. 
Opportunities exist for fresh water fish production and processing using artificial ponds. In addition, the country's fresh water bodies have an estimated annual fish production capacity of 30,000-40,000 tons, of which less than ten per cent is presently being exploited.  
Forestry and Apiculture
An estimated 2.5 million hectares of natural forest presently remains in 58 designated National Forest Priority Areas (NFPA). Of these, 13 are managed under integrated forest management systems, with about 80,000 hectares of industrial forest having been established for limited sustainable exploitation. Investors are welcome to invest in integrated commercial production of structural timber, pulp-wood, match wood or even fuel wood. Production of rubber and natural gum also offers exciting opportunities for private investment. With some 3.3 million beehives, Ethiopia is the leading honey and bees wax producing and exporting nation in Africa. This offers excellent prospects for private investment in apiculture. 
Agricultural Services
Investment in the provision of agricultural support services such as pest and disease control, technical consultancy, agricultural machinery, cold storage, transport and marketing services offer considerable scope. 
Manufacturing is now at an early stage of development, and currently accounts for about 7 per cent of GDP and 5.3% of employment. It covers about 145 state owned and 643 private manufacturing industries of all sizes. These industries are mainly engaged in the production of food products and beverages, tobacco products, textiles, wearing apparel, tanning and dressing of leather, footwear, luggage and handbags, manufacturing of wood and its products, manufacturing of rubber and plastic products, manufacturing of chemicals and chemical products, manufacturing of other non-metallic mineral products, manufacturing of basic iron and steel, manufacturing of fabricated metal products, assembling of motor vehicles, trailers and semi trailers . As part of the government effort to re invigorates and revitalize the manufacturing sector, a new Industrialization Development Strategy has recently been adopted. The Strategy clearly identifies the priority areas of the manufacturing sub-sectors and put in place strategies that insure the development of vibrant industries in the country. Major manufacturing opportunities offering attractive potential benefits to prospective investors exist in the textile and garment, food and beverage, leather and electronic, building materials and non-metallic mineral and metallic industrial sub-sectors. These investment opportunities include: 
  • Food and Beverages: processing and preserving of meat products; integrated production, processing and preserving of fish and fish products; processing and preserving of fruits and vegetables; integrated production and processing of dairy products; manufacture of sugar; brewery, winery, soft drinks, processing and bottling of mineral water, etc.
  • Tannery, Leather Goods and Articles: tanning up to finishing; manufacture of luggage items, handbags, saddlery and harness items, foot-wear, garment and integrated tanning and leather goods.
  • Textile: spinning, weaving and finishing of textile fabrics and production of garments.
  • Glass and Ceramics: tableware and sanitary ware, sheet glass and manufacturing of containers.
  • Chemicals and Chemical Products: manufacture of basic chemicals based on local raw materials, including PVC granules from ethyl alcohol, formal-dehyde from methanol, manufacture of caustic soda and chlorine-based chemicals, carbon black; activated carbon; precipitated calcium carbonate and ball-point ink.
  • Drugs and Pharmaceuticals: manufacturing of pharmaceutical, medicinal, chemical and botanical products in the form of tablets, capsules, syrups and injectables.
  • Paper and Paper Products: pulp from indigenous raw materials, paper and paper products.
  • Building Materials: manufacture of cement, lime, gypsum, marble, granite, limestone, ceramics, roofing tiles, corrugated sheets, tubes, pipes and fittings.
  • Electrical and Electronic products: manufacture of office, accounting and computing machinery; manufacture of electric motors, generators, transformers, capacitors, resistors, switch gears , electrical fittings and integrated circuit boards; manufacture of radio, television, VCRs, printers, floppy disc drives, communication and other equipment and apparatus for the domestic and export market.
  • Metallurgy: manufacture of basic iron and steel, operation of blast furnaces, steel converters, rolling and finishing mills. Recycling of metal waste and scrap. Manufacture of basic precious and non-ferrous metal; mechanical working, heat treatment, pleating of ferrous and non-ferrous metals.
  • Structural Products: manufacture of structural metal products, reservoirs and steam generators.
  • Machinery and Equipment: assembly and manufacture of agricultural machinery and equipment, industrial, transport and mining machinery and parts, construction machinery, machine tools and accessories, miscellaneous light engineering products, components and parts.
Ethiopia offers excellent opportunities for mineral prospecting and development. According to the Ministry of Mines and Energy, "Ethiopia's green stone belts offer one of the finest areas for gold mineralization any where in the world," and already more than 500 metric tons of gold deposits have been identified by Government exploration efforts. Additional gold reserves are expected to be identified in at least seven regions of the country. 
In addition to gold, Ethiopia is blessed with good deposits of tantalum, platinum, nickel, potash and soda ash. Included in the construction and industrial minerals are marble, granite, limestone, clay, gypsum, gemstone, iron ore, coal, copper, silica, diatomite, bentonite, etc. With regard to fossil energy resources, there are significant opportunities for oil and natural gas in the four major sedimentary basins, namely the Ogaden, the Gambella, the Blue Nile and the Southern Rift Valley. Details of the mineral resources have been published by the Ministry of Mines in two volume prospectus.
Tourists and writers who have been to Ethiopia wonder why Ethiopia's tourism potential is still so little known. According to December 12,2002 edition of Our World, "Those who have discovered Ethiopia would probably like to keep the secret to themselves." In any case, the message is starting to filter through. Tourism in Ethiopia is growing slowly but surely. 
The country has a lot to offer to tourists. Visitors will find landscapes comparable to its neighbouring countries, Kenya or Tanzania, and awe-inspiring historical sites and monuments similar to its other neighbour, Egypt. 
The highlands of Ethiopia have an attractive landscape, scenery and wildlife. In the African Rift Valley system, a wide variety of wildlife and numerous bird species, both endemic and common, are found and a substantial volume of traffic is directed to this area. The magnificent Tis Issat Falls on the Blue Nile (Abay) river the endemic wildlife in Semien Mountains, the Sof Omar Cave in the south east are some of the interesting sites. The rock-hewn churches at Lalibela, the ancient buildings of Yeha and the obelisks at Axum, the medieval palaces at Gondar and the monasteries of Lake Tana, Debre Damo aand Debre Libanos are the main tourist attractions. 
Given its unique cultural heritage, magnificent scenery, pleasant climate, rich flora and fauna, important archaeological sites, friendly and hospitable people and the recent growth in the inflow of tourists, Ethiopia's potential puts it among the leading tourist destinations in Africa. Tourism infrastructure, which is still inadequate, should be developed in order to cope with the growing traffic. There are, therefore, great opportunities for private investment in hotels, lodges and international restaurants.



14 Novermber 2013: National Treasury

The Primary Dealers in fixed rate government bonds of the Republic of South Africa are
required to constantly improve liquidity in the secondary market by quoting a two-way
price on the bonds that have an outstanding amount of R10 billion and more.

The outstanding amount on the R2037 (8.50%: 2037) bond has reached the R10 billion
mark and consequently, Primary Dealers are obliged to quote a two-way price on this
bond as stipulated in the rules of the Primary Dealers in fixed rate government bonds of
the Republic of South Africa.

The R2037 (8.50%: 2037) bond should be quoted at a maximum bid-offer spread of
10 basis points and a minimum amount of R10 million between Primary Dealers and
other market participants.

Thursday, November 14, 2013


Following his 2013 Budget announcement, the Minister of Finance publicised the members
of a tax review committee on 17 July 2013. The committee, now known as the Davis Tax
Committee (DTC), will examine the role of South Africa’s tax system to promote growth, job
creation, sustainable development and fiscal self-reliance. It will take the long term
objectives of the National Development Plan into account in its work.

Using its Terms of Reference as the point of departure, the DTC has adopted a work
programme that has prioritised the establishment of specialist sub-committees on small
businesses, the appropriateness of the tax base and tax mix in South Africa, and base
erosion and profit shifting (BEPS).

The DTC has also adopted an approach that is participatory and consultative. This will
provide for wide engagement with all stakeholders. Special dialogue sessions are arranged
on an ongoing basis to take into account a diversity of interests and opinions. The DTC
accordingly calls upon all interested parties to make use of the opportunity to contribute to
the mentioned priorities for now.

Top priority of the DTC at the moment is to address ways in which the tax system can be
improved to facilitate entrepreneurship and the growth of small businesses. Various tax
packages already exist to encourage small businesses. The DTC needs to review these
packages to find an optimal tax package that assists small businesses in contributing towards
economic growth and reducing the high unemployment rate. Urgent contributions in this
regard will be most welcome by 20 November 2013.

Contributions with regard to the tax burden and tax mix are invited by 30 November 2013.
The BEPS Sub-Committee is working on a longer timeframe that is aligned with the OECD
BEPS Action Plan. Contributions with regard to BEPS are welcome by 31 January 2014.

All contributions can be made via e-mail to . More details on the work
of the DTC and its Terms of Reference can be found on its website,

Wednesday, November 13, 2013

Investing in Women’s Employment – Good for Business

Addis Ababa, Ethiopia, 31 October 2013
 – IFC, a member of the World Bank Group, is promoting increased participation of women in Africa’s private sector, helping them overcome long-standing barriers that prevent them from starting businesses or gaining employment opportunities open to their male counterparts.
As part of this effort, IFC hosted an Africa Gender Forum in Addis Ababa that brought together more than 50 women leaders, IFC clients, members of civil society, and development partners to discuss best practices and challenges to scaling successful approaches. Discussions also focused on ways to increase access to training and finance for women entrepreneurs, who own or partially own only about one third of Africa’s smaller businesses. 

“Women's economic empowerment is essential to achieving sustainable economic growth and poverty reduction. When women entrepreneurs are supported with loans and new skills, they are able to turn their ideas into small and medium-sized businesses that generate economic benefits for their families and communities. An investment in women is an investment in the community,” said David Usher, Canadian Ambassador to Ethiopia.
“IFC recognizes the need to tap the vast potential of women as drivers of inclusive economic growth and shared prosperity, and has made gender one of its cross-cutting strategic priorities. We need to support and harness the positive effect that women’s economic empowerment and leadership can have on our economy,” said Adamou Labara, IFC Resident Representative in Ethiopia.
A recently-published IFC report, ‘Investing in Women’s Employment – Good for Business, Good for Development’, found that investing in women’s employment and improved working conditions can bring dramatic benefits to both women and businesses. IFC also runs a number of programs that promote increased participation of women in business, including Women in Business which has helped over 3,000 African women entrepreneurs gain access to $27.5 million in financing. 

During the Gender Forum, several women spoke of how they or their employers are helping women gain a foothold in the private sector. 

One female business owner, Constance Swaniker, explained how she benefited from a collateral lending system IFC helped establish in Ghana. She said that the registry allowed her to use her machinery to access finance, which helped her create 50 new jobs. 

Brenda Achieng, Legal and HR Director of Finlays Kenya, a horticulture company, highlighted Finlays strategic approach to promoting greater gender equality among its employees. Finlays achieved cultural change in the workplace by developing clear policies, training for supervisors, vocational health and safety training and support from senior management.

For more information, visit 

IFC facilitates expansion into Africa

Istanbul, Turkey, November 11, 2013 — IFC, a member of the World Bank Group, is providing a $35.5 million loan to Elif Plastik, Turkey’s largest supplier of flexible plastic packaging, helping the company expand into Egypt, creating jobs, improving local know-how, and bolstering supply chains. 
The investment will help the company, which makes flexible plastic packaging for consumer goods like food, cleaning materials, and personal hygiene products, build a modern factory in Egypt. Some $15.5 million of the loan will go toward the plant, Elif Plastik’s first international expansion, while $20 million will help fund the company’s operations. The new plant will be able to produce 15,000 tons of flexible plastic packaging annually.

"We plan to expand into Egypt and other countries in the Middle East, and make the new plant a hub for Elif Plastik’s operations in the region," said Selcuk Yarang├╝melio─člu, Managing Director of Elif Plastik. "We look forward to developing a long-term partnership with IFC to further expand in the region and increase our company’s competitiveness."
The investment is part of a wider IFC effort to encourage economic development in Egypt by supporting the country’s private sector and to support leading regional companies as they expand into Egypt, helping to create jobs and to strengthen the country’s economic integration with Europe, and the rest of the Middle East and North Africa.
“This investment fits with our strategy of boosting confidence in Egypt's private sector, a major contributor to employment,” said Nada Shousha, IFC Country Manager for Egypt. “At the same time we are helping a Turkish company expand in the region, promoting cross-border investment between developing economies."
During fiscal year 2013, IFC committed $276 million in Egypt across five projects. That brought IFC's total commitments since 2011 close to $1 billion, including $303 million mobilized from other investors.
IFC has been investing in Turkey’s private sector for nearly 50 years. In fiscal year 2013, IFC delivered a record $985 million in 20 projects, supporting smaller businesses, renewable energy projects, energy efficiency, energy security, healthcare, education, infrastructure development, and cross-border trade.

 For more information, visit:

Investing in Moroccan poultry

Rabat, Morocco, November 12, 2013—IFC, a member of the World Bank Group, is making an equity investment in Zalagh Holding, a leading grain trading and poultry group, to help create jobs and encourage economic development in rural Morocco. 

IFC’s $24 million investment in Zalagh will support the company as it expands and creates new jobs, including those for women. The expansion will also help generate indirect employment in rural areas, where Zalagh is a key economic player.

"This agreement will support our strategy to become a major player in a rapidly expanding sector and strengthen our integrated value chain,” said Ali Berbich, Chairman of the Management Board of Zalagh Holding. “As well, IFC will bring with it its agribusiness expertise and its extensive experience in optimizing corporate governance and institutionalizing family businesses.”

This investment is part of the IFC strategy in Morocco to support the manufacturing and agribusiness sectors.

"Supporting the development of Zalagh Holding is part of our effort to spur job creation and promote sustainable growth in rural areas of Morocco,” said Guy Ellena, Director of IFC’s Manufacturing, Agribusiness and Services Department in Eastern and Southern Europe, Central Asia, the Middle-East, and North Africa. “We are excited to partner with a company with such an extensive experience and a reputation for supporting communities.”

The project will also support the growth of the poultry industry and promote the use of top-notch environmental and health standards.

Zalagh Holding is embarking on an ambitious 350 million Moroccan dirham expansion over the next three years. It is planning to ramp up production of animal feed, increase its supply of chickens and turkeys, and build poultry farms across the country. 

 For more information, visit