Boosting Ethiopia’s economy, one shoe at a time
Bethlehem Tilahun Alemu, founder and CEO of soleRebels
By Jenny VAUGHAN
For Bethlehem Tilahun, the answer to ending poverty in Africa is not aid or sympathy or donations from the West. It’s shoes.
Specifically, building a successful shoe manufacturing business that creates jobs, empowers employees, like the one she founded Ä
SoleRebels, the first ever global footwear company to come out of a developing country.
“You don’t build your economy based on aid, you want to build your economy based on the way SoleRebels built its business, so that it’s sustainable,” Bethlehem told AFP.
SoleRebels highlights how burgeoning enterprises can transform economies across Africa.
By shifting away from a reliance on exporting raw materials to the production of premium products such as shoes, Africa can ease its dependency on aid and slowly move toward industrialised growth.
Founded in 2004, SoleRebels now employs around 150 Ethiopians producing shoes with hand-spun Ethiopian cotton, rubber and leather for export in over 65 stores around the world.
She believes creating jobs, supporting local industries and transforming Africa’s image abroad will have lasting impact on economies across the continent in ways that traditional aid cannot.
“That is sustainable, and that’s the only way of getting out of poverty,” she said, sitting in her flagship store in downtown Addis Ababa.
With a growth rate of 7.2 percent, according to the World Bank, Ethiopia is one of the fastest growing economies in the world.
But, paradoxically, it also remains one of the top recipients of aid in Africa.
Today, the Ethiopian government is keen on boosting private investment, increasing trade and transforming the agriculture-based economy into an industry-based one, mimicking development models from Asia, such as South Korea or China.
For Bethlehem, it is not only about moving from aid to trade, it is about building a savvy business and manufacturing a product that resonates with customers from France to Taiwan, not because its made in Ethiopia, but because it is a good shoe.
“People see them and say ‘wow, cool shoes!’ without necessarily knowing they are made in Ethiopia. To me, that is critical,” she said.
She is intent on marketing her product in exactly the same way as longer-established Western-based companies market theirs.
“We are not saying … ‘we’re poor, we’re in Africa, we’re doing this to help the poor’. We have a brand, and we strongly believe in what we’re doing,” she said, lighting up at she gazes at the racks of shoes in her wood-lined store.
Ä Trade, not aid Ä
Born in a poor neighbourhood in Ethiopia’s capital, Bethlehem said she was inspired at a young age to go against the grain, especially after seeing how little impact traditional aid had in her community and her country.
“To follow everybody’s pattern is not something that I wanted to do from the beginning,” she said with a characteristic zeal in her eyes. “If I am doing the same thing that everybody is doing and I don’t make a difference, there is no change.”
Shoes, she said, are the perfect homegrown product since they can be produced entirely from Ethiopian materials. The cotton and leather is sourced locally, while the rubber soles are made from recycled tires.
Plus, the shoes and the company name resonates with Ethiopia’s rich history. Having never been formally colonised, Ethiopian rebels famously fought off Italian occupiers in 1941, inspiring a pride and spirit of independence Bethlehem sought to invoke with her company.
“We’re free, that’s why we call ourselves SoleRebels,” she said, sitting next to a display of colourful, rubber-soled shoes modelled after shoes worn by Ethiopia’s rebels.
Her business ethos is one that succeeds where charitable retailers elsewhere do not. Tugging on philanthropic heart strings, Western companies often brandish products manufactured cheaply in Asia in order to help Africa, something the socially-conscious founder of SoleRebels adamantly opposes.
She said too many companies “come up with ever more outrageous claims of how they are saving Africa or helping Africa as a marketing tactic to sell product,” adding that “most of it is pure ‘BS’.”
“We strongly believe that people have to get a certain salary, so we don’t want to produce our products with cheap labour,” she added.
The first certified fair trade shoe company in the world, SoleRebels proudly pays their employees five times the minimum wage in a country where average per capita income is less than $1 per day, according to the World Bank.
The secret to her success lies in large part in her perseverance. She faced many financial and administrative challenges early on but refused to give up.
Bethlehem also stands out in a country where business is dominated by men.
She built her company up from scratch with an initial investment of $5000. Today, she is aiming to build the company’s net worth to $250 million by 2020.
Having received accolades internationally, including from Forbes and the World Economic Forum, Bethlehem admits she is sometimes surprised at how successful her business is, but having gained momentum in recent years, she is set on expanding her global empire now.
“I am dreaming about it all the time,” she said.
SoleRebels will open over 50 stand-alone retail shops abroad over the next three years, adding to the 11 already in Taiwan, Singapore, Austria, Japan, Spain and Ethiopia. Her dream is to see Ethiopia’s economy transformed by supporting more businesses like her own.
“Imagine we have hundreds or thousands of SoleRebels…,” she said, with a sly smile. – Sapa-AFP
Ethiopia lost $11.7 billion in outflows of illegal funds and corruption in the past decade.
BIG FISH
By ELLENI ARAYA
FORTUNE STAFF WRITER
The Administration of Prime Minister Hailemariam Desalegn made the full might of its power known last Friday, after ordering the arrest of 10 high and medium ranking officials of the Ethiopian Revenues & Customs Authority (ERCA), along with six businessmen, some of whom are well known.
The Federal Ethics & Anti Corruption Commission (FEACC) announced launching a probe against the suspects, but remained quiet about the wrongs they are being accused of.
“Following leads from the public, the Commission, in cooperation with the national security and information services, has been investigating the suspects,” said the Commission headed by Ali Sulieman on Friday night. “Compiling sufficient material evidence and people to testify, the Commission finds it necessary to take them into custody until their case is presented to a court of law.”
Prominent, among those arrested on Friday late afternoon, is Melaku Fenta, director general, of ERCA. He was in his office located off Equatorial Guinea St., (near Megenagna roundabout), when investigators arrested him at 5:00pm, according to eyewitnesses. At about the same time, his deputies Gebrewahed W. Giorgis, in charge of ERCA’s most feared intelligence unit, was arrested by members of the Federal Police Commission outside of ERCA, while Eshetu Woldesemayat, head of the prosecutors’ Directorate, was escorted by police officers from ERCA headquarters.
It is believed that they were heading to the Federal Forensic Department of the Federal Police Commission, a.k.a Maekelawi, on Dejazmach Belay Zeleke Road.
Asemelash W. Mariam, head of Kality Customs; Amegnie Tagel, head of Nazareth Customs; and Tiruneh Berta, team leader of confiscated goods inspection, were also taken into custody on the same day.
The list of people arrested late last week hardly stopped with those inside the government. Prominent businessmen were also arrested in connection with Melaku and his colleagues, including Nega G. Egziyabher of Nesta Trading Plc; Ketema Kebede of K. K. Plc; and Simachew Kebede of InterContinental Addis. Two lesser known businessmen, Zerihun Zewdie and Marishet Tesfu, both of whom run transit companies, were apprehended by police.
Mihereteab Abraha, a businessman who is the brother of Seeye Abraha, was arrested at around 2:00pm, when he went to his children’s school, according to a family member.
“There must be some kind of mistake,” a close family member told Fortune. “He fought ERCA all the way to the Supreme Court where he won his case.”
This is the second time Mihereteab has been arrested and probed by the Anti-Corruption Commission in ten years. Back in the early 2000s, he was arrested and spent close to five years fighting charges of corruption before he was released in the mid-2000s.
“I wonder how he could be implicated with the others,” said this family member.
But none of the officials from the Federal Police and Anti-Corruption Commission have disclosed to the public on what grounds the suspects were put under custody.
“The list is a tall-order,” said an administration official.
Searches were carried out by investigators on Friday night and Saturday morning in the homes and offices of the suspects, Fortune learnt.
However, the investigation directed at some of ERCA’s officials has been going on for close to six months, according to sources in the government. A taskforce from the Commission, the Information Network Security Agency and the Forensic Department of the Federal Police Commission was collecting material evidence, although “very few people were privy to the investigation,” according to a mid-level official from the Anti-Corruption Commission.
“I was aware that they were investigating Gebrewahid,” this official told Fortune. “But, Melaku’s was not something that was revealed to us. It must have come much later.”
The case involves alleged improprieties at customs processing, especially involving imports of steel, according to sources.
The arrests were, however, made after the information allegedly implicating the suspects was presented to Prime Minister Hailemariam Desalegn a week prior to the wave of arrests was carried out, according to a senior aide of the Prime Minister.
“He feels very strongly about this,” this aide told Fortune, but asked anonymity due to the sensitivity of the case. “I believe he started to make good on his promises that he will fight corruption provided that the public supports him by providing valuable leads and information.”
It is the first time since the early 2000s the government has conducted a wave of arrests against officials and businesspeople, including a member of the powerful executive committee of the ruling EPRDF.
Back in the 2000s, Seeye Abraha, former strongman of the TPLF, was arrested, along several businessmen and bank executives, and subsequently charged with corruption. They all had spent close to five years in jail before they were released. Prior to that, Tamrat Layne, former prime minister during the transitional government, was arrested in the mid-1990s, together with businesspeople, all accused of corruption.
Melaku, an economics graduate from Addis Abeba University, oversaw several tax reforms including widening the tax base, by requiring businesses to install cash registration machines and to become registered for Value Added Tax (VAT). He was appointed by former Prime Minister Meles Zenawi, to be director general of the newly organized ERCA, in June of 2008.
Under him, the amount of revenues the federal government mobilized has reached 71 billion Br in 2011/12, a dramatic increase from the 19 billion Br collected before he took the position. ERCA has also consistently managed to meet the revenue targets set for it by the government, though it fell short of the in-house goals it set for itself.
But reforms were not easy to implement and were not necessarily popular. Businesses have long complained of ill-treatment by lower level officials of ERCA, lack of uniform information, bureaucratic bottlenecks, and regulatory unpredictability, marred by inefficiency and unfair taxation.
Front and centre fielding such complaints from the business community at consultation meetings along with Melaku was his deputy Gebrewahed who headed the most feared law enforcement directorate within ERCA.
Most recently, officials from the ERCA have come to loggerheads with businesses, after demanding businesses pay undistributed dividends. During ERCA’s performance assessment meeting, higher level officials were accused of turning a blind eye towards some big businesses for which only lower level officials were bearing the brunt, sources disclosed to Fortune.
Last week’s wave of arrests on people known to be well connected within the political establishment no doubt has put many people off guard.
“Hailemariam wants to prove that there are no holy-cows,” said a senior official in the administration.
Source: FORTUNE
Ethiopia arrests minister, 11 others big fish over corruption
(Reuters) – Ethiopian police have arrested a minister and 11 other people on corruption charges, an official and state media said on Saturday, in the country’s most high-profile swoop against graft for more than a decade.
Businesses in the region regularly complain of corruption as an obstacle to their work. Transparency International ranked Ethiopia 113 out of 176 nations worldwide in its 2012 perception of corruption index, where No. 1 is considered least corrupt.
That ranking puts Ethiopia above most nations in the Horn of Africa and east Africa regions, although Rwanda is ranked 50.
Melaku Fenta, a senior ruling party member and director general of the revenue and customs authority with the rank of minister, was arrested on Friday alongside two other officials from the authority, government spokesman Shimeles Kemal said.
“They were under investigation on suspicion of corrupt practices,” Shimeles told Reuters, without giving details.
The spokesman said there were further arrests as well but did not give a total. The state news agency reported 12 arrests overall. Independently, newspapers said the arrests included a prominent businessman and customs employees outside the capital.
Global Financial Integrity last year said Addis Ababa lost $11.7 billion in outflows of illegal funds in the past decade.
Melaku is the most high profile suspect to be arrested on corruption charges since Siye Abraha, a former defense minister who was released in 2007 after six years behind bars. However, he was already out of government when arrested.
Melaku Fenta, director general of the Ethiopian Revenues & Customs Authority (ERCA), Gebrewahed W. Giorgis, the most feared deputy of Melaku, and Eshetu W. Semayat, chief prosecutor of ERCA, were taken to custody by the Federal Police Commission around 5:00pm on Friday afternoon, May 10, 2013. They are three of the 16 suspects law enforcement agents apprehended, together with prominent businesspeople.
The Federal Ethics & Anti-Corruption Commission has announced that businesspeople such as Nega G. Egziyabher of Netsa Trading Plc; Ketema Kebede of K.K. Plc; Semachew Kebede of InterContinental Addis; and Mihereteab Abraha, brother of Seeye Abraha, are under custody suspected of crimes that is yet to be disclosed.
Other officials of ERCA include Asemelash W. Mariam, head of Kaliti Customs; Amignie Tagel, head of Nazareth Customs; and Tiruneh Berta, team leader of confiscated goods inspection have also been detained. Two transit company heads, Zerihun Zewdie and Marishet Tesfu, are among the suspects arrested late Friday.
(Reporting by Aaron Maasho; Editing by Edmund Blair/Mark Heinrich)
Ethiopia’s Journey From Poverty to Prosperity
By Haddis Tadesse
The walia is a species of ibex found only in northern Ethiopia. Some 40 years ago, with fewer than 200 left, the walia was in danger of extinction. It remains an endangered species, but through conservation measures, numbers are increasing. Things are getting better.
The development of the walia’s home country – Ethiopia – is even most robust. As leaders from around the world gather in Cape Town, South Africa, for the World Economic Forum on Africa, they will be talking not about the wali but about countries like Ethiopia, and comparing notes on the challenges and opportunities they represent.
I left Ethiopia in the late 1980s as the country was gripped by a civil war. I returned one year ago as the representative of the Bill & Melinda Gates Foundation based in Addis Ababa. The progress the country is making is evident. The number of children dying in Ethiopia has been reduced by over 60% between the time I left the country and today, with the situation continuing to improve.
As Bill Gates noted in his Annual Letter this year, “Today, Ethiopia has more than 15,000 health posts delivering primary health care to the farthest reaches of this rural county of 85 million.” Using the Millennium Development Goals as a measure, Ethiopia is on its way to meeting most of them by 2015.
The country’s economic growth has also been impressive. In the last decade or so, Ethiopia’s growth has been among the strongest in the world, partially due to better policies, increased productivity and an increase of Foreign Direct Investment (FDI); private equity players are also increasingly active in Addis, while local entrepreneurs are expanding their operations.
In addition to this, the biggest change I have witnessed since my return may very well be that government, donors, the private sector and the public in general have realised that growth and prosperity can be achieved if the right policies and implementation strategy are put in place.
The country is no longer paralyzed by the complexity of challenges. This mental shift from “we can’t” to “we can” has dared a nation to dream big; to become food secure in a few years’ time, to build the largest hydroelectric power plant in Africa, and a new, robust, electrified railway system of 4,744 kilometers, to create light manufacturing industrial zones. Also, the significant improvements in the outcomes in the health and education sectors are critical to building a prosperous nation.
Ethiopia now knows it does not have to reinvent the wheel in its quest for prosperity. Looking to countries like India, Malaysia, China, Brazil, Turkey and others, Ethiopia can find successful models of newly industrialized economies that sustain impressive GDP growth over decades. Ethiopia is well positioned to escape the poverty trap. But it won’t be easy. Fundamental challenges to infrastructure, human and financial capital and the market need to be carefully addressed.
If we can bring the walia back from near-extinction, we certainly can build on the immense progress this nation has made and improve the health and lives of all people living in Ethiopia.
Leaders gather in Cape Town to discuss ways of delivering on Africa’s Promise
JOHANNESBURG, South Africa – Delivering on Africa’s Promise will be the theme of the World Economic Forum on Africa 2013 which will take place in Cape Town, South Africa, 8-10 May, with the participation of more than 1,000 leaders from business, government, civil society and academia.
The meeting, which convenes against a backdrop of significant economic growth and progress in reducing poverty in most parts of sub-Saharan Africa, features a programme built around three pillars: Accelerating Economic Diversification; Boosting Strategic Infrastructure; and Unlocking Africa’s Talent.
Led by President Jacob Zuma of South Africa and representatives from his government, other leaders that have confirmed their participation are: Benin, President Thomas Yayi Boni; Ethiopia, Prime Minister Hailemariam Dessalegn; Kenya, President Uhuru Kenyatta; Malawi, President Joyce Banda; Nigeria, President Goodluck Ebele Jonathan; Seychelles, President James Alix Michel; Swaziland, King Mswati III; Tanzania, President Jakaya M. Kikwete; Togo, President Faure Gnassingbé; Uganda, Prime Minister Amama Mbabazi; and Zimbabwe, Prime Minister Morgan Tsvangirai.
“Africa has an historic opportunity to take advantage of recent improvements in governance, as well as its massive youth bulge, to transform its economy and society. The World Economic Forum on Africa presents Africa’s leaders with a platform to build on these encouraging signs and work together to create innovative models, solutions and outcomes to tackle the region’s challenges and harness its great potential,” said Elsie Kanza, Director, Head of Africa, World Economic Forum.
In addition to a two-day public programme, there will also be a number of significant meetings on the fringes of the World Economic Forum on Africa. The Grow Africa Investment Forum, on 8-9 May, will attempt to build on its successes in 2012 by underscoring further commitment from both the public and private sectors. Another meeting is Shape Africa, organized by the Cape Town hub of the Global Shapers Community, a worldwide network of young leaders between the ages of 20 and 30, which takes place in the city on 6-7 May.
The Co-Chairs of the World Economic Forum on Africa are Frans van Houten, Chief Executive Officer and Chairman of the Board of Management and the Executive Committee, Royal Philips Electronics, Netherland; Mo Ibrahim, Chairman, Mo Ibrahim Foundation, United Kingdom; Mustafa Vehbi Koç, Chairman of the Board, Koç Holding, Turkey; Frannie Léautier, Executive Secretary, The African Capacity Building Foundation, Zimbabwe; and Arif M. Naqvi, Founder and Group Chief Executive, Abraaj Group, United Arab Emirates.
Ethiopian Corrupt Judge-Supreme Court judge Dagne Melaku
Addis Ababa – An Ethiopian court on Thursday dismissed the appeal of blogger Eskinder Nega and opposition leader Andualem Arage who were jailed last year for terror-related offences.
“The sentencing is still correct so there is no reduction,” said Supreme Court judge Dagne Melaku, confirming Eskinder’s jail term of 18 years and Andualem’s life sentence.
One of the charges – serving as a leader of a terrorist organisation – was dropped, but had no effect on sentencing.
After the ruling, Eskinder made an emotional appeal to the court which was crowded with family, friends and diplomats.
“The truth will set us free,” he said. “We want the Ethiopian public to know that the truth will reveal itself, it’s only a matter of time.”
Both men are accused of links to the outlawed opposition group Ginbot 7.
“The walls of justice will be demolished,” Andualem told AFP.
Four other men also jailed for terror-related charges had their appeal quashed.
One other defendant, however, Kinfe Michael, had his sentence reduced from 25 years to 16 years.
Rights groups have called Ethiopia’s anti-terrorism legislation vague and accuse the government of using the law to stifle peaceful dissent.
“I am very sad, I am very angry, I cannot talk rationally,” Eskinder’s wife Serkalem Fasil told AFP after the decision.
Harsh sentencing
Defence lawyer Abebe Guta said that justice had not been served, and that if his clients agreed, they would appeal to the court of cassation, Ethiopia’s highest court.
The US was “deeply disappointed” that Ethiopia’s federal supreme court upheld the men’s “conviction and harsh sentencing,” acting deputy State Department spokesperson Patrick Ventrell said.
“Today’s decision further reinforces our serious concern about Ethiopia’s politicised prosecution of those critical of the government and ruling party, including under the anti-terrorism proclamation.”
He did not say if the court’s decision would impact a planned trip to Ethiopia by US Secretary of State John Kerry at the end of May.
Ethiopia has one of the most restricted media in the world and the highest number of journalists living in exile, according to US-based press watchdog, the Committee to Protect Journalists.
Last year Eskinder was awarded the prestigious PEN America’s “Freedom to Write” annual prize.
Justice is supposed to be blind. Judges aren’t supposed to be when it comes to justice. When one thinks of court, one thinks of justice. The famous picture of the lady with the blindfold covering one eye – but that blind fold is starting to look more like an eye patch on a pirate, as many Ethiopians and foreigners as well are being robbed of their day in court. There are good judges out there, but sadly there are quite a few bad ones like Judge Dagne Melaku.
His conduct, among others, is the subject of a forthcoming Sonustar film titled “Justice and Truth.” Thanks to this dirty judge, I got to see firsthand, the sweeping corruption present in the Ethiopian judicial system that in my opinion is the most corrupt in the world.
Rights groups including Amnesty International and Human Rights Watch condemned the initial conviction of Eskinder in July 2012.
Ethiopia and China sign $1 billion power deal
Ethiopia signed a contract Friday worth nearly $1 billion with a Chinese energy company to build two transmission lines linking the country’s largest dam to the country’s central power grid.
The Ethiopian Electric Power Corporation (EEPCo.) signed the deal with China Electric Power Equipment and Technology Company (CET) in the Ethiopian capital.
The three-year project, which will be fully funded by the Export-Import Bank of China, will start immediately.
EEPCo.’s CEO said the deal was a major step for Ethiopia’s energy sector.
“This is another milestone in (realising) Ethiopia’s development objective,” Miheret Debebe told reporters.
The two transmission lines, with a combined capacity of nearly 1000 kilovolts, will run over 700 kilometres to link the Grand Renaissance Dam to the main power grid near the country’s capital Addis Ababa.
Miheret urged CET to adhere to the timeline set out in the contract for the project’s completion, and admitted that securing funding for the large-scale project was a “challenge.”
As part of its ambitious Growth and Transformation Plan (GTP), Ethiopia is developing its energy production sector with the aim of exporting power to neighbouring countries.
With a capacity of 6,000 MW, the Renaissance Dam on the Nile River is the largest of Ethiopia’s dams, most of which are still under construction.
Hydropower is set to be the largest energy provider, but wind, geothermal and solar projects are also underway.
The country has the capacity to produce 45,000 MW of power, more than the total amount currently consumed in all of sub-Saharan Africa, according to official figures.
The GTP seeks to boost economic growth in order to transform Ethiopia into a carbon-neutral, middle income country by 2025.
China is a major player in the Horn of Africa nation, heavily invested in manufacturing, energy, and transport industries.
Copyright © 2013 AFP
