comesa spearheads investment in africa · 2014-08-11 · comesa spearheads investment in africa...

Secretary General of the COMESAMr. Erastus J.O. Mwencha, MBS

COMESA SPEARHEADSINVESTMENT

IN AFRICA

With 380 million people and vast untapped naturalresources, stretching from Egypt to Namibia, the CommonMarket for Eastern and Southern Africa (COMESA), is atrading bloc uniquely placed to spearhead the next waveof global investment in Africa.

Founded in 1994, COMESA came of age on October 31,2000, with the formal launch at its headquarters in Lusaka,Zambia, of Africa’s largest free trade area. The 20 govern-ments that belong to COMESA aspire to follow in the foot-steps of the European Union, the biggest business cus-tomer for COMESA outside Africa.

"For the past 30 years, our economies have not beengrowing," says COMESA secretary-general ErastusMwencha, an economist and career civil servant fromKenya. "We believe that the entire continent should unitebecause no part of Africa can be an island." Given theintense competition in the global marketplace, COMESA’schampions believe that economic integration is now notjust a luxury but in Mwencha’s words "a matter of survival."

COMESA unites Angola, Burundi, Comoros, Congo,Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi,Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland,Uganda, Zambia and Zimbabwe. Between 1991 and 1998,intra-COMESA trade was estimated at $4.2 billion, growing at20% a year. Mwencha forecasts that with trade restrictionsnow scrapped trade should more than treble by 2003.

In the medium term COMESA will improve its citizens quali-ty of life by adopting a common external tariff for exports anda Customs Union for imports. By 2025 it hopes to build anEU- style economic community with monetary union and freemovement of peoples between countries – political integra-tion is also on the agenda. COMESA has already beguncapacity building. Its institutional framework includes a clear-ing house for transactions, a court of justice, a trade devel-opment bank, a re-insurer and industry specific organizationsto promote leather products and metals. COMESA is stillevolving but enjoys a strong links with the World Bank, IMFand the Southern African Development Community, a com-plementary trade body involving South Africa.

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BASHIR –Architect ofResurgence

The architect ofSudan’s new resurgenceand recognition in interna-tional and regional forumsis President LieutenantGeneral Omar Hassan

Ahmad El-Bashir. Since 1999, the President has consoli-dated his hold on executive power and has been remark-ably successful in ending Sudan's diplomatic isolation both

at the hands of the UN, the US and multilateral lendingagencies. Above all Sudan under his leadership as head ofstate since 1989, has succeeded with economic reformand restructuring and maintained healthy levels of growth.

President Bashir, aged 57, who was re-elected in presi-dential elections in February, enjoys the confidence ofmost of the major players in Sudanese domestic affairs.In January 1999, legislation was introduced allowing polit-ical associations to form and operate as parties in localand national elections. The new constitution introducedin June 1998 also pledged a referendum to allow thesouth of Sudan to determine its own future. Bashir’s newgovernment of 28 ministers contains six from the south-ern states. Iimmediately after the presidential poll hepledged more funding for the south as well as plans forreform of the state assemblies elsewhere in the country.

PRESIDENT LIEUTENANT GENERAL Omar Hassan Ahmad El-Bashir

SUDANSUDAN


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Before taking office in 1989, Bashir was a brigadierwith a paratroop division, having served as a young sol-dier with the Egyptian army in the defense of the SuezCanal. His better-known brother was the editor of anewspaper, El Sudani, that played an influential role inSudanese political and religious life. From the outsetBashir identified himself closely with Egypt but alsostrengthened his ties with Libya as part of a drive to cre-ate better relations with Arab countries.

In an interview, President Bashir emphasized that "politi-cal stability is fundamental for economic growth and devel-opment in Sudan" and attributed to his economic programthe improved relations with the World Bank and the IMF.Since 1996 the economy has been guided by strict mone-tary policy that has been rewarded by health growth rates."An excellent economic reform program has been imple-mented which has resulted in four years of consecutivegrowth and a positive balance of trade," said the president.

Indeed Sudan’s success in changing the economy froma highly centralized command structure to a market ori-ented system is seen by many as his crowning achieve-ment together with the improving relations with the UnitedNations and western states. "These factors, coupled witha successful privatization program and enormous mineral,natural and human resources make Sudan a potential par-adise for foreign investors," said President Bashir. "Theenvironment is conducive and an increasing number ofinternational investors are coming to Sudan."

Among the president’s priorities is to increase agricul-tural production by farmers, since agriculture with 42% isSudan’s most important economic sector in terms of both

gross domestic product and employment. Nomadic pas-toralists and small-scale farming exist in the country aswell as raid-fed mechanized schemes. The president hasissued a decree canceling taxes levied on agriculturalproduce in order to boost production and to help farmersescape from a burden of debt.

Sudan Emerges From ShadowsAs the New Giant of Africa

Sudan, the largest country in Africa and located at theheart of the continent, is emerging with a new strengthand resilience after a period of slowdown and difficultywith its major trading partners in the 1990s.


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Since 1999, under President Omar Hassan El-Bashiractive leadership, Sudan’s reputation has largely beenrestored, while his government’s espousal of a free mar-ket economy has encouraged foreign investors to revisit

and re-engage with this African giant. Sudan is onceagain in favor with the World Bank and the IMF, whichhad blocked its access to the donor community after adispute with the government. The US and the EuropeanUnion is encouraged to see a more openly democraticSudan, with reconciliation achieved between the politicalparties.

Economic growth over the past three years has aver-aged 6-7%, with the added advantages of a stableexchange rate, a balanced government budget and a pos-itive trade balance. Part of this progress has been due toSudan’s enviable position as an oil producer, with currentproduction of 250,000 barrels a day (b/d) set to double by2005. "Sudan being in the heart of Africa borders ninecountries and all these areas have potential for business,"says Minister of Civil Aviation Joseph Malwal Dong.

However, ministers acknowledge that much work liesahead before Sudan takes full advantage of its strategic

position and close to export markets in Saudi Arabia andthe Gulf states, where 500,000 of its people work asexpatriates. The key political and social problems still tobe overcome include a negotiated settlement of the pro-tracted civil conflict in the south with the Sudan People’sLiberation Army. The government signed a bindingagreement in 1997, and confirmed it through legislation ayear later, giving the southerners the right to a referen-dum on their future – the first such concession by anySudanese government since independence in 1956.However, the SPLA rebels rejected this historical offerand further negotiations lie ahead.

Sudan remains hugely disadvantaged by its poor infra-structure with urgent programs required for electricity, irri-gation and airport and road construction. "We also needto address the issue of social development – we still havetoo many people in the rural areas who do not haveaccess to primary education," says a former minister who

says the future lies in encouraging more foreign invest-ment. "All the production areas are open now for the pri-vate sector – agriculture, industry, transport, energy andmining. So, I think now that the investment climate in

Sudan is once again in favor withthe World Bank and the IMF

“the investment climate inSudan has never been better"


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Sudan has never been better."The economic restructing process has been accompa-

nied by a twin strategy of re-scheduling foreign debt anda domestic regime aimed at containing inflation. "Oureconomic policies are open," says the ex minister. "Thereare no restrictions on foreign exchange and no licensingof imports or exports. We are also restructuring our cus-toms to make the country less restrictive." Further liberal-ization of the Investment (Encouragement) Act, by anamendment passed last year, says that there should beno discrimination between local or foreign investors. Allinvestors are assured of a 10-year tax holiday and free-dom from fear of confiscation as well as other incentives.

As a member of the Comesa regional economic group-ing, Sudan can offer investors access not only to its owndomestic market of 30 million, but to 200-250 millionpeople through the Comesa free trade area. The domesticmarket is impressive enough. In addition to hydrocar-bons, Sudan is exporting 5 tons of gold a year valued atUSD 60 million and is also rich in animal husbandrybecause of its rich pasture. The Nile Valley is renownedfor its fertility and in the Gezira irrigation scheme Sudanhas a farming area the size of Holland under a single

administrative structure.Sudanese officials temper their enthusiasm for hydro-

carbons resources with pragmatism. "We have to use oilcarefully and create wealth because it might not last forever," says Hassan Mohamed Ali Eltom, director-generalof the Sudanese Petroleum Corporation (SPC). Sudanworked successfully with foreign companies, includingTalisaman of Canada, Petronas of Malaysia and CNPCfrom China, and is proud that even without US help it hasbuilt the longest crude oil pipeline in Africa. TheKhartoum-based Higleig Petroleum Services & InvestmentCompany is a leading locally-owned support servicecompany to the oil sector, having worked as a sub-con-tractor to among other CNPC, and is currently diversify-ing into exploration, the petrochemicals industry and roadbuilding.

left: Director General of the Sudanese Petroleum Company: Mr. Hassan Mohamed Ali Eltomcentre: Director General of the Sudanese Free Zone and Markets Company: Mr. Mohamed Abbas

right: General Manager of the National Pensions Fund: Mr. Kamal Ali Madani

Sudan has a farming area thesize of Holland under a singleadministrative structure


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A key role in exploiting the coun-try’s strategic location is played bythe Sudan Free Zones & MarketsCompany (SFZ), which operates theRed Sea Free Zone along the RedSea coast. The free zone allows100% foreign ownership and 100%repatriation of capital and profits, aswell as a 12-year tax holiday, free-dom of labor recruitment and a one-stop shop for registration. "We areworking towards becoming the bestfree zone in our region," says SFZManaging Director Mohamed Abbas.His company also operates one of

the biggest fair grounds in Africa andMiddle East. Here, the SFZ organiz-es a number of annual internationaland local fairs including theInternational Fair of Khartoum, awater equipment fair and an I.T. Fair.The company also runs a chain ofduty free shops spread all overSudan.

Yet many of these efforts dependfor their success on improvements tothe infrastructure. With an area ofmore than 1 million square miles,Sudan not only needs more homesbut also has to house migrants from

the country to the towns. FormerMinister of Construction, Housingand Public Utilities Dr Sharif Bannagasays two-thirds of Khartoum’s popu-lation of 6 million are "displaced per-sons" and as a result the governmentis seeking investors in roads, publictransport and housing. "Our first pri-ority is how to accommodate this[displaced] population and how toserve the population but our secondpriority is protecting the environ-ment." Khartoum is in fact threetowns between the three rivers, theBlue Nile, White Nile and River Nileand to link Khartoum, KhartoumNorth and Omdurman more bridgesare needed to cross the rivers tosupplement the Elingaz Bridgeacross the White Nile.

Similar pressures to innovate andrenovate rest on the Civil AviationAuthority (CAA), which plans todevelop the proposed Khartoum NewInternational Airport as a regionalhub. The new Minister of CivilAviation sees this as a new center forrefueling long-haul flights betweenEurope and the Asia Pacific andAustralasia. In the meantime, theCAA has recently signed a £15 mil-lion contract with a British-Italianjoint venture for a new air traffic-con-trol radar system, making a majorcontribution to air traffic control safe-ty in Africa. The needs of Sudan’sfar-flung communities have not beenignored, with an airport under con-struction at Al Gadarif City near theborder with Ethiopia. There are plansfor a new airport at Halfa near LakeNuba to open up the potential forexporting fish.

"We have to use oilcarefully and createwealth because itmight not last forever,"


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Demand for electricity presents another major chal-lenge for the government. The state-run NationalElectricity Corporation (NEC) has a 10-year plan for theprovision of energy. Managing director Makkawi Awadadmits that the current supply reaches only three out of10 Sudanese and estimates that USD250 million needs tobe spent on the national grid alone to close the gapbetween supply and demand. NEC’s development planseeks a total of USD930 million, excluding the big ticketMerrawi hydro project at USD 1.7 billion. Given the chal-lenge, new legislation has been introduced to allow pri-vate companies to generate power and supply it to thenational grid. Independent Power Producers are welcomeon a number of operating arrangements but will be

allowed to sell electricity directly to their own customers.In the financial service area, Sudan has 26 banks, of

which five are government owned, and has undergone athree-year program to improve their capital adequacyratios. Among those, which successfully restructuredwas Bank of Khartoum, the leading bank in Sudan spe-cializing in Islamic forms of finance, which has a networkof more than 95 branches. The bank has successfullyinvested in new technology, including the customer inter-face. Development finance is provided by institutionsincluding the El Nilein Industrial Development BankGroup. The banking sector is open to foreign investmentand liberalization is continuing.

The National Pensions Fund (NPF), which providesretirement support for retired civil servants and has600,000 subscribers, plays a major role in developing theeconomy. General manager Kamal Ali Madani says that in2001 for the first time the Fund received workers’ contri-butions in full from the state governments. Thanks to a

new five-year plan starting this year, pensions are due torise and there will be an assistance scheme for pension-ers’ children to help them to access higher education, aswell as a healthcare program for senior citizens.

Madani says the NPF has invested in a constructionand trading company. "We are planning to have differentinvestments in the future," he says. "In the long term weare aiming to have a very developed financial system andto have it privatized." Madani’s optimism extends toSudan’s membership of Comesa, where he sees benefitsfrom national pension funds working together. "We arenow one of the most promising markets in Africa," hesays. "We welcome all investors and we can help them indeveloping and exploiting many attractive opportunities,

left: General Manager of the Gum Arabic Company: Dr. Musa Mohmed Karamacentre: General Manager of the Gum Arabic Processing Company: Mr. A. Magid A Gadir

right: Chairman of the Gum Arabic Company: Dr. Babiker Tom

"We welcome all investors andwe can help them in develop-ing and exploiting manyattractive opportunities”

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KHARTOUM GUM ARABIC PROCESSING COMPANY

Arabic Processing Co Ltd, Baladia Avenue,PO Box 12034, Khartoum, SUDAN

Contact: Abed El Magid AlgadirTel: +249 11 776640 • Fax: +249 11 774632

Email: [email protected]

GAPC is the pioneer company for pro-cessing gum arabic in Africa. It process-es 100% natural Kordofan gum arabic(acacia senegal). Its factory in PortSudan has a capacity of 20,000 tons peryear. The products are crushed andsieved into uniform particles rangingfrom 0.5mm up to 8mm or powdered toless than 125 microns. The products arefree of adulterants, GMO or other harm-ful micro-organisms.Gum Arabic is anemulsifying, encapsu-lating, binding, stabilis-ing, thickening andcoating agent. Packedin 25Kg 4ply paperbags with a PE liner.

like construction of roads andbridges, petroleum services, thecement industry and general trading."

Sudan’s natural resources andheritage – 6,000 years of history –make it one of Africa’s most impor-tant unexploited tourist destinations.Not the least of these attractions isthe Red Sea coastline, with its richcoral reefs, and the many species ofanimals to be found inland, as well

as desert and the archeologicaltreasures at Meroe near the northernborder with Egypt. Investment intourism in Sudan is still in its infancybut among those that have steppedinto serve the demands of bothtourists and business travelers is theMalaysian-owned Holiday Villa HotelGroup, operators of the 163-roomGrand Holiday Villa Khartoum.Formerly, the Grand Hotel adminis-tered by Thomas Cook, the refur-bished property offers five-star facili-ties and modern convenience, cou-pled with the charm of the colonialera in the heart of the capital.General Manager Capt Charles Bainexpects this boutique hotel to growfurther with higher occupancy, espe-cially as more Asian business execu-tives are looking to invest in Sudan.

Historically, Sudan’s most famousagricultural export after cotton hasbeen gum arabic, widely used in theproduction of soft drinks, cosmetics,printing ink and other goods andcollected from wild acacia trees.Sudan produces 80% of global pro-duction of gum arabic in a goodseason, depending on rainfall, butseasonal fluctuations often turnedexport markets fickle. MusaMohamed Karama, general managerof the Khartoum-based Gum ArabicCompany, founded in 1996 with anational monopoly, says a nationalreserve stock has now been created,equal to a year’s supply and priceshave been adjusted to match substi-tutes such as gelatin. "We havestarted to learn from our past mis-takes and this has lead Sudan toimprove and become more competi-tive," says Karama.

"We have started tolearn from our pastmistakes and thishas lead Sudan toimprove andbecome morecompetitive," saysKarama.

A positive view of the investmentenvironment is taken by BritishAmerican Tobacco (BAT), whichworks through Blue NileCigarette Company (BNCC) ofKhartoum, where a spokesmansays: "The investment environ-ment is definitely positive andwill improve. International com-panies are coming in but to becost effective they should takecare in selecting a local partner."BNCC, which employs 200 peo-ple, is the sole agent in Sudanfor BAT – the market leader fortobacco products in eastern,western and southern Africa.Through the BAT connection,BNCC contributes to the econo-my by offering the governmentnot only extra revenue throughtaxation and new jobs but alsoas BAT points out through "tan-gible trade development andincreased investment."

The Grand Holiday Villa Khartoum, Sudan, is a 5-star Hotel located strategically in theheart of the Khartoum centre and overlooking the famed Nile River.Formerly known as The Grand Hotel, the building was constructed in 1902 by theBritish Thomas Cook in collaboration with the French.Rich with historical splendour, The Grand Hotel was the official hotel for royal visitorsand famous dignitaries of the past.Amongst the colourful hotel guests were Queen Victoria and Sir Winston Churchill.The hotel has undergone an extensive rehabilitation and refurbishment programme atan estimated cost of US$15 million.Grand Holiday Villa Khartoum now boasts of an attractive facade to reflect a Britishcolonial design and concept.The new hotel features a total of 140 guest rooms and suites.The facilities include a 120-seater all day dining room Lagenda Restaurant, a 80-seaterGarden terrace called The Nile Terrace, a Karaoke Lounge, a ballroom capable ofaccommodating 400 people, meeting rooms for 30-40 people and a Business Centre.The Nile Terrace offers “al fresco” dining with Khartoum’s only live entertainment. TheLagenda Restaurant has an international buffet featuring different theme nights daily.Lunch at the Lagenda offer a wide selection of Western, Sudanese and Malaysian specialities.For recreation, there are exclusive male and female swimming pools, children’s pool,gymnasium, shopping arcade, barber shop and a travel agency.All rooms and suites are well-appointed and feature first class amenities such as cof-fee/tea making facilities, a colour television with satellite dish (selected internationalchannels) telephone with IDD and a safe deposit box. Hotel suites feature additionalfacilities such as sofa beds and kitchenette.The hotel also offers a club membership for the exclusive usage of the hotel recre-ational facilities. These include swimming pool. a ladies pool, a spa, snooker, massageservices, gymnasium, sauna, steam, bath, children’s room and drinks counter.

Nile Avenue, P.O.BOX 316, Khartoum, SudanTel: +249-11-774039-787256 Fax: +249-11-773961

Email: [email protected]: www.holidayvilla.com.my


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Our VisionTo become the focal point for telecommunications in the region

Our ObjectiveTo become a regional hub for telecommunications

Our Value StatementWe are customer driven, we work to understand our customers’ present & future needs & expectations.

Our aim is to become the carrier of their choice • We are performance driven, we are continuously working to

improve and excel. We build on our human & technical resources to enhance our performance

Our services (GSM)Data communications • Internet • Tel, fax, telex • Cellular network

FacilitiesState of the art fibre optic submarine cables: SWW2 & SMW3 • Satellite earth stations • Digital switching Centres • Digital

microwave link with Ethiopia • Analogue microwave link throughPanaftel network with some African countries

Plans for the futureTo become a landing point in Africa One project • To take part in theRascom African satellite project • To prepare for the Comtel Project •

To expand our rural network • To digitalise all analogue microwave links

DJIBOUTI TELECOM S.A Share Capital: DJF $4 Billion Turnover: DJF 4.3 Billion

Sheraton Djibouti HotelStanding at the crossroads of several cultures, on the storied Horn of

Africa, the Sheraton Djibouti Hotel offers travelers a warm and graciouswelcome. The hotel seamlessly belends extraordinary comfort, moderncomforts and traditional East African hospitality. Situated on a palm-fringed peninsula a kilometer from the city’s center, the Sheraton DjiboutiHotel is convenient to foreign embassies, government offices and thevibrant shopping district. Although the hotel enjoys a serene setting over-looking the ocean, it is only 6.5 km from Ambouli international airport. TheSheraton Djibouti offers 98 Classic Rooms and 84 newly refurbished TowerGuest Rooms, including 9 Junior Suites and the luxurious Ministerial Suite.

The Sheraton Djibouti Hotel is an ideal base from which to discoverDjibouti’s many natural wonders. Most destinations are accessible on daytrips from the hotel and excursions to explore the underwater treasures ofthe Red Sea leave directly from the L’escale dock. Djibouti is increasinglybecoming a center for water sports and has gained a well-deserved repu-tation as one of the world’s finest, most unspoiled diving destinations.

Thanks to its openness and its capacity to adapt,Djibouti has achieved an identity of its own, which isstrongly reflected in the different sectors of its economy, aswell as in its cultural and human aspects.

Since its independence, Djibouti actively diversified itsservice economy in both regionally and internationally. Theport, airport, railways and modern telecommunications arethe key sectors of the countries service industry and cru-cial for the economic development of Djibouti.

The banking sector plays an essential role in the nation-al economy, representing more than 5% of the GDP. Thedjiboutien franc, is directly pegged to the American dollarby a fully convertible exchange rate, this lack of exchangerate controls is a guarantee for the economic stability ofthe country. Thanks to this financial liberalism and thecommercial important of the banks at a regional level,helps to attract important foreign investments intoDjibouti’s economy.

DJIBOUTIDJIBOUTI

Services:La Brasserie – French and local specialtiesLe Ghoubet – Most vibrant nightspot in townKhamsin Pool Bar – Poolside snack and tropical beveragesModern business centerSwimming poolTennis CourtIsland Beach Club and water sports

Nearby Casino24 hour room serviceLandry/dry cleaningConciergePostal servicesShoeshine serviceComplimentary airport shuttleLobby Gift Shop

Sheraton Djibouti HotelPlateau du Serpent P.O. Box 1924Republic of DjiboutiTel: (253) 350405 Fax: (253) 355892www.sheraton.com/Djibouti

Eritrea Rebuilds After Years ofNeglect

Eritrea, a strategically located resource-rich African countryat the southern gateway to the Red Sea, celebrated 10 yearsof independence in May in a new era of peace and stabilitythat has enhanced its appeal to international investors. Witha population of 3.9 million, Eritrea is bordered by Sudan,Djibouti and Ethiopia but is within easy reach not only of

African but also of Middle East and European markets. Thepeace treaty with Ethiopia signed in Algiers in December2,000 has ended a rumbling border war and begun to removelingering fears among the investor and aid donor communityabout Eritrea’s long-term future.

Nevertheless, Eritrea’s pro-business government headedby President Isayas Afewerki that has opened up all areas ofinvestment to foreign capitalists faces major challenges ofreconstruction and development. At liberation in May 1991,the Eritrean authorities inherited a country and economy thatwas virtually destroyed. Infrastructure, industry and welfare


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ERITREAERITREA

Since gainingits independ-ence in 1991,Eritrea hasbecomeamong thesuccessfulcountries in

Africa. In light of the destruction it sus-tained during the Ethiopian occupationthe economic progress Eritrea hasmade in the 10 post independenceyears is stunning.

Hon. Tekie, Governor of the bank ofEritrea, says that Italian colonialism,despite its colonial flaws, was animportant factor in modernizing theEritrean economy. Eritrea was one themost industrialized countries in Africaat that time and long after, during theBritish administration in the 40’s andduring the federal period with Ethiopiain the 50’s. But during the Ethiopianoccupation, which followed the annul-ment of the federal arrangement andannexation by Ethiopia in 1952 thecountry saw the unfolding of the dark-est chapter in its history. The deliber-ate policies of neglect and scorchedearth of the Ethiopian rulers’ com-pounded by the 30 years war of libera-tion and draught destroyed the coun-try’s infrastructure, industrial base andhuman capital. At liberation Eritreainherited totally devastated economy.But the immense investment made atrehabilitating and reconstructing the

shattered economy by the governmentand people did pay off and revived theeconomy to a viable stage with in arelatively short period of time.

Financial sector reforms commencedin 1992. Far-reaching changes weremade, which ultimately saw the intro-duction of the country’s own currency-the Nakfa ending Eritrea's dependenceon Ethiopian Birr, once and for all. Thereforms have helped in creating aviable financial sector. During theEthiopian occupation the financial sec-tor was virtually non-existent.

The Nakfa introduced in November1997 has remained relatively stable,avoiding sharp fluctuations, ever since.Inflation has been kept at bay. Theunderlying inflation remained withinlimits - mostly single digit.

Currently, the financial sector is com-posed of the Commercial Bank,Housing and Commerce Bank, theDevelopment and Investment Bank,the National Insurance Company andseveral exchange bureaus. At the cen-ter of the financial system is the cen-tral bank. Another local bank is due toopen shortly and foreign banks will beopening branches soon.

The central bank is currently workingon a project worth US$5-6m to com-pletely computerize the prevailingbanking system. This project will bringabout radical change in the bankingsystem.

"Our market based and open econom-ic policy partly explains our success inrevitalizing the economy. We don’tmaintain current or capital and finan-cial account restrictions. Theexchange rate is market based in linewith the rest of the economy". SaysTekie.

Still more progress could and should bemade, with some fundamental factors,which influence our economy, changed.The prevailing low level of trade amongAfrican countries is a hindrance, whichneeds to be addressed. "We believe",says Tekie, "the benefits derived fromincreased trade and regional coopera-tion will be tremendous".

"African countries should be dedicatedto the letter and spirit of the regionalcooperation agreements to boosttrade among them", says Beyene, " asfar as we are concerned, the Eritreangovernment is committed to free tradeand regional cooperation arrange-ments. We are aware of the fact thatwe are not going to ripe the benefitsfrom COMESA in the near future".With some reforms, however, we antic-ipate positive results in the long run.

Bank of Eritrea

Governor – Mr Tekie BeyeneBank of Eritrea, P.O. Box 849,Asmara, EritreaTel: +291 1 123033-6,Fax: +291 1 122091

GOVERNORMr Tekie Beyene


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HOUSING AND COMMERCE BANKTel: 291-1-120350 Fax: 291-1-120401 P.O. Box 235 ASMARA, ERITREA

ERITREANDEVELOPMENT& INVESTMENT

BANK

The Sole Development andInvestment Bank in Eritrea

P.O. Box 1266,Asmara, EritreaTel: 126777, Fax: 201976

Email: [email protected]

BANK ON USBANK ON US

At HCB we are determined to meet your every banking need our

wide rangeing services.

We offer saving accounts, certificates of depositand current accounts for both individuals andbusiness in Nakfa and US dollars.Whether youare buying, building or renovating your homeHCB has the loan you have been looking for.

Short, medium, and long term loans areextended for everything from the constructionof homes and other buildings to repairs andextensions. Other Banking services include fullcommercial and business loans, remittance,local transfers, letters of credit, performancebonds, ect…

Inter-Continental Hotel – EritreaThe only 5 star property available in Eritrea, situated 2 km from

the airport and only 4km from downtown, the Hotel Inter-Continental Asmara offers 144 deluxe rooms and 22 suites. AClub Inter-Continental floor is also available with a private loungewhere guests will enjoy our exclusive and personalised service.

Whether you are in Asmara for business or leisure, our hotelfacilities are specifically designed to satisfy your needs. Try ourmeeting place packages with its unique venue the SelamConference Center, taking up to 420 people with simultaneoustranslation facilities and six other meeting rooms.

The Hotel offers extensive Recreation and Leisure facilitiesincluding, heated indoor and outdoor swimming pools, tennis,squash, Turkish bath and massage relaxing sessions. Day trips tothe Dahlak islands in the Red Sea where Scuba divers will enjoythe unique fish species can be arranged.

Deb Mie 04, Expo Area, P.O. Box 5455 Asmara – The State Of EritreaFor your reservation, please call 00 291 1 150400.

One World One Hotel

A modern financial sector with

highly professional, efficient

domestic & international banking

provides the following services

throughout ERITREA.

• Coordinating of investment flows &deposits

• Short, medium & long term loansand credits

• Banking services throughout the country

• Deposits denominated in foreign currencies

• A sole agent of Western Union MoneyTransfer

COMMERCIAL BANK OF ERITREA

HEAD OFFICE – Liberty Avenue No. 208P.O. Box 219

Tel: 291-1-116005 • Fax: 291-1-124887Telex: 583-1445557 • Fax: 291-1-121849

Tel. PBX: 291-1-121844-48CABLE ERITREA-ASMARA

ASMARA, ERITREA

services had received little or no atten-tion for 30 years. The rehabilitationplans, which have discarded state own-ership of enterprises, were initially ham-pered by shortages of skilled labor –

during the liberation struggle withEthiopia whole generations missed outof formal education. Economic growthsee-sawed in the 1990s and by 1997Gross National Product was onlyUSD900 million, making Eritrea one ofthe world’s poorest countries.

Sudan has become Eritrea’s majormarket followed by Italy, the US andSaudia Arabia but exports to Ethiopiadwindled in the late 1990s, leading to arenewed urgency to seek new marketselsewhere. Eritrean industry is notbroad based, with processing of agri-cultural inputs playing the major role.Coca-Cola of the US and Pall MallRothmans of the UK have invested inEritrea for beverages and cigarettesrespectively.

Eritrea belongs to Comesa, aregional economic grouping with 21member states, committed to freetrade. However, the major potential forinvestment lies in mining, hydrocar-

bons, especially offshore and tourism.Eritrea’s mining history stretches backto biblical times and gold was pro-duced for the Pharaohs and there areproven deposits of other minerals suchcopper, base metals and ferroman-ganese, as well as construction materi-als such as granite, marble and lime-stone. Heritage tourism, beaches andcasinos offer opportunities.

A major lead in promoting privatesector investment is the EritreaInvestment Center – a one-stop shopfor foreign and domestic investors.Eritrea introduced its own currency thenafka in 1997. The financial sectordominated by institutions including theDevelopment Investment Bank, theHousing & Commerce Bank, the


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NATIONAL INSURANCECORP. OF ERITREA

P.O. Box 881Asmara – Eritrea

Tel: 291-1-123000Fax: 291-1-123240

Direct Line: 122256 Email:[email protected]

Infrastructure, industry and welfareservices had received little or no atten-tion for 30 years

TELECOMUNICATION

SERVICES OF ERITREA

Telecoms Seeks

ForeignPartners

Telecommunication Service of

Eritrea (TSE), the sole national oper-

ator, is being assessed by internation-

al consultants KPMG for early priva-

tization but is already a major player

in the economy. Since 1994, TSE

has increased the telephone sub-

scriber base by 300% through new

terrestrial microwave, fibre optic,

copper and satellite links in the net-

work, introducing the first Internet

services to the capital Asmara andother towns.

TSE is committed to market liberal-ization and sees a major opportunity

for expansion of fixed-line and

mobile services in partnership withforeign investors who have been

negotiating with the government to

participate in this sector. Among the

priorities are to meet the waiting listof 120,000 for telephone services inAsmara alone and to improve and

expand the Internet service through

more bandwidth. By 2006, TSE aimsto install more than 250,000 lines inAsmara and about 406,000 nation-

wide as well as modernizing the

existing network infrastructure.

Commercial Bank of Eritrea and the National InsuranceCompany is regulated by the Banks and Financial InstitutionsAct. This allows for the licensing of privately-owned financial

institutions including foreign banks, although none is repre-sented in Eritrea at present.

The state-owned Eritrean Development & InvestmentBank, established in 1996, is Eritrea’s youngest bank and is

investing in expanding its network of branches throughoutEritrea and offers loans to entrepreneurs in agriculture, indus-try, construction and fisheries, assessing their contribution tothe economy through employment, transfer of technologyand export generation. The Housing & Commerce Bank ofEritrea specializes in housing finance but offers full commer-cial and business loans, letters of credit and savings andinvestment products with offices not only in the capitalAsmara but also in other major centers.

Financial services are not limited to banks such as theCommercial Bank of Eritrea, which specializes in serving thegrowing business community - the investment law allowsforeign-owned companies to engage in exporting. The soleprovider is the government-owned National InsuranceCorporation of Eritrea but officials emphasize that they havenever exploited their monopoly and put a high priority on sat-isfying customer expectations.


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the major potential for invest-ment lies in mining, hydrocar-bons, especially offshore andtourism

Open for BusinessNamibia, a vast democratic

country of 1.7 million people onthe Atlantic seaboard of south-west Africa, has tailored itsinvestment polices to assist glob-al investors. Under PresidentSam Nujoma, Namibia is commit-ted to private enterprise inexploiting abundant naturalresources that include reserves

of oil and natural gas. With more than 70 mines, this sector is the economy’s backbone with diamondsthe biggest earner. Namibia is drafting legislation for an offshore financial services industry, and

taking advantage of abundant sunshine, wide horizonsand unconfined spaces.

will develop expertise in e-commerce and tourism

PRESIDENTMr Sam Nujoma

NAMIBIA NAMIBIA

Namibiahas a well-developed infrastructure, no longer dependent on South Africa,

including a modern transport network, operated by the state-owned national

carrier Transnamib Holdings. Headquartered in the capital Windhoek, the

company serves both Namibian and regional markets with road and rail services.

Ceo Mr. John Shaedonhodi thinks Namibia has the capacity to handle everything for its landlocked neighbors. Transnamib is com-

mitted to boosting not only regional trade but every domestic industry from

mining and agriculture to tourism. TransNamib runs the Desert Express – a

luxury tourist train between the capital and the coastal town of Swakopmund,

as well as passenger services on most rail routes.

TransNamib Holdings LtdPrivate Bag 13204, WindhoekTel (+264 61) 298 2109Fax (+264 61) 298 2386


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BURUNDIBURUNDIThe signing of the Arusha PeaceAgreement in July will help the countryto heal its wounds and to regain confi-dence from the international community

Burundi, a nation slightly smaller than the state ofMaryland, is located in the very heart of Africa, on theEastern shore of Lake Tanganyika. When Dr. Livingstonewas searching for the Mountains of the Moon, the mythicalsources of the Nile, he was actually looking for Burundi.

Burundi, which attained its independence fromBelgium in 1962, used to be one of the most stable coun-tries in Africa and one of the richest in terms of naturalresources. Due to the ongoing war and the two-year eco-nomic sanctions imposed, GDP contracted by 24%between 1993 and 2000. "We will need more than 8 yearsto attain the same level we had in 1992" remarks Mr.Charles Nihangaza, Minister of Finance. Sanctions weresuspended in 1999, but the country has not yet recoveredfrom the ravages of war and the economy remains crip-pled. The signing on July 23, 2001, of a Peace ProcessAgreement in Arusha has started a transition period of 18months for the country. A permanent cease-fire should

bring the necessary stability for the economy to prosperagain. So far, most of the economic indicators are red,however there are signs of improvement. Inflation used tobe 30%, but " since December 2000 it is at 14%, andwith the program we have with the International MonetaryFund we intend to keep it at that level or even to reduce itfurther" explains the Minister Nihangaza. "We used tohave US$ 350 million of aid for development, now it isonly US$ 90 million. It is obvious that we need invest-ments as soon as possible. We are counting on theresults of the IMF Paris Conference to obtain the neces-sary aid and to meet the most pressing demands, suchas refugees and displaced people. We also need moneyto invest in social activities and infrastructures. Howeverthe promises from Paris keep being postponed".

Budgetary deficit since 1998 has been between 7.5 and8% of GDP. Hence, while waiting for international donorsaid, the government has set up a number of measures toincrease their income and improve the economic situation."Everyone is paying taxes and we are reducing expenses"explains the Minister of Finance, "This year we have regis-tered 3% deficit, and we believe we can reach 1% at theend of the year". In order to regain confidence fromdonors and the international community the Burundian


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government has also made an important effort regardingthe transparency of their activities. Together with theWorld Bank they have initiated a program to control publicexpenses that will allow trace at any given time how themoney is spent. Recognizing these measures the IMF hasestablished a program with the government, an importantstep that has boosted the confidence of donors.

INTERNATIONAL AID COULDHELP BURUNDI RESUMEINDUSTRIAL ACTIVITIESThe country abundant reserves of rare minerals, rich agricultural lands and idle factories are just waiting to be discovered and exploited by international investors

In terms of natural resources Burundi is a rich country.Coffee, tea and cotton are the basis of its agriculture, butwith so many people displaced by the war and the declineof international coffee prices, coffee production has shrankto half of what it used to be. According to Mr. JosephNtanyotora, Minister of Commerce, Industry and Tourism,"the cease fire will allow the people to come back to theirestates and to restart agricultural production". Recentlydiscovered nickel deposits amount to 261 million tons, i.e.5% of the world reserves. Gold, platinum, cobalt, chrome,coltan – used in the manufacture of cellular phones – vana-dium, phosphates, titanium or lanthanides – extremely rareminerals highly appreciated for their versatility – are alsoabundant. Burundi’s 36 million tons of peat reserves insurea cheap source of energy for the country.

The war has kept at bay prospect investors, and thelevel of cooperation dropped dramatically. "This caused ahuge lack of foreign exchange which has tremendouslyhampered the development of industries" explains Mr.Ntanyotora. "Raw materials can only be obtained withforeign currency. The application of the Paris Round TableAgreements represents US$ 450 million in aid, i.e. fourtimes the national budget. This aid could help us launchour industry thanks to the availability of raw materials. Itwould also help us to foster trade and to repay theState’s internal debt with the private sector", concludesthe Minister of Commerce and Industry.

FOREIGN INVESTMENT ISANTICIPATED THANKS TOTHE ENACTMENT OF NEWLAWS AND INTERNATIONALTREATIESThe ongoing privatization process andthe enforcement of COMESA free tradeagreement are intended to attractinvestors and revamp the economy.

Burundi is taking a number of sound measures toattract foreign investment, such as the signing of treatieswith international agencies such as ACA (Agency for theInsurance of Trade in Africa) and MIGA (MultilateralInvestment Guarantee Agency) in an effort to protect andstimulate investments. They have also set up legislationinsuring foreign investors total respect on their industrialproperty rights while vowing to prosecute industrial pira-cy. Any company wanting to invest in the country willenjoy 8 years of tax holidays on customs, income taxes,and VAT on equipment and raw materials.

A new Free Trade Zone has been set up in the capital,Bujumbura, covering sectors such as agriculture, industryand trade, with a particular emphasis on technology. "Webelieve this new FTZ will work better than the previousone" comments the Minister of Commerce, Mr.Ntanyotora. "The span of activities of the Free Trade Zonewill now be applicable to the 20 countries of COMESAand its 400 million consumers", concludes Mr.Ntanyotora. Custom taxes for COMESA goods havealready been cut by 60% and by October 2001 they willbe totally eliminated. "Integration has a cost, but also anumber of benefits. Today Burundian industries are work-ing at 25% of their capacity. Thus member countries ofCOMESA will have to support the cost of integration. Wehave foreseen measures to safeguard our young busi-nesses and the pivotal industries of our country", con-cludes Mr. Ntanyotora. An ambitious privatization processwill make local industries more competitive. Public com-panies such as ONATEL (telecommunications), ONAPHA(pharmaceuticals), INSS (Social Security) or SODECO(Coffee) will be liberalized and then privatized. The gov-ernment will part from of companies under difficultiessuch us COTEBU (textiles) or the National Printing House.Companies enjoying good financial health such as publicbanks or the Burundi Bier Co. will continue under stateownership and will eventually be sold.

LEFT : MINISTER OF COMMERCE, INDUSTRY AND TOURISM, JOSEPH NTANYOTORA RIGHT : MINISTER OF FINANCES , CHARLES NIHANGAZA

FOR FURTHER INFORMATION PLEASE CONTACT:Ministry of Financetel:+257 222775fax:+257 223827Ministry of Commerce, Industry and Tourismtel:+257 218940fax:+257 238205


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SWAZILANDSWAZILANDSwaziland - Millennium ProjectFulfils King Mswati’s Dreams

Swaziland, a country the size of New Jersey or Walesand the smallest in the southern hemisphere, is neverthe-less on track to develop into a major player in the tourismand convention business, thanks to an ambitiousMillennium project, involving construction of a new interna-tional airport, theme park and hotel and conference center.

Independent since 1968, the Swazi nation of just over 1 million, takes its name, Emaswati, from King Mswati I whoreigned in the 19th century. Its government combinesdemocracy and the traditional tribal system, with executivepower vested in His Majesty King Mswati III. He rules in

consultation with the cabinet, the bicameral Parliament andthe Swazi National Council - a traditional component of gov-ernment headed by the monarch and the Queen Mother. Forimportant announcements the king still summons all adultcitizens to the national cattle kraal at eLuzidzine.

Landlocked Swaziland is bordered by South Africa andMozambique but now enjoys a 3.1% rate of economicgrowth - a performance that is dependent on attractingsupport from the donor community and direct foreigninvestment. The recently established Swaziland InvestmentPromotion Agency is tasked with promoting Swaziland,which is developing a manufacturing base but whose tradi-tional exports are sugar, maize, tobacco, citrus fruit andcotton, with sugar supplying about 23% of GDP and 27%of the country’s employment.

Sun International Swaziland www.sunint.co.za


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Mike Matsebula, chief executive of the Swaziland SugarAssociation, says sugar provides 16% of the country’sexport earnings, with production at around 530,000 tonnesa year. "The future is bright as far as agriculture is con-cerned," he says. "Swaziland has a competitive advantagewith its excellent climate and soil and adaptable laborforce."

Swaziland belongs to the Southern African DevelopmentCommunity, a 14-country trading block including SouthAfrica that promotes free trade between Southern Africanstates. Swaziland enjoys close links with South Africa andits currency is tied to the rand. Under an agreement nowcoming into effect, customs duties will be removed from85% of the trade between SADC states by 2008. BarnabasDiamini, Swaziland’s prime minister says "greater trade lib-eralization is an economic reality" and that SADC membersmust maximize the benefits.

The priority for Swaziland within SADC is to promoteeconomic development and improve infrastructure. "Thereare a lot of incentives that need to be put in place toencourage investors, both local and overseas, to see howthey can participate in the use of land and in manufactur-ing" says HM King Mswati III, "The room for expansion isthere." Prime minister Diamini also emphasizes the needfor close working between the public and private sectors,adding that growth will come from the private sector withgovernment limiting itself to infrastructure, creating a pro-

business environment and guaranteeing good qualitysocial services.

Tourism is a vital growth area for Swaziland, given itsrich cultural heritage and assets of game animals andwildlife but in the mid 1990s visitor numbers sagged, hov-ering at around 330,000 a year, due to the difficulty ofaccess via the 12 land border crossings and the limita-tions of the tiny airport at Matsapa. For bird watchersSwaziland has the greatest species density in the wholeof Southern Africa, as well as some of its finest arts andcrafts. The "Big Five" game animals are will representedin the national, royal and private game reserves andtourists are always welcome in a country renowned forhospitality. Among topographical features, Sheba’sBreasts - the rocky ledge overlooking the Ezulwini Valleywas reputedly the inspiration for the classic novel KingSolomon’s Mines. And Swaziland already caters foradventure sports ranging from white-water rafting to troutfishing and hiking.

However, tourism at present is characterized by visitorsstaying on average only one or two nights, suggesting thatSwaziland is mainly attractive for week-end visits and shortstopovers. There are a total of 69 hotels with 1,016 roomsin the capital Mbabane and the two other main urban cen-ters, with another 489 rooms in the rest of the country. In1995, Swaziland was the ninth largest tourist market inAfrica, based on visitor arrivals, but in the late 1990sSwaziland slipped out of the top ten and now governmentis determined to return to the premier league.

The key to this strategy of resurgence is the Millennium

"Swaziland has a competitiveadvantage with its excellent andsoil and adaptable labor force."

says HM King Mswati III, "Theroom for expansion is there."

THE CHALLENGE FOR TOURISM IN SWAZILANDRevising the Decline in Visitor Arrivals

350

000's

300

250

200

150

50

0

Source: Central Statistical Office & RETOSA

Number of Foreign Visitors Arrivals to Swaziland

1994 1995 1996 1997 1998 1999


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Project being undertaken by the Swazi government andco-ordinated by the Ministry of Economic Planning. Its aimis to bring Swaziland into the forefront of nations so thatby the year 2022, the country will be in the top 10% ofstates founded on sustainable economic development,social justice and political stability. The project has fourcomponents - multipurpose convention center and tradecenter and a hotel and sporting complex at Ezulwini; atheme and amusement park at Manzini and a new interna-tional airport at Sikhuphe.

The Royal Swaziland International Convention Center isthe cornerstone of HM King Mswati III’s millennium project.The site is ideally situated in the Ezulwini Valley (whosemeaning is Place of Heaven) where many of the country’sexisting hotels and entertainment facilities are located.They include the Royal Swazi Golf Course and the SunInternational Hotel Complex, currently the country’s leadingconference venue and able to handle up to 600 delegates.The convention center will cater for 1,200 delegates in ple-nary session, while the permanent trade center will displayand sell products made in Swaziland. Consultants estimatethat the center will attract 150 conferences and 18 exhibi-tions in its first year of operation - likely to be 2003. The436 million emalangeni project, whose architecture willblend African forms with state of the art building tech-niques, will be managed by the private sector.

The 500-room hotel and sporting complex complementsthe convention center. Its accommodation is specified as acombination of three, four and five star rooms to attractthe maximum number of delegates, according to prevailinginternational standards. The Swaziland government is

encouraged that prospects for golf resort developmentsglobally are improving - currently Swaziland has only two18-hole golf courses and seven nine-hole courses. It islikely to implement the project as a public private partner-ship, with the government financing the costs of the con-struction and then leasing the facility to a private operator.

The Millennium Project envisages the construction of an"Out of Africa" railroad meander linking all the attractionsof the Ezulwini Valley and beyond to the Crater - a featureof outstanding natural beauty and the site of the Ngwenyairon ore mine (the world’s oldest at 44,000. The consultantsto the project have also included the creation of a largefresh water lake as a reservoir and for recreation.

The King Mswati Adventure Playground, to be locatedsouth-west of the city of Manzini, is targeted at the localpopulation, where four out of ten people are under the ageof 15. There are no recreational facilities available to themat present. However, this Disney-type adventure play-ground and theme park, slated to open in January 2003,will also attract new tourists to Swaziland ,with a focus onsports, church, youth and school groups. The park willhave swimming pools and slides, fun fair attractions, videoentertainment halls, a large cinema and night club andshopping complex. The 38 million emalangeni adventureplayground will offer an experience that combines enter-tainment, culture and education. The project’s consultantsaim to provide "the authentic cultural experience much

sought after by visitors to Swaziland."

Swaziland’s new international airport catering for long-haul jumbo jets for the first time in the country’s history isthe linch-pin of the millennium project. Not only will the air-port serve the domestic tourist market but it is also wellpositioned to boost Swaziland’s sugar belt and economicactivity in the Lubombo region. A virgin site has been cho-

sen at Sikhuphe near the country’s geographical center, 45km from the existing small airport at Matsapha. With aroyal pavilion and VIP terminal, the new airport (to open in2005) will also be a home for Swaziland’s proposed newnational airline offering services to neighboring countriesand serving visitors traveling to Mozambique. Traffic isforecast to rise from 62,000 passengers a year at presentto 255,000 by the year 2020.

A common theme throughout the Millennium Project isto create jobs for Swazi citizens. The Swazi people arepredominantly rural with less than a quarter urbanized. Thepopulation is rising at the rate of 2.9% a year and unem-ployment is a growing problem with 22% of the populationjobless. While it is difficult to forecast the total number ofnew jobs the project will Millennium Project will introduce,the consultants say that for every eight tourists one newjob is created. The airport plans envisage that the commu-nity supported by the airport alone will be 1,360 by 2005.For the convention center experts say the constructionphase will generate 6,700 jobs and when open the centerwill employ 950, with another 190 at the trade center.

At the Central Bank of Swaziland, the governor MartinDlamini says the government is also planning to diversifythe country’s financial portfolio. "Our dream is to establisha financial services center here and to attract investmentsfrom the finance community." There are more Swazis livingas expatriates in South Africa than in Swaziland itselfwhich serves to emphasize the need for Swaziland to workclosely with its more economically powerful neighbor.

Mobile telecommunications as part of the improvinginfrastructure has proved a success story in Swaziland withthe commercial operator MTN already serving 29,000 sub-scribers. "There is a huge opportunity for growth in thissector in Swaziland," says MTN’s chief executive NoelMeier. "We hope our efforts to improve it will make a differ-ence." However, Swaziland is part of a region where onlyone person in 3,000 uses the Internet compared to one insix in Europe and looking ahead Swaziland recognizes theneed to invest heavily in information technology to supportthe aspirations of its young population.

“our dream is to establish afinancial services center here”

MINISTRY OF TOURISM ENVIRONMENT & COMMUNICATIONTel: (268) 404 4556 / 404 6420/3/404 2531Fax: (268) 404 5415 / 404 64438E-mail: [email protected]. Box 2652 MbabaneKingdom of SwazilandWebsite: www.mintour.gov.sz

now government is determinedto return to the premier league

DESTINATIONETHIOPIAA new reality inthe making

Ethiopia, one of the world’soldest countries, has spentthe past decade undergoingfundamental change tobecome a market-oriented

economy open to global investors. After the 1974 oustingof Emperor Haile Selassie, who belonged to a dynastyclaiming descent from the biblical Solomon, Ethiopiaendured 17 disastrous years of corrupt Marxist rule. Thecurrent Prime Minister Meles Zenawi’s arrival in 1991brought immediate stability and paved the way for demo-cratic elections. In 1995 this strategically important nation of65 million with vast untapped natural resources was officiallyre-named the Federal Democratic Republic of Ethiopia.

Under Prime Minister Zenawi’s government, Ethiopia isconsolidating vital gains in economic rehabilitation but ishungry for foreign investment to accelerate the pace ofdevelopment. "We think we have succeeded in trans-forming the country into a market-driven economy, with-

out it having to collapse," says Zenawi. "This is one ofthe major achievements of the past 10 years – we havestabilized our nation – and also problems with Eritrea arenow behind us." Zenawi is clear about Ethiopia’s compet-itive advantage and commitment to transparency in busi-ness dealings stressing that investors stand to make"profits as well as offering benefits to their hosts."

"We have a competitive advantage in agricultural prod-ucts, particularly organic crops and in agro-processing,"he said. "We welcome all investors to come and invest inour future." Ethiopia with its Agricultural DevelopmentLed Industrialization (ADLI) strategy has a predominantlymixed farming economy, raising both crops and animalsbut is vulnerable to fluctuating commodity prices, espe-cially of coffee. "We want to link up our companies, busi-nesses and farmers to foreign companies which haveestablished outlets in developed countries to market ourproducts," says Zenawi, who plans to apply the samepolicy to manufacturing including textiles.

Foreign Minister Ato Seyoum Mesfin sees democracyas a tool for economic development. "We are now a newnation, a new reality," he says. "We are establishing anew democratic and transparent society, because this isthe only way we can see Ethiopia flourishing and develop-ing." Allied to this is the need to build new partnershipswith the international community, especially long standingfriends in the European Union and with Ethiopia’s largest

PRIME MINISTERHon. Meles Zenawi

ETHIOPIA


S21

ETHIOPIAwww.uneca.org


S22

trading partner the US. ThroughCOMESA, Ethiopia is also seeking tosustain significant growth in tradewith African countries.

Part of the modernization driveentails a policy on regeneration thatis not just about disposing of publicassets to the private sector. TheAddis Ababa-based EndowmentFund for the Rehabilitation of Tigray(EFFORT) is an investment companyseeking foreign partners but aiming

to fill a niche. "The objective ofEFFORT is to exploit those areas ofbusiness which are not covered bythe public or private sector, " sayschairman Sibhat Negga. "The gov-ernment is not going to establish orown cement or textiles factories.This is where we bridge the gap."

With seven World Heritage Sitesrecognized by the UN, Ethiopia hashuge potential for tourism once newinfrastructure is in place. The sevensites include Axum, with its inscribedobelisks and reputation for being theArk of the Covenant’s last resting

place; Gondar, a city of castles;Lailbela, a sacred town with rock-hewn churches; Harar, a millennium-old walled city once famed for thecaravan trade and Lake Tana, at theBlue Nile’s source, studded withisland monasteries. Nor is its attrac-tion purely monuments and pre-his-tory - Ethiopia is one of the mostphysically and biologically diversecountries, with 823 species of birdsand 277 of wildlife.

"Ethiopia is a mosaic of peoplesand cultures, with more than 80 lan-guages spoken and three of theworld’s greatest religions, Christianity,Islam and Judaism," says YusufAbdullah Sukkar, commissioner of theEthiopian Tourism Commission. "Wehave parks with fantastic scenery andan unrivalled combination, includingwhite-water rafting, the beautifulwaterfalls of the Blue Nile, forests,mountains, lakes and deserts."Sukkar’s message is "forget theimage and experience the reality".The welcome extends to investors inhotels and tour operations, becausethe government has "land to give, taxbreaks, no import duties and hard-working affordable labor."

With its tree-lined avenues and finearchitecture, Addis Ababa, boostsexcellent international hotels andconference facilities, including the$120 million UN Conference Center,built in 1995, that could host interna-tional as well as regional events. Itsbusiness will be boosted by moves tobring in strategic partners to improvetelecommunications and the railways,the creation of a new international air-port and the opening up of improvedroads and transport links. "Ethiopiaoperated under a socialist system for

"We are now anew nation, a newreality"

Left: Commisioner for Toursim – Mr. Yusuf Abdullahi SukkarRight: Minister of Foreign Affairs – Mr. Seyoum Mesfin

“we have succeed-ed in transformingthe country into amarket-driveneconomy, without ithaving to collapse"

17 years so we did not encourageany local or international investor butnow there are many opportunities, "says Minister of Works & UrbanDevelopment Ato Haile Assegede.Among the private sector opportuni-ties available is a 50% stake in theforwarding company Packtra which isseeking new shareholders.

During the socialist regime, state-

owned Ethiopian InsuranceCorporation (EIC), founded in 1976,was well positioned to control theinsurance business by monopoly. Yetfar from resting on its laurels, EIC'sA/Managing Director TewodrosTilahun has presided over drasticgrowth with annual written premiumsnow standing at Birr 228.4 millionfrom Birr 50 million at inception, whilestaff have doubled to 1,092. EICremains the market leader, attributingthis to its excellent service and bal-anced investment portfolio. Long-term expansion will be in COMESA.

Despite having hydrocarbons andmineral riches, energy production andtransmission will likely play the deci-sive role for Ethiopia. "Our potentialto produce energy is one of thegreatest in the world even though weare one of the lowest consumers,"says former Minister of Mines &Energy Ato Izaddin Ali Zikeh. "Thehydroelectric potential is a capacityof MW30,000 but we are using lessthan MW450 for our large popula-tion." The Ethiopian Electric PowerCorporation (EEPC) is seeking tomeet demand through innovativepublic private partnerships. The min-ister says four foreign companieshave already responded by signingagreements with EEPC.

EEPC general manager MiheretDebebe says that over the next fiveyears electricity will be extended to164 towns but other priorities includeimproving technology and manage-ment systems. The company isdevising a power sector masterplanfor the next 25 years. With $1.2 bil-lion investment over the next fiveyears alone, Debebe is proud thatsome 30% of the target can be metfrom operating income. Ethiopia also

has ambitions to supply power toother COMESA countries includingSouth Africa.

Former Minister of Trade &Industry Kassahum Ayele sees ADLIas the motor for economic develop-ment. His strategy is to ensure thatEthiopia reaps the seeds it has sownby working on international capacitybuilding through free market accessopportunities for its produce offeredby the EU, COMESA, the US and infuture through the World TradeOrganization. He considers thatexport promotion should focus onselected products capable of gener-ating significant foreign earnings."The strategy has identified as priori-ties coffee, cotton, fruit and vegeta-bles, livestock and livestock prod-ucts," he says. Following this will bean emphasis on textiles, leather andmeat products. The minister tem-pers his optimism about COMESAwith realism pointing out the twinchallenges of poor infrastructure andcompeting products.. Lookingahead five years he sees growingforeign earnings, continued politicalstability and manufacturing growingin importance.


S23

"We are establishinga new democraticand transparentsociety, becausethis is the only waywe can seeEthiopia flourishingand developing."

Left: Managing Director of Ethiopian Insurance Corporation –Mr. Tewodros Tilahun

Right: Mr Sebhat Negga – Chairman of EFFORT

Ethiopia is a tourist 'treasure thatdefies words', says Hilton AddisAbaba managing director KlausSchak, 'with thousands of years ofhistory, scenic beauty and culture tooffer the visitor.' The 356- roomnewly refurbished Hilton, set in 15acres of gardens and originally builtin 1969, has by far the best recre-ational facilities in Ethiopia, offeringan oasis of calm for the businesstraveler, with its well-equipped bars,restaurants, gym, heated swimmingpool and racket sports. NowEthiopian Airlines has started adirect flight to the US, the Hilton hasbecome a popular and accessible'home from home' for its sophisti-cated international clientele.

HILTON HOTEL Tourist Treasure 'Defying Words'

Telephone: 518400 Fax: 510064 Email: [email protected]


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Uganda SurgesAhead UnderMuseveniThe land-locked East Africancountry of Uganda is achievingdramatic economic resurgenceand political stability underPresident Yoweri Museveni whowas re-elected in March for five

more years. With 23 million people in a nation slightlysmaller than the State of Oregon, Uganda has hugeuntapped natural resources,including fertile soils, regularrainfall, and sizable cobalt andcopper deposits , and others,in varying quantities, such asgold and wolfram. Internationalcompanies are speculating foroil. Agriculture is the econo-my’s biggest sector, employingmore than 80% of workers,with coffee the main exportcrop, accounting for the bulk offoreign earnings.

Museveni was born in 1944to a family of pastoralists inAnkole, Western Uganda, andfrom an early age, even beforegraduating from the Universityof Dar-es-Salaam, becamedetermined to fight againstpolitical and social injustice.Uganda gained independencefrom Great Britain in 1962 butthe country was almost ruinedby two dictatorial regimes inthe 1970s and early 1980s andrecovery only began in 1986.Museveni formed a broad-basedgovernment including former ene-mies united under his NationalResistance Movement.

Since gaining power the Movement government hasconcentrated on restoring peace to a war-damaged countryand restarting an almost obliterated economy. Uganda hasgained new respect from its neighbors and has joined theEast African Community, with Kenya and Tanzania, and alsoCOMESA. Gross Domestic Product is expected to rise by5.1% in 2001, since the Movement came to power theaverage rise over 15 years is over 6% per annum, which ishigher than last year because some non-coffee export sec-

tors had strong growth, including perishables such as freshwater fish and flowers. The government is pursuing tightfiscal disciplines in budgeting, giving a priority to education,health and development of agriculture. Public services,especially telecommunications, have benefited from privati-zation and increased competition through the market econ-omy and other state-owned businesses are in the pipelinefor divestiture.

The government’s privatization agenda will focus duringthe current fiscal year on medium to large-scale commercialenterprises, including the dairy and insurance corporations,and utilities, especially electricity, where $70 million in newinvestment is needed over the next five years.

In social affairs, Museveni has adopted a leading role inUganda’s fight to combat thespread of HIV/AIDS that hasalready killed 800,000, with 1.4million children losing one orboth parents, the highest of anycountry.

"When a lioncomes to yourvillage, youmust raise thealarm loudly,"says Museveni."If we raiseawareness suf-ficiently, it willstop."

The Uganda AIDSCommission is now working onthe president’s strategy to sen-

sitize 6.8 million school children to the dangers of this dis-ease. Uganda is at the forefront in the world in fighting thescourge and has reversed the trend. At one stage the sick-ness rate was 30% (judging by women in pregnancy). Nowit is around 8% or less. Uganda is a role model throughoutthe world and is studied as an example.

The potential for tourism and more business travelers ina country with lakes, wildlife, forests, mountains and desertplains that Winston Churchill called the ‘Pearl of Africa’ isan undoubted challenge. It is already being met by organi-

SHERATON KAMPALAwww.sheraton.com

UGANDASpecial Advertising Section

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UGANDAPRESIDENT

Yoweri Museveni

called the ‘Pearl of Africa’ is an undoubted challenge. It isalready being met by organizations, such as MIDROC Africa,which deals with the purchasing of property in Africa, and itssister company Golden Leaves Hotels & Resorts, handling itsmanagement. Since March, they have operated the KampalaSheraton and are investing $20 million in renovation of thispopular property to make it five-star from top to bottom.MIDROC is looking for expansion and its experience so farhas been positive. "We are seeking to develop hotels that aregeared towards the tourist," says Golden Leaves CEO VijayVijeyakummar. "We are currently looking at viable locationsfor the development of hotels, resorts and lodges." Togetherwith director of operations Dirk ten Brink, he is optimisticabout the investment and business climate in Uganda,although for tourism to prosper more airlines will have to fly toUganda to make the market more price competitive. The lib-eralization of foreign exchange has eased the restrictions onbuying US dollars and government reforms have enabled for-

eign investors to repatriate their profits, provided they pay alltheir local taxes.

Part of Uganda’s success is that it is becoming more selfreliant and less aid dependent, with domestic revenues cov-

ering recurring government expenditure. As a landlockedcountry, bordered by Kenya to the east, Tanzania to thesouth, Rwanda on the southwest, Congo to the west andSudan in the north, Uganda requires an orderly and efficientair transport industry.

The Civil Aviation Authority, founded in 1991, is seeking todevelop Entebbe Airport into aregional hub so that exportscan be diversified and overconcentration on the EuropeanUnion avoided. Air transport isvital to promote tourism andnon-traditional perishableexports including cut flowers,vegetables, fish and fruit. By2000, 15 operators, includingnew arrivals Emirates Airlineand South African Airways,were offering 76 frequencies aweek to Entebbe Passengernumbers had risen to 397,643a year by April 2001, with38,259 tonnes of cargo. TheCAA has already rehabilitatedthe airport infrastructure buthas a shopping list of futureprojects including a new cargocenter, airport hotel and exportprocessing/free trade port.

Uganda Railways also playsa major role in servicing busi-ness transporting 800,000tonnes a year, mainly ofimports such as wheat, sugar,machinery and petroleum products but also exports of coffee. Therailways are wholly government owned but theorganization is preparing for partial privatization in thatwhile government will retainownership of its assets, privatecompanies will be invited tocompete to run the operations.Uganda Railways, which hasattracted interest from SouthAfrican and Canadian-basedgroups, says that by the time itis privatized in June 2003, thecompany will be debt free. Itspayroll has already been cutfrom 4,000 five years ago to1,300 and will drop to 1,000


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Paving the way to the futureThe National Housing and ConstructionCorporation of Uganda has been involved since1964 in the provision of quality and affordablehousing for all our clients. These houses areavailable for sale in Naalya Pride Housing Estateand Lubowa 108 Housing Estate.National Housing and Construction Corporationis looking for joint venture partners in puttingup condominiums and housing estates inUganda. We build for progress.

NATIONAL HOUSING AND CONSTRUCTION CORPORATIONContact Person: Barbara

Head Office: 3-5, 7th Street, Industrial Area, P.O.Box 659 Kampala, UgandaTel: 256-41-232312, 257462/3 Fax: 256-41-258708Email: [email protected] Website: www.nhcc.co.ug

"We have a rich lean organi-zation with great employeerelations,"

year. "We have a rich lean organizationwith great employee relations," saysMr Daudi Murungi, Managing Director."We are on very friendly terms withKenyan Railways as it is through theirsystem that our traffic must pass."

With some 45 state-owned busi-nesses already sold off, attention hasswitched to some of the more spec-tacular success stories. UgandaTelecom (UT), founded in 1998 fromthe former Uganda PTC, was priva-tized in June last year when a consor-tium formed by DETECON of

Germany, Telcel International ofSwitzerland and Orascom Telecom ofEgypt bought a 51% stake from thegovernment. Since then UT has beenstructured into three strategic busi-ness units – UTL Telecel for both pre-paid and post-paid cell phones; UTL

Online for high-speed data networkand Internet service and the parentcompany UT as the fixed-line serviceprovider, also offering fax, telex andpublic pay phones. In the short spaceof seven months, the cell phone busi-ness has acquired over 50,000 sub-scribers, while UTL Online is fastbecoming the leading data andInternet company in Uganda. Its hugebandwidth and technical expertise hasset it apart from its competitors.

An enterprise that is listed for priva-tization, with the government retaininga 51% stake, is the National Housing& Construction Corporation (NHCC), aparastatal under the Ministry of Works,Housing & Communications foundedin 1964. NHCC, which builds andsells housing developments, officeblocks and builds industrial estates, isa strong advocate of privatization,seeing the advantages of greater effi-ciency, transparency, competition andinnovation. "People have become con-scious of their stake in their lives,"says Mr. Martin Kasakenda, GeneralManager. "People are realizing thatthey must be in charge of their des-tiny." NHCC points out that even withits own huge portfolio of current proj-

ects, ranging from up market residen-tial developments to affordable socialhousing, there is a need for other play-ers in the industry, especially for lowcost homes. The company is interest-ed in joint venture partners to furtherits aims and points out that theUganda Investment Authority offers aone-stop shop for all the relevantinformation required by investorsabout tax holidays and tax exemptionsfor construction equipment.


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The Prime Pride for thewise concessionaire right

in the Pearl of Africa

Come toUganda Railways Corporation

the major bulk cargo haulier into the hinter land.

BE SURE GO RAIL AND SAVE THE ROADS!

5 Nasser RoadP.O. Box 7150, Kampala, Uganda, East Africa

Tel: 256-41-254961, 258051/6 Fax: 256-41-344405Email: [email protected]

"People are realiz-ing that they mustbe in charge oftheir destiny."

Satellite Earth Station at Celtel'sheadquarters. It links the extremeNorth Western town of Arua to the

Celtel network.

[email protected]

BACKGROUNDWhen the National Resistance Movement tookGovernment in 1986, it inherited a dilapidatedeconomy that had been subjected to misman-agement by the previous regimes. This alsoincluded a huge and inefficient public enterprisesector that was not contributing its fair share toGDP and yet was heavily subsidized by

Government. To reverse the situation, a radical EconomicRecovery Program was adopted in 1987, which entailed the lib-eralization of the economy, and removal of state controls andintervention in the business sector. A number of macro econom-ic policies were introduced to provide an enabling environmentfor private sector development.

With respect to the commercial, manufacturing and utility sec-tors, Government adopted a strategy of private sector drivengrowth and adopted two basic policy objectives in relation topublic enterprises, namely to reduce the direct role ofGovernment in the Ugandan economy and to promote a corre-spondingly greater role for the private sector; and to improve theefficiency and performance of the public enterprises that willremain under the ownership and control of the Government. ThePublic Enterprises Reform and Divestiture Statute 1993, StatuteNo. 9, was then enacted to give legal effect to the above policyobjectives, thus setting the stage for privatization in Uganda.

PRIVATIZATIONThe general principle guiding the privatization process is that

"any person whether or not a citizen of Uganda, shall be eligibleto participate in privatization." Uganda has a liberal investmentpolicy, and as such, there are no restrictions to the shareholdingby foreigners during the divestiture of public enterprises. Themethods used vary, depending on the status and nature of theenterprise. These include sale of shares, asset sales, publicauctions, management and employee buyouts, preemptiverights, public flotation, liquidations etc. In all cases of sale ofshares, and sale of assets, public tender is used.

The impact of privatization on the economy has been tremen-dous. As a result of completing 108 divestitures to date,Government has been able to transfer more than 70% of publicenterprises to the private sector relieving it from the burden ofsubsidizing their operations. Subsidies has dropped from 4% ofGDP in 1992 to 2% by 1998. Overall efficiency of the companiesincreased significantly: capacity utilization surged from 11% in1993 to 51% in 1998; sales grew by 42% in the manufacturingsector and taxes paid increased by an average of 25%.Employment has correspondingly increased.

The current phase of the privatization process is focussing onthe divestiture of medium to large scale enterprises, and reformof the public utilities. During this phase, emphasis will be placedon getting strategic equity partners and sale of some shares ofthe enterprises to the public through the stock exchange. Someof the enterprises yet to be divested include Kinyara Sugar WorksLtd., Dairy Corporation, National Housing and ConstructionCorporation, Uganda Development Bank, New Vision Printingand Publishing Corporation, Nile Hotel, Uganda Printing andPublishing Corporation, Uganda Livestock Industries, etc.

For more Information, please contact:The Director Privatization Unit,Ministry of Finance, Planning

and Economic DevelopmentP. O. Box 10944 Kampala Uganda

Tel +25641250108 Fax +25641342403E-mail [email protected], Website www.perds.go.ug

UTILITY REFORMPrivatisation of utilities is a new concept in Uganda. It involves

liberalization and reform of the utility sector, commercializationand privatization of the constituent parts and putting in placeregulatory regimes to safe guard the consumers. This processstarted way back in 1995 with the liberalization of the telecom-munications sector culminating in the sale of 49% of UgandaTelecoms Ltd. in June 2000. The remaining 51% will be sold tothe public through the stock exchange. The liberalization of thetelecom sector has lead to tremendous improvements in sector:teledensity increasing from 0.2% in 1995 to almost 1% by endof 2000 – one of the highest in Africa.

In the power sector, enabling legislation to allow private sectorparticipation in the power industry has been enacted and severalIPPs have applied for licenses. Uganda Electricity Board, theexisting monopoly, has been unbundled into generation, trans-mission and distribution and new entities incorporated so thatthey different business units can be privatized. Bidders havebeen pre-qualified for the distribution and generation compa-nies. The privatization will be in the form of long term conces-sion agreements. A power sector regulator, Electricity RegulatoryAuthority is in place.

Privatization of the water and sanitation sector will be throughprivate sector participation in the provision of water and sanita-tion services in urban centers. The operations of National Waterand Sewerage Corporation, the existing monopoly, will beunbundled and decentralized to enable privatization of the con-stituent parts. Long-term concessions will also be given to pri-vate sector service providers including incentives for serviceprovision in outlying rural areas. As for the privatization of therailway network, preparations are underway to invite the privatesector for long-term concession of the network, or sectionsthereof. The rail network in Uganda covers 1,244 Km plus ferryservices connecting to Kenya and Tanzania through LakeVictoria.

CAPITAL MARKETS DEVELOPMENTThe privatization program kick started capitalmarkets development in the country through ini-tial public offering of two enterprises. The twocompanies, now listed in the Uganda SecuritiesExchange (USE), have about 3,000 shareholders.Privatization IPOs have been a catalyst for thestock exchange with several companies exploring

possibilities of raising funds through the exchange. It alsoensures transparency, accountability and good corporate gov-ernance. The Privatization Unit together with USE and CapitalMarkets Authority (CMA) are undertaking a rigorous campaignto educate the public about capital market operations.

Other methods being used to cultivate a culture of share own-ership is Employee Share Ownership Plans (ESOP) andManagement and Employee Buy-Out (MEBO). A CollectiveInvestment Schemes Bill is currently before Parliament. Whenpassed, this will enable mobilization of saving through use ofsmaller denominated unit trusts and mutual funds. The pensionsector is also to be reformed to allow private sector participa-tion, and hopefully energize capital market activity

For information on other investment opportunities, please contact:The Executive Director

Uganda Investment Authority P. O. Box 7418 Kampala Uganda

Tel +25641251562 Fax+25641342903E-mail [email protected] Website: www.ugandainvest.com

PRIVATIZATION IN UGANDA

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