Extracting treasuries from belly of Ethiopia option to reinforce macro economy

The agrarian led economy would no longer be the main drive force for Ethiopia as time demands to foresee, practice optional and lucrative economic activities investing on human resources and developing execution capacity.

Albeit Ethiopia is endowed with varied climatic zones, potential arable lands, relaying on such a primary economic activity would no longer absorb the teaming unemployment rate and enhance the export trade.

The country is yet lagging behind to take advantage of the blue economy and the mining sector. Have there been progresses? Yes indeed, but not enough.

Since recent years, there are ventures to utilize waters based on the principles of sovereign right over natural resources and shared benefit. Accordingly, there are bright hopes in reaping fruits from hydro power mega projects.

Nonetheless, the mining sector had been crawling however it could have been a gear shifter business from various econometric perspectives.

The sector has potentialities to employ many, secure foreign currency, attract investment and thereby up line the nation towards prosperity.

According to statistics and geological survey, there are untapped potentials of minerals that need to be exploited.

Recent empirics foreshadows that the country would secure among gold medalist position in the globe if it efficiently extract its natural gas, coal and iron ore deposits.

Wossenseged Assefa, Economist by profession, in telephonic interview with The Ethiopian Herald said that Ethiopia remained agrarian country for the fact that it adhered to importing culture.

As countries that are pioneer in manufacturing goods are well advanced and skilled, beginners like Ethiopia cannot cope up with them as the production cost is high for nation traveled distant in primary economic activity.

Hence, agrarian nation relay on imported goods than to find way to engage business in secondary and tertiary economic activities. So agriculture appeared to be one of the main stay of the economy for centuries, Wossenseged said.

Most notably, the tendency to import goods got growing ever since the expansion of colonialism as Maxim gun was the preferred demand of the time and Europeans were well experienced in the gun technology.

The effort to enhance mode of education was also emanated from the western, so it was irrelevant to foresee optional economic endeavors. Then, nations intend to use artificial fertilizers instead of using green manure which the generations were conditioned to continue with similar momentum.

These days, ventures to utilize mineral resources and thereby backing the agriculture sector by Ministry of Mine are a smart move and what the time demands, Wossenseged insisted.

“Of course, the unfair global politics, poor extraction and execution capacity appeared to be some of the factors that limited emerging notations to take advantage of their resources. For Instance a UK based oil company claimed 95 percent of the product to extract resource in Ethiopia. And we failed to exploit the untapped resources of our country and crawled to make the mining sector marketable,” he remarked.

In Ethiopia the effort to install fertilizer factory is far beyond better for the vast segment of the society from different economic parameters as “Export Creates Job; Import Destroys Job” So if the country exports or substitutes impute, there will be huge opportunity of job, employment and foreign currency earnings.

He further said Ministry of Mine along with MoE is urged to strengthen initiatives to extract minerals and other resources devising mechanisms in upgrading execution and extraction capacities.

He also conveyed across his message to the Ministry of mine to sustain its support the people under emergency in war torn areas.

Ethiopia is set to start production of fertilizer and coal next year, as well as iron ore processing within three years, Eng. Takele Uma Minister of Mines said.

During an interview with local media Minister Takele indicated that his Ministry has been closely working with private investors that allow the country to commence fertilizer production in Ethiopia and reduce the country’s growing import bill.

“Within three to six years, the Government of Ethiopia has made a serious decision to stop importing fertilizer, coal, water treatment mineral (corium), and fuel…We will not continue importing these products,” he said.

“At the end of Ethiopia’s next year [August 2022], we will not import fertilizer,” he said indicating that the import will be substituted by local manufacturing of fertilizer.

Reports show that currently Ethiopia spends about half a billion dollar every year to import fertilizer from abroad.

The investors are currently in the process of importing the machineries required to start producing fertilizer using natural gas of the country found abundantly in the eastern part of Ethiopia, Ogaden area.

The Minister noted that Ethiopia has far much more oil and natural gas reserve than what has been reported by some international oil and gas exploration companies. “The figure we found [related to Ethiopia’s deposit of natural gas and crude oil] are not only better but also promising,” he said.

Eng. Takele indicated that Government of Ethiopia is set to invite big international companies to come to Ethiopia and engage in production of crude oil and do refining within Ethiopia where the deposits are found.

It is also recalled that though a Chinese company registered in British Virgin Island, has started test production of crude oil in Ogaden Region of Ethiopia a few years ago, not much progress is made in terms of exporting the product to Djibouti via a pipeline. After six years importing fuel to Ethiopia will be history, according to Eng. Takele.

Minister Takele also indicated that Ethiopia has found huge iron ore reserve in different parts of the country with concentration quality ranging from 57 percent to 96 percent.

His Ministry is currently approaching potential local and international companies to set up iron ore processing and steel manufacturing in five different locations in Ethiopia where iron ore deposit is found.

“We can install iron ore processing steel factories at least in five to six locations,” he said, indicating that the Ministry is currently selecting potential companies from abroad and within Ethiopia.

Within three years’ Ethiopia will start processing its iron ore reserve and produce steal, according to Eng. Takele. Reports show that Ethiopia currently imports worth one billion dollars iron and steel.

Eng. Takele further indicated that while the country has the potential and the resource to produce coal, it has been spending 275 million USD every year for importing.

“We have better quality coal compared with the one we import…We have reserves in Oromia, Amhara, Benishangul Gumuz, and in Southern Region,” he said.

Twelve companies have already got product licenses and currently purchasing machineries for their factories, according to the Minister, who indicated that the factories will be operational within one year period.

The demand of Ethiopia is estimated to be around 1.5 million tons of coal. Currently, coal is being used in Ethiopia as source of energy in cement factories.

Meanwhile, according to Eng. Takelek, in the future the government also plans to expand its use in iron ore processing and steal factories, textiles and paper factories.

The Ministry of Mines expects to earn one billion dollars from export of minerals during the current budget year of the country started July 8, 2021.

Last year, Ethiopia has earned about 850 million USD from export of minerals of which about 650 million USD was generated from gold export. Based on the new law and policy of Ethiopia related to natural and minerals use, every region and locality where a mineral resource is being exploited will get percentage share from the income collected by the federal government of Ethiopia.

Such a new approach and policy of the Government of Ethiopia is expected to speed up and ease mining activities in the country by guaranteeing safety of the investments in mineral rich localities of Ethiopia.

BY LAKACHEW ATINAFU

THE ETHIOPIAN HERALD DECEMBER 2/2021