Fortune gossip – Ethiopia’s mega-projects and their source of finance

www.simplesharebuttons.com Share this post...

Fineline- The Revolutionary Democrats bestowed upon themselves the…

For a poor country like Ethiopia, with an ever expanding appetite for building the entire physical infrastructure of the nation, nothing sends a chill down the spines of those entrusted with the job as much as finance, gossip observed.

The Revolutionary Democrats bestowed upon themselves the historical burden of such a colossal responsibility. But, running an economy that remains unable to cover the huge requirement for finance – a little over one trillion Birr, if a World Bank estimate is to be believed – presents a daunting challenge.

Their ability to mobilise domestic revenues is painfully limited, as is their desire to boost export revenues, particularly in the absence of natural bounty. Neither is the country they are governing the most ideal destination for foreign direct investment, compared to many competitive nations. Nor is Ethiopia blessed with a healthy track record on the map of international commercial lending, where global banks would be in rush to engage it in a national or sovereign debt arrangement, claims gossip.

Provided that they succeed in getting even half of this finance, one legacy they would likely be proud of would be the construction of a massive railway network, which would crisscross the entire nation – 5,000km altogether.

To their credit, the EPRDFites are hardly daydreamers, gossip observed. Whatever they set out to do, history is in their favour and shows their determination, claims gossip. In their contemporary ordeal, the sugar estates, the renaissance dam and the railway projects are good illustrations. For instance, the high raise concrete structures scattered all the way from Sebeta to the border with Djibouti are positive reminders to the public of the launching of the project, thus kindling hope for a country that is on the rise, claims gossip. The exciting news to those in support of the project is that the finance, a little over five billion dollars, has been secured from a Chinese bank, and the construction awarded to a Chinese company.

Another major railway project is about to be launched in March 2014, gossip disclosed. A Turkish construction company has been awarded the project, which will likely cost the country no less than 34 billion Br, claims gossip. Designed to connect the highland town of Weldia up in the north to a railway line that connects Addis Abeba to Djibouti, and at a station in Awash, experts deployed by the company are currently carrying out an aerial survey to determine the specific areas where the line will be laid out. It is likely, however, that the line will pass through Kara Qore – a small town 300Km north east of Addis Abeba, which is also known as a hub for teff – disclosed Fortune.

The financing of the project is not as predictable as the project itself though, gossip disclosed. The Ethiopian government has entered into a commitment to cover 15pc of the project cost, while eying others, such as the Turkish government, to chip in too, gossip disclosed. There was a decisive meeting between prime ministers Hailemariam Desalegn and Recep Tayyip Erdogan recently, where the latter pledged to provide as much as 600 million dollars, claims gossip. It is perhaps half of this amount that has been realised so far, according to those at the gossip corridor.

This has left the job to Sufian Ahmed, minister of Finance & Economic Development (MoFED), and his team to negotiate with other financiers, claims gossip. Interestingly, no less than four European countries – Switzerland, Austria, Belgium and Sweden – are actively involved with their governments, guarantying their respective banks to advance loans to cover the outstaying balance, gossip disclosed. Although the interest rate the consortium of these banks would charge is higher than what the country could possibly access in development loans, the talks are at their final stage, and could be signed in March, claims gossip. Nonetheless, all these governments have preconditions that the Turkish company ought to agree to buy many of the parts used to lay the railway from none other than their respective manufacturers, gossip disclosed.

AddisFortune