Wednesday, December 3, 2014

Ethiopia issues unfamiliar investor warning over war and famine - FT.com



BARENTU, ERITREA: Ethiopian soldiers pose 19 May 2000 on the road 14km outside Barentu, an Eritrean town that they took 18 May. After taking control of the key town of Barentu, Ethiopia said today it was ready to talk peace with its Horn of Africa neighbour. (ELECTRONIC IMAGE) AFP PHOTO: Alexander Joe (Photo credit should read ALEXANDER JOE/AFP/Getty Images)©AFP
Every country tapping the global sovereign bond market details the dangers investors face in its prospectus, often in a boilerplate section enumerating possible problems – such as fiscal deficits or taxation issues – that is largely ignored.
But the document sent by Ethiopia to international investors ahead of its foray into the global sovereign bond market is somewhat different. Far from a boilerplate, it includes a list of unfamiliar hazards, such as famine, political tension and war.
The document, seen by the Financial Times, is a sobering reminder of the risk of investing in one of Africa’s less developed nations. With gross domestic product per capita at less than $550 per year, Ethiopia is the poorest country yet to issue global bonds.
In the 108-page prospectus, issued ahead of its expected $1bn bond, Ethiopia tells investors they need to consider the potential resumption of the Eritrea-Ethiopia war, which ended in 2000, although it “does not anticipate future conflict”.
There is also the risk of famine, the “high level of poverty” and strained public finances, as well as the possible, if unlikely, blocking of the country’s only access to the sea through neighbouring Djibouti should relations between the two countries sour.
Addis Ababa, Ethiopia’s capital, also warns that it is ranked close to the bottom of the UN Human Development Index – 173rd out of 187 nations – and cautions about the possibility of political turmoil. “The next general election is due to take place in May 2015 and while the government expects these elections to be peaceful, there is a risk that political tension and unrest . . . may occur.”
But the long list of risks is not deterring investors, as ultra-low interest rates in the US, the UK, eurozone and Japan push sovereign wealth funds and pension funds into riskier countries in search of higher-yielding bonds.
Instead, some investors are focusing on the danger of a currency crisis. Addis Ababa has devalued its currency, the birr, twice over the past five years – by 23.7 per cent in 2010 and 16.5 per cent in 2011 – in an effort to win export competitiveness. Since then, the Ethiopian central bank has managed to slow the currency’s depreciation by intervening regularly in the market.
Ethiopia map
Addis Ababa has now told potential investors that “it may not be possible for the National Bank of Ethiopia to manage the exchange rate as effectively in the future as it has in the past” because of reduced hard currency reserves.
The country has reserves to cover only 2.2 months’ worth of imports – almost half the 4.3 months it had in 2010-11. “Failure to manage a steadily depreciating exchange rate may adversely affect Ethiopia’s economy . . . [and its] ability to perform obligations under” the bonds, it says.
The prospectus also reveals for the first time details of Ethiopia’s heavy dependence on Chinese loans to finance its infrastructure investment. Credit lines from China and Chinese entities accounted for 42 per cent of all external loan disbursements in 2013-14, and for 69 per cent in 2012-13.
Chart
“China has emerged as a key development partner,” the prospectus says, “often providing sizeable financing tied to infrastructure projects undertaken by Chinese firms.” Among those, telecoms groups ZTE and Huawei and a company the prospectus names as China Electric Power have lent Ethiopia more than $2bn over the past few years.
Lazard, the investment bank advising Addis Ababa on financial matters, declined to comment. The Ethiopian government did not respond to a request for comment. Investors said the bond was expected to price later this week at between 6 and 7 per cent.

Saturday, October 25, 2014

30 years on: Ethiopia and the business of hunger | openDemocracy

30 years after images of Ethiopian famine haunted British TV screens, they still shape how we see Africa - and ensure we fail to understand.
It’s 30 years since Michael Buerke’s harrowing report of a ‘biblical famine’ reached BBC TV screens. Following a year of cynical government inaction and silence, Bob Geldof launched a frenzied celebrity campaign to get aid to the famine-hit regions.
Money from the public, if not the government, poured into the country. But in the process, the politics of what was happening in Ethiopia was completely erased, and our ideas of ‘charity’, ‘hunger’ and indeed ‘Africa’, were changed in fundamental ways which to this day are difficult to challenge.
The BBC remains proud of its reporting of Ethiopia’s famine, and certainly it directed public attention to a horrific situation. But it did this at the price of understanding what was really happening in Ethiopia, a problem compounded by Bob Geldof who insisted on seeing the famine as a terrible ‘natural disaster’.
In fact Ethiopia’s authoritarian government under Mengistu Haile Mariam, heavily armed by the Soviet Union as a key proxy player in the Cold War, was waging a war against Eritrean and Tigrayan freedom fighters. Drought was being used by Mengistu as one tool to starve and defeat the rebel areas.
Yet when aid started flowing in, it largely went to the Ethiopian government itself, which further used that aid to forcibly displace thousands of opponents. In an excellent article for the Guardian yesterday, former BBC journalist Suzanne Franks makes clear just how problematic the aid effort was:
Victims of famine were lured into feeding camps only to be forced on to planes and transported far away from their homes. Some estimate the number of deaths from this policy to be higher than those from famine.”
As Franks says, Médecins sans Frontières refused to play along – a principled position they have maintained in humanitarian emergencies ever since. War on Want sent aid directly to rebel areas, where it was administered by the rebel infrastructures and senior Labour Party figures like Glenys Kinnock continued to support the Eritrean People’s Liberation Front and expose the horrific circumstances they were facing.
But by and large, aid agencies played along with the politics as the best chance they had of getting aid in. Indeed, the Ethiopian famine played a huge role in the enormous growth of the aid industry over the next few years.
Unfortunately, I’m not convinced that such a situation would be tackled more honestly today. Partly that’s because the way Ethiopia was treated fundamentally shaped the way we view Africa. Our idea of starving Ethiopians – helpless, passive and in desperate need of Western salvation – became our image of Africa as a whole. Media and governments played a role, but the biggest culprit was the aid organisations themselves, who understood it was untruthful, but found it an incredibly successful way of raising money.
Thomas Sankara/Wikimedia
In a report commissioned several years ago called ‘Finding Frames’, researchers found that this framing of Africa – what they describe as the ‘Live Aid’ legacy – remains incredibly strong today. Swept away is the political context of Africa – the decades of Empire and slavery through to structural adjustment and debt crisis. Also ignored are the many examples of African resistance and success – from the national liberation governments of the 1950 through to Thomas Sankara’s transformation of Burkina Faso up to 1987. Africa’s agency is marginalised.
The idea that we are a ‘Powerful Giver’ to ‘Grateful Receiver’ continues to dominate the aid discourse today, constantly reinforced by some aid agencieswho still insist of perpetuating offensive imagery in order to raise funds.
It’s important we use the anniversary of the Ethiopian famine not simply to show ‘how far Ethiopia has come’, after all Ethiopian civilisation long precedes our own. Rather we should use it to review our image of, and relationship towards Africa, and refuse to support those organisations which still grow rich on the ‘Live Aid’ legacy.

Tuesday, October 14, 2014

Burundi, Eritrea, East Timor top global hunger index | Reuters

BY KIERAN GUILBERT


LONDON (Thomson Reuters Foundation) - Sixteen countries have alarming levels of hunger, with Burundi the worst affected, according to an annual index released on Monday which also reveals that 2 billion people worldwide suffer from "hidden hunger".
Hidden hunger, which is a lack of vitamins and minerals, weakens the immune system, stunts physical and intellectual growth, and can lead to death.
Burundi, which tops the Global Hunger Index for the third year in a row, is followed by Eritrea, East Timor and Comoros.
Some 805 million people around the world are still chronically undernourished, according to the report, despite progress in combating hunger – three years ago, the index recorded 26 countries with "alarming" or "extremely alarming" hunger levels.
South Asia and Sub-Saharan Africa face the highest levels of hunger.
Countries showing the largest improvement since 1990 include Angola, Bangladesh, Cambodia, Chad, Ghana, Malawi, Niger, Rwanda, Thailand and Vietnam.
The report said hidden hunger not only affects the well-being of individuals, but also has economic impacts, including lost productivity, persistent poverty, and reduced gross domestic product in many developing countries.
"Particularly in countries facing a high burden of malnutrition, hidden hunger goes hand in hand with other forms of malnutrition and cannot be addressed in isolation," said Bärbel Dieckmann, president of German aid agency Welthungerhilfe.
"In the long-term, people cannot break out of the vicious cycle of poverty and malnutrition without being granted the basic right to nutritious food," he said in a statement.
The index, now in its ninth year, combines three indicators - the proportion of the population that is undernourished, the proportion of young children who are underweight and the mortality rate for under-fives.
Among its recommendations, the report calls for an increase in numbers of nutrition and health experts, improved access to local markets and the development of local food processing facilities.
The report, compiled by the International Food Policy Research Institute, Welthungerhilfe, and Concern Worldwide is released ahead of World Food Day on October 16.
It comes a week after the Food and Agriculture Organization announced world food prices had hit a four-year low following a record high forecast for global wheat production in 2014.


(Reporting By Kieran Guilbert. Editing by Emma Batha.)

Burundi, Eritrea, East Timor top global hunger index | Reuters

BY KIERAN GUILBERT


LONDON (Thomson Reuters Foundation) - Sixteen countries have alarming levels of hunger, with Burundi the worst affected, according to an annual index released on Monday which also reveals that 2 billion people worldwide suffer from "hidden hunger".
Hidden hunger, which is a lack of vitamins and minerals, weakens the immune system, stunts physical and intellectual growth, and can lead to death.
Burundi, which tops the Global Hunger Index for the third year in a row, is followed by Eritrea, East Timor and Comoros.
Some 805 million people around the world are still chronically undernourished, according to the report, despite progress in combating hunger – three years ago, the index recorded 26 countries with "alarming" or "extremely alarming" hunger levels.
South Asia and Sub-Saharan Africa face the highest levels of hunger.
Countries showing the largest improvement since 1990 include Angola, Bangladesh, Cambodia, Chad, Ghana, Malawi, Niger, Rwanda, Thailand and Vietnam.
The report said hidden hunger not only affects the well-being of individuals, but also has economic impacts, including lost productivity, persistent poverty, and reduced gross domestic product in many developing countries.
"Particularly in countries facing a high burden of malnutrition, hidden hunger goes hand in hand with other forms of malnutrition and cannot be addressed in isolation," said Bärbel Dieckmann, president of German aid agency Welthungerhilfe.
"In the long-term, people cannot break out of the vicious cycle of poverty and malnutrition without being granted the basic right to nutritious food," he said in a statement.
The index, now in its ninth year, combines three indicators - the proportion of the population that is undernourished, the proportion of young children who are underweight and the mortality rate for under-fives.
Among its recommendations, the report calls for an increase in numbers of nutrition and health experts, improved access to local markets and the development of local food processing facilities.
The report, compiled by the International Food Policy Research Institute, Welthungerhilfe, and Concern Worldwide is released ahead of World Food Day on October 16.
It comes a week after the Food and Agriculture Organization announced world food prices had hit a four-year low following a record high forecast for global wheat production in 2014.


(Reporting By Kieran Guilbert. Editing by Emma Batha.)

Thursday, September 18, 2014

14 million people are food insecure in the Horn Guardian




  • Written by Xinhua/NAN


THE United Nations and East Africa's regional community on Monday, appealed to the international community to move swiftly and avert a looming humanitarian disaster in the Horn of Africa region.
UN Assistant Secretary-General for Humanitarian Affairs, Kyung-Wha Kang, and Mahboub Maalim, Executive Secretary of the Intergovernmental Authority on Development (IGAD), made the appeal in a joint statement issued in Nairobi.
 The statement said that the appeal was for the purpose of raising fund to help 14 million people who were food insecure in the region.
``Displacement in Horn of Africa stand at an estimated 6.8 million people and 14 million people are food insecure, yet funding has remained at half of the appeal,” Kang said.
The move came after UN agencies called for more donor support to help scale up humanitarian assistance in Somalia.
According to a latest food security report, released earlier in September, over 1 million people in Somalia face acute food insecurity and 218,000 children under the age of 5, are acutely malnourished.
The joint assessment by the Food Security and Nutrition Analysis Unit for Somalia (FSNAU), a project managed by UN Food and Agriculture Organization (FAO), the Famine Early Warning Systems Network (FEWS NET) and other partners, warned that the situation is likely to deteriorate further until October.
The statement also said out of the 933 million dollar appeal, less than one third had been raised.
Both IGAD and the UN are urging the donor community and governments of the region to urgently scale up response to avert a humanitarian disaster.
According to IGAD fact-finding mission reports, 7 million out of 12.9 million people in South Sudan, are food insecure.
``3.9 million are severely food insecure, with 1.2 million already at the risk of famine, if violence continues, and 50,000 children are at a risk of dying from starvation,” it stated.
It added that food shortage in Somalia and South Sudan, as a result of drought, violence and conflict, has had serious consequences on food and nutrition. (Xinhua/NAN)

Wednesday, August 20, 2014

Climate change impacts livelihoods in Ethiopia - Worldbulletin News


Climate change impacts livelihoods in Ethiopia

A UN report also asserted that Ethiopia's low level of economic development, coupled with a heavy dependence on rain-fed agriculture and high population growth, made the country particularly vulnerable to the adverse impacts of climate change.

World Bulletin / News Desk
Climate change has impacted people's livelihoods in Ethiopia, a new United Nations report has found.
"Both the frequency and intensity of droughts have increased, impacting the livelihoods of people," reads the report by the Inter-governmental Panel on Climate Change (IPCC), unveiled in Addis Ababa on Monday.
"At the same time, increases in flooding have also intensified the vulnerability of households in Ethiopia," it added.
The report, entitled "What does it mean for Ethiopia's development," predicted that temperatures would rise by between 0.9° and 1.1° (centigrade) by 2030, by between 1.7° and 2.1° by 2050, and by between 2.7° and 3.4° by 2080.
It went on to assert that Ethiopia's low level of economic development, coupled with a heavy dependence on rain-fed agriculture and high population growth, made the country particularly vulnerable to the adverse impacts of climate change.
"The country has experienced both warm and cool years over the last 55 years. However, the recent years are the warmest compared to the early years," the report read.
It added: "There has been a warming trend in the annual minimum temperature over the past 55 years. It has been increasing by about 0.37° every ten years."
Several officials were present at the report's launch ceremony, including Ethiopian Water, Energy and Irrigation Minister Alemayehu Tegenu and Ethiopian National Meteorology Agency General Director Fetene Teshome.
Also present were scientists and representatives of regional and international organizations, who are expected to discuss the report for the next two days.
The report followed an outreach event organized by the National Meteorological Agency in collaboration with the Ministry of Environment and Forests, the IPCC and the Climate and Development Knowledge Network.
"The report means a lot to Ethiopia since environmental issues get updated through research from time to time," senior environment adviser Tewolde Berhan Gebre Egziabher said.
He added that the report's findings would help Ethiopia better tackle the environmental challenges it faces.
Berhan said Ethiopia's resilient "green economy" policy envisaged a carbon-free nation by 2025.
Minister Tegenu, for his part, said that Ethiopia's green economy strategy rested on three pillars: renewable energy, biofuels and afforestation.

Sunday, August 10, 2014

Oceans to blame for Ethiopian famine, says Ghent researcher | Flanders Today



SUMMARY
New analysis of oceanic patterns offers scientists a new understanding of the causes of the droughts that spurred Ethiopia’s deadly famine of the 1980s

A look back at famine

Everyone older than 35 remembers the tragic famine that ravaged Ethiopia and neighbouring Eritrea between 1983 and 1985 – if not because of the footage of starving children on television then because of the Live Aid concerts organised by Bob Geldof.
In northernEthiopiaalone – the hardest stricken region – more then 400,000 people died from the effects of the famine, mainly because of starvation and disease, but also due to  violence inflicted by the oppressive Ethiopian army. According the United Nations, more than one million people died during the three-year famine.
One of the major causes of the disaster was a lingering period of drought that struckEastern Africain the beginning of the 1980s. In Ethiopia, the economy relies heavily on agriculture and the export of agricultural products.
The first signals were already there in 1981, when a less-serious drought wiped out harvests. ButEthiopia’s food reserves were then still large enough to handle what was hoped to be an isolated incident. In the following years, however, the usual spring rains again stayed away, and diseases destroyed crops on a massive scale in the Sidamo region, Ethiopia’ breadbasket.
By the summer of 1984, tens of thousands were dying of starvation and related diseases. Aid agencies said six million people were at risk. Food aid from the West came much too late because Western countries were reluctant to support the Marxist government of Ethiopia, and the famine became the worst in the history of modern Africa.
Thirty years later, it is clear political factors were largely at fault: aside from the West dragging its feet, the Ethiopian government preferred spending the country’s already narrow budget on its army instead of on its starving population.
But what caused the droughts in the first place? Flemish scientists, together with Ethiopian colleagues, have now solved the puzzle. A complex interplay between three oceanic patterns from three different oceans is to blame, they have announced.

Science reveals underlying cause

That oceans have an important impact on global climate is well-known. Lesser known is that climate variability – or the occurrence of local extremes – can be caused by anomalies in oceanic patterns tens of thousands of kilometres away. For example, the effects of El Niño, a band of warm water temperatures that periodically develops off the South American coast around Christmas, are felt globally.
Ethiopian meteorologists have known for many years that their weather is influenced by El Niño. However, a Flemish researcher fromGhentUniversity(UGent) has recently discovered other contributing factors apart from this one powerful “oceanic driver”.
Sil Lanckriet, a UGent meteorologist and PhD student, has pinpointed two other major influences in Ethiopia’s weather system: the so-called Indian Ocean dipole and the monsoons in the south-western part of the Atlantic Ocean.
By doing so, he was able to increase the accuracy of the country’s rainfall model dramatically. The results from the model now fit precisely with the data of the recorded rainfall (or the absence of) during previous decades inEthiopia. In other words, Lanckriet has identified the true cause of the lingering drought that caused the famine inEthiopiaandEritrea.

Description, not prediction

Lanckriet made use of a 15-year-old modelling technique called EOT. “It’s a method used to find large-scale atmospheric patterns,” he says. “In Earth observation data, we use this technique to examine each pixel of millions that make up satellite images and to identify the ones that have the greatest influence on the global picture. Using EOT, we found relevant patterns not only in the Pacific [due to El Niño], but also in the Atlantic and the Indian Oceans.”
According to Lanckriet, all three oceanic patterns were needed to cause the severe droughts that resulted in the famine of the 1980s. “The interplay between them altered the monsoon circulation as well as the air flow in the lower atmosphere in the tropics.”
So is this phenomenon likely to recur? Lanckriet thinks so. “Yes, it is, though we really need all three oceanic patterns to be present at the same time to cause a drought as severe as the one we saw inEthiopia. But predicting future droughts with our currently model is still difficult. It is a diagnostic model and not a real prediction model. However, we hope to construct a drought prediction model for the Northern Horn of Africa soon.”
photo courtesy Wikimedia

About Me

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Prof. Muse Tegegne has lectured sociology Change &  Liberation  in Europe, Africa and Americas. He has obtained  Doctorat es Science from the University of Geneva.   A PhD in Developmental Studies & ND in Natural Therapies.  He wrote on the  problematic of  the Horn of  Africa extensively. He Speaks Amharic, Tigergna, Hebrew, English, French. He has a good comprehension of Arabic, Spanish and Italian.