24 June 2014

East Africa: Ethiopia Eyes Stakes in EAC Integration Projects

Ethiopia will attend the upcoming Heads of State summit on Northern Corridor Integration Projects where the leaders will assess the implementation of fast-tracking the process.

According to Monique Mukaruliza, the national coordinator of the Northern Corridor Projects, Ethiopia will attend the Kigali meet as an observer.

"They will attend as observers and assess which projects they want to join in the implementation process," Mukaruliza said yesterday.

The summit will also be attended by Jin-Yong Cai, the chief executive of International Finance Corporation, an institution that offers investment, advisory and asset management services to encourage private sector development in developing countries.

Jin-Yong is expected to make some commitments on the financing of the regional oil pipeline as well as the Mombasa-Kigali standard gauge railway line that is estimated to cost about $13.5 billion.

Mukaruliza said Rwanda had previously signed a power purchase deal with Ethiopia, adding that if the Addis Ababa government picks interest in the projects, it would be advantageous to the region's economies.

Integration ventures:

During the EAC infrastructure summit in Uganda in February, leaders of Rwanda, Kenya and Uganda agreed on projects to be fast-tracked, including a standard gauge railway between Kigali and Mombasa, a single customs territory, single tourist visa and use of national identity cards as travel documents.

Others are the establishment of an oil pipeline as well as electricity generation.

Later, South Sudan and Burundi joined the move aimed at boosting the regional economic growth.

Derrick Kayombya, the managing director of Petrocom, a company that deals in transportation of petroleum products, said Ethiopia had a potential market for both the local and regional business community.

"Ethiopia has a big population where we can sell our products and this would benefit the business community in the region," he said.

According to 2014 United Nations statistics, Ethiopia has a population of more than 97 million with an annual growth rate of 3.02 per cent and is envisaged to increase to over 118 million by 2020 with a GDP of $51.87 billion.

Trade with Ethiopia:

Hannington Namara, the chief executive of Private Sector Federation, said Ethiopia has an advanced tanning industry where Rwandans export hides and skin, adding that if it becomes a member of the Northern Corridor Projects, it would help to broaden the market.

"They have cheaper energy and there is a lot we can export to their market. Their coming on board is good news," Namara said.

He said the region will also benefit from sharing knowledge services and labour.

Experts believe that if Addis Ababa becomes a member, it would create competiveness among the member states.

"The Heads of State should bring Ethiopia on board. When you look at Ethiopian commodity exchange, you notice that it has grown over time and there is a lot to learn," John Bosco Kalisa, the country programmes manager of Trademark East Africa, said.

Kalisa said Ethiopia's enormous energy resources would help boost regional energy production.

Under the Eastern Electricity Highway Project, several regional countries are set to benefit from Ethiopia's electricity power surplus of 2000MW.

In December 2012, the World Bank and the Ethiopian government signed a $243 million loan agreement for the financing of a section of Eastern Electricity High Way Project connecting Ethiopia's electrical grid with Kenya.

Rwanda would be able to import its share through Lessos in Kenya connecting to Tororo-Bujagari-Kawanda-Masaka-Mbarara Mirama up to Kigali.


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