The Ethiopian American

THE ETHIOPIAN AMERICAN www.theethiopianamerican.com volume 5 no.5 Aug 2015 ETHIOPIAN 10th DIASPORA BUSINESS FORUM Exploring opportunities in Ethiopia’s untapped healthcare industry

Trailblazing 250 diaspora doctors on a mission to build $100 million hospital in Addis

Healing hands

Dr. Akeza builds what young Akeza dreamt 1P FAIRFAX.indd 1 05/04/12 11:24 THE ETHIOPIAN AMERICAN www.theethiopianamerican.com In this issue...

COVER STORY Featured Stories

06 16 Trailblazing 250 diaspora doctors on a The success story of Ethiopia’s primary mission to build $100 million hospital in health care services Addis 20 10 Long wait for Ethiopia’s universal health Healing hands insurance may end soon 12 24 Dr. Akeza builds what young Akeza Two way street in food, beverage dreamt business involving diaspora

INVESTING 27 Ethiopia’s tough journey towards 38 pharmaceuticals industry Investing in Ethiopia: a guide to the diaspora 30 Ethiopia, US pay tribute to the ART Brown Condor 45 32 ZAAF: Made in Ethiopia Ethiopia pleas for private investment to arrest growing medical tourists 35 Ten years of progress: history, purpose and achievements of Ethiopian diaspora business forum

1P FAIRFAX.indd 1 05/04/12 11:24 years, the establishment of chapters across the US and the world to expand the work we started so humbly a decade ago.

This year’s Forum will “explore opportunities in Ethiopia’s untapped healthcare industry”. As Dr. Akeza Teame, one of the true leaders in the Diaspora healthcare investments in Ethiopia noted, one cannot build a healthy economy without a healthy workforce. Therefore, investments in healthcare are not just lucrative but also necessary for a fast growing economy. Publisher’s Note In this year’s Forum, we will cover every angle Every year, I look forward to the annual of the opportunities and challenges involved gathering and celebration of Diaspora in investing in Ethiopia’s untapped healthcare entrepreneurship at the Ethiopian Diaspora industry. We will explore the range of Business Forum (Forum). This year is a special regulatory and policy challenges as well as the year for me and my colleagues at the Form. It sweet spots in investment opportunity. is the 10th year anniversary of the Forum, a The special anniversary issue of The Ethiopian real milestone for any organization, let alone American also covers a wide ranging topics one that is run by volunteers. What makes this and developments in the healthcare sector. year’s special is also that we will be holding the Omer Redi, our editor-in-chief, writes about annual Pioneer Ethiopian Diaspora Business the amazing and brave band of 250 Ethiopian THE ETHIOPIAN AMERICAN Person of the Year Awards Dinner at the Diaspora doctors who are in the process www.theethiopianamerican.com Sheraton Addis in Addis Ababa. The Awards of building a $100 Million state of the art Dinner will coincide with the five-day first THE ETHIOPIAN AMERICAN is published hospital while Rehima Awol highlights the by the Ethiopian American LLC ever Diaspora Week celebration where various extraordinary work of Dr. Selam. Andualem 6394 Andrew Mathew Trc Diaspora organizations will be descending on Springfield V A 22150 Sisay reports on the remarkable journey of Dr. Addis for the festivities. So, we will celebrate [email protected] Akeza and Ethiopia’s success in establishing www.theethiopianamerican.com our 10th year anniversary in stile on two primary healthcare system, as well as the continents. Editor-IN-CHIEF pharmaceuticals industry in Ethiopia, while Omer Redi Ten years is a long time and much has Elias Gebreselassie writes about Ethiopia’s happened since our humble beginning. universal health insurance scheme. Finally, Reporters Indeed, through hard work and perseverance, attorney Biset Beyene enlightens us with a Andualem Sisay Binyam Tamene the Forum has become the most important details of Ethiopia’s investment protocol and Elias Gebreselassie Ethiopian Diaspora gathering devoted to process. I hope you will enjoy this year’s The Rehima Awol business and investment. The Forum has Ethiopian American magazine as much as I Contributors become a place for deal making, for networking have enjoyed it. Andrew Laurence and serious policy engagements for serious Biset Beyene Finally, I want to thank Zemedeneh Negatu Matt Andrea (Photography) businessmen and women both here in the of E&Y, Manny Amare of Altour Tech, Yusuf Diaspora and Ethiopia. Hundreds have found Reja of Info Mind Solutions, Henok Assefa of Graphic Design & jobs, made deals to start their dream business Precise Consult, Addis Alemayehou of 251 Content Development and some even have met their soulmates at the Ifriqiyah Media & Communications Communications, Jeff Hoffman of Danya Forum. With each year, we have seen also a www.ifriqiyahmedia.com Corp, Commercial Bank of Ethiopia, Ethiopian remarkable growth in the number and quality of Airlines, eClipse Printing Press, for their advertising sales professionals who participate in these events. Belco Business PLC personal and financial support of the Forum By our estimate, over 10,000 businesspersons over the past 10 years. and professionals have participated in our Subscription US - The Ethiopian American LLC 6394 programs over the past 10 years. As part of our In sum, it’s been a wild and fun ride over the Andrew Mathew Trc 10th year anniversary, we are holding regional past 10 years. I thank you for your support Springfield VA 22150 Tel. +1 202-527-0980 gatherings and consultations across the US and over the past 10 years and look forward to ETHIOPIA -Belco Business Plc, Ethiopia to further broaden our reach. We held working with you in coming 10 years. the sole marketing agent of the Ethiopian American LLC in Ethiopia our first event in November 2014 in New York P.O.Bos. 4832 Yohannes Assefa, Esq., and a similar event is planned for Los Angeles Tel. +251 912-600-379 Publisher & Executive Director in September. We hope to see, in the next ten ADDIS ABABA, ETHIOPIA ኢክሊፕስ ማተሚያ ቤት CLIPSE PRINTING PRESS Tel: +251 11 557 2222 +251 11 557 2223 Fax: +251 11 557 2224 E-mail: [email protected] THE ETHIOPIAN AMERICAN

EADG hopes to complete and open this center of excellence by December 2018

COVER STORY Trailblazing 250 diaspora doctors on a mission to build $100 million hospital in Addis By Omer Redi To maintain clinical distance, avoiding experts suggest, is centered on the envisioned and subsequently put on bad news to affect them or getting in short-term nature of such missions, paper. A month later, a corporation the way of doing their jobs, doctors which can lead to inappropriate and named Ethio-American Doctors seem unemotional in caring for their unsustainable treatments. Group, Inc. (EADG) was established in patients. Medical missions, however, North Carolina and the group began Such was the main reason, coupled by their very nature grow from an recruiting other physicians to join with the emotional ties to the country emotional tugging doctors feel to with the vision to establish a state- of their birth, for nine Ethiopian- alleviate pain and suffering. of-the-art hospital in Ethiopia. As born physicians to come up with a their idea further developed, it was Medical missions have grown grand vision to impact the industry evident that they needed to rely dramatically in recent years in in Ethiopia, and impact it in a on permanent medical staff for the response to increased global transformative way. hospital, according to Tesfaye Fanta, communication, travel, and awareness They first met in Dallas, Texas, in April MD, President of EADG. During their of inadequate healthcare services in 2011. They quickly drafted a basic maiden annual meeting in September impoverished countries. But this is business plan with the idea that they 2011, their number had grown to 35 not all perfect and the best way out, will travel to Ethiopia on a rotational physicians. according to industry experts. The basis to staff a hospital they have main criticism regarding this, these The group now stands at 250 6 www.theethiopianamerican.com physicians of Ethiopian origin from will be completed by June 2016 and develop the hospital. For example, THE ETHIOPIAN AMERICAN across the globe. According to the groundbreaking is scheduled for GE Healthcare has worked with group’s own survey, 75 per cent of September 2016. Hence, the hospital EADG from the start and is now a these physicians either attended will be commissioned in December Strategic Technology Solutions Partner medical school in Ethiopia or, after 2018. bringing with it essential hospital completing their medical education project development knowledge EADG management and board will be abroad, worked in Ethiopia for and expertise. According to Melaku, busy for the next 12 months mainly a number of years as practicing forming such relationships are critical working to raise the required capital physicians. in an emerging country environment to complete financing for the project, where lack of adequate information, “This demonstrates that these retain a construction company that will infrastructure and range of vendors in physicians have view of the challenges become part of the EADG team, and different disciplines is prevalent. and opportunities that lies ahead for work with the Ethiopian government this ambitious and historic project,” to overcome regulatory hurdles, Another key relationship to form says Melaku Negussie, Chief Operating including importing goods and services was with an architectural and Officer and General Counsel of EADG. for the construction and development engineering team. Because the of the hospital. They will also have hospital will seek Joint Commission The hospital to work on creating the processes to International (JCI) accreditation, EDAG The hospital whose construction is streamline customs and duties related says it is imperative for experienced scheduled to start in a year will be a to pharmaceuticals and supplies. healthcare architects and engineers 300-bed, state-of-the-art medical to join the team, especially because Goal and project facility, with a full complement of such experts are hardly available in services, according to the group. EADG’s mission is now more focused: Ethiopia. ThusHowever, in line with its To build an economically sustainable, knowledge and skill transfer mission, “Its clinical area of focus will be Level center of excellence hospital that which the group says part of its core I Cardiovascular and Neurological will deliver internationally accredited values, EADG has retained a local Centers of Excellence that will provide standard of care and become the architectural and engineering firm, the full range of services and invasive catalyst for change in how healthcare ZIAS. procedures that will be the first of its is delivered in the region and Africa. kind in Eastern and the Horn of Africa, “It is important to note that the design The goals include transferring offering a total comprehensive, multi- and construction of the hospital will medical knowledge and skills through disciplinary approach to caring for integrate environmentally sustainable education and relevant medical patients with severe illnesses,” Melaku principles to enable the hospital research to healthcare workers in elaborated. to maintain and operate in a cost- Ethiopia, and for the hospital to efficient and energy-saving manner,” become a hub for medical tourism for With estimated cost of $100 million Willy Schlein, President of Anthrotects the entire region. during phase one, the construction is Architects and chief architect for the expected to take up to three years. The Accordingly, EADG has partnered projectMel, explained. “To accomplish architectural and engineering designs with international organizations to these design and operational goals,

An illustration of the hospital 250 diaspora physicians will present Addis Ababans in few years. www.theethiopianamerican.com 7 THE ETHIOPIAN AMERICAN EADG plans to use the US Green travel abroad, there are tremendous it economically sustainable, the Building Council’s LEED (Leadership incentives for patients to seek medical group considers it important for the in Energy & Environmental Design) treatment close to home,” Melaku said. hospital to be made whole so that certification program, which will make the hospital’s quality of service does Currently, thousands of Ethiopians the hospital the first LEED certified not suffer. However, the benefit to travel to Thailand, India, South African, hospital in Africa,” Willy said. the society goes deeper, according Europe and the US seeking medical to TesfayeMel. For instance, EADG Business case treatment. Besides the risk of travel in plans to enter into an agreement with a venerable medical state, the burden EADG believes the hospital presents public medical schools to provide to the patient is significant - cost and a very strong business opportunity. residency and fellowship training in being away from supportive family Their business case is justified by speciality services, such as surgery members. the very character of the city where and cardiology. the hospital is to be housed. Addis It is also conservatively estimated that Given this project enjoys strong Ababa boasts the third or fourth the annual outflow of medical tourism support from the Ethiopian largest diplomatic corps of anywhere from Ethiopia exceeds $80 million. government, as was recently globally, following New York, Brussels The negative financial impact on the demonstrated with the offer of land and London. It is home to the country is burdensome, including in an ideal location at favorable lease African Union and the UN Economic huge foreign exchange deficit when terms, the pre-construction phase Commission for Africa, the regional one travels aboard to seek medical seems to be going smooth. In addition, arm of the UN in Africa. Also, there treatment. The loss of domestic the project enjoys strong support are numerous NGOs who are involved expenditure that would have gone to from Ethiopians at home and aboard - in developmental projects. Thus, employ locals is also one more issue to businesses and individuals alike. thousands of diplomats, expatriates consider. and their families reside in the city. When commissioned, not only will Larger community in Ethiopia To obtain medical treatment, most this ambitious project transform the of their employees take the next Although it is a for-profit hospital, delivery of healthcare in Ethiopia, available flight out of the country or EADG claims it also plans to set aside according to Melaku, “it will also seek medevac services. a portion of its profit, as well as raise become an example that provides a funds, to provide care to those who new model to harness the energy and “Putting aside the difficulty of are unable to afford the treatment emotional ties of the larger Diaspora obtaining visa and patients’ perilous provided at the hospital. To make community.” medical conditions preventing them to

The $100 million state-of-the-art medical facility EADG is going to build will have 300 beds. 8 www.theethiopianamerican.com MODERN COMPUTERS

Desktops Printers

Laptops

UPS Network Accessories

Hardware Maintenance

Modern Computers supplies genuine computer products and our maintenance technicians are ready to help you with your IT problems anytime at our store

Come visit us at Snap Plaza 2nd floor, | near Bole Millenium Hall Tel: +251 961 06 9020 | Modeth Outsource PLC THE ETHIOPIAN AMERICAN

Dr. Selam Aklilu is among the first chiropractors in Ethiopia.

COVER STORY Healing hands By Rehima Awol Having worked in the field of encouraged her to study business, but professionals. That dream prompted chiropractic for 14 years in the United Selam had her mind set on medicine. her to go back to school once again States, Selam Aklilu, M.D., is among Despite a doctor’s advice not to read and obtain yet another degree in the first medical professionals to bring extensively, she continued to focus on general practice of medicine. chiropractic treatment to Ethiopia. her education and soon acquired her Given the number of expert first degree in Chemistry. Selam was born and raised in Dire chiropractors in California, Selam Dewa in eastern Ethiopia, where However, Selam’s health issues never felt that her presence there she attended primary school. After remained and doctors informed her would make as much difference as it grade six, she continued at the former there was scarring on her retina. At could back home. Nevertheless, she American Mission now International that point, Selam began to think about had doubts about moving to Ethiopia Community School (ICS) in Addis the kind of profession with which she and postponed the decision by telling Ababa. would be engaged. The experience herself “I would do it one day”. during her retinal treatment shaped As was the case for several Ethiopian Meanwhile, her husband proposed her career choice. Selam recalls that youth, Selam was forced to flee the to move to Ethiopia, believing that time saying “my elder sister took me volatile political situation in Ethiopia at it would be the best place for them to a chiropractor. This was a time that the age of 17 in 1978, at which point to raise their children in their own I was first introduced to this field of she went to Kenya and later joined her culture, language and ethics. “Though medical treatment and I liked what I family in the U.S. I had a wish to someday return to experienced then”. Ethiopia, I never thought this particular Selam always believed that the field Soon after, she completed her second moment was the time. Nevertheless, I of medicine was her calling and degree in Chiropractic from Ceriferend considered my husband’s idea and we therefore took her education seriously. Chiropractic College in California. While finally moved here in 1999 after 21 In grade 10, however, Selam was practicing the profession in the US, years in America,” she said. forced to briefly pause her schooling she always wished and dreamt of due to an eye-related illness. When Once she arrived in Ethiopia, however, promoting such treatment in Ethiopia she returned to school, her family she quickly realized that her type of to serve others and teach young 10 www.theethiopianamerican.com profession would prove to be difficult already decided to undergo surgical field. Some international universities THE ETHIOPIAN AMERICAN to operate in Ethiopia, initially finding procedures. Another person who are offering scholarship programs it hard to even register the business in knew about me opening the center in to help address the shortage of the country. Her efforts to seek advice Ethiopia informed the family of this skills in the sector in Ethiopia while from authorities said to have mandate young man and the family found me preparations have been completed over the branch of medical practice she somehow. The young man was carried to also start trainings within desperately wanted to start in Ethiopia by people when he came to me. I Ethiopia, according to Selam. “We did not bring any result. There was made the necessary examination and are undertaking activities to begin almost no one who clearly understood gave him the appropriate chiropractic training professionals specializing in chiropractic treatment. treatment. He was able to walk within chiropractic field. We think we can a week,” she said proudly. “Words solve the shortage of teachers in After overcoming such initial hurdles, cannot explain the joy I felt at that it took Selam approximately three time”. months to get a license and open the “First Chiropractic Clinic in Addis Word got around town this young man Ababa”. As a pioneer in this nascent was healed by the hands of a woman industry, Selam had to write the whose name is now very familiar for guidelines for the field since no one many in Addis Ababa and beyond. at the Ministry of Health knew about Patients began to flood her clinic “to chiropractic practices at that time. a point I am not able to treat all the patients myself. That is when I started “I named the clinic First Chiropractic training nurses and health officers not because it was the first center for because I had to have assistance”. such treatment. Rather, it is because I believe that any treatment begins Today, patients have to make with chiropractic. Many of us do not appointments weeks in advance understand our body is made to heal to be treated by the healing hands itself. In order to do that, it should be of Selam. There are obviously only free from any internal and external some professional chiropractors Dr. Selam now plans to expand her influences. That is what chiropractic in Ethiopia, but the number of reaches from Ethiopia to Africa. gives us,” she explained. chiropractic physicians is nowhere near the amount necessary to provide the first few years. However, until Selam, 54, describes chiropractic as treatment for those who seek it. we reach such capacity, we will be a science, art and philosophy. It is the importing instructors from abroad process by which the nerve, bone and “The South African saying Ubuntu (I to give the training at two identified muscle are treated. “Therefore, the am what I am because of who we all universities - one government and one treatment is not only concerned with are) signifies that I am created for private,” she explained. spinal cord and cervical parts of our others and others are created for me. body; it is a treatment which ensures I am really happy I am here for people Along with endeavoring for the that we are healthy and functional in who need my service,” Selam said. “My national programme, Selam launched our daily life. If the spinal bones are absence in here may cause additional her own initiative to construct a not working properly the nerve does pain and illness for many people. In medical treatment and rehabilitation not and this may cause cardiovascular, the US, there is this attitude ‘you treat center in the Lebu area of Addis. abdominal and lung illnesses,” the me because I am paying for it’ among Currently under construction at a celebrated chiropractor in Addis patients. But to love something and budget of 80 million Birr, the facility - elaborated. care for someone does not have a expected to open for service in 2018 price. Everything began from loving - will not only serve Ethiopians but Despite her success in launching something”. also patients from across Africa living her clinic, the challenges remained. up to its name, “Chiropractic for Africa”. Since many people neither knew First Chiropractic now has four The 50 rooms facility will allow for about chiropractic treatment nor branches in Addis Ababa. Other the examination of up to 200 patients its availablity in Ethiopia, months branches in Jimma and Dire Dawa, per day, and perhaps could take had lapsed with only a few visitors Selam’s birthplace, show her reach chiropractic in Ethiopia one step ahead. to Selam’s office. She now recalls beyond Addis. The practice is expected the turning point for her practice: to expand even further across Ethiopia “There was this young man who had thanks to trainings in this expensive

www.theethiopianamerican.com 11 Dr. Akeza Teame is still on the move even after establishing two high end medical facilities. (Phto by Andualem Sisay) COVER STORY THE ETHIOPIAN AMERICAN Dr. Akeza builds what young Akeza dreamt By Andualem Sisay Gessesse In summary: With two specialization very beginning, when I went to study the three health facilities in Ethiopia fields and certification to work as a abroad, was to come back and work in certified by the United States Embassy medical doctor in the United States, my country”. in Addis Ababa to provide medical where he studied, Dr. Akeza Teame clearance for travellers to the US. His journey of investing at home chose to battle the bureaucracy of his began at small scale when he opened But the wasn’t to be the end of Dr. country; hence invested in the health St. Yared Higher Clinic in Addis Ababa Akeza’s journey. He has launched sector home. Within seven years, he seven years ago. Two years in the a second health facility, American and his partners managed to set up business, he realized there was a huge Medical Center (AMC), about two years one hospital, one special medical center demand for his services; the clinic was ago. and a pharmaceutical products import then upgraded to a hospital. company. He believes the health sector Established with an initial capital in Ethiopia is untapped and provides lots Located around Megenagna area of close to a million dollars, AMC - of opportunities, especially to Ethiopian of Addis Ababa, the 6 story building famous as the only paperless and health professionals in the diaspora. St. Yared Hospital operating with fully information technology-based Today, he has embarked on a bigger 40 beds and 190 employees is now health center in the country - targets plan that aims to set up a state-of- among the few high end medical a specific segment of clientèle. It the-art medical center to treat patients facilities in Addis Ababa. mainly serves people busy their lives who spend millions of dollars travelling be it business people or demanding The hospital’s capital and abroad. and stressful professional work. sophistication of services got a Patients can only an AMC physician Akeza was 18 when he went to the boost when Dr. Akeza brought on after appointments made online or by United States to study at the Medical a board two more partners - Sisay phone. University of Kansas. After graduating Shimelis, and Dr. Getahun Yitbarek, in Medical Science, he specialized in a returnee from France. To date, the Managed by his wife, Melat Abate, two fields - internal medicine and total investment on the hospital has who studied Information System infectious diseases - the latter with a reached 30 million Birr. Management with work experience fellowship from Albert Einstein College in the United States, the Center also St. Yared treats from infectious of Medicine in New York City. He was plans to launch telemedicine where diseases and pediatrics to general subsequently certified to practice both a specialist sitting in an office in and neuro surgeries. It is also one of in the US. Washington, London or Brussels,

After spending 19 years in the United States, studying and practicing medical science, he returned home to realize his dream of opening a hospital and serving his people.

Dr. Akeza had this plan to build a hospital in Ethiopia from very young age when he completed his first year at the medical school.

“This is home. It is a calling for me like ... if you see our history all who went to study abroad during the emperor era have returned home after graduation to serve their people,” he said. “Likewise, my intention from the The reception area of American Medical Center speaks to the quality of the facility. www.theethiopianamerican.com 13 THE ETHIOPIAN AMERICAN among other places outside Ethiopia, Currently over 40% of the Healthcare key ingredient to a healthy economy can treat a patient at the Center service in Ethiopia is provided by the “You can’t have a healthy economy via real time video communication. private sector with most of the highly without a healthy society, the Dr Akeza says all the necessary specialized healthcare services in government needs to facilitate equipments are ready for the service; Ethiopia coming from this sector. mechanisms to enable the private “our challenge now is the telecom “The private sector is playing very sector to get the financing that it connectivity problem”. important role and the government needs,” Dr. Akeza added. The opportunities needs to understand the importance He argues that much as the local of that,” Dr. Akeza says, calling on During his first and second year of pharmaceuticals manufacturing the government to improve some of medical school, Dr. Akeza came back and export oriented businesses, the the bottlenecks of the sector such to Ethiopia for a research on HIV; that Healthcare services also deserves to as shortage of finance and often enabled him to understand where and be part of government priority areas frustrating bureaucracy. Industry how to start his investment. with designated incentives such as actors complain such bureaucracy in loan, priority with favourable land “I would say getting investment some government office is a major lease price and quick delivery. He backs license was much easier and less factor that delays projects and at his argument saying, for example, the complicated back then than it is now. times discourages investors from medical center he is planning to set up I think the process has become more investing in the sector. in Ethiopia can save millions of dollars cumbersome now,” Dr. Akeza says. Regardless, Dr. Akeza and his partners that leaves the country every year and A father of three girls, he has recently seem determined to realize the new should be considered equally like any ventured into the pharmaceutical project in three years if they get the sector that generates hard currency. products import business under 30,000 – 50,000 square meters of How to navigate through his new company, Caduceus plot for the construction from the Pharmaceuticals. The import aims government. “The medical center we And for those in the diaspora who may to make available medicines and are planning to build accommodates be considering to join the industry, Dr. necessary pharmaceutical products a medical school, nursing school, Akeza reminds there are numerous for his service centers in a timely and housing for physicians and nurses that obstacles and opportunities. “So you sustainably. “We took baby steps to will come from abroad, among others need to approach it with an open mind. get where we are today,” he says. ... no reason that we can’t do that”. My advice to fellow Ethiopians from the diaspora, they need to manage Even that is not the end for the 44 According to Dr. Akeza, though the their expectations. Many of us think years old physician; he is working to opportunities in the sector outweigh that it is easy and when we face mobilize $24 million to finance another the challenges, the government needs certain challenges, we drop everything vision, an ultra-modern medical center to work on improving much to make and go back. There are also times I feel to serve patients who travel abroad for sure people are not scared off due to like dropping everything and go back to special medical treatment. prevailing frustrating situations. The where I came from,” he explained. processes investors go through need “This is untapped market. Thousands to be well-tailored, clearer and refined And in the end the question is ‘what and thousands of Ethiopians travel for people who want to investment would the government, which won abroad in search of better medical including those from the diaspora to praises from donors for its success care,” he explained. “Even as hard as feel confident on the big decisions in expanding primary healthcare we are working here, we have not they are about to make, he argues. across the nation, do to spur the same been able to meet the demand. If for “For instance when we import medical momentum once again. Developing instance, we add up all the private equipment and supplies, the process the secondary and tertiary level hospitals in Addis Ababa in terms of is simply nightmare. There is also a Healthcare service of the country their capacities, all combined won’t huge need to do reforms related to the with a motivated and confident even be as big as a medium size process of procurement, which is very, private sector involvements through hospital in the United States”. very bureaucratic,” Dr. Akeza says. incentives requires come a thorough strategy that helps the likes of Dr. That shows there are lots of works Financing is another key challenge Akeza realize their dreams while to do in the sector, according to him. investors in the sector keep advancing the country in effect, “Beyond serving our people, my dream mentioning. Industry advocates say experts suggest. and plan is to attract medical tourists the health sector has a good track from the neighboring countries and record of paying back loans and it is a make Addis Ababa medical hub”. 14 www.theethiopianamerican.com

THE ETHIOPIAN AMERICAN

Featured Story The success story of Ethiopia’s primary healthcare services By Andualem Sisay Gessesse Ethiopia has long been considered development, including the expansion health related education institutions a country with one of the poorest of road networks throughout the (colleges), hospitals and clinics are now Healthcare systems available. For country, helped to facilitate access commonplace in most urban areas. several decades, life expectancy to Healthcare services by millions of According to the Ministry of Health, remained stagnant at approximately people. all drug vendors and drug stores are 40 years old. A couple of decades back, now privately owned. Of these, more Ethiopia is now repeatedly cited the government was only one of a than 70 percent are pharmacies. as an example by the international handful of healthcare service providers Further, approximately 4,033 non- community for how to effectively in the country, in part due to the governmental clinics and 63 hospitals expand primary Healthcare coverage socialist ideology of the government. are operating throughout the country. in rural areas. The country’s health The role of private health facilities is As a result, the government managed extension program is credited for growing particularly in urban areas. the limited number of hospitals and saving millions of lives and improving clinics as well as health professional the life expectancy of its citizens, Today, life expectancy of males training centers. Most of these among other successes. and females is 62 and 65 years, institutions were located in urban respectively. According to the World The liberalization of the sector that areas, and as a result people in rural Bank, the infant mortality rate is came in the wake of the new policy areas, representing approximately 80 estimated to be 44 per 1,000 live allowed private sector involvement, percent of the population, had to travel births while the under-five mortality and huge investment by the by foot or on horse and donkey backs rate is 64 deaths per 1,000 live government and international donors. for days to get to the nearest city with births. The maternal mortality ratio is a health center. Major achievements estimated to be 420 per 100,000 live births, according to the 2014 World To address this disparity, the Unlike in previous years, where the Health Statistics Report. government announced the national government was the sole health health policy in 1993 that emphasized education and service provider, private An analysis of findings from the the importance of achieving access to a basic package of quality primary Healthcare services by all segments of the population with equitable distribution and decentralization of the health service system.

Today, the healthcare landscape in Ethiopia is dramatically different. In addition to the decentralization of the healthcare system, the government’s continued investment in infrastructure 16 www.theethiopianamerican.com accelerating brands against all odds

We are an independent, creatively driven advertising agency that creates strong and provocative relationships between good companies and their customers. We believe that it doesn’t matter where, how or in what medium an idea is expressed, you still have to start with a good one. some of our services

Strategic planning, consumer behavior mapping, media strategy, media planning, placement & monitoring, communication strategy, product positioning, copywriting, integrated ATL & BTL campaigns... contact us

www.251communications.com +251 116 62 18 24 [email protected] THE ETHIOPIAN AMERICAN Ethiopia Demographic and Health Survey (EDHS) in 2000 and 2011 reveal that infant mortality declined by 39 percent, from 97 deaths per 1,000 live births to 59 deaths per 1,000 live births. Meanwhile, the under-five child mortality rate declined by 47 percent, from 166 deaths per 1,000 live births to 88 deaths per 1,000 live births during that same period.

As a result, in 2013, Ethiopia achieved Health expenditure committed to health progress [of] its Millennium Development Goal its people. If you look over the (MDG) related to child health. In Financing comes from multiple last few years, they have already addition to child mortality, other top sources including household out-of- achieved Millennium Development health priorities for Ethiopia include pocket spending, the government Goal 4 and reduced child mortality maternal health, HIV/AIDS, TB, malaria treasury (federal, regional, district, by two-thirds,” says Julius Court, of and reproductive health; all of which and municipal levels), bilateral United Kingdom’s Department for are receiving a great deal of attention and multilateral donors and non- International Development (DFID). from both the Ethiopian government governmental organizations (NGOs), Mr. Court expressed his government’s and international donors. private enterprises, and parastatal plan to continue assisting Ethiopia organizations. In addition to allowing the private in reducing the remaining health sector to invest in Healthcare services Funding from international donors burdens of the country. “That is an sector, the government has also immensely helped the Ethiopian incredible performance. That is why invested in training and deploying government tackle the major health the UK is proud to be supporting that health extension workers, midwives burdens of the country. Such sources commitment and performance”, says and health development army while of funding include the Global Fund, Mr. Court. constructing health posts throughout Bill and Melinda Gates Foundation, National health expenditure increased the entire country. USAID and the European Union, substantially between 2007/08 and among others, which have injected Currently, the health sector is 2010/11. billions of dollars into Ethiopian developing a long term strategy health sector over the past two “…But it still is not adequate to buy “Visioning Ethiopia towards universal decades. Official figures show that better health for all Ethiopians,” stated health coverage through primary last year, development partners have the April 2014 health accounts report Healthcare” and a medium term committed a total of $558 million in of the Ministry of Health. strategic plan for “The Health Sector support of Ethiopia’s health sector. Transformation Plan” 2015/16- The report shows that nominally, 2019/20. “I think Ethiopia is incredibly national health expenditure increased

18 www.theethiopianamerican.com from 11.1 billion Birr ($1.2 billion) in schools, making the total number of year in search of advanced treatment THE ETHIOPIAN AMERICAN 2007/08 to more than 26.5 billion Birr medical students 14,290, according to that is still scarce in Ethiopia. ($1.6 billion) in 2010/11. “In addition a report from the Ministry. The latest report of the Ministry of to strengthening the health workforce, However, just like the case for health Health reveals some of the major ... government has continued investing per capita, physician to population obstacles to the development of heavily in an accelerated expansion of ratio in Ethiopia is far below the health sector of Ethiopia: shortage of health infrastructure that has built and standard set for developing countries human resources in terms of number, fully equipped 15,000 health posts by the WHO, which is one physician capacity, and professional skills top the and over 3,200 health centers around for 10,000 people. In Ethiopia one list while gaps in midwives, doctors the country,” states the report. physician currently serves double and anesthetists are recurrent issues. The number of government-owned that amount, close to 21,000 people, Additionally, an absence of round the health centers has reached 3,245 in according to a report from the Ministry clock services in many health facilities, 2013/14 while the number of public of Health. poor quality of diagnostic laboratories, hospitals has increased to 126, and low utilization of outpatient services Therefore, to address this huge gap, another 185 are under construction, and limited capacity to provide on time the government has been engaged in according to official data of the supportive supervision and monitoring training tens of thousands of health Ministry. at each level are still problems that extension workers and midwives remain unresolved. Furthermore, Ethiopia’s rate of spending in the who are deployed in health posts and a weak referral system and lack Healthcare sector, however, is far from centers across the country. of standard medical equipment adequate. Per capita national health Further, in order to raise awareness management system continue to expenditure has increased modestly, on primary health services in the plague the sector. With such issues to from $16.09 in 2007/08 to $20.77 rural areas, such as the need for address, Ethiopia still has a long road in 2010/11. This figure remains far vaccination, sanitation, etc., the ahead before it completely turns the below Ethiopia’s per capita spending country has introduced Health corner on Healthcare services. target of $32 and is also low when Development Army using the one- compared to Ethiopia’s peer countries. So what? to-five network model approximately For example, 49 low-income countries three years ago. Assisted with health More problems could sometimes on average spent $22 per capita in extension workers, this system allows mean more opportunities. Establishing 2006. This is by far much less than the one household to become a trainer for sophisticated and advanced medical $34 per capita recommended by the five other households. The exemplary facilities that cater to those who World Health Organization in 2001. household is expected to have currently travel abroad for better Additionally, similar to most African implemented the primary Healthcare treatment, opening health education countries, Ethiopia was not annually and prevention steps among the institutions and manufacturing and committing 15 percent of its national family members and educate five supplying medical equipment are budget to the health sector – a pledge other households in the neighborhood. among areas for the private sector made as one of the signatory of the to consider as untapped potential. Despite all of the achievements African Union’s Abuja Declaration Nevertheless, all the opportunities are the country has so far registered, of 2001. “Thus, health is still under- not without their challenges. Ethiopia’s health sector is still in its financed and there is strong need infancy and far from transforming Highly skilled Ethiopian health for making more resources available itself to a robust industry with professionals in the diaspora may to the sector to improve health sufficient human capacity. To be sure, agree on the idea of making Ethiopia service delivery and ultimately the training of physicians and primary a hub of East African medical tourism. health status of the population,” health service providers is one area in For a country that is starting from the the health account report urged. To which the private sector and diaspora bottom, however, this project will be a address the health sector’s financing could be further engaged. Thousands significant challenge, some observers needs, the 49 low-income countries, of mothers and children are still suggest. For private sector business including Ethiopia, should be spending dying every year during birth because partners, whether the benefits derived approximately $60 per capita in 2015. of absence of health professionals from such a project is worth the uphill The practitioners in some rural areas. In addition, climb, will be seen in the years to come thousands of people travel abroad to as some initiatives go operational. In the last fiscal year (2013/2014), countries such as Thailand and spend approximately 3,583 new students an aggregate millions of dollars every were enrolled in 27 public medical www.theethiopianamerican.com 19 THE ETHIOPIAN AMERICAN

Featured Story Long wait for Ethiopia’s universal health insurance may end soon By Elias Gebreselassie One of the most pressing concerns for Ethiopia has, to the most part, also scheme are expected to contribute many is whether they are guaranteed been seen as a drain on ones and three percent of their salaries. This a reasonably good medical support loved ones savings and a way into is to be matched by their employers when their health deteriorates destitution for some. – or the government, in the case of regardless of their financial condition pensioners. Those insured, and their Add to that, Ethiopia is 10 times at such times. One common way of family members, will get ‘essential below the World Health Organization addressing this concern is through health services’ and ‘critical curative (WHO) standard which stipulates every established national health insurance services’ at selected public institutions, citizen of a country must visit a health system. according to the proclamation. institution at least three times a year Such scheme are considered more for a regular check up to keep healthy The Ethiopian Health Insurance important to people in developing with a preventive early detection of Agency was subsequently established countries like Ethiopia where, in the possible silent health complications. in 2010 mandated to implement the absence of strong social welfare One average an Ethiopian visits a proclamation. The Agency is, therefore, systems of any sort, the best health institution for such purpose responsible for collecting contributions guarantee people can have a health once every three year. and making agreements with health insurance. institutions that will provide health The wait is to end services. Most Ethiopians know of loved ones A universal health insurance scheme or friends who have died untimely due The Health Insurance scheme has two the talk of which has been around to lack of immediate access to medical components - Social Health Insurance for years, but so far implemented (SHI) and Community Based Health only partly, promises to change this Insurance (CBHI). So far, however, the problem and act as guarantee to Agency has been busy only managing people who quietly wonder of their the one component - the CBHI - as fate if they suddenly fall ill. pilot insurance scheme since the The idea of a reliable health insurance 2010/11 fiscal year. This is where scheme in Ethiopia first surfaced in communities in pilot regional districts 2008 when government announced contribute premiums and are then a plan to create an equitable, modern provided with primary Healthcare and sustainable health insurance through public and private health system as part of the country’s institutions. The poorest 10pc of Black Lion Hospital is one of the oldest Universal Health Coverage (UHC) the communities are covered by and biggest hospitals in Ethiopia that strategy. Subsequently, a proclamation the insurance through government treats most emergency patients. that makes health insurance subsidies. support while suffering illness - be it mandatory for all government The Agency, already fully staffed with malaria, TB, kidney failures or cancers. employees, pensioners and private 530 employees since last Ethiopian Most curable illnesses are worsened employees at organizations with more fiscal year (2013/14), is currently leading to deaths simply because the than 10 people, was issued on August working with 20 active offices in all affected are not automatically able 19, 2010. regions but Gambella, Somali and Afar to get standard treatment unless out of the 24 it plans to eventually they are affluent enough to cover According to a regulation that was have, according to Aseffa Yirgalem, the expenses on their own. Hence, issued after the proclamation, those Director of Communications and until recently getting seriously sick in falling under the umbrella of the Mobilization with the Agency. The 20 www.theethiopianamerican.com remaining four offices are coming soon premium. and minor children), household level THE ETHIOPIAN AMERICAN in the three regions. Also, the Agency monthly premiums range between Government claims CBHI coverage now seems ready to activate the Birr 10.50 in SNNPS and Birr 15 in is an important part of its overall second component of the insurance Oromia. For each additional non-core strategy to achieve Universal Health scheme, the broader Social Health household member the monthly Coverage (UHC) by 2035; hence its Insurance (SHI), on the onset of the premium lies between Birr 2.10 and prioritization. new Ethiopian year come September. Birr 3.00. The CBHI partly emanates from the Priority to people in informal To put these figures in context, the fact that it is the community at the economy premium for all core household village (Kebele) level that determines, members in Oromia amount to The Agency is currently implementing based on a simple majority vote, about 1.4 per cent of household the Community Based Health whether or not to join the scheme. monthly non-medical consumption Insurance in 198 pilot Woredas/ Possibly due to prior sensitization expenditure. Some eight village- districts of Amhara, Oromia, Southern activities, all villages in pilot districts level CBHI officials and community Nations, Nationalities and Peoples voted in favour of the scheme. Once representatives may adjust the (SNNP) as well as Tigray regions a Kebele accepts CBHI, it is up to the interval of premium collection based covering a total of 1.2 million household to decide to enrol in the on local conditions. The scheme is households. In aggregate, about six scheme. subsidized by both the central and million people from these households Enrolment is at the level of household regional/district governments. engaged in informal economic rather than individual, according activities such as small and micro Long awaited social health insurance to documents from the Ministry scale enterprises (SMEs), agricultural and its pitfalls of Health. This reduces chance of workers and maids, among others, adverse selection within households. The Social Health Insurance (SHI) are covered essentially providing them By design, the community is also component is meant for the formal risk protection mechanisms since involved in scheme management economy sector; hence covers those 2010/2011. and supervision. Within each village, on payrolls - be it of government, Addis Ababa is also set to see the CBHI three CBHI members are selected parastatals or of private companies - for the first time come September to be delegates in the local CBHI and on pensions. with 10 out of its 99 Woredas, where administrative bodies. However, while The Agency plans to roll-out the SHI in the informal sector is believed to be a these members are supposed to take the just started fiscal year (2015/16) dominant economic activity, covered part in the general assembly organized coinciding it with Ethiopia’s new year under the scheme. at district level, in practice their in mid-September. It will start in participation may be limited. Assefa says this scheme with its Addis Ababa to be followed by Dire emphasis on the informal sector works The premium payment methods also Dawa town and will see fixed income calculating an area’s development and productivity level fixing contribution (premium) rates between 120 Birr (USD 6) to 180 Birr (USD 9) annually, on average. However, the government covers for the poorest who can’t afford the minimum contribution after they are confirmed so by the local population. Government estimates show that on average 10 per cent of a Woreda’s population are considered poorest; hence covered from government coffers. slightly differ across states. While in people contributing three per cent However, the government plans to Amhara State the unit of contribution from their salaries and their employers simplify the process by classifying is the individual (three Birr per contributing an equivalent percentage people based on their income level individual a month) in other states it is on behalf of the employees. categorizing them into either of the the household. upper, middle and lower income The Agency’s estimates show that status instead of applying a uniform For core household members (parents currently only less than one per cent of www.theethiopianamerican.com 21 THE ETHIOPIAN AMERICAN expected beneficiaries are covered by Assefa says adding that those who do injuries and cosmetic plastic surgeries their employing firms through various not follow medical referral procedures or any such cases considered as and isolated health insurance benefits. opting to go to hospitals without a unessential. physician’s approval will be expected Pensioners are expected to contribute According to Assefa, with such a to cover 50 per cent of treatment one per cent, with the government task needing a complex strategy costs. contributing the equivalent half to go and expertise, the Agency has so far to their health insurance premium. Nevertheless, emergency treatments been building its capacity through will be excluded from both stipulations through various ways including “The scheme aims to create a feeling and the Agency will not make arbitrary experience sharing from countries of solidarity and cooperation among decisions, Assefa insists. “A medical such as Germany, which has 132 years citizens, from those earning 600 Birr audit will be done to solve this experience, as well as Japan, South (30 USD) a to those paid 30,000 Birr problem, through the Agency’s service Korea, Rwanda, Ghana and Tanzania. (1,500 USD) a month; and the illness providers and quality assurance and prone and the healthy as health costs With the government now working accreditation directorate,” Assefa will be evenly burdened,” says Assefa. on an upcoming national electronic explained of ways to address the card, EHA hopes to capitalize on However, he confessed that recent pitfalls. that database to avoid inefficiency experiences on the CBHI scheme What treatments are excluded? and fraud in serving beneficiaries revealed abuses of the system either of the health insurance system. It, from needlessly repetitive visits to The SHI scheme, however, will not be nevertheless, will not wait for the health facilities or failure to follow for every treatment of the insured. implementation of the national the rules for treatment, among other While it covers surgeries, in hospital, identification. Until then, the Agency pitfalls. itinerant, maternity, laboratory, as well will prepare a special ID card with as cancer treatment to mention some. “Those who needlessly go to health a secret code to protect against centers for repetitive examinations To be excluded are those already cheating. and treatments will be obliged to pay covered by other schemes such as five per cent of the treatment cost,” injuries from traffic accidents, on job

22 www.theethiopianamerican.com

THE ETHIOPIAN AMERICAN

Mama Fresh produces Injera in the typical Ethiopian way. (Photo by Elias Gebreselassie)

Featured Story Two way street in food, beverage business involving diaspora By Elias Gebreselassie When thinking of external investment touch with her country through food Ethiopian diaspora populations such as or trade in Ethiopia, most may and spices. “I eat injera, [the type that the US, Sweden, Kuwait and Norway. first think of commodities such as is only] partly consisting of teff, but Mama exports injera, derkosh (dried electronics and cosmetics sourced it is not as good in texture and taste Injera), pepper, chilli, atemit (porridge), from Asian markets. Some may even as the one I grew up eating,” says and doro-wot (chicken stew). “We discount the beverage and food Sara. The injera she eats at her home are especially focusing on expanding industry as one with investment in Atlanta uses teff grown in the U.S. [further into] the US market by potential. state of Idaho. Although the texture opening a Los Angeles export route of the food is not ideal, she still enjoys However, a look at recent trends in in addition to the Washington DC injera because it also serves as a Addis Ababa reveals that the food and metro area, where a large Ethiopian reminder of Ethiopia. beverage sector is not only attracting Diaspora community resides”, says investments but also building bridges To be sure, there are some Ethiopian Mirafesilassie Hailu, marketing and between Ethiopians at home and companies that export processed and export manager of Mama Fresh. He Ethiopian diaspora1. semi-processed Ethiopian food. One goes on to say that he has witnessed such firm is Mama Fresh, which has a growing interest in the company’s Taking the taste of Ethiopia abroad been selling injera and spices for the products not only among the Ethiopian Sara Gebreselasse, a resident of past 12 years. The company’s sells its diaspora but also among non- Atlanta who has been in the US for products both in Ethiopia and abroad, Ethiopian Americans. almost eight years, says she feels in mostly to countries with substantial 24 www.theethiopianamerican.com the capital as Adama (Nazreth), while THE ETHIOPIAN AMERICAN distributing spirits across the country.

Although the company has grown from 12 million Birr in annual revenue and 12 employees during the first few years to 300 million Birr and 124 employees today, its owners are still not content and intend to continue growing their company.

Improving investment climate Employees of Mama Fresh make sure their products are labled properly. (Photo by Elias Gebreselassie) EveryBlock is just one example of an increasing amount of investment Laura Davis, a US citizen whose equity of diaspora abroad, Ethiopian diaspora from Ethiopian diaspora. About 80 investment company, RENEW, has are increasingly moving back to their percent of investment from the US is partnered with Mama Fresh says that home country to launch businesses from the Ethiopian diaspora, according so far, the partnership has worked that address market gaps targeting to Getahun Negash, director of the smoothly. According to Laura, Mama domestic consumers. Established in Ethiopian Investment Commission Fresh exports five times per week 2008, EveryBlock Distributors PLC is Public Relations Directorate. or 2,200 cartons per week reaching one such example. about 3,000 people in the Washington The increasing investment relationship Feleke Girma, returned to Ethiopia DC metro area. between Ethiopia and US-based after having spent 25 years in the Ethiopian diaspora is as a result of Laura met Mama Fresh through the US where he owned a chain of liquor series of moves by the Ethiopian Ethiopian Agricultural Transformation stores in Washington DC. He says government to make Ethiopia suitable Agency (ATA), a government institution investing in his home country has been for its diaspora, Getahun asserted. tasked with revolutionizing Ethiopia’s a rewarding endeavor despite initial Prime among them are the various largely traditional agriculture practice, challenges. incentives available to Ethiopian a prime sector of its economy. Mama Feleke moved to Ethiopia in 2008 with Diaspora. “Diaspora investors have Fresh and RENEW signed their his family to launch EveryBlock with all the privileges of a local investor, agreement in January 2014. fellow returnee, Robel Feleke. The such as no capital restrictions, while A two-way street company now claims to be the largest at the same time they can invest as beer and spirits distribution company foreign investors. As such they are Although Ethiopia-based in the country. EveryBlock’s beer entitled to the right to take the capital entrepreneurs and companies are distribution channels reach a 99 kms and dividend out of the country,” says successfully exporting their locally radius from its office in Bole area of Getahun. produced goods to cater to the needs Addis Ababa, going as far south east of

Laura Davis partnered with Mama through her equity company, RENEW, and reaps benefits of Injera. (Photo by Elias Gebreselassie) www.theethiopianamerican.com 25 THE ETHIOPIAN AMERICAN

Feleke Girma of EveryBlock brought to Addis a business he knew in US. (Photo by Elias Gebreselassie)

Additionally, the commission also whiskeys, for example. We have now Mama Fresh is the third of such cites a combination of other factors solved that,” says Feleke. business deals, so far the return on including rising labor costs in Asia, investment in both social and financial Despite these successes, Getahun the enthusiasm created by Ethiopia’s terms means more investments are says assumptions and sterotypes millennium celebrations, good bound to follow. among diaspora about the difficulty investment conditions and vigorous of doing business in Ethiopia remains. For Mirafesilassie, the future promotional works that are attracting However, he says the government has includes the new building Mama investment from the Diaspora. not only enacted laws and regulations Fresh acquired at a generous rate Challenges remain to attract investors, but has also from the government, which will devised mechanism to solve the mean operational expansion and Despite the optimism by the business bureaucratic hurdles. “We have put up more employment and therefore community and the government in our building a one stop shop system more Ethiopians at home and abroad officials, both admit that challenges where you will find services from consuming their products. Mama remain. various government bodies - Revenues currently employs 75 permanent and Mirafesilassie and Feleke say and Customs Authority, Development 38 temporary employees, while buying problems with logistics when and Commercial banks as well as the premium teff from 300 farmers. transporting their goods are major Immigration and Nationality Affairs For consumers in Ethiopia and handicap. Ironically, the difficulty is Main Department.” The Commission diaspora living abroad, companies more acute in their domestic trade, expects the Electricity Corporation such as Mama Fresh and EveryBlock although, they say that lately they see and the Ministry of Environment and are keenly identifying market gaps and signs of changes. Forestry to open service in the building using their business experience and soon. Feleke says EveryBlock believes in understanding of Ethiopian culture and one-on-one customer relationship, Looking into the future taste to address the demand and build therefore it is even more important successful enterprises. For Sara, who While all agree on the challenges in to have a good distribution logistics buys mixed ingredient injera because Ethiopia’s beverage and food industry system to engender trust and it is less expensive than whole-teff in forging an even stronger bond reliability and thereby thrive in the injera processed in Ethiopia, her between Ethiopia and its diaspora Ethiopian market. dream is to taste the real flavor of population, the future opportunities her country. “There are big Ethiopian are what preoccupies most. Another issue both have raised communities in Seattle, Los Angeles, is maintaining the quality of their EveryBlock is now planning to increase Washington DC, Atlanta and Dallas, products among low quality and diversify his business with an who wait for a day to enjoy Ethiopian counterfeit products that enter the investment into manufacturing in the food as good and delicious as it is back market. non-alcohol beverage industry. home,” Sara concluded. “We used to have problem with For Laura whose partnership with counterfeit versions of Black Label 26 www.theethiopianamerican.com THE ETHIOPIAN AMERICAN

Featured Story Ethiopia’s tough journey towards pharmaceuticals industry By Andualem Sisay Gessesse In summary: Ethiopia spends over $300 industries. of which only three have WHO’s million of its hard-earned forex to import Good Manufacturing Practice (GMP) Agro-processing such as production of essential medicines and pharmaceutical documentation, which allows them to textiles, leather and food processing products annually. In an attempt to export their products and participate and packaging are identified by the reverse this case in the sector and ensure in government tenders financed by government as strategic sectors availability of affordable medicine at donors. that have the potential to create home, the country has been encouraging plenty jobs. It will also support the Some 200 importers of local manufacturing of pharmaceuticals. agriculture sector that is mainly based pharmaceuticals and medical However, its efforts has not resulted in on small scale farmers who can supply consumables are also operating in the much success so far. It has achieved only their products as an input for these country. The local industry currently 10% of its plan of exporting $20 million industries. comprises of 22 pharmaceutical and pharmaceuticals in the past five years medical suppliers and manufacturers. earning only two million dollars. In addition, the government has also Of these, nine are directly involved in been encouraging the local production With the advice from the WHO, the the manufacturing of pharmaceutical of medicines and chemicals, with the country has now drafted a ten year products. The Ethiopian Food, main intention of saving the several Strategic Plan on manufacturing of Medicines, Healthcare Administration hundreds of millions of hard currency pharmaceutical products with detail five and Control Authority procurement the country spend in importing years plan of action already presented has reached $310 million in 2014 from such products and facilitating the to the Council of Ministers to consider. $27 million in 2007. technology transfer in the sector. Part of what the government is expected The incentives to consider is a set of incentives that are But most of all, local production meant to attract private businesses to of generic medicines promises Current incentives by the government the sector. affordability, accessibility and for local production of pharmaceuticals availability of needed drugs, according include tax free loans of up to 70% for The Ethiopian government has to report of the World Health new investments and up to 60% for identified several strategic investment Organization (WHO). upgrading projects for the first five areas as a matter priority that deserve years from the dedicated government incentives in order to attract the Pharmaceuticals sector of Ethiopia bank - the Development Bank of private sector. One of the major areas Ethiopia. that are currently enjoying significant Currently Ethiopia’s pharmaceuticals market is estimated to reach around government attention and, therefore, There is also a 100% custom half a billion dollars and on the series of incentives is manufacturing. duty exemption on import of all rise. Frost and Sullivan in its 2012 granted capital goods, such as With the objective of substituting the survey estimated that Ethiopian plants, machinery equipment, and bulk import of manufactured products, pharmaceuticals market could grow construction materials. Spare parts which is consuming the already by 14 per cent annually and reaches at up to 15% of the total value of scarce resources of the country, the around one billion dollars by 2018. imported investment capital goods are government is providing incentives for exempted from customs duty. the private sector interested to invest There are around nine local pharmaceutical manufacturers, out in pre-identified light and medium Those exporting 50% their products www.theethiopianamerican.com 27 THE ETHIOPIAN AMERICAN or services, or supplying 75% of their products or services as production or services input to an exporter are exempted from income tax for five years. While those exporting less than 50% of their products or services of their products or those supplying only to the domestic market are exempted from income tax for two years.

Investors who put their money in priority areas to produce mainly export Many of the pharmacies in Ethiopia retail mostly imported phrmaceuticasl. (Phto by products will be provided with land Andualem Sisay) necessary for their investment at reduced lease rates. incentives are not enough to spur the the more than 380 products on the development of the industry”. national essential medicines list. In Further, the Public Procurement 2014, local pharmaceutical companies The sector is obviously at infant stage. Agency grants local manufacturers a supplied products worth around Its growth has been constrained due to 25% price preference, and also prepays $44.23 million. 30% of the tender value upon contract a combination of factors and changing award. The balance of the 70% of the this industry state of affairs is proving In addition to the absence of national award value can be accessed through difficult even with officially stated strategic and action plan, the industry the Development Bank of Ethiopia if prioritization. The pharmaceutical has also been facing significant the local company requires additional industry performance report shows challenges such as human resource capital and is willing to cede the tender that most the manufacturers in capacity constraints, limited access to to the bank. While product registration the country have been operating capital/financing and raw materials for local manufacturers is also reduced below their capacities due to several procurement difficulties. problems and supply only around 20 to an average of one month. With all the supports extended to the per cent of the market. The variety of sector and ambitious targets set, the Meanwhile, the 25 pages document products by the local pharmaceutical performance of local manufacturing that details the various incentives manufacturers is also limited. They of medicines was insignificant over states that “on their own, these have been producing only 90 of the first phase of the expiring Growth

28 www.theethiopianamerican.com industry market to 50% and create THE ETHIOPIAN AMERICAN close to 7,000 jobs.

Dr. Mebrhatu Meles, State Minister of Industry, believes that the targets are attainable with additional incentives and special focuses on the sector. “However, much more is still to be done in order to achieve these targets,” he says indicating that the government is considering additional incentives. “As the pharmaceuticals industry operates under complex internal and external requirements, the [strategic] MedTech Ethiopia is one of the long established private companies active in the document is believed to encompass, industry. (Phto by Andualem Sisay) among other things, issues such as human resource development, and Transformation Plan (GTP I) over because of lack of access to essential regulatory infrastructure, quality the past five years. Even though the medicines”. standards, WHO’s GMP, supply chain, country has planned to produce locally This ten years strategic vision and the research and development, technology and export pharmaceutical products detailed five years action plan derived transfer, pharmaceutical data and worth $20 million between 2010 and out of it generally envisage to boost information, and financing,” he added. 2015, it only attained 10% of that the share of local manufacturing to target earning only two million dollars. Creation of windows of opportunity 50% and make essential medicines In addition, only 20% of the total through incentive packages and affordable to the public at large pharmaceuticals products supplied protection of local manufacturers are in the stated period. “Though the to local market was sourced from crucial, according to Dr. Skhumbuzon pharmaceutical sector was long domestic producers. Ngozwana, WHO Consultant, who identified by the government as one also suggested more incentives What next? of the eight priority sectors, we had for companies to invest in the no comprehensive strategy like this Supported by the WHO, the pharmaceutical sector of Ethiopia. one,” says Dr. Kebede Worku, State government has now revealed a 10 Minister of Health, commenting on Given the ground works to propel an year strategic and action plan to the document tabled for discussion on effective pharmaceutical industry are boost local production of essential yet to be done, it takes much more medicines. Dubbed A National Strategy The strategy now envisages than it would have under normal and Plan of Action for Pharmaceutical growing the export revenue from circumstances to convince the private Manufacturing Development in pharmaceuticals to $30 million in to put money into the sector in Ethiopia (2015-2025), the document five years and to $80 million by Ethiopia. That means double challenge was brought for discussion in Addis 2025. for the government. Ababa in June this year. “Ethiopia is building the ship as it sails”, The document was produced by the June 2, 2015. said Prof. Tsige Gebre-Mariam, one of WHO on request by the Ethiopian The strategy now envisages WHO consultants who were involved government. It “explicitly combines the growing the export revenue from in the preparation of the strategic plan, objectives of industrial development pharmaceuticals to $30 million in five indicating the multiple challenges the policy and those of health policy in years and to $80 million by 2025. sector has been facing. order to develop the sector, grow It aims to make essential drugs the economy and help the people to Now the major challenge for the affordable for local people while at access locally produced good quality sector regulators is to figure out the same time creating jobs and affordable medicines,” says Dr. Zafar what they can do differently, which significantly cutting the over $300 Mirza, Coordinator, Public Health they haven’t done during the first million spent every year for importing Innovation and Intellectual Rights Growth and Transformation Period pharmaceutical products and drugs. at WHO. “We are not interested in (2010-2015) in order to boost the supporting local pharmaceutical During Ethiopia’s GTP II (2015-2020) performance of local manufacturing of industries if local people and local the country also envisages to raise the pharmaceuticals and essential drugs. population continue to suffer and die share of domestic pharmaceuticals www.theethiopianamerican.com 29 THE ETHIOPIAN AMERICAN

Ethiopians and Americans have come together in celebration Col. John C. Robinson.

Featured Story Ethiopia, US pay tribute to the Brown Condor By Andrew Laurence

This year’s Ethiopian Patriots’ Day Robinson, who provided a wonderful gravesite for Col. Robinson at Gulele celebration in May was unique luncheon for the many invited guests. Cemetery in Addis. The speakers for it had a new African American The speakers for the day included included US Ambassador to Ethiopia element to it that’s said to highlight President Girma, US Deputy Chief of Patricia Haslach, President Girma Ethio-American friendship. The first Mission, Peter Vrooman, Ethiopian Wolde Giorgis, Lij Daniel Jote Mesfin, annual commemoration for Col. John Foreign affairs Minister Dr. Tedros Yahoshuah Israel and an Ethiopian C. Robinson a.k.a Brown Condor, Adhanon, Lij Daniel Jote Mesfin, Head general from East Africa Command. Ethiopian war hero and African of the Ethiopian Patriots’ Association, The program was highlighted by the American aviation pioneer, was held Cardinal Gebreyesus of the Ethiopian unveiling of a bust commissioned by in Addis Ababa the week of May 4, Catholic Church, Council Chairman, the Council that depicted the likeness 2015 to coincide with the Patriots’ Day Yahoshuah Israel and US Council of Col. Robinson. It was sculptured by celebration on May 5. representative, Andrew Laurence. Ethiopian artist Henok Azene. A wonderful mural was unveiled at Organized by the International Council Among his many accomplishments, the event depicting the life of Col. for the Commemoration of John C. Col. Robinson was instrumental in John Robinson that was painted by Robinson and the Ethiopian Patriot’s the formation of what was to become Ethiopian artist Fasil Dawit. Association, the celebration brought the Tuskegee Airmen of WWII fame. together both the Ethiopian and US On Patriot’s Day, May 5th, a beautiful He established the first US accredited governments along with other NGOs flower wreath provided by the Patriot’s African American owned airline and to honor Col. Robinson’s dedication Association with the assistance of pilot school in Chicago, USA, and and sacrifice for Ethiopia. Ethiopian ambassador Alemeyehu founded the American Institute School Abebe, was laid at Victory Square by in Addis Ababa, Ethiopia. It is with Col. Robinson was invited by Emperor Council chairman Yahoshuah Israel. great appreciation that the US led Haile-Selassie to train Ethiopian pilots To the witness of hundreds of people African American community and for the impending war with Italy. He and dozens of former Patriot’s Col. flew many missions at the start of the Ethiopian community would come Robinson received a great ovation war and returned later to continue together on such an auspicious for his dedicated service to the cause to assist Ethiopia’s fledgling airline. occasion to celebrate their common of Ethiopia in battle with the Italians Col. Robinson would die in Ethiopia in history that extends back two hundred and later as a pilot instructor of the a plane crash to deliver blood for an years to the Abyssinian Baptist Church Air Force. The program continued in injured pilot. in Harlem. It is with great hope that Trinity Church where the bust of Col. future commemorations will include The commemoration began on May Robinson will be placed with special other notable personalities who have 4 with a VIP program at the home permission. contributed to the unification and of former Ethiopian President Girma The following day, May 6, a moving friendship between the two countries. Wolde-Giorgis, a personal friend of Col. ceremony was held at the long lost 30 www.theethiopianamerican.com

THE ETHIOPIAN AMERICAN

Featured Story Ethiopia pleas for private investment to arrest growing medical tourists By Binyam Tamene Ethiopia hopes for an increased private Medical tourists too lament that they the total number of medical tourists investment in tertiary healthcare as have to spend their life-time earnings globally as distinct from spa and the number of citizens going abroad like this. wellness tourists, experts at African in search of advanced quality services Development Bank (AfDB) claim “My doctor told me to go abroad grows. increasingly more Africans leave the to treat my eye as it was difficult continent in search of Healthcare. Reports indicate Ethiopians spent for him to treat me without proper over $ 30 million in medical treatment technological support,” spoke More tourists also visit African expenditure abroad in the year 2012 one patient who runs his own countries such as South Africa to alone. The exact figure for the number businessman in Addis Ababa. receive Healthcare. of travelers for such purpose is still Fortunately for him, he can afford Dr. Seye Abimbola, who is an expert unknown. But government says the to do that albeit losing much his of on health systems and policy, advised number is significantly growing along business’s capital. Africans to invest more on, in addition with the cost citizens are incurring. to a manpower shortage, the required “I will have to spend most of my “A number of our compatriots travel infrastructure and medical equipment working capital in order to save my aboard to seek better care bearing to treat conditions that often get eye,” he said. the huge cost and complexity of such referred abroad. And the Ethiopian undertakings,” President Mulatu The global medical tourism market is government seems to take a notice Teshome (PhD) said in mid-June while estimated to grow from $10.5 billion of the trend and is taking steps to inaugurating a new project at the in 2012 to $32.5 billion by 2019, with eventually take matters in to its own Myungsung Medical Center (MCM) or Africa supplying a significant sum. hands. Korean hospital in Addis Ababa. While there are uncertainties about 32 www.theethiopianamerican.com “Our Growth and Transformation Plan basic health service delivery at local study for the medical city, which will THE ETHIOPIAN AMERICAN II gives due emphasis to the expansion level, through increased financing to be housed in an area between Black of hospitals responding to changes districts (Woredas), by and large, for Lion Hospital and Merkato. Children’s and this patterns and in meeting recurrent expenditures. As a result, hospital with 200 beds will soon be public’s expectations for advanced child immunization rate, percentage built within the medical city by the quality of Healthcare,” said President of births attended by trained health government. Mulatu at the same event. personnel, and the percentage of The Chinese government too will pregnant women receiving iron and The Korean-run health center is one construct what the Ministry calls folate supplementation increased of few tertiary health centers with the “a high-tech hospital” with 1000 significantly. much needed high-tech facility. beds within the medical city after an Government wants to repeat this agreement was made during a recent The medical tourists in secondary and above healthcare Ethiopia’s president visit to China. The Ministry of Health’s concern right now facilities in the country too. funding for this hospital will come is how to avert the flow of Ethiopian from the Chinese government in a “Following a successful primary ‘medical travelers’ which experts similar arrangement with Tirunesh- Healthcare interventions,” Dr. Mulatu specifically define as individuals who Beijing Hospital. said the government is now working leave their country of residence to “to improve the quality of secondary The project would materialize in the receive complex medical treatment and tertiary Healthcare”. next five years, according to Aduljelil. delivered by licensed medical professionals, typically in a hospital A city within a city Desperate for private investment setting. The treatments include As a part of the next five year Officials, however, admitted that all medical care in orthopedics, cardiology, development plan, Ethiopia slated a could not be undertaken by public oncology, pediatrics, neurology, stem specific plan to develop a Medical Hub investment alone. cell, and others. and build a medical tourism industry “We also recognize our limitations And most of these tourists generate in the capital city. Ministry of Health in the area of tertiary Healthcare the highest dollar spend per claims the plan is both to check the and meeting the expectations of our individual, says unpublished report growing number of medical tourists people for advanced medical care,” on Development of Medical Hub in and make the country a destination President Mulatu said. Ethiopia. for medical tourists, much like South Africa is now. “The Ethiopian health policy clearly Prioritization induced challenge! recognizes the genuine partnership Mandela’s nation is Africa’s market In hindsight, experts and officials and contribution of the private sector leader in providing medical tourism agree that the focus of Ethiopia’s and the key role the private sector can services, according to information on health sector on improving the play in filling the gap that can’t be filled AfDB’s website. More than 2.5 million primary healthcare services has by the public sector”. medical tourists visited South Africa, contributed for the improvement from 2006 to 2010 alone, out of which The government vied to tap into of access to the sector but at the less than 10 per cent were from high- Ethiopia’s current unique position expense of the need for quality tertiary income countries. of increasing Healthcare needs of healthcare. World Bank says these its growing middle and upper class have helped improve the provision of Abduljelil Reshad, Director of population. The plan also considers the Resource Mobilization at the Ministry, need for the high-tech health facility said Ethiopia is working to change for the growing number of expat the current trend and become a community and those attached to the destination to medical tourists from its 118 consulates and embassies, and neighbors. the African Union, among other in the “We have already started to work diplomatic community residing in the on various projects and programs country. to realize this vision of ours, which “It’s my sincere belief that the private includes building a medical city in sector would play increasingly Addis Ababa,” Abduljelil said. greater roles in introducing advanced The Director also added that the Healthcare and health technologies,” Ministry already carried out a baseline he said. www.theethiopianamerican.com 33 THE ETHIOPIAN AMERICAN T H E ET IO P IA N A M ERI C

A LOOK BACK TO PAST YEARS FORUM 9th (Photo by Matt Andrea) ETHIOPIAN DIASPORA BUSINESS FORUM

34 www.theethiopianamerican.com THE ETHIOPIAN AMERICAN

Featured Story Ten years of progress: history, purpose and achievements of Ethiopian diaspora business forum The Amharic adage that roughly The timing of their initiative coincided Ethiopian community in the United translates to “it gets darker when a with the launch of a new web-based States contributed to Starbucks’ new day is about to break” perhaps community magazine, The Ethiopian eventual recognition of Ethiopia’s right is equivalent to the English “it gets American. The Ethiopian American, to the aforementioned trademarks. worse before it gets better”. a non-partisan magazine, was also Buoyed by the success of the lecture looking for ways to engage the But little, if at all, did the group of series, the magazine and its partners Ethiopian Diaspora community on key young Diaspora professionals in North began to look for ways to enhance issues affecting the community. America know that their extreme and extend the dialogue to a larger frustration from the lack of sustainable In 2004, the magazine and the young audience, including for ways to spur link between the Diaspora community professionals joined forces to stage investment and trade in Ethiopia. In and their homeland, in fact was a sign one of their successful public events, June 2005, the magazine began a something new and big was about a lecture by Ato Getachew Mengistie, new chapter by organizing the first to start. They may never thought of who at the time was the Director Ethiopian Diaspora Business Forum this famous Ethiopian motivational General of the Ethiopian Intellectual (the “Forum”) with the generous maxim when, eight years ago, they Property Office. The purpose of the financial support of USAID/VEGA began discussing on ways to embark lecture was to educate the Ethiopian Ethiopian AGOA + and several on something unprecedented. May be, Diaspora on the substance of Diaspora businesses. they were also not sure how far their Ethiopia’s trademark dispute with the The Forum’s goal was and is to plan would go. They simply wanted Starbucks Corporation on the use of strengthen the social, communal and to engage the Diaspora community Ethiopia’s most famous coffee names: business relationship between the to spur dialogue within the Diaspora Keffa, Sidamo and Yirgacheffe. The Ethiopian Diaspora and indigenous community and to build a bridge group assisted both the EIPO and Ethiopian business community by with their country of birth, Ethiopia. Oxfam in mobilizing 100,000 petitions creating an opportunity for business Fortunately, they were not the only against Starbucks. linkages, knowledge sharing, and ones with this vision of raising the The success of the lectures and the highlighting opportunities both in the issue of contributing to Ethiopia to a awareness it created within the United States and Ethiopia. meaningful way. www.theethiopianamerican.com 35 THE ETHIOPIAN AMERICAN Ten years later, the Forum has grown year brings new possibilities and Summary of the Past 9 Forum in every aspect and is going strong, challenges. “Each year, the Forum The first Forum was held in June 29, empowering the Diaspora business makes every effort to provide 2005 at Four Points by Sheraton community with valuable information guidance on taking advantage of the in Downtown Washington DC. The and enabling the community to opportunities and find solutions for meeting attracted about 100 Diaspora participate in Ethiopia’s economy and the challenges. Each year, the Forum businessmen and a number of development in a meaningful way. comes up with innovative ways of American professionals engaged in conveying key messages the Diaspora Since the launch of the Forum, many investment and development. The to make informed decisions” added important issues have been tackled, focus of the Forum at that time was Yohannes. and valuable information have been on expanding trade and investment shared with the Diaspora community This year will mark the tenth year between the US and Ethiopia, in the areas of nostalgic trade, trade anniversary of the beginning of the including on ways to take advantage and investment with Ethiopia and Diaspora community dialogue and the of AGOA’s duty and quota free access the United States, policy advocacy sixth year anniversary of the Forum. for Ethiopian products to the US. The both in the US and Ethiopia, availing While the program this year will return Forum also discussed the WTO and

THE ETHIOPIAN AMERICAN www.theethiopianamerican.com Moments from past Ethiopian Diaspora Business Forum (Photo by Matt Andrea) benefits from the African Growth to the half day format of the past five Ethiopia’s accession process. Speakers and Opportunities Act (AGOA), year, the organizers are promising to from the Ethiopian Diaspora engaged promoting trade and investment hold an award dinner in Washington in exporting of garment and textile financing opportunities and resolving DC. The organizers also plan to as well as those working on the US regulatory bottle necks by working publish a new annual magazine that side at major buyers spoke about the with other institutions. Specifically, anchors on issues of interest for the challenges and opportunities related over the years the Forum has proved Diaspora. to AGOA. The anchor sponsor of the an effective platform for the Diaspora Forum was USAID’s VEGA Ethiopia The community lectures and the community to exchange ideas and AGOA Plus project. Forums have greatly contributed critically important information to the growing social and business The second Forum was held on July 12 about the overall economic situation relationship between the Diaspora 2006 in Washington DC. The Forum’s back home, the opportunities and community and Ethiopia. “The success focus was on investment in Ethiopia challenges of investing in Ethiopia, of these events and activities were and how to address and manage among other major issues. The largely achieved due to the support challenges. Up until that time, there Forum has also focused on providing and assistance of USAID and many was hardly in opportunity for the information on financing for Diaspora volunteers who have supported the Diaspora to discuss and find solutions investors, both in the US and in event”, says Yohannes. for the many problems facing Diaspora Ethiopia and on useful tips on how to investors in Ethiopia. The problem had improve the odds of success. This year is a special year where we grown so much that investors were look back and marvel how far we “Many of our participants have gone abandoning projects and discouraging have come and at the same time look on to invest in Ethiopia and support new investment. Diaspora investors at forward to the next ten years. We their loved ones and the economy the time operating business in Ethiopia look forward to continuing the past of Ethiopia” said Yohannes Assefa, were brought back as speakers to ten year’s productive and informative the convenor of the Forum. Each share their experience. The Forum exchange of views and information. 36 www.theethiopianamerican.com also discussed the best ways to raise Investor’s panel discussed the Ato Tadiow G. Belete, founder and CEO THE ETHIOPIAN AMERICAN funds and acquire financing both in challenges to financing even with US of Boston PLC and Ato Zemedeneh the US and Ethiopia. To that end, three Government support. The Forum’s Negatu, Managing Director of E&Y private equity firms were invited to anchor sponsor was USAID. Ethiopia were the co-recipients of the present on financing opportunities. Pioneer Diaspora Business Person The Fifth edition of the Forum was The Forum was a huge success in of the Year Awards. A $10 million loudly and colourfully celebrated with achieving its goal. The Forum also investment in new hospitality ventures a two day symposium and trade fare. started to track down investors who was announced at the Forum, hence, The trade fare attracted 15 Ethiopian attending the Forum and went on to starting a new trend in the business. businesses who provide services invest in Ethiopia. The Forum’s anchor to the Diaspora community both in The Eighth Forum was held on July sponsor was USAID. Ethiopia and in US were carefully 15, 2012 and focused on Ethiopia’s The third Form was held in July 2007 identified and invited to participate at emerging agricultural sector. Forum at The George Washington University’s the Forum in Washington. Ten more discussed specific investment Jack Morton Auditorium in Washington businesses based in the US joined the opportunities in agri-business, agro- DC. The move to The George ones from Ethiopia. The Forum also processing and financing and value Washington University was prompted held a luncheon for the first time in its chain development opportunities in by the desire to accommodate the history. Assistant Deputy Secretary select subsectors. In addition, the ever increasing numbers of Forum of State for East Africa Karl Wyckoff forum features an agri business attendants. As usual, the Form had was the keynote speaker. Rosa proof of concept competition and the three panels discussing various Whitaker and Ermias Amelga also winning team was rewarded with Diaspora business matters. The first spoke at the luncheon. Among others, a round trip ticket to Ethiopia and panel discussed how best to integrate United States Agency for International technical support from the Forum and Diaspora developmental institutions Development, Zemen Bank, Altour its sponsors as well as “participate with Government efforts to support Tech and Turkish Airlines were major in a USAID-funded matching grant Diaspora investments in Ethiopia. The sponsors of the event. program to support investments in second panel discussed how best to select agricultural value chains.” Ato The Sixth Forum was held on start and operate business in Ethiopia. Amman Fissehazion, CEO of Ethiopian August 20, 2011 at the Grand Hyatt The third panel featured Diaspora Broadcasting Service (EBS) was the Washington Hotel in Washington entrepreneurs currently operating in receipient of the Pioneer Ethiopian DC. The sixth Forum was also a Ethiopia. The entrepreneurs discussed Diaspora Business Person of the historic one in that it featured the challenges and possible solutions. Year Award for his effort to introduce first ever Pioneer Ethiopian Diaspora The third Forum attracted over 200 satellite TV programming and Business Person of the Year Awards participants from as far as London, transmission from the Diaspora into Dinner. Ato Ermias Amelga won the Frankfurt, Los Angeles, Denver, Ethiopia. inaugural award for his investment Arizona and New York. The Forum’s in Highland Bottle Water which The Ninth Forum was held on August anchor sponsors were USAID and The forever changed the face of water 2nd and Thursday 2-3 in Washington George Washington University’s CIBER consumption in Ethiopia. Legendary DC. The forum reviewed opportunities Institute. Ethiopian-American businessman and challenges on “Investing in The fourth Forum was on June 19 and Zemedeneh Negatu was the keynote Ethiopia’s Emerging Technology June 29, 2009 at the Four Points by speaker. Other special guests include Sector,” in recognition of the growing Sheraton in downtown Washington the D.C. Mayor Vincent C. Gray, and importance of technology as a key DC and at the University of California VP of OPIC Mimi Alemayehou. A driver of innovation in the Ethiopian at Los Angeles. The fourth Forum networking cocktail hour – sponsored economy. The Awards dinner was for the first ventured out West to by ModernETH and Altour Travel held at Grand Hyatt Hotel and the Los Angeles while maintaining the of Ethiopia offered participants an awardees were Ato Munir Duri, CEO, annual Washington DC-based event. opportunity to network and make Kifiya Financial Technologies PLC and The focus of the Forum was on US business deals. Daniel Gizaw, CEO, dVentus PLC, a Government support for American technology company based in Ethiopia. The Seventh Forum was held on July investments abroad, including those of The Forum also held for the first time 14, 2012 at The George Washington the Ethiopian Diaspora, many of whom a Private Equity pitching session to University and the Grand Hyatt are US citizens. Speakers from OPIC, allow five select companies to see Washington Hotel. The Forum focused Ex-Im Bank and USAID spoke from investment from the equity firms. on the hospitality industry and the their respective institution perspective. Diaspora’s contribution to the sector. www.theethiopianamerican.com 37 THE ETHIOPIAN AMERICAN

INVESTING Investing in Ethiopia: a guide to the diaspora By Biset Beyen General enter the market. Such investors will Ethiopia is untapped in terms of adapt to the business environment investment opportunities despite The story of Ethiopia’s economic before others and thereby hold a grip efforts by the government to growth has lately become a regular on the competitive edge and position encourage foreign and diaspora part of mainstream news around the themselves to stay ahead of those investors to do business in the globe with media outlets reporting on who come late. country. There is an evident thirst the “booming economy [in] what used for private sector investment in to be one of the poorest countries With little or no competition, these what is now referred to as one of on earth”. The momentum around first movers in Ethiopia are able to the fastest growing markets in investing in Ethiopia seems to be establish brand recognition and win Africa. Ethiopia’s economy is still building with foreign investors giving the loyalty of the average consumer. characterized by foreign trade a serious consideration to entry and Such companies include Ambo Mineral deficit, under cultivated arable land, presence in Ethiopia. From China to Water, Highland, Omo, Ajax and Fafa. huge gap in the supply of housing, Iceland, investors are eyeing Ethiopia. Such brands still remain popular underdeveloped tourist destinations And for those from Turkey, India, Saudi among consumers even when some of and traditional but low-yielding Arabia, UAE, Egypt and the Sudan, them are no longer in the market. For farming techniques. Additionally, the Ethiopia has almost become their example, Highland is no longer in the country’s large labor pool coupled second home in recent years. market and dozens of other competing with business opportunities requires brands dominate the market, Although Ethiopia’s business entrepreneurship, technology, however, the term “Highland” is now environment is far from the standards financing and above all the will to synonymous with bottled water. that most international investors are contribute to change this country. The Similarly, mineral/sparkling water is accustomed to, some will view the demand is ever here – the supply is almost always referred to as Ambo, challenges as an opportunity and opt coming, but not as fast and as much as every powdered soap as Omo, every not to wait for perfect investment is needed. dish washing blue bar of soap as Ajax, conditions to prevail before they and every baby formula food as Fafa. What opportunities for diaspora 38 www.theethiopianamerican.com Where your health matters most!

American Medical Center is offering the following services and medical specialties to its clients. Special features or attributes of our clinic • Patient-center setting with calming and pacifying atmosphere • The first health care facility in Ethiopian to go paperless (we use electronic medical record system) • Services are provided by highly qualified Western trained as well as locally recruited healthcare professionals • Safe, secure and surplus parking space • Conveniently located in a beautiful and peaceful residential neighborhood • Recognizing the importance of child safety and infection prevention, we have designated an entire wing to pediatric patients

Medical specialties and services Pediatrics Internal medicine Infectious diseases Trauma and Orthopedic surgery Cardiology Nephrology Gastroenterology Obstetrics and Gynecology Ultrasound and X-ray Additional services Echocardiography Pre-employment screening (check-up) Doppler Studies Health screening (check-up) for food handlers, hotels and Dietetics restaurants Immunization services Health screening (check-up) for domestic helpers (baby sitters Laboratory services ,maids and cooks) Annual general check-up Medical clearance to US-bound immigrants and college student Annual VIP membership for adults and pediatrics Immunization Services Referral Services to Apollo Hospital (India)

Clinic Working Hours: Monday-Friday 8:00 am to 6:00 pm and Saturday 8:00 am to 5:00 pm. Tel.: +251 116 67 80 00/04/07 Fax: +251 116 67 80 38

E-mail: [email protected] Website:http://www.amcethiopia.com Address: Inside the Sunshine Real-estate Compound (Meri Luke) THE ETHIOPIAN AMERICAN investors? education and training, and health “Yellow Card”. This is a document one care are also lucrative areas with huge can get from the Ethiopian Embassy or There is a special opportunity for opportunities for investment, although mission in the country in which he/she the Ethiopian diaspora investing in incentives may not be readily available. resides or at the Main Department for Ethiopia. The rich knowledge and The government is not keen to offer Immigration and Nationality Affairs, in expertise from exposure to different incentives in attractive investment Addis Ababa. cultures, know-how and business areas because the large demand methods outside of Ethiopia can give Identifying the right Line of business would almost ensure a large return on their businesses in Ethiopia significant investment. One of the tricky issues investors had leverage in both domestic and to grapple with is identifying the right international markets. Diaspora investors can tap into line of business to secure a business widely available financing through For Ethiopian diaspora, their license. Under Ethiopian law, it is illegal loans if they choose to engage in knowledge of the country, culture and to do business beyond the scope of manufacturing sector, for example. language(s) gives them a competitive what the business license allows. The government has widely advantage when launching a new Therefore, an investor who wants supported investors engaged in venture in Ethiopia. Such a background to do business in one sector may export manufacturing in particular coupled with their own business mistakenly apply for a very closely through provision of loans through the acumen or a partnership with foreign related business line believing that Development Bank of Ethiopia. investors would reduce the risk he can carry on the business he has in pursuing a business venture in Unlike foreign investors, the Ethiopian in mind through the business license Ethiopia for both the diaspora and diaspora can also take advantage secured. However, that may result in foreign investor. of opportunities in business sectors cancellation of the business license reserved, by legislation, only to and penalties for exceeding the scope There are several reasons why Ethiopians. An Ethiopian diaspora of the business license obtained. The foreign investors may not want to investor can choose to invest as a best way to do that is to get the right invest in Ethiopia just on their own. domestic investor, including in areas legal counselling before jumping into First, they want to take advantage reserved exclusively for Ethiopian applying for business licenses. And of local knowledge to reduce risks nationals or invest as a foreign there are several such consulting firms and uncertainty. There are several investor with all responsibilities and with expertise. instances where foreign investors guarantees available for foreign who tried to invest without a local Incentives investors. counterpart have either failed or The current investment legislations wasted significant time and resources Investment requirements provide specific incentives packages before succeeding. Therefore, they The minimum capital requirement for for investments made in specified often want to invest in joint ventures foreign investment undertakings is areas. The manufacturing sector with people or companies with $200,000. However, if the investment is generally favored in terms of knowledge of the local market to is undertaken in joint venture with incentives provided, including tax increase the probability for a larger domestic investor the threshold is holidays, customs duty exemption return on their investment. Ethiopian decreased to $150,000. This minimum privileges, and availability of land diaspora investors can capitalize on capital requirement is applicable for and infrastructure, depending on the their combined knowledge of local all investment modalities; whether location investment is to take place. situations and understanding of the investors establish a company, a the foreign business culture. Their Income tax exemption partnership or simple joint venture. experience of both capital source and Investment in engineering and capital destination countries is also a Under Regulations 270/2012 (as technical consulting, publishing plus. amended), the government has has the lowest minimum capital pledged to provide tax holidays/ Some of the very attractive requirements with $100,000 if it the income tax exemptions as long as investment areas especially for the company is fully foreign owned and 15 years depending on the areas of diaspora include manufacturing, $60,000 if it is a joint venture with investment and sector. The income particularly for export, agro-processing domestic investors. tax exemption generally favors and information communications manufacturing and investments made Domestic investor includes Ethiopian technology (ICT). Investment in outside of the city of Addis Ababa and diaspora who have the necessary other sectors such as agriculture, its surroundings under the Special documentation to prove their construction and real estate, Zone of Oromia. If the enterprise is Ethiopian diaspora status: namely the 40 www.theethiopianamerican.com set-up in areas farther than Addis eligible for duty free privileges for the exported goods without having THE ETHIOPIAN AMERICAN Ababa, there will be an additional vehicles as well. Further, if an investor any equity in the exporting business. one year exemption from income tax. buys goods locally, which otherwise Although this mechanism could be Investments made in areas where would have been imported duty free used to attract foreign participants the government has designated as from abroad, he/she would be entitled in local manufacturing businesses, “developing” by legislation are entitled to refund of duty paid on them. it has been little utilized so far. for 30 percent deduction of income tax Manufacturers in the textile, leather Export incentives for three consecutive years after the products, agro-processing, and other expiry of the originally available tax With the intent to boost export export oriented manufacturing sector exemption period. The areas identified manufacturing, the government of can take advantage of this mechanism include Gambella, Afar (outside of 15 Ethiopia issued the Export Trade Duty to enter foreign markets and grow kilometer radius of the Awash River), Incentive Schemes Proclamation in their businesses. Benishangul-Gumuz, Somali and the 2010. The purpose of the proclamation Industry zones Gujji and Borena Zones of Oromia as is to help investors engaged in export well as several Zones and Woredas manufacturing reduce their costs, Industrial Zones have enjoyed (districts) of the Southern Nations, more effectively exercise the duty more attention in the most recent Nationalities and Peoples regions. exemption and reduce customs amendments of the Investment There could be further income tax procedures for manufacturers seeking Proclamation as a matter of strategy exemption for another two years if to export as well as those who supply to motivate potential investors the manufacturer exports at least 60 vital raw materials. The various in the manufacturing sector. The percent of the products. The period of schemes in the proclamation are Proclamation has also established tax exemption commences from the duty draw-backs, vouchers, bonded Industrial Zone Corporation date of commencement of production export factory, bonded manufacturing responsible for establishment, by the investor. During this period warehouse, bonded input supplies management and maintenance of in which the investor enjoys the tax warehouse and the industrial zone Industrial Zones. Several industrial exemption, the law requires that schemes. The beneficiaries of the zones have been identified and most income generated from investment schemes are clearly enumerated and are in the development phase and activity shall be reported periodically. the qualification requirements as there are some which have already Income tax exemptions could be well as procedures and regulatory gone operational. Industrial zones are available for both new and expansion sanctions have been outlined by believed to offer incentive to investors of existing investment undertakings. the legislation. The beneficiaries are as they provide a readily available producer exporters, indirect producer business establishment with all Loss carry-forward exporters, as well as raw material necessary infrastructure and in some Furthermore, in the event that the suppliers and exporters. cases installed machineries await investor has made no profits but potential investors reducing the cost Exploring the investment laws losses during the tax exemption and time of building infrastructure, opportunities period, there is a loss carry-forward installation of imported machineries, scheme for half the duration of the Non-equity based collaboration in addition to other facilities such original tax exemption period after the as customized customs clearance expiry of such period. One of the fundamental challenges services for imports of raw materials for Ethiopian industrialization is and export of produce. Duty free privileges lack of access to foreign markets for manufactured and processed The bonded warehouse Investments in real estate, publishing, goods made in Ethiopia. Recognizing export trade and wholesale trade The bonded warehouse service can be this obstacle, the investment are entitled to import customs duty considered one of the most important proclamations have devised a exemption. This exemption extend facilities that the government has put mechanism through which local to capital goods, spare parts and in place to alleviate customs related producers can collaborate with construction materials that are challenges export manufacturers foreigners through a profit-sharing necessary for the establishment of a or those who supply them raw arrangement. The Non-Equity new enterprise or the expansion or materials face. Beneficiaries of based foreign collaboration scheme upgrading of an existing enterprise. the bonded export factory scheme allows foreign partners who can Depending on the number of shall be persons who have engaged provide market access to products employees and the amount of exclusively in the production of export of an Ethiopian investor to be given investment, investors may also be commodities; obtained certificate a portion of the profits made from www.theethiopianamerican.com 41 THE ETHIOPIAN AMERICAN of eligibility from the Ministry of venture. However, the later kind existing company affects competition Industry; and a manufacturing of duty free privilege is available and consumer welfare; nor is it plant which meets the standards if the investor has made an initial clear how the minimum investment set by the Ethiopian Revenues and investment of more than 5,000,000.00 threshold becomes relevant to its Customs Authority. There are certain Birr and the amount of duty free authority, given that it has always requirements to be fulfilled and allowed goods could not be more than denied clearance on the grounds of procedures followed to benefit from worth USD $ 10,000.00. Furthermore, failure to meet minimum investment the bonded warehouse system. The it is further required that the five requirements by every single applying notable advantage of these is to help million Birr should be proved to have shareholder in the company. manufacturers or importers of raw been used to import duty free capital Tax matters materials to be supplied to export goods necessary for the investment. manufacturing industrialists relieve General Franco valuta is not generally allowed from payment of duties until they in Ethiopia, as a matter of law and made use of the raw materials in TTaxation in Ethiopia is governed principle. We can only find them in manufacturing and get their hands by the income tax, value added tax, very few and expressly provided for on cash. This will help them with excise, and turn over tax proclamations by legislation. Diplomats returning to their short term liquidity problems. under which tax is imposed on basis Ethiopia, investors who are allowed However, they are supposed to pay of residency. There are also other laws to import capital goods and spare their customs duty obligations within that provide for different levies and parts and travelers who carry personal the period of time prescribed by the charges, including the stamp and the effects are some of the very few who law. customs duty laws. can enjoy franco valuta import of The voucher system goods. In all other cases goods can Residents or companies in Ethiopia be imported with the formal channel are taxable on their worldwide The voucher system is also a customs using banks and under the direct income. A non-resident’s trade or duty related service which the knowledge of the National Bank of business income is taxable with Ethiopian Revenue and Customs Ethiopia (NBE) regarding the use of respect to Ethiopian source income. Authority manage for the benefit foreign currency. The definition of “Residence” under of qualifying export manufacturing the Income Tax Proclamation includes sector investors. The beneficiaries Investing in existing companies permanent establishment of non- of the voucher book system are resident persons for the purpose of Investing in existing Ethiopian producer exporters, indirect producer extending the tax jurisdiction and companies needs to be taken exporters and raw material suppliers. subjects of Ethiopian tax laws. cautiously as in recent years Investors who qualify for the voucher additional requirements have been system can apply and will be issued Tax issues introduced, arguably exercised with voucher books for their import by some government agencies Every taxpayer is required to have of raw materials used for export in awkward manner. Under the a tax identification number (TIN) manufacturing. Commercial Registration and Business and one taxpayer cannot have more Duty free privileges and franco valuta Licensing Proclamation it has long than one TIN even if the taxpayer been maintained that the Ministry owns more than one business/ Duty free privileges could be of two of Trade should give permission company. Companies, joint ventures, kind for the purpose of this brief. for a foreign national to invest in partnerships and sole proprietorships Investors could import capital goods an existing/operating company. are equally subject to this requirement free of any duty plus spare parts of With the changes in legislation, one as registered traders and business 15% of the value of the capital goods of the requirements is to obtain a operators. Tax registration is the imported. The other kind of duty free clearance from the Ethiopian Trade simplest thing to do. Caution is privilege relates to household and Competition and Consumer Protection required though that once registered office furniture to be imported in the Authority (TCCPA). While it is possible as taxpayer, it is essential that one name of the investor or a partner to understand scenarios where the does the tax reporting routines on or general manager of the investor TCCPA can legitimately exercise its regular basis and make sure to have business. While the household powers in the interest of ensuring obtained what is required by the furniture could be pretty well beyond fair trade competition and welfare law. For companies TIN registration the capital goods qualification in the of consumers in screening mergers may not be the only thing required. first sense, this is allowed to further and acquisitions, it is not clear how Registering for VAT, obtaining a comfort investors in their Ethiopia the transfer of few shares in an fiscal registration machine, monthly 42 www.theethiopianamerican.com reporting of VAT etc are also necessary Businesses which do not have juridical whose total annual turnover exceeds THE ETHIOPIAN AMERICAN undertakings. status pay income tax according to the 500,000 Birr are obliged to VAT bracket where the income may fall in register. However, voluntary VAT Employment income tax the bracket whereby the Income Tax registration is allowed for businesses Every person deriving income from Proclamation subject to the specific with a lower annual turnover and for employment is liable to pay tax on bracket where the income falls. a startup of a new business. Any VAT that income. The rate is specified registered business is required to Withholding tax (WHT) hereunder. The marginal tax rates fully comply with the VAT laws and range from 10% to 35%. Organizations having legal personality, regulations. or private non-profit organizations and Employees are required to be Regardless of their annual turnover, non-governmental organizations have registered as employment income the following taxpayers are also the obligation to withhold income tax taxpayers at ERCA and shall have required to register for VAT: Grade 1 of 2 percent from payments they make a Tax Identification Number (TIN). to Grade 9 contractors, leather and to taxpayers who provide the following Employers have the obligation to leather products manufacturers, shoe goods and services. withhold employment tax from every factories, computers and related month payment of an employee. products suppliers, electronics, Therefore, the employer shall calculate refrigerators, television sets, decks Supply of goods involving more than and withhold the employment tax suppliers, importers, flour producers, Birr 10,000 in any one transaction from each employee based on the plastic and plastic products producers or one supply contract; Rendering income tax bracket where the salary and jewelers. The list could be of services listed by the regulation falls (see table below). The law expanded by further directives to be involving more than Birr 500 in one requires declaring the employment tax issued by the Ministry of Finance and transaction or one service contract are withheld within 30 days of the end of Economic Development (MoFED). subject to withholding of taxes at the each calendar month. said rate. There are also products and services However, if the tax on income from that are exempted from paying VAT as Splitting procurements, which employment, instead of being listed under the relevant proclamation. otherwise should be made in a single deducted from the salary or wage of transaction, with the intention of Turnover tax (TOT) the employee, is paid by the employer hindering the withholding of tax, in whole or in part, the amount so paid Turnover taxpayers are those that shall be considered a criminal offence shall be grossed up and considered a are not required to be registered for punishable under the Proclamation. part thereof. VAT because the total value of their Considering the above information, tax yearly taxable transactions is less According to the Ethiopian Income subject is obliged to withhold tax on than 500,000 Birr. A 2 percent tax Tax Proclamation, employment payments to its registered suppliers at is payable for goods sold locally and income shall include any payments or the rate of 2 percent and in the case for services rendered locally. The gains in cash or in kind received from suppliers who cannot submit a TIN services rendered include contractors, employment by an individual, including 30 percent. In addition, the Federal grain mills, tractors and combine- income from former employment Revenue and Customs Authority shall harvesters. A 10 percent tax is levied or otherwise from prospective withhold 3 percent of the total cost on other services. Base of computation employment. There are non-taxable insurance and freight value (CIF value) of the Turnover Tax is the gross employee benefits and yet deductible of all imported goods. Upon declaring receipts in respect of goods supplied or from the taxable income for the the annual profit tax, the Tax Subject services rendered. Goods and services employer under Ethiopian law. will receive a tax credit for the total which are exempted from VAT are also Business income tax amounts withheld during that period. exempted from turnover tax. In case a loss is incurred, the tax office Under the Income Tax Proclamation Excise tax shall refund the deducted withholding the taxable income of a business amount. Excise tax is charged on 19 locally is arrived at only after all the legal produced goods or imported goods. deductions are made. Corporate Value added tax (VAT) The base for computation of Excise income tax generally is paid at the Value Added Tax (VAT) is levied at the Tax is the cost of production in rate of 30%. However, the tax rate rate of 15% on value added at every respect of goods produced locally, and for income from mining operation, taxable transaction and is transferred cost, insurance and freight (C.I.F.) in excluding petroleum, natural gas and to consumer’s expenditure. Businesses respect of goods imported. The rate oil shall be taxed in Ethiopia at 35%. www.theethiopianamerican.com 43 THE ETHIOPIAN AMERICAN

Withholding on other income… (schedule “D”) Type of Income WHT Rate (%) 1 Dividend 10 2 Interest on Bank Deposit 5 3 Interest on Foreign Loan 10 4 Royalty 5 5 Income from Rendering of Technical Services outside Ethiopia 10 6 Income from casual rental of property 15 7 Gains on Transfer of Certain capital/Investment Assets (Shares) 30 Other capital/investment assets such as buildings, plants etc 15

of tax depends on the type of goods to the Private Organization Employees Ethiopian diaspora may be better produced or imported, and ranges Social Security Agency copies of its suited in the Ethiopian investment from 10 percent to 100 percent. It establishment law, personal data of environment as compared to wealthier is important to note that excise tax its employee taken at the time of first foreign investors. The government’s for locally produced goods has to be employment, letter of employment efforts to tap into the investment reported and paid in 30 days after issued to the employee and other potential of the diaspora recognizes production. A lot of foreign and local particulars determined by the Agency that an Ethiopian diaspora investor manufacturers mistake the reporting within 60 days from the date of potentially leaves much contributes time for excise tax with that of VAT. establishment or employment. much to society in terms of in capital investment and technology transfer. Stamp duty The contributions payable to the It is high time that the diaspora take Private Organizations Pension Fund, Stamp duty is levied on specific its rightful place in the Ethiopian based on the salary of the employee instruments. Depending on the type Investment arena, and the sooner of the private organization, are 11 of the instrument, the rate of stamp the better. By investing in Ethiopia percent, if by the employer and 7 duties ranges from 0.5 percent to 2 as early as possible, the diaspora can percent, if by the employee. percent, for those instruments whose speed up the flow of other foreign basis of valuation is flat; and from Birr Regarding the payment of these collaborators through which both 5 to Birr 350, for those instruments pension contributions, every private the local economy and the diaspora whose basis of valuation is value. organization is required to deduct from investor can benefit. Most of all there its employees and pay the amount, are vast opportunities in technology The instruments chargeable with together with its own contributions and innovation with promising stamp duty include memorandum to the Pension Fund on monthly potential for return. and articles of association of any basis. The contributions must be business organization, award, bonds, Pioneers remain in the minds of paid to the Pension Fund within 30 warehouse bond, contract and generations. Be a pioneer! days from the last day of the month agreement and memoranda thereof, in which payment of salary has been security needs, collective agreement, effected. Failure to comply with the contract of employment, lease, Private Sector Pension scheme carries including sub-lease and transfer of criminal liabilities. similar rights, notarial acts, power of attorney and documents of title to Conclusion property. While doing business is not easy Pension contributions anywhere, the government is adopting more and more business Per Article 4 of the Private friendly measures that appeal to Organization Employees Pension an increasing number of investors. Proclamation No. 715/2011, any With better business acumen, access private organization is responsible, for to capital and local knowledge, the the purpose of registration, to submit 44 www.theethiopianamerican.com THE ETHIOPIAN AMERICAN

ZAAF has recently become on the spotlight internationally as emerging brand.

ART ZAAF: Made in Ethiopia By Rehima Awol Saturday afternoon is, for many, a Ethiopia, as stated on the company’s government agency, thereafter joining recess from week long work. Not so official website. Handmade leather ASHOKA, a Washington DC-based for the workshop located near Atlas bags, laptop holders, money-notes and company that provides assistance Hotel in Addis Ababa. It is as busy as credit card holders/wallets are among to entrepreneurs with sparks of any working day, if not busier, marked their products, with purses topping innovation. As an employee of a by bustling activities. Workers rush the list. These luxury accessories company which assists individuals as from one side of the shop to the other. are decorated with loom tapestry of they pursue innovative business ideas, The showroom, which is also a display handicraft and embroidery. Abai wished she was the entrepreneur shop for handmade bags, wallets and on the other side of the interaction. Life before ZAAF scarves offered for sale, is also full While at school, Abai used to come to of shopping bags clamped all over Born in Wollo area, Abai spent most of Ethiopia for vacation. That helped her the wall and glass bearing the phrase her childhood in Catholic orphanage in connect with her ancestral roots and “Made in Ethiopia”. Addis Ababa. At 11, she was adopted culture which in turn sparked a dream by her American foster parents and These luxurious bags are to be to one day come back home to start moved to Texas untill she completed dispatched to their destination on a business that benefits her while secondary education. Monday. To ensure they are ready as sharing her knowledge and skills to per customers’ order, Abai Schulze, At 26, Abai now has her first degree people she employs. “My wish was to founder and Creative Director of ZAAF, in Economics with a minor in Fine involve in something that can enhance runs from one corner of the workshop Arts and is a business woman leading my creativity. However, I had never to the other checking progress and an early stage company that seems thought of engaging in the business of inspecting quality. to be on a path to success. The manufacturing bags,” she confessed. fine arts courses at her alma mater, “When I came to Ethiopia, I saw the ZAAF, the Amharic word for tree, is George Washington University, helps abundant leather resource. In the US a new brand; a collection of luxury the creative side of her business. and Europe leather producers import apparel and leather accessories After college, she worked at a US cheap hide and skin from countries produced by highly skilled artisans in www.theethiopianamerican.com 45 THE ETHIOPIAN AMERICAN like Ethiopia which gives them the advantage to reap high profits selling processed products for much higher prices. If we can do some leather products here, Ethiopians can get such benefits too”.

Growing ZAAF

The negligible number of companies engaged in the export of what she exports now made Abai see an untapped opportunity that encouraged her to start the business with an initial capital of 100,000 Birr in December 2013.

Ethiopia is ranked first in Africa Abai Schulze hopes to have Ethiopian models wear her brand soon. and ninth in the world in livestock population making it a dreamland for have appeared in prestigious fashion the process of obtaining a license, business people in the leather and and entertainment magazines such as access to a working space and skilled leather products industry. With 90 Vogue. labor. While these are overcome in percent of inputs for ZAAF’s products time, shortage of foreign currency to “I could not even believe my own sourced locally, various leather import minor inputs and recurrent eyes when I saw an article about us manufacturers and artisans supply the power outage remain among major [in] Vogue. The pride and excitement key inputs to the brand. constant hurdles. was beyond any expression” she The final products are exported mainly recalled the emotional moment when “Our products are mainly dependent to American and European markets in she saw her name and brand on the on locally available raw materials addition to being retailed in Addis at August 2014 issue of the magazine. indeed. However, we import some its showroom and sales shop. ZAAF is The recognition came approximately inputs like zippers and bag hanging also exporting to Kenya as part of its a week after ZAAF accessories got straps that don’t come easy to us,” plan to eventually penetrate the entire a rare access to be displayed along she said. “In addition to the shortage African market. with products of other world class of foreign currency, import transit designers during the New York time is really unpredictable which Abai calls the first year of ZAAF International Fashion Week. results in unanticipated operational a learning season she used to delays. Whenever we fail short on our “I envision ZAAF as a more developed understand the ups and downs of schedules it results in being unable to and famous brand than it is now. I doing business in Ethiopia. She met satisfy customer demands. That would have plans to open outlets in big cities people and built market networks. definitely ruin our reputation,” she of Africa, the US and Europe,” she “Those who bought my first products emphasized. were friends who believed in my work explained her plan. “I have a dream and who wanted to encourage me. to see Ethiopian super models and Why ZAAF? That helped me to cultivate the best in celebrities holding my products, to see Besides the environmental, cultural me,” she said. as many people as possible wearing and social values attached to ZAAF attires bearing the brand ZAAF and (tree in Amharic) in Ethiopia, the word Encouraged by the positive reaction ‘Made in Ethiopia’.” to her product, she decided to quickly is also an ideal choice as a brand work to refine her designs and take Annually, ZAAF currently produces for practical reasons. It appealed the new brand from Ethiopia - ZAAF - about 2,500 bags for women, wallets/ for Abai because it is very simple to to the international market. In its first purses, laptop and credit card holders pronounce and to remember. “On year, the brand quickly got significant as well as traveler suitcases. This top of that, trees have a special place attention from the fashion industry figure is expected to increase in years in my childhood. I grew up playing spurring quick growth. to come, of course, but given the under a tree. Moreover, I do know that challenges Abai has had to overcome, Ethiopians use the shade of trees for ZAAF is now on the spotlight the performance is satisfactory. various social functions,” she said. internationally as an emerging brand from Ethiopia; Abai and her brand Among the challenges Abai faced were 46 www.theethiopianamerican.com