Annual Report 2019
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WWW.TESETEO.COM Annual Report 2019 ተሰጥዖ WWW.TESETEO.COM Index 1. Introduction 2. Overview 3. Outsourcing Sector in Ethiopia and Africa 4. Global Outsourcing Sector 5. Technology 6. Milestones 7. Sustainability 8. Conclusion Ethiopian Parliament meets to discuss 2019/2020 budget. WWW.TESETEO.COM 1. Introduction The United Nations Department of Economic and Social Affairs (UN DESA) projects that the world’s 10 fastest growing cities, between 2020 and 2035, will all be in Africa. Ethiopia’s economy grew by 8% last Ethiopian fiscal year, which ended on 7th July. Foreign investment continues to pour in and services is the most promising employment sector of all. Dr Abiy Ahmed’s new government and regime has opened up this country making it an attractive destination for well-known Western brands such as Heineken and Pizza Hut. Ethiopia is one of the least corrupt bureaucracies in Africa and with a more liberal attitude towards business; has become the most exciting emerging market economy in the world. Dr Abiy Ahmed – Prime Minister & Nobel Peace Prize Winner. Even more valuable than Ethiopia’s natural resources, are its people. As the only African nation to remain independent from colonial rule, there is a sense of pride and ambition here like nowhere else. Last June, World Bank officials approved $175 million credit in support of Ethiopia’s effort to create more jobs and improve competitiveness. Although mainly geared towards industrial parks, it just goes to show how fast employment is increasing in a country of almost 110 million citizens. Infrastructure investments are beginning to bear fruit and the provision of public services such as education and health have increased dramatically. As a result, Ethiopia’s population is enjoying welfare gains and moving closer towards becoming a middle-income nation. “My economic model is capitalism,” says Dr Abiy Ahmed. Ethiopia has recently focused on improving quality of service and competitiveness across a number of state-owned and largely monopolised sectors. Ethio Telecom and the Ethiopian Sugar Corporation are two companies currently being privatised with others in the pipeline including Shipping/Logistics and Ethiopian Electric Power. It has been a long process but swift actions are being taken to transform this once socialist country into the competitive nation it aims to be. Now is a good time because new policies mark a break with the previous administration who wanted control over every major industry in operation. Foreign investment not only stimulates growth but also improves Forex shortages. Consequences of private sector participation always result in a higher inflow of capital and it will be interesting to monitor how the economy improves further throughout 2020. WWW.TESETEO.COM 2. Overview GDP - £72.5 billion GDP Growth – 8% National budget - £10.5 billion Revenue from state enterprise - £7.24 billion Population – 112.08 million Q1 Successful start to the year for Ethiopian Airlines as they add a number of new destinations to the rota including Marseille, Manchester and Turkey. The company are awarded “African Champion of the Year” and open a 5 star luxury hotel located 10 minutes from Bole Airport. Ethiopia’s travel industry is reported to have grown 48.6% in 2018 – highest worldwide. A number of large corporations established factories at the start of 2019. In February, South Korean company Hyundai opened a vehicle assembly plant with capacity to build 10,000 cars a year and employ 1,000 people. Germany’s Volkswagen also signed an MoU with the Ethiopia government to build a plant here and Unilever unveiled their world-class oral care factory in Dukem. Kangaroo Plast PLC invested $52.5 million in a brewery with capacity for 1.6 million hectolitres a year and 230 jobs. German industrial manufacturing company, Siemens, sign an MoU to boost infrastructure with future projects, financing and training of Ethiopian technicians. They also agreed to assist extend the national grid and find energy solutions for remote villages. Huajian Group announced plans in February to open a world class industrial city – part of a 2011 pledge to spend $2 billion in Ethiopia and see its own exports reach $4 billion. KFC also opened up in Addis Ababa, similar to Pizza Hut in 2018. Click here for full review of the quarter Pizza Hut opens first restaurant in Addis Ababa. WWW.TESETEO.COM Q2 President of the World Bank Group, David Malpass, visited Dr Abiy Ahmed to express his support of the ongoing reform. Reports confirmed tourism in Ethiopia supports 2.2 million jobs and is growing. Japanese automotive company Isuzu Motors sign an MoU with the government to open a factory and Coca Cola released a video campaign promoting Ethiopia as an attractive investment destination. New companies entering the market include Pinehilu Akabia Foods (£40 million), Zhonglong (£22.5 million), Fit Holdings (£8 million) and a joint venture/deal with Saudi Arabia for oil/gas (£80 million). A study about industrial park wages revealed some people are being paid as little as $26 a month. The government met to discuss new labour laws and the possibility of implementing a minimum wage. A new 250km highway funded by the UAE continues to be constructed and once complete it will link Djibouti with Ethiopia lowering travel time while increasing trade by 30%. German football club Bayern Munich opened its 6th global football academy in Addis Ababa. Sugar factories across the country were put up for privatisation and tier 1 Telco companies such as Duetsche, Vodafone and MTN all expressed interest to bid for equity in Ethio Telecom. Click here for full review of the quarter Q3 Ethio Telecom appoints KPMG as privatisation advisor. This involves splitting the company into two wings – service provider and infrastructure developer. Whichever company successfully bids for 49% can benefit from both as it will remain one company. They also reported a profit of £640 million for the year. In July, Ethiopian nationals and expats joined forces to plant over 353 million trees in one day. The country has been suffering from frequent droughts over previous decades so work like this contributes massively towards lowering national and global emissions. Hansa Flowers invested over £200,000 in a brand new school and South Korean Steel Manufacturing company, EKOS, inaugurated the Dukem Health Centre. The Ethiopian Ministry of Finance and EU pledged 45 million Euros to create 400,000 new jobs whilst Deputy Mayor of Addis Ababa, Takele Umma, gave free school uniforms and utensils to over 600,000 disadvantaged school children. In business law, probation for employees is now 60 days not 45 days, maternity leave has been extended and annual leave moves up from 14 working days in year one to 16. Tax collection was £6.9 billion - £586 million higher than 2017/2018. Dr Abiy Ahmed won the Nobel Peace Prize for making peace with Eritrea and improving Ethiopia since coming to office. Click here for full review of the quarter Click here to meet our team. WWW.TESETEO.COM Q4 Eight political parties signed to join a new Prosperity Party - it will serve as a springboard to continue transforming Ethiopia - using knowledge and truth as guiding principles. Ethiopian Airlines launched an innovative capacity development initiative aimed at creating local value in agricultural products. Tax income of Dukem, an industrial hub in Ethiopia, almost quadrupled from it was five years ago, said officials of the town. Ethiopia’s town of Batu which is known for its Lake Zway invited both foreign and local investors to open lodges there. The International Finance Corporation (IFC), a member of World Bank Group, announced a €20 million investment in Soufflet Malt Ethiopia. The Ethiopian government announced it aims to facilitate the creation of twenty million jobs in different sectors over ten years. Germany committed 352.5 million Euros to the country for strengthening industrial parks, improving tax systems and enhancing the investment climate. Coca-Cola brought sugar free products to consumers in Ethiopia for the first time. With the aim of selling its products online, the government of Ethiopia and Alibaba’s Co-founder Jack Ma sign a deal. Sidama zone became the 10th region of Ethiopia after referendum. Ethiopian Telecom Regulators met investors and there was new interest for equity from Huawei. Click here for full review of the quarter Ethiopia sign agreement with Alibaba Group. Teseteo, which means “gifted” in Amharic, is a Customer Experience and KPO company in Addis Ababa. Cost effective, offshored solutions include AI blended CX, technical support and knowledge process outsourcing. We support Sustainable Development Goal 8 and have a strong ESG Agenda in place – www.teseteo.com WWW.TESETEO.COM 3. Outsourcing Sector in Ethiopia and Africa In Ethiopia many workers are moving out of agriculture into services. Along with expansion of infrastructure, the services sector is responsible for continued vibrancy in urban centres such as Addis Ababa. Further industrialisation and growth here is key to economic improvements. Until now, outsourcing and the benefits it can bring have been undervalued. The industry currently contributes 9% of annual GDP growth in the Philippines and can do the same for Ethiopia, while considerably improving Forex shortages. Addis Ababa has a strong university network, high level of English and 70% of its population are under 30. Still, urban youth unemployment is 19.1% and more than a quarter of existing jobs are informal. These often provide limited working conditions such as low pay and irregular/long hours. Two million people enter the jobs market each year so the country faces a daunting prospect of building sustainable and inclusive employment for all. Job creation is now the critical development challenge which raises importance of the private sector.