Fertile nature of agri-business expands horizons

Africa is a growing investment destination for both advanced and emerging economies and, as President Obama stated, the continent with the greatest potential. How is Ethiopia taking advantage of this African momentum?

Our country is growing more than other oil producing countries in the continent. We have experienced double-digit economic growth for the last decade. The main contributor to this growth has been agriculture. Nowadays the investment from the private sector is increasing, mainly in trading, construction and other sectors that are growing immensely.

Ambasel Trading House has played a key role in this economic development. Our main business is focused on agricultural inputs such as agricultural tools like water pumps and walking tractors, and agrochemicals, i.e. herbicides, insecticides, and fungicides. We import them from abroad and distribute them through cooperatives and private agents, with which we have a strong relationship.

Our second focus is the export of agricultural products all over the world. We mainly export sesame that we process in Gonder, in the Amhara region. We export natural, organic, hulled, roasted and processed sesame in form of tahini. We are the only producer of tahini in Ethiopia; we mainly export it to Middle Eastern countries.

You are one of the few export award-wining organizations, something that Ethiopia badly needs. What are your export markets and which ones would you like to enter in the future?

We are mainly exporting to China, Japan, Europe and the Middle East. Our export share of American and European markets is not that significant, so we are planning to expand our markets in Europe, mostly the UK. Dashen Brewery, our sister company, is co-owned by Vasari and UK-based asset management firm Duet Group. Thanks to this collaboration we are not only planning to distribute Dashen beer to England, but to export agricultural products as well.

We belong to Tiret Corporate, a conglomerate that runs 30 companies involved in agriculture, agro-processing, construction, manufacturing, trading, energy, engineering, electronics, consumer goods and transport. Tiret is also planning to expand into the garment industry, as we are currently producing cotton and supplying to textile companies. However, we want to get involved in the entire value chain. This new project will create hundreds of jobs.

Regarding agro-processing, we are already producing honey and tomato paste in the eastern part of Amhara region. We also have in the pipeline the construction of a food-processing factory to produce pasta.

The responsibility of Ambasel is to supply and import for all the companies under Tiret Corporate. We are importing more than 75 different types of products from abroad, and exporting around 15 types of products. Out of $80 million annual sales, only $10 million come from export. Our ambition is to expand our exports volume. That is our main objective for 2016. We want to increase our export volume and generate hard currency, which is also aligned with the government’s ambition. In 2015, Ethiopia’s annual import value was $11 billion, whereas the value of exports accounted only for $3 billion. We are focused on expanding our export capacity through agro-processed products. Ambasel will also be responsible for selling Dashen Beer abroad. Ambasel is also the exclusive distribution agent of the Dangote Cement Factory in the Amhara region. We also assemble printers and refrigerators for Samsung.

In that respect, why do you think renowned companies such as Samsung or Dangote choose Ambasel as their representatives in the country?

We are one of the oldest traders in the country; we have been operating in this market for over 21 years. Ambasel has many branches all over Ethiopia; we have good market expertise and experience in distribution and marketing channels all over the country.

How are you ensuring to be on top of innovation and have the latest technology, and how do you train your employees to be up to international standards?

At Ambasel we are only focused on service, trading, exports and logistics. Our sister companies focused on manufacturing, like Azila Electronics, are in charge of the assembly. Samsung is actually planning to outsource from us the entire production line in Ethiopia, and not only contract the assembly of the printers and refrigerators. We also have a sister company producing plastic, so we do not need to import the plastic cover of the printer.

In 2016 we are planning to produce also some pieces of the refrigerators. We have the capacity to produce everything in Ethiopia, instead of importing the pieces. That is the plan of Tiret Corporate, to work as a whole and manufacture everything locally.

Ambasel was established in 1993. What would you say are the milestones you have achieved in these more than two decades of existence and how did you impact on the backbone of Ethiopia’s economy – agriculture?

Eight years ago, Ambasel was the only importer of fertilizers in the country, until the government took control of this market. We are currently supplying high quality products such as agrochemicals, herbicides, insecticides, etc., mainly imported from Singapore. We play a key role in fostering the efficiency of our crops and increasing productivity.

In addition to that, specifically in Amhara region, we are supplying water pumps in order to upgrade the irrigation systems. In the last 10 years we have supplied around 70-80,000 water pumps to the farmers. We also import tractors so that farmers can be more productive and replace the use of ox. Our main focus is to supply high quality products and tools in order to increase the productivity of agriculture in Ethiopia.

We also export agricultural products, not only commodities but also agro-processed products in order to increase the added value and contribute to the growth and development of our economy.

As we are experiencing a downturn in commodities, focusing on specialty products, for which buyers are willing to pay a premium for quality, environmentally friendly and origin-specific commodities is key. How do you reach this market niche?

Quality is definitely our main competitive advantage. For example last year, we imported hose for water pumps from Asia and when we realized they were not up to our quality standards, we requested a refund and sent the goods back. We are highly committed to exclusively trading high quality products.

Regarding sesame seeds, there are different types of quality. The best one is Humera, which is mostly preferred by our existing markets. Some exporters mix Humera with Wollega, whose quality is inferior but it is also less pricey. Ambasel would never do that. Our clients are sure about the value and quality of the products we supply.

As per our environmentally friendly policies, we are certified with international standards and awards. We have fulfilled all the requirements regarding safety and sustainable development. In this regard, we are on the right track.

According to World Bank figures, in 2014 the coffee sector made up almost half of Ethiopia’s gross domestic product and 84% of exports. The Ministry of Trade recently said coffee exports will increase 45% to over 260,000 tons this year. How will Ambasel be part of it?

In terms of exports volume, coffee is by far our best commodity, followed by sesame seeds. Our main focus is sesame, but from last year we have started to export coffee as well. In the coming five years we are planning to have our own coffee processing machinery and increase our coffee export volume.

How do you assess the impact Ethiopia’s major infrastructure projects, such as building Africa’s biggest airport and the Ethio-Djibouti Railway, will have on trade?

I honestly believe the Ethio-Djibouti line will be a game changer and define the future of trading in Ethiopia. We now have access to the main ports of neighboring countries. Ethiopian Airlines is planning to increase cargo capacity as well. Investment in roads is also critical. We distribute with our own sister transportation company, which currently owns 400 trucks and of course gives priority to Ambasel Trading House. In the coming five years, we have a plan to expand capacity to around 600 trucks.

The government is highly committed, as 30% of the national budget is being invested in roads. We will soon have better connections with Kenya and Sudan. This plays a key role in terms of regional integration and trading, and will give us an excellent opportunity to expand our business.

Regional integration and industrialization are among Africa’s key priorities, and Ethiopia is no stranger to it. As Ethiopia is currently heading COMESA, what are Ethiopia’s regional integration efforts?

Indeed. For example, we have started to cooperate with the government of Djibouti to supply hydroelectric power. The completion of the Grand Renaissance Damn will make Ethiopia the clean energy exporter of the region, as well as the north of Africa.

Regional integration is critical. Without peaceful relationships in the continent there is no room for trading or economic development. It also plays a key role for our export expansion. Currently our exports volume is worth $10 million, and we are planning to increase it to $25 million in 2016 and to $200 million in the coming five years. The strategy and the commitment of the government is very critical for our future growth, both for import and export businesses.

What is your assessment of the current diplomatic and commercial relations between the UK and Ethiopia, and what opportunities do you want to highlight to the UK’s private sector?

We are planning to build a big shopping mall; our ambition is to build the biggest mall in Africa. For this project we would like to work with UK investors and joint ventures like we have already done with Dashen Breweries. We are very satisfied with our joint venture agreement. During these five years of collaboration we benefitted from expertise, technology and know-how transfer. It is also in our strategy to build a supermarket chain and to expand our electronic manufacturing.

As one of the biggest exporters in the nation, we are continuously looking for new buyers. In the future, the companies under Tiret Corporate will produce a huge variety of agro-processed products and garments. Our labor force is cheaper than in China, so we can produce high quality products with competitive prices. There are numerous opportunities for UK companies to work with us.

During your time leading Ambasel Trading House, what has been the biggest challenge you have encountered and how did you overcome that challenge?

We have been growing steadily in the last five years. We are doing well, but there are many challenges involved in the import and export business. The main challenge has been hard currency scarcity. The solution for this problem does not lie solely with the government, but also with the private sector. We should expand our export volumes. I have also faced time scarcity; managing Ambasel and coordinating with our sister companies is very time consuming – you have to work day and night. I am proud that despite the difficulties we always deliver to our clients and we gained their trust. We do not have a short-term approach; we are not greedy about today’s profits. Our goal is to build long-lasting relationships with our clients. As I mentioned, we import over 75 types of products, for which we need different suppliers. Having a good communication and building trust is critical for our business.