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Ethiopia Faces a New Crisis

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Bloomberg | First there was a war, now Ethiopia faces a debt crisis.

The nation’s request to restructure its external debt under a Group-of-20 program highlights how much circumstances have changed for the country and Prime Minister Abiy Ahmed in just over a year.

In 2019, Abiy won the Nobel Peace Prize for ending two decades of conflict with Eritrea. After coming to power in 2018, he was hailed for pledging to open up the economy and create more space for democratic expression.

The coronavirus outbreak and a war with the rebellious Tigray region, have stifled that. Little progress has been made on privatization, and civilian casualties and displacement in Tigray has seen the leader of one of Africa’s fastest growing economies condemned internationally.

Now the country is worried about meeting its debt obligations and its announcement that it’s discussing liabilities with official lenders has sparked panic among private creditors. The country’s Eurobonds plunged the most on record last week.

“The World Bank has stepped in to fill the gap” in the past, said Mark Bohlund, a senior credit research analyst at REDD Intelligence. That’s “become more politically challenging in the wake of alleged human-rights abuses committed during the war in Tigray,” he said.

For now, there isn’t an immediate way out for Abiy.

The coronavirus has slashed demand for the country’s horticulture and textile exports and tourism has ground to a halt.

The war, which threatens to drag on in the form of guerrilla resistance, hasn’t helped.

Ethiopia asks for debt relief as Covid takes toll

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Financial Times | Pandemic adds to pressure on developing economies trying to meet repayments

Ethiopia has asked for debt relief under a G20 programme to help poor countries reeling under the economic impact of coronavirus, making it the second African country to do so in the past week.

Ethiopia has long been seen as one of Africa’s most promising economies but the pressure the pandemic has placed on healthcare systems and economies means many developing nations are struggling to keep up with debt payments.

In a statement on Monday, its finance ministry said that it was “preparing for upcoming discussions with official creditors” as it looks to reduce “debt vulnerabilities and lower the impact of debt distress”.

“We haven’t even inoculated one individual against Covid, so we need to redirect the resources that we have towards that,” a senior official at the ministry of finance told the Financial Times.

Under its state-led development model, Ethiopia’s economy grew at close to 10 per cent a year for much of the past two decades until the arrival of Prime Minister Abiy Ahmed in 2018. He had promised sweeping liberal reforms, including privatisation of the huge telecoms monopoly, to take the economy towards middle-income status. But ethno-political tensions and a conflict in the northern Tigray region have slowed his plans.

Monday’s statement from Addis Ababa follows a statement by the IMF last Wednesday that Chad had also asked for relief under the G20 programme agreed by the world’s biggest economies. In November, Zambia became the first African country to default on its debt since the start of the pandemic.

The Ethiopian move will be an early test of the G20 debt relief initiative, which requires borrowers to reach agreement on their debt with private creditors as well as official lenders.

Under the initiative, agreed last year by the world’s biggest economies, 73 of the world’s poorest countries can ask for debts to be restructured and, in the most extreme cases, written off. This goes beyond the G20’s debt service suspension initiative (DSSI), which allows the same group of countries to defer debt repayments but does not provide any debt reduction.

The DSSI has been criticised by debt campaigners and others for failing to enlist the participation of private sector creditors. This meant that debt relief secured from official lenders could be used to repay other debts. Several countries benefiting from the DSSI have stressed that they do not want relief from private creditors as this would jeopardise their access to commercial credit markets.

Despite the G20 framework’s requirement to seek a deal with private sector creditors, the finance ministry official sought to play down the impact on private sector lenders. “It would be a fair burden-sharing between all our official bilateral creditors and then, based on that, we will look at whether we need to reach out to private creditors, which is very unlikely,” the official told the FT. The official stressed that the adjustment would be “minor”.

Ethiopia had total public foreign debt of $27.8bn at the end of 2019, according to the World Bank, including $8.5bn owed to official bilateral creditors and $6.8bn to commercial creditors, including $1bn to bondholders. Chad has no outstanding foreign bonds but its total debts of $3.5bn include $1.5bn in commercial debt, about half of which is a loan from Glencore, the commodities trader, and associated banks.

“Ethiopia is trying to explore the options for broader debt relief,” said Kevin Daly, investment director at Aberdeen Standard Investments. “This is their way of saying things are difficult, we need further relief. What we don’t know is how this will work in practice. There is a lack of clarity right now.”

Airtel won’t bid for Ethiopia licence, but China’s Sharing Mobile will

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Capacity | Indian operator Airtel, which has 110 million customers in Africa, will not bid for one of the upcoming Ethiopian licences, China’s Sharing Mobile will do so.

The Xinhua News Agency, the official state-run press agency of the People’s Republic of China, said this morning that Sharing Mobile “is joining the bid for the telecom licence in Ethiopia”.

The company, based in Beijing, is little known outside China, but has been actively exploring overseas markets, said Xinhua. It has had an 80% share in a Nigerian operator, GiCell, since 2016 and has made overtures in South America.

Xinhua said: “With flexible decision-making mechanism and deep accumulation in technological innovation and platform building, Sharing Mobile is expected to be a strong competitor in this transaction, bringing more localised communication products to Ethiopia and introducing the most advanced communication technology and international operation management system to enhance the economic competitiveness of Ethiopia’s communication industry.”

Airtel Africa’s CEO said on Friday that the company will not bid for Ethiopia. Raghunath Mandava (pictured) told the agency that the company sees more room to grow in the 14 countries it has already invested in, including in its biggest market in Nigeria.

He said “our entire current focus” is on Nigeria, Congo, the Democratic Republic of the Congo (DRC), Tanzania and Kenya, so “we are not looking at bidding for Ethiopia at this stage”.

The Ethiopia Communications Authority has set a deadline of 5 March for applications for the two new licences.

Sharing Mobile, also called Sharing Internet Mobile Communications, was established in March 2006. It operates a range of technologies, according to details from the GSMA, the industry trade association.

Ethiopia updates debt sustainability assessment with IMF help

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NAIROBI (Reuters) – Ethiopia is updating its debt sustainability assessment with International Monetary Fund help and will then talk to official creditors, its finance ministry said in an apparent attempt to allay market concerns over a possible restructuring of sovereign debt.

On Friday, a Finance Ministry official told Reuters that Ethiopia planned to seek a restructuring of its sovereign debt under a new G20 common framework and was examining all available options.

This pushed its government bonds to their biggest ever daily fall and analysts said restructuring concerns could spill over to hit other borrowers.

The ministry said in a statement on Monday that once the discussions with official creditors were complete, it will inform other creditors of the need for broader debt treatment.

Read More “EU suspends Ethiopian Budget Support Over Tigray Crisis” 

It also said it was confident that possible implementation of debt treatment under a new G2 framework will address vulnerabilities and preserve long-term access to international financial markets.

Under the new G20 framework, debtor countries are expected to seek an IMF programme to put their economies onto a firmer footing and negotiate a debt reduction from both public and private creditors.

Read About “Tigray War”

Ethiopia has a $1 billion dollar bond outstanding, though only $66 million worth of interest payments on the issue are coming due this year.

Chinese ambassador, Ethiopia capital mayor agree to enhance economic partnership

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ADDIS ABABA, Jan. 29 (Xinhua) — Chinese ambassador to Ethiopia Zhao Zhiyuan and Mayor of Ethiopia’s capital city Adanech Abiebie agreed on Friday to enhance the economic partnership between the two countries.

In a press statement, Abiebie said she has reached an agreement with the Chinese ambassador to Ethiopia on the need to add new Chinese built projects that improve the economic and social lives of Addis Ababa city residents.

Abiebie also said her office discussed with the Chinese ambassador to Ethiopia on the need to further enhance cooperation in road projects in Ethiopia’s capital city.

Addis Ababa, a city of an estimated five million-plus population is Ethiopia’s main social, economic and political hub.

Chinese firms are engaged in various infrastructure projects in the city aimed at meeting the social and economic needs of Addis Ababa’s big population.

These include the multimillion U.S. dollars expansion infrastructure in the Addis Ababa Bole International Airport and the landmark “Beautifying Sheger” project.

“Beautifying Sheger” is a personal initiative of Ethiopian Prime Minister Abiy Ahmed who envisions creating a clean, livable environment for the residents of Addis Ababa.

Exclusive: Ethiopia to seek debt relief under G20 debt framework – ministry

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NAIROBI (Reuters) – Ethiopia plans to seek a restructuring of its sovereign debt under a new G20 common framework and is looking at all the available options, the country’s finance ministry told Reuters on Friday.

Debt

Ethiopia Government Debt as a percent of GDP

Ethiopia’s government bonds saw their biggest ever daily fall on the news and analysts said restructuring concerns could spill over to hit other borrowers.

G20 nations agreed in November for the first time to a common approach for restructuring government debts to help ease the strain on some developing countries driven towards the risk of default by the costs of the coronavirus pandemic.

Chad became on Wednesday the first country to officially request a debt restructuring under the new framework and a French finance ministry told Reuters on Thursday that Zambia and Ethiopia were most likely to follow suit.

Asked if Ethiopia was looking to seek a debt restructuring under the G20 framework, Finance Ministry spokeswoman Semereta Sewasew said: “Yes, Ethiopia will look at all available debt treatment options under the G20 communique issued in November.”

Ethiopia’s government bond due for repayment in 2024, which it issued in late 2014, plunged 8.4 cents on the dollar from roughly par to just under 92 cents.

Ethiopia is already benefiting from a suspension of interest payments to its official sector creditors until the end of June under an initiative between the G20 and the Paris Club of creditor nations.

‘UNCERTAINTY’

Under the new G20 framework, debtor countries are expected to seek an IMF programme to get their economies back onto a firmer footing and negotiate a debt reduction from both public and private creditors.

Ethiopia has a $1 billion dollar bond outstanding, though only $66 million worth of interest payments on the issue are coming due this year.

The news that Ethiopia would seek debt relief left investors wondering whether they would be left to take a hit in the event of a restructuring.

“Given the G20 common framework has not been put to the test yet, we hope the G20 will come out with some sort of explanation as this uncertainty can hit the countries’ rating and spill over into other sub-Saharan African credits,” said Simon Quijano-Evans, chief economist at Gemcorp Capital LLP.

ING emerging market sovereign debt strategist Trieu Pham said the fact that Ethiopia has Eurobonds outstanding was a cause for concern as it could have broader implications.

“Should Ethiopia go this way then that could weigh on overall sentiment as people will wonder if there might be others (following),” he said.

Ethiopia’s privatization program threatened by security risks

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(Ecofin Agency) – Ethiopia’s initiative to privatize public companies could be hampered by security risks.

“In recent months, the conflict between Ethiopia’s central government and the leaders of the Tigray region has dominated the news. Although federal government troops have regained control of Tigray, the conflict illustrates potentially serious flaws in Ethiopia’s federal system,” the Institute of International Finance (IIF) said.

The other conflict that could be of concern to investors interested in this privatization program is that between Ethiopia and its neighbors Egypt and Sudan over the Great Renaissance Dam (GERD). This project is however one of the strong pillars of the economic transformation of the country.

Reforms undertaken by the Prime Minister, Abiy Ahmed, led to the decision to organize the very first democratic election slated for June 5, 2021. In Africa, this type of transition often does not go smoothly.

Beyond being a political line, the privatization of Ethiopian public enterprises has become a necessity. Already, the growth model based on public investment has begun to show limits, even before covid-19. Data from the IIF indicate that after average annual growth of 9.5% between 2011 and 2018, the Ethiopian economy grew by only 2.4% in 2019.

The other challenge facing Ethiopia’s public companies is the contingent debt they have accumulated. The debt of state-owned enterprises also affects the stability of the national financial system through the Commercial Bank of Ethiopia, one of the country’s largest lenders. It has extended large loans to public enterprises at lower rates than private borrowers, the IIF says.

In such a scheme, foreign capital would help support the ongoing restructuring of the Ethiopian economy. The local government has pledged to allow minority private participation in some large public enterprises – including Ethiopian Airlines, EthioTelecom, and Ethiopian Shipping and Logistics Service Enterprise – and to fully privatize others. This announcement is being closely followed by large companies and investors targeting Africa.

Ethnic conflict could unravel Ethiopia’s valuable garment industry

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Source: The Conversation | Dorothee Baumann-Pauly

Ethiopia has long been considered one of Africa’s economic wunderkinds. Until recently, it had relative political stability in comparison to other countries on the continent. And, with an average GDP growth rate of 10% in the past decade and a government that instituted policies friendly to foreign investors, the country was able to attract South and East Asian clothing manufacturers. These sell to international brands, such as Decathlon and H&M.

But, for the past two months, violent conflict in Ethiopia’s northern Tigray region fuelled by ethnic power politics has threatened the country’s stability. According to the International Crisis Group, the violence has likely killed thousands of people, including many civilians, displaced more than a million people internally, and led some 50,000 to flee to Sudan.

The scale of the conflict could scare off foreign investment in the country’s garment industry. This sector is hugely important to Ethiopia, which aimed to propel its agricultural economy toward a more prosperous future built on providing clothing to consumers in the West.

While the Ethiopian textile and garment industry is still small – its export share is not more than 10% of total exports, and its products only represent 0.6% of total GDP – the sector was expected to grow by around 40% a year in the next few years.

In March 2019, I assessed Ethiopia’s garment industry alongside two colleagues from the New York University’s Stern Center for Business and Human Rights. We wanted to see whether Ethiopia – as the new frontier of garment manufacturing – had learnt from mistakes in other sourcing countries. We analysed the industry’s prospects and the working conditions with a close look at the flagship Hawassa Industrial Park. This is a vast and still only partly filled facility, which currently employs 25,000 workers about 225km south of the capital of Addis Ababa.

What we found was sobering.

Manufacturers told us about the many challenges of doing business in Ethiopia. These included bureaucratic and logistical hurdles and the problems that come with an unskilled workforce that had no prior experience of working in an industrial setting.

Workers reported that they could barely survive with their base monthly wage as low as US$26. The government’s eagerness to attract foreign investment led it to promote the lowest base wage in any garment-producing country.

In addition to this already-strained business context, the report we published points to what we saw as the greatest challenge of all: ethnic tensions.

In Hawassa, ethnic tension erupted in July 2019 and caused disruptions to the industrial park. The new conflict in Ethiopia’s Tigray region could be the tipping point for foreign investors in the garment industry. Manufacturers had told us that further political instability in the country could jeopardise all future business.

The collapse of this sector would be disastrous. Tens of thousands of people would lose their jobs and the investments made in this enterprise wasted. In addition, foreign investors and the Ethiopian government need to understand that its collapse could have a symbolic knock-on effect in the region – Ethiopia’s garment sector is often seen as a pioneering experiment proving that structural transformation in Africa is possible.

Unmet promises

Garment manufacturers were already struggling to do business. We found that workers, unhappy with their working conditions and pay, were increasingly willing to protest by stopping work or even quitting. Attrition was high, and production was low.

There are also problems with raw materials, almost all of which need to be imported into Ethiopia from India or China. The government advertised the availability of more than 3 million hectares for cash crops, including cotton cultivation in 2010. In fact, only about 60,000 hectares were being used by 2019 to grow cotton, and that figure is falling as local farmers switch to sugar, sesame, and other more lucrative cash crops.

Ethnic tensions disrupted factory operations further. When Abiy Ahmed took over as Prime Minister in 2018, his reforms – which aimed to create a more ethnically inclusive government – unsettled the ruling coalition and opened a political space for ethnic tensions to resurface. For instance, in Hawassa, a group of the Sidama people – who are the majority ethnic group in the Hawassa state – pushed for independence in 2019.

The political uncertainty due to ethnic tensions translates into economic uncertainty for investors.

In Hawassa, security concerns emerged for local workers and foreign staff. Night shifts had to be cancelled so that workers could get home safely before nightfall. Political demonstrations at the park’s fence and within the park disrupted production. Sidama people also mobilised within factories and demanded more jobs for their people resulting in short strikes and occasional park-wide closings.

Such disruptions are a wild card beyond the control of investors, which may set back further investments.

By a thread

When the COVID-19 pandemic broke out in early 2020, the sector was hanging by a thread. In June 2020, the International Labour Organisation published a report, which described reduced orders and a situation for workers even more perilous than before.

By the end of 2020, many of the over 60,000 garment workers in Ethiopia had lost their jobs or were too afraid to return to work, fearing they would catch the coronavirus.

The current ethnic conflict could be the straw that breaks the camel’s back. For instance, the industrial park in Mekelle built for 20,000 workers – and with an occupancy in 2020 of around 3,500 workers – is currently closed. The current internet and phone blackout in the Tigray region now also makes any communication between buyers and the factories impossible.

A worsening human rights situation creates reputational and operational risks for investors and buyers. It increases uncertainty over the ability to complete orders and ship them on time. It also increases security risks for staff and workers. This may all cause long-lasting damage to investor confidence and the opportunity for sustainable economic development.

What must change

To assure investors, buyers, and international stakeholders, Prime Minister Abiy Ahmed needs to end the blackout in the Tigray region, better protect journalists and civilians, and allow for independent human rights monitors to assess conditions.

At this critical moment, clothing companies and manufacturers invested in Ethiopia need to double down on their commitments to business in Ethiopia. This means they need to stay in the country and speak up to support human rights.

Once ethnic tensions are defused, more work will still need to be done by both the government and foreign manufacturers to strengthen the sector. This includes developing a domestic supply chain and establishing a minimum wage that ensures decent living conditions for workers.

But first, the future of the industry must be secured.

Mysterious Wheat Deals Complicate Hunger Fight in Ethiopia

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Source: Bloomberg | Samuel Gebre, Agnieszka de Sousa and Simon Marks

Nation scrapped import tenders for grain after no progress
Ethiopia is seeking outside assistance to help feed its people

Back in November, Ethiopia unveiled two deals to buy deeply discounted wheat from suppliers that seasoned traders had never heard of. A website named for one of the companies listed a German address that didn’t exist and appeared to use stock photos of models.

Two months on, it remains a mystery who was behind the deals or what their motivation was, especially as Ethiopia says it hasn’t lost any money. One thing is clear though: no wheat has been delivered. The government has now canceled the tenders and plans to start over.

It’s an embarrassing blunder that could have ramifications for a country in desperate need of food. Ethiopia relies on more than 1 million tons of wheat imports a year to feed its people; the two canceled tenders together represented 600,000 tons. Global wheat prices have risen since the deals were initially awarded, meaning it will probably have to pay more now.

Ethiopia’s grain-tender process has for years been dogged by cancellations and corruption allegations, as well as putting strain on much-needed foreign-exchange reserves. The nation had already postponed or canceled tenders over the course of last year. That’s especially a problem for a country where some 11 million people were seen in need of food aid by the end of last year.

Ethiopia’s farming industry last year suffered from the worst desert-locust infestations in decades as well as the Covid-19 pandemic. At the same time, conflict in parts of the country displaced tens of thousands of people, adding to widespread food shortages.

“There is no doubt that there is a major food security crisis,” said Tedd George, founder at Kleos Advisory, a U.K.-based adviser on African markets. “Ethiopia has lost a number of tenders beforehand. It may have been that they have had difficulty finding more established, more respected traders to provide wheat.”

A spokesperson for the Ministry of Finance this week said that while the two tenders were canceled, the nation has been able to meet its needs through other purchases and domestic supply, though couldn’t comment further.

Major grain merchants have largely shunned Ethiopia’s tenders due to unfavorable terms such as requiring offers to be valid for 30 days, exposing traders to losses should prices change. However, there are a handful of smaller suppliers that regularly participate in the tenders.

The two tenders awarded in November were for the purchase of 400,000 tons from Rosentreter Global Food Trading and 200,000 tons from Martina Mertens, at a combined value of about $117 million. However, the companies were unknown to nine experienced international grain traders surveyed by Bloomberg.

The Public Procurement and Property Disposal Service this month said it canceled the tenders because the companies didn’t follow through with the deals and plans to reissue them. Since the tenders were awarded in early November, benchmark futures have climbed about 10% to $6.72 a bushel in Chicago.

When asked about Rosentreter’s authenticity in November, PPPDS Director-General Tsewaye Muluneh said that while it was the first time the new company had participated in tenders, it had passed the PPPDS’s checks.

Two Companies

There are reasons to question the firms’ legitimacy. Rosentreter and Martina Mertens offered wheat much cheaper than other tender participants. The German address that was stated on a website for Rosentreter doesn’t exist, phone numbers wouldn’t connect, an email failed to deliver and personal biographies used what seems are stock photos of models.

Rosentreter’s website no longer works, and Bloomberg couldn’t identify one, or locate contact details, for Martina Mertens.

It’s not clear who would stand to benefit from the failed tenders. Tsewaye said Ethiopia hasn’t lost any money in the two tenders, with the companies even putting up a bond payment to participate. She wouldn’t elaborate further.

The Ministry of Finance didn’t respond to phone calls, emails and text messages over the past two months seeking comment on the authenticity of the companies involved and whether the awards were a blunder.

The government held a monopoly on wheat purchases until early last year when, as part of new state reforms, it started allowing some private companies to import as long as they use their own foreign currency. There’s no public list of who is eligible to import.

It seems the country still needs more food. The Catholic Relief Services said Ethiopia has asked it for assistance, with distribution already underway. The World Food Programme also confirmed it’s assisting the government in procuring wheat.

Ethiopia’s National Disaster Risk Management Commission said 11.1 million people needed food aid last year and that it’s working on figures for 2021. The country is currently buying about 700,000 tons of wheat and plans to purchase another 300,000 tons later this year, said Mitiku Kassa, head of the agency.

“It is inevitable they are going to need support from the World Food Programme,” Kleos Advisory’s George said. “At least this will be wheat, not a tender someone will cancel.”

 

— With assistance by Megan Durisin

Ethiopia is set to end its $3.6 billion oil deal with a controversial US firm after probe

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Source: Quartz Africa | By Zecharias Zelalm

Senior officials at Ethiopia’s Ministry of Mines and Petroleum say the government is set to rescind an agreement with a US-based self-described energy firm after an investigation by Quartz Africa revealed the company had no petroleum industry expertise or technical credentials.

“We are in the process of canceling our agreement with the company,” says Dr. Koang Tutlam, Ethiopia’s state minister for Petroleum and Natural Gas, in a statement sent to Quartz Africa.

GreenComm Technologies, a Virginia-based firm run by an Ethiopian-American former car dealership employee, Nebiyu Getachew, was poised to oversee the construction of a $3.6 billion oil refinery in Ethiopia’s Somali region, after entering into an agreement with the Ethiopian government on April 28.

That agreement had followed at least two years of talks between the entity and the Ethiopian government that included examination of the company’s profile by prominent members of the ministry and an Ethiopian state-run oil firm.

“GreenComm wanted the Ethiopian government to put forward a $100 million letter of credit because they sought to get billions from lenders. But we refused to give in.”

But the investigation revealed the company had made misleading statements about its capabilities and its connections as part of an elaborate scheme. It portrayed itself as an industry leader despite having never completed an oil-related project anywhere, and despite the company being delisted from the Virginia state corporate database when it signed the deal on April 28.

After Quartz Africa’s story was published one local social media user drove to the company’s listed address in Virginia, and found empty office space, with no sign of an extraction company in the area.

Many ordinary Ethiopians at home and in the diaspora were concerned GreenComm had managed to get through the Ethiopian government’s vetting process despite multiple red flags.

Quartz Africa’s Dec. 22 story on the Ethiopia oil deal.

When probed about the agreement earlier this year, Ethiopia’s minister of Mines Takele Uma told Quartz Africa he was unaware of GreenComm’s existence, saying he had “no clue.” His predecessor, Samuel Urkato who has since gone on to become Ethiopia’s minister of Science and Higher Education, acknowledged the existence of the deal when reached by phone, but refused to speak any further, hanging up and ending the call with Quartz Africa.

However, with the revelations made public, ministry representatives have been far more open to addressing press inquiries on the matter. According to Dr. Koang Tutlam, whose office is under minister Takele Uma, there had been resistance to allow GreenComm to operate coming from within the ministry.

“Although the so called GreenComm Technologies project preceded most of us at the ministry, some of us were skeptical about their genuineness from the beginning,” Dr. Koang tells Quartz Africa. “As such, some of us worked hard to prevent the [government] entering into a commitment that would cost the country.”

Koang says the parties agreed to commence with a one-year feasibility study period, before any construction would begin. GreenComm executives, he says, were very keen to pursue a huge advance before delivering any work.

“First, the company wanted the Ethiopian government to put forward a $100 million standby letter of credit, which we learned was because they sought to get billions from lenders. But we refused to give in, despite immense pressure from some heavy quarters.”

Dr. Koang declined to clarify who he meant by “heavy quarters.” However, another official, Mulugeta Damtew Seid, head of state agency Ethiopian Mineral, Petroleum and Biofuel Corporation (EMPB), told Quartz Africa company officials had taken the matter to the Foreign Ministry and even the prime minister’s office. Mulugeta also identified prime minister Abiy’s former chief of staff and Ethiopia’s current ambassador to the US, Fitsum Arega, as having lobbied on GreenComm’s behalf.

Although Fitsum Arega has not previously responded to Quartz Africa’s queries, in  a series of social media postings in response to the story, the ambassador wouldn’t confirm or deny his proximity to GreenComm Technologies, but stated that no deal had been struck to allocate the company with funds. Instead, he claimed, the agreement was solely to assess the feasibility of the project.

“As this study is a private sector foreign direct investment initiative,” Ambassador Fitsum wrote, “no financial resources are committed or promised by the Ethiopian federal or regional government for its implementation.”

Local media reports and statements by the company however, suggest the agreement went beyond a study agreement and that it had actually encompassed the refinery’s construction. Reports stated the American company had recruited Korean construction giant Hyundai Engineering and Construction to assist with its implementation. Hyundai later clarified that this was false and that it had refused an offer to collaborate jointly with GreenComm Technologies after establishing that the company had no active operations.

But Dr. Koang told Quartz Africa that after growing concerns, GreenComm included a clause in their April 28 agreement, obligating the company to deposit a $5 million performance bond as insurance. Something, he says, the company failed to do.

“We are canceling the agreement, but we are also taking legal measures against the company for its failure to release the performance bond,” Dr. Koang explained. “Rest assured, Ethiopia has not lost a penny and wasn’t about to lose anything.”

Greencomm Technologies had first pitched the oil refinery project to the Ethiopian government in 2018, as part of a joint endeavor with the Texas-based Innovative Clear Choice Technologies (ICCT) firm, which similarly had no credentials and was dissolved by February 2020.

Dr. Koang Tutlam was part of the team of officials that studied the joint pitch in 2018. Two years later, there was suddenly no further mention of the existence of ICCT, but this didn’t hinder the remaining company’s ability to hash out a deal.

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