nati

Ethiopia’s rich coffee industry, predominantly fueled by the toil of over 5.8 million smallholder farmers, now faces a looming threat as the European Union’s Deforestation Regulation (EUDR) takes effect. This regulation, aimed at combating global deforestation, lays down stringent diligence requirements for commodities like coffee.
Introduced on June 29, 2023, the EUDR compels companies dealing in specified commodities to ensure their products are free from the taint of post-2020 deforestation or breaches of environmental laws. Non- compliant goods will face exclusion from the EU market starting December 30, 2024. Such a scenario poses a significant risk to Ethiopia’s coffee exports, which contribute a substantial 35% to its total export revenue.
In response, collaborative endeavors involving the European Chamber in Ethiopia (EuroCham), the EU Green Deal project team, and local stakeholders have been initiated to grapple with the implications of the EUDR. However, lingering concerns persist, particularly regarding the practicality of compliance for smallholder farmers.
A recent round table discussion hosted by EuroCham and European Coffee Buyers shed light on the mounting apprehensions among international buyers. The harsh penalties for non-compliance, which could amount to at least 4% of EU turnover, have served as a deterrent for importers contemplating engagement with Ethiopian exporters.
The hurdles in implementing the EUDR are multifaceted, with one of the significant challenges being the complexity of tracing coffee origins across Ethiopia’s extensive smallholder farming landscape. Though the Ethiopian government has put forth a compliance action plan, encompassing geo-location data collection, the feasibility of such measures remains uncertain.
Furthermore, the EUDR fails to provide adequate incentives for smallholder farmers, potentially driving them towards deforestation in pursuit of more lucrative crops, thus negating the regulation’s environmental objectives.
As discussions continue, the imminent threat to the livelihoods of Ethiopian coffee farmers underscores the urgent need for comprehensive solutions. Striking a balance between environmental conservation and the socioeconomic realities of coffee-producing communities is imperative in navigating these challenging times.
In light of this, calls for strategic foresightedness from the Ethiopian Coffee and Tea Authority in addressing the compliance challenge for the over 5.9 million smallholder farmers are becoming increasingly urgent. The time to act is now to safeguard the future of Ethiopia’s renowned coffee industry.
Bahru Temesgen/EuroCham

EIMA International’s 46th edition was officially presented in Addis Ababa, signifying a milestone in Italy-Ethiopia agricultural cooperation. Riccardo Zucconi and Fabio Ricci emphasized Italy’s role as Ethiopia’s major supplier of agricultural machinery and the potential for further collaboration.
Zucconi stressed the need for mechanization in Ethiopian agriculture, highlighting Italy’s commitment to supporting local enterprises. Ricci expressed optimism about bilateral trade growth despite projected declines in exports.

The upcoming EIMA International in Bologna from November 6 to 10 is crucial for fostering cooperation. With over 50,000 models of machines, it offers cutting-edge solutions for Ethiopian agriculture. The Idrotech showcase features irrigation technologies crucial for sustainability.

Attendees include an Ethiopian delegation facilitated by the ICE Agency, promoting collaboration. Beyond exhibitions, EIMA offers diverse programs, including demonstrations of machinery for bioenergy and highly automated systems in agriculture.

For more details, click here.

EuroCham’s CEO Networking Event provided a platform for an insightful panel discussion on the recent Memorandum of Understanding (MoU) between Ethiopia and Somaliland. Dr. Paul-Simon Handy of the Institute of Security Studies shared nuanced perspectives on the geopolitical implications of the agreement. Attendees engaged in a robust dialogue, exploring the challenges and opportunities arising from the MoU, including its potential impact on regional stability and Ethiopia’s strategic interests. The event facilitated meaningful networking opportunities and deepened participants’ understanding of the complex dynamics surrounding the agreement.

On February 9, 2024, His Excellency Mamo Mihretu, the Governor of the National Bank of Ethiopia (NBE), welcomed EuroCham Board members to his office for a pivotal technical meeting. This meeting served as a platform forfruitful discussions on a wide array of fiscal policies and mattersfalling underthe jurisdiction of the NBE.
During the engagement, challenges faced by the European Foreign Direct Investment (FDI) community were candidly addressed. These challenges included hurdles in the clearance process from the delinquency list, lack of forex priority allotment for importing raw materials and capital expenditure (CAPEX) investments to substitute imports, transparency in foreign exchange (FX) allocation, and the exploitation of export commodities especially coffee for generating FX, alongside issues related to dividends repatriation and the potential offsetting of receivables versus payables.
Governor Mihretu acknowledged these challenges and highlighted ongoing efforts by NBE to address them. He emphasized NBE’s commitment to ensuring strict adherence to directives issued for managing FX allotment, while also stressing the need for fundamental solutions to address forex allocation challenges comprehensively.
In response to concerns about importers engaged in coffee exports, participants proposed reviewing certain business pathways, such as treating import and export performances separately. This proposal aims to prevent sustained losses from export activities leading to business liquidation or bankruptcy, thereby promoting sustainable export practices.
Regarding dividends repatriation, NBE recognized the longstanding challenges faced by FDI entities and proposed to look into backlogs as will be compiled by the European Chamber in a bid to allocate a certain percentage of dividends to signal commitment the Ethiopian Government in supporting FDI and enhance
investor confidence.
Discussions also explored the possibility of offsetting receivables versus payables, with NBE citing precedents like local currency swaps as potential solutions to explore further. NBE welcomed innovative proposals for intra-company arrangements, promising thorough examination on a case-by-case basis.
Finally, Governor Mihretu touched upon broader macroeconomic challenges and upcoming policy revisions in the forex regime aimed at ensuring price stability and the soundness of financial institutions.
The technical meeting between EuroChamber and NBE underscored the commitment of both parties to fostering a conducive investment environment in Ethiopia while addressing the concerns of the European FDI community