Ethiopian entrepreneur Bethlehem Tilahun started Sole Rebels in 2005 in order to create jobs and sustainable prosperity in her country. Courtesy: Sole Rebels

By Ed McKenna
ADDIS ABABA , Jan 1 2013 (IPS)

Innovative Ethiopian footwear manufacturer Sole Rebels will open its second retail outlet in Taiwan this year. With ambitions to open 30 more franchise stores across the world in countries like the United States, Australia, Italy and Japan, Sole Rebels, the largest African footwear brand, is now fast becoming a global competitive brand.
The company currently sells its innovative range of artisan shoes made from recycled materials in 55 countries and is now one of Ethiopia’s thriving businesses with a major presence on e-commerce sites such as Amazon. Its success reflects this Horn of Africa nation’s growing footwear-manufacturing industry as Chinese businesses are increasingly investing in the sector here.

Founded in 2005 by Ethiopian entrepreneur Bethlehem Tilahun, who wanted to create jobs and sustainable prosperity in her country, Sole Rebels made two million dollars in sales in 2011 and is expecting to generate over 15 to 20 million dollars in revenue by 2015.

“We are extremely excited to open a Sole Rebels store in the heart of Taichung. Taichung is a footwear epicentre, home to the Asian design centre for the planet’s largest footwear brands,” Bethlehem told IPS. 

The new outlet expands the company’s plan to exploit increasing consumer demand in Asia’s mushrooming retail footwear market and makes it the first African consumer brand to open franchise retail outlets in Asia.

Bethlehem is intent to defy the stereotypes about her country. A poverty index released by Oxford University and the United Nations in 2011 ranked Ethiopia as the world’s second-poorest country after Niger.

But the success of Sole Rebels is evidence of how Ethiopia is ready to make a transition from being foreign-aid reliant to being able to direct its economic future by exploiting home grown skills, resources and the many business opportunities in the country, according to Bethlehem.

“Sole Rebels is proud to be the planet’s fastest-growing African footwear brand and the very first global footwear brand to ever emerge from a developing nation. It stands as living proof that creating innovative world-class brands is the best road to greater shared prosperity for developing nations like Ethiopia,” Bethlehem said.

Sole Rebels is the world’s first certified fair trade footwear company. All of the shoes are hand crafted by a staff of over 100 people using traditional Ethiopian artisan practices and locally-sourced, hand-spun organic cotton and recycled materials. In a market where the majority of footwear brands are produced by machines, Sole Rebels shoes are a breath of fresh air.

“Our business model centres on eco-sensibility and community empowerment. Our model maximises local development by creating a vibrant local supply chain while creating world class footwear,” Bethlehem said.

Bethlehem, who was on the front cover of Forbes magazine in January 2012 where she was listed as one of Africa’s most successful women, has won many plaudits and a significant amount of international recognition for her work at Sole Rebels. She is now one of Africa’s most recognisable female entrepreneurs. Female entrepreneurship is, according to the World Bank, higher in Africa than in any other region of the world.

In 2011, the World Economic Forum selected her as a “Young Global Leader”. In June 2012, she won the award for “Most Outstanding Businesswoman” at the annual African Business Awards organised by African Business Magazine.

Eugene Owusu, Ethiopia’s representative at the United Nations Development Programme, told IPS: “Sole Rebels is taking advantage of the improving infrastructure and growing local skilled labour to exhibit all of the characteristics one looks for in Ethiopian entrepreneurs.

“It’s innovative, a jobs creator, environmentally sustainable, and globally competitive. Sole Rebels is indeed blazing a trail for other local companies to follow, as Ethiopia seeks to minimise its dependency on aid.”

The International Monetary Fund (IMF) reported that Ethiopia’s economy grew at a rate of 7.5 percent in 2011. This second-most populated country in Africa has been one of the fastest growing, non-oil producing economies in Africa in recent years, according to the World Bank.

The country’s export earnings increased by 15 percent to 3.2 billion dollars between 2010 and 2011, according to the Ministry of Trade and Industry of Ethiopia. The government aims to double exports as a share of economic output by 2015 with a much bigger contribution coming from the sale of minerals and manufactured goods.

Owusu said Ethiopia’s booming private sector would help the country continue with its growth trajectory and this should translate into poverty reduction and national development.

“Locally-grown private enterprises will be a foundation from which Ethiopia can consolidate the strong overall growth exhibited over the last decade, and to achieve the bold transformative vision that the country has set itself to become a middle-income country by the year 2025,” Owusu said.

According to a recent IMF report on Chinese investment in Ethiopia: “The manufacturing sector accounts for the largest amount of Chinese foreign direct investment in Ethiopia, attracted by low-cost labour and large-scale land leases, in addition to Ethiopia’s market size.”

Chinese manufacturers, particularly footwear manufacturers, are now starting to relocate production facilities to Ethiopia to escape rising production costs at home, but also because Ethiopia has one of the largest livestock industries in Africa to supply leather to producers.

Ethiopia also boasts one of the largest and cheapest labour forces in Africa. Ethiopia’s late Prime Minister Meles Zenawi wanted the country to become a major producer and exporter of leather shoes as part of his economic development plan.

Chinese company, Huajian Shoes, announced in 2012 that it would invest two billion dollars in Ethiopia’s footwear manufacturing industry. To date, Chinese companies have invested 900 million dollars into Ethiopia’s economy, according to Ethiopia’s Investment Agency.

Zemedeneh Negatu, a managing partner at Ernst & Young in Ethiopia, thinks that companies like Sole Rebels will help transform the economic landscape of Ethiopia and the continent.

“The company’s success is an inspiration to the newly-emerging Ethiopian private sector. It’s important to remember that until 1991, Ethiopia was a pseudo-socialist country with no private sector. Yet in a relatively short time it has started to produce success stories such as Sole Rebels, which is a good example of an export-oriented global success story from the private sector.

“I regularly use the phrase ‘It’s time for Africa’ precisely because I see more and more African Sole Rebels like Bethlehem and her company.”

In the forest in Gbarpolu County, northwest Liberia, a group of men work on a surface gold mine. Credit: Travis Lupick/IPS

By Ed McKenna
ADDIS ABABA , Dec 24 2012 (IPS)

Many of the fastest-growing countries in the world are in Africa, the poorest continent on the planet, but the potential for recently-discovered resources to generate broad-based inclusive development opportunities is massive and remains under-exploited.

“I don’t believe that African nations are even close to understanding the enormous wealth that is their natural resource endowment,” David Doepel, chair of the Africa Research Group at Australia’s Murdoch University, told IPS.

African countries preparing to cash in on mineral wealth in East Africa include Tanzania, Uganda, Mozambique and Ethiopia, based on recent discoveries of oil and gas.

In 2010, Guinea alone represented over eight percent of total world bauxite production, Zambia and the Democratic Republic of Congo have a combined share of 6.7 percent of the total world copper production, and Ghana and Mali together account for 5.8 percent of the total world gold production, while Ethiopia also accounts for one-sixth of the world’s tantalum production.

A World Bank report issued in October claimed consistent high commodity prices and strong export growth show that African countries need to value the economic importance of their unexploited natural resources.

Well-managed revenue from Africa’s resources could increase economic activity in the long term, create jobs, reduce poverty and improve access to health and education,said Doepel.

“It is vitally important for any resource-rich country to have a focus of maximising the total value of any of its natural resources over the lifetime of that resource – that is a combination of maximising returns and minimising negative consequences (both environmental and social). Opportunism and urgency to extract are not necessarily ingredients for maximising value,” warned Doepel.

African countries like Nigeria have been losing out to corruption and short-sightedness in pursuit of quick profits in the oil sector. Nigeria is Africa’s largest crude oil exporter, shipping more than two million barrels per day, and is also home to the world’s ninth-biggest gas reserves. An investigative report requested by Nigeria’s oil ministry released in October revealed that a lack of transparency in the West African nation’s oil sector led to a loss of revenue of 29 billion dollars between 2002 and 2012.

The Revenue Watch Institute is a non-profit policy institute that promotes the effective, transparent and accountable management of oil, gas and mineral resources for the public good. Alexandra Gillies, head of governance at the institute, told IPS that African countries need to be circumspect at every stage of exploiting their recently-discovered oil reserves.

“For new African producers, striking a good deal can be a real challenge. They often lack capacity and familiarity with the oil sector as compared with the oil companies, and political agendas can make leaders overly anxious to begin production quickly, sometimes at the expense of better, long-term deals.”

Current working models that ensure the private sector and the government are held to account are starting to succeed in countries like Ghana.

“Ghana has taken some promising steps with its young oil sector. They have created a citizen-led Public Interest and Accountability Commission to oversee the collection and allocation of oil revenues,” said Gillies.

Countries endowed with natural resources have a tendency to heavily depend on economic activity solely based around extracting and exporting the resource as a primary product. This approach limits economic opportunities for development and makes a country vulnerable to fluctuations in commodity prices and levels of demand, according to Doepel. For example, Nigeria possesses 2.9 percent of the world’s oil and gas reserves and hazardously depends on oil and gas for 90 percent of its export revenue.

Focusing on maximising revenue by taking oil out of the ground and exporting it without any value addition could be seen as dangerous short termism and as a barrier to long-term inclusive development, he said. It is not just the resources that are a source of development but also the potential for local industry to be built around the extraction of resources.

Extraction industries offer huge opportunities for job creation and skill enhancement to improve the lives of ordinary Africans, said Doepel. He is convinced that many of the skills required by the extractive industries are transferable and could be utilised to help generate and expand economic activity in developing countries with an emerging industrial base.

“Mechanical engineers and civil engineers can work on building an open cut mine and just as easily work on water purification plants and roads and bridges,” he said.

Economic benefits can be achieved “as long as the extraction industry is deeply linked to the national and local economies and the ‘mining spend’ is captured rather than ‘exported’ along with the ore,” said Doepel.

There are many opportunities ahead for enterprising Africans to play a role in their country’s development based on the continent’s untapped resources, said Francis Steven George, CEO of Innovation Africa, an organisation that provides consulting to companies and institutions on how to exploit business opportunities for development and poverty reduction.

“Citizens can benefit by participating in the exploration of the resources. They can gain employment or can become suppliers or service providers to the industry. Governments need to help by creating an enabling environment. For example, investment in the education system to enable the relevant degree programmes to meet the needs of the industry, or by providing soft loans to local entrepreneurs who participate in the industry,” he told IPS.

Countries like Ethiopia, which has recently discovered vast mineral reserves such as gold, tantalum, oil and potash, are taking inspiration from countries like Botswana as they strive to maximise development opportunities. In early 2012 Botswana demanded that diamond company De Beers move much of its diamond-sorting operations from the United Kingdom to Botswana in an effort to localise value addition.

Citing this as a good example of how mining can enrich a country, the Ethiopian government seems determined to exercise maximum transparency and caution to ensure mining revenues benefit its population of over 90 million, which makes it Africa’s second-most populous nation.

“We want our country to benefit from our resources in the broadest sense. Development for all and not just a few is our goal,”  Ethiopia’s State Minister of Mines Tolesa Shagi told IPS.

British Nyota Minerals is set to be the first foreign company to receive a mining license to extract gold on the basis of its own exploration in western Ethiopia in the coming months.

Recent surveys indicate an estimated 500 tonnes of gold reserves in Ethiopia. According to mining experts, extraction of gold could rise to 40 tonnes a year from just over four tonnes last year, earning the country around 1.7 billion dollars based on current commodity prices.

Ethiopia is planning to sign up to Publish What You Pay, an international initiative subscribed to by over 70 countries, early next year. It holds governments of resource-rich nations accountable for the management of revenues from extraction industries.

Organisations like the Revenue Watch Institute are emphatic about the need for transparency from governments to ensure countries make the most of their resources and embark on a course of sustainable development that improves the lives of ordinary Africans.

“After the deals are signed, governments must regulate operations, maximise complex revenue streams like profit taxes, manage these revenues which are very volatile, and spend them on valuable development projects. Across all these functions there are risks of corruption, of decisions driven by patronate, favoritism and short-term political considerations,” said Gillies.

The message is clear – by having 30 percent of the world’s extractive resources, Africa has one of the greatest opportunities it will ever have to graduate its people out of poverty.

Development organisations are promoting the view that sustainable development in African countries should be generated by a partnership between large corporations and small farmers. Credit: Elias Asmare/IPS

By Ed McKenna
ADDIS ABABA, Dec 23 2012 (IPS)

Africa’s smallholder farmers, who contribute 80 percent of food and agricultural production in sub-Saharan Africa and much of the world’s food supply, are being encouraged by big business, governments and NGOs to become less subsistence based and more entrepreneurial by tailoring production to market forces.

“Increased productivity and value-chain involvement should address weaknesses in Africa’s food economy and create employment opportunities by engaging smallholder farmers in agro-processing, packaging and the marketing of their products,” John Moffett, director of policy and strategy at Self Help Africa, an NGO that works with rural communities to bring sustainable solutions to the causes of hunger and poverty, told IPS.

The question is: can Africa balance the task of feeding a population of two billion by 2050 and at the same time accommodate the interests of global food retailers who are hungry to capitalise on the continent’s resources, markets and smallholders?

Michael Hailu, director of the Technical Centre for Agricultural and Rural Cooperation, which works to advance agricultural and rural development in African, Caribbean and Pacific countries, told IPS that the private sector needed to play a greater role in smallholder agriculture as their increased participation in agricultural value chains was essential to stabilising global food supply and developing the livelihood of Africa’s smallholders.

“More than at any other time in the past, agriculture has been getting considerable global and national attention, particularly after the 2007-2008 food price crisis. As a result, the sector is attracting the policy and investment support it needs to fulfil the goals of food security and economic growth.”

Against a backdrop of volatile food supply and climatic uncertainty, global food retailers and agribusinesses want to prioritise smallholder farmers more than ever. Many large companies like Unilever and Walmart are claiming that the livelihood of smallholders is critical to the commercial expansion of giant food retailers.

David Hughes, professor of food markets at Imperial College, London, told IPS that the emphasis on smallholders was a commercial imperative and not just a corporate social responsibility afterthought.

“If they don’t get on the green train then they know they won’t have a long-term business. I think we will start seeing businesses making radical changes to their business models over the next 10 years.”

Development organisations are also promoting the view that sustainable development in African countries should be generated by a partnership between large corporations and small farmers.

Farm Concern is an Africa-wide market development organisation that advocates smallholders need to be market savvy and strategise production to satisfy the demands of the market in order to break out of subsistence agriculture.

The NGO promotes a smallholder “Commercial Village” model to help producers respond to the needs of food security and market forces.

“We take the total number of hectares in a village and promote three categories of commodities. Food and nutrition commodities are produced using 35 percent of the available land; the second category being inedible commercial crops occupies 65 percent, leaving five percent of land for natural resource management,” Mumbi Kimathi, strategy director for Farm Concern, told IPS.

The United Kingdom is also busy promoting the role of the private sector in smallholder agriculture.

Its Department for International Development is funding the creation of smallholder farmer linkages with the U.K.’s food retail industry and supermarkets to create opportunities for Africa’s farmers to export more of their products to U.K. supermarket shelves.

The partnership between Taylors U.K., a Yorkshire tea brand, and Rwandan smallholder tea growers is one example of how the U.K. government has helped facilitate the entry of giant retailers into Africa. This alliance resulted in the training of 10,000 farmers and 1,800 producers, and a 40 percent increase in the minimum wage for Rwanda’s small-scale tea producers.

Global food retailers are also getting excited about the high growth potential within emerging markets in sub-Saharan Africa. The International Monetary Fund (IMF) forecasts a 5.7 percent economic growth in 2013. This growth, according to the IMF, is being driven by rising commodity prices.

Global food retailers have seen these trends as opportunities for integrating smallholders into more sophisticated value chains to satisfy the new demand.

The world’s biggest food retailer, Walmart, made profits of 460 billion dollars last year– 15 times the size of Ethiopia’s GDP. Walmart is now extending its monopoly into Africa. The company purchased South Africa’s Massmart supermarket chain in 2011, providing them entry into 13 sub-Saharan African countries.

They aim to sell one billion dollars in food from small-scale farmers by 2015 in a bid to demonstrate a commitment to sustainable development.

Resource-constrained African smallholders are being lured by promises of greater access to credit, inputs, improved seed varieties, and market training opportunities, and the promise of a greater financial return.

Agricultural growth is more important for Africa than for any other continent. Africans depend on agriculture and non-farm rural enterprises for their livelihoods, yet they are also unable to meet their basic food needs due to population pressure, the effects of climate change and land degradation.

According to the New Partnership for Africa’s Development, an African Union programme for pan-African socio-economic development, nutrient depletion in Africa represents a significant loss of natural capital valued at an estimated one to three billion dollars per year. If most of the nearly 70 million smallholder families in sub-Saharan Africa fail within the next decade to adopt sustainable land and water management practices on their farms, long-term food security, productivity and income will be jeopardised.

There is also a risk that cash crops like tea, coffee, tobacco and flowers will become more attractive to smallholder producers than staples, which could damage efforts to make Africa more food secure.

Patrick Mulvay, co-chair of U.K. Food Group, is opposed to the industrialisation of smallholder agriculture and the participation of small African farmers in the corporate food economy. He told IPS that although it might boost production and provide a supply of raw commodities in the short term, in the long term it is unsustainable and destructive.

“African farmers really need support to sustain these food systems, which currently feed more than 70 percent of the world’s population, and they need protection from the industrialised commodity production as they will capture and trash the farmers’ markets, livelihoods and environment in the long term.”

He said he was concerned about how sustainable it was to divert food production towards the demands of giant foreign retailers and global volatile markets when 63.6 percent of household income in sub-Saharan Africa was spent on food. Mulvany was also worried that African countries that are unable to feed their growing population would become vulnerable to revolt as experienced in Tunisia in 2011.