Bloomberg News

Ethiopia’s Bank-Secured Sesame Seed-Sales Seen Boosting Exports

December 06, 2012

Ethiopia, the world’s fourth-largest sesame grower, may see earnings from exports of pulses, oil seeds and spices rise by a third to more than $900 million this year.

Africa’s largest coffee producer and second-most populous nation is providing free land for processing and warehouses, as well as waiving related import and export duties, Haile Berhe, president of the 110-member Ethiopian Pulses, Oil Seeds and Spices Processors-Exporters Association said.

“The government is helping exporters through many incentives for each company,” he said in an interview in the capital, Addis Ababa, yesterday. “If the supply side is there, I am sure we can export that amount” in the year through July 7, 2013.

If the trends continue, Ethiopia may earn $2 billion a year from seeds, spices and pulses by the end of a five-year government growth plan in mid-2015, Haile said. Ethiopia’s government is working to attract foreign investment into agricultural processing to help it diversify an economy that relied on coffee for about a fourth of the $3.2 billion it earned from exports last year.

Sesame seeds accounted for around $460 million of last year’s revenue of $660 million from oil seeds, pulses and spices, Haile said. Ethiopia is the biggest sesame grower in Africa, and largest after India, Myanmar and China, according to the United Nations Food and Agriculture Association.

Sesame Collateral

Chinalight General Merchandise Import & Export Corp., Qingdao Kerry Vegetable Oils Co. Ltd., and China National Chemical Fiber Corp. are major Chinese buyers of Ethiopian sesame, said Haile, who is also marketing manager for Guna Trading House Plc, part of the ruling party-linked Endowment Fund for the Rehabilitation of Tigray group.

Sesame seeds are used as in cuisines around the world, from candies in India and the Caribbean, to a hamburger-bun topping in the U.S. and as both a cooking-oil and ingredient in East Asian meals.

China buys about 60 percent of Ethiopia’s sesame, and foreign currency earned from those are legally required to be deposited at the state-owned Commercial Bank of Ethiopia, the country’s largest lender, he said.

“This money is then put into an escrow account with the Export-Import Bank of China and used to secure at least one of the construction loans obtained from that bank,” Deborah Brautigam, professor and director of the International Development Program at Johns Hopkins University in Baltimore, said in an e-mailed response to questions Nov. 29.

That is the collateral for credit “that Ethiopia couldn’t otherwise secure on global credit markets,” she said. Commercial Bank of Ethiopia took a $300 million credit line from the Chinese trade bank in December 2011.

Government Guarantees

The government in turn has guaranteed 80 percent of each bank loan made to the oil seed, spice and pulse industry, said Elias Genet, general manager of Agro Prom International Plc, an Addis Ababa-based exporter.

“The investment environment is better than it ever has been,” he said in a Nov. 29 interview. Growers have been given advice by the government and helped with seeds, fertilizers, pesticides to help boost production, he said.

Around 90 percent of sesame seeds and all white pea beans are bought by exporters on the state-owned Ethiopia Commodity Exchange, Elias said. There is potential for increased production of niger seed, linseed, soybeans, groundnuts, chickpeas and fava beans, he said.

To contact the reporter on this story: William Davison in Addis Ababa at wdavison3@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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