Ethiopian Builder Sees Revenue Doubling on Infrastructure Spend
Sur Construction Plc, a construction company with ties to Ethiopia’s ruling party, expects to almost double revenue this year as the state boosts investment in infrastructure, General Manager Tadesse Yemane Hailu said.
The Horn of Africa nation, the continent’s second-most populous country, plans to spend 144 billion birr ($7.9 billion) in the current fiscal year that ends on July 7 on industries including transport, telecommunications, energy and housing in the third year of a five-year industrialization plan. Revenue may grow to 2.3 billion birr from 1.3 billion birr last year as the state invests in projects including the Grand Ethiopian Renaissance Dam, set to be Africa’s biggest hydropower plant.
The five-year plan presents “a very huge opportunity for the construction sector,” Tadesse said in an interview yesterday in the capital, Addis Ababa, where the company is based. “There will be many big dam projects.”
Sur is part of the Endowment Fund for Rehabilitation of Tigray group, or EFFORT, which has Azeb Mesfin, widow of former Prime Minister Meles Zenawi, as its chief executive officer. EFFORT, which has interests in cement, trucking and textiles, was established in 1995 by amalgamating companies the Tigray People’s Liberation Front, or TPLF, acquired during a 17-year insurgency. The TPLF is one four members of the ruling Ethiopian Peoples’ Revolutionary Democratic Front that has led the government since overthrowing Mengistu Hailemariam’s military regime in 1991.
Sur’s pretax profit increased to 203 million birr last year from 125 million birr a year earlier, mainly because of contracts from the state-owned Sugar Corp. and Metals and Engineering Corp. to work on a sugar plant at Welkite in the Ethiopia’s northern Tigray region, Tadesse said. It expects to pay 61 million birr in tax on last year’s profits, according to an unaudited financial statement provided by the company.
The cash will be channeled into EFFORT’s manufacturing ventures including a new iron-ore mining project, cement- producer Mesebo Building Materials Production, Mesfin Industrial Engineering and Almeda Textile Factory, Tadesse said.
EFFORT also plans to turn its waterworks business into its “biggest wing” and to move into railway construction, while starting operations in neighboring South Sudan, he said.
EFFORT companies aren’t subject to public oversight and receive “help” from government officials, while profits fund political activity, said Negasso Gidada, former Ethiopian president and now head of the opposition Unity for Democracy and Justice party.
“They have an advantage over other private firms,” he said in a phone interview from Addis Ababa.
Ethiopia operates a mixed economy that encourages foreign investment, excluding banks, while state companies monopolize industries including telecommunications and power generation. Sur competes on equal terms and has “zero favors” from the government, Tadesse said.
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