Agriculture Knowledge, Learning

Documentation and Policy

(AKLDP) Project, Ethiopia
www.agri-learning-ethiopia.org

Policy Brief
September 2017

Meat Safety Matters

Can public-private partnerships improve abattoirs in Ethiopia?

Introduction
Meat consumption in The consumption of meat is central to Ethiopia’s history and culture. Nationally, the
Ethiopia is expected to demand for meat is projected to grow from about 1 million tons in 2013 to about 4.6
increase 4.5 fold between million tons in 2028. This trend is mainly attributed to population growth and rising per-
2013 and 2028, to 4.6 capita income.i In general, as incomes rise, so does the consumption of animal products
million tonnes per year. such as meat, eggs and milk.
This trend poses a
From a public health perspective, Ethiopia also has special challenges in terms of
susbstantial public health
ensuring that meat is safe to eat because of the common practice of consuming raw
challenge, not least due to
meat. Popular dishes included raw minced beef or kitfo, and larger pieces of beef or kurt.
the consumption of raw
This practice increases the risks of consumers contracting certain “zoonotic” diseases,
meat.
because cooking meat kills various types of parasites and bacteria. Zoonotic diseases
include brucellosis, tuberculosis, salmonellosis and tapeworm infestation – there is a
long list of diseases that can pass from animals to people via meat. Globally, 75% of the
new diseases that have affected humans over the last 10 years have been caused by
pathogens of animal origin.
One of the most important approaches for improving the safe supply of meat to
consumers is to check the health of animals before slaughter, and also check the quality
and safety of meat before it reaches butchers and retailers. For this reason, the
effectiveness and performance of abattoirs is central to public health.
This Policy Brief summarizes the current challenges facing abattoirs in Ethiopia,
and discusses how public-private partnerships can be used to build new and better
abattoirs, and improve abattoir management and performance. The brief focuses on
municipal abattoirs in Ethiopia’s main towns and cities, and draws on a recent detailed
study for the Ministry of Livestock and Fisheries (MoLF).ii

Ethiopia’s municipal abattoirs – current challenges

In Ethiopia there are currently about 296 municipal abattoirs, and most of them were
built over forty years ago through Second Livestock Development Project. Apart from
some newer abattoirs in Adama, Jima, Hawassa and other locations, most other
abattoirs are in a state of disrepair, and their physical, sanitary and operational condition
are very poor. About 94% of these older abattoirs are located in the inner city or town,
where expansion and safe waste disposal are no longer possible.iii However, with meat
consumption set to increase, the risks of disease, and the need to ensure proper waste
disposal, there is now an urgent need to relocate many abattoirs away from residential
zones. The construction of new abattoirs is needed, in non-residential locations, and
with adherence to modern structural requirements, hygiene management practices and
environmental compliance.
Related to the Ethiopia Recently, MoLF and the Ministry of Urban Development and Housing (MoUDH)
government’s Growth and developed and approved four standard designs for abattoirs. Grades A and B are for the
Transformation Plan, 320 main urban centers and Grades C and D for smaller towns. Standard operating
new abattoirs are needed. procedures (SOPs) for abattoirs are also developed, and 44 priority urban centres have
This will cost approximately been identified for abattoir development. The MoLF has also planned to construct 320
ETB 3.8 billion, equivalent new abattoirs under the government’s current Growth and Transformation Plan.iv
to over US$162 million. However, the cost of construction is a major challenge, and no new abattoirs have been
constructed - the construction of 320 abattoirs requires 3.8 Billion ETB. Most
municipalities are not in a position to finance these projects. In general, municipal
abattoirs in Ethiopia are suffering from limited public sector financial capital for
construction or upgrading, and limited public sector technical and business capacity.
 Meat Matters: Can public-private partnerships improve abattoirs in Ethiopia?

Public-private partnerships (PPPs) – can they work?

Although municipalities have a responsibility for ensuring that meat is safe to eat, this does
not mean that they must physically provide slaughter services. Instead, abattoirs can be
The World Bank defines a
PPP as, “A long-term contract
operated by a third party, such as a private sector partner. With this arrangement, the
between a private party and a municipal authorities and MoLF provides the overall regulatory and quality control of the
government entity, for facility, but the private partner handles the day-to-day management and operation. This
providing a public asset or type of partnership can also be extended to include abattoir construction, whereby the
service, in which the private private partner builds, operates and maintains an abattoir, delivers a slaughter service of
party bears significant risk high standard, and charge users for the services. The government ensures that the
and management construction and services are performed as agreed, through regular monitoring and
responsibility, and enforcement as necessary. Within this arrangement, good hygiene practices and
remuneration is linked to environmental protection can be emphasized.
performance”. Many private partners can be considered, but butchers are the major clients of
abattoirs and so could make ideal private partners for abattoir PPP arrangements. Butchers’
groups have expressed interest in managing abattoirs and indeed, this has already been
partly achieved in Jima and Harar.
In terms of the construction of new abattoirs, the following figures are drawn from the recent MoLF/AKLPD
assessment:
• A typical investment for a new category B abattoir is estimated at ETB 12 million (US$ 0.5 million).
• As 70% of the cost could be raised through loans from commercial banks, the equity investment would be
less than ETB 4 million (US$171,000)
• If a city has around 30 to 50 butchers (on average), the investment requirement per butcher ranges from
ETB 80,000 to 150,000 (US$ 3,417 to 6,407)
• Category C abattoirs require a capital investment of around ETB 8 Million ETB, with investment by
individual butchers ranging from ETB 50,000 to 100,000 (US$ 2,135 to 4,272), depending on the number of
butchers willing to invest.
Consultations with butchers during the MoLF/AKLDP study indicated that these levels of investment by butchers
were feasible. If so, butchers could become good private partners for municipal abattoirs. Specific PPP options for
constructing new abattoirs, and managing existing abattoirs, are summarized below.

PPP Options
New abattoirs –significant investment is needed to build new abattoirs in non-residential areas, and a “Build
Own and Operate” (BOO) PPP arrangement is the preferred option. The contract period often ranges from 20
to 30 years. The arrangement is suitable for butchers associations, not least because it requires mobilizing
resources. However, it might also be used by youth associations if the finance can be raised.
Operational abattoirs – these are pre-existing abattoirs in relatively good condition, and are not situated in
residential areas. Here, an “Operate, Maintain and Own” (OMO) PPP arrangement can be used. Whereas
leasing the facility would provide only the rental income to the Government, an OMO also involves royalty
payments from the private partner to Government. An OMO can be a good option for youth groups because
the up-front capital investment requirement is very limited, Butchers can also be considered, as they already
have the knowledge and skill to manage the abattoirs. A third option is to sell the facility to a private investor.
An OMO would provide a consistent and incremental revenue stream to the Government, whereas the sale of
an abattoir would deliver a single large payment to Government.

Value for money

An analysis of value for money is provided in the Table overleaf, and clearly illustrates how the BOO and OMO
options for category B and C abattoirs are financially viable for both the private partner and for municipalities. As
financial performance varies directly with capacity, it is presumed that viability would also hold for category A
facilities. Overall, the value for money of PPPs for municipal abattoirs is demonstrated by:
• Replacement of the current subsidies drawn from municipal resources, to support abattoir operation by
royalty payments from the private partner to the municipalities.
• PPP leading to high standards of meat quality and safety, due to far better buildings and equipment, and
staff training, and adherence to new working practices developed by the MoLF and MUDH. Municipalities
cannot afford to improve existing abattoirs, or construct new facilities. High abattoir standards of welfare
and hygiene under PPPs will be promoted, with inspection and monitoring by an independent body (local
animal health staff); at present, independent monitoring is not assured.
 Meat Matters: Can public-private partnerships improve abattoirs in Ethiopia?

Value for money analysis

Category of PPP Revenue share Project Equity NPV @ 14% Payback period PV to
abattoir option to IRR IRR (million ETB) Government
Government (million ETB)
B BOO 48% 18.3% 20.4% 5.69 5 years, 10 months 127.24
OMO 60% 18.6% 20.3% 2.11 6 years, 2 months 159.05
C BOO 23% 18.3% 20.3% 2.41 5 years, 10 months 15.24
OMO 44% 18.9% 20.7% 0.93 6 years, 1 month 29.16
IRR – internal rate of return; NPV – net present value; PV – present value (of the stream of royalty payments using a discount rate of 14%).

• Significant reduction in environmental pollution as PPP Concession Agreements will specify full compliance
with existing and future environmental protection legislation: in most of the existing facilities the disposal
of waste is non-compliant (e.g. on open fields or into rivers), and environmental compliance officers find it
impossible to act against municipal authorities. New abattoirs will be sited away from residential areas
(94% of abattoirs are currently in inappropriate sites*).
• Efficient use of by-products will be encouraged under PPPs e.g. by stimulating the development of a
rendering industry; this will enhance revenues and therefore, royalty payments.
Overall, PPPs are a technically sound and financially viable alternative for addressing the current crisis in abattoirs,
protecting consumers from zoonoses and food safety hazards, as well as protecting the environment.

The way forward: How can Government promote PPPs for municipal abattoirs?
• The Ministry of Finance and Economic Cooperation (MoFEC) has recently developed a PPP Proclamation and a
PPP Policy, and both will enable rapid progress with PPPs in the livestock sub-sector. Establishing a PPP team in the
MoLF is now needed, to work closely with the MoFEC and implement the new PPP policy and proclamation.
• The Federal Government could facilitate the introduction of PPPs by providing a fronting-role, and partly
contributing capital for new abattoirs. Funding from the International Finance Corporation (a division of World
Bank) may also be explored.
At the level of abattoir-specific actions,
• The Proclamation covering the illegal slaughter of animals should be strictly implemented, so that more
animals are handled by abattoirs
• General Private Sector licenses for abattoirs should be regulated specifically to protect the interests of
PPP operated abattoirs.
• A policy and budget for training of youth groups and butchers for abattoir technology and business must
be in place before entering into dialogue with them for PPP-based abattoirs.

Disclaimer. The views expressed in this Policy Brief are those of the AKLDP project and do not necessarily reflect the views
of USAID or the United States Government.

This Policy Brief was produced by the USAID/Ethiopia Agriculture Knowledge, Learning, Documentation and Policy (AKLDP)
project, implemented by the Feinstein International Center, Friedman School of Nutrition Science and Policy, Tufts University.
For more information about the AKLDP, contact Dr. Berhnau Admassu, email: [email protected]

Endnotes

i Shapiro, B.I., Gebru, G., Desta, S., Negassa, A., Nigussie, K., Aboset, G., and Mechal, H. (2014). Ethiopia Livestock Sector Analysis. ILRI Project

Draft Report. Nairobi, Kenya. International Livestock Research Institute (ILRI)

ii Agriculture Knowledge, Learning, Documentation and Policy Project (2017). Study to Assess the Feasibility of Public-Private Partnerships for

Selected Livestock Facilities/Service Areas in Ethiopia. USAID/Ethiopia - AKLDP Project, Addis Ababa Ethiopia. Available from http://www.agri-
learning-ethiopia.org/wp-content/uploads/2015/10/PPP-Report-final.pdf [07 September 2017]
iii CNFA Agricultural Growth Program- Livestock Market Development (2016): Standardization of Domestic Abattoirs in Ethiopia- AGP-LMD

Consultancy Report. Addis Ababa, Ethiopia

iv Ministry of Livestock and Fisheries (2016). The Second Growth and Transformation Plan for the Livestock Sector (2016-2020). Ministry of

Livestock and Fisheries, Addis Ababa, Ethiopia.