The CEO speaks
For the past 18 years, Arega Yirdaw (PhD) has been the Chief Executive Officer of Midroc Technology Group and notably, Midroc Gold, a division of Midroc Technology Group. After receiving his first degree, in engineering from Addis Ababa University, he spent a decade at Ethiopian Airlines. After moving to the United States on a scholarship, he lived in the United States for two decades earning a PhD from Pacific Western University. An Electrical engineer, he started his professional career in earnest, working and fulfilling his academic ambition concurrently. The father of nine children and grandfather of twelve, he has had a demanding life since his return to Ethiopia almost two decades ago. As Midroc Technology Group is in the news, making a substantial contribution to the current famine in the country, Melaku Demissie and Bruh Yihunbelay of The Reporter were granted a rare interview with the man at the helm of one of the most important institutions in the country, as he opens up about citizenship, business, controversies and what he does to take a break from a demanding career. Excerpts:
The Reporter: How did your career with Midroc Ethiopia start?
Arega Yirdaw (PhD): Before I left for America, I used to work with Ethiopian Airlines. It is because of my work with Ethiopian, that I went to the United States. Then, I worked in aviation and later in the aerospace industry. In the middle of all these, I was invited by Sheik Mohamed Al Amoudi, to work for him and assist him with his companies in Ethiopia.
When did you come to Ethiopia?
I came here in 1999. Before coming back, I spent two years, studying Ethiopia and what I can do to best fulfill my potential. I also tried to get a clearer picture of what my role would be in the company. I started working for Midroc in 2000. From that time, until now, I have been working at Midroc. I was initially in charge of a total of five companies within Midroc as chief executive officer. These companies have grown to be 25 today. When I first returned, my role was as a liaison officer.
These days, Sheik Al Amoudi is in the news for his generous contribution to the drought victims in the Oromia and Somali regions. What is the value of the contribution?
Sheik Al Amoudi at the moment is making a substantial contribution to the issues associated with the current drought. Using the transportation and agricultural products from his own companies, he has donated generously to the drought victims in the Oromia Regional State. We have been making a donation worth three million birr of products, such as our Alfa Alfa products that are vital to the survival of animals. This effort is not just in the Oromia region, but within the Somali region as well. The effort will continue.
You told us that Midroc Technology Group started with a combination of five companies but has now grown to 25 companies. Would you share with us the progression? Is it incorporated legally? Or is it a federated company? What is it?
If I am not mistaken, at the moment, Sheik Al Amoudi has about 74 companies. When I first moved to Ethiopia, I was trying to make all these efforts under one mega company. For seventy days, that was all I did. That was all my effort. That was the mission, to make all the efforts, all the companies under one umbrella company. At the time, in Ethiopia, there were no laws governing holding companies.
Even now, while the law may have been entrenched, I do not think its being practiced. What we did was, with Midroc Gold, the Kombolcha-based Kospi and others, was to incorporate them as one entity. That was the change we implemented. I put that as one entity and I started leading the new company. While I was the head of the new mega company, under the bylaws of our companies, there are indeed issues of governance unique to each, including those who liaison and advocate for each of the divisional companies within Midroc. That is how we govern ourselves.
Though there are limitations because of the laws of the country, in terms of creating mega holding companies, our growth continued. As our growth progressed, we created Midroc CEO PLC, to be inclusive of the changes that were taking place; in terms of the size (jumping to 25 companies) and capacities of our company.
The Midroc CEO PLC currently offers management services for the other 24 companies. All the 24 companies have agreement with Midroc CEO PLC. Because of our desire to be a legal entity, that is the road we chose to take.
We see the name – ‘Midroc Technology Group’. It gives the impression of a company involved heavily in the technology sector. However, there are other sectors the company is known to be involved in, including in transportation and service. How do you make all these interests and areas work under one big entity?
Along with my boss, I sat down and envisioned to create a company that is involved in, partially or fully, in the technology sector. Because of that vision, we built a mission; we looked at Midroc Gold, Huda Rea Estate and others, a total of five companies and incorporated them under one entity. The name Midroc Technology Group was the name that we became known for and that continued.
But our work kept on continuing and expanding. For example, we have a company called Home Depot and a metal factory, called Kospi. That means we have a company that makes construction equipment and another that sells construction equipment. Similarly, if you look at our company, Elfora, it produces dairy and animal products but it is not involved in retail business. If we need to sell its products, we created a company called Queens, a supermarket.
That Company has grown over the years and you have created 25 branches under the Midroc brand. What is the total capital of the technology group?
If I did that, it would be a mistake on my part. Each of our companies has their own capitals and their own management. What I can tell you is how much they sell. We sell about 5.5 billion birr worth of products. Each of our companies have their own capabilities. They have their own capital and management. Some of them make money, while some do not. Some even come at a loss. From all those investment, the one that has a healthy return is Midroc Gold.
When I first came back to Ethiopia, for the first four years, it was losing money. However, it has turned to be a profitable effort for Midroc.
Many of private investors in the country are faced with difficulties and challenges. As a noted private sector pioneer yourself, you are no exception. What has been some of the noted challenges you and Midroc have faced?
We face many challenges. Each year comes with unique challenges for us. What we face today is different than, let’s say, the previous year. Some of the companies we created are for profit; some are because we saw a need for them. Take Home Depot for instance; it was the issue of need that gave it its foundation. Our airlines, Trans Nation Airways PLC (TNA) was created because we saw too many planes being parked and we wanted to put them in great use.
From all we have achieved, we are fortunate to offer employment to thousands of Ethiopians. We have more than 7,000 people working for us. No employee gets terminated without my authority. We are not trying to fire and hire, but give all our employees the foundation they need to be long-term employees.
You mentioned how some of the member companies of Midroc Technology Group are losing money. How is that financially sustainable?
Midroc is no different than most companies. We follow the law of the land and receive our guides from it. If a company loses money for five consecutive years, we will end up shutting it down. For instance, we have a company named Trust. While it had a different role at the beginning and it has very slow growth, we transitioned it to work on a different arena, including on government contracts by providing transitory service for products coming from Djibouti, to make their movement faster.
TNA, a division of Midroc, a while back started scheduled flights but shortly ended that. Why is that? Was it targeted to cease operation?
That is wrong. I have never believed there was a policy targeting us, or created to benefit us. You have to be careful from operating on wrong premises. Whatever our activities, we do them with no harm to the national interest of the country. What we considered to be a difficulty was the limitation of number of seats. During the time of Emperor Haile Selassie, it was 20 people, and the law exited for some time so as to protect the flag carrier. But, that gradually changed. It was a long process. Still, our scheduled flight was not good business and we started focusing on charter flights.
Midroc Gold has been controversial from the outset. Tell us about some of its activities?
I will be glad to. The enterprise is involved in the exploration and the delivery of gold. We are still in the exploration stage in many parts of the country and it is a heavy investment. I do not have the exact figures, but I suspect we export 100 million dollars’ worth of gold a year. We produce three to four thousand kilos of gold. From the machines needed for the exploration to the human capital, it is expensive but the return has been good.
The government continually inspects the operation of the company and they are due to release their report. Are there any pressing issues from their side?
There are none. There are no companies that have opened their books and its operation than us. What many are not aware is that we do not sell gold within Ethiopia. We export it elsewhere in Europe. Once we have produced the gold, we store it at the National Bank of Ethiopia and with the government before we ship it aboard.
There have been criticisms coming from the people that reside at gold exploration and mining area towards Midroc. Has that been resolved?
There has been none.
It was reported in the media, including the national TV.
Let me explain. There were some, but they were unfounded. We operate at an international level, with ethics and standard. Our exploration is at a 500km distance from the area where people reside. Anyone is free to visit and witness our operations. If you can recall, Sheik Al Amoudi had an open conversation with the locals, along with the then government minister, Alemayehu Tegenu, Regional and local officials; I attended the meeting.
The residents wanted a donation, and we made a one million birr donation to each of the weredas and we also contributed 15 million birr to a technical school in the area.
The minister observed our operations and produced an assessment, expressing how our company is that of high standard with no complaints from local residents. We follow the law of the land very carefully. As media, you need to be careful about your reporting because you have an important role to play. It is important to view our work, and reflect the reality on the ground. When you report falsely, you do not just harm our company, but the interest of the country. You will be in a position to harm the country’s attractiveness to bring other investors into the country.
You will not harm Arega or Al Amoudi, what will be at harm’s way is the country.
There are some who claim that you don’t report to the Extractive Industries Transparency Initiative?
That is also another false allegation. Completely unfounded.
You are a man of many titles. There is an open discussion as to why there is a need to carry so many burdens, when there seems to be many qualified and experienced people who are in a position to share some of the responsibilities of the enterprise.
There are many qualified people to do the job. That is true. We even have those with experience that is world class. I am a product of the local educational products granted to citizens. I can fulfill many responsibilities because of the education I received locally. Within our company, we have trained and able people that will one day take the company to a new frontier.
If you venture in Thailand, the person who runs the hospital is not necessarily a doctor. If you see my background, I am an engineer, not trained to be in a leadership role, but here I am. If you ask me if I studied agronomy, I will tell you, no. Within our country, we lack those with an agronomy background. That is the truth.
Let’s come to Huda Real Estate; a well-known company in the capital…
I am not sure whether it is well-known, but it has undertaken some major projects both in Addis and out of Addis. The Woldia Stadium and a modern building in Dessie are the two projects that were undertaken by Huda. Before I came, there were Nani and Loli buildings. Nani is done and Loli is nearing completion. Anyone can go and check.
What about the sluggish projects and others that have been fenced but are yet to commence?
There could be some plots that are under Huda and those plots could be designated for a particular purpose. As an investor, if Sheik Mohammed has a real estate company and wants to acquire plots, he can do that. I don’t see any harm in that. However, I can only speak for the projects I am responsible for – Loli, Nani, Woldia Stadium and the building in Dessie. All have been completed.
Ethiopia is a changed society, where the world is coming to invest, and the births of the industrial parks have shown interest from investors from aboard. Looking at the future, what are some of the projects Midroc is looking at expanding?
Midroc will not venture in to the industrial parks business. We have no purpose or reason to do so. From what I see, the Industrial Parks are created to help produce products that are then exported outside. Our approach is different. So that will not be something we would be interested in.
You are a very busy man, with a number of public roles. How do you relax and unwind?
I do not know what a break or vacation is. I work seven days a week. I do not oppose vacations, as they are created to have us relax, so we can be more productive. Since my early days with Ethiopian airlines, I rarely took a break. I married young; I do not have young children at home. I work even on weekends. I had my first child, when I first entered secondary school. By the time I finished my first degree, I had five children. If I do not come to work, I feel guilty, as it is my guilty pleasure. When I have a rare free time, I like to switch my usual car, and travel outside of the capital, be surrounded by nature, the forest scenery by myself and just relax.
Even at the conclusion of this interview, I am to be inspecting our projects. That is the same even in the evening. I get home at 7 pm at night, everyday. I am a convinced I am a productive citizen. To be frank, and if I was to be jobless for more than a week, I do not think I will survive.