The Addis Ababa Chamber of Commerce and Sectoral Association (AACCSA) sealed a partnership deal with the Ethiopian Development Research Institute (EDRI);
a government policy think tank. The partnership is aimed at boosting private sector development. The agreement is meant to improve the poor performance of the private sector characterized by low level of competitive business, low managerial competency and lack of momentum to move with development policy.
“For instance, if we take the grain trade fifty years ago in Ethiopia; the grains were produced by smallholder farmers and traded by small traders. Though the market was not developed as compared to the present day market, it was competitive. However, after half a century the producers of grain remained the same while a few dominant traders emerged. This drives the market to be less competitive. Though profit arises from economic efficiency, this dominant traders gain profit from inefficiency. They simply hoard the grains to get an abnormal profit,” argued Newai Gebre-ab, Executive Director of EDRI.
The above example represents the traditional nature of Ethiopian business over the years, he explains.
“There is no clear line that separates ownership and business in a traditional sense. Thus, business people do not even know their gains and losses in clear terms. That is why most traditional businesses struggle over the years instead of transferring themselves in to a modern business entity that distinguishes between management and ownership. Modern businesses flourish while traditional businesses struggle. That is because modern businesses reinvest their profit in some other profitable business venture,” he asserted.
The essence partnership between the two entities lies in shaping such a traditional business environment in line with the country’s development frontier. To that end, AACCSA is planning to form the Ethiopian Corporate Governance Institute. It performs like the African Union’s Peer Review Mechanism where member states review their counterpart performance in economic, social and political governance of a given country that joined the group on voluntary basis.
“We have drafted the code of conduct for the planned institute. We will establish it within 18 months,” said Ayalew Zegeye, President of AACCSA while explaining the role of chamber in the development of the private sector.
Though Addis Ababa is home to more than 200 thousand business establishments, AACCSA has less than 10 thousand members. One of the reasons behind low membership is due to the fact that membership is voluntary, say members.