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New Life for Civil Servant General Business S.C (NLCS), a new share company under formation, aims at fundamentally changing the wholesale and retail goods business structure of the country by stabilizing the volatile goods market and ensuring equitable wealth distribution. It is making preparations to float shares, where the main beneficiaries will be employees on payrolls with Tax Payer Identification (TIN) numbers, who will be the shareholders. “Payroll Employees are the most faithful tax payers in the country. Though they are major depositors of capital, they are not beneficiaries of the banking loan systems. Their deposits are usually at the disposal of the so-called investors, who control the goods market of the country. These investors are mainly responsible for skyrocketing commodity prices which result from monopolistic business structures and distribution systems. That is why we want to establish a company that can stabilize the market and create wealth for the employed,” said Abel Hailemariam, General Manager of the under-formation share company.
“We plan to deal with banks and government authorities, to provide loans to employees who have accounts in different banks, using their work as collateral so that employees can access loans and create their own wealth in the booming economy,” added the General Manager.
The company plans to mobilize 20 billion birr by floating 20 million shares with a share value of 1,000 birr each. An employee with a TIN number has the right to buy a minimum of one share and a maximum of 25 shares. The limits have been introduced to prevent monopoly and ensure equity. The employees are expected to pay 10 percent of the total value of their subscribed shares and pay the remaining over a five year period. Every share is subject to a 10 percent service charge.
“We think that the realization of our idea will reduce the price of commodities by 30 percent. If an individual spends 1,000 birr per month on consumer goods for instance, our engagement in the business will save the consumer 300 birr per month. If the consumers save this money, they will save 3,600 birr per year,” said Abel.
“Since most urban consumers are employees of either public or private companies, they can channel these savings back in to our company. For an employee, it’s like hitting two birds with one stone. It means they can enjoy quality products at a fair price while building a company that can generate steady income over the years,” he added.
He is of the view that private commercial banks in the country are not serving the interests of the majority, because these banks only provide loans to those who can afford to offer collateral. Therefore, he believes, with interested parties, NLCS would strive to implement other ways in which the masses will be able to obtain loans using a different ethical means in lieu of collateral.
Thus, according to him, private banks are not helping in the creation of wealth among the masses in a thriving economy. He argues that the banks are serving the interests of the privileged few. These privileged few are not engaged in the productive sector of the economy that has the potential to create wealth through job creation and product self-sufficiency though they are making use of the deposits made by the public.
“They [the rich] are making huge profits off the commodities they import and hoard. They earn these profits by manipulating the trade structure of the country. Our effort is to solve the problems that arise from such a distorted business model and ensure equitable wealth distribution,” argued Abel.
“We want to stabilize the market through bulk import with wide and properly structured distribution channels while consistently ensuring the quality of imported goods. That will ensure the availability of products at fair prices across-the-board, solving the prevailing price and quality inconsistencies in the various markets. It also avoids artificial inflation,” he added.
The idea behind bulk import is in reaping the benefits of reduced prices through negotiation. The company aspires to enter the markets of neighboring countries after it has made its mark on the Ethiopian market.
It has to be recalled that before imposing the ultimately ineffective price cap on 18 consumer goods two years ago, the government warned heavy weights in the goods business to either pave the way for fair business practices or face foreign competition. That move was the authorities’ attempt at curbing galloping inflation which the government attributed to unfair business competition.
This view of unfair practices has its place in the present as well. The commodities business owners were successful in threatening the effectiveness of the government’s move. Right after removing the price cap, the government went on and approached giants like Wal-Mart, in order to share their experience or arrange ways to let them in. The coming in to the spotlight of this new company seems like an answer to all this.
New Life for Civil Servant General Business S.C is the second company to float shares to the public, next to Hasset Wholesale Trade Share Company, in order to address the perceived problems in the goods business, afflicting the country. The first share company has already started operations, though not on a large scale.