Warehousing Enterprise to re-merge with ECX

The Ethiopian Agricultural Commodities Warehousing Service Enterprises (EACWSE), which spun-off from the Ethiopian Commodity Exchange (ECX) about 31 months ago, will reunite with its mother organization by July 1, 2017.

The government was expecting agriculture to bring in a staggering amount of export revenue however things did not go as planned so it is undertaking massive changes to the agriculture market.

Coffee the nation’s largest export product is the major target in the new change. Several discussions from bottom to apex have taken place over the past few months to identify problems and make improvements.

The disappointment is shared by market actors and exporters. Experts in the coffee sector stated that some exporters are frustrated about the market’s unpredictable behavior. A representative of coffee exporters, who attended the exchange authority meeting held on February 18, at Ellily Hotel, stated that the Coffee Exporters Association conducted a study on marketing coffee that they will submit to the relevant government bodies for examination.

The major mission was given to the Ethiopian Coffee and Tea Development and Marketing Authority (ECTDMA), which was reestablished in the past budget year.

The authority was full of activity in the first year of its formation to organize itself and has come up with a new direction and strategy to improve the coffee sector from a farmers’ garden to large investment farms and from rural markets to export.

Recently Sani Redi, Director General of ECTDMA, told Capital that the new strategy will be implemented in different stages.

He said that some of the changes will be implemented without restructuring the policy and strategy. A new policy and strategy will also be followed over the long term.

Since it finalized its preparation a couple of separate meetings have been held at the Office of the Prime Minister with stakeholders about two weeks ago. These meetings have sparked upcoming changes in the sector, according to sources.

Sources said that in the past week the authority has continued its meetings at the regional level and even at the zone and Woreda level.

One of the unexpected changes that sources told Capital is the reemergence of the warehouse enterprise that was split on September 3, 2015 through the Council of Ministers Regulation No. 331/2014 with the goal of boosting the system.

When the formation of EACWSE was announced the exchange also said that by acquiring best practice approaches from other commodity exchanges elsewhere in the world; a spin-off to its warehouse and quality operations has been deemed paramount.

EACWSE was mandated to separately and independently handle warehousing services of agricultural commodities as an offspring of the current Ethiopia Commodity Exchange. EACWSE has the objective of providing innovative warehouse management service to customers and stakeholders through the application of best practices and available technologies.

The enterprise was established by the government with an authorized capital of one billion birr and paid-up capital of 250 million birr.

However on different occasions market actors expressed their dissatisfaction in terms of the service that they got from the enterprise. Quality and quantity of products have been the major issues stressed by traders. Lack of adequate service is the other issue that customers complain about concerning the warehouse activity.

The solution document tabled for the government identified that coffee traceability has been affected since the enterprise was formed. It also added that the loading and unloading process has forced an additional cost and the quality of the product has been affected.

It concluded that the formation of EACWSE has not made a positive contribution to the sector’s development.

Sources told Capital the two organizations will start their joint operation as of July 1, 2017 under ECX.

The re-emergence of the two organizations mainly targets the coffee sector, which takes over a quarter of the country’s export revenue.

Sources said that the merger is one of the options tabled for Prime Minister Hailemariam Dessalegn to improve the coffee export, competitiveness and local trading.

According to source, the establishment regulation of the warehouse enterprise has been annulled by the Council of Ministers a week ago because it is mandatory to merge the two bodies again.

Ermias Eshetu, CEO of ECX, declined to comment on the issue and his institution’s preparation.

Olero Opiew (Eng.), Director General of the Ethiopian Commodity Exchange Authority, which is a supervising body for the trading system, told Capital that his institution is ready to control the new system as they did previously.

“The remerging process is the responsibility of the two organization but we have finalized looking after their operation as the current trend,” Olero, who become head of the authority recently since the first Director General Addis Alem Balema (PhD), Amb, left the post in October, 2015.

In the past fiscal year 625,925 tons of coffee, sesame and white pea beans were handled by EACWSE and traded by ECX.

In the first seven months of the budget year the country has earned over USD 360 million form coffee exports, which in a 4.24 percent increase compared with a similar period of the preceding year.