Maneuvering the cement shortage crisis

In an attempt to solve the chronic shortage of cement in the market in a sustainable manner the Ministry of Trade and Industry has prepared a guideline that will go into effect starting from Monday August 31st, 2020.
Eshete Asfaw, State Minister of Trade and Industry told Capital that the guideline is mainly prepared to sustain the supply chain, and also will allow the private sector to be involved in the supply of cement. “Previously the Ministry had decided that only governmental organizations would supply cement directly from the factories.”
Guna Trading House Plc, Ambasel Trading House Plc, Biftu Adugna Business S.C., Ethiopian Industrial Input Development Enterprise, and the Ethiopian Trade Works Corporation were authorized to exclusively wholesale but now this has been extended to include private sector enterprises.
According to Melaku Alebel, Minister of Trade and Industry, the shortage of cement is mainly due to lack of spare parts, power outages, lack of inputs, lack of leadership and professional skills, security problems, supply of raw materials, and other pertinent issues.
According to Melaku, the Ministry has prepared three types of solutions; short term, middle term and long term. As he said in a short term solution the ministry has decided to import 3 million tons of cement in the coming three months to solve the current problem. Also the ministry has allowed companies which have foreign currency accounts to import cement to sustain the market.
According to Melaku as a long term solution the ministry is working to increase the production capacity of factories which in return has increased the production capacity of the factories to 63 percent. Beside the government has allocated 85 million dollars to alleviate the shortage of spare parts in the factories.
“Based on the guideline by supporting the factories the ministry is planning to reach up to 85 percent production capacity of factories” said Eshete.
There are about 12 cement factories in the country with 345,000 tones of production capacity per day – of which most of them are operating under their capacity.
In an attempt to solve the problem related to shortages and sky rocketing prices the Ministry authorized five governmental development enterprises and selected private distributers to directly purchase and distribute cement from factories to the open market.
Different stake holders in the sector have pin pointed that the price hike had been caused majorly by the rise of illegal brokers and the inefficient control of the government on the market.
In previous years, as a result of the construction boom, the construction industry, through massive public investment and infrastructure projects have consequently led to a high demand of cement consumption.
According to the Ministry, in the retail market cement is sold around 350 birr per quintal but currently it soars up to 600 birr. The country has a capacity to produce 17.1 million quintals of cement per annum.