Following the decline of hoarding of commodities, the Ministry of Trade and Regional Integration (MoTRI) has decided to lift the price cap on agricultural commodities export. However, experts opine that such moves have the potential to harm the sector.
Slightly over a year ago, MoTRI which is responsible for the follow up of the export sector introduced price caps on the aim to tackle unfair competition on access to commodities at the trading platform of the Ethiopian Commodities Exchange (ECX).
Following the introduction of the caps, the ministry in consideration of the international market has been providing weekly upper caps on the prices for major export commodities such as oil seeds and pulses trading.
Experts recall that price caps were rolled out because exporters we aggressively focused on the foreign currency that they were earning without really paying attention to the market.
“Exporters were giving their own prices left right and center against the international market to get the foreign currency which has affected the market expanding unethical practice on the export business,” experts said, adding, “They exported at lesser prices than they paid at the local market. Exporters major goal was securing hard currency for their import business.”
They said that such erratic practices had contributed to value loss and hoarding, “the export business has not been profitable because of exporters shipping their commodity at lesser price points than they paid at the trading floor, but the cap has been changing this narrative.”
“As a result the government has decided to control the market and has harmonized the prices with international price points,” they added.
They said that lifting the price cap would be disadvantageous to the country since the initial motive was to create harmony and a calm market in the sector.
However, Kassahun Gofe, State Minister of MoTRI, argued that the government introduced the price cap when hoarding was taking place at its peak.
“When exporters buy the commodity at high price points they hoard the commodity, thus the price cap was introduced to mitigate that. Now that the stock has balanced out we have seen it best to lift the cap,” Kassahun told Capital.
“Lifting the cap with the principle of free market will allow exporters to buy products at competitive price points, but if the cap was to continue the trading practice without the ECX will prosper leaving out the platform. So we decided to lift the price cap,” the State Minister who is export responsible for the sector explained.
“We lifted the cap to boost the export market,” he added.
Regarding the concern of mismatch of local market and hard currency sales of the commodities, he said that the country is a price taker and thus, “It will not relate with that.”
Some exporters that Capital interviewed estimate that even if the cap is lifted, the price will not see exaggerated rate as the past.
“This time higher price against the international market will not be given by exporters since they will not access the foreign currency as per the recently introduced directive of National Bank of Ethiopia,” experts opined citing their expectation.
“In the past, we gave exaggerated price points to buy oil seeds or pulses since we would take the foreign currency to import commodities and make a profit from it, but now the government takes 70 percent of the hard currency from export earnings and partner banks take 10 percent. So doing trade with 20 percent of the hard currency is not feasible, because of that exporters shall only target profits from export trade meaning they buy the product at reasonable price points at the trading platform or at contract farming deals,” exporters said.
The new product that has been produced this harvest season is getting into the market from Mid October. Experts said that the result of the new decision of MoTRI will be seen in the near future.
Experts say that despite the challenge in the northern part of Ethiopia, which is a major source of oilseeds particularly for the high quality sesame seeds, the harvest is expected to be higher. Similarly the harvest of pulses is expected to be very impressive for this season.
However experts stated that currently traders are highly engaged on the deal of contract farming to access to commodity as opposed to the trading floor of ECX.
MoTRI noted that exporters who access to commodity through contract farming scheme ought to pass through ECX for quality test and grading.
However experts argue that, “ECX is a trading platform and not an accessing platform.”
Experts pointed out that the contract farming scheme that is not following the proper system is said to indirectly dysfunction the trading platform.

The newly released International Monetary Fund (IMF) World Economic Outlook narrows down from its earlier forecast on the global economic growth. Despite the dip in projection, Ethiopia’s projection remains unchanged with projections showing higher growth estimation when compared to the global and regional forecasts.
The outlook was published on October 11, in line with the joint annual meeting of the IMF and the World Bank with the countries finance ministers and central bank leaders indicating that the economic growth has faced several challenges.
The forecast that was given in April has met revision and reduction, as per insights from the outlook. In a similar publication on April 2022, during the joint spring meeting, the IMF forecasted that the global economic growth will slow down to 3.6 percent in 2022 and 2023.
However, the latest estimation dropped the rate slightly for 2022 and more for 2023.
“Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023,” it reads, adding, “This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic and reflects significant slowdowns for the largest economies.”
It added that about a third of the world economy faces two consecutive quarters of negative growth. According to the outlook, global tightening in financing conditions could trigger widespread emerging market debt distress.
“Interest rates are expected to rise as central banks tighten policy, exerting pressure on emerging market and developing economies,” the outlook underlined.
The global economic growth is also estimated to be hurdled by challenges including the aftermath of COVID 19, inflation and conflict between Russia and Ukraine, which also imposes limitation for small economies.
“Scarring effects are expected to be much larger in emerging markets and developing economies than in advanced economies reflecting more limited policy support and generally slower vaccination with output expected to remain below the pre-pandemic trend throughout the forecast horizon,” the outlook added.
The report indicated that the economic growth for low income countries will be 4.5 percent and 5.3 percent for 2022 and 2023 respectively that has slight reduction similar to the global forecast. The April IMF forecast was 4.8 percent and 5.6 percent for low income countries economic growth.
However, according to the latest IMF document the low income countries economic growth forecast for 2022 reduced compared with April one whilst the Ethiopian estimation is similar from the preceding outlook.
IMF estimated that the Ethiopian economy will expand by 3.8 percent in 2022, which is one of the highest rates in similar economies. While the forecast for the coming year has been estimated to be 5.3 percent that was projected to stand 5.7 percent in April’s forecast.
For low income countries such as DR Congo is expected to attain highest economic growth with 6.1 percent and 6.7 percent for 2022 and 2023 respectively followed by Kenya of 5.3 percent for 2022 and 5.1 percent for 2023. Tanzania and Uganda are the other countries that are expected to register relatively better economic growths in 2022 and 2023.
The latest IMF estimation for DR Congo, Kenya, Tanzania and Uganda has seen reduction when compared with the April forecast for this year’s economic growth.
Sub-Saharan Africa: Living on the Edge
Sub-Saharan Africa’s economic activity is expected to slow significantly in 2022 and remain relatively modest in 2023. A downturn in advanced economies and emerging markets, tighter financial conditions, and volatile commodity prices, have undermined last year’s gains. Looking ahead, the outlook remains highly uncertain. Consequently, countries in the region are living on the edge, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Sub-Saharan Africa launched on Friday October 14.
“Late last year, sub-Saharan Africa appeared to be on a strong recovery path out of a long pandemic. Unfortunately, this progress has been abruptly interrupted by turmoil in global markets, placing further pressures on policymakers in the region,” stressed Abebe Aemro Selassie, Director of the IMF’s African Department.
The region is expected to grow by 3.6 percent in 2022, down from 4.7 percent in 2021, due to muted investment and the overall worsening of its balance of trade. Non-resource-intensive countries, which enjoy a more diverse economic structure, will continue to be among the region’s more dynamic and resilient economies, growing by 4.6 percent in 2022, compared to 3.3 percent in oil exporters and 3.1 percent in other resource-intensive countries.
Following worldwide trends, inflation has increased faster and more persistently than previously anticipated, reflecting mounting prices for essential food and energy items, which comprise about 50 percent of the region’s consumption basket. And while the recent pickup in inflation is less striking relative to historical averages for sub-Saharan Africa, the cost-of-living squeeze has pushed millions of people into acute food insecurity and could weigh on economic growth and undermine social and political stability.
The most recent turmoil is just the latest in a series of shocks over the past few years, all of which have taken a toll on the region’s policy space. Public debt has reached about 60 percent of GDP, leaving the region with debt levels last seen in the early 2000s. In this regard, the composition of debt has shifted towards higher-cost private sources, increasing debt service costs and rollover risks. In fact, 19 of the region’s 35 low-income countries are now in debt distress or at high risk of distress.