Ethiopia’s government does not have wheat in stock needed to distribute to over 60 wheat flour companies throughout the country.
Under normal conditions 645,000 quintals of wheat are distributed to the nations’ flour companies. However, according to information that Capital obtained from the Ethiopian Grain Trade Enterprise (EGTE) there are less than 35,000 quintals of wheat for July distribution slated to go to trade bureaus, universities, prison administrations and selected three flour companies.
Over 1,400 bakeries in Addis who were getting subsidized flour previously will be directly affected. They will be forced to purchase flour on the open market.
Only 60 bakeries in Addis will get subsidized flour this month. Others will likely increase bread prices in line with higher wheat prices.
Wheat has gone up from 1,000 birr to 1,500 birr per quintal in the last six months. Wheat procurement delays are partly behind the wheat scarcity.
Bekele Solomon, Basic Consumer Distribution Head at the Addis Ababa Trade Bureau told Capital that the bakery has the right to sell their products at higher prices if they cannot get the subsidized wheat from government.
“We can’t force the bakeries to sell at our price if they don’t get subsidized wheat they deserve to be able to compete fairly.’’
EGTE said the problem will not be solved till the wheat gets to the government’s stock.
Currently 350,000 metric tons of wheat is being shipped and 1.1 million metric tons is in the procurement process.
The Ethiopia Trading Business Corporation (ETBC) is responsible for distributing wheat. They have imported it to stabilize the market and supply it for institutions like higher education facilities. In the past two months the government has prioritized importing fertilizer to distribute it to farmers for the rainy season. This has led to demurrage hikes for wheat transported from the Port of Djibouti and delays getting it to the local market.
Consumers to fork over more dough for bread
Upstart, local sugar company in privatization push
The recently formed local firm, Ethio Sugar Manufacturing Share Company, is shortlisted as the only local company in the privatization process for the established Wonji and Metehara Sugar Factories.
Following an April Request for Information (RFI) several international companies, expressed an interest in privatizing Ethiopia’s sugar factories. However, only one local company Ethio Sugar, is adopting a community inclusive business model.
Companies from Kenya, Mauritius, UAE, Morocco, South Africa, Algeria and elsewhere expressed interest and presented business models.
According to sources, long established and operational factories like Wonji, Metehara, Fincha and Tendaho attracted the most interest. “However we are the only local company shortlisted based on the RFI,” Eshetu Geletu, Board Member and Corporate Communication Senior Advisor, told Capital.
He said that the business model targets to empower the local community and was explained to government officials at the Ministry of Finance, Sugar Corporation and Office of the Prime Minister, who facilitated a forum for company founders to get strategy details.
“We want to underline that the government should consider Ethiopians as opposed to only prioritizing hard currency. At the same time our move indicates that we will obtain foreign currency from resources like the Diaspora to secure the sugar factories,” he said.
Based on the company’s strategy they have agreed with local communities in five woredas near the sugar factories to buy shares via a loan scheme from private banks.
There are 40,000 shareholders and local community members including 10,000 sugarcane farmers 20,000 employees and 10,000 civil servants that have agreed to buy at least the minimum share, which is 20,000 birr, at the share company and their investment will be covered by a long term loan scheme of banks, according to Eshetu.
He said that three local banks, Awash, Nib and Oromia Cooperative have already agreed to cover the loans. “Cooperative Bank of Oromia, for instance has already agreed to provide loans for sugarcane farmers without any condition.”
“In the near future settling the loan process will be finalized since the privatization process is nearing,” he added.
An additional 20 shareholders from the general public including the Diaspora will also buy shares in the share company. According to Eshetu, Ethio Sugar plans to own 30 percent of the factories, and based on their target HVA Holland, a company established in 1879 with a wide range of experience in agricultural and agro-industrial development, constructed the Wonji Sugar Factory in 1951 and expanded to Metehara and now has agreed to reinvest in the factories. They are expected to take 39 percent with partners. Eshetu indicated that since the factories have debt the government will take a 21 percent share and the balance will be owned by i stakeholders like exporters or other strategic partners who use the sweet as input for their production.
The local company has targeted to amass up to four billion birr from shareholders, while other bodies like HVA will come up with the balance of finance. The valuation work on the sugar companies including the newest factories is nearing completion. On Friday the government indicated that from five to 6 sugar factories would be privatized in the coming six months to a year.
“The government has to consider the local power and give affirmative action to local investors in the privatization process. In addition, we are formed by well experienced sugar industry leaders, who operated or have several decades of sweet experience,” he said. “In relation to share mobilization we are on a promising path to get the money we need,” he added.
The share company has floated expression of interest for those experienced in sugar technology since privatization is getting closer to reality.
On Friday, Eyob Tekalegn, State Minister of Finance, indicated that several local and international companies have responded to the RFI. He said that sugar factory proclamation will govern the production, sale, import and export of sugar.
In a related development Minister Eyob said two international telecom providers will be part of the Ethiopian market via a bid selection, and that 49 percent of ethio telecom will be privatized.
Libyan Embassy plot grabs 10 times the asking price
A foreclosed site of what was supposed to be the Libyan Embassy, has fetched quite a sum.
According to the auction notice issued by the Federal Court Judgment Execution Directorate the floor price for the bid stood at 19.05 million birr for a 4920 sqm plot. However, in the open auction last week, a potential buyer offered 205 million birr, according to sources who attended the process.
NKH Construction PLC said their client could not settle the payment for the project and sued at the Federal High Court to get its sum.
In the January 31, 2019 verdict the court ordered the embassy property at Nifas Silk Lafto Sub City around Bisrate Gabriel to be foreclosed to compensate the construction company.
Libya is well known for wealth primarily from oil but has been unstable since the removal of Muammar Gadaffi during the 2011 Arab spring. Currently the embassy, which is controlled by the internationally recognized administration based in the capital Tripoli, is located at the heart of the city around the National Bank of Ethiopia.
Ethiopia, which is the diplomatic capital of Africa, has provided plots in Addis Ababa for African countries for free to erect their embassies instead of having them lease private and public facilities.
Some of the countries have realized the project, while some of them are still under construction or in the process. Besides the plots the city administration has given street names to AU member countries.
Ethiopia up to the challenge, PM says
Prime Minister Abiy Ahmed presented his report to parliament last week. He talked about reform measures taken as well as security, intelligence, diplomacy and the economy.
Internal displacement, polarized ethnic conflicts, mob justice, religious conflict, contraband trade, and economic sabotage were discussed in his speech. He then addressed questions raised by lawmakers.
He said the economy should grow by 9.2 percent, which is an increase over the 7.7 percent of the previous year.
He said that the last three years of unrest had damaged the economy but that on average it still grew by 8.6 percent.
Even though this year one million jobs were created there are over 10 million unemployed and 2 million join the workforce every year. 
The government plans to change the scenario by engaging more private companies. Currently the private sector creates 20 percent of Ethiopia’s jobs.
For the next fiscal year, the government intensively plans to create three million new jobs.
Endeavors like the Eagle Hill Leghar projects, parking lots which have 60 a meter underground tunnel connected to the grand palace, heritage projects. The Adwa Museum planned adjacent to Minilik Square at the cost of 4.6 million birr, the land mark city library which is believed to accommodate 20 thousand people will be built in front of the Parliament building at a cost of 1.1 billion birr will all create new jobs the PM said.
His government is also doing its best to find jobs abroad for professional and semi-skilled personnel.
Revenue collection must also be improved he said. For the last 11 months, the government collected only 178.8 billion birr but hopes to collect 189 billion birr.
The Prime Minister also talked about inflation which skyrocketed to 16.2 percent in May. He said the government is investigating by establishing a committee chaired by the deputy, planning and development commission, and members from different ministries.
The privatization process is being conducted in three stages by establishing supervisory bodies and valuing assets. In this regards Ethio-telecom, Sugar factories are placed in the first line while power generation plants, railways and logistics are planned in the second phase.
Ethiopian Airlines and Industrial parks will be in the final stages.
“Although there are a lot of challenges that the country has encountered, we will transcend it,” the Prime Minister said confidently.
