The Ethiopian Industrial Inputs Development Enterprise (EIIDE) is struggling with a shortage of funds. They are also asking the government to fill their leadership position.
The enterprise changed its name and revamped its main goal about five years ago. Its mission is to support the manufacturing sector by supplying industrial inputs. Currently they are complaining about financial problems as a result of uncollected credits. They also have not received an expected settlement from the Ministry of Finance.
The public enterprise has also been running without a board of directors because the previous board of directors were dissolved.
Wondale Habtamu, the recently appointed CEO of EIIDE, said that his enterprise is working to collect uncollected credits.
The enterprise supports the industry sector so EIIDE has provided financing for suppliers in advance. This includes items like: textiles (partially completed), leather products and cotton. They have also sold rebar through a bank guaranteed bond. Now they are trying to retake the payment from three buyers.
Just from rebar, cotton and leather the enterprise is looking to collect 78 million birr, 182.5 million, and 30 million birr respectively. “In general we have 300.7 million birr uncollected from different suppliers and buyers,” Wondale told the standing committee of the House of People’s Representative.
He said that EIIDE has 104 million birr from Ayka Addis, the largest textile factory in the country. It is being controlled by the Development Bank of Ethiopia after its over one billion birr debt default by the investors from Turkey.
He said that when the enterprise was first established it was supposed to be paid 792 million birr by the Ministry of Finance in paid up capital but that has yet to happen.
“Furthermore, we spent 596 million birr to purchase sugar to stabilize the market. This should have been refunded by the ministry but they have not paid,” he added.
According to the CEO, in total the enterprise has unsettled payments of 1.7 billion birr. This affects the activity of EIIDE.
He said that from the uncollected sales 55.3 million birr was collected in the first five months of the budget year. “We are trying to collect the additional 300.7 million birr through legal negotiations,” he added.
According to the report he presented, the enterprise has handed some cases through civil courts and others through criminal courts.
The enterprise appeared at the standing committee of the Trade and Industry on Friday December 28 saying that they have been unable to access loans from bank because their solvency has not met standards. “Based on the current status we cannot get a loan because some of the registered assets exist in Eritrea which separated from Ethiopia in 1993.”
In the stated period EIIDE had a goal of making transactions worth 1.5 billion birr. In reality they have only made 394 million birr worth of transactions which is 25 percent of their target.
The enterprise earned 8.9 million birr in sales profits before tax but their goal was 24 million birr.
EIIDE replaced the former Merchandise Wholesale and Import Trade Enterprise (MEWIT), when it split into two.
MEWIT managed 86 branches at the time. Now EIIDE manages 37 branches throughout the country.
“We have been trying to repossess our properties which are currently being controlled by city administrations or regions but we have not been able to,” he said.
The enterprise, which was established in 2015 via the regulation no. 328/2014 is one of the biggest public enterprises. It has a huge amount of procurements from local and overseas markets.
In the past experts who closely follow the enterprises argued that in fact EIIDE was established to support industrialization by supplying industrial inputs. However, this did not work out as expected. Most of the materials went to project MEWIT oversaw. An example of this is rebar sales. The new CEO also stated that in the past the organization did have a strategic plan or a leader, “We are now engaged restructuring the organization and have developed a strategic plan,” he said.
Disagreement between the former management and employees was one of the challenges that the enterprise faced. In addition there were several misdemeanors the staff complained about. There was also a problem with leasing the head office. However, now they have their own office in Piazza which is in the heart of the city. Formerly it was the head office of MEWIT.
The current CEO disclosed that the problem between management and the staff has been solved. He also said that the head office has been relocated to Piazza, which is a more central location for employees than their former headquarters located south west of Addis Ababa in front of the Vatican Embassy. “We were able to save 14 million birr since we left the rented building,” the CEO said. Employees suspected that the former management leased another building in relationship to a network in order to benefit themselves. They said that the former head office was rented to others and then the organization rented another plot, which is not located in a suitable place for employees.
Late last budget year the former CEO Asfawossen Alene, who is the founding CEO and his deputy Abay Kebede left the country. Later on they sent a resignation letter.
In his report Wondale also mentioned the situation about the former heads. He said that in relation to the rebar credit sales there is suspicion about the top leaders and the former head of the warehouse, which his where about for the last several months is unknown, involvement that police is investigating.
He asked support from the standing committee and the parliament to accelerate the investigation in order to settle the case as fast as possible. There is a suspicion about the existence of one rebar buyer and the bank bond. They are unable to determine if it is phony or not. Three buyers have been involved in rebar credit sales.
Early this budget year Melaku Alebel, who served as the Minister of Trade, replaced the former board chairman, Mebrahtu Melese (PhD). Now, however, there is not a board chairperson to follow the enterprise. This was recently discussed by a standing committee chaired by Getachew Melese. Getachew said that the committee will work with the Ministry of Trade and Industry to obtain a board of directors.
Wondale further told Capital that the absence of board has affected the enterprise’s activity. “We have several decisions that needs a green light from of the board,” he added.
Other board members, Ahmed Tussa, former state minister of Finance that is now transferred to Oromia region and Wondu Legesse, former head of Leather Industries Development Institute, left the board membership.
“I have written a letter regarding the issue to the Minister of Trade and Industry, and it has informed us that the enterprise will get new board chair in the near future,” he concluded.
Industrial Inputs Enterprise short of fund
Factories killing Awash River
The discharge of chemical waste from factories along the outskirts of Addis, Modjo, and Adama are increasing the Total Dissolved Solid (TDS) amount of the Awash River which is killing aquatic animal life and harming irrigation systems along the river.
A recent study conducted by the Environment, Forest & Climate Change Commission, Ethiopia –(EFCCC) indicated that factories in Addis, Adama and Modjo are the major pollutants of the river by discharging untreated chemicals and sewerage.
TDS is a measure of the dissolved combined content of all inorganic and organic substances present in a liquid in molecular, ionized or micro-granular suspended form.
According to the study there is a high amount of TDS around Beseka Lake which is a source of water for the Awash River. The area around Awash Fountain, Modjo River and Adaitu are the places that are discharging a high amount of acid and salt into the river.
Because of the pollution, some farmers in Afar are shifting their irrigation lands to escape the high amount of salty water from the river and some fish in the river are in danger because of the high amount of solid pollution in the Awash River.
Hundaol Gemechu, water pollution expert at EFCCC told Capital that the factories have been warned to stop putting chemicals into the water but those warnings are often ignored.
“A constant level of minerals in the water is necessary for aquatic life. Changes in the amounts of dissolved solids can be harmful because the density of total dissolved solids determines the flow of water in and out of an organism’s cells. Many of these dissolved solids contain chemicals, such as nitrogen, phosphorous, and sulfur, which are the building blocks of molecules for life.”
“Concentration of total dissolved solids that are too high or too low may limit the growth and may lead to the death of many aquatic organisms. High concentrations of total dissolved solids may reduce water clarity, which contributes to a decrease in photosynthesis and lead to an increase in water temperature. Many aquatic organisms cannot survive in high temperatures. Discharge of pollutants into rivers or any aquatic environment can change aquatic species diversity, abundance and ecosystems, due to their toxicity and accumulative behavior”.
He added that over the last decade huge scale usage of chemicals in various human activities has grown very rapidly. The industrial and domestic effluents are released directly or indirectly into the large water bodies.
Awash River in eastern Ethiopia, rises on a steep northern escarpment of the Eastern (Great) Rift Valley and is fed by Lakes Shala, Abiyata, Langano, and Ziway. Cotton is grown in the fertile Awash River valley, and dams (notably the Koka Dam, 1960) supply hydroelectric power. Herds of antelope and gazelle live in the Awash National Park. The river ends in a chain of salt lakes in the Denakil Plain, after a northeasterly course of about 750 miles (about 1,200 km).
New building planned at confiscated Piazza Midroc site
New discussions are underway at the Addis Ababa City Administration to resolve the issue of a confiscated G+4 project partially constructed by MIDROC.
The city has decided to compensate MIDROC, which invested millions of birr in the building but stopped construction after it had built some ground pillars and floors.
“When we compensate MIDOC we will consider the money they have spent while at the same time taking into account the wasted years of unsuccessful construction, if MIDROC had completed the building on time they would have earned money,” a source close to the issue said.
According to the source a new G+4 building will be constructed.
Capital asked the source about the timing of construction, how the building would be used and when it would be finished.
For the past two weeks the city has been partially using the land at Piassa as a bus terminal for Midi Buses traveling to Bole, Mexico, Saris and Sar Bet. When building construction begins the terminal will be relocated.
“Discussions are still ongoing when we reach agreement about the cost of the building we will use it as a government or business center,” the source said.
Some 20 years ago MIDROC received three hectares of land from the city to build a G+4 building. They partially did so but then changed the design and did not finish it.
Recently the Addis Ababa’s new Deputy Mayor, Takele Uma ordered the City Land Management Bureau to confiscate 11 fenced plots of land owned by MIDROC and put them into the land bank. Limited construction had been ongoing on those plots over the past two decades.
The city had been criticized for allowing MIDROC to hold on to idle land for such a long time, and since they failed to start construction the government took the land and plans to re-sell it via tender.
The fenced land in Mexico Square was planned for a business building. Another plot next to the Sheraton Addis Hotel was taken away from MIDROC even though they had paid 87 million birr to relocate people who lived on that land. The company says they plan to appeal. In total MIDROC lost 250,413 square meters of land.
ECX begins soybean trading
The decade old Ethiopian Commodity Exchange (ECX) has added soybeans as an additional exclusive trading crop on its electronic floor.
Sources close to the case told Capital that since Friday December 28, 2018 the product has been transported to the ECX warehouse, while as of December 31 the trading of soybeans outside of ECX has been officially stopped by the government.
Sources at ECX told Capital that the product, which is considered an industrial crop was expected to be traded at the ECX floor on Thursday, although that did not occur.
A statement that ECX sent to Capital on Friday January 4 indicated that so far 1,042 quintals of soybeans are being stored at the ECX warehouse.
In its over ten year history ECX has introduced the exclusive electronic trading of coffee, the historical major export earning item, followed by sesame, the second largest hard currency source for the country, and then white pea bean.
The stated three products are exclusively traded at ECX, while soybeans would be the fourth product even though mung bean was expected to become the fourth product sold at the trading facility.
The production of soybean has dramatically increased in the past couple of years. Different surveys indicated that the area covered by the oil bean has increased. Production has risen as well.
A 2014 study undertaken by Mekonnen Hailu and Kaleb Kelemu of the Ethiopian Institute of Agricultural Research found that the total hectare of land under soybean production during the last 10 years (2004-2014) has increased by 10 fold; while the total volume of production during the same period increased by 21 fold.
Experts in the sector told Capital that the production for the current harvest is expected to be high since several areas in the western part of the country have been covered by soybeans. “I have information that in the past rainy season several areas in Welega, Benshangul Gumuz, west Amhara including Metema, which is new to soybean production have been covered by the bean which would expand the production during the current harvest season which commonly begins in October,” an exporter who requested anonymity said.
He supported ECX’s decision to begin trading soybeans. “It would harmonize the price which is different than what we have observed previously,” the exporter who is also a consultant in the oilseeds and pulses sector explained. “During one period last year a quintal of soybeans were 900 birr but the price dramatically increased to 1,700 birr within a month when the number of buyers increased suddenly. The price will stabilize when ECX begins trading as they give a limited percentage up or down floor prices.”
Reports indicated that within seven months in the past budget year the country has exported close to 60,000 metric tons of soybean worth over USD 26 million. Currently the country’s soybean product is estimated to be up to 100,000 tons per annum
India, Vietnam, China, Canada and Pakistan were the major destinations for the crop during the past export season. Experts at the export sector explained that clients of Ethiopian soybeans particularly in India really like the Ethiopian product due to its multiple varieties and non using GMO as opposed to West African countries. “Buyers in India give from ten to 20 USD more prices per ton for Ethiopian soybeans than other west or southern Africa products even though Ethiopia’s product is very limited,” exporters told Capital.
The demand of and production of the bean has increased frequently because it is an industrial product. The trend in Africa has increased in Africa over the past three decades. South Africa is the largest producer of soybean on the continent and followed by Nigeria, Zambia, Zimbabwe and Uganda, while Brazil and US are the leading soybean growers globally.
A year ago Ministry of Trade ordered ECX to undertake the exclusive trading of red kidney bean and mung bean, however it postponed this for an unspecified period because exporters claimed that they need more time for preparation. Recently the ministry sent a letter to ECX to introduce the exclusive trading for mung bean, which is optionally traded on the floor during the last five years, as soon as possible.
The Ministry of Trade and Industry has also approved the optional trading of chickpeas at the trading floor.
In a related development in December the trading floor managed the trading of 78,008 metric tons of items worth 3.8 billion birr. During the stated period 39,240 tons of sesame seeds, 27,773 tons of coffee, and close to 11 thousand tons of white pea beans were traded at ECX. From the total transaction of 3.8 billion birr 40 percent went to coffee trading, while the volume of sesame seeds took the largest share at 51 percent.
The statement that ECX sent indicated that the rate of coffee trading has increased by 36 percent compared with November’s performance. The volume in December, which is considered as one of the peak months on trading because it is the harvest period, has also increased by 29 percent.
The trading of sesame seeds, which has shown a dramatic price increase over the past few months, has improved by 27 and 22 percentages in value and volume respectively. The trading value of white pea beans has increased by half compared with the November performance. The relevant government body claimed that the trading of white pea bean out of ECX or primary markets is occurring. In the past month the Ministry of Trade and Industry (MoTI) has been warning trading actors, mainly exporters that it will take action against those engaged in the trading the bean out of ECX.
The trading volume of white pea beans has also increased significantly compared with the preceding month. The ECX monthly report indicated that the volume has increased by 36 percent.
MoTI has been also warned sesame seeds exporters to stop the under invoice practice on their export. It has been announced that some of the exporters are exported the seeds under the price that they bought from ECX, which affects the country and themselves.
