|
The trucks that had carried sand from Debre Zeit lined up without work
for days in the parking lots on Yima Dernisse Street
close to the Ethio-Djibouti Railway Station in
Kirkos District.
The place has been losing the hectic business atmosphere that used to
dominate it, due to a lack of demand from clients
who cannot keep up with the spiralling sand price.
On April 17, 2011, it increased from 5,300 Br per 16
cubic metre truckload to 7,000 Br after the price of
diesel increased to 17.73 Br per litre earlier last
month.
Sellers and truck drivers who used to compete for customers, rushing up
to any person looking to buy sand, were sitting with
their faces in their hands on the cloudy and windy
afternoon of Wednesday, April 27, 2011. Close to 500
trucks had been parked there for at least 10 days
due to the unprecedented lull in business.
Fisseha Gebre, 47, a married father of two who drives one of the trucks
transporting sand, mostly from Adama (Nazareth), has
been in the business for the past decade. However,
for the 10 days prior to Wednesday, he had not
travelled anywhere to transport sand. This is making
a dent in his income, which used to comprise a net
salary of close to 2,500 Br and per diem which could
be as high as 300 Br per day.
“I have been sitting idle for a while,” Fisseha told Fortune. “As a
result, I have reverted to my old habit of smoking
and chewing Khat to forget the realities of my job,
which I might lose because I am not doing any
business.”
Similar complaints were echoed by some of his colleagues whose words
were muffled due to mouths full of Khat.
One of these, Kassay Birru, a single father of seven in his late
sixties, owns a Nissan truck that had also been
standing idle on the parking lot since April 17.
The number of trucks that used to work everyday has been reduced from
at least 300 to only three, claimed.
Prior to the price increment and slump in business, Kassay earned a
minimum daily profit of 200 Br. Now he pays 60 Br
for parking during the day, but takes the truck
home, saving 40 Br he would otherwise be charged for
parking.
The price hike is attributed by traders to the price of diesel, which
has shown a significant increment since August 2006
when it increased from 2.27 Br per litre to 5.44 Br
per litre.
Aside from Debre Zeit, most of the sand transported to the capital is
from places such as Meti, Modjo, Alemtena, Mermersa,
Sodere, Adama, and Southern Regional State. The
price depends on the distance of the delivery site
from the source of the sand; the price for nearby
deliveries can be as low as 5,700 Br.
The price is also affected by the bargaining power of the brokers who
earn commission from buyers and sellers, most of the
sellers who spoke to Fortune agreed. The quality of
the sand also impacts on the price; sand containing
less mud is worth more, they said.
A crucial element in construction, the sand price increment has also
given rise to a hike in the prices of other
materials, such as cement, bricks, and metal
reinforcement bars.
The price increment that construction materials have seen over the past
few years has never before been observed by Biessa
Geleta, a contractor who has worked in the sector
for the past 19 years.
From left: Ajeb Teyeb, Omer Ali, Said
Hussein, and Kebede Zemerga, at Tekele Haimanot,
Tesema Aba Kamaw street heave with all their might
to bend reinforcement steel bars and load them onto
the back of a truck to be delivered to a
construction site.
Biessa typically constructs private four-room houses for between 12,000
Br and 14,000 Br.
However, the price increment in materials has left him with only 1,500
Br net profit, down from 3,000 Br, he claimed.
Biessa used to have no problem finding work, but since the increment on
construction materials he has been faced with
difficulties in obtaining contracts. This has made
business difficult and, to save costs, he has
employed his 17-year old son.
The increase in the prices of construction materials is attributed by
sand suppliers to an increased demand from
government projects for the construction of
condominium housing units and roads as well as big
construction work by private firms.
Following the increment, Biessa was ordered to halt construction of a
three-room house on a 150sqm plot by his latest
employer, even after receiving a down payment of
3,200 Br out of the total 7,500 Br. Construction is
to resume when prices come back down, which is
likely to occur eventually.
“When the price of sand increases, the demand decreases along with that
of cement, metal bars, and bricks falls because
sand,” is integral to construction work. said an
instructor who has taught construction management at
Addis Abeba University (AAU) for the past seven
years.
As a result, the demand will not decrease in the short-term, he
claimed. However, the price of construction
materials will eventually decrease because the
demand will decrease in the long-term, he explained.
However, the construction sector, which is growing annually by 12pc,
has been affected as the increment poses a dilemma
to those trying to complete construction work, such
as Fikru Tadesse, 56.
A father of three, he earns 2,800 Br before tax from his job as a civil
servant. Fikru recently purchased a 500sqm plot from
a farmer at a place called Taffo for 50,000 Br with
the aim of constructing a five-room house. He began
procuring construction materials four weeks ago and
started construction two weeks ago.
On Monday, April 25, he paid 7,000 Br for a truckload of sand, which he
claims was of low quality with more mud than usual,
while it cost 5,300 Br two weeks before.
Along with the sand, he bought bricks at 8.50 Br apiece, a one Birr
increase from two weeks before. Cement cost 500 Br
per quintal, while Mugher PPC had been sold at 410
Br per quintal prior to the sand price increment,
and 12mm metal bars cost 230 Br apiece, up from 210
Br.
In addition to paying skilled daily labourers up to 120 Br per day,
constructing the foundation cost him 10,000 Br per
day, Fikru claimed.
“While my house is not far beyond the foundation stage, I have already
spent more than my total budget, making it
impossible to finish my house,” he told Fortune.
Fikru, who had constructed a five-room house in Kotebe, claimed it cost
him 65,000 Br 11 years ago. He regrets starting the
construction in bricks as using mud and covering it
with cement would have significantly cut his
expenses, he claimed.
Unlike Fikru, who has been forced to stop construction, Yohannes Besahw
chose to significantly alter his building plans.
Yohannes, who returned to Ethiopia three years ago after working as a
taxi driver in the United States (US) for 10 years,
initially planned to construct a two-storey building
on a 200sqm plot he leased in Sululta Town, located
25km from Addis Abeba in Oromia Regional State.
He has since given up on the idea out of fear that the construction
would consume most of his savings. Yohannes plans to
construct a small structure instead, in order not to
lose the plot he must start developing within two
months of leasing it.
At the same time, Fikru plans to sell his old house to afford finishing
his dream house, which remains under construction. |
