|
The recent sugar scarcity in Addis
Abeba has turned the mood of the city’s residents
sour. For the past three weeks people have had to
walk or drive significant distances to locate stores
that have sugar in stock.
Shops of Ethiopian Fruits &
Vegetables Market Enterprise (EtFruit),
cooperatives, and wholesalers have at one time or
another run out of stock. Frustrated customers
cannot get information as to why the sugar they use
for household consumption or their business is hard
to get in the city.
One such person is Tegestu Taso, who
was selling hot tea and snacks, such as sambusas,
hardboiled eggs, and bread, on the roadside of
Mickey Leyland Street on the cold night of November
9, 2011.
The street becomes more active at
night compared to the day, having small bar and
liquor groceries that are decorated with Christmas
lights all year round and open for business with
their music blaring.
Tegestu’s customers are drivers of
Lada Taxis and street vendors who wait on the
customers of the bars. The six month-old business
belongs to Tegestu’s brother who is currently away
on a religious pilgrimage.
Tegestu, who works at a medium-size
retail kiosk under normal circumstances, does not
like overseeing his brother’s business. He says he
makes a 40 Br net profit on a good night by selling
snacks for one Birr and fifty cents and tea for one
Birr.
Many things annoy him about this
business, like staying up all night without sleep
and drunken customers who refuse to pay. However,
what caused him the most annoyance was when he did
not sell anything on Monday, November 5, 2011,
because he could not find sugar.
“I used to bring some sugar from the
retail store I worked at when the scarcity around
this area started around three weeks ago, but, on
Monday, I could not get it anywhere,” he told
Fortune.
His customers do not buy snacks
unless they are accompanied by a hot drink, when it
is cold at night, Tegestu says.
“I went home empty handed,” he says.
Although he works at a retail shop,
Tegestu does not have a clue about why there is
scarcity these days.
“The cooperative shops used to have
a supply, but not anymore. I do not know where the
problem comes from.” he says.
In hopes of curbing the rising
prices, the Ethiopian government decided to
subsidise and handle the import, supply, and
distribution of the country’s sugar supply through
its institutions, starting on July 8, 2011.
The supply of sugar to the country
is handled through the Sugar Corporation, which gets
local sugar from Wonji, Metahra, and Fincha sugar
factories with annual capacities to produce
75,000tn, 136,692tn, and 110,000tn, respectively.
Tegestu, who thinks that there is
enough supply in the country, does not like the fact
that most of the sugar distributed in Addis is
imported.
“I see a notice that says ‘Made in
Brazil’ on the packages of the sugar that comes to
the store,” Tegestu says. He favours the local sugar
because he says that a small spoonful sweetens a
whole cup, while it takes a larger amount for
imported sugar to do the same.
Despite Tegestu’s beliefs, the local
sugar supply is not enough for the country’s demand.
The corporation imported 134,000tn of sugar in the
2010/11 fiscal year, mainly from Brazil and India as
well as Singapore and Thailand.
When it comes to distribution, the
system is slightly different in Addis Abeba than in
other regions of the country.
The Addis Abeba Trade and Industry
Bureau facilitates for cooperative associations,
unions comprised of cooperative associations, and
certain selected wholesalers, to buy sugar directly
from the corporation for 1264.40 Br a quintal and to
sell it to retailers at 1,320 Br a quintal. The
quota for retailers is three quintals a week from
cooperatives, and cooperatives usually get a supply
of 50ql a week, although there are no time
restrictions.
The government imports the sugar at
1,761 Br a quintal, subsidising almost 560 Br a
quintal, according to an official from the marketing
directorate, who wished to remain anonymous.
In the 10 districts of Addis, there
are 108 cooperatives, including 10 unions. There are
also 60 wholesalers, selected by wereda forums, that
get their supply from the Sugar Corporation,
according to the Addis Abeba Trade and Industry
Bureau.
In order to buy sugar from the
corporation, a wholesaler or union must get a letter
from their districts’ trade office, stating that
they distributed their previous supply fairly. They
will take this letter to the Addis Abeba Trade and
Industry Bureau. The bureau will approve and fax the
letter to the corporation, after which they can get
their supply.
If processed properly, it will only
take two days for cooperatives, unions, or
wholesalers to get sugar from the corporation’s
warehouse in Kality, Addis Abeba, according to an
official from the city’s trade and industry bureau.
For registered value-added tax
(VAT)-paying and non-paying businesses, the
corporation supplies sugar through five EtFruit
service stations, from which they can get their
supplies.
In the other regions of Ethiopia,
Merchandise Wholesale and Import Trade (MEWIT)
Enterprise, transports sugar directly from Wonji,
Metahra, and Fincha factories and distributes it to
its 27 branches countrywide. Cooperatives and
wholesalers approved by regional trade bureaus can
then come to get their supplies.
Somewhere in this supply chain,
there may have been a glitch that caused the
scarcity. However, stakeholders’ opinions vary, as
to why.
Kedir Menda, who owned a retail shop
in Wereda 3, Bole District, ran out of his sugar
stock a week ago and has not been able to get a new
supply, by the time Fortune talked to him on
Tuesday, November 8, 2011.
“When I go to the cooperative shop
in this wereda they say supplies are unavailable.”
Kedir claims.
“Previously, even though sugar was
expensive, it was, at least, in abundant supply.
Now, there is a problem with the supply,” Kedir
alleges.
The business is not profitable, says
Kedir, who is required by the government to sell
sugar at 14.50 Br for a kilogramme.
“We sell sugar as an accompaniment,
so that customers will buy other commodities, but
the sale of sugar itself is not profitable,” he
says.
The problem is not supply from the
Sugar Corporation but distribution, the Addis Abeba
Trade and Industry Bureau says, from its position
higher up in the supply chain.
The problem is twofold, according to
Gemechis Melaku, trade activities control and
supervision sub-process owner, at the bureau. The
first is that MEWIT did not supply sugar to regional
localities on time, putting pressure on Addis
Abeba’s supply.
Retailers who know that sugar costs
17 Br a kilogramme on the black market in Sululta or
Debrezeit where they are also guaranteed demand,
would rather sell it there, than at the set tariff
price here in Addis Abeba, he says.
“Another problem is lax supervision
on our part,” Gemechis admits, “because the sugar
distribution process was going smoothly after we
started it, we were giving more attention to issuing
trade licences for the supply of wheat to wereda
cooperatives.
As a result, retailers are just
keeping a quintal of what they buy in their shops,
while selling the rest for a higher price on the
black market, Gemechis thinks.
“The Sugar Corporation has supplied
enough sugar, and I do not think there is a lack of
supply with the cooperatives or wholesalers,”
Gemechis argues, “because the people that oversee
the cooperatives do it for free, after being elected
by the residents of a wereda, there would be little
chance of corruption,” he says.
However, cooperatives in Wereda 3,
Bole District, and Wereda 2, Kirkos District, did
not have any sugar supplies during the week of
October 31st through November 6th, 2011, according
to sales people from the cooperatives and retailers
of those areas.
Several EtFruit shipping container
shops around the city, like the one near the stadium
terminal, have been supplying sugar at retail prices
to the public, in the last few weeks, but they have
also put up signs saying that they no longer have
sugar or oil in stock, two weeks ago.
This indicates that the supply and
distribution problem is not only with the retailers
but may have existed higher up the supply chain.
MEWIT, which has been accused of not
delivering on time to the regional branches, has a
period of 45 days to deliver the sugar, and most of
the delivery has been completed, with the rest to be
done in the next 15 days, according to Alemayehu
Tsegaye, manager of Public Relations Services at the
company.
MEWIT, which has gotten sugar from
the corporation every 45 days beginning July 8,
2011, has procured 337,600ql from the sugar
corporation for the third round of purchasing, which
it is supposed to get from the three local factories
to distribute to its branches. As of Monday,
November 7, 2011, 240,374ql have already been
distributed to regional branches, according to
Alemayehu. What remains will be distributed by
November 15, he says.
However, the suggestion that there
was a supply shortage in between deliveries, may be
true, as it took 10 days for supplies to reach their
branch, says a MEWIT official from the Shashemene
office.
The Sugar Corporation, which has
been trying to get to the bottom of the scarcity
problem, has done investigations on the matter,
according the official from the corporation’s
marketing directorate.
“There is no supply problem. The
amount of sugar circulated in Addis Abeba in the
fourth round from October 12 to November 10, 2011,
is 101,000ql, a 48pc increase from the first round’s
supply in July,” the marketing directorate official
informed Fortune.
The Sugar Corporation is conducting
expansion projects at the factories in Wonji, Fincha,
and Metahra, that cost five billion Br each. In
addition, nine new factories are being built, out of
which six are in the Southern Regional State of
Ethiopia, one around Wolkaite, Tigray Regional
State, and one in the Amhara Regional State. The
corporation has made deals with Ethiopian Metal
Engineering Corporation, to build these factories
for 3.8 billion Br each, not including their
corresponding farms. The Amhara Regional State
factories will be finished first, in 2012.
MEWIT’s “inefficient” distribution
among the regional states and its own lax
supervision may have contributed to the problem, the
Addis Abeba Trade and Industry Bureau claimed, in an
investigative meeting conducted on November 3, 2011,
where officials from the Addis Abeba Trade and
Industry Bureau, Sugar Corporation, and Ministry of
Trade (MoT), were present.
On the afternoon of the meeting,
officials from MEWIT were also in attendance. Aside
from delays in Zeway, Woliso, and Shashemene, there
were no distribution problems on MEWIT’s part, and
the Addis Abeba Trade and Industry Bureau should
look to itself to answer the scarcity problem in the
capital, officials from the company said, according
to the marketing directorate official at the Sugar
Corporation.
"The loading capacity of the
factories per day is limited, so we had sent MEWIT a
list of the number of trucks they could send in a
day to one factory, so that trucks will not be
idle,” the marketing directorate official tells
Fortune.
MEWIT mentioned at the meeting that
the imported sugar is wet, adding to the weight of
the sugar, which later evaporates when being
transported, reducing the amount given to branches.
Sometimes branches refuse to accept the sugar supply
because of significant reduction in the weight of
the sugar.
However, the official from the
market directorate dismisses the comments because
the packaging is sealed and does not allow water to
penetrate, though sometimes there was a reduction of
20kg to 30kg, he says.
“We asked the Addis Abeba Trade and
Industry Bureau to look into itself in terms of
regulation and advised MEWIT to start new rounds of
supply every 30 days, so that they will have 15 days
of stock in reserve,” the marketing directorate
official as the corporation informed Fortune.
“We also organised a committee with
representatives from MEWIT, the Addis Ababa Trade
and Industry Bureau, the Sugar Corporation, and the
MoT to supervise and check, the situation,” the
official said.
“We found that sugar is sold for 30
Br by the kilogramme on the Kenyan border, so we are
investigating whether our sugar is going out of the
country, because what we supplied initially is
certainly enough,” the official concluded.
People like Tegestu and other
consumers in the country, will have to wait until
the investigation is over, the blame game settles,
and these institutions get to the bottom of the
problem, to have their questions answered. |
