Uncomfortable with competition in the market place, Messebo blows cement on everyone’s face By Keffyalew Gebremedhin

March 2nd, 2012 Print Print Email Email

Ethiopia now has 15 cement factories and seems more open to competition in that area, as we saw what happened between Messebo and Sheik Al Amoudi’s Derba. For now, Messebo has been compelled to respect its contract with South Sudan to deliver 2,000 quintals of cement, at a time when prices have gone down almost by half. It pinches the long-planned bottom-line.

However, what surprised me most now is that Messebo is grumbling, according to Addis Fortune, perhaps because it could not take the heat of competition from other producers of cement. The good thing for Ethiopian is that the price of cement has come down for ordinary builders.

EFFORT should take time to admonish its cement arm to recall that in the early days they had prospered controlling the fertilizer market. Many peasant farmers were held at gunpoint and threats of ruling party cadres to accept fertilizers, and pay the price demanded whether the chemicals worked or not. Anyone who cannot trust my words, consult the observation the UNDP country office wrote at the time to its headquarters!

Since fertilizers were just imported with a business interest, many peasants lost their crops using chemicals inappropriate to their soils and in a country with 17 different ecological variations. Incidentally, this problem persists, if any one listens to agricultural experts and peasants from as close distance to the capital city, see, round Addis Abeba or Working Together towards Self-sufficiency or outcome of last summer’s proceedings of Ethiopian agricultural experts seminar. Bear in mind also that, when EFFORT was in the fertilizer business, it managed to force closure of a few private importers! One of the businesspersons left the country and exiled himself to the United States. I do not know whether it is that same problem that has now shifted from fertilizers to the cement producers, hopefully not.

From the message Messebo threw in all directions, one gets the impression that it feels stabbed from the back by Debra Cement management, which is owned by Sheik Al Amoudi—the man —the man whose control of Ethiopia’s economy has jumped by several notches up with his possible acquisition of the few remaining state companies from the Ethiopian Privatization and Public Enterprises Supervisory Agency. I assume this present duel is only about cement prices, not about who controls what in the Ethiopian economy!

At this point, Messebo must understand that the Ethiopian people would only care about whoever gives them their hard-earned monies worth. Clearly, Messebo has suffered setbacks with the price it has now shipped the cement to South Sudan. If that is the stone in its shoes, I would remind EFFORT leaders of their own words about their boastful claim of bringing about discipline into the Ethiopian business environment, when they spoke to Dr. Sara Vaughan in December 2010 when she was preparing Rethinking business and politics in Ethiopia: The role of EFFORT, the Endowment Fund for the Rehabilitation of Tigray (August 2011).

In December 2010, when Sara Vaughan, Affiliate of the Africa Power and Politics Program (APPP), a creation of the UK’s Department for International Development (DFID) and IrishConcern, spoke to Ato Abadi Zemo and Ato Getaneh Kassa of EFFORT in connection with the above-mentioned report, they repeatedly gave EFFORT flying colors and to its role in the Ethiopian economy as a genuinely competitive concern with both the private sector and state enterprises. All other businesses were dismissed as irrelevant and, at its worst, impediments to development. she interviewed

In fact, these two officials are quoted attributing the prevalent corruption in the country today to others outside EFFORT, while presenting themselves as the guys with integrity. The report recalls EFFORT’s relations with other Ethiopians, where it states:

… [T]hroughout the 1990s the EPRDF had an ambivalent relationship with the Ethiopian urban middle classes and entrepreneurialism more broadly, explicitly prioritising its commitment to the rural majority. Whilst ruling party ideology and policy changed in 2002, it remains the case that the private sector is not always seen as the natural ally of ‘revolutionary democracy’, at least under current circumstances. There is an irony here. Ruling party interlocutors insist the private sector is key to the ‘transition to capitalism’ which they seek to achieve, and that entrepreneurs rather than politicians should lead the process, firstly because (being rich) they are less likely to be corrupted than politicians, and secondly because they have a literal investment in the success of the transformation. Meanwhile, however, politicians are clearly in the driving seat and the transition is still very much in the future. The institutionalisation of trusting co-operation between Ethiopian entrepreneurs and the ‘developmental state’ in pursuit of commonly conceived goals remains very much a work in progress. Rhetoric that characterises many business people as ‘rent seeking’ rather than ‘value creating’ is symptomatic of this.
Of course, I have felt uncomfortable with the integrity of the report itself since the authors have bent backwards to accommodate Ato Abadi Zemo and Ato Getaneh Kassa’s interests, who constantly requested revisions on the various drafts leading to the final report. In the end, the EFFORT was literally given a veto over its final version.

From some sentences, one can sense the veiled frustration of possibly Sara Vaughan, who wrote it singlehandedly. At one point, she states: “there is much stress in the official rhetoric associated with EFFORT on the importance of the fund and the companies it owns playing an ‘exemplary’ role in terms of business probity and payment of taxes, specifically in order to influence the behaviour of other business actors (interviews).”

I must admit, of everything that is being said by the Ethiopian society about EFFORT, the report captures at least one strand: “… it seems likely that EFFORT companies experience many aspects of the day-to-day micro-sociology of dealing with Kafkaesque regulation as easier to negotiate than most.”

See the article by Addis Fortune entitled Messebo Exports 2,000ql of Cement to South Sudan

http://transformingethiopia.wordpress.com/

  1. Idris
    | #1

    It is a some what a good article, but, it would also be better if we discuss about how we can get the government out of the market! The TPLF lead Ethiopian government is stifling the political and economic space of Ethiopia.

  2. alli
    | #2

    TPLF politbureau members are getting greedier as they grow supper rich by looting Ethiopian resources. Their appetite for greed is just insatiable. where is this all going to end?

  3. Dawi
    | #3

    I didn’t read the report but from the author’s description it goes to show how EFFORT is being used to a good cause of a catalyst in strengthening the Developmental State.

    Ethiopia being self sufficient in Cement for now, South Sudan and other States around the neighborhood are places to export. $11 dollars a sack is the world price and unlike other items Cement in Ethiopia is being ruled today by world supply and demand. Hoarding and playing games with cement is a thing of the past.

    Keffyalew is again one of the few with out of the box contributions to our understandings of what it going on out there.

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