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Month: July 2020

BUCKING THE TREND

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The performance of goods exports bucked the trend of Ethiopia’s macroeconomic situation in the past fiscal year, rising to a little over three billion dollars after increasing by 13.6pc. Considering the context of the past 10-year period, it still fell short of the 3.3 billion dollars that was earned in 2013/14. However, given the challenges of the Novel Coronavirus (COVID-19) pandemic, it has been a cause for optimism.

Attributable to this performance was the combination of amendments as well as coincidence, especially in the recently tottering mining sector. Helped by COVID-19 inspired border closures that had the unintended consequence of reducing illegal cross-border trade, the industry fetched over 200 million dollars, a four-fold growth compared to the preceding year. Gold, one of the leading export commodities from the northen part of the country, accounted for most of this.

But it was the revision of prices at which the National Bank of Ethiopia (NBE) buys gold from local miners, currently set above the global average market value, that played the significant role, according to authorities.

It has been less of an exciting year for the export of manufactured goods. Agricultural commodities such as coffee may also have not hit their marks, but they managed to squeeze out better figures compared to their performance in the previous year.

Exports Rebound Amidst Decline in Global Trends

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They say, fortune favours the bold and the brave. But that is not necessarily the case, as Bethlehem Shakuna will be the first to tell you. For the brave and bold miners who are out digging for gold 12 hours a day in the small town of Gogle, Bero Wereda, down south in West Omo Zone, it is a game of pure luck.

“You could be digging for 20 years and only be able to feed yourself and secure a place to live,” Bethlehem said.

On the other hand, you could also make around a million Birr digging through one auspicious hole, like the 30-year-old and his friends had nearly four years ago.

“I am one of the lucky ones,” said the gold miner, who has been mining since his high school days. “I hit the jackpot a few months after the government initiated us into an association and gave us land to work on.”

This was in 2016, three years after he finished 10th grade and turned his summer exploits into a full-time occupation. Since then, he has been serving as chairperson for an association of 200 miners in his neighbourhood.

“It’s very difficult in the beginning,” he said. “I spent whatever money I made and lived in a house with 20 other friends who were also miners.”

The community in the Shola Kebele, where the miners live, nearly five kilometres away from the mining site is a very tight-knit one. They work and live together.

It takes at least four miners to discover gold. One person is tasked with digging the hole, down to six kilometres into the earth, until they reach the sweet spot dubbed letowhere gold is supposedly waiting to be extracted. Another hauls the dug-up earth in a bucket that is pulled up by a third, and the final person is in charge of washing the precious gold in a gebete.

It is a physically taxing job, but one that feeds the whole community, according to Bethlehem.

“We share everything, because we know the nature of the job,” he said. “You may be lucky today, but tomorrow you may need someone’s help.”

Bethlehem’s lucky strike was how he bought two houses in the neighbourhood, one a small bar, a grocery as it is more commonly known, and the other where he shows movies and football matches through his DStv satellite.

Artisinal miners like Bethlehem, living in different parts of the country, are the main reason that the export from minerals has grossed over 200 million dollars this year, accounting for seven percent of the total export revenue generated by the country. Gold alone accounts for six percent of the country’s foreign exchange.

This has boosted mineral exports after consecutive years of a downward spiral that culminated in an all-time low of 49.8 million dollars the previous year. This is in stark contrast to the highest recorded number five years ago of 654 million dollars.

In Southern Nations, Nationalities & Peoples’ Regional State, where Bethlehem lives, there has been 341kg of gold mined this past fiscal year, according to Eyasu Mamo, director at the region’s Mines & Energy Agency.

“There’ve been major works undertaken to strengthen this sector,” he said. “The price by which the National Bank of Ethiopia buys gold (NBE) has increased, and this has deterred the illegal sale of minerals greatly.”

The Agency has also driven up its budget from 800,000 to a little over one million Br, dedicated to getting more professionals involved in staking out areas for mining and allocating more security personnel according to Eyasu.

“The area is on the border with Gambela,” he said. “It’s known to have an armed militia, so we’ve deployed additional security personnel.”

This has been good news for Bethlehem and his miner friends, who prefer working the night shifts as the weather is less warm.

But the surprising turn of events has come from the effects of the Novel Coronavirus (COVID-19) itself. The border closures enforced to minimise the spread of the pandemic have restricted the illicit trade of minerals across the border, according to the director.

“What has been detrimental to other sectors has benefited this one,” he said.

The amendment in the price at which gold is being bought by the NBE has played the biggest role, according to Betru Haile, mineral transaction competence insurance director at the Ministry of Mines & Petroleum.

“The National Bank is now buying gold at a higher price than the global market value,” he said. “It has increased the price of gold, scaling up by 29pc compared with the previous price depending on the amount.”

This has brought on more licensed gold buyers and miners to sell directly to one of the nine buying stations across the country. Before the changes in the regulation at the end of March, there was a little over 700kg of gold produced in a period of seven months in the country, according to data from the Ministry. However, a total of 2,632kg of gold was produced in the three months following the amendment in pricing.

Ezana Mining Development Plc, currently the most significant player in the field, brought in 700kg. Still, it has been the combined efforts of artisanal miners like Bethlehem that have brought in the bulk, according to Betru.

In Oromia Regional State, the second-highest gold producing region last fiscal year, the artisanal miners are being supported by the government in the form of capital good loans to strengthen their capacity, according to Alemayehu Oljira, the region’s mineral administration works team leader.

There are 39 associations in the region.

“They’re being assisted with the goal of upgrading them to special small-scale miners,” he said.

The region, which produced 30kg in the previous year, brought in 485kg in this one.

It is not just the mining sector that has shown an increase in export revenue, however. The country’s total export revenue has increased from 2.7 to over three billion dollars this year due to sectors like coffee, khat, flowers and manufacturing.

Coffee has shown a significant result both in terms of price and value, according to Assefa Mulugeta, director-general of export promotion under the Ministry of Trade & Industry.

“We’ve yet to get it to the optimum price that it deserves,” he said. “But it has reached a record high in terms of the amount exported.”

Close to 271,000tn of coffee were exported in the just-ended fiscal year, according to data provided by the Ethiopian Coffee & Tea Authority.

The growth in export revenue, though commendable, has achieved only 80pc of its target. The reasons for this are multi-fold, according to the director-general.

“The country hasn’t produced the expected amount,” he said. “There are also problems with logistics, market systems and pricing that haven’t been solved.”

The impact of the pandemic has also been strongly felt in manufacturing, one of the three main categories of export revenue.

“Contract cancellations have impacted the textile and leather industries,” he said. The sector, though showing an increase of three percent from the previous year, managed to reach only about 51pc of its goal, 405 million dollars.

With no central regulation by the government, exporting had turned into a means to access foreign exchange by some individuals known as “hit and run” exporters.

These exporters buy the local goods at a higher value, making sure to get hold of the limited local production, over-invoicing, and later selling it at a much lower price to the global market, aka under-invoicing. Money lost in the process is made triple-fold through the import of luxury commodities by the same individuals.

A series of moves that have disrupted the industry in the past five years, this has pushed legitimate export companies to the side, in turn impacting the export revenue of the country.

To counter this practice, the Trade Ministry enacted the export contract registration directive, which came into effect on October 28, 2020.

The Ministry makes sure they are buying at the local market price and ensuring they do not sell at a loss, according to Assefa.

The commodities regulated under this directive currently comprise only six: coffee, sesame, red kidney beans, white pea beans, green mung beans and soybeans. Data obtained from the Ministry shows that the global prices of these commodities have increased from five to 18pc, with the average price of sesame going from 1,280 dollars to 1,512 dollars a tonne. This is a welcome change by local exporters engaged in the sector.

One local exporter, in the business for 15 years, says that exporting sesame used to bring in 10 million dollars annually but was down to 1.2 million dollars before the directive came into effect. One of the top 10 exporters in the country, it has seen a staggering increase of over eight million dollars in export revenue in the past year since it was enacted.

For those engaged in the sector with ulterior motives, this has resulted in license cancellations. The Ministry has cancelled 10 export licenses using this system.

Legal reforms that can help track the process in export may aid in legitimising the sector. Still, there needs to be attention given to whether these processes are effective and not just adding one more step to an already cumbersome operation, according to Atlaw Alemu (PhD), an economist and lecturer at Addis Abeba University’s Faculty of Business & Economics.

“The procedures need to be evaluated on their effectiveness,” he said. “If not, it could end up pushing exporters to look for alternatives.”

Whether or not the decisions being taken by the government, in both the mining sector and elsewhere, will continue in their well-intended path, is something yet to be seen. What we can say for sure, at this moment, however, is that miners like Bethlehem and genuine individuals engaged in the export sector have already started reaping the benefits of their hard-earned work.

Hunger Spectre Casts Long, Ominous Shadow. Time to Get Ready

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The economic indicators for Ethiopia this fiscal year are less than encouraging, even if economic advisors around Prime Minister Abiy Ahmed (PhD) foresee strong growth and less macroeconomic instability. They have not justified how this could be for a country reeling from a global pandemic and political upheavals.

For all of their optimism though, even they do not mince words when reflecting on the sheer scale of challenges the economy is faced with.

How these challenges will come to affect poor and fixed-income households is often unfortunately lost in the attention given to the macroeconomy. But for those who care to look closer, it is self-evident that the circumstances are dire and have already begun to be felt as food insecurity peeks out its head.

It was only a testament to the deeply worrying political and macroeconomic circumstances of the country that one of the more comprehensive surveys on creeping food and nutrition insecurity within the most economically vibrant city, Addis Abeba, largely went unnoticed.

The Novel Coronavirus (COVID-19) pandemic is contributing to food insecurity as incomes are affected, a survey of around 600 households by researchers Gashaw T. Abate et al. for the International Food Policy Research Institute found. Among the households surveyed between May and June this year, 67pc said that their incomes were “lower or much lower than usual.” It was poorer households that were “considerably more likely to report income losses than richer households.”

While three-quarters of these households were digging deep into their savings to cope with declining incomes, over half reported cutting down on their food consumption. The figures do not get any less depressing when 68pc of the households reported they were unsure or quite certain they did not have enough savings to cover food costs for 30 days.

The households had reported a 22pc fall in their consumption of fruit between February, when there were no confirmed cases of COVID-19 in Ethiopia, and May, while that of meat and dairy products declined by 31pc and 11pc, respectively.

These are enough indications to believe that it is just the tip of the iceberg. Acute food insecurity was already in the cards for Ethiopia this year as reports from the UN’s Food & Agricultural Organisation’s (FAO) integrated food security phase classification showed (IPC).

Between February and June this year, 8.5 million people were expected to be food insecure in Ethiopia. A lean Belgseason will further complicate the high food prices for market-dependent areas for food during this period.

These were dire figures in their own right. But it was also an assessment taken at a time when the possibility of a pandemic on the scale of COVID-19 was not on the radar. Neither was it as obvious that the political situation in the country would deteriorate to the level it has now.

Given that the desert locust outbreak was already raging and likely to occur for a second round, it was included in the IPC projection. Six million of those estimated to face severe food insecurity between February and June this year were thus people living in areas that were hit with the swarms.

But this too is expected to have been an underestimation given that the desert locust outbreak is believed to have worsened as the rainy season started much earlier than anticipated. It was good news for a species of locust that needed the wet rainy condition to reproduce and proceed to feed on almost any kind of vegetation and crop they could find. It is terrible news for farms and pastures that will be caught in their migratory path.

What this translates to is a million people needing food assistance directly as a result of the infestation in 2020.

This has been described as the worst invasion of desert locusts the East African region has ever seen in a quarter of a century. It no doubt will pose severe threats to crops, especially in the Eastern and Southern parts of the country. What Ethiopia thus has is a unique cocktail of challenges that has become an unprecedented test to the food security of millions of its people.

But this is only a threat to the production of food.

COVID-19, as a result of partial lockdowns put in place to contain the spread of the virus, has created obstacles within the food supply chain. It has complicated getting food that has been produced from reaching consumers, including spoilage of food items such as vegetables. Already 20 million people in Ethiopia are feared to be facing food shortages, according to GOAL, an Irish international humanitarian response agency.

Adding insult to injury is the rising prices of food items. Inflation having stood at 23.1pc last month, and reaching a high of almost 27pc in March, the prices of food are galloping ahead faster even for a country used to a double-digit, year-on-year rise of prices for food items. It will be a headache that gets more severe the further down households are in the income distribution. It is as much a consequence of supply problems – a combination of the COVID-19 impact on the food supply chain as well as the desert locust invasion – as it is an outcome of a depreciating Birr against a basket of major currencies and a slowing economy.

Given the government’s thin fiscal space, how meaningful a humanitarian response would be without a substantial donor response is unclear. Five billion dollars would need to be poured into countries – mostly those located in sub-Saharan and South Asia – that are projected to see an aggregate of 95 million people going hungry, according to Ceres2030, an international institute working on development. Over 65 million dollars is needed for control operations and social protection programmes by UN-FAO for Ethiopia.

But there is a case to be made for putting in place more efficient means of expanding and meeting the targets of social safety net programmes.

This can be by putting in place cash transfers to the poorest, especially women, a more efficient means of meeting needs through self-administration. Togo is a good example, where cash handouts are being transferred through mobile phones for any informal worker with a voting card.

A good opportunity to realise something along these lines in Addis Abeba’s case would be to extend the initiative by the Addis Abeba Trade Bureau to bring into the formal sector 80,000 of the city’s informal traders. Registration had taken place in the effort to assign them allotted corners in marketplaces, a system that can be built on to effectuate safety-net programmes. There are also safety net programmes that have helped to identify the most-at-risk and chronically food-insecure households in urban and rural settings. Ongoing since 2006, they can be used to make social support programmes more effective and efficient going forward.

Indeed, addressing this issue cannot be divorced from the need to address economic challenges. A fall in the incomes of households is combined with inflation and creates food insecurity for urban dwellers as well as rural populations that will no longer be able to live on subsistence crops.

Here, at least, the Prime Minister’s economic advisors are right to worry about macroeconomic indicators of the past fiscal year, which in all likelihood will be carried over to next year.

Central Bank Introduces Deposit Protection Fund

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The federal government is set to establish an agency that will amass funds to be used as insurance payouts for depositors in times of financial crisis.

Drafted by the National Bank of Ethiopia (NBE), the regulation lays out a legal framework for the establishment of the Ethiopia Deposit Insurance Fund that will report to the central bank. The 19-page draft regulation states that the Fund will reimburse insured depositors during a crisis, dictate annual premiums, determine and regularly update the coverage limit for an insured deposit and collect premiums from financial institutions, development partners and the government.

The Fund will have a board comprised of the governor, vice governors and banking supervision director of the central bank, as well as its chief executive officer. Additional members will be appointed by the government.

The Governor of the central bank and the Minister of Finance will be the chairperson and deputy chairperson of the board of the Fund, respectively. The CEO and the deputy CEO will be appointed by the government with the recommendationfrom the central bank.

After the regulation is enacted, all members of financial institutions will sign a membership contract with the Fund and pay an initial premium, which will be determined by the Fund. The bill proposes the government put up 200 million Br as initial capital for the Fund.

It has not yet been decided how to define the government and the source of the initial capital from the government, according to a source close to the case.

“This is because the draft is going through a consultation process,” said this source.

The annual premium to be paid by financial institutions, which is subject to revision, is proposed to be 0.3pc of average bank deposits.

With a designed deposit insurance system, the new scheme aims to place troubled financial institutions in a safety net and avoid protections on ad-hoc terms, such as through restructuring a troubled bank or injecting capital, according to the source.

An example of implicit ad-hoc protection, the central bank had forwarded 57.5 billion Br of liquidity injections in four rounds to banks in the just ended fiscal year when banks were facing the most severe liquidity crunch in the industry’s history.

In the event where there is a troubled bank or microfinance institution, the central bank will declare a revocation of the business license of the failed financial institution and the Fund will refund insured deposits.

The insurance coverage from the Fund, which will be paid to all depositors, is limited and covers the large majority of depositors but leaves a sustainable amount of deposits to market discipline. The limit of the coverage of the Fund will be proposed by the board, but it should not be less than 100,000 Br.

The Fund does not cover the deposits of capital goods leasing companies, other financial institutions and the government.

“It’s believed that these entities have their own safety net or can manage the loss,” said the source close to the case. “The focus of this scheme is for small depositors and SMEs.”

The Fund will cover the total amount of insurable deposits by summing up all insurable deposits in different accounts including the interest rate to the date of the occurrence of the event. The payout for depositors will be made within a three-month period after the occurrence of the crisis. However, even after 90 days, depositors can also claim their refunds within five years from the event of the trouble.

In the case of deposits in foreign currency, the troubled financial institution will present the parallel amount in Birr at the buying exchange rate on the date of the insurance event.

If there is an induced shortfall from the Fund to cover the insurable deposits, then the Fund has the privilege to request a bailout from the government. It can also request that member financial institutions pay advance premiums and can draw loans secured by the Fund’s assets or guarantees issued by the government.

This has been studied for a long time at the central bank, according to Alemseged Assefa, former vice governor of the central bank.

“This will buffer the existing defence including capital reserves and reserve requirements,” he said.

Unlike reserve requirements at banks, the first line of defence that acts as a liquidity buffer for banks, the insurance fund is not a static pool of money but rather it is given the privilege to be used for capital investments. The resource can be used for investment including in government securities.

This initiative solidifies the financial sector, according to Asfaw Alemu, president of Dashen Bank.

“It’ll also give the push for small depositors to take risks in investments,” Asfaw said.

Total deposits at banks, both private and state-owned, reached 917.2 billion Br in the second quarter of the year, which is 97pc greater than the deposits mobilised by financial institutions. The 18 banks operate 6,023 branches, whereas the number of microfinance institutions has reached 38.

This will replace the existing measure of the central bank injecting liquidity into banks, said Atlaw Alemu (PhD), a macroeconomist and lecturer at Addis Abeba University’s School of Business & Commerce.

“To some extent, it will guard against inflation, as the money isn’t additional capital but has rather circulated in the economy,” he said.

Regardless, it is the hand to hand effort of strict supervision and prudential regulation, financial institutions’ resolution, deposit insurance and the central bank that cements the financial safety net, said the expert.

Commission Obliges Import-Export Permit Issuance via E-Service

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The new procedure that obliges traders in the import-export business to secure permits via the celebrated Ethiopian Electronic Single Window Service (eSW) is now fully operational.

The portal, which connects 16 major regulatory agencies, enables traders to submit documentation and receive electronic import and export permits through a single-window submission. The system was launched this January, but it became mandatory for traders as of July 8 following a request from the Customs Commission to the National Bank of Ethiopia (NBE).

The Commission sent a letter to the central bank requesting the enforcement of the eSW system through banks to decrease the physical contacts as a means to contain the spread of Novel Coronavirus (COVID-19).

In the process, the traders have to go to the premises of the Commission to get a username and password after producing their business license. With their account, the officers of the Commission feed sales contract agreements, proforma invoices and letters of credit into the system for the exporters, as well as insurance certificates, proforma invoices, certificates from the regulatory agency and undertaking letters for importers, into the system.

All this data will be scrutinised by each of the 16 respective regulatory agencies before the issuance of the permit. The entire process is said to take three days. Out of the 16 government bodies, four of them – Oromia Islamic Affairs, the Ethiopian Food & Drug Authority, the Ethiopian Chamber of Commerce & Sectoral Association and the Ethiopian Conformity Assessment Enterprise – are not giving service.

However, after the death of the famous Afaan Oromo singer Hachalu Hundessa at the beginning of this month followed by a nationwide internet shutdown, a hiccup occurred when issuing a permit through the new system online.

Traders from all over the country started flocking to their respective banks to get on the new system and run through their respective permits. This led to heavy traffic from business people in different parts of the country at banks.

“This could have been avoided, because even with the internet shutdown, traders can access the system since it is locally hosted,” said Robel Tesfaye, programme director for the Ethiopian Single Window Service programme.

The project office of the new system, which is located at the headquarters of the Ministry of Revenues, started taking on the load of customers from the banks. The project office gives two services, creating a username and password for traders to be registered in the system and processing application permits for exporters and importers.

“This is to give confidence to the traders to have trust in the system but also to make them familiar with the new system,” said Robel. “But this can be done through their mobile phone or computer at home.”

Despite the intentions of making the system an obligatory procedure due to the pandemic, the project office is filled with a queue of people in close proximity who are confused and frustrated.

“This is the fourth day I’m in line just to get the username and password,” said Tizazu Adela, general manager of Bete Meri Trading, which has been importing electronics for the last 10 years. “There is no chair or window open for that matter.”

In order to decrease the pressure, the Commission had sent another letter to the central bank to effectively enforce the service to be provided through the respective banks at the end of last week.

“By this week, we expect lesser pressure as banks will serve their own customers,” said Robel.

As of July 24, the system has registered 3,786 traders from the expected 150,000 traders. And it has run 6,306 applications through the new system.

This is an important system as it will bring the country closer to international trade standards, according to an international trade specialist at the International Finance Corporation.

“Refining trade initiatives like the new system will also help to increase the ease of doing business in the country,” he said.

Ethiopia currently stands at 159 out of 190 countries in the World Bank’s Ease of Doing Business 2019 report. The nation has slipped two positions from the previous year and is down 55 positions from its best-ever ranking in 2011.

The eSW, which was started in 2012, had a total budget of 32 million dollars. In addition to this, earlier this year the Korean Government also vowed to give 7.2 million dollars in kind for the advancement of eSW.

Phase one of the system was designed by Customs UNI-PASS International Agency (CUPIA), a South Korean firm that focuses on the development and operation of e-customs and single window systems as well as providing customs modernisation consulting services to customs authorities around the world for more than a decade.

The Korean company secured the project three years ago without a bidding process after a series of failures in the bidding process. The World Bank Group’s International Finance Corporation wing has also assisted the government in designing a blueprint including functional and technical architecture and business process reviews for the new system.

The second phase, which is in its early steps, plans to interlink 22 additional regulatory agencies, including the Ethiopian Shipping & Logistics Services Enterprise.

In the introduction of new systems like this, the key point is creating awareness, consensus with users, training and acceptance to avoid these kind of issues, according to Salehu Anteneh (PhD), associate professor for information systems and IT doctoral director at Addis Abeba University’s College of Business & Economics.

Salehu suggests there is also going to be a cut off point in the introduction of new systems, and this is likely a learning curve; thus, business people will get used to it at some point.

Bole Lemi Industrial Park Sees Increases in COVID-19 Cases

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Bole Lemi Industrial Park, the first park developed by the Industrial Parks Development Corporation, has seen a spike in confirmed Novel Coronavirus (COVID-19) cases last week.

The Park, which has 18,000 employees, has sent 88 of its employees to treatment centres within a week’s time. The tests, conducted throughout the week, were initiated last Saturday after employees started showing up with symptoms at the clinic located in the Park.

The health centre, established close to four months ago, has 10 staff; a doctor, four nurses and five other workers. Samples were initially taken from there and returned three days later confirming the first 32 people with the virus. Following this, further tests were conducted from employees at other companies in the Park.

Results showed that 56 more people were confirmed from the samples taken last Wednesday. Almost all of the employees have been taken to a treatment centre in Tulu Dimtu, while one individual with underlying conditions has been taken to a treatment centre at Millennium Hall.

Symptoms of the employees included shortness of breath, cough, general weakness and joint and back pain. The Park had installed thermal cameras last April to detect body temperatures as a precautionary step toward containing the spread of COVID-19. However, temperatures taken from symptomatic employees showed normal levels.

A total of 1,400 employees gave samples on Saturday, Wednesday and Friday. Close to 600 samples were taken from individuals employed at Shints, a textile company employing 4,500 people and where most of the confirmed cases were found. Owned by Shin Textile Solutions, the company has also built dormitories for its employees on site. The dormitories are being disinfected daily following the tests the past week.

The COVID-19 tests, based on symptomatic selection and contact tracing, is expected to continue starting Monday, July 27, 2020, in collaboration with the EPHI, according to a person who is closely following the issue.

Even though masks are mandatory and regular temperature check-ups are happening throughout the day, employees dine and take public transportation en masse. Companies in the Park are operating in their normal way without cutting staff or working in shifts.

The Ethiopian Occupational Health & Safety Professionals compiled and recommended a guideline on the health and safety procedures following the onset of the Novel Coronavirus (COVID-19) in the country, according to Ansha Nega, a member of the Association and associate professor of public health at Addis Abeba University.

“We shared the recommendations with the International Labour Organisation, the Ministry of Labour & Social Affairs, as well as safety officers,” said Ansha, who believes that there needs to be more aggressive work done. “But public health individuals need to be engaged at a strategic level.”

The recommendations have also been sent out to the industrial parks in the country.

Existing and routine procedures will not be sufficient, according to the expert.

“We need to set emergency responses,” she stressed. “The procedures should provide a guide as to what should be done at various points of intervention.”

This includes methods on continuing smooth working operations in the sudden absence of an individual, according to her.

The standard of operations at workplaces should also be done in line with the relevant health bodies, according to the expert.

“We need to effectively use our limited resources when it comes to health professionals as well,” she recommended.

Tinsae Yimam, general manager of Bole Lemi Industrial Park, and Shiferaw Solomon, deputy CEO of IPDC in charge of operations and industrial park management, did not respond to the inquiries from Fortune before the paper went to print.

Five Companies Vie to Supply Retendered Wheat

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Five companies are vying to supply four million quintals of wheat that was retendered after the contract awarded to two companies two months ago was terminated due to price variations.

Four international and a local company reached the technical evaluation stage for the supply of the wheat that will be procured in a single lot. The wheat will be procured on behalf of the Ethiopian Trading Business Corporation to be used for market stabilisation.

The Public Procurement & Property Disposal Service refloated the tender on June 16, 2020, after the contract awarded to Martina Mertens Sample and Olam International Limited was terminated a month ago due to variation in price.

Martina Mertens Sample was awarded a contract to supply three million quintals of wheat for 65.9 million dollars, while Olam International was also contracted to supply one million quintals for 21.3 million dollars. There was a 6.91 dollar a tonne price variation between the two companies for the same quantity of wheat. This triggered the Service to terminate the award to the two companies.

After getting approval of a special procurement permit from the Public Procurement & Administration Agency, the regulatory agency, the Service decided to procure the wheat under a single lot that was previously divided into four batches. So far, the government has been floating tenders by dividing the grain into batches, each containing one million quintals.

Dividing the supply into batches was aimed at attracting more companies and getting lower prices, according to Abeba Alemayehu, deputy director of the Service in charge of procurement and contract administration.

“But after we noticed the price difference for the same quantity,” said Abeba, “we decided to award the wheat to a single supplier.”

For the retendered bid, a total of 53 companies bought the bidding document, but only five of them returned it during the opening that was held on July 24, 2020. The Service has postponed the opening date three times due to the internet shutoff in the country.

Huyton Inc Group, Mush Candle Factory Limited, Tudo General Trading LLC, Aston FFI (Suisse) SA, and Aplaus Importer, a local agent of WifagMabrouk General Trading, are the five companies that made it to the technical evaluation stage.

The financial opening will be made after 10 days, according to Worku Gezahegne, acting director of procurements at the Service.

The technical evaluation is expected to be completed within a week, and the financial evaluation will follow if other bidders do not file a grievance within the mandatory seven-day standstill period, according to Worku.

The current trend of hiring one company for the supply will continue as long as it safeguards the government’s interest, accessibility and quality of wheat, according to Abeba.

While cancelling the award for the two companies last month, the Service awarded GemCorp Commodities to supply two million quintals of wheat for the National Disaster Risk Management Commission to be used for humanitarian assistance. GemCorp is supplying the grain for 40.7 million dollars.

In the last fiscal year, on behalf of the National Disaster Risk Management Commission, the Ethiopian Business Trading Corporation and the Ministry of Agriculture, the Service procured 1.7 million tonnes of wheat from four international companies. The procurement is worth 11.1 billion Br.

Tesfaye Melaku, a lecturer at Bahir Dar University’s Department of Economics, says that the cancellation of the contact could have consequences.

“It could lead to bread shortages and inflation,” he said, “but this will only happen if the government does not have enough wheat backup.”

Tesfaye also backs the current procurement procedure, saying that the larger the purchase, the lower the price will be, making it easier to identify an efficient and experienced supplier.

Ethiopia is among the top three wheat producers in Africa. Wheat accounts for about 20pc of the nation’s total cereal production. More than 90pc of Ethiopia’s wheat production is grown on small farms without irrigation, most of which are in the highlands.

There are approximately 4.7 million small-scale wheat farmers in Ethiopia, which accounts for about 95pc of wheat production and large-scale commercial farms account for only 5pc of the total production, according to Global Agricultural Information Network’s 2019 report.

Bill Operationalises Long-awaited Warehouse Receipt System

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A bill proposes the formation of a regulatory body that will oversee the implementation of a warehouse receipt system that facilitates credit for farmers depositing storable goods in exchange for a warehouse receipt.

The regulation was drafted by the Ministry of Trade & Industry in collaboration with the International Finance Corporation, a member of the World Bank Group that advises on private sector development. The regulatory body will be established under the Ministry and be tasked with supervising the development of the warehouse receipt system and issue a certificate of competence to warehouse operators, inspectors and agricultural product certifiers.

The regulator will also have an advisory board, which will be comprised of representatives from the ministries of Trade & Industry and Agriculture, the National Bank of Ethiopia (NBE), the Ethiopian Standards Agency, the Federal Cooperatives Agency, the Ethiopian Bankers Association, the Association of Microfinance Institutions and the Ethiopian Chamber of Commerce & Sectoral Association.

It will have additional members of independent experts nominated by the Bankers Association and the Chamber of Commerce and a rotating representative from the warehouse operators. The head of the regulator will serve as the secretary of the Board.

The Advisory Board will work on the recommendations including legal frameworks, additional agricultural products and endorsing strategies. It will also have standing committees under its wing in charge of nominations, operation, risk, and complaint hearings that will work on the jurisprudence, warehousing operations, finance and risk management, and appeals against administrative measures taken by the regulatory body, respectively.

The bill comes 17 years after the Warehouse Receipt System Proclamation was legislated.

“There hasn’t been any progress for the last 17 years, because at the time the Ministry was not organised and there was not any implementing legislation,” said  NurHussien Gasha, crop market expert at the Ministry of Trade & Industry.

“We didn’t alter the proclamation, because it was well-designed and appropriate for the time,” NurHussien said.

The warehouse receipt system will function when farmers deposit agricultural products in an approved warehouse operator that will give out a warehouse receipt, which can be either paper-based or electronic. The receipt, prepared by the regulatory body, will consist of the quality, quantity and date the agricultural goods were stored in the warehouse.

The quality and the quantity of the agricultural products to be deposited in the warehouse will be executed by a certified agricultural product certifier, which has received a certificate of competency from the regulator. A warehouse operator, upon entry to the warehouse receipt system, has to present the financial standing of one million Birr and has to have insurance coverage for the warehouse.

To set the standards of a warehouse, National Agricultural Warehousing Service Standards have been designed by the Ethiopian Standards Agency, in collaboration with IFC. It was approved by the Ethiopian National Standardisation Council in June 2019. The National Agricultural Warehousing Service Standards will grade prospective warehouses under A, B and C categories.

The warehouse operator will also have to present a performance bond, a bond issued by a bank guaranteeing the fulfilment of the soundness of the goods in the warehouse. The type of performance bond has yet to be decided in the regulation.

In order to build trust on the safeness of the agricultural products in the warehouse, the bill also proposes the formation of a Settlement Guarantee Fund, under the regulator.

The Fund, which will source capital from different entities including the government and development partners, will compensate in cases where the capital of the approved warehouse operator and the performance bond cannot cover losses incurred if there is any damage to the goods inside the approved warehouse. The contribution of different parties, the administration, and the details of the Fund have yet to be decided by the regulation.

The warehouse receipt system will simplify the market, improve grower incomes and reduce food loss, according to NurHussien Gasha, crop market expert at the Ministry of Trade & Industry.

The system will resolve the current constraints for farmers to access credit from banks as the only assets they have are crops, according to Jotework Gudeta, a financial sector specialist at IFC.

In the last five years, banks have availed less than 10pc of their loan portfolio to the agriculture sector.

“It’ll also prevent post-harvest loss from the mishandling of agricultural products,” Jotework said.

Dereje Zebene, president of Zemen Bank, also believes the system is a remarkable initiative, especially its intentions.

“But from the perspective of a financial institution,” said Dereje, “it needs a solid assurance to be entitled to proceeds after the liquidation of the commodity if any damage is inflicted on the goods.”

It is hard to say if things will be implemented as written on the ground, and it also needs an extensive capacity building and awareness creation campaign for farmers, according to Dereje.

Even though there was no regulation that followed the proclamation, the Ethiopian Commodity Exchange started a warehouse receipt system six years back with sesame, maize, white pea beans and wheat. ECX had kicked off the service with Commercial Bank of Ethiopia, Hibret and Nib banks. However, after functioning for a year, the system was cut short.

There was a hiccup in the implementation of the practice, according to Netsanet Tesfaye, corporate communications manager at ECX.

“The local consumption for maize and wheat was high, and the production didn’t matter much for export levels,” he said.

At the end of last year, the ECX reignited the system after conducting a comprehensive study with IFC. It has started with maize as a piloting stage in two warehouses in Neqemte  and Bure.

“We plan to add more agricultural goods and warehouses,” said Netsanet.

This is going to be a game-changer in the value chain from the producer to the trader, according to Alebel Weldesilassie (PhD), a country economist at the International Growth Centre.

“In addition, it’ll also increase the market power of smallholders by enabling them to choose at what point in the price cycle to sell their crops,” he said.

But there must be well-established market information since the system requires it, especially on prices and crop forecasting, recommended the expert.

Teff Disruption Pushes Tigray State Switch to Sorghum

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Due to the supply disruption and price hike of teff, Tigray Regional State is considering increasing the production and consumption of sorghum in the Regional State.

The Regional State’s Agriculture Bureau is working with farmers to switch from sesame to sorghum production. It also aims at partially replacing teffand wheat with sorghum, which is primarily a starch with carbohydrates, proteins and oils based on the variations of the cereal.

The supply disruption due to the spread of Novel Coronavirus (COVID-19), which has restricted movement and market flow, and peace and security issues that have further hindered commodities supplied from outside the region are among the reason for the turn to sorghum, according to Michaele Miruts, public relations director at the Region’s Bureau of Agriculture.

“This is being done to protect food security and encourage better nutrition,” said Michaele. “High dependency of teffin cities is driving living prices higher.”

In the Regional State, a quintal of teffis sold for close to 5,000 Br depending on the variety of the grain.

The Regional State has over 1.3 million hectares of arable land that is mainly covered by sorghum, sesame, wheat and teff. Most of the western part of the Regional State is known for its production of sesame.

Sesame production is extremely labour intensive, according to Michaele.

“It’s inconvenient considering the spread of the pandemic, since nearly 25,000 labourers are deployed each year for the harvesting season,” he said. “While the pandemic has brought with it a set of obstacles to our health and the economy, it has also forced us to look into our potential.”

Unlike other parts of the country, soil fertility is low in Tigray, so consistent and major production ofteffwould not be environmentally friendly or productive. Much of the agriculturally friendly land in the region is arid land, and sorghum is an important potential crop for the region, according to Michaele.

While sorghum takes up just about 30pc of the arable land, it makes up about 40pc of cereal production in the Regional State. There are five to six types of sorghum varieties in the region.

Before reaching a decision to switch into sorghum production and consumption, the Bureau tried mixing the cereal with teffand wheat in 50/50 and 60/40 combinations.

“We were satisfied with the end results,” said Michaele.

The Bureau also provided this combination to bakeries and is in discussion with food complexes for better processing of the product, according to Michaele.

The administration is currently campaigning to change the dietary consumption in the region through local media, encouraging the residents to use sorghum in combination with other crops.

Sara Tewolde-Berhan (PhD), a lecturer in Meqelle University’s Department of Food Science & Post-harvest Technology, supports use of the grain not only for food security issue but also for diet.

The cereal is rich with proteins, vitamins, calcium, iodine, zinc, iron and amino acids, according to the food technologist.

Amanuel Tesfaye, president of the Tigray Commercial Oilseeds & Pulses Producers Association, says that lockdown has slowed down the market, while information on the weather forecast and the market have also been limited due to different factors including the recent internet shutdown.

The sesame market has been less profitable even before the pandemic due to maximum selling prices set by the Ethiopian Commodities Exchange (ECX) in this past year, according to Amanuel.

“It doesn’t put into consideration the overhead cost of production for sesame,” Amanuel said. “We feel government responses to any problem should be well researched and done in consultation with stakeholders.”

Hansa Teklay, an economist and lecturer at Meqelle University, says the jury is out on the sesame market this year.

“It’s more expensive than other oilseeds,” she said. “When economies are battered, buyers are likely to search for cheaper substitutes.”

A farmer can harvest two quintals of sesame a hectare, while the same size of land can yield 40ql of sorghum, according to Hansa.

Hansa also says that ECX is meant to be a platform for traders to exchange products, with the highest bidder taking the product.

“ECX is meant to facilitate better prices for farmers, information asymmetry and market access. If it starts stating prices, it becomes a marketing board,” she said. “Grain markets are the closest thing to a perfectly competitive market, so the sorghum market should be free of interference.”

Poultry Industry Incurs 123m Br in Losses

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Fourteen poultry farms under the wing of the Ethiopian Poultry Producers & Processors Association declared over 123 million Br in losses due to the changing economic and market conditions brought on by the Novel Coronavirus (COVID-19) pandemic.

Out of the total losses, the companies incurred the highest value, amounting to 103 million Br, from day-old chicks, followed by broiler and partner chickens worth 3.2 million Br and three million Birr, respectively. They also reported losses of 1.2 million Br on pullets, 1.2 million Br on fertile eggs and 200,000 Br on eggs, accordingly.

The global outbreak of the pandemic has disrupted the supply chain of poultry farmers who import day-old chicken parents once a year to continue their poultry husbandry. Because of the pandemic, the farmers cannot import the chicks from Europe, where most of their suppliers are located.

The farms looked for other possibilities and potential suppliers and identified Brazil as a potential supplier, but the higher transportation cost prevents the farmers from importing, according to Alemayehu Amdemariam (Maj.), general manager and co-owner of Alema Farms Plc.

The companies used to import the day-old chicks via Ethiopian Airlines and Lufthansa by paying one dollar a chick.

“The airline asked us to pay three dollars to transport each chick from Brazil,” Alemayehu said.

Since the major consumers of chicken products, hotels, restaurants and fast food outlets are in complete or partial lockdown due to the pandemic, the demand has sharply decreased by half.

Many commercial farmers lost their markets and have been disposing of the chicks in order not to incur further losses by feeding them. So far, about 2.2 million day-old chickens were disposed of.

The commercial farms mention that they are challenged by the shortage of foreign currency to import day-old parent stocks, feed inputs and vaccines.

Alema Farms produces 4,000ql of poultry feed a day and distributes it to the farmers by importing vitamins and minerals. But the farm has been in a severe situation because of the foreign currency shortage, according to the manager.

Price hikes for poultry feed due to higher prices for soybeans and corn is another problem that is battering the industry.

The farmers used to source the inputs from Wellega and Bir-Sheleqo. Due to transport disruptions to and from Wellega, the prices of maize and soybeans have sharply increased, according to Alemayehu.

The other problem the farmers mention is the lack of working capital.

The Development Bank does not lend to commercial poultry farmers in cash if they ask for less than 30 million Br, according to Genene Tesfaye, board chairman of the Association.

“Most of the farmers are small and medium-scale and don’t need loans beyond 30 million Br,” Genene said.

Citing these problems, the Association wrote letters to the Ministry of Agriculture, the Meat & Dairy Industry Development Institute, the Office of the Prime Minister and to the Development Bank of Ethiopia soliciting support, according to Genene.

“However, no institution gave enough attention to us,” he said.

Even if there is a huge market in the neighbouring countries and the Middle East, the farmers could not export their products because of the shortage of facilities, according to Fanta Terefe, owner of ELERE and vice-president of the Association.

ELERE Farms, which disposed of close to 100,000 chicks since there has been no market for its production, was thinking of exporting chicken products and procured a slaughter machine that slaughters 1,000 chickens an hour. Established in 2008, ELERE lost 8.9 million Br in the last fiscal year.

“But we couldn’t because of the lack of and higher cost for refrigerating, processing and transportation facilities,” Fanta said.

Alema Farms Plc, which used to hatch 20,000 chicks and slaughter 10,000 chickens a week with 1,000 employees, disposed of 24,000 eggs because of the market disruption. The Farm slaughtered the chickens and stored the meat in vain.

“The meat was wasted, because it couldn’t be stored for longer times, and we disposed of it,” said Alemayehu.

Some of the farmers are approaching to stop operation and shut down their farms. ELERE Farms, which has been in the industry for over a decade, is on the verge of closing its doors, according to the owner.

“We hoped the problem would soon be gone, and we’ve been hatching chicks for months,” said Terefe. “The government couldn’t support us, and we realised we couldn’t go more.”

Demeke Wendimagegn (PhD), director of the poultry sector at Ethiopia-Netherlands Trade for Agricultural Growth, anticipates a shortage of chicken products will occur starting from December to the months of March and April 2021.

“The farmers aren’t importing parent stocks to produce chicks and eggs,” he said. “To get the eggs or the day-old chickens, they need to have the parent stock at least 10 months before.”

Demeke also said that the government should create a market linkage for farmers with school feedings, food banks and quarantine centres.

The government further should provide the farmers with logistics, storage facilities to stock the products, foreign currency, working capital and vaccines, according to the expert.

Chinese Firm Secures Delayed Road Project

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The long-delayed Neqemte-Bure road project was awarded to a Chinese company after the contract was terminated from IITNL-Elsamex Neqemte-Bure JV – a joint venture of IL & FS Transportation Networks and Elsamex S.A., a Spanish firm.

Covering 260Km, the road that connects Neqemte with Bure in Gojjam has been underway after being divided into three lots since 2016 with a loan from the World Bank Group. The first and third lots of the project were awarded to IITNL-Elsamex Neqemte-Bure, while JMC Project India Limited secured the second lot.

While IITNL-Elsamex Neqemte-Bure’s part of the project got stuck, JMC was able to complete 75pc of the 87.7Km road that extends from Andhode to Agamsa. This segment is expected to be finalised by December. The Neqemte-Bure road project is one of the beneficiary projects from the 320-million-dollar loan the World Bank gave to Ethiopia in 2014.

The Neqemte-Bure gravel road, which is set to be upgraded, was built three and a half decades ago with a loan secured from the World Bank. The project had also included one of the largest bridges in East Africa at the time.

After terminating the contract that was given to IITNL-Elsamex Neqemte-Bure JV, the Ethiopian Roads Authority (ERA) awarded it to Chongqing International Construction Corporation last week to construct 171Km of the road for 3.4 billion Br. The company is expected to deliver the project in three years.

The agreement signed between the Authority and the Chinese company is a delivery output performance agreement. With the arrangement, Chongqing International will be responsible for maintaining the road for five years after the delivery of the contract.

Chongqing International, which is a subsidiary of Chongqing Foreign Trade & Economic Cooperation Group, will build the first segment of the road that extends from Neqemte to Endehode covering 86.4Km for 1.7 billion Br. The 86.5Km second project extending from Agamsa to Bure will be built for  1.77 billion Br.

Before the contract with IL & FS Transportation was terminated, the company had abandoned the project without progressing much and left the country after declaring bankruptcy.

Angry local employees in Neqemte, Bure and Woliso towns in Oromia and Amhara regional states protested over unpaid salaries and took seven Indian employees of the company hostage after demanding pay. Later, following negotiations between the two countries, the employees were set free and returned to India.

The Neqemte-Bure road is among the 12 road projects the Authority awarded to 10 companies last week. The roads that have total coverage of 825.2Km will cost 19.9 billion Br. Out of the awarded companies, six are local firms.

FAL General Contractor, Amhara Road Works Enterprise, Ethiopian Construction Works Corporation, Samson Chernet General Contractor, Kibish Construction and a joint venture between Powercon Plc and Aser Construction are the local companies that secured contracts. Chongqing, Shandong Luqiao Group, Jiangxi the Second and China Wu Yi are the Chinese firms that were awarded five projects.

The local and the foreign companies have three and six months for mobilisation, respectively, according to Habtamu Tegegne, the director-general of the Authority.

For the current fiscal year, the government has allocated 58 billion Br for the construction of road projects at a national level. The value is 38pc higher than the previous fiscal year’s budget.

Companies Jump into Seasonal Businesses to Stay Afloat

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For the past four months, all of the campuses of Rift Valley University were empty with almost no activity. The campuses used to be very busy with students rushing to go to class or leaving the compound, while others goofed off with their peers, giving a vibrant mood to the premises.

This is no longer the case. Most of the campuses are empty with classes suspended for the time being.

The compounds emptied out following the closure of schools in mid-March as part of preventive measures against the spread of Novel Coronavirus (COVID-19). The University is teaching students via internet-based platforms to comply with physical distancing measures.

It closed all of the campuses in the capital, except for its head office located in Gotera on Sierra Leone St. It furloughed half of its employees and supplied them with sanitiser, face masks and gloves. But the supply of personal protective equipment was not enough.

Currently, 120 staff are working at the head office, which is still full of people and students who come to submit their assignments and receive other document-related services.

This continued activity at the head office triggered the management to disinfect the entire office, according to Tigist Reta, head of administration and finance at the University.

For the disinfection service, the University hired Ethioairs Trade & Investment early this month. Ethioairs disinfected the five-storey building, every office with its equipment and the entire premises, for 25,000 Br.

While hitting hard most of the manufacturers and suppliers, the pandemic has created a business opportunity for some companies, including manufacturers of sanitiser and face masks, delivery businesses and video conferencing websites.

Globally, companies such as Amazon, Zoom and Netflix have seen enormous and unprecedented user growth and revenues during the pandemic. Video conferencing firm Zoom earned 328 million dollars from February to April 2020, a 206-million-dollar increase from the same period last year.

While such high flyers capitalised on increased demand for their primary tech platforms, many non-tech companies in Ethiopia have had to reinvest in new business segments, since their main revenue streams have deteriorated.

Established 13 years ago, Ethioairs has been engaged in tour and travel, event organisation, training and employment, and advertisement and promotion services. However, it tailored itself to a new business following the COVID-19 slowdown.

After the first COVID-19 case was reported in Ethiopia, the management of the company decided to close its doors for 15 consecutive days, according to Betelhem Tadesse, the owner of Ethioairs.

The management believes that it cannot stay in business by closing its doors for an extended period of time, but decided to venture into another business as a means to stay afloat. The business that the company decided to join is disinfection service.

“We understood there is a massive demand for the service,” said Betelhem.

After allocating two million Birr in start-up capital and procured machinery, the company applied for a license from the Food & Drug Authority to secure a permit. It then acquired a temporary service for half a year. So far, the Authority issued permits to 14 companies engaged in disinfection and cleaning services, and over 40 companies are waiting to secure the license.

Currently, there are 449 personal protective equipment importers and 159 sanitiser manufacturers in the country that have secured temporary licenses from the Authority.

Since its establishment, Ethioairs has provided service to over 670 institutions in the capital. It is now manufacturing the chemicals utilised for disinfection.

“We’re providing services to 18 to 20 institutions a week across the country,” Betelhem told Fortune. “We’ve also signed contracts with many private and public institutions to disinfect their premises constantly.”

Founded in the capital, Ethioairs recently branched out to Adama, Meqelle, Bahir Dar, Modjo, Sodo, Dessie and Bishoftu.

“We’ll be opening new branches in Dire Dawa and Harar soon,” Betelhem told Fortune.

The company is now dealing with the Addis Abeba City Administration to venture into another seasonal business in opening an isolation centre in the capital, according to Betelhem.

Not only Ethioairs but also Ethiopian Trade Contacts Plc (ETCON), which has been engaged in the import of building products, banking automation devices and academic books for the past two decades, was forced to divert into a new business segment to remain afloat.

Over the years of its existence, the company has imported different items from Europe, the United States and Asia.

After the pandemic imposed severe disruption on the supply chains of ETCON along with the existing problems in the economy, such as the chronic forex crunch, according to Yazew Bekele, managing director and co-owner of ETCON.

“For the last three years, we’ve been struggling to stay vigilant due to the hard currency crunch,” Yazew said. “We couldn’t import as many commodities as we wanted.”

ETCON, which has been selling 2,000 to 3,000 units of bank equipment a year, turned its face to import germicidal, ultra-violate cash counting machines. It imports the germicidal cash counters from Taiwan.

ETCON, which mobilised 20 million Br in capital, used to act as the third party in the trade channel that distributes SCAN COIN’s brand of cash counting machines, which is the distributor of True Trust International Co, Ltd, the original manufacturer of banknote counters. The manufacturer supplied SCAN COIN machines based in Europe and MAGNNER based in the United States with the cash counting machines.

Two weeks ago ETCON secured a deal to be a direct distributor of True Trust International and will directly purchase from the equipment manufacturer located in Taipei. Miranda Lee, communications manager of True Trust, confirmed to Fortunethat ETCON had become their direct distributor.

“The seasonal market opportunity has encouraged us to be a direct purchaser and distributor from the company,” said Yazew.

The market for the newly introduced germ sterilising cash counter is very encouraging, according to Yazew, who adds that the businesses and financial institutions are becoming very interested in buying the germicidal bill counting machines.

The company is now planning to import products with new features and innovations because of the huge market opportunity, according to the managing director.

Established by five members of Yazew’s family with a registered capital of 50,000 Br, the company has so far imported over 2,000 germicidal lamps for different buyers.

The COVID-19 pandemic has inflicted unbearable damage on most of the companies in the capital, leading them to struggle for survival with the drying up of their revenues and the lockdown of their customers.

MTS Trading Plc is another business that obtained a temporary license for a disinfection service. TMS, which was established in 2016, has been providing cooling maintenance and cleaning services for brewery firms that have declined amidst the pandemic.

MTS, which operates with 130 employees, uses eight different chemicals for disinfection, according to Tomas Alemayehu, general manager at the company.

Businesses in the hospitality sector are the major customers of these disinfection services, according to Tekie Alemu, associate professor of economics at Addis Abeba University.

“It has become a marketing strategy in order to help customers have confidence,” said Tekie.

The companies are essential to the domestic economy in terms of production sufficiency to local demands, according to Tekie.

“Thus, the government should support these new businesses by availing working capital, inputs and hard currency to them,” recommended Tekie.

The Ethiopian Hotel Marketing Association, which has 152 member hotels, also recently prepared a manual for disinfection services. The manual recommends that the hotels regularly disinfect their premises as a standard with chemicals that are enumerated by the World Health Organisation. The manual outlines nine chemicals to be used, and most of the disinfection service providers are using them.

“We’ve obtained a license to give regular disinfection services to the members and other institutions,” Getahun Alemayehu, president of the Association’s board, told Fortune.

The Association was provided with a license by the Food & Drug Authority to give disinfection services for free, since the members make an annual contribution to fees. To provide the service to member hotels, the Association is now spending around 80,000 Br a month.

“We’re looking for arrangements that we can provide disinfection services to non-member institutions with payment,” said Getahun.

Tekie, the expert, argues that these businesses should also repurpose their production according to the demands of the market.

“The government should work toward import substitution to satisfy local demand by assisting businesses to produce the commodities they are importing at the moment,” he said.

However, the users of these services seem to be determined to stay customers of these companies until COVID-19 is over.

The management of Rift Valley University is planning to disinfect the head office at least once a month, according to Tigist.

Oromia International Bank, which grossed 1.1 billion Br during the recently ended fiscal year, is disinfecting its head office every week to prevent the pandemic.

The Bank hired Ethioairs to constantly spray its branch offices, which are crowded and anticipated to be highly susceptible to the spread of the pandemic, according to Belay Bayisa, head of strategy and business development at the Bank.