Shemu Plc, a company known for manufacturing fast-moving consumer products, invested 1.6 billion Br in its already operational edible oil plant in Dire Dawa to triple its production capacity. The expansion enables the company to refine 950tn a day.

Shemu Construction, its sister company, undertook the construction of the plant, which took three years. The machinery was imported from China. The expansion will increase the total number of employees by six-fold to 1,500.

The company was inaugurated in 2017 with a production capacity of 120tn of oil a day, and it went through its first expansion in 2019, stepping its production capacity up to 230tn a day.

The plant is under Shemu Group, a conglomerate comprised of 15 companies, including Shemu Detergent and Aveza Ethiopia Retailing Company. The plant will supply waste products from manufacturing the oil to the plant that manufactures soap.

The foreign currency shortage affecting  the import of raw material is one of the main culprits behind the edible oil shortage, according to Frezer Debela, the general manager of  Shemu Group.

"If we're able to produce at full capacity," said Frezer, "we'll cover 46pc of the local demand."

The Food, Beverage & Pharmaceutical Industry Development Institute proposed alternative methods in 2019 to minimise foreign exchange expenses and maximise supply in the market. In light of this, the Institute is prioritising the import of crude palm oil, mainly from Malaysia and Indonesia, to be filtered and processed by domestic oil manufacturers like Shemu.

Shemu is one of the refineries that received foreign currency under this scheme to import crude palm from Malaysia. In September, the company secured 8.5 million dollars to manufacture and distribute a little over three million litres of oil through the quota allocated by the Ministry of Trade & Industry.

It was assigned to cover four regional states and one city administration through the Ethiopian Industrial Inputs Development Enterprise, Biftu Adugna Business and the Ethiopian Trading Businesses Corporation. Oromia gets the largest volume of a little over 1.5 million litres, followed by Somali and Afar that receive nearly 800,00 litres and 400,000 litres, respectively. Harari and Dire Dawa City Administration are allocated 150,000  and 270,000 litres of palm oil, respectively.

The proposal from the Institute to encourage local manufacturers to process crude palm oil is the right move, according to Yared Desalegn, an investment promotion expert.