Trade authorities’ attempt to regulate the besieged cement supply chain faced a backlash last week, exacerbating long-standing issues in the market. It pushed retail prices for cement to an unprecedented 1,500 Br a quintal, creating apprehension in the broader economy, for, cement drives core inflation upward.

The price increase comes after a series of ordinances from Gebremeskel Chala, minister of Trade & Regional Integration. He ordered cement distribution through agents stopped and cement factories to sell directly to government entities and institutional buyers. Minister Gebremeskel urged regional administrations to set up depots for storage and distribution. The Minister also pushed factories to hand over 30pc of their products to youth associations, which retail to end users.

Last week, the Ministry reintroduced a price cap, compelling cement factories to sell a quintal to designated distributors for between 770 Br and 870 Br. Cement plants set specific prices for destinations considering transport and warehousing costs.

Gebremeskel’s move has backfired. It resulted in the highest retail prices the construction industry has ever seen.

A buyer, Daniel Getachew, was roaming around Megenagna, a hub for cement retail in Addis Abeba, last week. He is renovating a three-bedroom house. Two weeks ago, Daniel bought 20qtl of cement for 1,250 Br apiece. Retailers had almost nothing in stock when he came around the second time.

“The contractor urged me to buy cement quickly before retailers run out,” he told Fortune.

After hours of bargaining with retailers, Daniel bought 16qtl for 24,000 Br.

A salesperson at one of the retail stores in Megenagna, Abeba Alemayehu, says she had sold a quintal of cement at 1,200 Br until last week.

“Our warehouse is empty now,” she told Fortune.

Retailers depend on intermediaries, not allowed to buy from the factories.

“After authorities banned the involvement of intermediaries in the supply chain, we’re left with nothing,” she said.

Officials claim the market crisis forced them to take the measures. The Ministry chose to let the factories have the final say on retail prices, avoiding price caps, according to Kumneger Ewnetu, communications director.

It is the authorities’ second attempt to control the cement market through price caps in two years. The Trade Ministry had capped distribution costs to 20 Br a quintal and limited wholesale privileges to six authorised dealers. The Ministry was forced to remove the price cap two months later as the procedures had brought on a severe cement shortage and driven a spike in retail prices.

Kumneger says this week’s measure is temporary.

Getie Andualem (PhD), a lecturer at the Addis Abeba University College of Business & Economics, argues the government has no business interfering in the cement market.

“Officials should first determine whether cement is a strategic commodity that requires government involvement whenever the market fails to function properly,” he said.