Fortune News | Dec 05,2018
Bags of cement are stacked up high in Megenagna, one of the more famous retailing areas in Addis Abeba. But the closed warehouses in the photo betray the turbulence of a market where production is low, prices escalating, and the authorities are at a loss on how to address the challenge.
It is not an entirely bleak picture. Cement shortages have improved from their level half a year ago. Surprisingly, it has not dented waiting times at wholesalers and forced contractors to turn to retailers that source from the underground market and sell for over 500 Br a quintal, double the wholesale price.
It is a development that the Ministry of Trade & Industry has attempted to stabilise with little to show for it. It allowed some 80 companies to begin wholesaling, from just about six, lifted price caps and gave priority to government projects.
"We've been waiting in line since then," said a contractor working on a public project, baffled that the government finds it hard to even help itself.
This is not fortuitous for the construction industry, which continues to grow despite slowing and tends to pick up after the rainy season. Still, the production capacity of the 14 cement factories lags behind by about a quarter of estimated demand. Power interruptions, the breakdown of machinery at two large cement factories and the hindrance of productions at Messebo Cement in Tigray Regional State, have not helped.
Experts warn that the government has yet to properly scrutinise the supply chain and suggest that intermediaries should be dealt with somehow. But even they do not believe there is much wiggle room short of ensuring that supply improves.
You can read the full story here
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