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Ethiopia - Commodity Exchange Pushes Opening Back Two Months
By MICHAEL CHEBUD
The Ethiopia Commodity Exchange (ECEx), which was due to begin operations last week on December 12, has postponed opening for two months due to delays in installing equipment.
The exchange, which is expected to change the face of Ethiopia's grain marketing, plans to open in February. Promoters hope the ECEx will aid in alleviating food shortages and encourage the commercialisation of agriculture by facilitating transactions between producers, traders and consumers.
"Even the standardised trading pit, which is supposed to be installed in the middle of the Exchange Centre, has not been procured," a source at ECEx told Fortune.
Chaired by Eleni Gebremedhin (PhD), from the International Food Policy Research Institute (IFPRI), headquartered in Washington D.C., a taskforce has been established and commissioned by the federal government to spearhead the project. Other members include representatives from the Ministry of Agriculture and Rural Development (MoARD), the Quality and Standards Authority of Ethiopia, the Grain Trade Enterprise and Ethiopian Development and Research Institute. The taskforce reports to Deputy Prime Minister Addisu Legesse, also minister of MoARD.
Commodity exchanges, first created in Chicago, United States (US), in 1848, provide a centralised trading venue for member businesspeople. They also disseminate market information instantly, collecting statistics, publishing price quotations and setting rules and standards for trading.
ECEx is a nationwide project that will work to harmonise the commodity markets through 13 mammoth announcement boards that will be installed across the country to show prices at the Exchange centre.
However, a source at the exchange disclosed to Fortune that none of the screens have made it to the country yet. Moreover, the exchange has yet to start registering members.
"We will be launching the project registering members as high as 100," Eleni told Fortune.
Though there was a plan to officially launch registering members on December 12, it was not done. This is because the board of the Commodity Exchange Authority, overseeing the project, did not give the final approval of the draft membership rules and regulations. The board, accountable directly to the prime minister, discussed on the draft rules last week on Thursday December 13. The draft has yet to get final approval of the board.
"The process is in the final stages," Ambassador Addisalem Balema (PhD), director general of the Authority told Fortune. "Membership registration will start in the near future once the draft gets final approval."
Desalegn Jena, deputy general manager of Oromia Coffee Farmers Cooperative Union, said that his union would first assess its relevance before joining the exchange as a member.
Officials at the exchange hope that consumers and producers cooperatives would be embraced in the ECEx project.
According to an official at the ECEx, a series of campaigns will be carried out to create awareness among the rural producers to get organised in cooperatives and join the Exchange.
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Why would they alligne the exchange system very close to the EPRDF government? This is a big turn-off for many farmes. Derg tried it with (ERSHA SEBEL LEMAT….) whatever egency. This typ of system needs to be independent and free of the governement’s influence.
I think ppl should buy the stock symbol berbere , it’s expected to rise as google did in the US markets..
The ECEx will help in the long run, it will help farmers to get a fair price for their grains while also establishing a standard for our country. It will also save thousands of grains from being spoiled in different storages around the country. Thank you very much ELENI, we appreciate your efforts and we have no doubts this exchange will succeed.
BRAVO ELENI, PROUD TO CALL MYSELF ETHIOPIAN IN YOUR PRESENCE, MAY YOUR KIND BE MANY FOR THE SAKE OF OUR MOTHER ETHIOPIA.
Please forget those reels without a cause shoutin beg for no reason, I mean I hoonestly voted for kinijit and now I am ashamed of that but be what ever it may there is a difference between politics and goodwill in professionalsm.e I admire what you do wether or not you are eprdf or not for me what matters is that u love Ethiopia and so do we!
I hope this is not one of those “Confession by the Economic Hitman” sabotage. I said this because, if EPRDF supports a policy, it means there is something in it against the nation’s interest.
Ok people just to break the monotony of all side of the political divide…let us come up with some stock symbols for this Exchange ok Be for Berbere…ok anyone for shiro, atmit, bula, should chat be included? so please let us make a list until they get the jumbo screens
Can anyone tell me how this Commodity Exchange work?
I was trying to understand by searching google but I could not understand how the excvhange work and benfit the poor farmer.
Let’s take a simple example berbere farmer and tell me how this exhange help this berbere farmer.
Let’s assume the farmer know the price of berbere in Addis Ababa… how this going to help him knowing the price…. if he have no money to take this berbere to Addis Ababa what is the point of knowing the price?
Beside even if he have money to take his berbere to Addis Ababa due you to the small amount of berbere he is producing would not be very expensive to transprot his berbere to Addis Ababa.
Now the second question is even if he know the price of berbere in Addis and doesn’t want to sale to the milde man for cheap price what is his altranitive store the berbere? if that is the case then he have no income while his berbere is in storage…. beside the storage techoloage is not modern he will lose any proftie he might get by not sale it.
If any one tell me in simple example how this exchange work I would be very thankful.
[May be this explains it a little better. Economist]
EPRDF will not fix the famine problem with this government nonsense.
It needs an independent system away from the greed of the woyane. This can work but woyane will have to let the people own land first.
What the hell is taking so long, werent they supposed to be finished by the mellenium.
I agree with the others that this is a good thing for the long run of Ethiopia. While in the short term there are sure to be problems, that is to be expected of something new.
This should not become political. Anyone who thinks that this should be separate or independent of the government, does not understand economics or financial markets. Of course there needs to be oversight and regulation.
a commodity exchange is a good start for a country like ethiopia’s economy growth.however,This has to be followed up by a stock exchange for the few industries we have going on in ethiopia.One thing that needs to be extermely emphasized is the need for the commodities and stock exchanges “independence".perhaps ,an accredation by well known foriegn exchangs is one way to go about
I am positive about what i am saying. I guess the commodities exchange program will help people. It will help peasants in the short term because they will be connected to world wide market an,d produce what they will gain money for, second they will have better prices and they will get organised, and even governement implication in the field will may be be necessary at first but on the long run it is a tool that will permit them to be independant and take personal risks. Let’s welcome ethiopian rural areas to the new market world.
Not being a Keynesist i would say that establishing these commodities exchange market will help evrybody on the long run, because it will cut all intermediates betweeen the producer and the buyers. Hence, it will help in lowering agricultural products prices in urban areas. So even commercial activities in cereal domain will defenitivly change it’s face, for good or bad.
As many noted, the fact the exchange is under the PM is a big red flag, when the main players of business collide with the main player of politics a much bigger and dangerous aligns are in the making.
The Dr who chair this project, unless she is a political appointee or in business for herself, how could she accept the ruling party involvement in an important project as an commodity exchange, that requires an independent entity and have any credibility in the public mind. How about the institution, specially IFPRI behind this projects, who would compromise their credibility financing a project to hand over the market to a small group of people with out any accountability to any one but the ruling party.
Addis Fortune report came short of the investigation needed to explore this project with lots of holes and with no accountability to any one but the ruling party.
There is more questions than answers
I really appreciate the goodwill and professional effort of Dr. Eleni particularly. A beautiful young lady has now decended down from D.C. to rescue the Ethiopian economy. I believe this system will work to the fullest if the following points are duely be considered in the project.
1. Strong political will ( It seems that the government has already been engaged in it…that is the first main thing)
2. Developing the infrastructure, such as road, warehouse, telecommunication, etc)
3. Producers have to be re-organised in cooperative, association, and in company form (they even have to extend their arms to form freight company which empower them to transport their own products to the point of delivery to the respective consumer)
4. The retailing system have to be also re-engineered (big supermarkets owned by numberous shareholders of the now small shop owners have to be created in order to easily managed and monitor the retailing activity)
5. There has to be a harsh measure on the agents who are deliberately and forcefully making the price to rise. The ‘delalas’ should be the one that this system should seve out from the market.
6. Education, Awareness creation, promostion —have to be continously undertaken.
7. Media should expand its transmition coverage both in radius and time for the program. There has to be continous update of the transaction on the tv and radio (more importantly).
8. Clearly established and registered commodity exchange chain has to finally be attained which will later be a good succes for the taxing system of country apart from its obvious role in making the prices fairest in the market.
These are some of the points came into my mind for now. I am very grateful once again to those who are investing their time to solve the complex market puzzle of Ethipia.
LIKE ALL THINGS WE DO IN ETHIOPIA IT WILL ALWAYS BE LATE…WE WILL NEVER CHANGE
Kelebet comment does not address the fundamentals of markets but cheerleading. Commodity exchange is not something you copy from others before you establish the background from the bottom up. A selfserving top down approach never worked as it is tried for 50 plus years but further distorts the market.
A political will is the single critical issue as kelebet put it. Short of defining what political will means is noting. Power corrupt and absolute power corrupt absolutely. By no means, a government should be involved beyond a regulatory role to facilitate the market to work properly.
In a real exchange, government agencies regulate and referee the players with strict guidelines and an oversight. Any resemblance of conflicts of interest will be dealt with for the sake of the integrity of the market. We never heard of, a Prime Minster or a politician in the ruling party having any role in any working commodity exchanges in the world.
The good doctor should know better and explain how she manages to put the PM to play, any role unless it is a political decision to benefit the ruling party than Economic decision to benefit the population. In the absence of independent institution that has a say in a project of this magnitude, she should demand a complete transparency and disclosures of who should and should not be involved and make it public. Beyond that, the institutions that backed the project should know better too and demand independent and transparent agency to oversee it. A project of this magnitude should not be left for the government and a few individuals to run it at their will.
There is an untold story with the intellectuals of our time, who are educated in western countries and know well what works and does not work, but fall for any thing and wreck their credibility. I do hope the good Dr is not going down that route and do the right thing. The biggest crises we are facing as a nation, is lack of credibility among our intellectuals. It is too early to make a judgment on this Dr but at the outset, the way she is handling the project does not look good.
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