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Coca-Cola Flows In Ethiopia, But Drains Foreign Currency
By Peter Heinlein
27 March 2009
The American soft drink Coca-Cola has become a symbol of Ethiopia's deepening financial troubles. The beverage is flowing again after a brief pause, even though it drains the country's precious foreign exchange reserves.
Truckloads of Coca-Cola began rolling out of the bottling plant in Addis Ababa Friday, ending a nearly two week Coke-drought. The local bottler had to shut down this month when it became impossible to obtain the hard currency needed for imports such as bottle caps.
With its foreign exchange reserves at a critical low, Ethiopian authorities have been giving priority to necessities like wheat and fuel.
But Coke bottling company spokesman Solomon Shiferaw says government bureaucrats have granted approvals to get the beverage flowing again.
"The flow of foreign currency was not as it was before. We have to wait some time to get the approval but yes we are getting the approvals, we're being supported so we're back in business," Shiferaw said.
Coca-Cola had become a rare commodity in shops across Ethiopia as supplies dried up.
Hotels and restaurants where the soft drink was available suddenly found business booming. One restaurant manager, who asked for anonymity due to fear of reprisal, said drinking Coke is seen by many as a political statement, because the rival Pepsi bottler is owned by a conglomerate with close government ties.
"The people prefer Coca-Cola because of political cases, the owner of the Pepsi company is very familiar and supporter of the government"
Restaurant manager in Addis Ababa
"The people prefer Coca-Cola because of political cases. I observe this. There was election here, and after that the people are diverted to Coca-Cola. Because Coca-Cola is a private company, but the owner of the Pepsi company is very familiar and supporter of the government, and after that people are drinking Coca-Cola," the manager said.
The Coca-Cola shortage is only one symptom of Ethiopia's economic malaise.
The government this week suspended the licenses of the country's six largest coffee exporters and confiscated 17-thousand tons of coffee beans. The action came days after Prime Minister Meles Zenawi said exporters were stockpiling coffee at a time when prices are low. He called the practice 'illegal', and said the government would sell the beans.
Coffee is one of Ethiopia's biggest foreign exchange earners, bringing in half a billion dollars a year, nearly one-third of the country export earnings. Government figures show coffee exports declined 10% over the past eight months.
The International Monetary Fund predicts Ethiopia's economic growth will decline from an estimated 11.6% last year to about 6.5% this year.
Many western economists and lending institutions say one of Ethiopia's biggest problems is its reluctance to abandon government controls and accept free market reforms. Banking and telecommunications are cited as areas where Ethiopia lags far behind.
The World Bank's lead economist for Ethiopia, Deepak Mishra, expresses confidence the old attitudes are changing.
"In some sense I do see some Marxist Leninist rhetoric, but I think on the whole there is a change in the mindset," Mishra said. "To give you an example, there's a group of government officials who recently went to Malaysia and Vietnam to look at the export process, and they came back and submitted a report to the cabinet, and the first thing they said is, without private sectors, we just can't grow."
Mishra says reforming the banking and telecoms sectors could sustain the high growth rates Ethiopia wants, while keeping inflation down, and breaking the country's dependence on foreign assistance. He says most Ethiopian policymakers agree in principle.
The only question is whether to reform now, as westerners advocate, or over a period of years, as the policymakers prefer
leave Bankes as the way it is but Tele should be allowed for foringe markets.
I think privatization a way to a sustainable growth. If the government was a democractic or a nationalist type( like the chinese government) it would prioratize national interest over regional( in this case tigrai) interest. let’s implement this model now, not later.
We should have many enterpreneural individuals invited to our Ethiopia for future economic growth.
COKA for everyone!!! Nazret, why did you bold out that quote about drinking coke being a way of defying the government. you guys showing subliminal disdain for al-Moudi? That would be weird since you guys always report, on his every move, in a positive light.
Well, it doesn’t take a genius to look around and see that the major problem is not privatization. If that was the case, the chinese, Ethiopian airlines and some other fledgling government owned enterprizes would have failed. No, the problem is not government ownership, it is corruption. If corruption is not dealt with you will have the worest crisis and a brazil like economic gap among Ethiopians which will definitely bring a revolution at its worst. What you need is a campaign to fight corruption. As long as there is no corruption, with good management Ethiopian government owned enterprises will be very profitable like Ethiopian airlines.
Why dont the coca cola company establishes its own cork producing factory instead of draining all foreign curencies to abroad. Or why is no one in the country who uses this advantage of establishing cork factory in the country and be profitable.
This report is very interesting.
One clear thing is people are smarter than government. The people hate the government they didn’t vote for. The people go to the extent that some commodities are beneficiary of the government and they don’t buy it. I like that.
It seems government controls the currency and favor one company from the other. Now the Pepsi don’t have problem with foreign currency to buy cork because they have some one who allow them the currency and the Coca guys don’t have some one from palace and their request was rejected so forced to close. This story is typical of corruption.
The biggest picture though is if people don’t like you then you are nobody.
Mishra is interesting character. He is there to satisfy big banks and big telephone monopolies. He want to sell Ethiopian enterprises to big outside monopolies. That is what he is paid for and paid by also. It is amazing every one wants to take the piece of pie from poor Ethiopia.
I like the story itself because it contains every thing. Politics, rejection of government, corruption, greed by monopolies, little guys rebelling against companies who associate with government they don’t like.
This is the real situation in today’s Ethiopia.
I prefer PEPSI but i drink COKE too
But hey what matters is COKE is back in Business
I am tired of people comparing Ethiopian Airlines with ETC. Lufthansa, Emirates, a dozen others are not forbidden to fly to Ethiopia. Don’t compare Ethiopian with ETC!!! BTW Ethiopian is only 3 star airliner after all. You cannot brag about that all day and night. It shows how desperate we are for something that is just average in comparison to the rest of the world. China is not against privatization, in fact the telecommunication industry is “ye gojo industry” in China. Small business do quite a lot of work.
Hay Nazereth,please do not make conflict here there is no politics if you drink pepsi or cocacola,always when short fall comes blame the government or blame individual investers.cocacola was shutdown because of short of foreign currency nothing else.Please contribute your own share to this country,we have been blaming each other for centuries now is the time to build this wonderful country.
EPRDF is to blame for the return of coca cola, they want to poison east Africa.
we need shabia to ruin, ooops to rule us
“Many western ‘economists’ and ‘lending institutions’ say one of Ethiopia’s biggest problems is its reluctance to abandon government controls and accept free market reforms. Banking and telecommunications are cited as areas where Ethiopia lags far behind.”
As expected every time these guys continue to pressure Ethiopia to hand over public property to the west and other richs. This according to them is the only way out. It talks about western economists, lending institutions,etc…wow, what a coordinated move towards possesion of key sectors, the rest will follow!
Now Ethiopians have to work more than ever to develop their country in every way possible.
” ‘The World Bank’s lead economist’ for Ethiopia, Deepak Mishra, expresses confidence the old attitudes are changing.”
“In some sense I do see some Marxist Leninist rhetoric, but I think on the whole there is a change in the mindset,” Mishra said. “To give you an example……”
“Mishra says reforming the banking and telecoms sectors ……
The only question is whether to reform now, as westerners advocate, or over a period of years, as the policymakers prefer”
Mr Deepak, please please don’t mix up things. That is your view. This what we hear from you guys who work day and night for the rich guys to disposses properties from citizens, to deny citizens the right to own properties in what ever way the ppl want. Who says that unless a country follows a capitalist or socialist ideology , it won’t grow. These ideologies are European, made for Europeans or the west. We are Ethiopians, we have a different way of living, culture, and doing things. I don’t think it is for you to decide for us to accept Marxist or western ideology, who are you after all to judge us. More over if Marxism is found to be good to the ppl of Ethiopia, why are you so angree? True we are living in the ‘globalization’ era, but it doesn’t mean we have to sell our land, telcom, bank, etc to others. What about our ppl? One surprising thing is your divisive words about government officials, they might have said something about private sectors but the way you wrote it is as if they agree about privatization of these sectors. Mr Deepak one thng you don’t understand is you have totally forgoten about the people’s power in making decision, most of you experts, economists, western officials think that if you can convice gov’t officials then who cares abouth the people(after all the agreement is to exploit the people barbarically).
It seems that there is pressure from every angle. It seems that ‘NOW OR NEVER’ makes them to be so coordinated in media(the recent Economist), WB, IMF, US and WTO officials , and hopefully we see a lot more to come. It seems that some rich ppl and western gov’ts are using the current global crises as an opportune moment to disposses the rightful owners of properties in Ethiopia - The ETHIOPIANS. The gov’t and the people shouldn’t rush to make decisions in this regard. It just is unacceptable. We don’t have to sell our only properties to foreigners in the name of free market, a concept that favors only the devloped, to become bystanders in our own country. We don’t have to invite all those ugly faces of capitalism which are systematically devised to leave out the majority while making the selected few rich.
More over I don’t want a foreigner to tell me to go to where I belong in my OWN COUNTRY in places where they don’t want to see locals as seen in most other African countries.
What a shame ,even during the bad days
of the military Junta Derg regime ,never
Coca Cola bottles desapeared from
shops ,groceries and Bars .What’s happening
now ,the crime minister ,his thugs and
Bandas with the complicity of the Fool
diaspora peoples are denying the sad realities
of the country .
While Pepsi which lost almost its entire market across the country did not run out of the dollar how com coca-cola did?
A SO CALLED GOVERNIMET AND PEPSI COMPANY OWNER “AL-HAMUDI” seamed to be engaging dirty economic game to re-introduce their product which funds the criminal acts of fascist TPLF.
After all I prefer to drink a GEFERSSA dam than any soft drink made in Ethiopia, both Pepsi and coca-cola tastes like charcoal powder mixed with sugar and water, why Ethiopian economic policy is a “Free Market” economic policy when it comes to quality and control? Is it because most businesses are owned by the government officials/TPLF? I consider my 45 days stay in Addis Ababa as waste of time and resource, the city is back to its trashy place, quality in almost every service is way under average, corruption is worst than even the DERG, is this where I am going to invest my precious resource?
I said hell no to that, the only reason why this tyrants are inviting investors is to gain a balance in foreign currency which have only one way flow, only to develop the TPLF monsters overseas bank accounts, so many towers stopped in a middle of construction due to lack of row material as cement and steel, high ways to most states are just more than dangerous, no wondering why most investors choused to stick around Addis since there is no access or assurance to invest in ethnically divided states out side Addis Ababa.
Till when are we going to cheat and fool our selves, do we really need to require profit from people trying to help and support this country to make a change and diffidence? The anti corruption agency is another trick TPLF really didn’t realize that people already have good amount of knowledge about, if corrupted high ranking TPLF officials come up with some thing called anti corruption agency, does it seam funny?
Simply the rotten TPLF political game is as easy as understandable by my 4 years old.
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