By Staff Reporters
April 15, 2011 (Ezega.com) - The Ethiopian Government has opened outlets selling basic food items such as sugar and edible oil to consumers directly. The decision was taken in view of scarcity of food stuff in the market caused by shop keepers opposing the price control imposed by the government.
Ethiopia’s trade and industry ministry is given the power to set up fair price shops and controlled sell of items, such as sugar, fruits, and edible oil. There have been long queues before government sales outlets in capital Addis Ababa and many people are taking off from their job to buy food stuff.
The government imposed price control measures on 18 basic commodities in January this year. Though the media and the people took a shy of relief at this bold move to help people against soaring inflation, the shopkeepers are opposed to it.
It is to be recalled that Prime Minister Meles had warned that should traders fail to respond favorably, his government would take things into its own hands and retail basic goods. He also said that he may even invite foreign corporations to start retailing in Ethiopia.
Shop owners refused to store and sell essential commodities citing the order was against their right to get a fair profit and the fixed prices would lead to losses. Since then there is paucity of sugar, cooking oil, and other basic items in the market.
Prime Minister Meles Zenawi had vowed last month to make every possible intervention to overcome the artificial shortage created by the retailers and ensure supply of required food stuff in large quantity. He also asked the ministry concerned to import edible oil and sugar until the situation is stabilized.
The Merchandise Wholesale and Trade Enterprise is allowed $17.8 million credit by the Commercial Bank of Ethiopia three days ago for importing 12,500tn of palm oil from Malaysia. The government had already purchased all palm oil imports ordered by Ethiopian businessman and would supply them to the market at subsidized rate. The price of palm oil has gone up in the international market and without subsidies it is certain to put a big strain on citizens.
Several businessman and economists are critical of government moves for market course correction. Eyessus Work Zafu, chief of Ethiopian Chamber of Commerce, has termed the steps as efforts to expand state control over the economy. According to him, such measures would discourage private participation and impact the overall economic growth.
Economists also see little impact of the price caps on rising prices. They warn counterproductive measures due to the state interference in the buyer-seller relation. The inflation stood at 14 percent in February, a month after price ceiling was put in place. However, chief price regulator Efrem Woldesellassie blamed the wholesalers and retailers for the crisis. He accused them of earning excessive profits on sugar and cooking oil and tax laundering.
According to him, the 6 percent and 4 percent profit ceiling on Sugar and palm oil is enough for shopkeepers to make gains. Efrem reiterated that price controls steps and government takeover of distribution were temporary and would be discontinued as soon as there was stability in the market. The last time such government distribution of food stuffs was seen in Ethiopia during the Communist era.