Joke of the day
A lawyer's dog, running around town unleashed, heads for a butcher shop and steals a roast. The butcher goes to the lawyer's office and asks, "if a dog running unleashed steals a piece of meat from my store, do I have a right to demand payment for the meat from the dog's owner?" The lawyer answers, "Absolutely."
"Then you owe me $8.50. Your dog was loose and stole a roast from me today."
The lawyer, without a word, writes the butcher a check for $8.50. The butcher, having a feeling of satisfaction, leaves.
Three days later, the butcher finds a bill from the lawyer: $100 due for a consultation.
CBC News - World - A country you can never stop worrying about
CBC News - World - A country you can never stop worrying about
Ethiopia is one country that I can never stop worrying about. Nor can the world.
Each time that I have gone back over the past 25 years I am encouraged to see so much has changed since the great famine of 1984-85 that shocked the world and so moved us Canadians. Yet there is also much here that is alarmingly similar.
This time old friends — survivors of that earlier tragedy — are proud to show me the signs of progress in the northern province of Tigray, the very epicentre of a famine that killed over a million people.
In the countryside, small catchment dams have been built to trap rainwater and reforestation projects are underway; in the small provincial capital of Mekele, they can now show off a modern university, busy markets and a vibrant youth culture.
A boy eats raw chickpeas from the family plot in Ethiopia's drought-stricken Oromiya region in January 2009. (Ho New/Reuters)
Still, for all these encouraging signs I know there remain two constants here.
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Joke of the day
A motorist was driving in the country when he came upon a priest and a rabbi standing on the shoulder of the road, fishing. Next to them was a sign that read "Turn Around. The End Is Near."
The motorist didn't like to be preached to, so he rolled down the window and yelled, "Mind your own business, you religious nuts!"
A few seconds later the two fishermen heard tires screech, then a splash.
The rabbi turned to the priest and said, "I told you we should've just written, 'Bridge Out.' "
Daniel Bekele stood for what he believed.
In the ever-shrinking space for freedom of expression and association in Ethiopia, Daniel Bekele has faced heavy-handed government repression as a prominent anti-poverty activist and human rights lawyer. Daniel has dedicated his life to building a vibrant civil society and strengthening human rights in a country where freedom of expression and other fundamental rights are severely constricted.
After leading grassroots efforts to promote voter education and election monitoring Daniel was arrested following the controversial 2005 parliamentary elections and spent two and a half years in prison on politically motivated charges of conspiracy and incitement to overthrow the government. He and fellow human rights activist Netsanet Demissie were the last two people released after a high-profile trial that originally charged 131 journalists, politicians, and civil society leaders with crimes ranging from genocide to treason.
Although he had an opportunity to secure his early release by joining co-defendants in signing a letter of apology to the government, Daniel instead chose to stand trial and contest the charges in court, testing the rule of law as a matter of principle. He was eventually convicted in a deeply flawed trial in which even the judges acknowledged that Daniel and Netsanet's civil society activities were legitimate and even commendable.
Since his release in 2008, the Ethiopian government has adopted the Charities and Societies Proclamation, a new law on nongovernmental organizations that is so restrictive as to make the work of most human rights groups in Ethiopia illegal. Human Rights Watch honors Daniel Bekele who, at great personal risk, challenges the Ethiopian government to uphold the civil and political rights that protect all people.
Daniel Bekele made the following statement upon hearing about the award announcement:
"I accept such a prestigious award with a genuine sense of humility. I hold this award in the name of my fellow colleagues working for the promotion of human rights in Ethiopia. I am humbled by such global level recognition of the human rights work in Ethiopia; but it is also a constant reminder of the human rights situation in my country.
Poverty, political conflict and lack of good governance have created a disheartening socio-political quagmire and a very poor record of human rights; however, a gradual transition to rule of law and a peaceful democratic political order is not entirely hopeless. While a constitutional level guarantee of human rights is a positive step forward; the real protection of the most basic human rights remains a daunting challenge. I hope we shall overcome the seemingly insurmountable challenges with citizens re-engaging in democracy in a peaceful way.
I thank Human Rights Watch for this award and its valuable work; and I thank my family, fellow colleagues and friends globally for your kind support."
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Humanitarian governance in Ethiopia: A view from INGOs
Tuesday, September 29, 2009 by Abby Maxman (CARE Ethiopia), Waleed Rauf (Oxfam GB, Ethiopia), David Throp (Save the Children UK, Ethiopia)
The spark for a debate
Earlier this year, the Overseas Development Institute published a Working Paper called Humanitarian governance in the new millennium: An Ethiopian case study. The paper was later summarised in an HPN article, which featured in the June edition of Humanitarian Exchange Magazine.
Though the article provides a valuable perspective on how humanitarian action and disaster management has changed in Ethiopia over recent decades, it misses an opportunity to provide a fuller analysis of the diversity and evolution of actors working in the humanitarian field. It also fails to present contrasting perceptions and discourse, which could help with much-needed consensus building.
The article focuses entirely on how selected informants from within Ethiopian Government circles perceive the conduct, motivation and performance of international Non-Governmental Organizations (INGOs). While these perceptions are valid and important, no attempt is made to present the perspectives of the INGOs themselves. This could have balanced the article considerably. The case study deliberately sets out to ‘study’ only part of the ‘case’.
Recognising change
The article draws a caricature of INGOs as stagnant and set in their ways. This is contrasted with the dynamic efforts of successive Ethiopian regimes to manage humanitarian affairs. Yet there have been a number of innovations made by INGOs recently, particularly in the area of accountability and transparency. These include: the Red Cross, Red Crescent and NGO Code of Conduct, the Sphere Project, and the Humanitarian Accountability Partnership.
INGOs have changed in other ways too. They are no longer traditional ‘charitable giving’ organisations. Their work is now shaped by participatory methods; rights-based frameworks; capacity building approaches; knowledge management initiatives; and so on. In fact, given the fast changing environment which shapes INGO behaviour and possibilities, it is unlikely that a reactionary INGO - resistant to change and adaptation - would survive at all.
In Ethiopia, INGOs have contributed to a large and well documented body of work, which supports government-led efforts to promote a more holistic disaster management approach aimed at reducing vulnerabilities and managing risk. Specific areas of contribution include:
support to enhance the effectiveness and efficiency of the Productive Safety Net Programme, including the current pilot in pastoral areas;
support to the Enhanced Outreach Strategy (a national health and nutrition initiative targeting children and mothers);
efforts to protect and diversify livelihoods, including through enhancing access to credit, markets and strengthening value chains;
initiatives to build local government capacities to better manage risks and contingencies;
support to early warning systems;
innovative drought cycle management interventions in pastoral areas;
support to immunisation campaigns and other activities to mitigate public health epidemics
Even at the sharpest end of emergency response - in dealing with severe acute malnutrition - INGOs have notably shifted their approaches over recent years. In line with current best practice, they have moved away from classical ‘feeding centre’ interventions towards ‘community therapeutic care’ programmes, which are premised on building local (and sustainable) capacities for early identification, referral, and treatment of the most vulnerable.
Humanitarian partnership
This list of examples helps to illustrate the fact that INGOs are not organisations stuck in the ‘famine and food aid’ paradigms of the past, nor are they primarily obsessed with feeding their own coffers through overstated and inappropriate emergency responses. Such assertions are anachronistic and not borne out by recent experiences and work taking place on the ground.
Partnership with the government underpins all INGO work in Ethiopia and is generally built around constructive technical collaboration at different levels. Many projects and programmes aim to contribute to a more holistic cycle of disaster management that goes beyond emergency response by attempting to address underlying vulnerabilities, and by promoting preparedness and mitigating shocks.
Beyond programmatic work, many INGOs also aspire to make relevant technical contributions to policy discussions through research and project based learning on a variety of topics, including disaster risk reduction and mitigation. These initiatives are frequently welcomed by officials and supported by donors who provide financial resources and other inputs. A lot of this policy work has the added aim of making programmes more timely, targeted and cost effective.
The start of a debate
The recent HPN article provides an opportunity for INGOs to join an important debate. How might we work more positively together, under government leadership, to address vulnerabilities and improve preparedness? How might we respond within a more comprehensive disaster management framework?
This goes beyond technical matters. It implies the need to reshape relationships between INGOs and government, moving beyond the stereotypes set out in the article. Greater acknowledgement of (and reflection on) the challenges, influences and trends that shape the evolution of INGO practice would also be helpful. This could offer a better and more constructive point of reference upon which to build dialogue.
These efforts to reshape relationships would require a number of elements. To begin with, a common vocabulary and conceptual framework for disaster risk management must be established and agreed by all stakeholders. Work must also be done to build trust and consensus through honest dialogue; and the creation of safe, mutually respectful spaces to discuss potentially contentious matters. This includes getting consensus on the way in which needs, risks and vulnerabilities are conceptualised, quantified and articulated.
All of this would help in the development of technically appropriate strategies for risk reduction and, when the need arises, for responses to acute shocks and crises. Efforts to help community voices be heard and incorporated into policy options would improve practice as well. Finally, the role of the media should be examined, both at the domestic and the international level.
Around the world - from Latin America to Africa to South Asia - INGOs are working with governments and other stakeholders to reduce the risk of disasters and to mitigate their potential effects. There is no reason why Ethiopia should be an exception to this.
The views offered here are given in a personal capacity and intended as a constructive contribution to debate and dialogue.
Improving financial and food security for farmers in northern Ethiopia
Improving financial and food security for farmers in northern Ethiopia
New York, 25 September 2009 – Swiss Re, Oxfam America, The Rockefeller Foundation and The International Research Institute for Climate and Society at Columbia University (IRI) announced a joint Commitment to Action at the Clinton Global Initiative (CGI) 2009 meeting in New York on 22 – 25 September. Aimed at helping communities most vulnerable to climate variability and change, the collaboration will expand on their joint 2008 commitment focused on using risk reduction and risk transfer skills to improve financial and food security for farmers within the drought-prone village of Adi Ha, Tigray Regional State, Ethiopia.
Drought-related risks are a primary concern throughout Ethiopia where 85% of the population is dependent on smallholder, rain-fed agriculture. Education and exposure to micro-insurance, increased access to credit and improved risk management techniques are necessary measures for these populations to effectively adapt to the changing climate.
The 2009 commitment builds on the success of the 2008 pilot project in Adi Ha. After conducting workshops on climate change, financial literacy and insurance, the pilot weather risk insurance project achieved uptake by 20% of the village (200 households), with 38% of enrollees from female-headed households (recognized as the poorest of the productive poor). 65% of enrollees were participants in Ethiopia's Productive Safety Net Program (PSNP is a federal cash-for-work program that serves 8 million chronically food insecure households in Ethiopia) and most work on projects designed to build greater resilience to climate change within their communities in return for cash they use to pay for crop insurance.
David Bresch, Head of Sustainability & Emerging Risk Management for Swiss Re, commented, "Swiss Re is delighted to build on the success of our work with Oxfam and our other partners to expand the pilot program in Ethiopia to five new villages. This expanded project will provide further validation on useful techniques that allow communities in developing countries to adapt to the changing climate."
The pilot project is part of the collaborative Horn of Africa Risk Transfer for Adaptation (HARITA) project including Swiss Re, Oxfam America and numerous additional international and Ethiopian organizations.
This year's commitment will expand the program to include at least one new crop and test the pilot model in four new villages in Tigray, and one in Amhara. Weather index insurance for rain-fed cereal farmers is proposed to be expanded utilizing two new automatic weather stations to cover the four new villages. Read more.
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Joke of the day
Two men were walking home after a party and decided to take a shortcut through the cemetery just for laughs. Right in the middle of the cemetery they were startled by a tap-tap-tapping noise coming from the misty shadows. Trembling with fear, they found an old man with a hammer and chisel, chipping away at one of the headstones.
"Holy cow, Mister," one of them said after catching his breath, "You scared us half to death ... we thought you were a ghost! What are you doing working here so late at night?"
"Those fools!" the old man grumbled. "They misspelled my name!"
Ethiopia - Telecoms, Mobile, Broadband & Forecasts
Paul Budde Communication Pty Ltd., Sep 2009
The Ethiopia - Telecoms, Mobile, Broadband & Forecasts report includes all BuddeComm research data and analysis on this country. Covering trends and developments in telecommunications, mobile, internet, broadband, infrastructure and regulation.
Ethiopia is the last country in Africa allowing its national telco, ETC a monopoly on all telecom services including fixed, mobile, Internet and data communications. This monopolistic control has stifled innovation and retarded expansion. The government tries to encourage foreign investment in a broad range of industries by allowing foreigners up to 100% equity ownership. However, there is no official schedule for the privatisation of the national carrier and the introduction of competition, but once this happens, the potential to satisfy unmet demand in all service sectors is huge.
Ethiopia has the second lowest telephone penetration rate in Africa, but it recently surpassed Egypt to become the second most populous nation on the continent after Nigeria. However, it is also one of the poorest countries in the world with approximately 80% of the population supporting themselves through subsistence agriculture, which accounts for more than half of the country’s GDP.
Despite the monopoly situation, subscriber growth in the mobile sector has been excellent at a compound annual growth rate (CAGR) of almost 90% since its inception in 1999 and more than 100% in the past six years. However, demand has been even stronger, and ETC has been unable to satisfy it. Ethiopia’s mobile market penetration is still one of the lowest in the world at little more than 3%. Fixed-line penetration is even lower, and this has also impacted on the development of the Internet sector. Prices of broadband connections are excessive.
Improvements are beginning to develop following massive investments into fixed-wireless and mobile network infrastructure, including third generation mobile technology, as well as a national fibre optic backbone. Ethiopia is investing an unusually large amount, around 10% of its GDP, into information & communication technology (ICT). However, telecommunications revenue has grown only moderately in comparison, at around 16% per annum. It has remained under 2% of GDP, a low figure in regional comparison.
Key Highlights:
- Forecasts for fixed-line, mobile and Internet markets to 2010 and 2015;
- Comparison with other countries in the region in terms of GDP, mobile, fixed and Internet market penetration;
- Detailed profile of the monopoly service provider in all market sectors;
- Launch of 3G mobile service in market with excessive broadband pricing;
- Extensive rollouts of national and international fibre infrastructure;
Multi-billion US$ investments planned before 2012.Fixed-line penetration in Ethiopia and other countries in the region – 2008
CountryFixed - line penetration
Djibouti - 1.4%
Somalia - 1.2%
Ethiopia - 1.1%
Sudan - 0.9%
Eritrea - 0.8%
Kenya - 0.7%
(Source: BuddeComm based on various sources)
What is wrong with ECX?
Editor's Note: Below this note is an article critical of Dr. Eleni's ECX. It is generally good that challenging views get articulated on major issues. There can't always be one perfect, know it all solution for any problem and Ethiopia's problems, specially in facilitating the natural flow of goods, need to be supported by ideas coming from experts on that field. I don't want to pretend I know enough about commodity exchange. One of the things that attracted my interest to ECX is its transparency. The farmer knows instantly how much he/she is paid for the product. To me, that says it all. The author didn't clearly state how much of the final sales amount the farmer gets. Prices usually follow the degree of stability in a system. It is possible the newly established ECX may need time to stabilize itself after which it may be able to command the pricing in a way that benefits the farmers. Then again, it is never too late to convene and initiate a combination of solutions, personalizing and patenting such a complex issue aside. Too much of talking without readily applicable and working methods to test will be repeating the old hollow tactics we badly need to retire. At the same time, ignoring expertise that have been dealing with the business as simply retards, can cause unexpected surprises.
Read below...
By Wondwossen Mezlekia
The Economist magazine describes the Ethiopian government as "one of the most economically illiterate in the modern world." This portrayal, albeit contentious, is not without truth. But, the government's recent meddling in the coffee trade has to do more with the government's socialist-inspired economic policies than economics per se. As if to prove this, Venezuela's Chavez, another diehard socialist, just took actions similar to what Prime Minister Meles Zenawi did earlier this year. Last week, President Hugo Chavez accused the country's largest coffee producers, Fama de America and Cafe Madrid, of smuggling coffee out of Venezuela to circumvent government coffee controls and vowed to nationalize they refuse to heed. Chavez was quoted as saying "if they give me an excuse, I'll nationalize them." This must be why some critics questioned the viability of a free commodity exchange in Ethiopia. But, technically, commodity exchanges can exist as viable institutions even under tyrannical governments. In fact, the only successful cash commodity exchange with spot delivery in Africa was the one in Zimbabwe. Studies show, Zimbabwe Agricultural Commodity Exchange (ZACE) was a viable exchange, until it closed in 2003 due to monetary instability, and operated successfully with its total costs covered by member subscriptions of brokers. The former coffee auction system in Ethiopia is another example. So, what went wrong with the USAID funded Ethiopia Commodity Exchange (ECX)? Dr. Eleni Gebre-Medhin says the exchange is a response to the paradox of "bumper harvest one year and severe shortages the next, or surpluses in one region and famine in another." If so, what's coffee got to do with famine? Is ECX delivering on its promises? The bumper harvest-famine paradigm Ethiopians who watched the state owned Ethiopian Television programs in years 1995 through 1997 vividly recall the infomercials about Sasakawa Global 2000 (SG2000) and the video clips of Meles Zenawi and the former US President, Jimmy Carter visiting certain corn fields. SG 2000, a joint program of Sasakawa Africa Association (SAA) and the Carter Center's Global 2000, is an agricultural growth program that promotes the potential of improved food crop technologies through field demonstration. SG2000's success stories in other countries were so appealing that the government adopted it right away. Increasing food production was a top priority for the government, so it was anxious to see SG2000 do its magic. The massive campaign to convince farmers to use fertilizers and improved seeds paid off pretty quickly and many farmers were provided with the inputs on a credit basis to be repaid at the first harvest. During the following season (1996/97), food growing regions saw a record high production due to the favorable rains and use of improved farm inputs. But, the excitement lasted for barely a few weeks as prices plummeted with supply surpassing domestic demand. Many farmers, deep in debt, defaulted on their credits. On the other hand, the rest of the country was in dire need of food and millions of people starved during the same year. It turns out, ones bumper harvest won't mean food to the other if the people cannot afford to pay for it. In Ethiopia, millions die of hunger not because they didn't know where to buy food, but because they didn't have the means to buy with. In any case, these are the historical events that Dr. Eleni talks about when selling the idea of a commodity exchange. According to her, ECX will help eradicate famine by facilitating the distribution of commodities in an efficient manner. She argues, event at times like during 1996/1997, grain traders are unwilling to transport stocks to drought stricken regions because of lack of price information and/or the inherent high risk of doing so; those traders who braved to defy all the odds have realized net losses. In brief, by reducing marketing risks and providing merchants with real time price information, ECX can help facilitate ease of transaction and enhance competition. By so doing, commodities can be distributed across regions, reaching a larger consumer base at competitive prices. Further, says Dr. Eleni, ECX can double the value of the domestic market over five years assuming it captures 40% of the domestic market that is estimated at $l billion in value and adds a mere 25% value to it. ECX came into existence in May, 2008 with able experts in the field and an aim to trade more than 25 agricultural commodities, mainly grain and pulse. The exchange was off to a rough start, as its commencement coincided with an unexpected sharp rise in domestic and global prices for commodities. There was a shortage of grains flowing through the exchange. The shortage persists to date. After a series of interesting events, in December 2008, ECX evolved into a coffee exchange, no explanation given. Today, the most traded commodity at ECX is coffee, not grain. ECX has replaced the old coffee auction center, not to conduct a forward trade which would have been an improvement, but to do the same old spot auction with an electronic warehouse receipt system. ECX, there's a slave in my coffee bag! With ECX taking over the coffee auction, the government emerged out as the main player in the market for the first time in the history of the coffee sector. All of the successive governments (the imperial, the military regime, and the current one) depended on coffee for export but only the current government dared to control the marketing system for coffee. This arbitrary move exposes the dark side of coffee trade in Ethiopia and ECX's role as a facilitator. For so long, the government has been oblivious to the fact that coffee farmers are hurting because of the mandatory export. In Ethiopia, it is illegal to sell export grade coffee beans in local markets; only second and third grade coffees are sold locally. Global prices for export grade coffee are determined at the New York Mercantile Exchange (NYMEX) and are generally less than domestic prices. For example, last week (Sept 19), a pound of coffee was sold at Merkato Buna Tera, the central coffee market in Addis Ababa, for 27 Birr or roughly $2.20 whereas the same volume of export grade coffee was traded at ECX for an average of 18 Birr or roughly $1.47. Coffee farmers and traders would better off selling their coffee stocks in domestic markets. The difference between local and export prices (in the above example, a difference of 15 Birr or $.73 per pound) is an obligatory duty imposed on participants. The governments (past and present) have never felt obliged to compensate farmers or traders for the benefit they forgo due to this export regulation. In one of her interview on Voice of America's Amharic Service, Dr. Eleni said, a market is deemed free if people can sell their produce whenever, where ever, and to whomever they want at whatever price they please. In that sense, she said, the coffee trade in Ethiopia is free. If so, since it is now known that the government is actually dictating the coffee trade, shouldn't it compensate exporters and farmers for the money they lost due to the mandatory export? That is exactly what the governments of Colombia and Brazil did in 2007 . These governments subsidized coffee growers for the price differential when the rally in the local currency eroded export profits. After all, why should citizens be responsible for the government's inability to create favorable sources of foreign exchange or limit its needs for it? This legal exploitation of poor farmers is exacerbated by ECX's new system because the system eliminates direct trade - the only system that pays farmers extra pennies for their hard work - and gives the government more power and means to control the value chain. In recent years, the increased demand for Specialty coffee opened up opportunities for farmers that grow the finest coffees. Importers sourcing single origin coffee often pay farmers premium prices over NYMEX prices for the highest quality. Specialty coffee importers make direct contacts with growers to ensure the highest possible level of quality and integrity for the coffee beans they want to buy. The introduction of ECX's hasty coffee trade system, however all but eliminates this direct trade between importers and farmers. The only farmers that are allowed to bypass the exchange are cooperatives and commercial farms. Since only less than 10% of the farmers are organized in cooperatives, the new system subjects the individual farmers to adverse competition. These farmers are now allowed to sell their produce at the NYMEX commodity prices only. On top of this, the government commands the majority sit in ECX's Board of Directors. Currently, only 18% (2 out of 11) of the directors are private business owners; the rest represent government interests. The parastatals, Guna Trading and Ethiopian Grain Trade Enterprise are now the most influential forces in the market as they enjoy preferential policy treatment over their competitors. Granted, these parastatals will use their leverage to lower their purchasing prices in order to maximize their profits. Under these circumstances, it is difficult to see how ECX maintains synergy and serve as a fair and free marketplace to all. Commodity exchange for coffee The former coffee auction system has been functioning very well and successfully operated in three successive governments. It would have been wise to enhance the existing system rather than starting one from the scratch. For that matter, the auction was prepared to make gradual upgrades to an electronic warehouse receipt system and eventually to a forward trade. The decision to replace the auction by ECX was completely political and not in the best interest of the sector. The government's allegation that some of the suppliers and exporters had diverted coffee beans meant for export to local markets or that they hoarded coffee stocks in search of better prices is an excuse. Smuggling will continue to be a problem as long as there exists price disparity between local and export markets. Replacing the auction centers by ECX won't solve the root causes of the problem. In countries where coffee is traded in a commodity exchange, coffee trade is conducted separate from other agricultural commodities. In Uganda, the operation of electronic warehouse receipt system and coffee exchange are supported by a two independent institutions: the Uganda Commodity Exchange (UCE) and Uganda Coffee Development Authority (UCDA). These institutions work together to promote a fair and transparent exchange. In Kenya, the coffee exchange is an independent operation that is managed by an association of direct stakeholders. The Kenya Coffee Producers and Traders Association (KCPTA) owns and manages the Nairobi Coffee Exchange (NCE). Another unique feature of the NCE is that it has a separate and smooth direct sale operation for Specialty coffee where marketing agents directly negotiate with foreign buyers. This system, also known as the "Second Window" is separate from bulk commodity trading. To fix the problems with ECX, first, the coffee exchange needs to be separated from ECX's broader functions as an agricultural commodity exchange and it should allow full participation of the stakeholders (from farmers to exporters.) Second, to take advantage of the price differential for Specialty coffees, and until most of the farmers are organized in cooperatives, the exchange ought to allow individual farmers to transact freely and directly with ultimate buyers who will enter into agreements with farmers and limit ECX's role as a third-party certifier to coffee stocks that are not associated with such a direct buyer. Lastly, to do away with the problems associated with coffee smuggling and to encourage the production of high quality coffee, the government ban on domestic trade that requires selling export grade coffee at a loss should be lifted or accompanied by monetary incentives from the government
Read below...
By Wondwossen Mezlekia
The Economist magazine describes the Ethiopian government as "one of the most economically illiterate in the modern world." This portrayal, albeit contentious, is not without truth. But, the government's recent meddling in the coffee trade has to do more with the government's socialist-inspired economic policies than economics per se. As if to prove this, Venezuela's Chavez, another diehard socialist, just took actions similar to what Prime Minister Meles Zenawi did earlier this year. Last week, President Hugo Chavez accused the country's largest coffee producers, Fama de America and Cafe Madrid, of smuggling coffee out of Venezuela to circumvent government coffee controls and vowed to nationalize they refuse to heed. Chavez was quoted as saying "if they give me an excuse, I'll nationalize them." This must be why some critics questioned the viability of a free commodity exchange in Ethiopia. But, technically, commodity exchanges can exist as viable institutions even under tyrannical governments. In fact, the only successful cash commodity exchange with spot delivery in Africa was the one in Zimbabwe. Studies show, Zimbabwe Agricultural Commodity Exchange (ZACE) was a viable exchange, until it closed in 2003 due to monetary instability, and operated successfully with its total costs covered by member subscriptions of brokers. The former coffee auction system in Ethiopia is another example. So, what went wrong with the USAID funded Ethiopia Commodity Exchange (ECX)? Dr. Eleni Gebre-Medhin says the exchange is a response to the paradox of "bumper harvest one year and severe shortages the next, or surpluses in one region and famine in another." If so, what's coffee got to do with famine? Is ECX delivering on its promises? The bumper harvest-famine paradigm Ethiopians who watched the state owned Ethiopian Television programs in years 1995 through 1997 vividly recall the infomercials about Sasakawa Global 2000 (SG2000) and the video clips of Meles Zenawi and the former US President, Jimmy Carter visiting certain corn fields. SG 2000, a joint program of Sasakawa Africa Association (SAA) and the Carter Center's Global 2000, is an agricultural growth program that promotes the potential of improved food crop technologies through field demonstration. SG2000's success stories in other countries were so appealing that the government adopted it right away. Increasing food production was a top priority for the government, so it was anxious to see SG2000 do its magic. The massive campaign to convince farmers to use fertilizers and improved seeds paid off pretty quickly and many farmers were provided with the inputs on a credit basis to be repaid at the first harvest. During the following season (1996/97), food growing regions saw a record high production due to the favorable rains and use of improved farm inputs. But, the excitement lasted for barely a few weeks as prices plummeted with supply surpassing domestic demand. Many farmers, deep in debt, defaulted on their credits. On the other hand, the rest of the country was in dire need of food and millions of people starved during the same year. It turns out, ones bumper harvest won't mean food to the other if the people cannot afford to pay for it. In Ethiopia, millions die of hunger not because they didn't know where to buy food, but because they didn't have the means to buy with. In any case, these are the historical events that Dr. Eleni talks about when selling the idea of a commodity exchange. According to her, ECX will help eradicate famine by facilitating the distribution of commodities in an efficient manner. She argues, event at times like during 1996/1997, grain traders are unwilling to transport stocks to drought stricken regions because of lack of price information and/or the inherent high risk of doing so; those traders who braved to defy all the odds have realized net losses. In brief, by reducing marketing risks and providing merchants with real time price information, ECX can help facilitate ease of transaction and enhance competition. By so doing, commodities can be distributed across regions, reaching a larger consumer base at competitive prices. Further, says Dr. Eleni, ECX can double the value of the domestic market over five years assuming it captures 40% of the domestic market that is estimated at $l billion in value and adds a mere 25% value to it. ECX came into existence in May, 2008 with able experts in the field and an aim to trade more than 25 agricultural commodities, mainly grain and pulse. The exchange was off to a rough start, as its commencement coincided with an unexpected sharp rise in domestic and global prices for commodities. There was a shortage of grains flowing through the exchange. The shortage persists to date. After a series of interesting events, in December 2008, ECX evolved into a coffee exchange, no explanation given. Today, the most traded commodity at ECX is coffee, not grain. ECX has replaced the old coffee auction center, not to conduct a forward trade which would have been an improvement, but to do the same old spot auction with an electronic warehouse receipt system. ECX, there's a slave in my coffee bag! With ECX taking over the coffee auction, the government emerged out as the main player in the market for the first time in the history of the coffee sector. All of the successive governments (the imperial, the military regime, and the current one) depended on coffee for export but only the current government dared to control the marketing system for coffee. This arbitrary move exposes the dark side of coffee trade in Ethiopia and ECX's role as a facilitator. For so long, the government has been oblivious to the fact that coffee farmers are hurting because of the mandatory export. In Ethiopia, it is illegal to sell export grade coffee beans in local markets; only second and third grade coffees are sold locally. Global prices for export grade coffee are determined at the New York Mercantile Exchange (NYMEX) and are generally less than domestic prices. For example, last week (Sept 19), a pound of coffee was sold at Merkato Buna Tera, the central coffee market in Addis Ababa, for 27 Birr or roughly $2.20 whereas the same volume of export grade coffee was traded at ECX for an average of 18 Birr or roughly $1.47. Coffee farmers and traders would better off selling their coffee stocks in domestic markets. The difference between local and export prices (in the above example, a difference of 15 Birr or $.73 per pound) is an obligatory duty imposed on participants. The governments (past and present) have never felt obliged to compensate farmers or traders for the benefit they forgo due to this export regulation. In one of her interview on Voice of America's Amharic Service, Dr. Eleni said, a market is deemed free if people can sell their produce whenever, where ever, and to whomever they want at whatever price they please. In that sense, she said, the coffee trade in Ethiopia is free. If so, since it is now known that the government is actually dictating the coffee trade, shouldn't it compensate exporters and farmers for the money they lost due to the mandatory export? That is exactly what the governments of Colombia and Brazil did in 2007 . These governments subsidized coffee growers for the price differential when the rally in the local currency eroded export profits. After all, why should citizens be responsible for the government's inability to create favorable sources of foreign exchange or limit its needs for it? This legal exploitation of poor farmers is exacerbated by ECX's new system because the system eliminates direct trade - the only system that pays farmers extra pennies for their hard work - and gives the government more power and means to control the value chain. In recent years, the increased demand for Specialty coffee opened up opportunities for farmers that grow the finest coffees. Importers sourcing single origin coffee often pay farmers premium prices over NYMEX prices for the highest quality. Specialty coffee importers make direct contacts with growers to ensure the highest possible level of quality and integrity for the coffee beans they want to buy. The introduction of ECX's hasty coffee trade system, however all but eliminates this direct trade between importers and farmers. The only farmers that are allowed to bypass the exchange are cooperatives and commercial farms. Since only less than 10% of the farmers are organized in cooperatives, the new system subjects the individual farmers to adverse competition. These farmers are now allowed to sell their produce at the NYMEX commodity prices only. On top of this, the government commands the majority sit in ECX's Board of Directors. Currently, only 18% (2 out of 11) of the directors are private business owners; the rest represent government interests. The parastatals, Guna Trading and Ethiopian Grain Trade Enterprise are now the most influential forces in the market as they enjoy preferential policy treatment over their competitors. Granted, these parastatals will use their leverage to lower their purchasing prices in order to maximize their profits. Under these circumstances, it is difficult to see how ECX maintains synergy and serve as a fair and free marketplace to all. Commodity exchange for coffee The former coffee auction system has been functioning very well and successfully operated in three successive governments. It would have been wise to enhance the existing system rather than starting one from the scratch. For that matter, the auction was prepared to make gradual upgrades to an electronic warehouse receipt system and eventually to a forward trade. The decision to replace the auction by ECX was completely political and not in the best interest of the sector. The government's allegation that some of the suppliers and exporters had diverted coffee beans meant for export to local markets or that they hoarded coffee stocks in search of better prices is an excuse. Smuggling will continue to be a problem as long as there exists price disparity between local and export markets. Replacing the auction centers by ECX won't solve the root causes of the problem. In countries where coffee is traded in a commodity exchange, coffee trade is conducted separate from other agricultural commodities. In Uganda, the operation of electronic warehouse receipt system and coffee exchange are supported by a two independent institutions: the Uganda Commodity Exchange (UCE) and Uganda Coffee Development Authority (UCDA). These institutions work together to promote a fair and transparent exchange. In Kenya, the coffee exchange is an independent operation that is managed by an association of direct stakeholders. The Kenya Coffee Producers and Traders Association (KCPTA) owns and manages the Nairobi Coffee Exchange (NCE). Another unique feature of the NCE is that it has a separate and smooth direct sale operation for Specialty coffee where marketing agents directly negotiate with foreign buyers. This system, also known as the "Second Window" is separate from bulk commodity trading. To fix the problems with ECX, first, the coffee exchange needs to be separated from ECX's broader functions as an agricultural commodity exchange and it should allow full participation of the stakeholders (from farmers to exporters.) Second, to take advantage of the price differential for Specialty coffees, and until most of the farmers are organized in cooperatives, the exchange ought to allow individual farmers to transact freely and directly with ultimate buyers who will enter into agreements with farmers and limit ECX's role as a third-party certifier to coffee stocks that are not associated with such a direct buyer. Lastly, to do away with the problems associated with coffee smuggling and to encourage the production of high quality coffee, the government ban on domestic trade that requires selling export grade coffee at a loss should be lifted or accompanied by monetary incentives from the government
Save a Tree
Let’s face hard facts: Ethiopia is facing an ecological disaster! Not from catastrophic climate change (that is macro-climatic changes resulting from variations in solar radiation, deviations in the Earth’s orbit, changes in greenhouse concentrations, etc.,) but from man-made causes. Ethiopia is facing an ecological catastrophe caused by deforestation, soil erosion, over-grazing, over-population, desertification and loss of biodiversity, and chemical pollution of its rivers and lakes. Hundreds of square miles of forest land and farmland are lost every year. According to the Ethiopian Agricultural Research Institute1 , “Ethiopia loses up to 200,000 hectares of forest every year and warned that if the trend continues the country would lose all of its forest resources by the year1 2020.” Other data show that “Between 1990 and 2005, Ethiopia lost 14.0% of its forest cover (2,114,000 hectares) and 3.6% of its forest and woodland habitat. If the trend continues, it is expected that Ethiopia could lose all of its forest resources in 11 years, by the year 2020.”2 The wild animal population is disappearing at an alarming rate due to deforestation and loss of natural habitat, and hundreds of plant and animal species are facing imminent extinction.
Dr Gedion Getahun, Research Scientist at the Environmental Radio analytical Chemistry in Mainz, Germany writes3,
According to the UN, Ethiopia’s forests are depleted, at present less than three percent of the entire country is covered with trees… In Ethiopia, biodiversity is treated in very awful manner. The destruction of natural habitat as well as a threat to the flora and fauna and other biological resources diminish the economy of the country. This affects the country’s wealth and with it, the existence and the well being of the nation.
The Lake Koka environmental disaster -- a topic of special coverage by the Al Jazeera Network4 -- a few kilometers outside Ethiopia’s capital is only the tip of the iceberg of Ethiopia’s environmental nightmare. As one resident of the Lake Koka community put it5 :
The main problem here is the water. People are getting sick. Everyone around here uses this water. There is no other water. Almost 17,000 people… come from 10 kilometers away and use this water. The water smells even if you boil it; it does not change the color. It is hard to drink it. The people here have great potential and we are losing them, especially the children. I am upset but I don’t have the ability to do anything. I would if I could, but I can’t do anything.
Another local resident lamented the polluted Lake Koka water in apocalyptic terms:
It is better to die thirsty than to drink this [Koka] water. We are drinking a disease. We told the local authorities our cattle and goats died due to this water, but nobody helped. We are tired of complaining.
Nothing has been done to hold criminally accountable the polluters of Lake Koka, or “compensate for damages” the people living in that community for the devastating health problems they continue to face from using the toxic water of the lake.
Almaz Mequanint, who has struggled for years to bring attention to the devastating environmental pollution caused by the Wonji/Shoa and Metehara sugar factories, wrote six years ago:
I feel helpless and in despair when I think of my whole family and the 100,000 voiceless residents who have been living around the sugar factories of Ethiopia…. I now suffer from asthma because of the air pollution at that time. My teeth are decayed and I have knee and other joint problems. My kids are suffering from tooth decay, cavities and staining.”6
Nothing has been done over the past six years to improve the health conditions of the tens of thousands of people who worked in the sugar factories or community residents, nor has any action been taken to “compensate them for the damages” they suffered as a result of industrial pollution of criminal magnitude. Just this past week, a website was set up to call attention to the plight of these victims.7
Africa’s knights in shining armor should take care of business in their own backyards -- lakes, rivers and factories -- before mounting their steeds on a crusade to save Africa from global warming.
Editor's Note:
The above article is an excerpt from Professor Al Mariam's article issued for solely politicizing the matter. While nothing is wrong with it, I think coming up with a solution would be a noble idea in addition to, of course, his great contributions to constantly inform us with major issues such as this. My recommendation for this disastrous situation is to immediately start doing something to fight it. The environmental concern, if nothing is done now in a national dimension, no doubt is already causing the demise of the society in that region much faster than any where in the world. Before things get to the point of no return, Africans need to fight the new enemy that's out to destroy them. Technology is the answer for this. There needs to be a way to stop people from massively cutting trees for their every day use. Any idea? Aha...
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