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Ethiopia: Gov't Enterprises Behind Food Price Hike
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The Daily Monitor (Addis Ababa)
30 March 2008
Posted to the web 2 April 2008
Abera W.kidan
Addis Ababa
Government business enterprises have played and are still playing un-desired role fueling the current inflation witnessed recently in consumer food prices in Addis Ababa, an informed source told The Daily Monitor.
Blaming "greedy traders and speculators" apart from other factors in the international market, the government recently announced the lift on Value Added Tax (VAT) and Turn Over Tax (TOT) on imported food items as part of efforts to subsidize key commodity items aimed at countering high food prices.
The source said despite the role they should have played in regulating the market to salvage consumers aginst " greedy "traders, as government bodies, these public enterprises failed to live up to their expectations.
In justifying his accusations, the source named some government food enterprises such as the Bale State Farm, Kality Food Complex, Diredawa Food Complex and Misrak Flour and Bread Factory, as behind a rampant food price inflation.
"As government business companies, these enterprises are basically expected to play a positive role in stabilizing the market to offset acts of greedy and a get-rich-quick traders and speculators," he said.
"It is absurd that these very enterprises capitalized the situation and sold, and are still selling on mounting prices much more than do private traders and merchants." What is more absurd, the source lamented, was that these enterprises did not heed parliament decision on the reduction of the prices of food items following government proposal on same and continue to sell the food items at inflated prices.
He said wheat for instance was sold at a 100 price increase on auction to private retailers who would naturally sell for more to unlucky consumers.
This, he said, was the case before and after parliament decision on the reduction of food prices.
Bale State farm continue to sell a 60-kg bag of flour for Birr 428.00, before VAT, from Birr. 338.00 it sold under normal circumstances, the source said.
Kaliti and Diredawa food Complexes are selling pasta at a 50% price increase, he added..
He said Misrak Flour and Bread Factory, too, is selling a 43 gram and 50 gram bread respectively for 0.25 and 0.35.
A pack of Pasta is being sold for 6 birr at the enterprises chains in the capital, just like private shops.
The enterprise buys from Diredawa food complex for 110 birr per cartons which it sells for 117 to private traders.
Small private bakeries have reduced price for bread from Birr 1.25 to Birr 1.00: Birr 0.30 to Birr 0.25, and Birr 0. 60 to 0.50.
Government bakeries including the state controlled Tourist Trading Corporation have not made a change in gram nor in prices, however, according to the informant.
Bakeries under the said enterprises visited by The Daily Monitor has confirmed thus.
Asked to comment, some shoppers told our reporter that the government should also control its own enterprises to ensure effective implementation of the lift on food prices.
One shopper, a woman in her fifties, said the authorities must tighten price controls, on businesses, private or not.
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The source said ambitious managers who think they can secure future promotion by proving the firms they manage are profitable were behind the price inflation, which cost the government over 4 billion Birr in subsidize to rising cost of food prices, fuel and other essentials.
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