8 November 2012

Ethiopia: Even a Kid Is Feeling the Severity of Cost of Living


One evening, I was walking on one of the streets of Saris area, in Addis Ababa with a small kid, son of my landlord (house renter). The vast green farmlands that we saw on the hills encompassing Addis Ababa at a distance were delightful. The wind blew calmly carrying sweet aroma of seasonal flowers locally called Adey Ababa, (yellow flower) together with the scenic landscape which turned almost yellow. The weather sprinkled a charm power, which utterly could heal out stressed emotions. Actually, it was difficult to explain beauty of the green distant landscape in words. The late Artiste Afewerk Tekle had already portrayed it magnificently on canvas how this scenery I am talking about looks like.

I couldn't continue with my admiration of the landscape across. The small kid accompanying me detoured my attention. He said "coin...coin gashe!,". He kicked the coin with the tip of his shoes. In deed, it was a ten cent coin, mixed with soil and gravel. "Is it wrong to take it?" I asked the kid. He hesitated a little bit and softly said "You told me not to take anything which is not mine."

I thought to myself that was a good moral lesson for him. I always tell him some do's and don'ts, for two things. One, it is the social responsibility to guide kids on the right track. The other and still very important is to put the master-tenant relations, with his parents, on a firm base. Hence, it may give me some relief from the worry of house rent fee increase. "Now we could not get a claimant to return it, ' I went on to say 'and the coin need not to be wasted here getting rust,"'. I said this to the kid to encourage him to pick the coin. But, the kid responded in a smarter way, putting a prerequisite, "I will pick it only if you can give me ninety cents more so that I can buy a candy for one birr." I was simply stunned. How a small kid knows the coin is valueless to satisfy his little need. My childhood period was, by far different from the this kid's time. No doubt, ten-cents had value for children of my age, in the past. We used to rub the rusty coins we found in filthy places against our hair and bought two candies for five cents.

It would be only a flamboyant story if I tell this to the present kids. Actually, the same thing happened to us (children of my age) when an old guy whom I remember him for his sweet told us the price of food commodities of his youth-hood. "In our time five cents bought a loaf of bread which is more than enough for two guys' breakfast" he also proudly narrated to us how they used their wit to color their monthly get together called Ikub-may be equivalent to credit association in which one can be paid their sum of saving on a rotational base. And they bought a sheep with seven birr contributing one birr each and enjoyed toasted meat for free as they sold its hide at seven birr. No doubt, the cost of living varies over generations and though it has never been such a nightmare in Ethiopia. Such a huge gap, in terms of price hike, is also unhealthy while the advancement of technology, be it agricultural or industrial, is making product and productivity a little more surplus than ever before.

Needless to mention, the cost of living has become unbearable these days, making some of the coins like five-cents useless. Issuing this cent as a currency unit is no more than wastage of national resources, particularity in smaller transactions. What makes the issue in context unique is, then, once the price of a given commodity goes up, it never comes down. To every one's surprise, it is just a question how to get a sound reason as to what governs the price hike in Ethiopia. For sure, it is not a market factor-supply and demand that governs our market. Overnight prices of any consumable goods doubles or triples. Once fixed, it would never come down. When consumers ask retailers what caused the soaring price on various commodities, their only response is pointing hands on distributors and it goes like that, always.

Altayou Demese, a resident in northeast Addis Ababa around Kotebe, is an employee with a monthly salary of less than four hundred birr. She carried a small thin plastic bag, inside it were three kilogrammes of onion and some lemons when the writer of this piece approached her on the eve of Ethiopian new year. She said, the onion was not enough to cook delicious Doro Wot, sauce made from chicken meat, butter and spices. "Whether you believe it or not, I had one hundred birr in my purse when I set out to come to this market, now what is left in my hand is this," and flashed to me a rolled ten birr and two or three one birr notes. It was enough to look at her saddened face to understand how she was dissatisfied with the market.

She asked some retailers the reason for a kilo of onion to cost twenty six birr. But, they only told her that there was scarcity in the distribution.

The superfluous market chain and the greedy acts of most traders, among other things are becoming a gangrene for consumers. Today, no one can make any prediction as to when this price hike ends. The most shocking phenomenon in this regard is, both a given product and its substitutes cost the same amount. No way to make a choice. Being that the case, questions come here. Who determines the market?... Is it a market principle? I mean demand and supply. Do consumers and producers have a say in the market? No doubt, the answer is no!. If the producer and the consumer have a say in the market, at least one of them could be a beneficiary. However, the middlemen are the beneficiaries, whether they are traders, 'butchers', brokers or whatever.

Habtamu Aklilu, a graduating class of marketing department at Admas University explains; "our market is entirely guided by individuals who rush to satisfy their evil greed. Most traders do not apply neither moral nor marketing principles when they set price on a given item. In deed, one needs to cover costs invested on the product or service like: raw material , transportation, warehouse, and the likes. And covering all that, ten per cent profit is too much. But, in our context the practice is diametrically opposite, they secure over three hundred per cent profit for themselves."

It is in everyone's recent memory that a kilo of onion cost twenty six birr on the eve of the new Ethiopian year. 'Thanks to mobile phone!' the price was soared swiftly every where in Addis. Why? There was no clear reason for that. But, it was artificial scarcity created by people who are rushing to satisfy their ever unsatisfied greed. This remark is not made out of the blue. There is a clear indication that the production was surplus. If that was not so, why have the price hike not continued with onion? One is not expected to be a farmer to understand the fact that onion could not be planted, grow and harvested in less than a month. Therefore, the problem is grounded in unhealthy mentality of some traders and/or brokers. Ill mentalities like, amassing large profit from few items. This is what we are experiencing now. The traders create artificial scarcity through switching tactics after tactics including; hoarding commodities, buying farmlands with surplus products with cheap price and creating a made up scarcity and trading commodities only for retailers whom they favour. Farmers have no choice. It is the trader and broker who have better access to trucks to transport goods from farmland to major central market areas. Thus, those who have the access to enjoy surplus profits retailing it little by little with high price, putting unbearable burden on consumers. Even in the harvest seasons- ideal cereal abundance time- the price of cereal crops is seen soaring. Plainly speaking, traders with a rent seeking mentality are steering the market to a limitless ditch, securing double, triple and even more profits than the efforts they had exerted. That is why some persons have managed to own a skyscraper in Addis Ababa through engaging in trade only for three years. In deed, if these traders are to be considered to add value to the market, it will be only through frustrating residents.

By the same token, the traders under discussion are misinterpreting free market economic principle; they are, obviously, on the wrong way. After all, they could not be considered as traders in this sense, rather they are 'butchers' that eat up sections of the society that have caused their existence, in fact, with due respect for those who run their business ethically. The question is then, how long are they to stay in the business with such a parasitic character on consumers, producers and the government as well? They add value to none, but are eating up the flesh and bone of the society. Due to that fact, consumers and producers are thinning and thinning while such traders and/or brokers are getting fatter and fatter, which is too unfair. More, this is resulting in imbalance of wealth distribution in the society.

It is a pity to hear that middlemen are even involving in illegal cross boarder trading, smuggling a range of food commodities, including live animals and cereals. Worst yet is, that they never refrain their hands from smuggling highly state subsidized food commodities like wheat. Being this the case, the mischievous acts they do include delivering counterfeit goods, dispatching commodities that threaten public health and decreasing quality and quantity. It is in our recent memory how traders responded to the price cap imposed on some food commodities, they stopped distribution of most basic food items.

To address part of the problem, the government has been importing huge amount of wheat and palm oil and it is said to have reached consumers through their associations. This is one good endeavour. But, it could not be a lasting solution. The hike is not on only some select food items, rather it covers a wide ranges of food and non food commodities, clothing for instance. A second hand T-shirt, may be disposed in its country of origin, here tagged with a price of over two hundred birr. What is more, a certain kid's story book which has a price of 5 rupees in India costs here over hundred birr. Thus, there will not be a better solution other than putting a means that could end these evil deeds. To this end, practices like illegal dominance, uncompetitive practice and unfair competition are among the major evils to be root dried. In fact, consumers could not satisfy their taste of quality and quantity without the existence of traders. Similarly, if consumers are back broken to buy commodities, it also frustrates the survival of traders. If the current hiking continues, the government might see various ways to settle it, one for instance could be through inviting multinational corporations. This measure may put our traders out of the game.

Therefore, the win-win approach benefits both. Now the country has put in place a law for trade practice and consumers' protection as well as an institution to enforce it. The authority in charge of enforcing the law is announcing that it is conducting enormous awareness raising sessions. But, this needs to be coupled with tangible results. What is on the ground? Have the traders brought about improvements?... our day to day observations testify that otherwise is true. , Most traders are still giving the market a shocking wave. Indeed, the intertwined long held problem of the market could not be tackled overnight. It might require a little more effort to combat malpractices of such traders. Whatever the case, however, is that it is a critical time to put some sort of solution in place and consumers like Altayou would afford living and kids could feel coins are worthy.

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