7 January 2013

Ethiopia: Illegal Cattle Markets Cause Headaches For Legitimate Traders

The cattle market in Akaki is just one of the four legal cattle trading centres that the Addis Abeba City Administration recognises.

Since the implementation of the new regularisation bill, cattle traders, such as Teshome Gelana, are bounded by space, whereas buyers, such as Wondwossen Negash would have to go to the dedicated markets to get their desired choice of cattle.

Dawit Abebe, 40, who has been trading cattle since 1994, was waiting for customers, on Wednesday, to sell his 14 oxen, at Shegole livestock market centre, located on Ambo Road, in Gullele District. These were all that were left of the 20 he brought from Harar three weeks ago.

"I used to sell 20 heads of cattle within a week, until six months ago," he said. "But now there are no buyers. Every buyer is diverted to Birchiko, even my long time customers."

Birchiko, the area around a local glass factory, is one kilometre from Shegole, which hosts a cattle, sheep and goat market. However, the City Administration does not recognise Birchiko as a legal market place. There are only four legal markets acknowledged by the city; Kera, in Kirkos District; Kara, in Yeka; Akaki Kera, in Akaki Kaliti and Shegole. Including Birchiko, there are 57 informal market places throughout the City, which the City Administration wants to clear and bring to the legal markets, according to Berhanu Tegegn, trade and marketing development core process leader at Addis Ababa Trade & Industry Bureau.

Traders are expected to be licenced and pay 10 Br a day, for every head of cattle they bring to the legal market centre, after a directive was put into effect in July, 2012. The directive, which was introduced by the Trade & Industry Bureau, fines sellers, trading outside of the legal centres, 60Br.In addition, it enforces traders to buy and sell on receipt, whilst eliminating brokers, who formerly acted as middlemen between buyers and sellers.

The Bureau, which has been discussing the implementation of the directive with Ethiopian Revenues & Customs Authority (ERCA), city and federal police, districts, and traders, commenced full implementation of the directive, in Shegole, as soon as it was issued.

Since then, 43 traders have been licenced and are able to sell at the Shegole centre, including Dawit. Police and controllers have been put in place to prevent brokers from entering market centres, though there are always fights with controllers at the entryway, according to Aklilu, head of the centre.

It is expected that Christmas would be the first holiday to experience the regularisation of cattle trading in Addis Abeba. Places such as Shegole Cattle Market (above) and Akaki (below), wherein trader Hussien Yemer is seen negotiation price with Neche G.Wahid (middle), would be the only places where trading will take place.

"The brokers never allow buyers to buy from the centre," lamented Aklilu. "Before they enter into the centre, the brokers persuade and take them to the illegal livestock market places like Birchiko."

Dawit added to these sentiments, by claiming that "before the directive, we used to sell at least 12 heads a week and 20 on holidays. But now, we just stock the cattle here and increase our cost. I sell a maximum of three a week."

"Since the brokers shifted the market to the informal place, even the licenced traders are migrating there," said Aklilu "Nine of the 43 traders have cancelled their licences and gone to the informal market within a month,".

Sixty heads of cattle enter into the Shegole market every day; a figure down from 300, just six months ago, according to Aklilu. Whereas the illegal market at Birchiko, receives up to 8,000 heads per week.

Over 80 trucks, each carrying 10 to 15 heads, arrived at Birchiko within two hours on Wednesday morning, Fortune observed.

One cattle at Shegole is sold for between 16,000 Br to 23,000 Br, whilst at Birchiko it is 18,000 Br to 26,000Br.The increment is caused by fees charged by the brokers.

The 8,000sqm Kara market, the second largest after the Kera market, accommodates up to 5,500 cattle, approximately one quarter of the number sold outside the market on holidays. Kara has also seen an average price increase of 1,000 Br per head. Cattles cost 15,000 to 24,000 Br when brokers are involved.

Brokers at all market places get 2,000 Br to 3,000 Br for every head of cattle, except at Shegole, where they have been forced out since July 2012.

"First they ask the price for which the trader wants to sell the cattle and then put up to 5,000 Br on the price. Then they negotiate with the buyers. When the cattle is sold, any amount over the price goes into the broker's pocket," said Aklilu.

"We are licenced and we could not use our right. Government could not eliminate the difference between the markets. Even the brokers do not allow licenced traders into the illegal market. We stay here and eventually sell for cheaper prices," added Dawit.

The unlicenced traders, at Birchiko, and other illegal market places complain about the licencing process, in addition to the impact of brokers on the market. The Bureau requires the cattle traders to have CPOs from banks, 250 Br payment, and a house number, although most traders come from outside Addis Abeba; at the end of the year, the authorities charge tax by estimation.

"How can we ask a farmer for a receipt who does not even know anything about the directive?" Said Dawit.

On Wednesday, officials from the Bureau had a meeting with the 34 licenced traders at Shegole, where all were asked to cancel their licences, unless the government forced the brokers out and eliminated the difference between the markets, or closed the informal market places.

They asked to build an abattoir for the 4,300sqm Shegole market, saying that cattle buyers preferred a market place that had the facility.

"We have to expand Shegole and build new market centres in order to bring all illegal traders under the directive," said Solomon Bekele, market development and management expert at the Bureau.

The Government has finished the design for two new livestock market centres, at Akaki Kaliti and Kolfe, and expansion of the Kera livestock market centre, as of last November. Government has budgeted 31.079 million Br for Akaki Kaliti, 28.86 million for Kolfe and 26.64 million Br for the Kera expansion. Financing is supplied by the World Bank, to which the government contributed 16.359 million Br, according to Berhanu.

"We waited a long time to get the title deed from the City Land Administration. But, recently we received the deed for Kolfe and Akaki Kaliti; we also expect to get the deed for Kera soon," he added.

The Bureau received 9000sqm for Kolfe and 20,000sqm for Akaki Kaliti. Kera, established in the 1950's, has 20,500sqm, but it never had the title deed for the land it rested on, according to Berhanu.

"We also planned to build three market places for sheep and goats for each district within the next two years," said Berhanu.

The construction of the centres, which is expected to be started within two months will be finalised after a year.

But for licenced traders, like Dawit, it is a matter of surviving in the market. He pays a 10 Br service fee everyday, for each cattle, and 76 Br for cattle feed, sufficient for three days. This is in addition to the 4,000 Br that trucks charge for 10 heads of cattle to be brought from Harar, and a total of 300 Br at customs checkpoints.

"We are afraid that the cattle will die here in the centre during the long stay, since the centre has no medical service," says Dawit.

That, he says, is on top of the expense that increase daily and the value of the cattle that could decline by the day.

"But we have to force out the brokers and close all the illegal market places until then, or let the licenced traders trade in the illegal markets and hold the directive until enough legal market places become constructed", said Solomon. "Even the buyer does not know the price difference between the legal and broker involved markets except buyers from butcheries," he added.

He says there is a need for awareness creation, regarding the directive.

The Bureau has decided to have a meeting with police from the district and the brokers, on Wednesday January 9,2013, at Shegole market centre.

"We will never negotiate with them. If government does not allow us to work in the legal centres, like Shegole, or close these illegal places, like Birchiko, we will take the whole market to Keta", said a leader of a brokers group at Birchiko.

Keta is a large field in Oromia special zone, North West of Addis Abeba.

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