17 February 2013

Ethiopia: Inked Out of Business

Prompted by the success of a friend in her neighbourhood, Nardos Woldu, 26, borrowed 20,000 Br from her mother and 8,000 Br from Addis Saving & Credit S.C. and opened a small shop in February 2011. She provides secretarial services, including computer typing, printing and photocopying.

She started her business, located in front of Unity University College at Gerji in Bole District, just before students were to take their end-of-year exams, and did most of their photocopying. She earned a good income in the first month.

Business looked even rosier when an NGO ordered her to copy and bind a total of 10,000 pages into handouts it required for a workshop.

"I could not believe my ears," she recalls. "I had no one to get help from to do all that business, but I accepted it since the money was attractive."

She procured reams of paper and five toner cartridges for her printer and photocopier.

Her troubles started as soon as she started making the prints and copies

"All were low quality from the first print out," she said. "I could not go to the stationary to change them since it was during the weekend."

Despite that, however, she went on making the copies the whole night. By morning she had a pile of poor quality handouts which the NGO declined to take.

"That day I regretted starting my own business; I lost about 10,000 Br," she said.

Another business that started in Merkato five years ago was forced to close shop three months later after suffering the same disappointment as Nardos, according to Jibril, brother of the owner, who joined him in another business a few months ago.

"He could not tell the difference between the original product and the refilled cartridges," Jibril says.

That was when he learned that he could run a profitable business by buying used and empty toner cartridges and filling them with powder, for resale.

Businesses that claim to save money by refilling toner cartridges advertise everywhere including in taxis. They encourage potential customers to refill their toners once they out, instead of buying new ones.

The brothers buy a used cartridge for 30 Br and a kilo of powder for 700 Br; they refill up to 300 cartridges a day.

"We advertise in town to buy more used cartridges and I hope our production will increase very soon," says Jibril.

They have three employees doing the actual refilling, while the brothers go around looking for business and delivering their products to customers. Their customers include government and private offices, NGOs and stationeries.

"It is a sophisticated business environment," says Ashenafi Hailu, marketing manager at Snap Trading & Industries Plc, an importer of HP products.

The users of refilled cartridges include those that cannot tell an original product from a refilled one and those that deliberately seek cheaper prices, Ashenafi says.

Currently, the minimum price for the genuine HP toner cartridge is 2,700 Br whilst the maximum is 4,900 Br. On the other hand, Jibril sells his refilled toner cartridges to distributers in Merkato at a minimum price of 600 Br and a maximum of 2,400 Br.

"I have seen people buying our products in stationeries thinking they are original," Jibril said.

This is because the stationeries tell buyers that it is original in order to sell it at a higher price, he says.

"In one way or another, it is affecting our business and the customers are not getting quality products," says Ashenafi. "In order to get quality printing work, it is very important to use high quality toner cartridges. If you use low quality toner cartridges in your printer, it can potentially harm your printer in the long term."

The harm is not only for printers but also for those that unknowingly purchase refilled toner cartridges. Nardos' business has earned a bad reputation and is struggling as a result of the below par print quality she previously delivered.

"I do not have as many customers as my neighbours do," she says. "I have a bad name because of earlier work."

The refilled toner cartridges are also a stiff competition for manufacturers and importers in the country.

It is becoming a challenge for consumers to identify original toner cartridges from the refilled ones and are therefore left with poor quality print outs.

Nanodas Trade & Industry Plc, a local company established in 2010, to produce toner cartridges at its factory in the Oromia Special Zone, has more than 67,000 various kinds of printer, photocopy and fax toner cartridges in stock. It sells its products from two distribution branches in Merkato and Kazanchis.

"The market is abused by the poor quality of forged products," complains Tewodros Amiga, marketing manager of the company.

The company has been trying to get quality certification from the Ethiopian Conformity Assessment Enterprise (ECAE), which offers testing and certification services based on international standards. However, the ECAE says that technologies such as computers and printers and their accessories are very challenging to standardise since technological advancements in the field are volatile.

"Currently, the ECAE is to open a new department for the certification of computers and accessories," says Gashaw Tesfaye, deputy director general of ECAE. "Consumers should be vigilant in identifying genuine businesses and items from counterfeit ones."

The ECAE, a federally owned public enterprise, supervised by the Ministry of Science & Technology (MoST), is currently preparing a product liability law that prohibits producers and sellers from producing and selling sub-standard products in order to protect consumers, according to Gashaw.

Such a law may help remedy the losses suffered by legitimate businesses and reduce the number of small-time businesses that depend on making cheaper and lower quality products.

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