31 August 2014

Ethiopia: Smokers Coughing Up a Hefty Price

‹Mikias Eskiyas, a 28-year-old house painter, has smoked for half his life. The smell of his smoke often makes his siblings avoid him. The 20 Br he spends daily on cigarettes also amounts to a quarter of his income.

"The price of cigarette was 40 cents for a stick and eight Birr for a packet two years back, but now it costs 16 Br to 20 Br depending on the location," said Mikias."I tried to quit smoking three to four times, but I found it difficult."

He was smoking a brand called Rothemans for more than 10 years; he believed Nyala, a local brand, smelled bad and did not look stylish to smoke. That was three years ago. Now Nyala is cheaper and has "less strong chemicals", so he has moved on to smoking those.

"Some years back, the price of Nyala was 15 cents for a stick and 50 cents for the Rothmans, but now both have increased drastically to 80 cents and two Birr, respectively," said Abdu Nassir, a shop owner at Mexico Square.

Tobacco affects the heart, liver and lungs. It is a major risk factor for heart attacks, strokes, and cancer such as lung cancer, cancers of the larynx and mouth. It also causes peripheral vascular disease and hypertension. Beyond all this tobacco use is a significant factor in miscarriages among pregnant smokers, and it contributes to premature births and low birth weight which can cause the chance for Sudden Infant Death Syndrome (SIDS).

According to a 2012/13 estimate, over six billion sticks of cigarettes are smoked in Ethiopia annually. The majority of them are brands of the National Tobacco Enterprise (NTE),with the others being imported from China, Lithuania, Kenya and Germany; some are smuggled into the country illegally. The NTE estimates that its share of the market is 62pc, with the rest of the market supplied by brands such as Rothmans More, Benson and Marlboro.

The NTE was established in 1942 as the Imperial Ethiopian Tobacco Monopoly. It was registered in 1999 as a share company with the monopoly right to produce, import and export tobacco and tobacco products. From the total share the government owned 78pc. with 22pc owned by a Yemeni company, Sheba Investment Group, up to 2014.

But, after June 2014, the Yemeni based company boosted its ownership of the Enterprise to 60pc, with the 1.25 billion Br acquisition of government shares from the Privatisation & Public Enterprises Supervising Agency (PPESA).

The Enterprise has four farms, at Shewa Robit, Blattie, Hawassa and Wolayita, working with the local farmers, which they call outgrowers, numbering 8,000. On average the company produces 1,200kg of tobacco a hectare, cultivating 2,000ha in two seasons each year.

The NTE is currently manufacturing four billion sticks of cigarettes across five brands, including Nyala, Elleni, Delight, Nyala Premium and Gisilla. Nyala accounts for 90pc of the total. The others account for between 1.38pc for Delight and 2.4pc for Gisilla.

The 70-year-old tobacco manufacturer had been operating with a single machine for over 60 years, but acquired a new 150 million Br model in 2003. It has now been operating with these same old machines for over a decade.

The Enterprise, which is located along Roosevelt Street, has a capital of 3.3 billion Br with a net profit of 280 million Br in 2011/12 and 319.5 million Br the following year. It employs 5,230 permanent and contract workers.

The company exports about 1.05pc, or 42 million sticks, of Nyala Premium brands to South Sudan annually. The remainder are sold in the local market, through its 75 wholesalers all over the country.

The company works three shifts a day to manufacture the cigarettes, but the production for the last two years stands at similar rate - four billion sticks. This number has grown from 3.2 billion sticks, in 2009/10, to four billion sticks in 2013/14 - a 20pc increase.

The Enterprise achieved the increase through training its employees and reducing the rate of machinery breakdown, said Ayele Alebel, public relations officer of the Enterprise.

The last two years have seen increased control by the Ethiopian Revenues & Costumes Authority (ERCA) along with regional administration to stop illegally smuggled brands, which made it difficult for the enterprise to meet the growing demand for local brands, according to Tiruwork Woldehanna, marketing and sales manager at the Enterprise.

The Enterprise has made a 10pc price increment since September 2013. The price adjustment was made only on Nyala two years after the last price increment. The increment pushed the price of a box of cigarettes, containing 200 sticks, to 86 Br at the company gates for the wholesalers.

Abdu buys a packet of Nyala for 13 Br from the wholesalers, and Mikias buys it from the retailers for 16 Br.

The NTE commissioned its own study, which estimated that there are 1.5 million smokers in Ethiopia, between the ages of 15 and 49. This, it says, is 1.7pc of the total population. Among the age group of 15 to 49-year-olds, 7.6pc of men and one percent of the population are smokers. The prevalence of smoking in Ethiopia has decreased sharply, almost 10 fold, since 2002/03, when it stood at 14pc, according to the Food, Medicine & Healthcare Administration & Control Authority (FMHACA).

The prevalence of smoking in Ethiopia is lower than many other African countries. In Kenya, for instance, 17 pc of men and two percent of women smoke.

With the intention of reducing the number of smokers, The House of Peoples' Representatives (HPR) has ratified the World Health Organisation's Framework Convention on Tobacco Control (FCTC), which places limitations on the sale and use of cigarettes.

The main focus areas of the convention include forbidding smoking in public areas, where 46pc of the total population become passive smokers; banning under 18s from smoking and banning tobacco advertising in the mass media, as well as on billboards and t-shirts. The proclamation approved by the House also indicates tax increases and public campaigns.

Following Parliament's ratification for the implementation of the WHO's convention, the country is in the process of drafting an implementation directive for the ratified proclamation, according to Samson Abreha, public relation & communication director at FMHACA.

The legal department of the FMHACA is in the process of drafting the directive, which includes details of penalties when individuals smoke in public places and who will have jurisdiction over the matter. The tax rate that will be imposed on cigarettes to discourage smokers is also under discussion at the Ministry of Finance and Economic Development (MoFED), according to Behailu Nigussie, public relations team coordinator at the FHMACA.

According to the WHO report on the global tobacco epidemic, 2011, tobacco use continues to be the leading global cause of preventable death. It kills nearly six million people a year, of whom more than five million are users and more than 600,000 are non-smokers exposed to second-hand smoke. Each year, it causes hundreds of billions of dollars of economic damage worldwide.

The last five years have seen Ethiopia's imports growing by 82pc in quantity and 182pc in value. In 2009/10, Ethiopia imported 275,512kgs of cigarette for 80.8 million Br, which increased to 502,466kgs for 228 million Br in 2013/14. China is the major supplier of tobacco to Ethiopia, During the last fiscal year, it supplied 92,000kgs of cigarettes worth 88.8 million Br, followed by Lithuania which supplied 108,000kg of cigarettes for 65.5 million Br.

The company is now working to boost its own supply by increasing production using new make and pack machinery that it is to acquire, with the intention of only replacing the imported quantity and not increasing the number of smokers, says Tiruwork.


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