Analysis: Incessant cement supply crisis bogs Ethiopia leaving countless workers reel in despair; govt hopes to fine-tune chaos

By Molla Mitiku @MollaAyenew

Addis Abeba – The normalcy of cement production and distribution has fallen under impediments since the past three years in general, and past six months in particular, leaving significant number of people whose livelihoods rely on cement businesses in a calamitous state of affairs to the level where they are unable to get daily bread for their children and themselves.

As such it’s is also one industry that has seen the ups and downs of frequently changing policy regulations. On 14 July 2021, the Ministry of Trade and Industry announced that a government directive which regulated cement prices hitherto and was implemented by the Ministry was revoked as of the day of the announcement. The cement market would be decided based on free market prices for an indefinite period of time, the Ministry said.

Enter 14 September 2022, the Ministry of Trade and Regional Integration declared that it had issued a new cement price regulation in what it said was to curb the rising price of cement products in the country, a far cry from the announcement a year before in which the free marker economy was to decide the cement market.

Such policy shifts did not exist in the vacuum. As far back as June 2020, the government issued new directive allowing only six companies to distribute cement throughout the country . By the time the directive was issued, in Addis Abeba alone, the chain of cement business provided jobs for close to 600,000 people; and many have already begun reeling from the changes.

The endless crisis has impacted not just the lives and livelihoods countless laborers and traders who depend on the production and supply chain market economy of the sector, but the construction from basic projects as as low-cost housing, to the luxury of like the La Gare integrated community development project, which is being build by Dubai based Eagle Hills developers.

Cement market for daily bread

But the pain has become unbearable for the countless laborers and traders throughout the country.

On the way from Megenagna roundabouts to Kotebe, the cement shops that used to be so busy are empty and closed for the past six months. In front of one of the shops, some youngsters who are unionized laborers were betting a gamble, which was previously uncommon in that busiest area. There were also people seated in groups here and there, and some of them stood leaning on the parked cars.

Chale Agign, 30, is a father of two and has been managing himself and his family by loading and unloading cements from lorries and carrying it to or out of the cement shops for the past 8 years.

“My daily bread depends on the presence of cement marketing in these shops. But now, all are closed for they were denied to buy and sell cements. Including with me, there are more than 70 daily laborers organized in a union only in this site who relied on this job. However, since last July 2022, we have faced a serious problem due to the closure of these shops,” he told Addis Standard.

Chale emphasized that they spent the whole day there without anything to do and turned back home at night. “Some of the laborers who sat in front of the closed shop are just gambling as they have nothing to do, which they thought can ease their stress”.

Wondimu Mulye, another member of the union, says, “We heard the government saying that it is working to reduce unemployment, and many people are getting jobs. On the other hand, it is dispersing us from the job we had for many years”.

Tsegaye Zerga, 48, is married and a father of three children. He was managing his life by providing cargo services to cement purchasers. “For the past six months, I come early in the morning, spend the whole day here without any work, and go back home at night. At this time, I along with others like me can’t manage to feed our family. There are about 200 drivers who are just in trouble, we inquire the government to give us a solution,” he told Addis Standard.

“We have had no income for almost six months. At present, we are at a point where we are unable to pay house rent and cover our children’s daily meals”

Solomon Assefa

According to Tsegaye, they are despairing much from time to time. The option of selling their old cars and buy another and engaged in another work is unthinkable. The old cars they owned are not in demand in the current market that no one dares to buy those cars even at a cheaper price.

Solomon Assefa has also relied on the same job. He says, “We have had no income for almost six months. At present, we are at a point where we are unable to pay house rent and cover our children’s daily meals”.

They say the government knows the problem and different media have reported it. Besides, officials from Ministry of Trade and Regional Integration visited them at different times and gave them hope to fix the problem but six months passed with no solution.

In addition to the plights of the laborers and cargo service providers, cement retailers have also faced similar problems as they are pushed out of the supply chain. Individuals with cement needs are also facing difficulties. A quintal of cement which was being sold at a maximum price of nearly 700 Birr from the factories, has just reached 2000 Birr in the black markets.

Coupled with significant production scarcity, at the center of the problem is a directive issued by the government six months ago, which renders cement retailers out of the supply chain. The directive sees individuals with varying cement needs directly buy from factories with approval from Ministry of Trade and regional Integration and regional trade bureaus.

The directive is fundamentally aimed to remove brokers from within the supply chain, unnecessary price high-rocketing, theft and bureaucratic activities with regard to cement transactions, according to Kumneger Ewnetu, Public Relations & Communication head at Ministry of Trade & Regional Integration.

Senior government officials have been frequently accused of having their hands deep in the cement business and hijacking its distribution for their own personal benefit.

However, she admitted the problems have persisted despite the directive. “We assessed and identified the existence of the previously raised problems in the past five months while the new cement distribution directive is under implementation,” Kumneger told Addis Standard.

Kumneger also said that all factories, except Muger and National, are not operating at their full capacity, and Habesha, Ethio-Cement and Dangote have ceased production for various reasons.

“Besides, no cement comes to market distribution from Derba for it is entirely billed to government projects like the Grand Ethiopian Renaissance Dam, and Koisha project,” she added, while noting that, “due to such production interruptions, 16, 650, 826 quintals of cement was distributed in the past five months, which accounts 72% of the required quantity”.

Haile Assegid, President of the Ethiopian Cement Producers’ Association (ECPA), says, “the lessening of cement production and the restraints made on cement retailers has significantly affected those people whose livelihood rely on it”.

Haile said, “insecurities, unavailability of forex to purchase spare-parts and coal are basic impediments to cement factories to produce with their full capacity that led to 30% reduction from what we had three years ago”. He added, due to the conflict in the northern part of the country, Mosobo Cement Factory, located in Tigray, with annual production capacity of 900,000 tonnes, terminated its production for almost two years.

Retailers have been pushed out of the market, contractors are not allowed to purchase cement from factories. Distributors don’t sell to individuals who have any construction and need cement. All these affects those people relying on cement,” he emphasized.

The cargo service providers and the laborers however disagree that the problem has emanated from production scarcity. They rather say the unavailability of cement is due to severe mal-administration and corruption.

Senior government officials have been frequently accused of having their hands deep in the cement business and hijacking its distribution for their own personal benefit. On 12 December, Ministry of Justice said it has filed grand corruption charges against Tesfaye Deme, deputy director for Construction and Logistics at the National Intelligence and Security Service (NISS) and three others, accusing them of buying 29,200 quintals of cement in the name of NISS from Darba and Dangote Cement Factories selling it in the black market at higher price.

Haile urged the government to give a serious attention to cement production and distribution as millions of lives rely on it. He said, “The government should allow retailers to resume their previous tasks and also allow foreign currency for cement factories so that they can purchase and import coal as well as spare-parts to produce cement with their full capacity”

Kumneger told Addis Standard that the government has decided the resumption of retailers in cement transaction in the a newly drafted cement distribution approach, which will be introduced soon.

As to the daily laborers and chauffeurs, they have been indecisive whether to wait for the government to resolve the problem so that they return to their previous works, or shift completely to other businesses given persisting problems despite multiple promises by the government to resolve their issues. AS