News: Ministry tells cement factories to exclude agents from transaction chain

Photo: The Reporter

By Firaol Bersissa @FiraolBer

Addis Abeba – The Ministry of Industry directed cement factories to exclude agents from the market network and sell the product directly, reports said. In a letter dispatched to 10 cement factories, the ministry asked the factories to indicate in a letter the names and number of agents they had excluded, according to the Reporter. 

State Trade Minister Hassen Mohammed told the news outlet that the ministry is working to shorten the commercial chain, adding that agents were one of the reasons for the stretching of the commerce chain and were not supported by law. He underscored that the ministry would enforce strict measures against cement factories still employing agents for distribution from now onwards. 

The minister stated that, in order to observe and regulate the market processes, the ministry has ordered cement factories to provide information as to their production and distribution lines over the past nine months. State Minister Hassen noted that cement commerce would operate on a non-interference basis whereby wholesalers would acquire it directly from the factories.  He, however, said that governmental development organizations and other governmental projects would be regarded differently. 

It was also stated that agents have been selling the cement to wholesalers at increased prices, causing long chains of commerce and impacting the final customer to purchase at three times more expensive than when it left the factory.  

The Ministry of Mines and the Ethiopian Investment Commission and the Ministry of Trade conducted a study on the transaction system within the cement sector from production to sales then concluded that the chain of commerce was not healthy, according to the report. 

Further explaining the price differences, Ferehiwot Fekadu, Public Relations Director of the Ministry of Mines, a participant in the study, said that agents profited at least 115-230 ETB per quintal of cement, these price differences during times of severe inflation have seen 400 ETB of difference between factories’ selling price and agent distribution prices. 

The study revealed that agents were operating on family networks with the factories, and sometimes the factories themselves are behind the agents themselves. 

The Ministry of Mines accordingly ordered that until the addresses of the agents are notified to it and a new directive is prepared, factories are barred from giving licenses to new distributor agents.

Furthermore, the Ministry of Trade has said that cement will be regarded as a necessary good and regulated accordingly, excluding it from the free market. A directive was also being prepared accordingly. AS

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