Ethiopia: Empty Shelves Returning Following Price Caps

By Meron Tekleberhan Addis Ababa, February 25, 2011 (Ezega.com) -- Shopping for basic household items in Addis Ababa has become a little bit more complicated then stopping by the nearby “Suq”. The recent shortage in many basic staples has necessitated extended trips around the city looking for things like flour and oil or standing in line for hours to buy sugar from government outlets. One of my co-workers wearily speaks of standing in line for more than an hour at an ET Fruit stand to buy sugar while another recounts giving up searching for flour altogether. A wiser woman told us of the deal she had made with her neighborhood shopkeeper. He delivers anything that she needs to her door and she pays what he asks unquestioningly. We all envied her hassle-free arrangement and wondered if we could replicate the same thing with the Suqs nearest our respective homes.         The current shortage of many basic staples followed the Ethiopian government’s move to fix the price of a range of goods in mid January. This decision was reached in an effort to combat the skyrocketing inflation. At the time, government authorities declared that inflation was made severe by the monopolistic and unconscionable tactics employed by a cartel of businesses only interested in enlarging their profit margin. The business community, however, completely disagreed with this assessment and decried it as an unfair persecution. Business owners insisted that they only raised prices when forced by increased expenses. For example they cite the ever increasing rent, transport costs and wages. Hagi Mohammed, who has owned a larger Suq popularly known as a ‘Makefafeya’ (distributor) for 25 years, claims that the government’s prices were set arbitrarily. He insists that he was forced to sell almost all the goods that had price caps put on them at a loss. Haji Mohammed feels that the accusations against ‘greedy businesses’ affected the close relationship he’d developed with the community he has served for so long. “It was very humiliating when old friends started to look at me suspiciously because they felt that I might be overcharging them. I feel that this is due to the media telling the people that shopkeepers like me were responsible for the increase in prices. Why would I raise prices unnecessarily, when I know my customers will abandon me if I don’t stay competitive?” he asks raising his hands in bewilderment. But consumers and what rudimentary consumer associations that exist agreed vocally with the government’s characterization. It seemed clear to all that producers, importers and wholesalers raised prices at any pretext and were completely impervious to the increasing pressure on the consumer. The promise to alleviate the economic stress that was threatening to break the back of the middle and lower classes was heralded by consumers from all walks of life. The local media reported the loud acclaim for the government cap on basic staples. If any complaints were voiced it was that the government should increase the scope of the price control to include other goods and services. The enthusiasm, however didn’t last long. Almost immediately after the price caps, shortages were registered everywhere. Retailers felt unable to restock because the new prices did not make distinction between wholesale and retail prices. Even when steps were taken to address this oversight, many perceived the margin was too narrow to justify their costs. Hagi Mohammed almost smiles now when customers ask him for things like sugar and flour that he maintains can’t be found on the market, at least not at prices mandated by the government. He insists that he knew this would be the outcome of all the unrealistic price setting. “It’s killing businesses and hurting the consumer” he said. “I don’t think anyone can say they are better off now than they were before the government intervened.” W/zt Senait Ayenew, 32 year old office assistant for an NGO, agrees with this last sentiment. “I contribute money to the family expenses every month and it was really unacceptable the way prices escalated over very short period of time. People like us who would be considered middle class in terms of the money we earn were struggling to make ends meet before the price caps,” She said remembering the hope that the government price fixes were met with. “Many people were very excited that the government was responding to their pain. But problems came up almost immediately. For example butchers forced to sell all types of meat at the same price refused to allow customers to choose what kind they want. Some even get aggressive when customers complain about the low quality of meat they had to offer.” But for Senait this is no longer a reason for concern. The shortage of basic goods is fast becoming the only thing she is anxious about. Cooking oil, sugar, flour, soap, exercise books are only a few of the things that have disappeared of the shelves.   “Many people were forced to adopt very tight budgets by the inflation. There is even a joke that the new meal times are 11am and 5pm as more and more people are forgoing three meals a day for just two. But now people are unable to find things at even the old inflated prices.”    Just this week the government has promised to alleviate the shortage by taking the initiative and importing basic household goods in bulk. If private businesses don’t follow suit and step up their own imports, however, the specter of the long lines that used to form at Kebele shops during the communist era is bound to rear its ugly head.