Addis Ababa, Ethiopia (Capital) — Starlight Roses Flower Farm was the last surviving subsidiary of the troubled Star Business Group, set up by three Addis Ababa businessmen. Despite its resilience, it has not been able to survive the financial collapse of the parent company and is now set to close. Worku Megra, general manager of the flower firm, is currently negotiating to return the 36 hectares flower farm to Sher Ethiopia. In the same week the Federal High Court authorized the liquidation of Ethio Investment Group (EIG) another of Star’s debt ridden subsidiaries.
Menwyelet Atenafu, Abebaw Desta and Worku Megra, business partners and shareholders of Star Business Group, Ethio Investment Group and many other well-known companies, established Starlight Roses Flower Farm two years ago. Like other flower exporters, Starlight also leased four green houses from Sher Ethiopia Plc, a flower grower and green house company based in Zeway town in the Oromia Regional State, 165km south of Addis Ababa.
Starlight had been exporting flower stems collected from the 36 hectares farm for the last two years, paying 0.51 Euro per square meter for the green houses each week. But as profits from flower farming have plummeted, due to a massive drop in export demand, the business venture became unsustainable.
“Forget about its near 1,000 employees salary, the company’s export revenue this days become unable to cover the weekly rental fees of the green house” one of the Starlight employees told Capital.
The owners have apparently tried to inject funds to cover the last two months of employee salary, said the source, but bankruptcy has forced the owners to return the farms and its employees to Sher. Gervit Barnhoovn founder and manager of Sher Ethiopia was unwilling to disclose the details of the transfer, saying negotiations are currently in the early stages. Worku Megra general manager and shareholder of Starlight confirmed the company would closed but refused to give any further details.
Employees of the farm are currently signing a 45 day contract with Sher Ethiopia stating the company will try to keep the farm functioning until another investor can be found. But, if there are issues unsettled, it would be the company’s unpaid arrears the source told Capital.
Star Business Group has now declared bankruptcy on all of its subsidiaries including Tis Abay Transport, Tana Transport, and Mina Trading. Other co-partners are currently in the hands of the country’s commercial banks, seized as collateral for unpaid debts.
This week, the Federal High Court has also authorized the liquidation of Ethio Investment Group (EIG) which was established in 1999 an importer of vehicles. EIG was the sole importer of BMW, Land Rover, Scania and others vehicles for more than seven years, but the company suffered losses of over 255.2 million birr which dwarfed its 31.9 million birr paid up capital.
This latest court ruling is a positive response to Selam Bus S.C. that had sued EIG for its failure to keep a contract signed between them. EIG agreed a contract in 2007 to deliver 15 Scanias to Selam Bus, a deal worth 23.9 million birr. The transport company, Selam Bus paid 7.1 million birr as an advance but, the vehicles are not delivered causing Selam to take legal action.
This is the latest in a series of legal problems for EIG. Since early this year they have been embroiled in court proceedings, over a disputed deal with Nile Insurance S.C. The Insurance company claim to have lost over 40 million birr from a guarantee bond issued to different companies owned by EIG’s founding business partners, according to the federal prosecutor accusation. The men are accused of misusing their position as board members at Nile Insurance to issue guarantee bonds to companies they were involved in.
Addis Ababa, ETHIOPIA — North Korea keeps shooting its long range missiles now and then. These missiles do not just reach all important targets; they can also deliver a nuclear message. Its leaders, or rather leader, has effectively made the world believe that he is unpredictable, that one day he could really strike American or South Korean targets.
Japan, Russia and China are all concerned, but not as badly as the other two countries. He has the gun; he seems to have the will to use it. The missing element is the excuse. (Of course, the other side of the argument is that he is already using them and reaping the benefits at least from the immediate south.) Now there are many of us who think that we are too far away or too detached to be concerned about this issue.
But suppose it was not North Korea, but Egypt. Suppose it tried a missile in its vast deserts. Suppose it stood its ground and kept trying them even at a great cost to its international relations. It would of course regain its old stature in the Arab world, Israel would not leave a stone unturned to destroy the country’s missile capabilities, and we in Ethiopia would at last live in constant fear of the consequences of a grave transboundary issue that followed the currents of the river Nile.
It all begins like a love affair. Abay (the Blue Nile) flees its home meets his lover, the White Nile in Khartoum, and the two disappear into the Egyptian Desert. For all the basin countries, except Sudan and Egypt, this trip is not a honeymoon, but an elopement. Everybody loved them, but they chose the desert.
These figures may clarify this point. A study indicated that Sudan has an irrigation potential of 4,434,000 hectares of which it has so far irrigated 3,266,000 hectares, which is 73.7% of the potential. Egypt is utilizing 53.5% of its irrigation potential by irrigating 1,946,000 hectares out of a total 3,637,000.
Ethiopia and Egypt have the same potential, but Ethiopia has achieved a mere 5.2% (190,000 hectares) compared to Egypt’s 53.5%. Tanzania has achieved only 23% (190,000 hectares) of its 828,000 hectares potential, and Uganda, slightly worse than Ethiopia, has achieved only 4.5% (9,000 hectares) of its 202,000 hectares potential.
The reality behind such numbers is that Ethiopia, for example, has never been able to feed itself, despite the fact that a very large majority of its people are kept in the shackles of poverty ever engaged in the losing struggle to grow enough food for themselves and for the market. Had it not been for the perennial drought which has always effectively wiped out years’ of growth and then put the country in recovery mode for more years, Ethiopia could have been a better country economically.
Traditionally Ethiopian agriculture has been low-input, low-output, always dependent on unreliable rainfall, and, even at the best of times, never fed the nation. According to the Famine Early Warning System Network report for June 2009, 7.5 million Ethiopians were indicated as chronically food insecure. “An additional 4.9 million people require emergency food assistance through June 2009. In addition, about 200,000 people have been displaced in the southern parts of the country due to clan conflict and are receiving humanitarian assistance. However, the official size of the food insecure population will most likely increase following poor performance of the belg/gu season this year,” it said.
Ethiopia’s agriculture had, in 1996, delivered a record harvest, following which the government proudly announced that it had finally achieved the long sought after food self-sufficiency. Three years of drought led to an emergency situation in 2000 and a sober assessment of the situation.
It was the following year the Nile Basin Initiative was launched, with its head office in Entebe, Uganda, and seven project offices in seven other places. Since then it has been negotiating. Its purpose was “equitable and reasonable use of the water system” by up and down stream countries “without causing significant harm to down stream countries.” With this initiative Ethiopia, Tanzania and Uganda, as well as other Nile basin countries will work to narrow the gap they have with Sudan and Egypt in exploiting the waters of the Blue and White Nile rivers for their maximum benefit. Ethiopia, for example, wants dams for electricity and irrigation. Such is the issue worldwide wherever there are transboundary rivers.
Asfaw Dingamo, Ethiopia’s water minister, returned recently from a Nile Basin Initiative meeting in Cairo apparently proud that Ethiopia’s interests had not been given away in the negotiations. In an interview with Addis Zemen, the state newspaper, he put the situation in a nutshell saying that Egypt had no rainwater at all, that Sudan was only slightly better than Egypt in that respect, and that the population of the Nile basin was growing very fast.
That was no recipe for war, he said, for studies had indicated that there was enough water for all in the basin. His argument in the negotiations is that extensive developments in the basin area in Ethiopia would avert flooding in Sudan and loss of water due to evaporation in Sudan and Egypt. The water flow would be regulated by the dams in Ethiopia for the best benefit of all three countries. Well, the two countries, who have always wanted to be the solitary users of the water, are negotiating for the next best thing, instead of taking Asfaw Dingamo’s words.
The doomsayers that predict war not just in north eastern Africa but wherever there are transboundary waters have a strong case in their favour.
In the 20th century, only seven minor skirmishes took place between nations over shared water resources, while over 300 treaties were signed during the same period of time to avert similar or worse incidents, according to statistics made available during the World Water Week in Stockholm, Sweden, this month. Examine the following related data: · There are 263 transboundary river and lake basins and around 300 transboundary aquifers worldwide.
* Transboundary lake and river basins account for an estimated 60 per cent of global freshwater flow and is home to 40 % of the world’s population.
* Over 75 percent of all countries, 145 in total, have shared river basins within their boundaries. And 33 nations have over 95 percent of their territory within international river basins.
* 158 of the world’s 263 international river basins, plus transboundary aquifer systems, lack any type of cooperative management framework.
The following figures give a hint of the human factor involved in this situation.
* About 1.4 billion people, mostly impoverished, live in river basins where all the blue water is already committed or overcommitted.
* Water withdrawals are predicted to increase by 50 percent by 2025 in developing countries.
* In 2030, 47% of world population will be living in areas of high water stress.
* By 2075, the number of people in regions with chronic water shortage is estimated to be between 3 and 7 billion.
When we bring this closer to home, Egypt recently announced that eight years from now, 2017, the water need of its growing population would surpass what available resources could provide. In 2006 the Nile water provided Egypt 55.5 billion cubic metres of water, out of the total 64 billion it consumed. The 55.5 billion was the figure that Egypt and Sudan negotiated in 1959 without considering other basin countries.
Soon that generous allotment will no longer be enough. Egypt’s consumption is already well below the water poverty line. So how easy will it be to find a negotiated usage agreement? How long will that agreement hold before increasing population demands for more water from dwindling resources?
According to a recent paper by Fasil Amdetsion, an Ethiopian lawyer in America, those parties that believe that there will not be water war either in the Nile Basin or others, give a number of reasons to support their position. They say that communities afflicted by scarcity are likely to alter lifestyles, make a more efficient use of water, and cope with a dearth of resources. There are also who say that there will not be any water war, because there has never been any. [The last one was fought 4,500 years ago.] Amdetsion repudiates these and other arguments claiming that Egypt has always had interest inn destabilizing Ethiopia. He mentions Egypt’s alleged support the Eritrea during the war with Ethiopia and its support to Somalia during the war with Ethiopia in the 1970’s. He believes that Egypt deliberately foiled the peace talks in Addis Ababa among Somali rebels. He believes that Egypt will do all it could to have the upper hand in Nile negotiations.
Meanwhile natural resources worldwide will continue falling. Population continues to boom against natural expectations. Egypt, a desert country that ought to be sparsely populated, has 76 million people living in it, and as Ethiopia, it is gripped by the concerns of providing for a very fast growing population. So doomsayers say that animal instincts will take over to survive, and those instincts will be the war mongering, blood thirsty type.
May be one day, if that war comes, with Sudan serving as a corridor and a fighter supporting Egypt (or Ethiopia???), that may be nature’s way decreasing our populations enough to fit available resources.
ADDIS ABABA (Bloomberg) — At least 34 people died in Ethiopia following a suspected cholera outbreak, with more than 4,000 sickened in the capital, Addis Ababa, in the past two weeks.
The disease has infected as many as 1,000 people a day in the past week, Dadi Jima, deputy director of the state-owned Ethiopian Health and Nutrition Research Institute, said in an interview today. He declined to say the disease is cholera.
The government has not “fully confirmed” the type of illness, Dadi said. “We usually report it as acute watery diarrhea.” The spread of the disease has been exacerbated by heavy rains in the Horn of Africa country, he said.
Cholera, mainly spread through contaminated water and food and poor sanitation, causes acute diarrhea and vomiting that can lead to death. The illness is considered to be endemic in “many countries” and the pathogen that causes the disease can’t currently be eliminated from the environment, according to the Web site of the World Health Organization.
The United Nations humanitarian agency said six cholera- treatment centers capable of treating 180 people a day have been dispatched to the country. The UN has also sent drugs for the treatment of more than 1,500 severe cases and 600 mild cases of acute water diarrhea, as well as water-purification tablets, the Office for the Coordination of Humanitarian Affairs said in an e-mailed statement.
Of the 34 who have died in Ethiopia, seven fatalities were in Addis Ababa, Dadi said. He didn’t provide figures for the number of people affected nationwide, adding only that the disease had been reported in 31 districts.
If untreated, cholera can kill a healthy adult in as little as five hours, according to the WHO.
(Jason McLure in Addis Ababa via Johannesburg at [email protected].)
Many Ethiopians have been intrigued by the advent of the Ethiopia Commodity Exchange and many voices have been heard from around the world in our virtual cyber-community and in private communication, some encouraging, some thrilled, some questioning, some skeptical, some downright opposed. I would like to thank all of those who have taken the time to express their interest, whatever their viewpoint. Open dialogue on important ideas, in a mutually respectful manner, is vital to our ability to grow and evolve as a society and as an economy. As we proceed in our dialogue, I trust that those who organize these forums will enforce the necessary standards of courtesy worthy of our age-old civilization.
To quote Victor Hugo, “there is nothing so powerful as an idea whose time has come.” In response to the many thoughtful and sometimes provocative questions that have been raised, I would like to take this opportunity to share with you why we believe that the Ethiopia Commodity Exchange is an idea whose time has come. Here in Ethiopia, over the past two years, we have continuously held open discussions with our stakeholders, in numerous events, engaging with thousands of private market participants from farmers to traders to processors to exporters, from all sides of the market, as well as others. Given the recent interest by those in the Ethiopian Diaspora, we are happy to take the time to respond to concerns raised and to clear up the misinformation and misunderstanding that seem to currently prevail among some. We do so out of respect for our fellow Ethiopians and because we believe that all deserve to get the facts about this important initiative in our country. This is probably a good time to make the appropriate disclaimer that the views presented here are my views and, where relevant, those of the Exchange, and do not represent the government of Ethiopia, any other institution, or any political party. In this essay, I will focus on the core questions related to the need for the Exchange, its ownership and possible control by government, and whether it is a free market or a monopoly. For those who might not appreciate the technical detail provided, please skip to the end where I summarize the key points. For the rest, buckle up and enjoy the ride.
I start with addressing why ECX is needed to begin with, and why we believe it can fulfill its vision of “transforming the Ethiopian economy by becoming a global commodity market of choice.” Like most countries in early stages of development, Ethiopia depends on agriculture as the backbone of its economy. To get out of agriculture and transform into a modern industrial state, Ethiopian agriculture must become increasingly productive so that labor can shift into other sectors. Greater productivity comes through investing more capital into production, through investing in productivity-enhancing technology, such as fertilizer, seeds, better farming tools, mechanization, etc. This investment can only happen if it is profitable. Profitability depends on whether there is a market where the product can be sold reliably and efficiently. Understandably, farmers hate risk. In addition to weather and production risks due to pests, crop disease, and other vagaries of nature, farmers also face the risk that there is no buyer, that they can’t access the market or it is too costly to do so, that prices are unknown or will drop, or that they won’t get paid. These very real market risks and costs prevent them from making the investments they need to make to be more productive. So they are stuck in a vicious cycle, producing at low yields, mostly for themselves, which is why only 25% of total agricultural production reaches the market. Farmers are not the only people whose livelihood is constrained by the market. If they are unable to get the supply of raw commodity delivered to them when they need it or prices fluctuate or the quality is unreliable, industrial processors, such as flour factories or biscuit or oil manufacturers, routinely incur higher costs because they are unable to utilize their machinery at full capacity and are thus discouraged from expanding their production. Similarly, commodity exporters who have contracted with international buyers face the terrible risk of not being able to make their shipment on time if they are unable to get the supply in time or in the right quality. To avoid this risk, they often are forced to tie up their capital holding large inventories, which means they can’t readily expand their business. So there is a real market problem, and it is faced by many actors on all sides of the market. And this problem constrains our economic growth. How does ECX provide a solution? ECX is a neutral third party, providing service to the market in four major ways. First, ECX certifies the quality of the commodity to be sold and holds it in warehouse on behalf of the seller, thus guaranteeing the quality, quantity, and delivery of the commodity to the buyer of that commodity. This solves the problem faced by buyers such as exporters and processors. Second, ECX operates a payment clearing and settlement system which takes payment from the buyer and transfers it to the seller, guaranteeing that the payment will be made in the correct amount and on time. This solves the problem faced by sellers, such as farmers and traders. Third, ECX provides a trading system which enables buyers and sellers to find each other when they need to trade. This trading system is for now a physical Trading Floor where bids and offers are made in person by buyers and sellers (or their agents) but will also have an electronic trading platform which can be accessed remotely. Finally, ECX disseminates information on prices as soon as trades are made to everyone in the market so that no one is at a disadvantage because they are missing market information. This price transparency helps everyone to plan their commercial actions better and thus make better deals. Having a reliable market system helps farmers produce more, expands our industrial base, increases our exports, and enhances our food security because commodities reach the areas where they are most needed faster and at lower cost. That is why commodity exchanges are part and parcel of most advanced and more recently emerging economies around the globe, starting with the best known US commodity exchange, the Chicago Board of Trade, started in 1848 for precisely the same reasons why our farmers and others in Ethiopia and our economy as a whole would benefit from an organized market.
I would now like to address a set of related questions: Who should own the exchange? If the government of Ethiopia owns it, how can it be considered a free market? Is it a monopoly and/or an instrument of control? These are all valid questions and have been asked many times by our stakeholders here in Ethiopia. Let us start with ownership. The historical experience is that exchanges in Western countries were set up by private actors as “mutual organizations” on a non-profit basis, meaning that a group of merchants got together and set up this third party marketing system which sustained itself from fees charged to its mutual owners, or members, at zero profit. Even though the exchange itself was non-profit, the members who owned the exchange on the other hand privately benefited from the system by restricting entry into the mutual organization and charging for-profit brokerage fees to non-members to use the exchange trading system, thus becoming very profitable, large brokerage firms such as Charles Schwab, Merrill Lynch or others. Over time, this system of mutual ownership become problematic because of the inherent conflict of interest in that the owners who were also members tended to put their private interest ahead of the market’s interests. So, traditional exchanges in most of the Western countries and newly established exchanges in the emerging markets have in the last decade evolved to “demutualized” entities, meaning that the owners are separate from the trading members. In the US, this has meant that most of the exchanges have gone public, meaning that they have sold shares to many individuals, who are not members of the trade. In places like India, exchanges have been recently set up owned by a few investors, such as banks or insurance companies (half state owned and half private), again who are not trading members. However, if there are investors or shareholders, it implies that the exchanges no longer have a non-profit orientation, meaning that they charge fees intending to maximize profit, rather than at cost. In the case of Ethiopia, having reviewed these various global experiences, we chose a unique “hybrid” model. Our model adopts the demutualized entity status in keeping with global trends, but retains the traditional system of membership and the non-profit status of the exchange, in order for it to attract maximum participation and not to impose a financial burden on the market users. In effect, this is a Private-Public partnership model in that, as a non-profit, it would only make sense for the state to sponsor the investment since no private actor would be willing to invest large sums on a non-profit basis. At the same time, there is private ownership of a restricted number of permanent and freely tradable membership seats (like shares) which gives incentive to private members to profit from using the exchange system and from charging brokerage fees to non-members. This model essentially marries the social objectives of creating an organized market with private profit incentives. By law, and unlike any other publicly owned enterprise in Ethiopia, our Exchange operates on an at-cost basis and does not pay dividends to the government Treasury and may only re-invest any net earnings into its own scaling up. Initially, in fact, the Exchange is operating at a loss since it charges fees somewhat below cost, in order to encourage participation. Thus, there is no motive to retain ownership by the state and over time, as the Exchange system takes hold, the government has publicly expressed its commitment to passing ownership to private entities. This model is not entirely without precedent. In the US, Government Sponsored Enterprises (GSEs) in the financial sector, the most well known of which are Fannie Mae and Freddie Mac corporations which operate multi-trillion dollar markets for home mortgages, were set up under state ownership in 1938 and later went into private shareholding in 1968. Their recent bailout, along with other financial institutions, by the US government following the 2008 financial crisis has restored ownership back to the US government. Many stock exchanges in emerging markets, such as Dubai, Tel-Aviv, Eastern Europe, and others, are established with government ownership, usually for the same reasons as Ethiopia, that the investment costs are too high to encourage private investment and because the exchange is desired for social objectives, as a benefit to the economy. I should mention that the start-up cost of our Exchange is in the order of US$ 24 million which, because of its public ownership and non-profit nature, was able to be financed by donor partners such as the USAID, World Bank, UNDP, WFP, Canada, and others.
And now, for what really matters, what about control? To begin, it is important to understand that, although government-owned, the Exchange is not a part of government. It is not an agency or department of any particular state organ. It is established, by law, as an autonomous commercial enterprise having its own legal status. A parallel example might be Ethiopian Airlines, although the corporate governance of the Exchange is unique. Our establishing law extends the concept of demutualization further to separating ownership, membership, and management. Thus, by law, the Exchange is managed by professionals that cannot be appointed from within government or come from the trading community. The Exchange has its own salary structure and its employees are not part of the civil service. In fact, at present, the Exchange has an internationally recruited management team of 10 professionals, financed by external donors, as a management on loan program, to ensure that the Exchange is run professionally and to transfer needed skills. Again, unlike any other publicly-owned enterprise in Ethiopia, the Board of Directors is composed in almost equal part of representatives of the owner (state) and the private members of the Exchange as well as the CEO as a non-voting director. The Exchange’s CEO is appointed by and reports to this Board of Directors. Thus, without any doubt in the law or in practice, the Exchange is managed independently of any government organ and is a serviceproviding entity to the private market actors. There is no interference or intervention in any aspect of day to day ECX operations, whether it is the warehousing and quality inspection, the dissemination of price information nationally and internationally (which relies mainly on the systems that ECX itself has developed), the financial systems, or the trading sessions. One could say, and many of our private sector members have quickly realized once it was explained, that the ownership-membershipgovernance model described above essentially gives a free pass to our private members, who can gain private profit from the exchange at minimal cost, without investing in the expensive assets, and still have a big say in the management of the entity.
At the same time, like in any country, no market can exist in a vacuum outside the reach of policy or the laws of the land. Thus, our Exchange regularly consults with appropriate line Ministries on the direction of policies, regarding changes to domestic or external trade policies, tax, or macro policies. This is no different than in South Africa, the US, India or elsewhere. For example, in 2008, when domestic inflation got out of hand, the Indian government banned rice and wheat trading on the Exchange and imposed an export ban. This has nothing to do with who owns their exchanges (in fact it is a combination of public and private investors). Similarly, the US has recently initiated a crackdown on excessive speculation in the commodity markets (oil) and imprisoned or fined several market actors such as Bernie Madoff who violated laws in the financial market. In addition to the laws and policies that govern a market in any country, all exchanges also have their own internal Rules that govern how the market is organized and how the market actors must behave. The Rule books of the Chicago and New York commodity exchanges are thick volumes with thousands of pages developed over 160 years with detailed instructions on how to govern their market. We also have our Rules of the Exchange that, like in the US, Argentina, Brazil, India or elsewhere, have to be approved by our regulatory body, the newly established Commodity Exchange Authority. This Authority is a government body which has the mandate of overseeing that our Exchange itself and our Members are in compliance with our law and with the other laws of the country and with our Rules. Having been set up alongside our Exchange, the Authority has been in active partnership to build its capacity through training with the US Commodity Futures Trading Commission, on which it is modeled. In any country with a serious market, government regulators like SEC and CFTC in the US, or FMC and SEBI in India, have a significant and constant presence. So a market is not a free market because it is operates outside of laws or rules. It is in fact the presence of these laws and rules that ensures that the integrity of the free market, or the principle of market competition, is maintained. For example, one of our rules regarding our Trading Floor is that all prices must be shouted out audibly so that all market actors can hear the bid or offer. This is a rule designed to ensure that everyone has a fair chance to compete for that trade.
So what makes a free market? It is, within the confines of the existing rules and laws in place, the absence of interference by any third party in the actual buying and selling of any good. In a free market, as long as the rules are followed, any seller can sell whatever they want to any buyer at any price, any time, and in any amount, and vice versa. Let us think of a free market like driving on a highway. As long as you have a driver’s license, a registered and insured vehicle, and follow the traffic rules, you can drive in any car you want, anywhere you want, with whomever you like, for as long as you like (gas permitting, of course). The rules are there to ensure that everyone is safe on the highway. In our Exchange market, this is precisely the case today. Our 450 mostly private trading members freely trade at prices and quantities and with whom they like without any interference whatsoever.
Finally, what about a monopoly? Why force all coffee or all sesame trading into the Exchange? Why not let people choose to use the Exchange of their own free will? To extend our above analogy, we might say that this is like forcing all drivers onto a single highway. At first glance, this seems quite unpalatable and rather contrary to the notion of a free market. Here is the catch. Among the four functions of the Exchange that were listed above, its very core role is to provide a central trading system for buyers and sellers to match their trades. This trading system results in what is known as “price discovery” which is the emergence of the competitively bid market price that reflects true supply and demand of a good at a particular moment. However, to be a truly representative market price, the trading system needs a critical mass of sellers and buyers, otherwise the Exchange’s price is meaningless as an indicator of market supply and demand. In other words, if the ECX price represents only a small share of the actual market trading, then this price is not the true market price. For this reason, all of the world’s exchanges essentially force this critical mass of trading in a commodity or stock into a single trading system. That is why there are only two major stock exchanges (NASDAQ and the New York Stock Exchange) for the entire U.S. economy and most companies are only listed on one of these exchanges. Similarly, for commodities, although there are about 4 active commodity exchanges in the US, each commodity is traded exclusively on only one exchange. For example, Hard Red Spring Wheat is only traded on the Minneapolis Grain Exchange and Soft Winter Wheat is only traded on the Chicago Board of Trade, and so on. By the way, the term “monopoly” is not the correct use of the term in this case since monopoly implies a single buyer or a single seller that sets prices non-competitively and, here, we have hundreds of buyers and sellers freely trading competitively at their own prices. We would hardly say the Chicago Mercantile Exchange has a monopoly on corn trading, no more than we would consider that the CEO of Fannie Mae is part of the US government. So, more appropriately, it can be said that our exchange, like other exchanges elsewhere, is an exclusive platform for trading in particular commodity contracts. Over time, as the market volume and liquidity grow, it might be appropriate to have more than one commodity exchange and our law provides for the Ethiopian regulatory body to recognize other exchanges.
IN SUM, here are the key points. A better functioning market is good for everyone and for the economy, from farmers to domestic traders to processors to exporters and an exchange is a tried and true model to deliver a better market. Though state owned, ECX is an autonomous (non-government) commercial entity set up on a non-profit basis, with private ownership of membership seats, which thus represents a Private-Public partnership model in which private seat owners are able to gain profit from using the exchange system at minimal cost. Our corporate governance structure ensures that ECX is managed independently and professionally with a Board of Directors representing nearly equally both the owner and the private trading members and a separation by law of management from ownership and membership. At the same time, the Exchange operates within the policies and laws of the country, like any exchange in the world. Within these rules and policies, there is no interference by the state in the operational management of the exchange or in the day to day trading by market actors. Finally, ECX cannot be considered a monopoly in the correct sense of the word but rather an exclusive trading place for specific commodities, in order to have a critical mass of buyers and sellers, in keeping with the way exchanges are set up around the globe.
In subsequent essays over the coming days, I will address the human side of ECX, the lives that have been touched and who is really benefitting, particularly among small farmers, and the very important issue of coffee trading and the concern on specialty coffee, as well as our first year performance and the exciting plans ahead as we embark on our second year. Some of these themes are also addressed on our website, www.ecx.com.et, where you can also find our establishing law. Some have questioned why invest the time to engage in this dialogue. It is because we believe that a national institution such as ours must be accountable and transparent to all Ethiopians, wherever they are. Public education is part of our job. We also believe that, through bringing knowledge or investment, anyone can meaningfully engage with ECX. After all, it is your Exchange too.
(Dr Eleni Zaude Gabre-Madhin is Chief Executive Officer of the Ethiopia Commodity Exchange)
Colonel Kassaye Kifle has passed away on July 14, 2009, after receiving medical treatment at St. Thomas Hospital in Nashville, Tennessee.
Friends and family held a memorial service for him at the Debre Keranio Medhanialem Church in Nashville on July 17.
His funeral services will be held at the Debre Libanos Monastery in Ethiopia on July 25, 2009.
Many who had served as officers in the Ethiopian armed forces remember Col. Kassaye as a leader who served his country honorably.
Over during his career he was trained as an aviator in the United States, and aviation commander in the Soviet Union and the Ethiopian Air Force Command Staff College.
As a member of the Ethiopian Army Aviation Unit, he led Assault Helicopter Teams and received medals for bravery.
His contribution to Ethiopia continued as a pilot trainer at Ethiopian Airlines.
Col. Kassaye Kifle is survived by his wife, two children, and two grand children.
(Messages of condolence to the family can be sent to [email protected])
“There are no good dictators. But some are better than others. The best dictators permit freedom of expression, rule of law and economic growth, creating a democratic minded middle class that eventually pushes them aside. The worst dictators, by contrast, grind down civil society, breeding poverty and sectarian hatred and pulverizing all the institutions from which liberalism might grow. The worst dictators eventually leave too, but when they do, all hell breaks loose.”
So said one called Peter Beinart on 6 August 2007 in a piece he wrote to Time Magazine under the title “How to deal with dictators.” At the time, he was outlining his ideas for the US administration on what is the best course to deal with one of Washington’s friendliest dictator, Pervez Musharraf, by drawing historical parallels between South Korea which evolved from a benevolent dictatorship into a democracy and Iraq which degenerated from a fully blown dictatorship into a killing field for sectarian violence to the point of abdicating its sovereignty to a superpower. After having read the writings on the wall, Musharraf, as we know it today, has left from the political landscape of Pakistan gracefully thereby prompting the ever prolific pen of Prof. Alemayehu G.Mariam to wonder as to whether dictators somehow become statesmen; also whether Musharraf had been a closet statesman all these years? (Read “Gotta know when to fold’em” 25 August 2008)
In Africa too, we have seen these kinds of dictators who got transformed from a military dictatorship into a statesmanship ranging from Lt. Jerry Rawlings of Ghana to General Olusegun Obasanjo of Nigeria. Others currently in power in most African nations too, manifest this positive signs of transforming themselves into statesmanship whenever their respective country requires it. They show the wisdom on how to blow with the wind of governance by consent. That’s why right after the Kenyan election debacle, the incumbent led by Mwai Kibaki got back to its senses and sat down with the opposition to form the coalition government for the good of Kenya. Even that octogenarian dictator of Zimbabwe who has been the object of unabashed vilification by the western media didn’t mess that much with the independence of the judiciary, nor the press.
On the contrary, where so-called judges and prosecutors in Ethiopia take blind orders from Meles Zenawi, Judges in Harare grant bail and also turn in a not guilty verdict for the adversaries of the Mugabe government. While you see gruesome pictures of Zimbabwean victims of “cholera” on CNN, you’ll be told in a hushed tone by a BBC Correspondent in Addis that the Ethiopian government/regime in my lexicon/prevented them from taking pictures and the matter rests at that.
In Uganda, where this writer has taken refuge since 2007, people complain vociferously that their president is a dictator.Indeed, according to my observation; he has the inclinations of a dictator. Unlike Ethiopia, though, let alone Ugandans, I the refugee suffer no consequence for saying so. People in Kampala get away everyday with obnoxious expressions on the numerous FM Stations and TV channels on any topic. Of course, abuses take place but not with impunity.And, when they do, those behind them will be made answerable for it.Recently, for instance, Human Rights Watch grilled the Ugandan government for the disappearance and torture of a couple guys in a secret detention centre run by the army. The American lady who did the research presented her findings right here in Kampala. Later, she was put on a talk show on FM and TV with the army spokesperson. The spokesperson, Major Felix Kulaigye was humble when defending the position of his government. I can go citing incidents like this from the Ugandan political landscape. The bottom line is; can any Ethiopian imagine such a scenario under the regime of Meles Zenawi?
The bare fact is, the Ethiopian regime even by African standards, is a relic of history belonging to barbarism. Being barbaric with zero tolerance for dialogue, rule of law or any civility, it views the whole world through its archaic lens.Thus,because of some exchange of diplomatic niceties between Meles Zenawi and Yoweri Museveni,TPLF’s lieutenants such as Girma T/sion here in Kampala expect their counterparts to hand them over some Ethiopian exiles. Little did their dense ‘intelligence’ allow them to understand how strong the political will in Uganda is when it comes to respecting human rights, including the sacred rights of refugees. Just because their bribery worked in the highly corrupted Kenyan society, they think they can do the same with Ugandan officials.However, it’s not the first time, nor would it be the last for Meles Zenawi’s regime to behave in this sort of asinine manner. During the height of its incursion in Somalia where it received a humiliating defeat, Aljazeera exposed the brutality committed by Zenawi’s henchmen on Somali civilians. Unable to stifle Aljazeera by invoking its partnership in the fight against terrorism to the White House so that it bears upon the Kuwaiti sheikdom, it broke diplomatic relationship with the Kuwaiti government with a manifestation of egregious infantile politics.
And, now accompanied by his new found lackey, Bereket Simon reportedly went to the United States to request for the umpteenth time so that VOA Amharic service is taken off the air. Probably too, to ask for the extradition of that “terrorist”Dr.Berhanu Nega.”All these farcical and frantic effort to stifle dissent not only reminds you of that age old saying “Power corrupts and absolute power corrupts absolutely.” It also shows you how a fully blown dictatorship inching by the day towards its demise becomes so out of touch with reality. Due to the highest level of intoxication that the Meles-Bereket clique suffers from controlling and undermining everything in Ethiopia ranging from SMS to the airwaves, they think it easy to do the same with Aljazeera and VOA. Because,they managed to bribe some Kenyan officials for the abduction of Ethiopian exiles or because of their previous success with Sudan and Djibouti in having Ethiopian asylum seekers extradited in a scratch-my-back-I-will-scratch-yours understanding of barbaric regimes, they assume that this is how things are done in international relations.Well,I’ve news for them. Uganda is different with many strong institutions notable among them is the judiciary. The police and the army too is not a force that panders to the whim of officials like its counterpart in Ethiopia.
Therefore, TPLF’s current effort to paint Ginbot 7 as a terrorist group thereby attempting to link Ethiopian exiles in Uganda with terrorism is in vain. Ugandans are too informed to be tricked by this sort of deviousness. They know very well to what extent the Meles-Bereket clique have narrowed the political space in Ethiopia and that no recourse is left to a people under such a tyranny except rebellion as laid down in the preamble of the Universal Declaration of Human Rights/UDHR/.Encouraged by their understanding, we on our part tell to our Ugandan friends in the intelligence service to take any bribe offered to them by Zenawi’s agents here in Kampala.Though, it’s sad that the Meles-Bereket clique squanders the country’s meager resource in this way too, we should be consoled that our African brothers and sisters would benefit something, even if it’s not anything like the hefty payment made to the already rich American lobbyist DLA Piper. As the Meles-Bereket clique is a company of fools that says history repeats itself instead of learning from history not to repeat the same folly, it’s proper to throw some platitudes before parting as platitudes are befitting to people who try to turn the clock back.
Colonel Kassaye Kifle has passed away on July 14, 2009, after receiving medical treatment at St. Thomas Hospital in Nashville, Tennessee.