Scarcity has become a typical trait of Ethiopia's consumables sector. Consumers lining up at the gates of consumer associations, even under a scorching sun, are becoming the emblems of the tradable sector in the country of a little over 90 million people.
Accessing basic consumables is no more about the ability of an individual to pay for it. It has become all the more difficult to translate disposable income, however little, into a box of consumables for the simple reason that they are not available in the market.
It is this reality that the ruling Revolutionary Democrats, who consider themselves as pro-consumers, are faced within their daily administrative routines. There, however, seems to be little that is coming from their side in the form of a lasting solution to this recurring problem. Neither has their approach to produce piecemeal solutions to parts of the problem continuum brought the expected changes.
Lately, the official line has seen a shift. For years, the scarcity in the consumables sector has been attributed to monopolistic wholesalers and a fragmented distribution system. Recent government reports, however, indicate that shortage of vehicles to transport goods from the Port of Djibouti has become the new addition to the list of justifications of the state. It all seems that the listing of excuses would continue unabated as far as the scarcity stays.
Policy circles were quick to trace the new line of argument and discuss it. There seems to be serious divisions on it, though.
There are those that treat the transport problem as a seasonal issue. For this group of people, the problem is confined to the transport sector. Not only is the sector affected by seasonal variations, their argument goes, it also depends on the seasonality of imports. Peak importing seasons entail shortage of transportation and off-peak seasons bring massive idleness. Considering the holiday seasons, which involve huge importation of consumables, shortage is predictable.
But there are those who argue that the whole issue relates to the way the logistics sector is administered. And the shortage of transportation that the government is touting is just a seasonal signal of a transport policy that is failing to deliver change over years. As much as they recognise the importance of the admission by the government of a problem that has been given almost no attention, they remain suspicious that it could just be another excuse.
A look back into the economic history of the nation since 1991 would show that the record of the ruling EPRDFites in the transport sector is not all bleak. They have important achievements they ought to be proud of.
Under the EPRDFites, Ethiopia has become a nation that is investing huge resources in enhancing national connectivity. The investment in the cross-country roads has been so huge that the time it takes to access an all weather road has been reduced by two thirds over the past two decades. The total stock of roads in the nation, according to the Annual Report of the National Bank of Ethiopia (NBE), stands at 99,522Km, of which about 26,857Km is cross-country stock.
Cities and urban centres around the country are also witnessing a rise in the amount of land dedicated to roads, a standard measure of urbanisation. The case with Addis Abeba, for instance, is about 11pc. This indeed is a considerable jump, and close to the global standard of 17pc.
This was not the only aspect in which the ruling EPRDFites have been investing their time and energy over the years. Infrastructure expansion and operational reforms have been undertaken in Customs clearance, dry port management, multimodal transportation and fleet management. A part of the reform efforts was to amalgamate the various public enterprises that used to operate at each juncture of the logistics chain into one enterprise, named the Ethiopian Shipping & Logistic Services Enterprise (ESLSE). These changes not only improved the external trade management capacity of the economy, but also contributed considerably to the growth the economy has been witnessing over the past 12 years.
Nonetheless, it seems that the efforts of the past years are not enough. There cannot be a more telling fact than the continuous shortage of consumables attributed to logistics problems.
The scarcity that is engulfing the consumables market is, slowly but surely, bringing inflation back to the policy scene. Of course, this is not to mention the overwhelming disappointment of consumers in the distribution system.
Even without the consumables scene, the Ethiopian logistics sector needs a transformative change. It is costing the nation hugely. The nation ranks at a disappointing 107th place out of 163 countries in the Global Logistics Performance Index (LPI), which rates Customs, infrastructure, logistic quality and competence, tracing and timeliness. Exporting and importing remain costly businesses in the country, as compared to both similar economies in Africa and the emerging economies of Asia that the nation aspires to emulate.
It is obvious that enhancing the logistics sector is smart economics. It is a way to enhance the competitive standing of the nation's external sector, and to optimise the efficiencies of the domestic trade. It is an obvious issue that needs solution from the ruling EPRDFites.
The Revolutionary Democrats are not short of commitment to effect change. Their decision to employ an international consultant, Nathan Associates, to help them solve the problem is evidence to this commitment of theirs. Yet, the intended reforms are slow to materialise.
The whole effort of creating an effective and efficient logistics sector has been guided by an attitude that the state can nurture it all. Another dominant perspective is to approach the case on a piecemeal basis.
If a change in the logistics sector is to happen, then, it is these basic premises that need revision. And the revision ought to take into account both the national reality and the international experience.
Both nationally and internationally, the private sector has proven to be an effective and efficient agent of economic activity. Its fundamental motive to maximise profit enables it to be creative and look for ways to enhance productivity.
In counties as varied as South Africa, United Arab Emirates (UAE), Sweden and Singapore, the private sector has proved to be an effective operator of the logistics sector. In key operations, such as shipping, port handling, multimodal transportation, dry port management and fleet management, the private sector has proven experience. Not only has the participation of the private sector in key junctures of the sector enabled the countries to stay competitive in international trade, it has relieved the state of the huge pain of overseeing routine operational issues.
In such cases, the state stays where it is better at - regulation. Be it restricted monopolies or competitive logistics markets, effective regulation can bring huge change in operation and deliverables. Learning from regional economic powers, such as South Africa, and renowned best practices, such as Sweden, Ethiopia's ruling elite ought to give the private sector its deserved place in the logistics chain. They ought to do this if their overall goal is to create a competitive, effective and efficient logistics sector.
Even then, the piecemeal reform approach the ruling EPRDFites have been using for over two decades ought to be avoided. Instead, the need is to effect a comprehensive reform that treats the logistics chain as an integrated platform. With such an approach, benefits of linkages could be optimised and costs of overlaps could be reduced.
In policy terms, the issue is about looking thoroughly into the road development, port utilisation, Customs, inland transport, fleet management and dry ports management policies of the nation and searching for the best case for integration. This may be easier said than done, but the pains from which consumers are suffering seem to leave no option other than going for it.
Source: AllAfrica
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