The Ethiopian Commodity Exchange that was established by Dr. Eleni G. Medhin and on the endorsement of the Ethiopian ruling party on April of 2008 promised to turn the Ethiopian poor farmers in to a commercial farmers.
Though, it is the single most important institution that would impact the lives of the vast majority of the population it raised very little interest among Ethiopians in Diaspora and the urban elites in Ethiopia whose sense of economic development has been far removed from the daily reality of the majority of Ethiopians for lack of independent information.
The founder and CEO of the exchange Dr. Eleni, an economist from two of the prestigious US learning institutions who was championed, mostly by foreign crowd to crack the code of solving the 'edge old problem' of under-development and poverty made speeches, visited the Chicago Commodity Exchange, run-around in the corridor of donors, political power, and made presentation to foreign audience prior to establishing the exchange.
The celebration still continued after a year and half of operation with a recent PBS documentary-Wide Angele aired without much prior challenge from Ethiopians.
What most Ethiopians did not pay attention was the exchange is no longer an exchange of grain commodities as promised, but a government agency to facilitate export commodities to earn foreign exchange.
In a recent article, "The dangerous hype behind the Ethiopian Commodity Exchange" Dr. Seid Hassan eloquently outlined numbers of structural problems and lack of transparency of the exchange. His article outlined the complete lack of any one of the key structures that would make a free market institution functional.
The founder and CEO undoubtedly possess the knowledge as a product of two prestigious learning institutions in the world (Stanford and Cornell University) and considered an expert on how the free market works. What went wrong, she is not able to create the basic transparency necessary to begin the process of developing the market?
There is no doubt a commodity exchange is the sole market institution that would transform an Agriculture based economy into a manufacturing economy provided, it is out of the hands of the government, unscrupulous, and politically motivated players. Currently the ECX not only turned out to be a government institution contrary to the claim of Independence, but it appears to be set-up by unofficial decree of the ruling regime to force its political and economic will on the people of Ethiopia.
In an economy where the ruling party's affiliated enterprises dominate the private sector never seen by any African standard, and when the means and ways of agriculture production including land and market infrastructures are under a strict control of the regime, to call it an exchange is troubling.
Furthermore, there is no a single mass-media under the private sector that could expose corruption or reflect transparency. In addition, the largest grain commodity buyer and seller in the country is a government agency (EGTE) and a member of the Exchange.
How an exchange owned, operated, and regulated by the government on top of market information disseminated by the only government owned mass media is considered to be a free market institution by any standard is the million dollar question that needs an immediate answer.
The donors who financed to establish such an exchange cannot claim ignorance of how a free market institution should operate. It begs the question and calls for extensive inquiry, why they chose double standard of transparency- one for a poor country like Ethiopia and another to the rest of the world.
It is quite troubling to see a country of 80 plus million populations in the verge of a major famine and rampant poverty is left to a regime and its enabler intellectuals without transparency and accountability to anyone under the funding agencies' watch.
Therefore, we urge Ethiopian intellectuals, independent Media, civic institutions, political parties, and the donors’ community to demand transparency and accountability. We believe the exchange should be taken-over by independent committee consisting of private market players and independent third party. In addition, banning the ruling party's affiliated enterprises and disclosure of the financial interest of the officers of the exchange is necessary to build confidence and protect the public from unscrupulous and politically motivated traders.
Note: It is estimated there are five millions donkeys in Ethiopia transporting the vast majority of grain commodity in the country. That would be the largest donkey population in the world, next to China of 11 million.When agriculture commodities transportation are heavily relied on animal packs, and when the vast majority of assembly markets created are consistent with how far a donkey travels in a given day, it is important to note the complexity of market formation and the bottleneck created to reach the consumer.
In addition, the lack of independent market institutions, credit, contract enforcement, market information, and storage to farmers and traders must be addressed before an exchange can be considered independent and functional.
An exchange can only be successful when it is transparent and addresses the problem from the bottom up than the top down, as ECX is attempting.
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