Ethiopian Commodity Exchange (ECX), that was established in April 2008 and Ethiopian Grain Trade Enterprise (EGTE), a government agency that begin trading coffee and oilseed on the exchange floor last year had a marriage of convenient. Ever the exchange was operational and abandoned its original declared mission of Grain Commodity market reform to become an export commodities collection center armed with government decree, it defied every transparency and independence a free market institution requires.
The Exchange that failed to bring about the real private traders to participate in the exchange floor made a habit of threatening and forcing farmers and traders with government proclamation and decree to force sell their commodity, contrary to its stated mission of free market promotion.
Therefore, the ECX marriage proposal to EGTE was too convenient and too good to be true following the calculated government raid of private coffee traders' warehouses and revoking their license last year. Accordingly, the ECX, backed by the power of the ruling regime and its operatives ended up cornering the export market with EGTE as as its unholy partner.
ECX that boost independence and transparency ended up being another government tool with the majority of high government official seating on the board of Directors, EGTE as a partner and the ruling regime’s business enterprises crowding out the private sector. in essence transparency became a PR stunt for gullible audience.
At the mean time, EGTE on its official website claims it was “re-established in accordance with Regulation No. 58/92 of the Councils of Ministers and completed merger with Ethiopian Oil Seeds and Pulses Export Corporation".
The Agency that joined the ECX as any trader of coffee commodities was re-established in 2002 and put up its website by an outfit called ITSC Technology Support, located in Bole, Addis Ababa with server in Malaysia, according Network Solution.
What is peculiar about the website that was created on July 2002 and modified on August of 2008, (four months after the ECX was officially opened), it began selling commodities online. What is also troubling is the connection of ITSC and Malaysia. When ECX uses the Ethiopian telecom server, how is it a government agency like EGTE managed by unaccountable private outfit to the public using a server in Malaysian?
In addition, for a major government agency like EGTE that dominates agriculture commodity trade and export in the country there is no a single responsible person named on its official website. How is it the Exchange overlooked these defecinecy to allow it to dominate commodity trade?
No one is sure the difference between the government’s agencies, the ruling party business and the ‘private traders’. But, one thing seems clear, like many other agencies the ECX and EGTE are fronts for the regime unlike the CEO of the ECX and the Genral Manager of EGTE wants the world to believe.
To illustrate the lack of transparency the official ECX’s website have many deficiencies. It resembles more like a private enterprise owned by individuals than a national commodity exchange. For example, it claims on about us “ECX creates trust and transparency through aggressive market data dissemination to all market actors, through clearly defined rules of trading, warehousing, payments and delivery and business conduct, and through an internal dispute settlement mechanism. ECX provides market integrity at three important levels: the integrity of the product itself, the integrity of the transaction, and the integrity of the market actors”
The above official statement does not equate with what is practiced on the ground by the hand picked "market actors” like EGTE. With its online sells around the world the agency that pride to have its own warehouse, transport… and a budget of over 105 million birr of public fund competing with private traders with impunity says more about ECX motives than to ‘create trust and transparency” as stated.
Since last year, the agency became coffee and various cash crops trader and exporter with multiple and confecting role in the market. It is a market price stabilizer, exporter of cash crops, a seller of grain commodities to institutional buyers, storage operator, transporter etc. The new addition to its service as an online seller of cash commodity to the world does not equate with “integrity of the transaction and market actors” as the ECX claimed. see EGTE website.
The convenient marriage between ECX and EGTE not only lacks integrity and transparency, but exhibits the prevalence of corruption and cronyism in the part of the ECX, the total breakdown of the market and the vulnerability of the indigenous farmers and traders.
When free market is used and abused by officals who have other motives than the free exchanges of goods and services to the benefit the public it shows the contempt of officials towards the public and how public institutions can be used by corrupt market operatives. Nothing can be more evidence than the only sources of public information than the websites of the ECX and EGTE.
During the establishment of the exchange, the present CEO and founder of ECX Dr. Eleni Z. Gabre-Madhin (then Chief of Party, ECEX Project of Internationa Food Policy Research Iinstitute (IFPRE), made a speech at TED conference on “Africa: the Next Chapter” in Arusha, Tanzania titled:- On Happiness, Freedom, and Unleashing the Power of the Market. Below are the last three paragraphs of the speech:
“The winds of change are here. At present, there is a great momentum on the part of both the government at the highest level and the private sector, from farmer groups all the way to industrial actors. ECEX is the market for Ethiopia’s new Millennium, which starts in late 2007. The last Parliament of our century opened last October with the President announcing that this initiative is the country’s top economic priority for the next year. The stakes are high, and the returns will be even higher.While the speech and the hype were meant to please the donor community to doll more money than anything else, it has no substance to the reality of the market in Ethiopia. As expected, the exchange did not go further than to become an efficient collection warehouse of cash commodity to the regime's liking.
Can Ethiopia do it? We believe it can be done. We say Yichalal!, it can be done, following the tradition of our great runner, Haile Gebreselassie. Moreover, ECEX paves the way for a pan-African trading platform. ECEX positions Ethiopia as a regional market player, adding significant value to its $1 billon domestic market, in which Ethiopia is Africa’s second largest maize producer, with total grain production 30 percent higher than South Africa. ECEX enables our farmers to connect to consumers of our pulses and sesame seed in the huge and growing markets of India and China, as well as Europe. If ECEX can capture even 40 percent of the current domestic market and raise commercialization by farmers by just 25 percent, this doubles the value of the domestic market.
By creating meaningful choices and transforming the lives of Ethiopian small farmers, we believe that ECEX is an outstanding value proposition to Ethiopia’s future and that the sky is the limit."
The CEO speech that promised to transform the Grain commodity market turned-out to be an empty promise, because the CEO compromised free market principle by breaking the rules of transparency to liking of the regime in power. She surrndered to the regime appitit to earn forign exchange by cornering the market than badly needed market reform.
In a positive note, the ECX, for the first time in the country's history introduced the concept of formal trading. If only the government along the corrupt and privileged traders who tag along with regimes in power gets out of the way, the country would have advanced as a major commodity producers in the region.
Salvaging the Exchange?
Like establishing the exchange salvaging it requires a political will of the government as well as principled stand and ethics on governance in the part of our intellectuals. In that regard, the regime consistently proven it has no desire to surrender public institutions to independent groups. What we are left with is the CEO doing the right thing, including banning the government officials and the regime affiliate traders from involving in the exchange affairs beyond regulating. The CEO would do the people and the maraket a big favior to resign.
While opposition political parties are distracted by the chaos created by the ruling regime, it is their duity to demand the independence of the ECX and the resignation of the officers and the CEO.
Amoung the few institutions in the country that have the major stranglehold in the lives of the people of Ethiopia are the ECX and EGTE. As much as political reform is needed for the rights and liberty of the people of Ethiopia market reform should comes on the top of the agenda of any serious opposition political party to free the people from the bondage of economic oppression by the regime and its affiliates. Among the urgent demands required by the oppositions are: banning all the ruling party businesses from the market, demanding the exchange to be run by independent committee, demanding public disclosure of the assets and monitory interests of all government officials, and the right for Indigenous farmers and traders to form independent associations.
