Cyber conversation with the ECX boss

eleni.jpgBy Genet Mersha, 2 November 2009 — I am very pleased that Dr. Eleni Gabre-Madhin has kept the conversation alive between her as chief of the Ethiopian Commodity Exchange (ECX) and Ethiopians residing in different parts of the world. In this article, I am reacting to her October 29 piece entitled “Will the Real Poor Farmer Rise.”

However, I must first preface this by stating it is regrettable that this helpful effort by Dr. Eleni in most instances is not being received either properly to support her ECX journey where possible or disagree with her because of x, y, z. Instead, some seem (three to one) so pleased with personal attacks and meaningless accusations over which she does not have control over what happens “outside of ECX”, as her article has indicated.

For me, the problem is her message mixes defence of her mission and ECX as an institution, which takes away a lot from the mission many Ethiopians are too happy to support. However, I cannot say that much independence of the institution. Similarly, the predominantly negative response against her is infused with opposition of the regime, and thus has missed its target. Even then, it borders the irrational, if not, much in the same manner as a spoiled child’s clutter for attention. Distrust is healthy when there is possibility of exchange; attacking wrong or false ideas is beneficial and helpful; but rudeness is no sign of either good political opposition to unacceptable government policies or of maturity of the individuals concerned.

Dr. Eleni’s main message, the way I understand it, is that ECX would endeavour to reach the peasant farmer and would someday be in a position to reduce the extent of his or her exploitation by intermediaries and victimization by unfair trade practices. She explains this by saying,

    The point is that Tadele, and many more like him, take their red cherry or dry beans to the nearest market outlets, with just the faintest idea of what their coffee is worth or what the world out there, or even the national market, looks like. Our challenge is that we need to figure out, as a country and as a national marketing system, how to empower Tadele and others like him to make meaningful choices of where to sell, when to sell, at what price to sell, and to whom to sell, so that he can maximize his returns and improve the quality of his life, send his children to school, make sure they get health care, and break the vicious cycle of poverty in which he is trapped.

If this dream of her is realized, I grant you, it would be a big achievement for all Ethiopians. Unfortunately, Dr. Eleni’s dream, as portrayed in her article and the reality of governmental practices are far apart like ‘fyel wodih, Qzimzim wodiya.’ We have seen this occurring repeatedly. Over the years, it has cost government its image and credibility, not to speak of the economic and political costs to the country. For instance, consistent was the action taken by six major exporters, as the ECX boss was saying right within the reach of ECX, six major coffee exporters ended up with the expropriation of their properties and the suspension of their licenses in March. All that they did with their coffee is exactly what Dr. Eleni says in her article—they waited for better market prices and to whom to sell. They also saw that the domestic market was more remunerating for them, given the exchange rate factors and behaviour of the market both at home and abroad.

Nonetheless, a government overwhelmed by its foreign exchange problem interpreted that action of theirs as deliberate attempt to undermine it. Thus, between November 2008 and March 2009, the TPLF went on building a cobweb of lies to cover up its designs to promote GUNA as Ethiopia’s coffee-exporter-in-chief. In November 2008, government first resorted to threatening to ‘cut the hands’ of coffee exporters [metaphorically], if they did not export their coffees as speedily as possible. Furthermore, the farce of this whole situation came to the hilt in the allegation by the prime minister that these merchants had tried to take the country back to the past it has rejected.

How ironic that Dr. Eleni Gabre-Madhin, the ECX chief, has now decided to throw titbits from across that jungle of lies and denials to confirm what we have known all along and have written about this mafia style business by politicians in power. In her above-mentioned article, Dr. Eleni wrote of the true reason for the expropriation of the exporters finally confirming what for half of 2009 has been public knowledge. In there she stated,

    regulatory actions were taken against some of the major exporters of the country, largely prompted by the foreign exchange crisis brought on by the global recession.” She then continued, “It should be clear by now and has been stated officially that the regulatory actions taken had nothing to do with ECX but were based on illegal behavior discovered outside of ECX, which the exporters have also acknowledged. In fact, these export companies continue to be members of ECX and interact with us regularly. They have continued to sell their supply coffees through ECX, although they cannot buy export coffees unless their export licenses are re-instated based on the court’s ruling.

Stop for a moment and think, as to which Ethiopian would not be enraged by the licensing by of EFFORT’s GUNA by ‘government’ as the country’s major coffee exporter, the news of which was made public at the end of October? This came less than eight months after the TPLF elbowed those six successful individual exporters out of the market accusing them of alleged political crimes of undermining the regime. In fact, their only crime was their decision to delay, to hold of like all businesspersons, their export of coffee at a time of falling international prices.

This writer does not deny the severity of the foreign exchange crunch the government had faced. The idea here is to register disagreement at its mistreatment of those exporters and its disrespect of private property, for that matter under false pretexts. In other words, the problem of foreign reserves was severe. However, the government could have used other means of dealing with the exporters. It ought to negotiate with the concerned owners, instead of using its muscles, which even by present Ethiopian laws is illegal. The government’s recourse should have been to offer them some incentives or by covering part of their losses at a specified time or through tax incentives—just to get the foreign exchange it needs. That would have enabled them take the actions it wanted them with their properties. Outside that, what the government has done is disrespectful of the property rights of citizens. Its actions are no different from highway robbery by government officials.

What is most troubling here is the fact that those individual exporters were the very people whose good performances the TPLF had acknowledged and given them awards during the previous years only to make a turn around early this year and expropriate their coffees. Having suspended their licences, it has now handed them over to GUNA, EFFORT’s major arm for commodities exports. By this action, not only TPLF has moved from political consolidation to foreign exchange accumulation, but is also engaged in putting the major sources of wealth of the country under its control, as is the case now with several industries, mining, huge plantations and agro-processing enterprises, agricultural mechanization, building materials and construction companies, trucking and transit services, commodities exports, etc.

Against this background, I listened to what Dr. Eleni has to say time and again, and thought carefully of what she has written in her latest piece especially,

    But our system is not just for Tadele. Exporters benefit too, a lot, because now they don’t have to incur the risk of getting the wrong quality or quantity of the coffee they have paid for, with an ECX delivery system that guarantees that Tadele’s coffee will get to the exporter-buyer on time, in the right quantity and quality. That is why we are closely working with our exporters association to ensure that their needs are met too.

Already in the foggiest days of the recession in late 2008, this writer was struck by the animated claims amongst people in leadership circles in Ethiopia about their ‘I told you so’ about the presumed end of capitalism, as we know it. Their stringers on government media and agiaforum did try a few times to air out which way things are moving under the guidance of government in Ethiopia. Unfortunately, with their habitual barking at everyone left and right, they lost the message and did a bad job of it. Consequently, the ultimate meaning of that cryptic message from TPLF top bosses about the direction of the country and extent of their swoop on the Ethiopian economy and its implications has barely become full public knowledge, as it should have been.

Government is not the real driver of the Ethiopian economy. Ato Sebhat Nega was forthright without meaning it, as usual to his detriment though, when he proudly asserted on the Voice of America ‘EFFORT controls key strategic sectors of the Ethiopian economy.’ We have already been aware of that ever since seizing power that the history of TPLF leaders is that of scrambling fiercely for every iota of political power—through the EPRDF, their potted plants, and the army and police—and economic power—through EFFORT, their huge business empire that has gobbled up our national resources.

Consequently, EFFORT has become wealthy by illegal means taking control of the country’s key economic assets and has grown exponentially amazingly faster than the country’s weak, structurally rigid and inefficient economy. At times, Ethiopia’s high GDP growth figures, which they constantly drum up, have been puzzling or confusing for many, against the background of such deteriorating human conditions. The truth of the matter is that it indeed is a measure of EFFORT’s performance, not the country’s economy. For this, the reality speaks better in Ethiopian cliché that portrays ordinary citizens as ‘የበይተመሌካች, literally meaning, distant spectators of the jet-set TPLF leaders and their collaborators feasting and dancing all over.

I admire Dr. Eleni’s strong faith in Ethiopian law, in spite of everything that is happening in front of her against the law. There I part company with her. She seems to have strong faith especially in the power of ECX’s Article 18, which recognizes ECX as “an autonomous entity.” What value is this to the peasant producers or commodity exporters in the country, if a stroke of the pen from the prime minister’s office rolls over everything? I am certain that it is not lost on Dr. Eleni that coffee producers are headed into a more difficult time. They may be compelled to change to different crops—perhaps khat. We never know that was even in the mind of Tadele who could only disclose to her that if he could get higher prices. Now with GUNA monopoly, the future of coffee production may be threatened even more by both price factors, as Ato Tadele had told her, and because of producers’ and associations’ resistance to what has happened as of the end of October.

I regret to say that Dr. Eleni, does not seem to be fully cognizant of the speed and direction of TPLF movement to control Ethiopia from all angles. Even then, she writes about the solid legal foundation on which ECX is established, in a way that has missed the whole point. Dr. Eleni believes,

    The law is even further explicit that certain key management decisions cannot be made by simple majority but by two-thirds majority, preventing the government side to override by its slight majority number. One of such key decisions is the decision when to recommend the sharing of ownership of the Exchange with the private sector, which is stated as an objective in the preamble of the law. So the idea that the government aims to permanently own the Exchange or to act as a monopoly trading entity or that the Exchange is an arm of government is simply false, both as a matter of law and in practice.

I would like to remind Dr. Eleni that in August I wrote the article entitled ‘Distrust of regime places ECX Chief in unenviable position’, . I repeat again, while maintaining my personal respect for Dr. Eleni, I stand by what I had written in that article. I would especially like to refresh her memory of the following,

    … What guarantees are there to show ECX’s independence in a political environment that rigidly demands loyalty, even from schoolchildren through membership of the ethnically oriented ruling party? It seems to me that Dr. Eleni’s inadequacy to make her case on that has taken the wind out of her sail, irrespective of how important what she had to say. This is not to say ECX‘s time has not come. The problem is government’s lack of credibility has rubbed on the Exchange. The absence of rule of law and an outside regulatory body to ensure the Exchange’s transparency and fairness is a multi-pronged handicap.

The writer can be reached at

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Posted by on November 2, 2009. Filed under NEWS. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.