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Ethiopia commodity exchange ; “high tech, low impact”

Dimetros Birku
February 2,2017

Latest edition of The Economist hailed Ethiopia Commodity Exchange (ECX) as “State of the art” and “sub-Saharan Africa’s most modern commodity exchange outside Johannesburg.” This same week, the new United Nations secretary general, Antornio Guterres, called upon the world, in his speech at African Union, to help tackle looming hunger that could endanger the lives of millions of Ethiopians. Other humanitarian organizations with ‘boots in the ground’ in Ethiopia have made similar plea to the world. Estimated five million Ethiopians are facing famine – in the south-eastern part of Ethiopia. Even the regime in Ethiopia admitted that millions are facing famine. In fact, ONLF -an ethnic based opposition party from the region-, outlawed in Ethiopia and operating overseas, contended that the magnitude of the looming crisis is overlooked and figure is much higher.

TE is aware that when Ethiopia Commodity Exchange was launched in 2008 it envisioned reducing hunger by way of transforming Ethiopian agriculture through incentivising farmers and tackling price fluctuation in the market. The founder of ECX, Eleni Gabre-Madhin, appeared in TEDx Talks to talk about it.
Nearly a decade after its existence, grim reality is that Ethiopia is once again faced with, this time amid narratives of “double digit growing economy” which became ubiquitous in western main stream media outlets, famine causing drought. Pastoral communities are not just loosing not only their cattle but also beloved family members in some cases.

True, the famine is happening in the arid parts of the country. Even if it is in the pats of Ethiopia where crop production dominates agriculture, ECX does not function in a vacuum. It is obviously influenced by government policies and, so to speak, the bureaucracy in place, which is fast becoming one of the most corrupt system in Africa.
In fact, TE seems to have noted that government is meddling in the export of some cash crops and that the high tech ECX is not effecting desired change. Whether export of crops like coffee should be left to offshore exchanges, as TE suggested, is something that Ethiopian economists need to grabble with.But it is hard to imagine that “well-established offshore exchanges” could be less exploitative than ECX, which is intrinsic to any capitalistic market, as far as farmers are concerned.

But when it comes to the looming famine, ECX can not be blamed for it, obviously. What is clear is that the drought could have been averted had there been informed and effective government polices in place that underscored the principles of prioritizing economic and development needs rather than an economic policy that indulged in prestige like projects, with the pretext of infrastructure development, with millions and billions of dollars of loans from the East and the West. Most of these projects, some observes believe, were rather vulnerable to squander. Take the newly completed Ethio-Djibouti railway line for example. Executives from Ethiopian railway corporation appeared before parliament to report that it is unable to keep up with debt payment and that it has got a serious operational cost issue. Even in the agriculture sector, Development Bank of Ethiopia and Commercial Bank of Ethiopia learned, ESAT reported about it, that of the 5 billion Ethiopian birr loan issued to investors for purposes of investment in agriculture in the Gambella region of Ethiopia, well over 4 billion Ethiopian Birr is wasted. No government authority is held accountable for it. Ironically, the banks are given executive orders to issue more loan for the same investors – who happen to be from Tigray region in fact.

It is not secret that the government is in dire shortage of foreign currency. As we speak, it is preparing treasury bill to sell in the hope of raising billions of dollars “to fund many unfinished projects” – among other things.

TE is mercilessly butcher administrations in Africa or elsewhere on matter of economic policies or governance especially when the administrations are deemed to be unfriendly to the liberal world order. But when it comes to reporting on Ethiopia, it tends to understate governance problems. That is what we exactly see it its latest report on Ethiopia. It didn’t even present a vivid picture in connection with the role of the administration in Addis Ababa for the under performance of Ethiopia Commodity Exchange. Because it will squarely lead to Tigray people’s Liberation Front officials.

Writer can be reached on twitter @dimetros



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