From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Tue Oct 27 2009 - 17:02:13 EST
Guna, Owned by Ethiopian Ruling Party, Eyes Coffee-Export Share
By Jason McLure
Oct. 27 (Bloomberg) -- <http://www.guna-trading.com/> Guna Trading House
Plc, owned by Ethiopia's ruling party, said it plans to become one of the
nation's biggest coffee exporters, raising concern among industry observers
that private industry may get crowded out.
The company began shipping the beans in July and aims to export at least
12,000 metric tons of coffee in the year through June, Mulualem Berhane,
general manager of Guna, said in an interview on Oct. 22 in the capital,
Addis Ababa.
"We are intending to export to Europe, the U.S. and China," he said, adding
that Guna is among at least four other companies owned by the state or Prime
Minister
<http://search.bloomberg.com/search?q=Meles+Zenawi%3Fs&site=wnews&client=wne
ws&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfie
lds=wnnis&sort=date:D:S:d1> Meles Zenawi's ruling party intend to expand in
the industry.
<http://www.lib.utexas.edu/maps/africa/ethiopia_pol99.jpg> Ethiopia, where
arabica coffee originated, is Africa's biggest producer of the crop, which
accounts for 26 percent of the nation's export revenue. The Horn of Africa
country shipped 133,993 tons of beans worth $375.8 million last year,
according to Trade Ministry data.
Only three exporters shipped more than 10,000 tons in the fiscal year ending
July 7, 2008, according to data from the Ethiopian Coffee Exporters
Association. Those three, who together accounted for more than a third of
the nation's shipments, were closed in March after the government accused
them and other exporters of illegally stockpiling coffee.
In April, the state-run Ethiopian Grain Trade Enterprise began operating a
coffee-export business. Earlier this month, the company said it would
purchase about 10,000 tons of beans in the current year, according to
<http://www.waltainfo.com/> Walta Information Center, a ruling party-owned
news service.
'Unfair Advantages'
Bulcha Demeksa, a lawmaker from the opposition Oromo Federalist Democratic
Movement, said parastatals operating in the coffee industry benefit from
unfair advantages and will take market share away from private operators.
"They are literally government," Bulcha said in a phone interview on Oct. 22
from Addis Ababa. "They have so many advantages. The small exporters will be
driven out of business."
Hussein Aregaw, president of the Ethiopian Coffee Exporters Association,
declined to comment.
Guna is owned by the Endowment Fund for the Rehabilitation of Tigray, or
Effort, a group of at least a dozen companies founded by former rebels from
Meles' ethnic Tigray People's Liberation Front in the 1980s and 1990s. The
TPLF ousted Ethiopia's former Communist Derg government in 1991, and has
since run the country in an alliance with other pro-Meles parties known as
the Ethiopian People's Revolutionary Democratic Front.
'Favorable Regulation'
Effort's chief executive officer is Abadi Zemu, a senior official in the
TPLF. Its deputy CEO is Azeb Mesfin, who is the wife of the prime minister
and a lawmaker from Ethiopia's northern Tigray region. Calls to Abadi's
office phone weren't answered and calls to Azeb's office line didn't connect
when Bloomberg News called them today seeking comment.
Eyesus Work Zafu, president of the <http://www.ethiopianchamber.com/>
Ethiopian Chamber of Commerce and Sectoral Association, the nation's largest
business lobby group, said government companies have better access to credit
and enjoy favorable regulation and opportunities.
"Government has been a preponderant economic actor in our country," he said
in a phone interview. "When private sector businesses are engaged in similar
activities as public enterprises such as in banking and insurance,
preference is given to government companies. The playing field is not
level."
A 2009 report on investment in Ethiopia by the <http://www.worldbank.org>
World Bank said that "there is an impression that endowment and state-owned
enterprises benefit from privileged access to policymakers and resources and
are consequently able to compete on unfair terms."
Business Ethics
Mulualem said the presence of government and parastatal companies in the
market will improve the business ethics of Ethiopia's coffee traders.
"If we and Ethiopian Grain Trade Enterprise enter into the market everything
will be legal, because we follow all the rules and regulations of the
country," he said. Guna and other parastatals don't enjoy favored treatment,
and criticism of them is politically motivated, he added.
The government also denied that the entry of parastatals into the industry
was part of an effort to increase control over the industry.
"There is no crowding out of private business by anybody," said
<http://search.bloomberg.com/search?q=Bereket+Simon&site=wnews&client=wnews&
proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields
=wnnis&sort=date:D:S:d1> Bereket Simon, Ethiopia's communications minister,
in an Oct. 23 phone interview. "This is a country increasingly becoming
ruled by competition, by efficiency and price. I think the First Lady will
not be guided by rent-seeking practices."
Berhane Hailu, general manager of the Ethiopian Grain Trade Enterprise, was
unavailable for comment when Bloomberg News rang his office today seeking
comment.
To contact the reporter on this story:
<http://search.bloomberg.com/search?q=Jason+McLure&site=wnews&client=wnews&p
roxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=
wnnis&sort=date:D:S:d1> Jason McLure in Addis Ababa via Johannesburg at
<mailto:pmrichardson@bloomberg.net> pmrichardson@bloomberg.net.
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