Foreign Companies Involvement in Importing Food Items Targets Market Ties, Competitiveness: Economist

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Addis Ababa December 13/2019 The green-light for foreign companies to import basic food items will enhance market ties and competitiveness beyond reducing the persistent inflationary pressure on Ethiopia’s economy, said an economist. 

government has recently decided to allow foreign companies to import basic food items including wheat, edible oil and sugar to alleviate the mounting of inflation rate.

In the face of rising inflation pressure, the country is inviting interested foreign companies to supply various food items.    

In an exclusive interview with ENA, an Economist at Haromaya University, Dr. Gutu Tesso, said the decision will leave the market to play its leading role in the economy of the country.

In modern days, the price of goods should be decided by the market on the basis of supply and demand, he said adding that the past experiences clearly show the market has not been free and fair in Ethiopia.

Appreciating the recent government decision, the economist said the move is crucial both at easing soaring price and creating competitiveness.

“With minimal supervision of the government, it is critical to ease price inflation. In the past the government and only few companies were delivered the items. But now, when hundreds of business people involved, the competition will be increased as well,” he said.

Inflation rate on food items was reported to have reached 19.6 percent in June and 20.1 percent in July 2019.

The economist further said giving government’s blessing to foreign companies to import food items and food items will have paramount importance in adding efficiency and quality of products.

“When foreign companies involved, it will add efficiency and quality with avoiding bureaucracy. Since their major target is profit, they can make goods accessible for the public using any means of infrastructure,” he noted.

Dr. Gutu indicated that the move also creates market ties between Ethiopians and foreign companies and to work in a joint venture and partnership.

Finance State Minister, Eyob Tekalign, said for his part that the main objective of the decision is to have sufficient products in the country so as to ease the soaring inflation rate.

The Ethiopian government recently imported four million quintals of wheat to combat the inflation.

Citing the advantage of permitting foreign companies to import goods, he said the companies will deliver the basic food items by their own foreign exchange.

“The decision is critical to creating competitiveness among foreign and local companies since the structure of our market has not been wide-open for competition but the major goal is to deliver the much needed produce on time for the general public,” Eyob stated.

The bid to identify companies has already issued, according to the State Minister.

The shortlisted companies will be selected by a committee composed of various representatives including the National Bank of Ethiopia (NBE) and Ministry of Finance, it was learned.

Reportedly, Ethiopia spends annually around one billion USD on wheat and fertilizers imports.

The Ministry of Agriculture has launched an initiative by the start of this budget year to end wheat import by introducing mechanized farming and helping small-scale farmers engage in irrigation agriculture within the coming three years.