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Government to take Strict Actions Against Hoarders
The Ethiopian birr has lost 60% of its value against the dollar as of Monday, sparking anxiety as customers are forced to pay more for basic commodities and some businesspeople are hoarding.
Many supermarkets in Addis Ababa are hoarding products in warehouses and only selling small quantities in their stores to escape punishment by city authorities, who have vowed to crack down on hoarders. Consumers who want to buy in bulk must pay inflated prices for products they are told to pick from warehouses.
In Merkato, the capital’s biggest open-air market, guards are stationed in an attempt to keep businesses from raising prices. Last week, police officers raided some warehouses and confiscated 800,000 liters (210,000 gallons) of edible oil they later distributed to local cooperatives, which offered it at previous prices. More than 3,000 stores accused of hoarding have been shuttered across the country.
The Addis Ababa City Trade Bureau has warned that more actions will be taken against people who take advantage of the floating of the birr to hike prices.
The new exchange rate policy was a historic decision in a country where the government for decades fixed the price of foreign currencies, allowing a black market to flourish. Commercial banks now can set foreign exchange prices, and non-bank entities are permitted to operate foreign exchange bureaus for the first time.
The International Monetary Fund approved a four-year credit facility worth US$3.4 billion coinciding with Ethiopia’s reforms. The IMF pledged to disburse US$1 billion immediately to address pressing needs, with Managing Director Kristalina Georgieva describing the reforms as a “landmark moment for Ethiopia.”
Ethiopia, which suffered foreign currency shortages in the months leading to the reforms, imports many essential commodities. To help consumers cope with the impact of the new policy, authorities imported 14 million liters (3.7 million gallons) of edible oil, but such interventions have been minor given the rising prices of other essential goods.
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Experts say Ethiopians face unpredictable days ahead in a country where official salaries have generally stagnated for years. Those with fixed incomes will be most affected by the floating of the birr, said Getachew T. Alemu, an Addis Ababa-based public policy specialist, adding that the immediate injection of IMF funds will not be enough to absorb the pressure.
