The Ministry of Trade and Industry has authorized only governmental development enterprises to directly distribute cement from factories to the open market.
“The high price of cement on the open market has stressed the construction sector despite the Ministry’s effort to control the price and protect the construction sector,” said Eshete Asfaw, Sate Minister of Trade and Industry.
Eshete added that the enterprises will purchase cement from the local cement manufactures and distribute it with a fair price to smaller retailers.
The illegal increasing price of cement in the open market has rise challenges on the construction industry.
To solve the problem on May 29, 2020 the Ministry held talks with different stakeholders.
According to the Ministry most of the stakeholders raise the inefficient control of the government on the market as the main problem to the price hike.
According to Eshete the decision will continue until situations get to the point as they were before the pandemic.
Cement known as the back bone of the construction world typically a heavy-consuming cement market, Ethiopian cement production had proven insufficient to meet demand.
Back in the past years through the development of the construction industry massive public investment and infrastructure projects increase the demand and consumption of cement.
According to the Ministry because of the current situation cement factories are working by their 50 percent capacity, although to benefit from the market some traders are increasing the price of cement as there is shortage of production.
As one of the mandates of the enterprises are to ensure supply of industrial inputs whenever necessary for trade and industry, the profit rate of the enterprise is much lower than the retail market. “The lower rate of the profit will solve the challenges facing the construction sector” said Eshete.
Cement producers are tackling a long list of challenges, unfavorable supply-demand balance, higher cement prices, escalating production costs, low utilization rates, social unrest, and a lack of foreign currency.
The ministry has been making manufactures set constant prices and pursue their distributers.
According to the Ministry, in the retail market cement is sold around 350 birr per quintal but currently it reaches up to 600 birr.
Currently the country has a capacity to produce 17.1 million quintals of cement per annum.
Ethiopia’s cement capacity grew at an annual average rate of 6.8 percent between 2013 and 2018, according to data from Cement World Group.