Industrial Inputs Enterprise short of fund

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The Ethiopian Industrial Inputs Development Enterprise (EIIDE) is struggling with a shortage of funds. They are also asking the government to fill their leadership position.
The enterprise changed its name and revamped its main goal about five years ago. Its mission is to support the manufacturing sector by supplying industrial inputs. Currently they are complaining about financial problems as a result of uncollected credits. They also have not received an expected settlement from the Ministry of Finance.
The public enterprise has also been running without a board of directors because the previous board of directors were dissolved.
Wondale Habtamu, the recently appointed CEO of EIIDE, said that his enterprise is working to collect uncollected credits.
The enterprise supports the industry sector so EIIDE has provided financing for suppliers in advance. This includes items like: textiles (partially completed), leather products and cotton. They have also sold rebar through a bank guaranteed bond. Now they are trying to retake the payment from three buyers.
Just from rebar, cotton and leather the enterprise is looking to collect 78 million birr, 182.5 million, and 30 million birr respectively. “In general we have 300.7 million birr uncollected from different suppliers and buyers,” Wondale told the standing committee of the House of People’s Representative.
He said that EIIDE has 104 million birr from Ayka Addis, the largest textile factory in the country. It is being controlled by the Development Bank of Ethiopia after its over one billion birr debt default by the investors from Turkey.
He said that when the enterprise was first established it was supposed to be paid 792 million birr by the Ministry of Finance in paid up capital but that has yet to happen.
“Furthermore, we spent 596 million birr to purchase sugar to stabilize the market. This should have been refunded by the ministry but they have not paid,” he added.
According to the CEO, in total the enterprise has unsettled payments of 1.7 billion birr. This affects the activity of EIIDE.
He said that from the uncollected sales 55.3 million birr was collected in the first five months of the budget year. “We are trying to collect the additional 300.7 million birr through legal negotiations,” he added.
According to the report he presented, the enterprise has handed some cases through civil courts and others through criminal courts.
The enterprise appeared at the standing committee of the Trade and Industry on Friday December 28 saying that they have been unable to access loans from bank because their solvency has not met standards. “Based on the current status we cannot get a loan because some of the registered assets exist in Eritrea which separated from Ethiopia in 1993.”
In the stated period EIIDE had a goal of making transactions worth 1.5 billion birr. In reality they have only made 394 million birr worth of transactions which is 25 percent of their target.
The enterprise earned 8.9 million birr in sales profits before tax but their goal was 24 million birr.
EIIDE replaced the former Merchandise Wholesale and Import Trade Enterprise (MEWIT), when it split into two.
MEWIT managed 86 branches at the time. Now EIIDE manages 37 branches throughout the country.
“We have been trying to repossess our properties which are currently being controlled by city administrations or regions but we have not been able to,” he said.
The enterprise, which was established in 2015 via the regulation no. 328/2014 is one of the biggest public enterprises. It has a huge amount of procurements from local and overseas markets.
In the past experts who closely follow the enterprises argued that in fact EIIDE was established to support industrialization by supplying industrial inputs. However, this did not work out as expected. Most of the materials went to project MEWIT oversaw. An example of this is rebar sales. The new CEO also stated that in the past the organization did have a strategic plan or a leader, “We are now engaged restructuring the organization and have developed a strategic plan,” he said.
Disagreement between the former management and employees was one of the challenges that the enterprise faced. In addition there were several misdemeanors the staff complained about. There was also a problem with leasing the head office. However, now they have their own office in Piazza which is in the heart of the city. Formerly it was the head office of MEWIT.
The current CEO disclosed that the problem between management and the staff has been solved. He also said that the head office has been relocated to Piazza, which is a more central location for employees than their former headquarters located south west of Addis Ababa in front of the Vatican Embassy. “We were able to save 14 million birr since we left the rented building,” the CEO said. Employees suspected that the former management leased another building in relationship to a network in order to benefit themselves. They said that the former head office was rented to others and then the organization rented another plot, which is not located in a suitable place for employees.
Late last budget year the former CEO Asfawossen Alene, who is the founding CEO and his deputy Abay Kebede left the country. Later on they sent a resignation letter.
In his report Wondale also mentioned the situation about the former heads. He said that in relation to the rebar credit sales there is suspicion about the top leaders and the former head of the warehouse, which his where about for the last several months is unknown, involvement that police is investigating.
He asked support from the standing committee and the parliament to accelerate the investigation in order to settle the case as fast as possible. There is a suspicion about the existence of one rebar buyer and the bank bond. They are unable to determine if it is phony or not. Three buyers have been involved in rebar credit sales.
Early this budget year Melaku Alebel, who served as the Minister of Trade, replaced the former board chairman, Mebrahtu Melese (PhD). Now, however, there is not a board chairperson to follow the enterprise. This was recently discussed by a standing committee chaired by Getachew Melese. Getachew said that the committee will work with the Ministry of Trade and Industry to obtain a board of directors.
Wondale further told Capital that the absence of board has affected the enterprise’s activity. “We have several decisions that needs a green light from of the board,” he added.
Other board members, Ahmed Tussa, former state minister of Finance that is now transferred to Oromia region and Wondu Legesse, former head of Leather Industries Development Institute, left the board membership.
“I have written a letter regarding the issue to the Minister of Trade and Industry, and it has informed us that the enterprise will get new board chair in the near future,” he concluded.