Thirty-eight companies have expressed their interest for the invitation to supply food commodities by using their own foreign currency to the government.
In April, the Ministry of Trade and Industry (MoTI) invited foreign companies to express their interest to supply basic commodities by using their own currency which will be paid back in two years.
In the expression of interest (EOI) document issued on April 8 the ministry expressed its interest to import 18.1 million quintal of wheat, 1.73 million quintal of rice, 104.3 million liters of edible oil, and 3.2 million quintal of sugar.
It has been recalled that the Ministry of Finance invited interested suppliers for basic commodities that can import using their own foreign currency and that will be paid within two years period. Experts said that MoTI’s expression of interest document is different because it states the volume that the government wants to import.
According to one of the foreign company representative who submitted the EOI document, in the previous call issued by Ministry of Finance the government called suppliers to show their capacity than indicating their demand.
Eshete Assefa, State Minister of Trade and Industry (MoTI), said that about 38 companies have shown interest meanwhile the exact number might be known when the document is opened.
He told Capital that currently a committee formed to evaluate the process is working on some additional standards before the opening of the EOI document.
“Additional standards are being observed for the sake of clarity on the evaluation process,” Eshete added.
He said that the document will be opened in the coming week.
Ethiopian Standard Agency, Ministry of Finance, MoTI, and Public Procurement and Property Disposal Service (PPPDS) are members of the committee that will evaluate the documents.
According to the plan overseas companies shall import and trade their products in the country by using their own foreign currency and the money will be settled in the future.
The scheme is targeting to give relief for the government from allocating the foreign currency for these products and stabilize the market.
Previously experts told Capital that the time is difficult to get basic commodities since the coronavirus pandemic challenge countries and their economy all over the world, while the number of companies who express interest indicated that the government target is achievable even though it will be determined after the evaluation of documents.
The Ministry of Trade and Industry EOI which is open to all overseas companies who meet the criteria indicated that the purpose is to solicit applications and short list multinational companies to supply the basic food commodities and/or industrial inputs to the Ethiopian market.
According to some of the criteria stated, the shortlisted companies will agree either to invest, which might be partially, or repatriate the cost incurred for importation of basic food commodities together with the margin above two years from the date of import.
Experts on the sector told Capital that they have doubts about the fruitfulness of the EOI. They argued that two years for repatriation is not feasible as a business.
Companies want to transact the money they invested more, while in the current interest of the government, the money will be idle for two years that could not be accepted by any manner and shall be affected by global price hike or inflation.
Previously State Minister of Finance Eyob Tekalegn, told Capital that there are companies coming to involve in the new scheme.
He ridiculed the argument of some experts that the government might not get companies to be involved on such kind of scheme.
“We have got several interested overseas companies to get on the business,” he told Capital few weeks back.
The government is getting on this new trend considering to tackle basic commodity supply shortage, fight the inflation and access fresh hard currency.
Currently, only Ethiopians and the diaspora are legally allowed to involve on the retail or wholesale business in the country.
Meanwhile in its way to be member of World Trade Organization and Continental Free Trade Agreement, Ethiopia is expected to ease such restrictions for foreign companies.
The government is the major importer of wheat at a cost of close to USD one billion every year. According to experts, the volume of wheat stated on the EOI shall cover the demand for about one and half year.
Edible oil is also mainly imported by the government even though there are over twenty companies that are allowed to import the product.
At the same time import of sugar is monopolized by the government so far. But the policy and regulation of sugar that is coming following the decision to privatize some sugar mills drafted the importation of the sweat by private operators who will buy the factories.