BGI Ethiopia, a pioneer foreign brewer in Ethiopia, has finished buying out all the shares in Zebidar Brewery at a total cost of 1.825 billion birr.
Previously in January 2018, the mother company of BGI Ethiopia, Castel Group, bought the shares of Belgian brewery, Unibra S.A. which was the major shareholder of Zebidar.
Since then the board of Jemar General Industries, a company formed by Ethiopians had a 42 percent share in the brewery. Zebidar Brewery is located about 166km south west of Addis Ababa at Gubre Woreda around Welqite town of Gurage Zone, SNNP.
According to information Capital obtained from BGI Ethiopia, Jemar and BGI agreed on the buyout of the Ethiopian share at more than 1.8 billion birr.
“Of the stated amount about 430 million birr is capital gains tax which has already been settled,” sources at BGI said.
Jemar has also received a 350-million-birr installment and the balance will be settled every month based on an agreement between the two sides, according sources.
Initiated by local shareholders Zebidar began making beer on January 5, 2017 with a unique pull-off cap bottle and an investment of 1.3 billion birr. The factory has a production capacity of 350,000 hectoliters per year.
Jemar has 1,100 shareholders who invested in the brewery and Zebidar is the second beer maker in the SNNP region after Hawassa’s BGI factory.
BGI was the major shareholder at Raya, taking 42 percent. They took the remaining 58 percent by investing 2.5 billion birr in 2017.
Currently BGI has diversified its breweries, including; south Ethiopia at Hawassa, 275km of south of Addis Ababa, in north Ethiopia at Kombolcha, 376km of Addis Ababa in Amhara region, and Maychew, 667km north of Addis in Tigray region in addition to its factory in the heart of Addis Ababa around Mexico Square.
In 1997 BGI became the first foreign brewery to invest in Ethiopia. It is also the owner of the oldest brewery and beer brand, St George, after it bought the brewery when it was privatized at a cost of about USD 10 million.
BGI completes takeover of Zebidar
Police mop up dirty water distributors
The Federal Police are going after people illegally distributing unsafe bottled water, Capital learned.
Sources in the water industry told Capital that the federal police are collaborating with stake holders, and police in Oromia and Addis Ababa. They have been conducting investigations, mainly along the outskirts of the city.
According to sources, last week the Federal Police began prosecuting suspects at several production sites. They are sill in the process of arresting other perpetrators.
Capital previously reported some of the 80 water bottling companies around Addis Ababa are producing unsafe water. In addition to illegally packing the water, there is a chain between input and label producers and distributors. In their annual meeting of the Ethiopian Bottled Water and Soft Drinks Manufacturing Industries Association (EBWSDMIA) the issue was hotly debated.
Assembly participants said they have seen many illegal bottlers operating on the outskirts of Addis Ababa. Not only are they using below standard plastic packaging, they are also putting not-potable water into the bottles.
Association leaders told members they are following the case with federal, city and regional security forces. The assembly leaders of EBWSDMIA alerted bottlers to follow their sales and marketing staff who might be working in cahoots with fake water producers.
Ashenafi Merid, General Manager of EBWDMIA, declined to give details about the Federal Police’s latest mission. “I can’t give details since the case is not finalized,” he told Capital.
Capital’s effort to get further information from the Federal Policy Public Relation division was unfruitful.
The association, which recently merged with soft drink and juice packing association has more than 100 members with over 50,000 employees.
CRONY CAPITALISM & ELECTIONEERING
Whether we like it or not, it is crony capitalism that has won the day in our modern world system. If truth be told, there is no place on earth where crony capitalism is not the main operating mode of accumulation. Rhetoric aside, the institutions of economic governance directly and indirectly encourage the entrenchment of crony capitalism across the board. From Ethiopia to Estonia from USA to Uganda, crony capitalism is now the actual face of the dominant global system. But there are plenty of problems associated with crony capitalism. The main problem being; unlike old-fashioned capitalism, crony capitalism alienates more than it empowers. As a result, it instigates insurrections, both creeping and abrupt, all over our planet!
In many countries oligarchs cannot exist without their supporting politicos. This also applies to our continent. The propaganda of the global ruling elites, which insinuates the possibility of creating genuine wealth outside of generalized corruption, is, by and large, a farce. Here is how the game is played. The crooked politicos need faux front companies to steal the country’s resources. Some of these stolen resources are recycled to facilitate elections, including vote riggings. Every time there is an election in an African country, the banks invariably become overstretched, as these institutions will be instructed to extend plenty of credit to the connected oligarchs. The money is then used to buying votes. A couple of millions of birr to a strong candidate can be quite convincing to force withdrawal. Frankly speaking, a billion birr can do electoral miracles! Vote rigging has become common and elections have been rendered mere rituals necessary to usurp power. Like anywhere else, the project of wining election, by hook or a crook, is the driving force of Africa’s psychopathic politicos.
Once the incumbents are reelected, plenty of money will again be directed to the old cronies, via tenders, government procurement, tailor made projects, etc., etc.! Rinse and repeat!
Elections are influenced by the preponderance of the ‘deep state’ in the core countries and the ‘Mafiosi State’ in the peripheries. Wining election outside the desires of the deep state/Mafiosi state is not easy. Nonetheless, upsets can and will happen when things become absurdly offensive. When such a point is reached, the sheeple (human mass) will cast its massive ‘protest vote’. In the process outsiders can usurp power. This is what happened in the recent Ukrainian election. Recall that we have defined the deep state as the military-intelligence-industrial-banking-media-complex. Invariably, the deep states of the powerful states would like to see submissive governments in the weak states of the nation-states system. To this end, everything will be done, including election rigging. Showing signs of stubborn independence, on the part of the weak, might well bring havoc to their existence. In the long run, these countries almost always face internal difficulties that can easily unwind coherence and expose them to fragility. Venezuela, Zimbabwe, Ukraine, etc., are the latest victims!
Crony capitalism creates money out of thin air. In crony capitalism the old fairytale of ‘from rags to riches’ through hard work is conclusively proven to be just that; fairly tale. Most of the money in global circulation is created by commercial banks. This phony/unearned money is systemically channeled to those loyal to the system, i.e., aspiring oligarchs and their political handlers behind the veil of capitalism. The creation of phony money always creates inflation and inflation disproportionately affects the working poor/stiff. The convertibility of countries’ currencies into gold, via the US dollar was abandoned in 1971. Since then countries print their own money as if there is no tomorrow, until they can’t! The case of Zimbabwe, and many others before it demonstrate this brutal reality of printing money with abundance. Those that depend on constant supply of bank money are not affected by inflation. It is only those who are forced to earn their keeps by selling their labor, mental or physical, that suffer the consequences of inflation. This is the main reason why crony capitalism supports vacuous electioneering!
Resistance to crony capitalism, by extension electioneering, is growing by the day. See Smith’s article next column. The ‘Yellow Vests’ movement in France is now on its 44th week. The MSM (main stream media), as part and parcel of the deep state, doesn’t want to cover the weekly protests of the ‘Yellow Vests’. On the other hand, the Hong Kong demonstrations are always on the news. Any perceptive reader can easily pinpoint which protests are favored by the deep state and which are not. Clearly, the ‘Yellow Vest’ movement is mostly about the existing injustice of crony capitalism and the frequent farce of electoral democracy! No wonder the global power that be, very much detests the awakening of the French sheeple. In places like ours opposition to crony capitalism can take a very undesirable turn!
Crony capitalism and useless elections go hand in hand, one cannot exist without the other. The two are always in a symbiotic relation. This relation is one of the main defining characteristics of late modernity. “If the citizenry cannot replace a kleptocratic authoritarian government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.” Charles Hugh Smith. Good Day!
Privatizing Ethio-Telecom now should not be an urgent economic imperative
The government of PM Abye wants to privatize Ethio-Telecom this year. His administration is working hard (rather follow the World Bank template) to establish the legal framework for privatization; the restructuring or reform (as it’s called here) to make the sale attractive to buyers is in progress. The next stage will be to work on the design of the transaction, appraise the assets, develop the criteria for tendering before selling it off to the highest bidder.
Knowing quite well that the evidence on the role of privatization of telecom companies in growth and development is mixed, why this rush?
What’s going on?
I am not saying all privatization deals are bad. But if we’re going to do this, let’s be honest with the public and let them know what’s and why is going to occur: It’s going to save this much money…, it’s going to cost this many jobs…, it’s the only best solution…it’s worth it! (handing over Ethiopian public assets to foreign companies)…
The big question inquiring citizens wanted answered today are: Why is there no public hearing on this matter? Why is this young Prime Minister obsessed with the beautification of the palace (which brings no income) and not with the restructuring of Ethio-Telecom to be efficient, accountable, transparent, and profitable? The Palace can wait… it ain’t going to fly away, but a privatized Ethio-Telecom once it’s gone, it’s gone.
Let me ask more naïve questions: Why privatize? Should privatization of state enterprises proceed before the institution of a market economy? Or should a market-oriented framework be established first before state-sector privatization? Is privatization the only solution? What if things go wrong after privatization?
Why is the government not answering any of these questions?
My guess is – First, there is nothing this government can do about it; the order has come from the top – if you know what I mean. Second, this government needs to please the World Bank and its collaborators in order to get more loans. And third, this government wants to conceal the weakness and incoherence of its administration; an administration without genuine indigenous transformation plans for the country.
The common people have no idea what is going on. But to the insiders, every momentous privatization deal has dollar signs on it. Power corrupts, goes the saying.
The real problem with the sale of Ethio-Telecom is not that the government is letting go one of its prized strategic infrastructure to a foreign operator, but rather the fact it’s putting the cart before the horse. Unlike Western European privatization, for example, where privatization means simply a sale of state assets to an already existing private sector, privatization for economies like ours requires not only the restructuring of the economy but also the creation of private property and the institutions of a market economy, while ensuring a maximization of economic growth and a minimization of social, economic, and political disorder.
Why has Russia, which privatized first as exhorted by Western advisers such as the World Bank and the IMF experienced a perpetuation of inefficiency and persistent economic downturns?
And why has China, which preserved an inefficient economic system against outside advice, experienced, for the most part, increased efficiency and economic growth`?
So why not learn from Russia? Why not liberalize the sector and create an opportunity for private entrepreneurs to operate in the field.
An interesting example from right home: When champions of market-based reform in Ethiopia looked at the financial sector in the nineties, they did not rush to privatize the Commercial Bank of Ethiopia, perhaps the largest black owned bank in the world. They partially liberalized the domestic market to attract new local banks to enter the market, while strengthening the institutional and regulatory framework. Twenty or so years later we see a vibrant banking sector developing an indigenous competitive financial system to facilitate economic growth. This financial sector liberalization should continue with the development of proper institutional structures, such as tax laws, financial intermediaries, capital markets, foreign banks entry into the Ethiopian market to increase competition, improve allocation of credits, and help easier access to international capital markets. For the financial sector creating a new market was achieved by simply removing state barriers and allowing a private entrepreneurial spirit to take over. On this matter, Ethiopia embarked on its own path of reform, one markedly different from the “Washington Consensus” model of transition prescribed for and applied to African countries.
Anyway, at this crucial moment of transition (a year before the general election), the first function of the government in Ethiopia should be the maintenance of law and order, and the re-construction of internal political consensus and control, not the sale of Ethio-telecom.
Yes, it took Ethiopia years to get into this problem, and it can’t be solved overnight, but there are some short- and long-term measures it must take immediately to mitigate the severity of potential future consequences, at least as far as economic growth and development is concerned. Selling Ethio-Telecom to reduce debt is not a smart move. In most cases, privatization has not closed governments’ fiscal deficits, it has in fact even worsened budgetary problems. In Ethiopia’s case, privatization may worsen the fiscal situation due to loss of revenue from the privatized Ethio-Telecom, or tax evasion by the new privatized entity.
The whole affair is a sham! ….Why? Because behind the scenes, the real winners are always the same: the multi-nationals, and their local cronies.
