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6,266 Posts
Its similar to COSTCO and Sams Club in the US, members only; and probably restricted to businesses not individual customers.
Well I think it will be great to get something of the same standards as COSTCO.

I do wish, however, that the Nakumatt chain of Kenya could enter the Ethiopian market. Nakumat really has great standards equal to only the best in the US (like Bristol Farms, Whole Foods, etc...).

2,893 Posts
Here is their website by the way :

:cheers:I cant wait for them to start their operation, this is one of the four things that I except will transform the economy of our country drastically, the other three are GERD, the Tossa steel plant , which is being constructed by Allamudi in Wollo, and the railway projects.
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I'm glad they used to build the site. That is the only real web development firm I have found in Ethiopia. The rest are all pretentious resellers who repackage second rate software from Russia.

As for the project itself, it's great news. I still don't like the idea of the state getting into the business of the private sector, especially if it leaves no room for competition, or is heavily subsidized by the state; or worse yet, it becomes a cash cow for the state. We don't need another Ethio Telecom.

That said, this might compliment the business I'm working. At least in the short term.

642 Posts
Discussion Starter · #13 ·
U.S. consultancy wins rare foothold in Ethiopia's retail sector

By Binyam Tamene

ADDIS ABABA (Reuters) - A U.S. management consultancy has won a short contract to run Ethiopia's just-launched state-owned cash-and-carry chain, officials said, the first such concession given to a foreign company by a country that tightly controls its retail industry.

A.T. Kearney will run the Alle wholesaler for two-and-a-half years, similar to other management deals that have on rare occasions been offered to foreigners in other prized but protected areas, such as telecoms.

Ethiopia's fast-growing market of 90 million people has lured foreign investors, including from Sweden, Turkey and India, to its manufacturing and agri-business sectors. But laws prevent international firms from entering sectors viewed domestically either as cash-cows or as politically sensitive.

Before Monday's launch of the wholesaler Alle, Reuters revealed that Ethiopia - once run by communists - was pushing the door ajar to foreign retailers by offering management deals although it is keeping the state in control.

"We are an independent management company," said Mirko Warschun of A.T. Kearney, which had advised on setting up Alle.

"Our work on behalf of the Ethiopia's Ministry of Trade gave us the opportunity to take this much further - to reduce food price inflation and modernise trade," he said, in comments at the Alle launch late on Monday.

Ethiopia has said it needs to modernise its supply and distribution networks and encourage competition to cut costs and keep down inflation, which leapt to 40 percent in 2011 when food prices surged and government price caps led to hoarding.

Trade Minister Kebede Chane said Ethiopia had looked into opening up the market to international companies such as Walmart as well as launching a state-owned "Walmart-like company".

"The current unfortunate status of Ethiopian businesses, which are not ready to compete with international (companies) like Walmart ... made government lose interest in the first option," Kebede said at the launch.

Ethiopia's private sector is not yet three decades old. During the 1970s and 1980s, the country's communist leadership - best known for "Red Terror" purges and a 1980s famine - nationalised businesses and ran the economy into the ground.

While Ethiopia is now among sub-Saharan Africa's fastest growing economies and its fifth biggest, it has spurned the liberalising approach of other African markets.

It has held control of its telecoms monopoly and kept foreigners out of retail and banking, while opening up its manufacturing industry to help create jobs.

Although Alle is state-owned, the government promises it will be run like a private firm.

The wholesaler's interim director, Nuredin Mohamed, forecast Alle would control about a quarter of the wholesale market. Ethiopia's leading commerical bank, the state-owned Commercial Bank of Ethiopia was financing 600 million birr ($31 million) of the 1 billion birr start-up capital, he said.

A.T. Kearney's Warschun dismissed worries that other wholesalers would be crowded out. "There is huge opportunity for other competitors in the market because Ethiopia is growing, the market is growing, the middle class is developing," he said. ($1 = 19.5625 Ethiopian birrs)

642 Posts
Discussion Starter · #14 ·
Ethiopia pushes retail door ajar to foreigners

Mon May 26, 2014 5:07pm IST
Foreign retailers blocked from Ethiopian market

* Government says it's open to foreigners managing state firms

* "Archaic" distribution networks force prices up

* High public spending squeezing out private sector

By Richard Lough

ADDIS ABABA, May 26 (Reuters) - Ethiopia has pushed the door ajar for foreign retailers keen to enter the fast-growing market of 90 million people, welcoming them as managers but keeping the state in control.

It is a tantalising, if limited, offer for firms such as Walmart of the United States and Kenya's Nakumatt supermarket, which already have stores elsewhere on the continent and would like a foothold in sub-Saharan Africa's fifth biggest economy.

"It is a vibrant market. The population is huge, the income is there, they have a lot to go around," Nakumatt's managing director Atul Shah said. "Why are we not there?"

Ethiopia has said it needs to modernise its supply and distribution networks and encourage competition to cut costs and keep down inflation, which leapt to 40 percent in 2011 when food prices surged and government price caps led to hoarding.

On top of that, the arrival of big foreign competitors would hurt locally-owned supermarkets springing up in the country's new malls while the small traders who still dominate retailing fear it would put them out of business altogether.

Instead of following other African countries which have opened up to foreign retailers, the nation that was once run by communists is launching a state-owned cash-and-carry wholesaler called Alle that it promises to run as if a private firm.

"Retail distribution is not competitive, it is archaic," Finance Minister Sufian Ahmed told Reuters when asked about Ethiopia's plans to shake up the retail industry.

"We are looking for outside management just to get international experience. We are open to any option, not only for Alle, but for any other major public enterprise," he added.

It follows a well-trodden route for Ethiopia, one of Africa's fastest growing economies that has spurned the liberalising approach of others by holding onto control of its telecoms monopoly and keeping foreigners out of the banks.

Management contracts have been offered to foreigners outside the retail business in the past, but these have usually been short. France Telecom won a two-year deal in 2010 to run Ethio Telecom, one of Africa's few government monopolies in the sector. Control of management then returned to Ethiopia.


The International Monetary Fund has warned that huge state spending on roads, railways and power could derail economic growth - which is projected at 11 percent a year by the finance ministry but less by the IMF - if it keeps squeezing out private business.

Still, an emerging middle class is enjoying increasing buying power in a country that failed to feed itself just three decades ago.:eek:hno: Ethiopia could still meet a target to become a middle-income nation by 2025, the IMF says.

Such prospects elsewhere in Africa - despite huge wealth disparities across the continent - have drawn big retail names to flashy shopping malls serving the middle class.

"Africa is brimming with potential for global retailers with its one billion people and growing economy," consultancy A.T. Kearney said in its 2014 African Retail Index report. "It is easy to see why many retailers consider sub-Saharan Africa the next big thing."

Big brands are prising open the door in some areas. Drinks giant Diageo bought a brewery and fashion retailer Hennes & Mauritz makes garments in Ethiopia. The Ethiopian Investment Agency told Reuters last year that Unilever and Nestle were both sniffing around.

But Ethiopia, whether on its own or with foreign firms, needs to improve its supply and distribution network if it is to keep a lid on costs. Inflation has come down from its 2011 peak, but has still hovered around 8 or 9 percent for months.

"Supply costs have a significant share (of import costs), going up to 50 percent of the overall cost," said Mirko Warschun of A.T. Kearney's Africa leadership team. "That is not sustainable."

A.T. Kearney, which was hired as consultants to help set up Alle, and Ethiopian officials said the new cash-and-carry would be run as a private business, with some Ethiopians returning from the large diaspora to join the management team.

The officials say Alle will bring more competition to the powerful suppliers who dominate the market, thereby forcing down the prices passed on to retailers.


When prices raced out of control in 2011, the then prime minister, Marxist-influenced Meles Zenawi, held talks with Wal-Mart, initially raising speculation it might open up.

Walmart's South African subsidiary Massmart Holdings said Ethiopia was a "compelling growth opportunity" but one it could not yet exploit. "Legally we just can't do it. But I'd love to trade in Ethiopia," Mark Turner, Massmart's Africa director told Reuters. "They'd welcome wholesale operations and that's just not an option for us.

In Addis Ababa, Turner's loss is regarded as a temporary reprieve for the local supermarkets in new city centre malls, without the logistic networks of a big chain.

"We would suffer," said one supermarket manager, barricaded in a pokey office behind piles of imported Chinese furniture in the upmarket Bole district, when asked what it would mean if foreign retailers were allowed in.

Yet in the teeming alleys of Mercato, a hillside maze of ramshackle stores and kiosks, small-time vendors already suffer as the new middle class with more cash turn to mini-markets.

"We used to turn over 60,000 birr (about $3,000) on a good day. Now it's more like 20,000 birr," said Feysel Kidr, 21, sitting under a mountain of deodorants, shampoos and toothpastes.

The fate of his 30-year-old family business would be sealed if foreign firms opened shop, he said: "That would finish us."


But even if foreign firms could open stores, other problems remain. The use of electronic payment systems remains limited. Visa entered Ethiopia a decade ago and is seeking to persuade the authorities to ease regulations.

Ethiopia's massive public spending means private credit is in short supply as the government drains liquidity from the economy. Even so, wider use of cards would help to increase lending, Visa says.

"Electronic payments (mean) more money stays in the banks and banks are able to lend that money back to retailers to do more business," Jabu Basopo, Visa's country manager for Southern and East Africa, told Reuters.

Despite hurdles, Ethiopia remains an enticing market. Experience from emerging markets around the world shows retailing starts to expand significantly when a country's per capital national income reaches $750 and really takes off at $3000, according to McKinsey Global International.

In 2012, Ethiopia's per capita income was $410 and it aims to reach middle income status - defined as $1,430 by the World Bank - in just over a decade.

Ethiopia's middle class is already increasingly brand conscious, even if available cash remains limited, said U.S.-educated Nega Asfaha who manages the Zefmesh Grand Mall, Ethiopia's largest shopping centre.

"The middle class is demanding more convenience, more choice, more brands," said Nega. "But it doesn't have that disposable income to really go out there and shop like you would at Macy's at the weekend." (Additional reporting by Aaron Maasho in Addis Ababa and Tiisetso Motsoeneng in Johannesburg; Writing by Richard Lough; Editing by Edmund Blair and David Stamp)

6,266 Posts
:cheers:I cant wait for them to start their operation, this is one of the four things that I except will transform the economy of our country drastically, the other three are GERD, the Tossa steel plant , which is being constructed by Allamudi in Wollo, and the railway projects.
They have already started! P.S. this is the way I'd rank the importance of our national mega projects in terms of their economic significance.

1) National railway projects because cheap and efficient transport is key to trade and commerce. Specially if they are to be electrified.

2) GERD because it will reduce our reliance of imported fuel as well as adding to our export revenue.

3) RSDP because road transport is key!

4) Addis Ababa LRT

5) The expansion of large scale manufacturing can all be categorized together (e.g. cement, fertilizer, textiles, steel [Tossa], and more)

2,058 Posts
1. Land Reform
2. Rural roads
3. Agricultural extension programs
4. Micro-power generation
5. Railroad

The LRT is negative on the list. All should be (well, just the power I suppose) done by the private sector. Long live the private sector!
Yes to 1 and 4. Land reforms are a must. You definitely need private property rights.

509 Posts
My take

Below is my list:
1. Power generation AND distribution - without it, you won't be able to run trains, factories, telecom network, etc. In our case, inability to meet the ever increasing demand will result in a halt of economic growth.

2. Transportation/Railroad - electrified heavy rail transport will result in sharp decrease of supply chain costs. Businesses will be able to relocate their operations to low cost areas far away from Addis but still remain competitive as long as they are able to move their products to market (both inside the country and for export) easily and cheaply. Hopefully, the government will create industrial zones close to every major train station.

3. Transportation/Road - even though the road network has expanded several folds in the last 20 years, a lot still remains.

4. Trade merchandising - The current state of merchandising in Ethiopia can be characterized as opaque, controlled by few mostly illiterate merchants, multiple layers of middlemen with each marking up their product insanely AND most cheat on their taxes. As a result, consumers are forced to pay huge prices, have fewer choices and no influence on the market.

The government has to take the lead or open up the market in areas where local investors are unable or uninterested. The problem with Ethiopian businesses are 1. very risk averse 2. focused on quick profits 3. not willing to innovate/study the market 5. unable to afford foreign expertise/advisory service 5. lack of exposure (which is the case with almost all of Ethiopia), etc. Opening up the sector to foreign investors will have huge ramifications and is not an option.

ECX has addressed the issue on the back end (farmers) and Alle should do the same for the front end (consumer side). It will also provide local food manufacturers an avenue to sell their products without much hassle (and expense), force them to maintain quality and, more importantly, allow them to focus on their core business. The analytic gained from the Alle by itself will help businesses to align their business strategy and operations to respond to market changes quickly. Eventually, though, the government must exit the sector and gradually open it up to foreign investors as well.

Land Reform - land privatization will lead to collapse of our economy (and country). I hope they hold on to the current land policy as long as possible.
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