ISSN 2330-717X

Ethiopia: Organized Crime Pours Cold Water On Coffee Exports – Analysis

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By Tadesse Simie Metekia*

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Ethiopian law prohibits the sale of export-quality coffee locally. Despite this, the country – regarded as the birthplace of coffee according to the legend of ‘Kaldi and the Dancing goats’ – hasn’t been able to control these sales. The illegal trade has grown into an organised criminal enterprise.

Ethiopia is Africa’s largest coffee exporter and the fifth largest globally. Coffee is the country’s main export commodity, generating close to 30% of its export revenue and supporting the livelihoods of over 25% of its population. The business operates on the principle of ‘consume less and export more’, with the highest quality beans reserved for foreign markets, which generate much-needed hard currency.

Exporting coffee from Ethiopia is tightly controlled under the federal government’s jurisdiction. However, for the marketing year ending 31 July 2021, Ethiopia exported 22 523 tonnes less than the previous year. Cheru Koru, the Ethiopian Coffee and Tea Authority’s director for coffee inspection and marketing, claims the illicit trade in export-standard coffee contributed to this decrease. Both licensed exporters and illegal traders sell export-standard coffee on the domestic market.

The local market is more profitable for licensed coffee exporters than the international market. Exporting coffee involves cumbersome bureaucratic procedures and expenses, such as taxes and costs for transport, packaging and storage. ENACT organised crime project sources allege that government employees in Addis Ababa are complicit in the illegal trade, altering the coffee’s documentation so that exporters can sell locally.

Illegal traders buy export-standard coffee directly from farmers and producers to sell on the domestic market. They work with brokers, intermediaries and wholesalers in Addis Ababa, who distribute the coffee to other wholesalers and retailers countrywide.

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A senior agronomist and coffee farm manager in Limmu, west of Addis Ababa, who requested anonymity, said local and mid-level government officials and police commanders were also involved in the illegal trade. They ensure the transporters avoid customs inspections at checkpoints along routes from Jimma in the west and Sidamo in the south-west to Addis Ababa. Smugglers also transport coffee at night, using bribery and threats of violence to pass through customs checkpoints.

Along with corruption and threats of violence, several other factors perpetuate the illegal trade. First, there’s no consensus on whether the federal or regional governments have the mandate to regulate coffee production and sales. The federal government considers coffee a natural resource over which it has a constitutional mandate to enact laws. By contrast, states such as Oromia, Ethiopia’s largest coffee-producing region, treat coffee as a commercial product to be regulated by their own laws.

The federal government and Oromia state have different legislation criminalising the sale of export-standard coffee in domestic markets. This creates confusion for law enforcers when the crime is committed in Oromia. Cases prosecuted using regional law usually get quashed on appeal by the Federal Supreme Court’s Cassation Bench because federal law should have applied. A senior prosecutor at the Oromia Attorney General who requested anonymity said regional prosecutors were unlikely to conduct a second trial using federal law.

Even when a regional prosecutor is willing to use federal law, the case is unlikely to succeed due to procedural and resource issues. Crimes that violate federal regulations can only be prosecuted by regional high courts located in towns far from coffee-producing districts. In those circumstances, collecting evidence requires time and resources, which are scarce.

Another problem is that laws criminalising the domestic sale of export-standard coffee are self-defeating. At the regional and federal level, the legislation entitles a police or customs officer who seizes illegal coffee to a sum of money after the government sells the confiscated product. A senior prosecutor from Jimma in Oromia told ENACT that this had become the sole incentive for law enforcers to inspect and seize unauthorised coffee. Once confiscated, the criminals aren’t pursued because doing so carries no financial benefit.

The illegal trade is also sustained by its organised framework. A senior prosecutor with the Oromia Attorney General, who requested anonymity, said investigations and prosecutions involving organised criminal groups and public officials were often discontinued for political reasons.

Last, like any successful business, illicit local sales of export-grade coffee are driven by profit. The Limmu coffee farm manager told ENACT that coffee is generally sold to Ethiopian consumers at around six times the farm price, making it profitable for exporters to sell on the domestic market. It is also a lucrative business for illegal traders who still profit after bribing customs inspectors and government officials and paying off intermediaries and brokers.

Ethiopia could clamp down on the illicit coffee trade by clarifying the jurisdictional confusion between federal and regional law enforcement organs. Also, the incentive-based approach that rewards police or customs officers for merely seizing illegal coffee should be replaced with one that focuses on arrests.

*About the author: Tadesse Simie Metekia, Senior Researcher, ENACT Project, ISS Addis Ababa

Source: This article was appeared in ISS Today and was first published by ENACT.

ISS

The Institute for Security Studies (ISS) partners to build knowledge and skills that secure Africa’s future. Our goal is to enhance human security as a means to achieve sustainable peace and prosperity. The ISS is an African non-profit organisation with offices in South Africa, Kenya, Ethiopia and Senegal.

8 thoughts on “Ethiopia: Organized Crime Pours Cold Water On Coffee Exports – Analysis

  • June 17, 2022 at 6:39 pm
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    Ok, corruption is a global treat and learning from others experience I don’t think Ethiopia’s situation is that alarming, good to mention it though. But, with regard to coffee export, didn’t you hear that the country generated historically high revenu from it this year?

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    • June 21, 2022 at 11:07 am
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      Coffe export mandate in Ethiopia:
      A case book example of a logic idea (seen from the treasury) turned into a total disaster.
      Abolish all regulation about coffee.
      What cannot be enforced, should not be regulated.
      Thereby leave it to the producer where they want to sell, and capture more value for their work,
      dry out corruption, inefficiency and costs. A no-brainer.
      Ethiopia will still export coffee if every farmer is free to export, I would think, and the population will enjoy the drink
      Dr.jur. Hans-Werner Wabnitz

      Reply
  • June 17, 2022 at 9:55 pm
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    Perhaps the issue is not about those who are trying to make a buck out the product but more about the policy and the regulation? Why would a small farmer be forced to sale his commodity to an export scheme when he/she can sale it for domestic consumption at a rate 6 six times higher? Is that not a legalized robbery? The discussion should be about that.

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  • June 18, 2022 at 4:39 am
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    I do not think you have used biased or incomplete data. I closely follow the performance of coffee cultivation from the major locations. I know that few unethical practices existed in coffee market value chain improved over time. Coffee is becoming among the economic goods and we are amazed with increased export size. Sure Ethiopia soon take control of coffee business leadership. In the mist of war and unstable poltical environment this is huge achivement.

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  • June 18, 2022 at 7:22 pm
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    I am going to second one of the comments; the legal framework in Ethiopia is unconstitutional by the simple fact that it denies the producer the right to sell his/her product to any willing buyer, be it local or international. Coffee is not the only product and service that Ethiopians export; thus, this has nothing to do with the stated motive, which the writer assumes to be foreign currency generation. Rather, it is about protecting the benefit of a few elites and their international partners to access Ethiopian coffees at a discounted price. It also protects international buyers against competition from the domestic market while cutting off the producers from the closest and most profitable domestic market. Thus, let’s stop beating around the problem and simply ask the government to pass a law that treats all Ethiopians equally. It is one thing to protect a sector from international competition, and another to deny citizens the right to earn a competitive income for their products and services. As a result, the status quo strips the rights of farmers and empowers the traders and exporters to abuse them and the system in ways that hardly benefits Ethiopia as a country and coffee as a strategic sector. So, it would go a long way for us to talk about the real problem, which isn’t illegal trade but rather illegal law. Thank you.

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  • June 19, 2022 at 3:49 am
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    The organized criminal is the Ethiopian government that denies farmers the right to sell their products locally at a great price.

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  • June 19, 2022 at 4:52 pm
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    I am Ethiopian

    This is a good thing, if the farmers are making 8 times more profit from local market, then good for them,

    This culture of policy based on seeking “foreign currency” needs to stop,and concentrate on trying to locally produce imported materials that requires foreign currency.

    Even though he was saying it in context of African Americans is USA , I believe this applies for the entire World & I would like to quote
    🇺🇸 congressman jamaal bowman
    “Poverty is not the result of children & families who don’t work hardour children & families work as hard as anyone else, poverty is by POLOTICAL DESIGN”

    & “Western foreign currency Needed” is one of the POLITICAL DESIGN that keeps Africa countries down.

    your article looks something from”The Sun”, “CNN” or “Reuters” Medias that seeks to sustain this “POLITICAL DESIGN” & not from Eurasiareview.

    Reply
    • June 21, 2022 at 1:02 pm
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      I strongly agreed with your ideas, dear robera.

      Reply

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