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How to control the parallel(black) market ?
Posted: 03 Aug 2024, 18:11
by Axumezana
The ongoing liberalization of the currency exchange market is expected to reduce the supply & demand side of the black market by 60 % to 70 % . How could the Ethiopian government control the remaining 40% to 30 % ? The following are the three main breeders of the parallel market & means to control them.
i, Smuggling of export items like gold, precious metals & stones, animals, cash crops etc: market driven exchange rate plus effective control on the smuggling route and control of corrupted officials will help to control the illegal trade. Informal traders have to be forced to have license and sell their products in the formal market.
ii, Illegal Currency Exchange network out of Ethiopia targeting the diaspora: This market is operating in coordination to the local Ethiopian banks & the government could issue directive to local banks to stop working with the foreign illegal currency exchange networks. The government could also devise incentives for the diaspora to transfer their money through the formal money transfer networks.
iii, Illegal Currency Exchange network within Ethiopia - This is could be easily abolished by allowing the establishment hundreds of privately owned currency exchange shops( already government plans to effect that) . Those shops could also be allowed to trade gold and precious stones and metals.
Another important issue is related on how to control illegal dollar transfer ( flight) from Ethiopia . Since this is handled through local banks mainly using inflated invoices( for import items) and under - priced invoice for export items , control by banks and by government will help to seal the leakage. Effective control at airports and smuggling land routes out of Ethiopia could also help to reduce dollar flight.
Re: How to control the parallel(black) market ?
Posted: 03 Aug 2024, 18:48
by Educator
There is only one way to abolish black market. It is by increasing productivity. Productivity can only be achieved if private investment is allowed unhindered. For that there should be justice where cadres and government officials cease to rule the country. If justice prevails, corruption will be eliminated, unfair regulations will be removed and democracy will flourish. Rule of law and democracy are the two conduits for investors' confidence and innovation. Without these two, capital flights are a must so the need for a black market.
So productivity brings surplus and then trade balance. This is economics 101 in simple terms.
Advocating for more satan Mamo Killo's dictatorial regulation will only exasperate the shortage of hard currency and the need for black market economy.
Axumezana wrote: ↑03 Aug 2024, 18:11
The ongoing liberalization of the currency exchange market is expected to reduce the supply & demand side of the black market by 60 % to 70 % . How could the Ethiopian government control the remaining 40% to 30 % ? The following are the three main breeders of the parallel market & means to control them.
i, Smuggling of export items like gold, precious metals & stones, animals, cash crops etc: market driven exchange rate plus effective control on the smuggling route and control of corrupted officials will help to control the illegal trade. Informal traders have to be forced to have license and sell their products in the formal market.
ii, Illegal Currency Exchange network out of Ethiopia targeting the diaspora: This market is operating in coordination to the local Ethiopian banks & the government could issue directive to local banks to stop working with the foreign illegal currency exchange networks. The government could also devise incentives for the diaspora to transfer their money through the formal money transfer networks.
iii, Illegal Currency Exchange network within Ethiopia - This is could be easily abolished by allowing the establishment hundreds of privately owned currency exchange shops( already government plans to effect that) . Those shops could also be allowed to trade gold and precious stones and metals.
Another important issue is related on how to control illegal dollar transfer ( flight) from Ethiopia . Since this is handled through local banks mainly using inflated invoices( for import items) and under - priced invoice for export items , control by banks and by government will help to seal the leakage. Effective control at airports and smuggling land routes out of Ethiopia could also help to reduce dollar flight.
Re: How to control the parallel(black) market ?
Posted: 03 Aug 2024, 19:01
by Axumezana
Educator your points are valid. My only comment is on productivity. One of the government's goal by liberalizing the currency exchange market is to incentivize productivity by assuring "price for value" for products produced in-house either for export or domestic consumption. However improving productivity requires sustained strategic actions that is achieved in a long term.
Re: How to control the parallel(black) market ?
Posted: 03 Aug 2024, 22:04
by Educator
Wrong. What you need to increase productivity is to address investors complains like the one below and make the country livable. Investors shouldn't die of high blood pressure caused by their own desire to invest and work:
https://www.facebook.com/share/v/GukEhg ... tid=SphRi8
Please wait, video is loading...
Axumezana wrote: ↑03 Aug 2024, 19:01
Educator your points are valid. My only comment is on productivity. One of the government's goal by liberalizing the currency exchange market is to incentivize productivity by assuring "price for value" for products produced in-house either for export or domestic consumption. However improving productivity requires sustained strategic actions that is achieved in a long term.
Re: How to control the parallel(black) market ?
Posted: 04 Aug 2024, 01:11
by Axumezana
Educator,
The issue is not who is wrong or right. What I could agree is that we need to address the productivity issue in holistic manner. Of course the government has to listen to the people( including investors) and work backward to meet the aspirations and address the challenges of the people.
Re: How to control the parallel(black) market ?
Posted: 04 Aug 2024, 17:36
by Axumezana
Axumezana wrote: ↑03 Aug 2024, 18:11
The ongoing liberalization of the currency exchange market is expected to reduce the supply & demand side of the black market by 60 % to 70 % . How could the Ethiopian government control the remaining 40% to 30 % ? The following are the three main breeders of the parallel market & means to control them.
i, Smuggling of export items like gold, precious metals & stones, animals, cash crops etc: market driven exchange rate plus effective control on the smuggling route and control of corrupted officials will help to control the illegal trade. Informal traders have to be forced to have license and sell their products in the formal market.
ii, Illegal Currency Exchange network out of Ethiopia targeting the diaspora: This market is operating in coordination to the local Ethiopian banks & the government could issue directive to local banks to stop working with the foreign illegal currency exchange networks. The government could also devise incentives for the diaspora to transfer their money through the formal money transfer networks.
iii, Illegal Currency Exchange network within Ethiopia - This is could be easily abolished by allowing the establishment hundreds of privately owned currency exchange shops( already government plans to effect that) . Those shops could also be allowed to trade gold and precious stones and metals.
Another important issue is related on how to control illegal dollar transfer ( flight) from Ethiopia . Since this is handled through local banks mainly using inflated invoices( for import items) and under - priced invoice for export items , control by banks and by government will help to seal the leakage. Effective control at airports and smuggling land routes out of Ethiopia could also help to reduce dollar flight.
Re: How to control the parallel(black) market ?
Posted: 04 Aug 2024, 17:47
by Abere
How did you arrive at the percentages? Do you know of any success stories to share with us and how they did achieve or restore their financial health and earned a sustained positive balance of trade?
Do not also think that the Black Market is an irrational one - it could be many steps a head of the formal market. It will always exist, especially where the regime itself is alleged to have been involved.
Let alone controlling black market, ransom and bank robbery are common place talks in Ethiopia. Hand twisted by being cash strapped to finance war with Fano and pay salaries, IMF shoveled through OLF-PP throats. 
Axumezana wrote: ↑03 Aug 2024, 18:11
The ongoing liberalization of the currency exchange market is expected to reduce the supply & demand side of the black market by 60 % to 70 % .
Re: How to control the parallel(black) market ?
Posted: 04 Aug 2024, 20:24
by Axumezana
Abere success is a function of the integrity of the government and the business community. Nigeria is a failure because of uncontrolled corruption by government and bank individuals. Ghana performed better because of better integrity. PP inherited the deep corruption culture of EPRDF and excelled in it. If Abiy cannot control corruption Ethiopia's economy will be down the drain. With the regard to the percentages they are experience based estimates based Axumezana's work exposure in Africa including Ethiopia.