Ethiopian Business Review

Rising From the Ashes

The two-century old Jigjiga has been the capital of the state of Somali for twenty years. Home to more 300,000 people, the city is known for being a center of the contraband and khat trade. But trade activities have slowed down in recent years, mainly because of administrative measures and civil violence. Although the city was rocked by some of the worst incidences of violence in the country nine months ago, Jigjiga and its residents are now trying to heal from past wounds. EBR’s Samson Berhane, who visited Jigjiga, reports.

Saturday, August 4, 2018 is a day that will live on in the memory of Jigjiga’s residents. On that day, Abiy Bekele, a teacher was who born and raised in Jigjiga, in his mid-40s, was spending the weekend at home playing with his three kids and chatting with his wife. Suddenly, he started hearing unusual noises of a crowd. Abiy went outside into the main street to check what was going on. He soon discovered that the city had descended into chaos, and youth gangs were attacking civilians. “People were crying and begging the attackers for mercy, and some running for their lives. Others were begging the attackers to let them stay in their homes,” Abiy recalls.

Nine months have passed since that dark moment. Although the trauma of the past still lingers, the city and its residents, including Abiy, are trying to let go of the past and focus on the present to restore the city’s prestige.

Historical evidence suggests that Jigjiga (meaning ‘light soil’ in the local language), has existed for over two centuries. But it was after the city, located in the semi-desert eastern part of Ethiopia, became the capital of the state of Somali in 1994, replacing Gode, that it started to develop. Currently, more than 300,000 people live in Jigjiga, while no fewer than 10,000 people travel in and out of the city, according to the City Administration. It covers a 25 square kilometer radius, and comprises two woredas divided in to 20 kebeles.

One way or another, life in Jigjiga is entangled with the vibrant contraband trade activities that are widespread in the state of Somali. Particularly, its closeness to the town of Togo Challe, a notorious contraband hub where contraband items and hard currencies are openly exchanged, contributes to this. In fact, close to 90Pct of the non-food items in Jigjiga come from Togo Challe, 70 kilometers away from Jigjiga.

Every shop commonly stocks clothes and shoes that are imported via contraband routes. In the last fiscal year, revenue from taxes in Jigjiga was around one billion birr. On the other hand, the price of many consumer goods is cheaper in Jigijga than in Addis Ababa or other cities that are farther from the eastern border. For instance, a pair of shoes, which costs more than ETB2,000 in Addis Ababa or Mekelle, can be bought for ETB550 in Jigijga.

Nonetheless, traders say that contraband trade has recently started to slow down. “In the past, we used to get a wide range of items on the market. But now, there is a supply shortage, mainly because now there is a fear among wholesalers that they may be arrested,” says Mohammed Abdullahi, a businessman in Etan Tera, the biggest market area of the city. “Clothes are getting expensive, and the price of shoes marginally increased. This, coupled with a slowdown in business activities after the violence last summer, has adversely affected our sales.”

A customs official, who spoke with EBR on condition of anonymity, agrees with Mohammed. “Although it would be difficult to abolish the contraband market, as federal and regional government officials are involved in the practice, stricter measures are being applied on traders,” he says, citing the millions in foreign currency seized by customs officials in the past month alone. “It has discouraged many people, and if it continues, many traders as well as customers will be affected.”

In an attempt to discourage the contraband trade and replace its role with formal trade in the long term, the city administration seems to be trying to encourage businesses to invest in the city. As a result, many people, (and Diasporas in particular) are increasingly investing in the city and are requesting land to pursue different projects. There are also companies already engaged in processing milk and producing wheat flour, rice and spaghetti.

Rice and flour is cheap, because there are production companies on the outskirts of the city, food items are relatively expensive in Jigjiga. Vegetables, fish, teff and lentils are particularly expensive. It is also common in Jigjiga to see people having camel milk in the morning and eating street food at night. On the main streets, one can find a restaurant or a hotel every 100 meters. Conversely, there are only a few bars, chiefly for of religious reasons.

The construction sector is also booming, with many construction projects by private investors and government institutions going on in all parts of the city.
 The khat trade is another key feature of Jigjiga. According to information from the City Administration, more than 75Pct of the city’s residents consume khat, which is supplied from surrounding towns in the state of Oromia. In particular, Aweday, a town known for khat, and which contributes a significant amount of export earnings to the country, supplies the lion’s share of khat to Jigjiga. The price is between ETB100 to as high as ETB1,000 depending on the type, quality and volume of the khat.

“Khat is very linked to the lifestyle of the society in Jigjiga. It has even the potential to be a cause for a violence in the region,” explains Mohammed Ali, a father of four who lives in the city.

The importance of khat and its value to the community was thrown into focus by an event during the conflict between the states of Somali and Oromia a year and a half ago. At the time, the road between the two regions was closed, and the khat trade was halted. So some residents took to the streets and asked the government officials who were in power at the time, to fix the problem.

With the growth of the construction sector, the hospitality industry is also growing. Yet, Jigjiga is also one of the cities in Ethiopia where customer service is very poor. The majority of guesthouses and hotels don’t provide enough water for their customers. Actually, even the majority of the city’s residents don’t have direct access to tap water in their homes. Those who do get water once every two weeks on average, except the few that regularly get water. Capitalizing on these opportunities, there are informal businesses that sell 100 liters of tap water for between ETB80 and ETB100.

Besides the shortage of water, electricity outages are also common in Jigjiga. There are areas where the electricity outages last for almost a month. This is particularly true in areas like Dembel, Koronati, and Chinaksen. “Corruption is very common when it comes to this. Electricity technicians ask for bribes when we ask them to fix the repetitive electricity outages,” says a resident living in one of these areas.

The city administration is aware of this problem. “The electricity outages really affect investors and discourage people from doing business in our city. Although Ethiopian Electric Power pledged to supply five megawatt of electricity to factories, it didn’t keep its promises,” explains Cabdi Salax, the manager of Jigjiga.
Roads are also another infrastructure lacking in the city. Particularly areas such as Ayer Hayl, Condominum Sefer, Shekih Nuriali, Ayerdega and CMC, have poor road infrastructure as no construction has been undertaken by the Administration so far.

Like any urban city, a housing shortage has become a hot button issue in Jigjiga. Even compared to some parts of Addis Ababa, rent is very expensive. While many residents in the city don’t own houses, one room in the center of the city is rented for as much as ETB3,500. This is a problem that the City Administration even admits. Earlier this year, the cabinet of the City Administration approved a ETB150 million budget to construct 200 apartment units for residents, according to Cabdi.


8th Year • May.16 - Jun.15 2019 • No. 74




Samson Berhane

Editor-in-Chief

samson.b@ethiopianbusinessreview.net

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