Addis Abeba Transferring Public Businesses to Consumers’ Cooperatives

Kirkos District 20/21/15 recreation cenre, one of the two recreation centre in kirkos district which soon is going to be transferred to Hebret Beandenet Consumers Cooperative Societies, after the district office perform audit.

The Addis Abeba City Administration Trade & Industry Development Bureau transferred 419 public shops and other income generating institutions which used to be under the Weredas to Consumer Cooperative societies without undertaking financial audit; the transfer of 650 is still in process.

The idea of transfer came after the bureau conducted a study in which it said it established that the shops were not able to stabilize the price inflation in the city and hence did not serve their very purpose of establishment.

The study indicated that there were 1,069 establishments such as Kebele recreational centres, butcher’s Shope and warehouses, with a total capital of 104.1 million Br in Addis Abeba. These institutions were first established during the Dergue regime.

The study was conducted for almost six months starting from December to May, 2011, and was followed by discussions with different stakeholders.

Then theAddis Ababacity cabinet issued a regulation in May 2012 to provide for the transfer of public shops and other income generating institutions, to be effective in six months period as of July 12, 2012.

“The income of these institutions has mainly been used by the institutions themselves,” according to Belayneh Woldesenbet, communication officer of the Addis Abeba Trade and Industry Development Bureau.

A total of 97 cooperative unions, where the institutions are found, were selected by the Bureau out of the 168 that operate in Addis Abeba, because they were believed to have the administrative and financial capacity to receive these institutions, according to Belayneh. The number of members the recipient cooperatives had was also considered.

However, the transfer has been delayed from the intended July 2012 timing as per the regulation of the city administration issued in May, 2012.

“This is because we were doing awareness creation for the institutions and society at large,” said Belayneh

The bureau also said that the death of the late Prime Minister Meles Zenawi also contributed to the delay of transfer.

However, the awareness creation did not seem to help that much as the institutions were showing resistance for such major transition before and after the issuance of the regulation as most of them argue that they have served their purpose of establishment well.

One of the unhappy members of such institution is Kirkos District 20/21/15 Recreation centre, which states that it has been properly serving the public for long time.

The centre, that has 40 permanent employees and administers seven shops, has finished audit by itself with an independent auditor.

“The auditor has undertaken over three years’ of transactions starting from 2008/9 to 2010/11,” said Tamrat Hailemichael, deputy manager of Kirkos District 20/21/15 Kebele Recreation Centre. “And later auditors assigned by District have come and performed audit for the 2011/12 budget year.”

The Kirkos District Woreda 9 Kebele 20/21 Hebret Beandenet consumer’s cooperative had been waiting for the transfer, which had been postponed on several occasions.

“The Trade and Industry Bureau ordered us to carry out the transfer without proper audit,” Taye Aweke, chairman of the cooperative said. “Even if we know that this may have its own problem, we were ready for the institutions to be transferred.”

The cooperative had undertaken its own audit by the auditors assigned by the district, and is waiting for the recreation centres, whose audit is said to be only recently completed, to be transferred to it.

It is very important to have fairly stated financial statement, and if there are issues that need to be decided after audit is performed, that has to happen before transfer, says Amanuel Bahata, auditor.

“This is to save time,” Belayneh counters.

But the audit is taking place even after the transfer has been completed, according to Belayneh.

He said that since there were many institutions, it would be impossible to perform audit for all within the time frame provided in the regulation, as there are too few auditors in the districts. He adds that the audit process would still be very difficult as most of the institutions have never been audited before.

Currently some of the institutions has made audit by themselves and are waiting for the auditors from district to come and review their audit.

The employees of the recreation centres will stay on their jobs even after the transfer, but they have been temporarily suspended from making managerial decisions, such as buying furniture or hiring new staff.

“When the transfer is made, we are planning to hire a new manager who will supervise both the cooperative and the two recreation centres found in the district,” Taye told Fortune.








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