Sunday, May 26, 2024
Money TalksThe cost of Christmas

The cost of Christmas

When Melkam Aschalew, a lawyer based in Addis Ababa, sent 8,000birr to his family in Bekoji, 222 kilometers south-east of the capital, he calculated the cost of the holiday based on prices in AddisAbaba.

“I know my mother is savvy and can make the holiday with half of that. But for a family in Addis Ababa, 8,000 birr is the conservative cost for this holiday. Many families are trying to celebrate this Christmas, to forget the horrendous year of 2021, and resume life anew. Most of the holidays in the past years were skipped. That is why I wanted my family to celebrate Christmas in a big way,” Melkam said.

Christmas used to be the third most expensive holiday next to Easter (Fasika) and New Year (Enkutatsh). But this year, the cost of Christmas has become discouraging for most families, as the price of holiday inputs soared, especially in Addis Ababa, where every holiday item to be purchased, turned into the hotbed of expenses.

Currently, a medium sized sheep costs between 3,500 to 6,000 birr in Addis Ababa, while it costs between 1,000 and 4,000birr in regional markets. To buy local chicken, it takes 300 birr in regional towns like Debre Birhan, Bekoji and Jima, but doubles in Addis Ababa. A kilo of butter fetches 300 birr in the regions, but costs 450 birr in the capital. A single egg, which costs six birr in the regions, fetches nine birr in Addis Ababa, tripling in three years.

“Christmas is not much about feasting but gifts. But it has become a culture for us to bring relatives together, eat and drink on the day. It is not about the material but the family and social capital it builds. Your children will forget you soon, if they do not pass through such social fabric of celebrating holidays with relatives. Ethiopia is not like western countries, where everything is individual based. We even take loans and advances from salaries, to maintain the same family trend to celebrate holidays,” said Genet Mengesha, a mother of two who runs a stationary shop.

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“For us, buying sheep or a goat is a trend during Enkutatash, Gena and Fasika. I am estimating it will take me up to 10,000 birr. I remember I spent less than half of that last year. This is the biggest expenditure excluding clothes for children, especially items bought from the supermarkets are very expensive now,” Genet added.

She said the new Sunday markets introduced recently are providing almost all consumer items except livestock. She was purchasing at one of the new market places the city admin had availed around sidist kilo square.

In fact, the high income segment of the population in Addis Ababa spends up to 40,000 birr, including a 3,500 birr cake, whiskey, large sheep or goat, and other holiday accessories. Big markets such as Mercato, Shola Gebeya, and livestock markets such as Kara, Shegole and Beke, are busywith middle and high income families that have a disposable income above the basic needs.

However, lower income families usually rely on Sunday markets and Gulits. The Addis Ababa city administration expects around 5,000 animals to be slaughtered for this Christmas, at slaughter houses. But much more takes place at household levels, which is costing 1.53 billion birr in annual revenue for the municipality from slaughter houses.

To the contrary, a low income family can skip the sheep, and buy two kilos of meat. With this, the least investment it takes for a family in Addis Ababa for a moderate holiday is around 3,500 birr. In fact, households outside Addis Ababa might not need cash, since almost every input comes from farms. Traditional bakery, chicken and sheep, house made wine, Christmas trees, and everyingredient, comes from the backyard, as Christmas comes usually at the end of Ethiopia’s major harvest season.

Yet, there are families who cannot celebrate Christmas at all, especially those in areas affected by the yearlong war in the northern part of Ethiopia, or families displaced from their houses, or that have lost their properties.

The income inequality of the social strata is usually visible in Addis Ababa. Though Christmas is a religious holiday, it reflects the economic status of families. This social stratum is more polarized by existing unfair political economy, inflation, and war.

In fact, the holiday expenditure in Ethiopia is still low, compared to other countries. For instance, average Christmas expenditure in the US is USD997 on Christmas gifts for families, friends and co-workers. This is reasonable, considering the median weekly income in the USA in 2021 is USD1,001.  In fact, Christmas is the single hyper market season in the US.The only time it hit a low point, was during the 2008 financial crisis.

But in Addis Ababa, high expenditure is highly linked to inflation. Basically, the inflation in Ethiopia is the result of high demand coupled with a meager supply side. Bank deposits are withdrawn during holidays, apart from remittances. The more money enters circulation, the more the demand side balloons and inequality expands.

Ethiopia’s inflation rate reached 34.2 percent in October, led by 40 percent food inflation. Food inflation is already absorbing the largest pie of household income, even overtaking house rent, which used to take two thirds of a monthly income. Coupled with the price revision in fuel, and impact of war on agricultural output on the current harvest, holiday markets have more than enough reason to inflate prices.

Nonetheless, the growth rate of income in Ethiopia has been stagnant, while that of inflation has been galloping at a much higher rate than the official rate, according to some experts.

“Inflation is not less than 50percent. The actual inflation is much higher than what thegovernmentadmits. The major reason is because the market responds through arbitrary price increments, when the government is unstable. Unreasonably higher money supply and low productivity are also contributing their fair share. Much of the low income segment currently needs direct assistance like the Productive Safety net programs, let alone having a disposable money at hand,” said Atnafu Gebremeskel (PhD), lecturer at AAU and who published ‘Inflation Dynamics and Macroeconomic Stability in Ethiopia: Decomposition Approach’ recently.

Of course, the government has imported basic items like edible oil, sugar and wheat, to ensure demands are met during the holiday season. It is also a wise move by the city administration, to avail new venues for Sunday markets, where agricultural suppliers from regional towns and traders can sell holiday inputs. Existing markets like Mercato and shola, are logisticallyinconvenient and small compared to the over a million households in the capital.

Considering one fourth of residents are middle income earners and spend 10,000 birr on average, there is around 2.5 billion birr in holiday expenditure in AddisAbaba alone, over the week to Christmas. This is much smaller, compared to the USD6.1 billion US residents spend on Christmas trees alone.

However, the Christmas market is sufficient to re-activate the social vibe and business activities that has been missing for the past couple of years, due to the political uncertainty in 2019, COVID-19 in 2020, and the war in 2021. Yet, the high-expenditure-seasons like Christmas need to be used as a trigger point to initiate the supply side as well, in a bid to create harmony in the domestic economy.

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