Wednesday, March 22, 2023
BusinessLivelihood of 270 workers in jeopardy, 40-year old factory at risk of...

Livelihood of 270 workers in jeopardy, 40-year old factory at risk of closure

Nib Candy Factory at risk of closure due to input shortage

Managers of Nib Candy Factory are between a rock and a hard place as they run out of inputs, including sugar, to operate manufacturing lines.

The company, which has cut over 100 of its workers in the last two years, has a manufacturing plant located inside Tatek Industrial Zone, resting on 15,000 sqm of land.

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Nib Candy produces eight types of candies and 11 types of chocolates, utilizing 10 percent of the factory’s capacity. It is among eight factories that produce confectioneries and are facing a critical shortage of inputs, particularly sugar.

“We did not get any sugar from the Ethiopia Sugar Corporation, which is a sole importer of the commodity yet unwilling to allocate some for us,” said Elias Teshome, manager for Nib Candy, adding that he is buying sugar from the parallel market, which costs more than twice what the Corporation charges.

Uncontrolled spikes in raw materials and shortages of foreign currency are causing huge losses to confectionaries, according to Elias. It takes at least a year for factories to get approval for a letter of credit. “On top of this, there is an excise tax imposed on inputs, which is burdensome.”

The 30 percent excise tax levied on confectionaries was reduced to 20 percent a year ago. The production cost remains high even after the amendment, according to Kssahun G. Giorgis, manager of the Ethiopian Sugar and Confectionery Producers Association.

Two years ago, there were over 100 businesses involved in the manufacturing of confectionaries. Only eight factories are now active.

“It was a sector that used to employ 35,000 people, of whom 90 percent have now lost their jobs because of the closure of many factories,” Kassahun said.

Bekele Mekuria, director of Food and Beverage Industry Research and Development Center at the Institute of Manufacturing Industry, says it is pushing for the reduction of excise tax. “Though we have proposed the excise tax be reduced as the costs outweigh the benefits, the Ministry of Finance has not responded to our request.”

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