EBR: Let’s start with what influenced you to study economics.

Eleni: I wanted to be an agricultural economist at the age of 15. I was influenced by a book called How Europe Underdeveloped Africa by Walter Rodney, which I found in my parents library. I read that book and realized that we needed intellectuals that are Africans and would solve African problems. According to my analysis, poverty and hunger are big problems that we need to solve. So I wanted to be an agricultural economist for that reason. That was a decision I made very early in life and was really based on the idea that Africa needed to find its own solutions, and I wanted to be one of the intellectuals [to do] that.

Where do you stand today in contributing to solve the problems of poverty and hunger in Africa?

Obviously I didn’t predict it when I was 15, but I do think that what I have been working on for most of my career, which is the problem of agricultural markets, is very much one of those ideas that was born here in Africa by an African trying to solve an African problem. I think that in some sense I have remained true to my ambition as a 15 year-old girl and I think that I consider myself very lucky – that  I did find something I was very passionate about and that has made a very big difference here in Ethiopia and hopefully it will emerge across Africa as an important idea.

Speaking of African agriculture, many note that poor productivity is a serious problem, since many African farmers are using old farming techniques and technologies. You are now focusing on the marketing issue, which is a post-production intervention. Do you see that as a wholesome solution to the problem? 

Markets functioning well have a very important impact on agricultural productivity. The reason is that when farmers, after they’ve produced, go to the market, they’re often at the mercy of the market. They face enormous risk because the market prices aren’t what they expected; they usually trade with people who aren’t honest. So most of the time farmers go to the market in fear that they’re not going to get rewarded for the efforts they’ve spent most of the time.

So if there was a market that worked better, that gave them signals earlier, that sort of assured them what the prices will be or that the trading partners will be reliable or that they would get paid on time, it would be an incentive for them to increase the investment they make on the farming and production side.

To give you an example, in 2002 there was a big surplus where prices fell by 80Pct in the case of maize. In some parts of Ethiopia, the prices fell, for a quintal of maize, to 15 birr. That was far below the cost of fertilizer that the farmers had taken out in loans. This was because most of the time farmers were getting loans to pay for the farm inputs for production, so it was roughly 50 birr per quintal for the cost of fertilizer applied to produce one bag of maize. And when the market collapsed, the price fell to 15 birr, so even though those farmers were producing in one of the most fertile regions of Ethiopia, the next year, 2003, there was a 27Pct drop in the application of fertilizer because the farmers made a conscious decision that they should not invest in fertilizer and take a loan which they couldn’t pay if the market was going to collapse again. So the market side is very important for business decisions that farmers make in the production and therefore their productivity is very closely influenced by how markets work.

It is good that farmers get a fair share of the value for their coffee beans, but I hear that this has contributed to the consistent decline of profit margins for exporters, to a point where they have no interest in engaging in export. This has even been reflected in the poor export performance of the country. Export grew by only 4.6Pct last year, while the Gross Domestic Product grew by double digits. 

I haven’t followed the export volumes recently, and I haven’t seen the last few years’ performance, so I can’t really speak of the reasons since I don’t know what’s happening with the international prices. A lot of influence comes from the international market, but what we saw with the coffee prices in 2011 and 2012 is that when the international prices jumped up very significantly, the farmer’s share of that export price grew very high. Farmers used to get 35Pct of the export price for coffee; ECX interventions grew that to 70Pct.

That means that because of the price information and transparency, the farmers were almost exactly correlating in the prices they were receiving with the movements in New York.

As far as export is concerned, there was no problem related with ECX; in fact, it increased by 30-40Pct for some years. So if prices are low now internationally, that might explain why exports are down.

ECX trades a few cash crop items. But think of how many millions of farmers produce barley, teff or other products that ECX doesn’t trade. How can you measure the success of ECX in terms of improving the lives of Ethiopian farmers while it is only trading a few commodities?

That’s a very good question, but I think I’ve [said] many times that ECX started with certain commodities. But that doesn’t mean it’s going to end that way. ECX is a system, it’s a way of trading, linking buyers and sellers no matter which commodity. Now it is agricultural products that it trades, but as our country grows, it can trade manufactured goods. The ECX system is agnostic, it doesn’t matter which product it is. It could also be trading in metals, energy products, there’s nothing that says it’s only an exchange for agricultural products, or it’s an exchange only for food grains; it could be for anything.

In my view, and in the view of the board at ECX and market players, it really should add on more commodities from the grains because there is a big need to addressing the problems ECX was set up to do. That means making markets less risky, more efficient, and transparent; that’s something the maize sector needs as well as teff and other grains. In my view the ECX expansion into new commodities is, at the moment, restricted by poor warehouse infrastructure.

Many people, including economists, say ECX is a success story in Ethiopia. They say the Ethiopian government should copy this success by opening a stock exchange. What’s your take on that?

I think it’s a matter of timing, my understanding from conversations with senior members of government is that there was always a feeling that we should start with commodities because that’s the bulk of where our economy is. And down the road, when our economy is sophisticated, we will have the scope for a stock exchange.

Let me tell you why it’s a good idea. I have travelled all over Africa; in most countries, especially those that were darlings of the World Bank (WB) and the International Monetary Fund (IMF) 20 years ago, like Ghana, Kenya, Tanzania, Zimbabwe, they all were given project financing by the WB and the IMF to set up stock exchanges and they all got stock exchanges. And guess what? The volume we have traded annually in ECX after three years is ten times the volume of trading on the Ghana Stock Exchange, even after 10 years; seven times more than the volume of stocks exchanging on the Nairobi Stock Exchange after 20 years; it’s 20 times the volume exchanged on the Dar es Salaam Stock Exchange. So we started with a commodities exchange because, in fact, the big share of our commodity is in agriculture. But [a stock exchange] is in the future definitely.

As a CEO of  ECX, you travelled to the smallest, minute operational hubs; trekking into rural areas; and inspecting warehouses. That type of down-to-earth management style is something we Ethiopians aren’t used to. Why did you decide to do that?

You know, I was influenced very early on as a researcher by a famous Japanese agricultural economist, Prof. Yujiro Hayami. He was nominated many times for the Nobel Prize [in economics] and has written many important books. He [used to say] ‘I`m a pedestrian economist: my best ideas and sharpest insights haven’t come sitting at my desk, in the academic tower of knowledge. [Rather, they] have come from walking and talking to everyday people about their everyday lives, that’s why I have come [up] with the theories and advance the knowledge in our profession.’ I am very much influenced by him. In fact, I say I am a field researcher.

If I had not spent years of my life in markets talking to people, spending days and days [observing] how things actually work, I don’t think I would have understood the things that I needed to understand in order to build this Exchange. So for me it’s extremely important when people say [I’m] doing this entire thing on the ground. I think of that as the highest compliment possible.

You have won several awards abroad for what you’ve done to benefit Ethiopian farmers. We’re all proud of that, but you haven’t been awarded enough at home, except an honorary doctorate from the University of Gondar. How does that feel?

I don’t feel anything about it. Every Ethiopian has a duty to do something for the country. So for me it’s not the prize or medal that counts, it’s the recognition by the people of Ethiopia, which has been ample. There’s no doubt in anybody’s mind that what we have is an institution [that will outlive] me; but more importantly, [one that’s] having an impact on people’s lives. That’s the best reward I can imagine.

Why did you leave ECX?

I left because it was time to leave. We built the institution to last, and once it proved sustainable, then it means that it can be handed over to somebody [else].

What was important about my contribution was the vision; convincing people that it could be done. I think that’s leadership – to show [people that] when something is completely blank, we can imagine fixing the problem and convincing others to see the same thing that I could see. That we did: many people got convinced; and we built something.

When you imagined establishing ECX, I guess you had certain objectives you wanted the Exchange to serve. Now you are no longer there . Do you still follow whether it is on track with its mission or not?

Of course. I’m following how the market goes every day. The best metric for a market is whether there’s trading, so everyday I receive a report like anybody can if you register on the mobile subscription service they have. And I don’t see any difference in terms of the performance of the trading before and now. ECX is proceeding as it should.

Let’s move on to more current issues. You are now trying to replicate the Ethiopian version of ECX in many other African countries. Can you update me where you stand in that goal?

We have a model that’s a bit different from what was done in Ethiopia, though in many ways similar. Of course we take with us the idea that a commodity exchange should be tailored to small actors; that we create something not so sophisticated that it leaves out the majority of the actors in the market, which is really what we saw in other countries that failed.

The second thing is the idea was very holistic; we not only created the exchange, but the regulatory body, the warehousing operation and the clearing system. It is holistic and unique compared to exchanges we have seen in other parts of the world. It was also gradualist, meaning it slowly evolved into using sophisticated technology.

Every exchange we visited was a futuristic exchange. [They were] purely electronic exchanges, and when we came back we said in Ethiopia a futuristic electronic exchange like the South Africans have will not be relevant to the lives of many who are in the market today, so we need to start it as a spot market and we need to start it as an open outcry, with a physical trading store.

But we are trying to have new approaches as well, in terms of the ownership of the exchange. In Ethiopia it is a public enterprise, while in other parts of Africa, we are trying a public-private partnership and make it commercially sustainable from the very beginning. We are also trying to establish the warehouse, transport and logistics enterprises, along with the trading and warehousing system. If you remember, we initially had warehouse problems in Ethiopia.

How many African projects are you currently involved with?

We are almost in the final stages of launching the project in Ghana. In Cameroon, we’re moving forward fast. We are also getting started in Tanzania and Kenya. We have also been approached by Vietnam, the Philippines, India and Bangladesh in Asia. I think in the next five years, we hope to have several exchanges up and running, so let’s say by 2020 we could have up to six exchanges in Africa.

Your headquarters were first in Nairobi, Kenya. Now you’ve moved to Addis Ababa. Why did you initially begin operations outside of Ethiopia?

The only reason why I felt it was important to go to Nairobi, and I still feel it was a good idea, was for branding reasons. Many people felt that what the company was going to do was simply [copy and paste] the Ethiopia Commodity Exchange to other countries, which wasn’t the case. We were able to be creative and look at each country from [within]. That is why we wanted to have an office in Kenya and also eventually an office in West Africa. When we grow the Asian business, we will probably have an office in Dubai.

We are back in Addis Ababa now for a number of reasons, including security and airline connections and other business reasons. And it’s good to be at home.

Our company can be anywhere in the world. It’s a young and dynamic company and we don’t know what ‘headquarters’ means. I would say the [headquarters] now is on a plane and my laptop. What matters, however, is that we have some of our management team in Kenya, some of our management team in Dubai, and some here in Ethiopia, too.

When you established your company, eleni LLC, you received funds from Morgan Stanley, the World Bank/International Finance Corporation (IFC) and the Eight Miles Fund, which was set up by Sir Bob Geldof. How did you manage to secure the funds?

I guess we found each other. Each of these institutions was aware of the work that has been done in Ethiopia. In the case of IFC, they had a project with ECX on warehouse receipt financing. In the case of the Eight Miles Fund, Sir Bob Geldof had come to visit ECX twice and he felt personally that ECX symbolized a new Ethiopia because he had been so involved to help Ethiopia in a charitable way for over 30 years. So he felt it was a new chapter for Ethiopia and he was excited and he talked to me in person to try to do it in other places.

The same thing happened with the IFC; they came and said this was a marvelous thing. And they asked if we had thought about doing it elsewhere. They said they would like to see it in other countries. So I was looking for investors for financing and these institutions were also curious whether this can be done in other countries. So it was a meeting of minds. All these big institutions felt that what we had done in Ethiopia was something truly transformational and thus can have a big development impact if done in more countries in Africa.

Many Ethiopians were proud to see you at the G8 Meeting in 2012 with global leaders. Can you tell us how you were invited?

I was invited by the head of USAID; he was here in Ethiopia a few months before the G8 Summit. There was a dinner for the private sector consultation, and after the dinner he took me aside and offered me to represent the African private sector at the Summit. Of course, I was extremely surprised; this was an invitation as an independent person, it wasn’t attached to the Ethiopian government, and he was asking me to come as a businessperson with some ideas about what the G8 leaders should be thinking about. The idea was I should go there to try to influence their thinking about markets and their importance and how to set them up, that was what I was asked to do.

I was of course informed that the late Prime Minister Meles Zenawi would also attend, as would three other African heads of state. It was a wonderful opportunity for me to see Ethiopia represented from two angles. So in a way the Ethiopia story got double coverage in the G8 because there was the two of us there.

I have to tell you that [United States] President [Barack] Obama was so excited about this Exchange and he was so enthusiastic that he even made some of the remarks that I was going to say. I had briefed him just as we were walking in [to our meeting]. Obama said this Exchange is a model for Africa; we have to do it for other countries.

What is the modality when you establish these commodity exchanges in other African countries; are you working as a consultant?

We’re not consultants; we’re a company that is basically a turnkey exchange builder.

How do you spend your leisure time?

I spend much time with my kids, I read books a lot, I also watch films a lot. In the last 4 [or] 5 years, I’ve been reading the [autobiographies] of the CEOs of big companies. I have now read the biography of the head of Hewlett-Packard, Carly Fiorina; the head of eBay; the head of Starbucks. I just find it so interesting to understand what makes somebody decide to lead a big company. What did they do wrong; do right, what I can learn from them.

In fact, I have also started to write a book. I’m actually writing a book about my experience because I realize that we don’t have many examples in Africa of people who have created a company or done something they want to share with others. So I think it’s that time. I’ve been reading all these other people’s biographies, memoirs and so on, I would like to share my story with other people too. Now that I’ve reached halfway through writing it, hopefully I will finish it by early 2015.

Where do you see yourself 20 years from now?

By then my company will be a big brand name in Africa. I will also be doing some philanthropic work with the Eleni Foundation. I think African philanthropy is just starting and now we’re starting to see people who are able to give back to the societies. Hopefully that’s not 20 years, but even much less: 7-10 years.