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At least two Ethiopian local governments have ordered the closure of dozens of businesses found hiking prices of basic commodities after the central bank floated the national currency, officials said on Thursday.
The Ethiopian birr weakened by 28% against the dollar this week after the central bank adopted a market-determined foreign exchange rate to secure a new International Monetary Fund lending programme and to put debt restructuring back on track.
"The businesses were caught making unreasonable price increases mostly on food items ... The stocks were imported before the new exchange rate," said Sewnet Ayele, a spokesperson for the Addis Ababa City Trade Bureau.
Some 71 businesses have been affected by the closure order, Sewnet said. In Oromiya region, another 19 businesses were closed and three people detained, said Meseret Assefa, head of the Trade Bureau of Oromiya.
"Those whose business are closed were the ones who increased prices on items just immediately after the (exchange rate) announcement," Meseret said.
The main commodity whose price has gone up is cooking oil, which is selling at 25%, or 300 birrs, more, said a trader in Addis Ababa, who did not wish to be named.
Other commodities whose prices have gone up by a smaller margin include rice, said the trader.
Although the removal of foreign exchange trading restrictions helped Ethiopia to clinch the IMF deal and funding from other creditors like the World Bank, some Ethiopian analysts fear it will cause price hikes that hit the poor hardest.
The government and its development partners say the liberalisation will help the private sector make a bigger contribution to the economy and boost long-term growth.
(Reporting by Dawit Endeshaw; Writing by Duncan Miriri; Editing by Giles Elgood)