Executives of the state-owned Awash Melkassa Chemical Factory say the manufacturer is struggling with client retention and an accumulation of product stock as more than 260 million birr’s worth of chemicals sit idle in its warehouses.

Located on a 9,000 square meter plot 100 kilometers east of Addis Ababa, the Factory produces aluminum sulfate, hydrogen peroxide, and sulfuric acid compounds. It used to supply its products to textile and leather industries, paper and pulp factories, sugar estates, beverage manufacturers, and wastewater purification plants before business began to turn sour due to market disruptions.

Executives say issues arising from the COVID-19 pandemic, foreign currency shortages, and competition from cheap imports have cast doubts over the Factory’s competency and financial viability. The problems were the center of discussion of a conference organized this week at Nexus Hotel.

Ahmed Motuma, general manager at Awash Melkassa Chemical Factory, said the manufacturer was forced to cease production completely in 2021 as a result of lockdown measures during the pandemic. The Factory, which is an arm of the state-owned Chemical Industry Corporation, lost clients as a result.

Ahmed observes a lack of access to foreign currency needed to import inputs has exacerbated the situation. Despite the resumption of production in 2022 after the government approved the company’s purchase of raw materials using Birr, business has yet to pick back up.

“When we stopped the production of aluminum sulfate, hydrogen peroxide, and sulfuric acid chemicals, our regular customers went away, including the Addis Ababa Water and Sewerage Authority. Even though we immediately restarted production, we couldn’t retain the clients,” said the General Manager.

Ahmed and his management team say they are actively seeking new market opportunities and making overtures to clients in hopes of luring them back. The company is also engaging in a promotional campaign and doubling down on marketing efforts, according to its executives.

However, clients have raised concerns about the quality of the chemicals produced at the Factory, packaging and labeling, and high prices.

A consumer survey conducted by the company found that the affordability of imported chemicals and the lack of supply in local markets have led to a rise in the import of chemicals from China, India, Turkey, and other countries.