Economic Slowdown Devastating for Night Businesses
Addis Ababa Taxis Lining -up for fares along one of the popular night streets of Bole Welosefer
05 January, 2009
Ermias Zewde, 27, a blue-cab driver, works both day and night. Sometimes during the night he works as late as 3:00 to 4:00am since he started the job in the early months of 2001. For him, being the owner of the taxi he drives, the minimum takings he is supposed to have when getting home at the end of the working hours every night is 50 Br plus the cost of a full tank fuel for the next day's work.
HILINA ALEMU, FORTUNE STAFF WRITER reports.
However, recently he hardly manages to reach the usual minimum target even if he works every night and goes home early the following morning.
"The money I spend on fuel, lately, is much more than that of earlier times," he told Fortune. "I am incurring more costs than earnings."
This is not the only concern Ermias has; the declining number of cab users - who normally do contract hiring during nights - troubles him much. Like Ermias, other cab drivers who work at nigh complain about the current slow business environment.
Debash Chane, 26, usually operates on Bole Road (Africa Avenue), considered to be the busiest as most recreation and entertainment centres happen to follow the course of the road and the neighbouring areas. He is so frustrated and at the end of his tether that he concludes people are no longer hiring contract taxis.
"It is only when people are desperately sick, with no one by their side that they hire our service," he told Fortune.
The taxi drivers attribute the slowdown in their night business to the shrinking number of people who go out to the entertainment corners of Addis Abeba.
For Mulat Demeke (PhD), vice president of the Ethiopian Economic Association (EEA), the slowing down night life is an indication of overall business slowdown in the country.
He looked at the entertainment industry as the most easily affected as a result of the general slump in businesses in the city.
"When the price of basic goods is on the rise, people are automatically forced to prioritize, leading to reallocation of resources," Mulat said.
Leisurely and entertaining nights with loud music in major night life corners of the city seem to have left their positions to what can be referred to as dark and silent nights, with little or no activity, where the number of party-goers is no where close to the figures six months ago.
Although not many customers are around, the small bars seem to be alive and open for business even as late 2.00 am in the morning especially in Chechnya, the major night life corner of Addis - in Bole District, near Atlas Hotel, on both sides of Mike Leland Street.
The entertaining mood that ranges from typical traditional music performed live to the atmospheres in modern night clubs makes the area poles apart from the other almost similar corners in Piassa, Kasanchez, Arat Kilo and Bole Road.
There are quite a number of the blue cabs, a.k.a. Lada, coasting on both sides of the Mike Leland Street looking for people to hire them, apparently ready to take whatever is offered by the service seeker.
"People now are taking advantage of the situation," Debash told Fortune. "They know that I would not bargain hard and refuse their price offer because they see me parked, not working."
The taxi-cabs' business environment in Chechnya is almost similar to the other areas close to Bole International Airport where the taxis are in extreme competition to take what is offered with less price negotiation than before.
The situation is correlated with the apparent general business slowdown in sectors of the economy likely to be affected by the dreary foreign exchange reserve situation in the country, which has had a significant impact on the import and export business, according to Mulat.
In a situation where the purchasing power of consumers is in decline one of the sectors immediately affected is leisure spending.
The economic theory seems to have been practically playing out in Addis Abeba's night business. There are some bars and clubs that registered a significant decline in the number of customers in the last two to three months.
Tibebe Befikru, a security guard at one of the few recently opened night clubs in the city, affirms that there is a much less activity now in the club he works in.
"We have hosted a maximum of 300 people at peak seasons," he told Fortune. "Now we are hosting only around 25 people."
But there are still people who do not stop visiting the places they frequent at nights, despite the situation.
For all-time party fans like Mickey Fisseha, 22, whose experience as a DJ subjects him to night life, staying at home especially on Friday and Saturday nights is the most unlikely scenario even under these difficult economic conditions. Mickey argues that there are still people out at nights spots though he agrees most have stopped, or at least reduced frequency.
"It might be possible for one to repeatedly come across familiar faces as you meet the same people in the same places," Mickey said. "There is a change, a decrease in the number of people for some time."
Mulat believes that the economic slow down in other parts of the world might have transferred impacts to Addis Abeba's night time business through an expected reduction in foreign currency remittances from abroad. Similarly, he considers the macro level condition of the economy, including credit restrictions, as part of the contributing factors. Enabling people to take on business activities by providing credit is one solution proposed by experts in the field.
A lecturer of economics at the Addis Abeba University, who says commenting on the case without a detailed study is difficult as it may lead to inaccurate judgments, however, agrees that the purchasing power of people has decreased in the last six to eight months.
The high level of inflation and price hikes on basic goods while wages are growing in much less percentage, when they rarely do, have made consumers wary of what they used to spend on previously, according to economists.
With their night businesses continuously on the decline for the past few months, taxi drivers like Ermias, owners of bars and night clubs in Addis should find a way to attract back their customers who used to frequently visit them, or consider switching to other business lines.
Ermias, for example, has decided to sell his taxi and go abroad in search of a better opportunity.