Ethiopia Opens Up Logistics Sector
The Ethiopian government has opened up its logistics sector to foreign investors for the first time, in the form of joint ventures with local firms. The country wants to attract at least $120 million of foreign direct investment into the sector by 2021. Meanwhile, the state-owned Ethiopian Shipping & Logistics Services Enterprise (ESLSE) is to be part-privatised, and the state railway company, the Ethiopian Railway Corporation, restructured then fully privatised.
Clearly, the government of Ethiopia has made improving logistics a top priority. A $2.5 billion, 750-kilometre railway connecting Addis Ababa with the port in Djibouti was launched in 2018 and should cut a three-day journey down to 12 hours. In an ambitious road-building programme flagship projects include a 200 kilometre expressway connecting Hawassa, home to the country’s largest industrial park, with the capital, Addis Ababa.
Two years ago, the government signed a $150 million World Bank project to transform Mojo, a poorly equipped and heavily congested dry port near Addis Ababa that processes more than 70% of imported containers, into a state-of-the-art logistics facility. Meanwhile, Addis is helping a Dutch consortium, Flying Swans, to set up a cold chain along the railway to the coast.
It also plans to increase to 90% the coverage of general cargo carried by ‘multi-modal’ transport – the theoretically more efficient system currently monopolised by the state-owned Ethiopian Shipping & Logistics Services Enterprise (ESLSE).
As of now, to transport a 20-foot container of garments from Ethiopia to Germany costs 247% more than from Vietnam and 72% more than from Bangladesh.
In 2016, Ethiopia scored 2.37 in the World Bank’s Logistics Performance Index – significantly lower than neighbouring Uganda, which is also landlocked. The country ranked 159th out of 190 in the World Bank’s Doing Business index in 2018; Uganda came 127th.
Most of Ethiopia’s bulk imports like wheat, sugar and fertiliser currently pass through the port of Djibouti which is small and congested, especially when the Ethiopian government procures. The port is also 70% more expensive than other ports in the region.
Ehtiopia has also signed a deal with Eritrea restoring Ethiopian access to the ports of Massawa and Assab. at will be most important to the Ethiopian economy. Ethiopia plans to invest in refurbishing the port with the help of investmetns from Saudi Arabia, United Arab Emirates and the World Bank.
