In a bid to enhance regional railway connectivity, the Ministry of Transport and Logistics is embarking on ambitious reforms aimed at transforming Ethiopia’s logistics sector. This initiative aligns with the country’s strategic goals for foreign trade, addressing the infrastructural challenges currently hindering supply chain and trade connectivity.
Recent research indicates that, despite these challenges, Ethiopia has significant economic potential that can be unlocked through expanded railway infrastructure across the region.
Ethiopia’s only operational international railway link, the Ethio-Djibouti Railway, currently operates below capacity. While it plays a critical role in connecting the country to the Djibouti port, inefficiencies in this line limit its effectiveness. To tackle these issues, the government is prioritizing the establishment of new legal and structural frameworks, as discussed in a recent workshop.
The reforms aim not only to enhance the functionality of railways within Ethiopia but also to extend their benefits to neighboring countries. With increased efficiency, the railway network could significantly facilitate regional economic growth by improving logistics and reducing transport costs, according to officials from the Ministry of Transport and Logistics and the Ministry of Finance.
Recognizing the need for international support to fund these ambitious infrastructural developments, the World Bank, a key financier for Eastern Africa’s railways, has expressed its commitment to assist. The World Bank’s Country Director for Ethiopia Mariam Salim highlighted that inefficient trade logistics pose a serious constraint on Ethiopia’s international competitiveness. “Several World Bank reports underscore the railway sector as a critical bottleneck for Ethiopia’s future economic growth,” she noted, welcoming the Ethiopian government’s reform efforts as essential for regional economic integration.
A study by logistics and transport experts also revealed the risks associated with Ethiopia’s weak connectivity. It emphasizes the need for a closer examination of the logistics sector, particularly regarding cargo flows and regional last-mile connectivity. Inadequate consolidation hubs and weak links to dry ports hinder the movement of Ethiopia’s value-added commodities, making improvements to the railway network essential for efficient goods movement across borders.
Beyond logistical enhancements, the reform initiatives aim to implement structural changes in Ethiopia’s railway sector. The government plans to establish a clear separation between policy-making, regulatory bodies, and railway operations, which is expected to attract private investment and foster competition within the freight services market.
Finance State Minister Semereta Sewasew emphasized that these reforms, which include opening the sector to private investors and increasing competition, could significantly improve service quality in the railway industry. The initiatives also foresee private-sector involvement in expanding and operating the railway network, potentially stimulating growth and promoting regional integration.
These ongoing efforts mark a pivotal step toward establishing a comprehensive and efficient railway system. If successfully implemented, the reforms are expected to bolster Ethiopia’s surface transport capacity in the short, medium, and long term. Achieving the railway sector’s full design capacity would not only enhance Ethiopia’s trade competitiveness but also promote greater economic integration across the region, as indicated by researchers.
BY YESUF ENDRIS
THE ETHIOPIAN HERALD SATURDAY 5 OCTOBER 2024
