Ethiopia is positioning itself to enhance its presence in both international and local markets by significantly improving its logistics capabilities. As logistics plays an indispensable role in facilitating trade, the Ethiopian government is taking proactive measures to bolster the country’s logistics infrastructure. This initiative is part of a broader economic reform strategy aimed at attracting foreign investment and fostering economic growth.
In a landmark decision, the Ethiopian government has opened its logistics sector to foreign investors. This move follows the passage of legislation that allows foreign participation in the finance and banking sectors, marking a significant shift in the country’s economic landscape. By liberalizing various sectors, Ethiopia is creating a more conducive environment for foreign companies to operate, thereby stimulating economic activity and innovation.
The logistics sector is particularly critical for attracting Foreign Direct Investment (FDI). A well-developed logistics infrastructure can significantly enhance the efficiency of trade, reduce costs, and improve service delivery. Recognizing this, the Ethiopian government is focused on enhancing logistics services to meet the demands of both local and international markets.
In addition to improving land-based logistics, Ethiopia is also exploring opportunities to expand its capabilities in maritime logistics. The country is strategically navigating various sea routes to facilitate smoother and more efficient logistics services on water. By enhancing its access to ports and shipping lanes, Ethiopia aims to streamline the movement of goods and reduce transit times, which is vital for boosting competitiveness in global markets.
The ongoing economic reforms in Ethiopia are designed to create a more open and competitive market environment. By inviting foreign investment into the logistics sector, the government hopes to leverage international expertise and capital to improve service delivery and operational efficiency. This strategic move is expected to lead to significant improvements in the logistics landscape, ultimately benefiting the country’s economy.
According to recent Ministry of Finance announcement there have been policy amendments to pave the way for greater participation of foreign companies in the logistic industry.
“The government has been taking various reform measures to improve the sector including increased budget allocation, policy reforms, enhanced international cooperation, said,” Finance Minister Ahmed Shide. The minister also revealed plans to open up the sector for international investors during an event held recently to recognize entities engaged in the logistic sector.
Speaking at the occasion themed: “Logistics Transformation for Sustainable Growth and Prosperity”, Ahmed emphasized the importance of modernizing the sector for overall national development.
He stated, “Strengthening our logistics capabilities is essential for our country’s future.”
In his remarks, the minister noted that infrastructure development, particularly road construction, is receiving significant budget allocations. “Different steps are being taken to enhance our logistics sector,” he said adding that in the effort of expanding the nation’s cargo capacity, the government is also progressing on plans for a new airport. Looking ahead, Ahmed Shide underscored the necessity of enhancing Ethiopia’s competitiveness in the international market. He mentioned that beyond strengthening logistics ties with Djibouti, there are on-going efforts to address port access challenges.
Support from the World Bank has been pivotal in advancing road construction projects, which are in their final stages. “These infrastructure improvements will save time and reduce costs in the logistics sector,” he remarked.
Transport and Logistics Minister Alemu Sime (PhD) echoed these sentiments, stating that significant efforts are underway to position Ethiopia as a competitive player in the global logistics arena.
Alemu (PhD) detailed the progress made. He noted that an independent assessment by the World Bank revealed improvements in Ethiopia’s logistics capabilities in 2023.
To attract trade and investment, a comprehensive policy and strategy for the logistics sector is currently being implemented. Alemu stressed that modernizing logistics is vital for economic development, and addressing existing challenges is crucial for optimizing resource use. Recent assessments indicate a rise in Ethiopia’s Logistics Performance Index from 2.53 to 2.94, reflecting the growing efficiency and capacity of the country’s logistics operations.
Also, according to Dhenge Boru Minister of State for Transport and Logistics says that Ethiopia’s international trade is experiencing consistent growth. The country’s logistics sector has improved its global ranking from 113th to 66th. Also, over 6,000 professionals are employed on international ships and generated more than 39 million dollar.
The average port duration for ships has been reduced from 20 to 30 days to just 12 days. Dhenge emphasized that modernizing logistics is vital for economic development, highlighting efforts to address sector challenges, update systems, and coordinate resource use.
To position Ethiopia as a preferred trade and investment destination, a comprehensive logistics policy and strategy are being implemented. Efforts include institutional organization, technology enhancement, and increased private sector participation.
Abdulber Shemsu (Eng.), the Director General of the Ethiopian Maritime Authority, noted that import and export activities reached over 15.6 million metric tons in 2016 E.C. The opening of multimodal transport to local and foreign investors has increased imported goods coverage to sixty-one percent.
It is also recalled that the Ethiopian Investment body announced The Ethiopian Investment Authority has announced a policy change allowing foreign investors to own up to 49 percent in joint ventures within the logistics sector. This move includes areas such as bonded warehouses and consolidation services. Previously, services like packaging and shipping were reserved for Ethiopian nationals, according to Article 3.1(b) of the investment regulation. This shift is part of the country’s broader economic reforms aimed at increasing private investment.
As the country continues to develop its logistics capacity, the government is committed to ensuring that the sector can support the growing demands of trade and investment. This includes investing in infrastructure, technology, and training to build a skilled workforce capable of managing advanced logistics operations.
Overall, Ethiopia’s efforts to enhance its logistics sector are a pivotal part of its broader economic reform strategy. By opening the sector to foreign investors and improving maritime logistics, the country is positioning itself as a competitive player in the global market. As these initiatives unfold, they hold the promise of attracting more foreign direct investment, fostering economic growth, and ultimately benefiting the Ethiopian populace. The government’s commitment to developing a robust logistics infrastructure will be crucial in realizing these ambitions.
BY EYUEL KIFLU
THE ETHIOPIAN HERALD WEDNESDAY 23 OCTOBER 2024
