Government officials from Ministry of Transport, Investment Commission, Prime Minister’s Office, and the Ministry of Finance have recently discussed macroeconomic policy reforms and its objectives followed by consultation from private stakeholders. According to the officials, the government has been taking various macroeconomic reform measures for the next five years entails maintaining macroeconomic stability, encouraging savings and investment, adopting appropriate policies that are designed to promote rapid and broad based growth. This article mainly focused on the investment as well as the shipping and logistics policies that is said to be managed in a manner consistent with macroeconomic objectives.
In this regard, Minister of Transport Dagmawit Moges said the logistic sector has systemic challenges that can be expressed in different ways. As to her, the inefficiency and fragmented transit service, the inefficiency in custom procedures that the private sector is expected to go through, and the poor quality and competency of the logistic service providers, the monopolistic practice in the logistic service, lack of modestic infrastructure, and poor management are the severe problems we have faced.
Apart from the above points, the inadequate institutional capacity in the logistic governance system is the other major problem the government has faced. Since the Ethiopian logistic system has faced these systemic challenges, it needs systemic kind of solution, she said.
“If we take privatization from the perspective of privatizing the shipping lines, we may not able to get a comprehensive kind of solution as the problem is very chronic and systemic. So that, the government tries to look into the different alternative solutions and come up with the new national logistic strategy, which was endorsed by the Council of Ministers on last July 2018, and it is now being implemented,” Dagmawit stated.
Regarding the privatization in the logistic sector, Dagmawit said that there are several factors affecting the logistic sector efficiency in terms of the time, the cost and the reliability of the service. Under this bigger umbrella, the issue of monopoly in port utilization can be taken as a major challenge. “As you know, we have one corridor we rely on, for instance, the 98 per cent of our import and export, will rely on one corridor. That is we have the challenge in using this one corridor,” she added.
In addition, “using exclusive service terminal operation even with this one corridor is also one of the challenges in the monopolistic acts. For instance, for the oil, we have only Horizon, for others we have only exclusive terminals for different containers, and dry port services.”
According to Dagmawit, the other challenge is the monopoly in shipping lines and the monopoly in dry ports. To address the above challenges, some major reforms are underway, like the development of different corridors. For instance, the government tries to enhance different corridor utilization on the port of Sudan, Berbera, and Lamu to diversify the different corridors that we can get access with. The other one is the Eritrean corridor, we are working with the ports of Massawa and Asab, she explained.
In relation to this, the other major reform is the revision of the bilateral agreement on the port of Djibouti. We started to further negotiate on the agreement that has been signed by the two countries to be able to get a better solution for the challenge we have in the import and export processes, Dagmawit said.
Moreover, a study is being carried out on establishing a facility having future governance structure on the dry port. These are the major activities the government tries to work on overcoming the challenges from the monopolistic sector.
“Ensuring the movement of goods through various modes of transport is the other major reform initiative, which is already underway. Some of the priority areas in this aspect is developing effective and efficient logistic system for export; the reform on Mojo Dry Port is something we are working on,” Dagmawit indicated.
Above all, the governance structure in the national logistic strategy is one of the reform areas that the government is now going to address. In this case, the government implements the integration of nation’s modes of transport. For instance, the government recently started to integrate the road with that of train and sea transportation, she pointed out.
“We are taking one of our industrial park (HAWASSA) as a pilot. We try to take the export item from Hawassa to Mojjo dry port, which is on tracks. We built the railway from mojo dry port to Djibouti. By doing these, over the past two or three months, we are able to reduce the cost and time from 6 to 10 per cent. This assures the availability of different modes of transport will further reduce the expenditure we may pay during import and export,” Dagmawit explained.
In general, if the government moved to reduce the cost and time in the logistic service, it will thereby enhance the competitiveness of the private sector, which helps the nation to benefit more from the sector.
On the other hand, Investment Commissioner Abebe Abebayehu said for his part that the government is almost finalized the drafting of investment legislation to make modern and flexible legislation that this country currently needs, which will be enriched by comments of private and foreign investors.
This legislation, that is almost being finalized, will sterilize protracted rules and regulations on investment that cloud create very flexible, transparent and is simple to administer, Abebe commented.
According to the Commissioner, the government is also revising some sectors that were previously closed to the private sector. In fact, there are now certain sectors that have been kept for the government, and in some cases, exclusively reserved for domestic investors.
“We are rationalizing the decision to actually open some of these sectors for foreign investors through joint venture. We are also adopting best practices from different countries for efficient investment administration that would assist us to develop modern and excellent investment legislations that can be included in our investment legal framework.”
As to him, the major shifts that the government takes are to enhance the efficiency of the service industries by attracting capital and technology into those selected investment sectors. It also expands space for investment to the Diaspora community; some of them have already been announced by the National Bank of Ethiopia. Shortly, the Diaspora will invest on the financial sector, the Commissioner indicated.
The Ethiopian Herald, June 15/2019
BY ZELALEM GIRMA
