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Ethiopia puts up a new national logistics strategy that will lead the sector’s development for the coming several decades.
The strategy that is developed by Nathan Associates Inc. a US based company, with the support of United Nation Development Program (UNDP), is showing directions on how the logistics sector should be developed and expanded.
The strategy document that was officially handed over to officials of the government by UNDP on Thursday, April 9 includes a diagnostics study, a blueprint of actions, intervention and implementation plan, according to Mekonnen Abera, Director General of Ethiopian Maritimes Authority Affairs (EMAA).
The goal of the Ethiopian National Logistics Strategy is to enhance Ethiopia’s economic growth through increasing trade, especially for value-added commodities, and through the reduction of transport costs by increasing efficiency. The strategy is structured to improve the export competitiveness of Ethiopian products and availability of imports for industry and consumers at competitive prices within reliable delivery times.
The logistics sector, particularly the import/export stream, is said to be one of the hurdles that slows down the country’s growth. The Ethiopian government has been undertaking several restructuring measures on the sector while expanding and modernizing the infrastructures in the meantime. Despite the efforts, the sector is still in its early stages compared to international practices.
Workneh Gebeyehu, Minister of Transport, who received the document, told Capital that the new strategy will be implemented in association with other policies and strategies.
Mekonnen, on his part said that EMAA has been following up the development of the strategy. “EMAA has setup a Logistics Transformation Office (LTO) that will be in charge of this task and the realization of the strategy’s implementation. UNDP has already committed resources for the setting up of LTO,” he said in a speech at the handover ceremony.
According to the EMAA head, a major achievement in this context is made with the establishment of a high level government body, National Logistics Council (ENALCO) that is responsible to oversee the entire logistics system in the country.
The council was formed under the direct leadership of the government. It is chaired by the Deputy Prime Minister and Transport Minister, Workneh Gebeyehu who is its Vice Chairman, and various ministers, business community and logistics service providers that assume responsibilities in the council to spearhead the logistics sector development. EMAA serves as a permanent secretary office, while LTO serves as the expertise arm of ENALCO providing professional and technical support to facilitate the accomplishment of the planned logistics transformation strategies.
Sources told Capital that the document stated that granting of a monopoly to Ethiopian Shipping and Logistics Services Enterprise (ESLSE) for arranging ocean and inland transport of goods imported using a letter of credit, as well as for the operation of the dry ports where these goods are cleared has resulted in an inefficient system that increases the cost and reduces the availability of consumer goods.
The strategic document that Capital had access to indicated that given the capacity of the private sector to perform the same services in a competitive market, there is little justification for continuing this monopoly.
Since the implementation of the multimodal system, the private sector has requested to be allowed to perform and be part of the logistics operations, while the scheme is fully controlled by ESLSE.
Workneh told Capital that the recommendations that were listed in the strategy document shall be implemented in harmony with the country’s policy.
He declined to give any details whether the private sector will be let to activate the multimodal scheme. “We will disclose that if we have any news about the issue,” the logistics Chief added.
He said that the country’s logistics sector is tied in quandary but the government is working to revive it. The strategic blueprint document stated that there is a clear need to separate two unique flows of Ethiopian cargo.
There are cargos whose owners want to clear as fast as possible and owners cooperate with the system operators to minimize the likelihood of delays. There are, on the other hand, cargos owners whose seem to want to use the port facilities (and dry ports) as storages.
These long-deposited cargo generate additional burden on the temporary storage facilities, as they create additional cargo pile ups and reduce terminal capacities. Such behavior is observed in container cargos as well as break-bulk cargos.
The earlier these cargo flows are separated, the lesser will be the impact on the cargo that is wanted quickly by its owners. “This reduces the impact on the port, trucks assignment, highway congestion, dry ports operations and final delivery. The cargo can be temporarily stored outside the Port of Djibouti and transferred slowly, during off peak times to different storing facilities around Ethiopia. The segregation will also allow services to be tailored to fast clearance cargo, such as reliable and predictable customs clearance, expedited transfer from Djibouti to the dry ports and final delivery,” the strategy document reads.