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The newly introduced National Logistics Strategy (NLS), which is deemed to boost the country’s logistics system, needs about two billion dollars investment, according to estimates of a baseline study.
A report that details implementation of the strategy authored by US based Nathan Associates Inc., stated several logistic related developments the country has to undertake in the coming years.
The report Capital obtained indicated that the country should expand its inland and international logistics infrastructures to achieve the target to become a middle income country by 2025.
The strategy that is classified in five volumes stated that the sector development would need billions of dollars investments in the coming years.
According to the report the country may need USD 1.914 billion baseline project cost to boost the sector development. In a best case scenario, the cost shall be minimized by 25 percent from the stated baseline estimates, which means, on the best case the amount would be USD 1.43 billion, the strategy document indicated.
In the worst case estimation, the same cost could be higher by 75 percent to USD 3.35 billion.
“African countries are increasingly tapping into their own funding to finance modernization efforts. Alternative funding sources, however, will remain an important option to bridge funding gaps. The NLS indicates that Ethiopia will require an investment of nearly USD 2 billion to realize the vision for a modern logistics system,” the document states.
The rollup (direct cost) of the project will be USD 903 million, and the indirect cost that includes training, marketing, communications, outreach, management reserve, and operation and maintenance will need USD 1.01 billion.
A highest sum of the cost is taken up by operation and maintenance that require USD 947 million.
To realize the strategy direct foreign lenders like China, Russia, Brazil, India and EU, and private funding like Ford Foundation, Rockefeller Foundation, and Commercial Logistics Providers (DHL, FEDEX, UPS etc.) were stated as alternative financial sources. International development partners are another source of finance listed on the document.
The document indicated that several infrastructural system will be build in the future.
The Inland Rail Freight Terminal at Sebeta will be the biggest project on the NLS. This freight terminal that will be built in conjunction with the centre of the national railway hub in Sebeta will consume USD 276.7 million. The NLS document reports the rail freight terminal at Sebeta could require 200 hectares of land.
The Intermodal Dry Port (IMDP) road infrastructure improvement and container freight stations are the other parts of the project financed from direct cost.
The strategy document that was officially handed over to Ethiopian officials by UNDP on Thursday, April 9 also includes a diagnostics study, a blueprint of actions, intervention and implementation plans.
The Ethiopian National Logistics Strategy has the vision of enhancing Ethiopia’s economic growth by increasing trade, especially for value-added commodities, and by reducing transport costs by increasing efficiency. The strategy is structured to improve competitiveness of Ethiopian export 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 infrastructure in the meantime. Despite the efforts, the sector is still in its early stages compared to international practices.