A high level delegation led by Prime Minister Hailemariam Dessalgen spent over a week in China meeting potential investors and attending the 21st trade system, Belt and Road Forum. The main strategy of Belt and Road Initiative is improving connectivity around the globe. To accomplish this state of the art infrastructure is a must. Capital met with Ahmed Shide, Minister of Transport, who was also member of the delegation, to talk about what transpired at the Forum and the visit in China. Ahmed also answered questions about infrastructural development and integration between Ethiopia and Djibouti and the logistics sector.
Capital: Prime Minister Hailemariam Dessalegn and high level officials came to China for the One Belt One Road Forum and then stayed over a week to meet with Chinese officials. What were the results of the visit?
Ahmed Shide: The two countries have a special and sustainable relationship. Ethiopia is one of the implementing countries of our One Belt One Road Initiative and a destination for the 21st century maritime belt. With its large population and growing economy Ethiopia is an important partner in the region. Our relationship is now classified as a ‘comprehensive strategic cooperative partnership’, which is a very strong alliance.
Ethiopia and Djibouti are connected by a railway, industrial parks and logistics these are all part of the one Belt on Road Initiative, soon we will upgrade the telecom system as well. The railway system connecting Ethiopia and Djibouti is one of the first harvests of the Initiative.
As part of this project, China plans to build several developmental zones alongside the railway and use the system to ship cargo and transport people. This will make the railway system more efficient and strengthen the relationship between Ethiopia and Djibouti.
Logistics projects in Djibouti like the recently inaugurated Doraleh Multipurpose Port will be part of this package.
Ethiopia has a big population, wide land and is registering fast economic growth as a result connectivity enhancement has gotten a lot of attention in this initiative. A major pillar of the One Belt One Road Initiative is connectivity in terms of infrastructure, people to people relationships, financial cooperation and policy coordination, so Ethiopia is going to be part of this major pillar.
The other point that was agreed to at the higher level is to expand cooperation in the aviation industry. Recently China has supported the expansion of Bole International Airport. We also have a plan to set up a mega hub (new airport). To achieve this we will work together. Ethiopia also played a big role in connecting Africa with China. They have agreed to support Ethiopian Airlines in flying to new Chinese destination to boost the connectivity between the two continents.
China is off to a good start in expanding its aviation technology so we want cooperation on air connectivity. The investment in Ethiopia like railways, roads and telecom also facilitate regional integration, so China considers Ethiopia to be an anchor state for regional development.
We have long history and big role on the continent so they respect us and consider us to be a natural partner for China.
As a result the infrastructure, industry and agricultural developments and capacity building work will continue strongly under the new initiative.
In the east African region we are the biggest country with multiple neighbors so the Chinese will benefit by the ease of getting to many places from Ethiopia.
The major maritime belt destination is east Africa and Ethiopia is the biggest country in east Africa. They want Ethiopia to play a huge role in developing the maritime belt. To achieve this they are ready to support investments in Ethiopia.
They plan to improve the production sector in Ethiopia. They want to relocate some of their investments to Ethiopia.
They agreed to work on ‘production capacity cooperation’ that will encourage Chinese investors to come to Ethiopia.
We visited four major GDP regions and three additional GDP regions, which sent their representatives, to Beijing.
Meetings have been held with investors from these successful regions led by PM Hailemariam to invest in the country.
Ethiopia is one of the few African countries invited to the Forum and Hailemariam is the only African leader who delivered his speech at the plenary session by representing the continent.
Only Ethiopia and Kenya were invited at the head of government level and the PM was the only African speaker at the event.
Capital: Ethiopia has invested USD 45 million worth of shares in the Asian Infrastructure Investment Bank (AIIB). The country targeted to make it an alternative financial source for developmental projects. What kind of progresses has been obtained in this regard?
Ahmed Shide: AIIB was established by Asian countries, now several non Asian countries with big economies including many in Europe have joined the bank. They created a huge international financial institution with more than USD 100 billion in capital. We met with the management of AIIB. It is a good opportunity for us to join it.
With regards to economic growth we have to diversify the financial sources besides the usual partners; World Bank, African Development Bank, European Investment Bank and other international financial sources that we want to continue to work strongly with.
AIIB is currently deciding which sector it will support, mainly for the African continent to introduce an actual financing scheme.
In the coming few years they will introduce full flagged finance and that will be an alternative for us. It will become an additional financial instrument for the government and the private sector.
Capital: The government plans to buy 15 additional vessels in GTP II from the current 11 can you tell us how that is going?
Ahmed Shide: In general the logistics system should be changed and improved. Currently a strategy is under formation to improve the sector.
This strategy will cover every part of the logistics sector and it will be answered in the strategy. The major thing is that logistics has to be fast and modern in relation to the agricultural and manufacturing growth.
The state owned logistics enterprise, Ethiopian Shipping and Logistic Services Enterprises (ESLSE), has been established to undertake the logistics activity that includes freight forwarding, shipping, dry port and inland transportation in general. The main issue would be transforming this enterprise. To transform ESLSE we are exploring our and overseas capacities under the strategy. The question you raised is a very specific component that will be answered in the strategy.
Our strategy is improving the logistics sector to be competitive. This is very crucial and needs an immediate response. Recently a national steering committee was established and is working on it. We are successful in infrastructure development but the sector needs compressive development in every part of activity including the logistics sector. This includes physical integration, operation integration and the future commercial integration with the port all need massive changes. The Addis-Djibouti corridor has to be automated. To attain this we will consider international companies and see how they will work with us and support the sector.
Capital: Will China Merchant Group join the Enterprise?
Ahmed Shide: It will be answered in the strategy and transformation agenda. It will not be done separately like simply selling shares of ESLSE. Logistics has to be addressed in a holistic manner.
Capital: So they will be involved in a supporting role?
Ahmed Shide: It will be decided in the future. As I said there will be a strategy for changing the Enterprise. The whole integration from Addis to Djibouti needs to be worked on.
Capital: When will the strategy be completed?
Ahmed Shide: We will finish within a few months and commence the implementation.
Capital: The railway from Addis to Djibouti does not connect to Djibouti’s ports. What is your response?
Ahmed Shide: The main line passes through the border of the ports in Djibouti. The link that will connect with the ports is responsibility of the ports since the project will be undertaken inside their compound. We have been discussing this issue.
The railway line from Doraleh Container Terminal is 800 meters. Construction will begin on this in the near future. The Doraleh Container Terminal is temporarily preparing a field to store containers around the main railway line.
The railway linking project from Doraleh Multipurpose Port to the main line will be 500 meters and construction on that has already started.
Similarly the line from Horizon Oil Terminal to the main line is 500 meters and construction will also start on that in the near future.
The branch line will be finished in the coming four to six months. We have stretched the railway line to connect with the port as opposed to simply going near the ports. The two countries are working together to accomplish this.