As part of a series of bold economic reforms, the Ethiopian government is set to invite foreign investors to operate freely in the logistics sector—an area previously closed to international players and reserved exclusively for local providers.
The new directive, recently unveiled by government officials, is expected to take effect before the end of the year, though an implementation date was not specified. Sources familiar with the matter told Capital that the legal process to liberalize core logistics operations is currently underway within relevant government authorities.
“The decision, which has been discussed for the past few years as part of the government’s bold reform agenda, will become effective at the start of the coming budget year,” these sources stated.
Foreign investors operating in Ethiopia have long cited the logistics sector as a major challenge. Some countries and interest groups have pressed the government to open up the sector, similar to reforms that have largely liberalized the finance and telecommunications industries over the past few years.
However, the government’s latest move has not been well received by local logistics operators. While acknowledging that the sector remains a bottleneck for the national economy and for doing business in the country, local industry players argue that the government has failed to provide the necessary understanding and attention for its growth and effective economic support. According to industry insiders, a lack of government focus on issues such as insurance access and financing has hindered the sector’s development.
Dawit Woubeshet, CEO of Cosmos and President of the Ethiopian Freight Forwarders and Shipping Agents Association, confirmed that Ahmed Shide, Ethiopia’s Minister of Finance, recently announced the decision to open the logistics sector at an industry event. Dawit recalled asking the Minister during a panel discussion what tangible benefits the country would gain from this liberalization. “I asked what advantage the country would benefit from liberalizing the sector,” Dawit told Capital.
Logistics experts interviewed by Capital noted that Ethiopia handles fewer than 300,000 containers annually—a volume that a single large Chinese logistics firm could easily absorb. “Due to this, there may not be significant interest from international players. If any do show interest, it would likely be in the multimodal transport sector,” one expert said.
A local logistics operator further argued that Ethiopian customs clearance is not particularly difficult to manage. “The volume of Ethiopian cargo is very small and can be handled by local operators,” he said. “Rather than allowing local firms to be swallowed up by monopolies, it would be better to help us enhance our capacity and expertise to operate seamlessly.”
Experts point out that the Ethiopian government, unlike its approach to the banking and telecom sectors, did not protect and strengthen the logistics industry before opening it up. Consequently, the sector has suffered from a lack of proper understanding and government attention, leading to limited access to financing and land for investment.
Even with market liberalization, some analysts doubt that major global logistics firms will be attracted. They cite Ethiopia’s relatively small economy and the slow inflow of foreign direct investment (FDI) as disincentives for large international operators. As one expert put it, “Foreign operators will ask what the benefit is of investing in the country. The cargo volume is very limited, and there are other conditions that make the market unattractive.”
Some observers suggest that the move towards liberalization may be primarily a political commitment, aimed at fulfilling World Trade Organization (WTO) accession requirements or satisfying foreign governments whose logistics companies are interested in Ethiopia.
An industry expert reiterated this view: “Logistics is one of the preconditions [for WTO accession]. So opening up the sector may be a political decision, but I do not expect companies to be interested in investing in Ethiopia’s logistics sector.”
Ethiopia, the world’s most populous landlocked nation, faces one of the most expensive logistics environments globally, a factor experts say deters potential investors. Despite this, the government has recently undertaken significant reforms and infrastructure projects to boost the sector.
These reforms include ending the multimodal transport monopoly previously held by the state-owned Ethiopian Shipping and Logistics (ESL) by licensing six additional operators. Simultaneously, the logistics business was liberalized to permit up to 49 percent foreign ownership, a move that attracted Ceva, Bolloré Logistics, and DHL to acquire stakes in joint ventures with Ethiopian Airlines Group.
However, while some experts see the entry of these companies as a sign of foreign interest, others remain skeptical. One expert starkly noted, “A single large company handles more volume than the entire country of Ethiopia. There is no attractive market here unless the economy improves dramatically.”
Adding to the challenges, the Office of the United States Trade Representative’s ‘2026 National Trade Estimate Report on Foreign Trade Barriers’, published three weeks ago, revealed that logistics costs in Ethiopia constitute approximately 22 to 27 percent of final product prices. Furthermore, shipping and freight costs are roughly 60 percent higher than in neighboring countries.
The Ethiopian government has assured its partners that complementary measures, including finalizing a legal framework for liberalizing key logistics sub-sectors like dry ports, freight forwarding, and logistics services, are expected to be completed by the end of December.
