The Ethiopian Freight Forwarders and Shipping Agents Association (EFFSA) is considering the creation of a free zone facility.
The association developed a study, which was presented to logistics officials, including the Ethiopian Maritime Affairs Authority (EMAA) and international partners at the Sheraton Addis recently, to encourage use of the Mojo Dry Port by the private sector.
In its proposal (EFFSA), which includes private logistics facilitators, stated that the formation of Free Export Zone Facility (FEZF) is adequate.
If the free zone is accepted by policy makers it will be the first one in the country.
“The dry port (Mojo) should ideally include a duty free export market zone,” the study indicated.
The report was presented by Aman Wole, Senior Instructor of Commercial and Ground Services Training at Ethiopian Aviation Academy, under Ethiopian Airlines Group.
Aman elaborated that the FEZF would create great market opportunities for the products of our agricultural producers, agro industrial manufacturers and others.
“The free zone facility will be a place where we organize duty free sales of manufactured products mainly for buyers from Africa and the Middle East,” Aman, who is an IATA and FIATA accredited expert, said.
He said that this will provide great opportunities to local manufacturers to promote their products and attract buyers for their own brands.
Another proposal is for the FEZF to have bonded warehouses and product outlets.
“We recommend adding value to our export items locally and selling them as opposed to the current service that we provide outside the country,” he told Capital. “If the export zone and bonded warehouses are established at the same location it will create a place for buyers from other countries to come and shop and for local manufacturers to promote their products at the facility,” he elaborated.
Aman said that the FEZF will boost exports, promote local manufacturers and to add value to goods. Products can be sold competitively and hard currency earnings will increase.
“The current bonded warehouse has many restrictions. The state owned Ethiopian Shipping and Logistics Services Enterprise has not fully provided service for all users,” he added.
“We have seen this work in places like Singapore and other Asian countries,” he explained.
Plans are for the FEZF to be located at the Mojo Dry Port compound.
The study also looked at inland containerization services. It stated that currently the majority of sea bound export cargo travels to Djibouti without completing shipping processes in Ethiopia.
“Cargo is carried to the port loosely and its containerization, packing and preparation for shipping is done in Djibouti,” the study said.
With the setup of adequate facilities nationally, it will be possible for the private freight forwarding companies to provide complete services for organizing a full shipping process of exports.
“The whole task of positioning empty containers, inspection and cleaning, tallying and sorting, packing and stuffing and trucking and shipping scheduling, issuing shipping orders and getting a bill of loading releases locally can be handled effectively nationally creating additional opportunities for the logistics companies,” the study added.
Currently containerizing is mainly done at the sea port area and is paid for in foreign currency.
Logistics bottlenecks have hindered Ethiopia’s economic growth. Several strategies have been developed to improve the logistics sector and make it competitive with other countries. Ethiopia now spends up to 25 percent of its GDP on logistic services. In developed countries that figure is around 10 percent, according to the study.
The common use facility under the Mojo Dry Port that will include the private sector is one of the upcoming strategies that will be applied by the government. Mojo, the first dry port in the country is now under expansion by finance secured from the World Bank.
The expansion project that is expected to consume USD 150 million is expected to double the carrying capacity of the dry port facility from the current 14,500 containers.