By Muluken Yewondwossen

The government is said that it should be taking a strong stance on equal competition in the recently liberalized multimodal scheme, according to experts in the logistics sector.

Despite the fact that the most recent selection procedure was unsuccessful, Capital has learned that the fifth multimodal operator is expected to receive a license as a non-vessel operating common carrier (NVOCC).

At a formal ceremony held on March 13 at the Sheraton Addis, the Ministry of Transport and Logistics (MoTL) awarded certificates to the three multimodal transport companies who were recently selected.

In addition to the existing state-owned VOCC, Ethiopian Shipping and Logistics (ESL), it has been stated that four other operators will be allowed access to the sector, under a plan that the government revealed almost four years ago.

According to the MoTL, ‘Multimodal Transport Operators Commercial Licensing and Competency Certification Directive no. 802/2021,’ prospective operators, including foreign businesses, have been invited to compete for the license, which will come into effect in approximately two weeks with the selection of Panafric Global, Tikur Abay Transport, and Cosmos Multimodal Operation.

The Amhara region oversees Tikur Abay, while Cosmos is a company founded by renowned logistics provider Tradepath International and Oromia region’s enterprise, Geda Transport.

One of the existing logistic firms, Panafric, has formed a partnership with a prominent businessman in the town.

According to industry analysts, the most recent action represents a significant turning point for the logistics sector.

However, they emphasized the need for the government to allow fair competition in the industry with the state-owned vessel operator. “We envision all actors having full access to the market and destinations,” they continued.

The international marine lawyer Yared Shiferaw commented on equal competition and said that ESL should keep holding the majority of the market share as multimodal operators as it is a national carrier.

Yared, a consultant and future partner of Cosmos, told Capital, “Even though ESL will continue as a leader in the operation, it is relevant to allow us to compete on all destinations.”

He said, “Given the government’s strategy of opening up the sector, we expected such direction from it.”

According to Yared, who worked on the feasibility study and other detailed papers for the firm, “ESL has been operating the multimodal scheme for the past 13 years; there were gaps that need to be filled by other operators.”

He continues, “We have ample experience and adequate and prominent global partners on sea and air freights so we shall handle the multimodal scheme as NVOCC.”

He claimed that in addition to Djibouti, Kenya, and Somaliland as a source for Ethiopian commodities, his company has branches throughout the Middle East, the Far East, and other destinations.

According to sources, the selection process for the fourth company will not end. They said that the state-owned Ethiopian Railway Corporation, which was excluded from the most recent selection process, would have a greater chance of being included in the scheme if certain prerequisites are met in accordance with the directive for 2021.

The government has chosen to liberalize the logistics sector to accelerate its growth trajectory, just as it has done with other important industries like banking and telecommunications.

By Eyasu Zekarias

The Ethiopian government faces a pressing challenge in attracting new foreign direct investment (FDI) and fostering economic development due to bureaucratic delays and land scarcity, exacerbated by the forthcoming land proclamation. The complexity of administrative procedures and the limited availability of investment land pose significant obstacles to FDI.

Outside of designated industrial parks, the management of land in Ethiopia is decentralized to state and city governments, complicating the process for investors seeking land outside these zones. Research in the sector indicates that acquiring sufficient land in Ethiopia is a major hurdle for investors, with unpredictable timelines and pricing adding to the difficulty.

The European Chamber in Ethiopia recently released a policy document addressing the issue of land provision for investors, titled “Access To Land: Streamlining Land Acquisition for Investors Outside Industrial Parks.” The document highlights the challenges faced by investors seeking development land outside of industrial zones.

EuroCham Ethiopia identified excessive bureaucracy across multiple administrative levels, from federal to district authorities, as a key concern raised by investors regarding land acquisition. This bureaucratic bottleneck is attributed to the land decree issued in 1161/2019, which outlines the allocation of land for public benefit, compensation procedures, and resettlement arrangements.

The policy document, unveiled on March 12, 2024, outlines various challenges, including the lack of pre-prepared investment land, excessive compensation claims, difficulties in compensation management, regional instability, and inadequate infrastructure.

Despite the Ethiopian government’s ownership of vast land resources, challenges persist in the implementation of land ownership policies. Coordination gaps between federal and state authorities, fraudulent practices, administrative capacity constraints, inconsistent land allocation practices, and improper land use by investors exacerbate the situation, according to research.

The policy document underscores the need for the government to establish clear and consistent policies that facilitate investment and economic development by ensuring efficient land management practices.

A source close to the Investment Commission acknowledged the concerns raised by investors regarding land issues, pledging to address these challenges.

EuroCham Ethiopia, representing the European business community in Ethiopia since 2012, comprises 180 members and operates as an independent association licensed by the Ethiopian Investment Commission.

By our staff reporter

The Ethio Djibouti Railway Company Standard Gauge Railway Share Company (EDR) is targeting a revenue of 4.5 billion birr this year while also expanding its fleet with the addition of shunting locomotives. Formerly managed, operated, and maintained by a Chinese joint venture (JV) until January 1st, 2024, the railway has since transitioned to full control by Ethiopian and Djiboutian workers.

Abdi Zenebe, CEO of EDR, expressed pride in the transition, emphasizing the company’s commitment to success in its new phase. “Taking over the operation and maintenance of the company is a big achievement for us,” stated Abdi, highlighting the implementation of an organizational structure aimed at positioning the company for future success.

Acknowledging the challenges faced during the transition, Abdi praised the commitment of Chinese engineers in sharing knowledge and empowering local staff. Despite initial challenges with power, parts, and security, Abdi noted that these issues have largely been resolved, paving the way for increased demand for both freight and passenger services.

Over the past six years, EDR has witnessed remarkable growth, with revenue climbing from 738 million birr in 2018 to an anticipated 4.5 billion birr in the current budget year, reflecting an average yearly growth rate of 38.4 percent. Abdi indicated that revenue is expected to continue increasing alongside the expansion of operations, with the railway’s share of overall import-export freight rising from 8.5 percent in 2018 to 15 percent today.

With a workforce of 4,000 employees from Ethiopia and Djibouti, EDR has significantly increased its freight transportation share, transporting 2.1 million tons in 2023 compared to 885,000 tons six years ago. The railway’s operations have also had a positive impact on the efficiency of Djibouti’s ports, according to Abdi, with notable improvements in port efficiency and logistics.

EDR’s efforts to enhance customer satisfaction include expanding the range of services offered and utilizing existing train carriages for various purposes. The company recently transported 2,499.52 tons of billets freight from Djibouti to Indode Railway Station, underscoring its commitment to meeting the diverse transportation needs of the region.

Looking ahead, Abdi revealed plans for further expansion and innovation in both passenger and freight services, building on the company’s success in recent years. As EDR continues to evolve under Ethiopian and Djiboutian leadership, it remains poised to play a vital role in driving economic growth and connectivity in the region.