In response to complaints by Ethiopian exporters concerning tariffs when moving products to and from Ethiopia and Djibouti, the two countries have announced the formation of a Djibouti Transit Corridor Management Community which will attempt to simplify the export and logistical process.
Djibouti port also announced that it has discounted the price of using the Doraleh Multi-Purpose Port (DMP) starting the first day of 2018.
At a forum organized by the Ethiopian Maritime Affairs Authority (EMAA) and Djibouti Ports and Free Zones Authority (DPFZA) at Capital Hotel on Friday February 2, representatives speaking for exporters said they face many logistical challenges and expenses.
The Djibouti authority, which is responsible for overlooking logistical activity in their country, attended the first session to offer solutions and hear challenges from Ethiopian representatives related to the logistical process, and the Chairman, Aboubacar O. Hadi said that such sessions should be undertaken monthly.
One of the participants at the meeting who exported livestock said that Ethiopia has many resources and hence should be exporting more.
He went on to say that Djibouti ports are not taking full advantage of the resources Ethiopia has because the ports are not well utilized. Instead products are exported via informal trades at other ports in Somaliland, Puntland and other places. It has caused Ethiopia to not earn as much as it could from exports and Djibouti to lose part of the market.
“Modification to accommodate livestock at the old port of Djibouti has been delayed so we need your response to speed up the logistics process with the goal of reaching the potential Middle Eastern market,” he said.
The export tariff at Djibouti for livestock is a bit exaggerated and needs to be reconsidered, according to the participant.
Aboubaker Omar Hadi, Chairman of DPFZA, said that that the old port, (Port of Djibouti), is fully dedicated to exporting livestock until the new one is ready at Damerjog.
“We want accurate figures that indicate Ethiopia’s livestock market share and its potential market. This will help us utilize the new port by providing the proper capacity,” Omar Hadi said.
Our prices have not gone up in ten years, but people sometimes confuse the port tariff with the fees of freight forwarders, according to the Chairman.
“You can discuss what you pay to your agents and we will also make recommendations to the private sector about how to negotiate with them. We have an office in Addis and you can meet with the representatives about this,” Omar Hadi suggested.
Capt. Clarence Rodrigues, CEO of Doraleh Container Terminal, who presented a report about port operations at the forum, told Capital that the exporters have to focus on the process and artificial price increases that are imposed for service by freight forwarders.
“Our operation is very clear and we haven’t increased the price in the last ten years and we have even issued E invoices so they can see directly what the port is doing,” Capt. Clarence said.
Fassil Taddesse, President of the Ethiopian Textile and Garment Association, said that the textile and garment sector is very competitive so the Ethiopian exporters have to take price into consideration because the manufacturers are not making a lot of profit due to the port handling charges. If logistical charges are high they won’t be able to stay in business. “Your support is important,” he said.
“If Djibouti is very expensive we will use other ports,” he added.
In his response Omar Hadi underlined that there is no customs duty on Ethiopia’s exports or imports.
Omar Hadi advised that exporters should not accept higher fees than the normal charges imposed by the freight forwarders in Djibouti. He said it is possible they may be exaggerating the charges.
One issue raised by the representatives of the freight forwarders was the difference in business days between Ethiopia and Djibouti. (Djibouti’s work week is Sunday-Thursday). They say this negatively impacts their business. The logistics chief in Djibouti acknowledged the problem, stating his concern that Djibouti is only working 4 days with Ethiopia and that they are looking into the need to adopt international weekends to resolve this issue. However, he reminded the stakeholders that the port operates seven days a week and 24 hours a day.
Experts in the Ethiopian logistics sector said the major problems with regard to logistics occurs in Ethiopia. A freight forwarder who requested anonymity told Capital that the Ethiopian officials and stakeholders have to use innovation and hard work to become competitive as opposed to simply imposing regulations.
He criticized the government’s decision, saying that monopolizing the majority of the operations under the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), is the main problem. This has been a common concern of people working in logistics in Ethiopia.
He believes that the container handling should be managed by freight forwarders as opposed to the state enterprise, which has to focus on the shipping operations. He said that the price escalation for exporters is mainly due to the government’s policy.
“Inefficiency from the Ethiopian side is damaging the sector. For instance if the seal number of one of the containers has a problem, the cargo can’t move to Ethiopia. This consumes the country’s hard currency because there are demurrage and storage fees until the error is corrected, but it would be better if the cargo moved to Ethiopia and the correction was made in the country,” an expert in the freight forwarding sector added.
He advised that stakeholders who handle logistics should look at other landlocked countries in the continent and evaluate their experience. With regards to price he said the port charge is set by the government of Djibouti; while transport fees depend on the market.
“It is a free market so the agents have to charge the rate the market demands but the government has to facilitate services for the private sector so most of the cargo operations can be handled locally,” he added.
He argued that the government has to facilitate a yard,land or a lease to handle containers and stuffing locally as opposed to Djibouti.
He agreed that the price increase and cheating were major problems from freight forwarding companies in Ethiopia and Djibouti, but he argued, that can be easily solved if the operation includes every actor in this concept. “Sometimes agents purposely delay the containers at the demurrage and push the exporter to pay an additional charge for loading the vessel,” the sector actor explained.
“The government has stated that it would provide a subcontract or partnership in the multimodal operation but it is not yet operational, a policy that improves the sector has to be applied as opposed to just proposing,” the freight forwarders that Capital interviewed said.
The international trend in the logistics sector has to be adopted if the government wants improvements and efficiency with a competitive price, one stakeholder said.
“More partnership with the private sector is better than the current status, otherwise the industry will never improve,” the representative argued.
Ahmed Shide, Minister of Transport, also said that the major concerns are directly related with efficiency and tariffs and joint discussions will bring about solutions.
“We need global competitiveness to enhance exports,” the Minister said.
Mekonnen Abera, head of EMMA, said that a committee that includes all stakeholders from the government and the private sector shall be set up to look into all the problems raised.
“Everything will be solved by following the study’s recommendations. These will be carried out by the community along the corridor,” he told Capital.
According to Mekonnen, the community will include ports in Djibouti, customs officials of the two countries, logistics regulatory bodies of both, logistics service providers and customers represented by their associations.
In his closing remarks, Mekonnen said “it will implement the solutions recommended in the study that will take place under the oversight of the community,” he told Capital.
Omar Hadi told the media that the community will follow the efficiency in the corridor and address any issues regarding customs and transit of goods between Djibouti ports and Ethiopia.
In the discussion several issues were also addressed from both sides of the private sector and the regulatory bodies.
Omar Hadi told media that the tariff at the port handling was the same for the last ten years. “We are trying to monitor what the private freight forwarders are charging. Because the service they are providing for the customers is just documentation, they are not handling the containers so it is not normal to charge a very high price, sometimes up to USD 300 per container,” he said. “That is why we regulated it as of last year and reduced to USD 60 per container,” he added.
Omar Hadi stated that such joint discussions with customers will take place every three months.
Currently DCT is connected with the railway which recently commenced operation to connect central Ethiopia with ports in Djibouti.
Capt. Clarence told Capital that the distance of the DCT project is more than 3 km and the cost, which is over USD 50 million is being covered by the port owner.
Omar Hadi said that railway linking DMP to Ethiopia will be fully finalized in the coming month.
CCECC, which constructed the project in Djibouti and part of the line in Ethiopia, is the contractor for the lines that are linked with the ports.
Djibouti is the major gateway for Ethiopia’s international trade. They have been expanding their facilities and are preparing to launch even more new projects.
Doraleh Ports reduces its price, task force formed to reduce logistics costs
Contraband trade continues to vex ERCA
Members of parliament are insisting that officials from the Ethiopian Revenue and Customs Authority (ERCA) make the list of people involved in the contraband business public. However, no response to the request was given. On Tuesday January 30 during the regular session the Authority appeared with its representatives to deliver their first half year performance report. Moges Balcha, Director General of ERCA, talked about what they have been doing to collect more taxes and clamp down on tax cheats.
He pointed to the National Contraband Trade Controlling Command Post formed to battle contraband.He said that in the first six months of the budget year 331.6 million birr of smuggled goods were seized. However, this is a 10.5 percent reduction from the preceding year.They also confiscated 105 million birr worth of goods that people were trying to smuggle out of Ethiopia illegally, an increase of 121 percent from the same period last year.
A week ago in its report the Ministry of Trade announcedthat even though the national Command Post stretching from the federal to the Kebele level was established, illegal border trade still continues to be a major challenge and hinders the country’s hard currency earnings.
Many members of parliament remained concerned about contraband trade.
“We have heard several times about contraband at the sessions at the parliament we want to know how these people are engaged in the business and what actions you took to stop them,” one of the parliament members asked the executives of ERCA.
Meanwhile the people’s representatives were eager to know about those that they called contrabandists but the executives of ERCA retreated. “It will be disclosed when the time comes,” ERCA officials said.
Moges reported that in the last fiscal year there were 19,557 corporate business income tax payers. However, only 65.4 percent ended up paying taxes. The rest either reported a loss or no income.
In the first six months of this fiscal year there were 18,178 VAT registered businesses. Of those only 32 percent ended up paying taxes, while 42.8 percent reported they were owed a refund and 25 percent said they owed no taxes or qualified for a refund.
“The customs area is also the same based on a random study, only 80 percent of the imported items came under invoice,” he said.
Moges said that the culture poses a very big problem because paying tax is not valued. Ethiopia is one of the countries with the lowest tax collection compared with its GDP.
Currently, ERCA has a system to review those who reported nil or a refund on their monthly vat report and has identified that most made false statements, according to the director’s report.
During the first half of the budget year ERCA had the goal of collecting 109.4 billion birr but it collected 83 percent of that amount, or 91 billion birr. The achievement is an increase of over 12 percent compared with the same period last year.
AU Summit attended by 49 Heads of State, over 10,000 Delegates
Ethiopia has successfully hosted the 30th Ordinary Session of the African Union, which was attended by more than 10,000 delegates, 49 heads of state, the UN Secretary-General, and Arab League officials, according to the Ministry of Foreign Affairs.
During his weekly briefing, Foreign Affairs Spokesman Meles Alem said the session was peacefully conducted due to the strong commitment of the Ethiopian government and the public.
Close to 680 journalists from all over the world also covered the event.
According to Meles, the capacity exhibited by Addis Ababa as Africa’s center for diplomacy and political affairs was demonstrated by the successful conclusion of this summit.
Ethiopia has also played a significant role in the success of AU’s agenda by forwarding constructive ideas which contributed to the amazing summit, he added.
The country has achieved tangible results from the summit in diplomatic relations, image building, political and economic achievements, the spokesperson stressed.
Ethiopia’s contribution to peace and security in Africa and the entire world was also recognized, the spokesman stated.
Meles also pointed out that many countries have shown an interest in working with Ethiopian Airlines to strengthen their aviation industry.
The 30th Ordinary Session of the African Union was held from January 22-29 in Addis Ababa, Ethiopia.
In a related development, Meles also visited Capital’s headquarters on Wednesday January 31, located around Rwanda Embassy and held talks with the newspaper’s Managing Editor and Editor-in-Chief.
Promoting domestic tourism, engaging children with the environment
With the aim of creating awareness about the importance of domestic tourism and the need to teach children why it is important to protect and learn about their environment, Travel Ethiopia launched a new project.
The company, a longtime player in the tourism sector with almost 25 years of existence, stated that it will be carrying out several activities to help increase domestic travel by locals and expats as well as work with different schools so that children can learn more about their country and environment.
“We launched this project on January 15th, 2018. One of our aims is to give the opportunity for children and students to learn about the environment, to know about their surroundings and their country. So this week on Thursday, we took our first batch of students from the Edget Behibret School to the Born Free animal sanctuary. These are students that do not have the opportunity to visit such places because they live in harsh economic conditions,” said Samrawit Moges, Managing Director of Travel Ethiopia.
Travel Ethiopia started to work with Edget Behibret as it is a school for many vulnerable children that come from poor families. On the trip the students learned about the importance of protecting the environment, limiting plastic usage as well as the need to keep surroundings free from trash.
“In the Rotary club of Addis Ababa West, which I belong to, there are two Rotarians that carry out school feeding programs. One of the schools where this program is implemented is Edget Behibret; so that is why we decided to work with the children and give them the opportunity to visit the Born Free sanctuary. It was a really heartwarming experience because none of them have actually seen a lion for example. This is true for most children in general. It was an exciting trip,” Samrawit said.
Now Travel Ethiopia is working on collaborating with different institutions such as banks and insurance companies to preach and promote this idea of traveling within the country. “We plan to do this with Castel Winery as well. Most of these companies organize employee retreats, but usually they don’t go somewhere where they can learn something about the environment or history. We hope to change that,” she underlines.
Samrawit says that through the project she plans to reach all 300 students at Edget Behibret with the opportunity to visit the Born Free Sanctuary as well as other places.
“The trip costs are covered by us given the circumstances of these students. We cannot do this for everyone obviously, for schools that cannot afford to send the children on trips we plan on hopefully connecting them with institutions that would sponsor the trips.”
“We all need to collaborate to bring awareness about domestic travel. It shouldn’t be only foreigners that come here and visit places; we need to do this as well. It’s a very important part of tourism revenue and yet not a lot of focus is put there,” Samrawit asserted.
She also pointed out, on the next trip that will be organized, students will learn more about indigenous plants in Ethiopia and will be part of a seedling planting activity.
