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Transforming Ethiopia's Logistics System

Published on: 06-Aug-2015

As a land-locked country, Ethiopia relies on neighboring Djibouti for the import and export of goods through the port of Djibouti. An urgent need to transform the logistics between these two countries has been identified by all parties involved, including government officials, transport authorities, and clients, due to a relatively low reliability of services which is characterized by comparatively high prices. Drastically improving the competitiveness of the Ethiopia-Djibouti logistics system has therefore been identified as a fundamental step in sustaining Ethiopia’s growth, and this will necessarily require a closer cooperation between Ethiopian and Djibouti systems and authorities. Radical improvements will be needed in order to increase competitiveness, and the urgency of this becomes clear when we consider that transporting from the port of Djibouti to Europe currently costs twice as much as transporting from South Africa to Europe.

With the Netherlands being an important trade partner for Ethiopia, and due to the Netherlands’ experience in hosting one of the most competitive European ports, dialogue between Ethiopian, Djibouti, and Dutch officials was identified as a key move in improving the Ethiopia-Djibouti corridor’s attractiveness for importers and exporters. Therefore, a logistics exposure visit to the Netherlands was requested by Ethiopian, Djibouti, and Dutch authorities, which the Netherlands-African Business Council (NABC) organized in Rotterdam from the 2nd to 6th of February earlier this year.

The exposure visit comprised many opportunities for exchange, including a roundtable with the private sector and branch organizations. As one visiting official said, “We have come together, not to defend our system, but to identify the problems and come up with ways to improve”. Ethiopian and Djibouti authorities welcomed criticism and suggestions from existing and potential investors, which furthermore pointed at the various opportunities that would open up as a direct result of improvements in the Ethiopia-Djibouti logistics system. One such example is Olympic Fruit, as a representative explained how improving the logistics aspects of imports and exports would make all the difference in their sector’s decision to invest in Ethiopia. Ethiopia has a grand competitive advantage due to optimal weather and soil conditions for the cultivation of fruit, and facilitating the export process would allow Ethiopia to be among the leading countries in fruit export.

Considering the potential of the Ethiopian economy, as well as the strategic value of the Ethiopian-Djibouti corridor, authorities expressed their absolute commitment to improving their logistics system. Efforts will be directed towards improving the customs process between Ethiopia and Djibouti, which will be directly reflected by higher service levels and more competitive prices.

Visit an overview on Ethiopia here.

Author: Celeste Flores, Netherlands-African Business Council

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