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China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
Image from The Africa Report
Ethiopia has high hopes for manufacturing and export products, but the country will not be competitive until it solves its logistics problems. To this end, Ethiopia began to liberalize the logistics department.
In January, it emerged that Ethiopian exports had once again disappointed, undershooting the government's six-month target of $1.96bn by nearly 40%. It was a sobering reminder that, for all Ethiopia’s rapid, state-led growth over the past decade, exports have consistently shown few signs of improvement.
"Logistics is the number-one bugbear for anyone in exports and manufacturing," says Graham Parrott, head of strategy at Ethiopia Investments Limited, which invests in local businesses. His words are echoed by many exporters, who say this challenge is rivalled only by the shortage of foreign exchange.
The figures are telling. To trans-port a 20ft container of garments from Ethiopia to Germany costs 247% more than from Vietnam and 72% more than from Bangladesh. In 2016, Ethiopia scored 2.37 in the World Bank’s Logistics Performance Index- significantly lower than neighbouring Uganda, which is also landlocked. The country ranked 159th out of 190 in the World Bank’s Doing Business index in 2018; Uganda came 127th.
In key export sectors, such as textiles, speed is essential to competitiveness. Slow and expensive imports, meanwhile, are bad for all businesses. According to Daniel Zemichael, chief executive of Freighters International, a local logistics company, goods take an average of 20-30 days to reach an Ethiopian customer from the port in neighbouring Djibouti. A 20ft container costs an average of $2,660 to import from its source to Ethiopia. "This is probably one of the most expensive corridors in the world," says Serge Tiran of Massida Group, another logistics firm.
The government has made improving logistics a priority. A $2.5bn, 750km railway connecting Addis Ababa with the port in Djibouti launched last year and should cut a three-day journey down to 12 hours. In an ambitious road-building programme flagship projects include a 200km expressway connecting Hawassa, home to the country's largest industrial park, with the capital.
Two years ago, the government signed a $150m World Bank project to transform Mojo, a poorly equipped and heavily congested dry port near Addis Ababa that processes more than 70% of imported containers, into a state-of-the-art logistics facility. Meanwhile, Addis is helping a Dutch consortium, Flying Swans, to set up a cold chain along the railway to the coast.
