Liberalizing the logistics sector the Ethiopian government is to open up the multimodal and dry port sub sectors.
According to the new strategy of the government selected private movers will be allowed to engage on the business for both dry port operation and multimodal scheme.
Mekonnen Abera, Head of Ethiopian Maritime Affairs Authority (EMAA), said that selected private sector actors will be allowed to be involved in the sector. But he did not elaborate the criteria of the selection.
“At the current level we will open the two sectors on limited steps and they will be allowed to operate independently unlike the previous draft directive that proposed the operation to be run under ESLSE,” he said.
The previous directive had been put in place different criteria that will be included on the multimodal operation. For instance the oldest draft document indicated that a company should have 5,000 square meters of transit plot and a capital of 10 million birr. Mekonnen told Capital in the near future the new approach will be implemented. He said that local private actors will be part of the new opening up. However by default foreign investors will be involved since they have a right to invest up to 49 percent on local businesses.
The multimodal scheme includes almost majority import items that eroded the business of the private actors.
During the establishment of Ethiopian Shipping and Logistics Services Enterprise (ESLSE), the state owned logistics enterprise, in 2011 by the amalgamation of the former Ethiopian Shipping Lines (ESL), Ethiopian Maritime Transit Services (EMTS), Dry Port Service Enterprise (DPSE), and Comet Transport the enterprise become the sole multimodal and dry port operator in the country.
The government in its recent reform plan disclosed that it will open some of the mega public monopoly businesses for the private sector and foreign investors. The logistics sector is one of the areas that the government targets to open for local and foreign investors.
As per the government decision the involvement of foreign investors on the logistics sector is up to 49 percent.
So far CMA CGM and Bolloré Africa Logistics, both French companies, have agreed to get the maximum share on two local logistics companies.
Since the government introduced the multimodal scheme (land, sea or road transportation services) under ESLSE monopoly private actors expressed their disappointment about the exclusion of them despite they have a capacity to run the business.
The logistics sector of Ethiopia is one of the bottlenecks for the economic growth. The government has been trying its best to modernize the sector but the change is not as required.