Ethiopia spending two million USD per day for transit costs

Emnet Assefa

Ethiopia consumes 16% of its foreign trade value which is about two million USD per day for transit costs, according to Ethiopian State Minister of Finance and Economic Development, Ahmed Shide.

Over 90 % Ethiopia’s total import export trade is carried out via the port of Djibouti.

Speaking at the African Review Meeting on the implementation of Almaty Program of Action, which was opened here this morning at the United Nation Economic Commission for Africa (UNECA), the minister said that high transit transportation cost is affecting landlocked developing countries’ competitiveness in the international trade.  According to him, local import- export firms in landlocked Ethiopia face a number of challenges that affect their competitiveness in the international trade including poor trade logistics which adds about 10% to their production cost. Shipping costs and cost of transit of goods from port to main land are also some of the burdens that these firms face, according to the Minister.

Ethiopia, one of the 16 landlocked countries in Africa, has two dry ports and heavily relies on ports from its neighbor Djibouti. “Agreements have been reached with Sudan, Djibouti and Yemen on port utilization, service to import- export cargoes and maritime transport cooperation,” according to Ahmed. He also indicated that high cost of charges, reduced free time for imported cargo, the untimely availability of empty containers of export cargos and inadequacy of facilities remain the major challenges that escalated Ethiopia’s total logistic cost for its import and export trade which affected the country’s competitiveness in the international market.

According to world Bank’s doing business 2013 report, the average costs of exporting a container for landlocked developing countries increased from 2220 USD in 2006 to 3000 USD in 2013 while transit developing countries are only paying 50 per cent of this cost.

Gyan Chandra Acharya, UN Under-Secretary- General and High Representative for Least Developed Countries, Landlocked Developing Countries and Small Island Developing Countries and States says that the highest transport costs are found in African and central Asian Land Locked Developing Countries (LLDCs) .

“This high costs continue to be greatest impediment to the countries’ trade competitiveness, equitable access, global markets and overall welfare of people,” Achary said, adding that LLDCs need to address most of their infrastructure gaps in order to address high transit transport costs and improve trade competitiveness.

 

Caption: Ahmed Shedi

Photo: addis Standard archive