ADDIS ABABA: September 04, 2018. The Ethiopian Investment Commission (EIC) has lifted restrictions on foreign investment (FDI) in the country’s logistics industry.
In a statement, the EIC said it would allow FDI in bonded warehouses, consolidation and deconsolidation services as well as joint ventures of up to 49 percent by international logistics service providers in order to develop a thriving and productive cluster to serve as another pillar of economic growth.
Explaining the rationale behind the revision, it said there had been no “significant improvement in cost or speed to market by the logistics sector,” adding the “country’s low performance against its peers under international benchmarks is a key testament in this regard.”
The EIC pointed out that policy and regulatory barriers barring the participation of foreign logistics companies in Ethiopia had imposed serious strains on the export manufacturing sector due to the lack of capital and technology.
Last month Ethiopian Airlines Group CEO Tewolde Gebremariam pre-empted the EIC change of rules by announcing a joint venture between Ethiopian Airlines Cargo & Logistics and DHL to set up a new company owning 51 percent and 49 percent respectively.
At the time Gebremariam said DHL was already a major customer of the airline generating US$50 million a year and the new company would focus on serving manufacturers in new industrial parks and major export centres.
Noting Ethiopia has an inefficient and expensive logistics sector, Tewolde said industrialization without equivalent global standards in logistics would lead to failure. “We believe that the logistics sector is the dragging force. It is under developed. That is why we are going to enter the logistics service in Ethiopia.”
During its 2017/2018 fiscal year, Ethiopia attracted more than US$3.7 billion in FDI according to the EIC. Commissioner Belachew Mekuria said the country had managed to “lure the stated amount of FDI, despite the multi-faceted challenges the country has faced”.
Citing a lack of foreign currency and “unrest” in some parts of the country, Mekuria noted the EIC had issued licenses for 275 foreign projects worth US$5 billion with China, India and Turkey the leading investors. According to the Ethiopian ministry of Foreign Affairs, China has invested US$4.0 billion in 400 projects.
(Pictured: Ethiopian Cargo took delivery of its seventh B777-200 freighter on September 03.)
