16 March 2018

Ethiopia: Spiraling Connectivity Cutting Cost, Time

Ethiopia has been investing in bulks in transportation infrastructure, modes and services, with a great amount allocated to facilitate its import-export businesses. Due to this, the country's trade and industrial competitiveness is growing by leaps and bounds.

Industrial parks of various kinds have taken shape and entered into operation across the length and breadth of the country. Anchor investors have joined the parks, creating jobs to the youth, and contributing to the technology transfer ambition of the country.

Investors have kept flowing into the country. Only over the last six months, nearly 158 anchor investors have been awarded with licenses. Even recently, 72 foreign anchor investors made pre-investment tours, and are on pre-investment implementation. [Anchor investors are those with a registered capital ranging between 500 million USD--1 billion USD.]

It is, therefore, safe to argue that the transportation sector's efficiency has been one of the guarantors of investors, not to mention the incentive packages applicable to them.

No doubt, it is hard to imagine trade and investment competitiveness devoid of adequacy in transportation infrastructure, modes and services. Manufacturing products of the various factories of the industrial parks ought to penetrate into the international market. For this to be real, the transportation sector should be efficient.

More clearly, trimming the time and cost of freight transport as well as maximizing load and accommodation capacity of freight should go side by side with industrialization.

That is why government's expenditure on the sector has been growing from time to time. To mention, Ethiopian's eight cargo fleet, with six of them state of the art triple seven airplanes, increased its lifting capacity to over 350,000 tons annually. Its new cargo terminals, worth 150 million USD, have raised the annual accommodation capacity to over one million tons.

Sea transport is another success story in the discussion of the efficiency of transportation. Nearly two million tons of goods were transported over the last six months using this mode as well.

The 3.4 billion USD Addis-Djibouti railways is yet another important factor which makes investment in Ethiopia lucrative. It immensely promotes the nation's import-export by lifting 3,500 tons of shipment at a time.

That is not all, various highways, including trans-boundary ones, have been paved. The roads have contributed to facilitate linkage among industrial input suppliers and the industries.

Investors are also getting access to major international markets by using the road network. Thus, over 151, 568 tons of goods were moved by road to the Red Sea port of Djibouti only in the past months of the current Ethiopian fiscal year [July 08/2017-June 07/2018].

Suffice it to say, the improvement in the transportation sector compounded with the industrial parks expansion, reliable energy supply, human capital development, among others, would further help the country unleash its trade and investment potentials.

Anchor investors from around the world have, therefore, ample reasons in making Ethiopia their prime destination. Ethiopia has presented most, if not all, of the essential ingredients to a successful investment. Their investments could get quick and ample returns.

Still, the country is striving to make investment more profitable by interconnecting the country with major markets in the region and beyond.

There are plans to build railway that connect Ethiopia and Kenya and Ethiopia and Sudan, in one hand. Ethiopian's passenger and cargo-fleet are increasing both in number and diversity, on the other. New trans-boundary roads are under construction to connect Ethiopia with its neighbors--Ethio-Kenya and Ethio-South Sudan, for instance.

These and other endeavors can foster the intra-regional trade in Africa, which stands at 12 percent now while increasing Ethiopia's trade and investment competitiveness.

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