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April 2017 · Africa

Upcoming feature: ETHIOPIA - Transport

Interview with H.E. Mr. Ahmed Shide, Minister of Transport, Ethiopia

Prisma Reports (PR): Could you talk about the vision of your government and how it translates; how are you transforming transportation and what are your top priorities as of today, in terms of transport?

H.E. Mr. Ahmed Shide (H.E.A.S.): The vision of our government and of Ethiopia is to achieve middle-income status of the economy in approximately ten years. We have a compliance development policy. We follow a developmental democratic model of development with our state facilitating a lot of investment in infrastructure, human development and human skill formation, as well as facilitating private sector developments to flourish the economy. So far, the economy has been achieving fast economic growth; over the last twelve years it has been growing on average in double digits, with significant outcome on human development, poverty reduction and implementation. As you know, Ethiopia is a country of more than 100 million now, which is especially very wide, neighboring the horn of African and East African countries and therefore, the market opportunities this growth is bringing to Ethiopia are going to be tremendous.

Transport plays a crucial role in this development process that Ethiopia is undergoing. We have invested a lot in road sector, connecting the center to the periphery; the center to the port of Djibouti, our neighbor. We have invested in the railway, which we are working on to make it fully operational. As you can see, Addis is having light rail system now. We are also a country that invested a lot in airports. We have more regional airports than any other African country and Ethiopian Airlines is growing very fast, with significant connectivity in Africa, as well as in Asia, Europe and North America, expanding its fleet size. Thus, transport is one of the key areas that the government has been investing in.

The most important issue is to continue with road development here in Ethiopia. The development of toll roads is our next major priority, particularly connecting the center to the major economic corridors and, mainly, to Djibouti port. We have invested in Addis Ababa – Adama expressway toll road and are expanding it down to Hawassa, down to Dire Dawa and up to Djibouti, so that the connectivity becomes facilitated and enhanced.

Currently, we are aggressively looking at improving the logistics efficiency. Although we have invested a lot on infrastructure in terms of transport, we still have to work on systems, warehousing, customs clearance, banking facilitations; when it comes to manufacturing, exports and imports. We need to reorganize ourselves in terms of facilitating the logistics activities because logistics is not only transport; it is a lot of actors working together to facilitate the exports, imports and distributions. We are going to address it.

We are going to invest in Mojo as a logistics hub, which is going to be connected to the railway and road. This will be an important mode for distribution in Addis Ababa region, as well as to other parts of the regional government. Therefore, we will continue to invest here because we are spacious, landlocked country, very populous and growing at a fast pace. The issue of efficient maritime connectivity is very important. We have been working with Djibouti in terms of railway and road connectivity. We are going to have two roads connecting us to Djibouti when we finish the railway line. It is going to give us a major boost in connectivity to Djibouti port and Djibouti is also investing a lot on different port infrastructure, depending on the growing demand that Ethiopia is generating.

We also work with other neighboring countries in terms of having additional maritime getaway capacity around us. We partly use port of Sudan; we have been working with Somaliland Authorities on the development of Berbera airport, which will serve us as an additional maritime getaway. However, Djibouti is going to continue to be the main artery of Ethiopia’s maritime getaway.

(PR): Which are the main projects that you are most proud of and you think best represents the development of your country today?

(H.E.A.S.): The extensive road infrastructure we have built in the country is the major transport infrastructure that we are proud of. The highways that we are developing connecting Addis Ababa to origins in different areas has facilitated significantly the goals we are achieving. In addition to this, the railway is going to be a game changer. It is a mega project; very extensive and involves working with Djibouti too. We invested together with Djibouti, and it is one of the biggest regional projects we have undertaken. The headquarters will be based in Addis Ababa but will go all the way up to Djibouti Port; a little more than 700km standard-gauge railway line. In the century that we are living in, the largest railway infrastructure is this one we are now completing and that we are extremely proud of. Making it fully functional to contribute to the logistics efficiency of the country, as well as to facilitate the mass production and mass movement of goods; agricultural, industrial, mineral products, etc. It is also connecting us to our neighbor Djibouti with maritime capability, therefore it is really going to make the competitiveness of Ethiopia much stronger. That is massive undertaking which we are extremely proud of and which we have learnt a lot from. The railway line is an integrated holistic area of development.

We will also invest in Industrial Parks development along the railway. We are going to have industrial parks in Dire Dawa, Awash, Adama and Addis Ababa, which will all be served by this railway line. The Hawassa Industrial Park will also be served by this railway because Mojo is going to be the major hub to work as an interface between the road and rail transport system. That is our major achievement.

Concerning the Ethiopian Airlines and the whole airport development in the country, Addis is becoming a hub when it comes to air connectivity, further boosting the capacity of our country to connect with Africa and the rest of the world. For example, from now on, exports have been facilitated by Ethiopian airlines; the demand for cargo is huge and therefore our airlines, along with their capacity of the Addis hub, is a major asset that we are very much proud of and that we must continue to grow. As you know, Ethiopia is landlocked, therefore air connectivity also boosts transport capability significantly. All modes of transport are really important for Ethiopia; air, sea connectivity, land transport by rail and road, all are contributing to this development.

(PR): Is economic integration a top priority for you today or would you say it is as important as developing the network inside the country?

(H.E.A.S.): We believe the only and most sustainable way to continue to develop Ethiopia as a country is through regional integration. We are at the center of Eastern Africa and in the Horn of Africa, with a massive population in relation to other countries. I think we are the largest in terms of population and territorially also one of the biggest in the region, neighboring with a lot of countries.

Regional integration will be important on three dimensions: most of the people who live along the boundary areas, whether in Ethiopia or in neighboring countries, are the same; in terms of language, culture, religion, etc. Even some of the traditional leaders are in Ethiopia are also leaders to people in other countries. The boarders we have is the result of history of our state formation. Therefore, the population in Djibouti, which is speaks Somalian and Afar are both also present in Ethiopia. We have the largest Somali community here. It is the same when it comes Kenya; we have Boronas who live in Ethiopia and in Kenya. In Gambella we have Anuak, Nuer, which is also in South Soudan. Therefore, people-to-people relation in our region is crucial; as a government and country, we have a vision to create larger connectivity between people of similar culture, language, etc. As a result, transport has to facilitate all this.

Secondly, economic development requires regional integration. People have to trade what they produce and connectivity has to be facilitated for economic growth. The best and most sustainable way to grow is through shared growth and regional integration. That is why Ethiopia invests in highway connectivity to Kenya, Sudan, South Sudan, Djibouti, Somaliland and Somalia. We need to have more understanding between regions. Peace building is going to be very important. Therefore, transport infrastructure connectivity will facilitate this building in the region and through that, also political integration. For us, investing in regional integration projects via transport linkages; rail, road, air connectivity is all very important for the sustainability of our growth and the collective growth in the region. This is how we view it.

PR): Who are the ones investing in transport today, in Ethiopia? How are you opening up to international investors and are US investors interested in the transport of your country today?

(H.E.A.S.): We are open to all international investors, from all corners of the world. We need to be successful in attracting diversified sources of investment into Ethiopia. We have a lot of investment from Europe, North America and Asia, however when it comes to the potential of the US, we need to do more. We need more investors from North America into the economy and we are working on it through our investment promotion activities via our embassies and other channels of communication. So far in infrastructure, the major investor is the Government.

We also have private sector participation in infrastructure, but in terms of hard infrastructure it is mainly the government, since it is considered a public good and the role of the private sector is minimal when, particularly, you are in the current stage of development. Now, the Minister of Finance is engaged in developing a regulatory framework, a formulation of PPP law. Once that law is in place, we are going to attract investment into infrastructure of various areas, so we are open to that and we will look to see if there are any potential investors related to transport, or so. The particular sectors that will open will be decided by the law which will be formulated.

The major providers of the transport service in Ethiopia is the private sector. We have government involvement in terms of mass public transport such as the railway, as well as buses in the urban areas in Addis Ababa and intercity highways. For example, the Djibouti Corridor, the main operator of transport service providers is not the Government but the private sector. The Government only has one company, Ethiopian Shipping Lines and Logistics Enterprise, which has a sizeable fleet which are not big and operate in Addis - Djibouti.

In the air market, it is mainly Government owned Ethiopian Airlines. We also have a few private airlines that do some charter servicing; National Airways and a few others. We have approximately 16 airlines but most of them are very small. They do some charter services for medical, touristic and services purposes.

In logistics, we have private sector participations and I can see there is even more room to work with the private sector. We are working on a logistics strategy to see how we can further develop the sector to bring, particularly, efficiency of the facilitation. The facility development in terms of the fleet size and storage facilities is important.

In addition to that, coal chain logistics is going to be important as well. Our main source of development is agriculture, so agro-processing is one area where the Government is investing; agro industrial parks. All the developments require coal chain logistics, which we are currently getting through Ethiopian Airlines. The horticulture flower sector is now exported to Europe, mainly, and sometimes to the Middle East, however we need to develop more when it comes to fruits and vegetables. By using the railway via Djibouti we can export to Europe, Middle East and Asia, which can only be facilitated by having coal logistics along the railway channel. There are a lot of private sector roles that can be developed in this area.

(PR): What would you like the readers to think about, as of 2017, when reading our report on Ethiopia?

(H.E.A.S.): Ethiopia is an emerging economy with significant market potential; strategically located in the region and therefore it can be one of the best destinations in Africa for FDI. It has a stable political and security environment. Regulated regime is very much predictable and the Government has now invested a lot on infrastructure and in terms of administration, we have come a long way in regards to facilitating private sector investments. Now, it is time for private sector developments to really move on to develop the economy. Both domestic and international private sector will be crucial to sustain the growth. The opportunities are very big, there are diversified business opportunities in Ethiopia with the country itself having a big market internally, with a growing population of more than 100 million. We are in the center of the region, in the Horn of Africa, therefore there are a lot of opportunities to export. It is an ideal place to locate in regards to market opportunities of diversified sources of investment opportunities.