Analytical Work on Ethiopia's Transport Sector

Analytical Work on Transport Sector in Ethiopia:
Growth, Competitiveness and Regional Integration
1st Draft Final Report
Jos Enrique Prez

ALG
December 4, 2014
Table of Contents
PART A. TRANSPORT ASSESSMENT ..........................................................................................................11
1
Economic and Poverty Reduction Contributions by Transport Sector ......................................................12

1.1
Introduction ...................................................................................................................................12
1.2
Socioeconomic hints on Ethiopia ..................................................................................................14
1.3
Ethiopian economy .......................................................................................................................18
1.4
Ethiopian production .....................................................................................................................21
1.4.1
Agriculture .................................................................................................................................21
1.4.2
Livestock farming ......................................................................................................................30
1.4.3
Mining industry..........................................................................................................................32
1.4.4
Manufacturing ...........................................................................................................................33
1.5
1.5.1
Product analysis .......................................................................................................................39
1.5.2
Commercial partners ................................................................................................................41
1.5.3
International corridors and border posts ...................................................................................43
1.6
Transport sector contribution to economic growth and poverty reduction ....................................50
1.6.1
The role of infrastructure in poverty reduction ..........................................................................50
1.6.2
Analysis of previous studies relating the transport sector and poverty reduction in Ethiopia ..52
1.6.3
Transport sector and poverty reduction. Direct approach ........................................................52
1.6.4
Transport sector and economic growth. Indirect approach. First findings................................53
1.6.5
Transport sector and poverty reduction. Future vision .............................................................55
1.7
2
Ethiopian foreign trade and trade facilitation ................................................................................38
Key issues ....................................................................................................................................57
Transport Sector Developmental Status ...................................................................................................59

2.1
Introduction ...................................................................................................................................59
2.2
Road transport ..............................................................................................................................59
2.2.1
Introduction ...............................................................................................................................59
2.2.2
Road infrastructure ...................................................................................................................60
2.2.3
Road transport demand ............................................................................................................65
2.2.4
Road infrastructure supply vs. demand ....................................................................................72
2.2.5
Road safety and overload traffic ...............................................................................................74
2.2.6
The road haulage services sector ............................................................................................77
2.3
Maritime transport and international logistics ...............................................................................80
2.3.1
International maritime and logistics infrastructure ....................................................................80
2.3.2
International transport and logistics services to Djibouti (DJI corridor) ....................................88
2.3.3
Customs and border post .........................................................................................................97
2.4
Railway transport ..........................................................................................................................99
2.4.1
The Ethio-Djibouti railway line ..................................................................................................99

2.4.2
Ethiopian Railways Corporation and the new national railway plan .........................................99
2.4.3
Preliminary demand estimations for new railway network .....................................................102
2.5
2.5.1
Airport network........................................................................................................................105
2.5.2
Carriers ...................................................................................................................................107
2.6
3
3.1
Development policy context ........................................................................................................112
3.2
Current transport policy context ..................................................................................................113
3.2.1
Policy and Strategic Planning in Transport Sector .................................................................113
3.2.2
Policy and Strategic Planning in Transport Sector: current and foreseen documents ...........114
Institutional framework ................................................................................................................117
3.3.1
Road transport institutional framework ...................................................................................118
3.3.2
Rail sector institutional framework ..........................................................................................118
3.3.3
Aviation sector institutional framework ...................................................................................118
3.3.4
Maritime sector institutional framework ..................................................................................119
3.3.5
Other institutions with impact on transport sector ..................................................................119
3.3.6
Institutional coordination .........................................................................................................120
3.4
Key issues ..................................................................................................................................110
Policy and Institutional Regimes .............................................................................................................112
3.3
Air transport ................................................................................................................................105
Key issues ..................................................................................................................................121
Financing the Transport Sector ...............................................................................................................123

4.1
Introduction to the financial status of the transport sector ..........................................................123
4.2
Analysis of investments and maintenance .................................................................................126
4.2.1
Ethiopian Civil Aviation Authority ............................................................................................126
4.2.2
Ethiopian Airports Enterprise ..................................................................................................126
4.2.3
Federal Transport Authority ....................................................................................................127
4.2.4
Ethiopian Roads Authority ......................................................................................................127
4.3
Financing mechanisms ...............................................................................................................132
4.4
Key issues ..................................................................................................................................134
Regional Context and Strategy ...............................................................................................................135

5.1
Regional integration context .......................................................................................................135
5.1.1
Introduction to Regional Integration........................................................................................135
5.1.2
RECs in Eastern Africa ...........................................................................................................136
5.1.3
The Tripartite Free Trade Agreement .....................................................................................139
5.1.4
The role of AfDB in Eastern Africa..........................................................................................140
5.1.5
Infrastructure Planning Documents for Regional Integration .................................................141
5.2
Current Ethiopian Regional Strategy ..........................................................................................145
5.2.1
Ethiopias Regional Integration Policy ....................................................................................145
5.2.2
The Regional Economic Integration of Ethiopia .....................................................................148

5.2.3
Regional Foreign Trade ..........................................................................................................148
5.2.4
Transport and Logistics Indicators ..........................................................................................154
5.2.5
Diagnosis of Ethiopias Regional Integration. Major Gaps .....................................................158
5.3
Recommendations to enhance the regional integration strategy ...............................................160
PART B. TRANSPORT STRATEGY .............................................................................................................162

6
Diagnosis of the Transport Sector ...........................................................................................................163

6.1
Transport corridors and regional transport markets ...................................................................163
6.2
General transport needs and gaps .............................................................................................171
6.3
Gaps by corridor .........................................................................................................................173
6.3.1
Central Eastern Corridor .........................................................................................................173
6.3.2
Southern Corridor ...................................................................................................................174
6.3.3
Central Western Corridor ........................................................................................................175
6.3.4
North-Western Corridor ..........................................................................................................176
6.3.5
Northern Corridor ....................................................................................................................177
6.3.6
North-Eastern Corridor ...........................................................................................................178
New Transport Strategy Ethiopia 2025 ...................................................................................................179

7.1
What can transport and logistics do for Ethiopia? ......................................................................179
7.2
Drivers for an efficient and competitive transport system...........................................................180
7.3
Transport Strategy for Ethiopia 2025..........................................................................................181
7.3.1
Project vision 2025 .................................................................................................................182
7.3.2
Strategies and main policies ...................................................................................................184
7.4
Action Plan..................................................................................................................................186
7.4.1
Proposals and recommendations ...........................................................................................186
ANNEXES ......................................................................................................................................................208
8
Pre-feasibility study of new/enhanced regional road linking South Sudan, Ethiopia and Kenya ............209
8.1
Introduction: Why this new regional road link? ...........................................................................209
8.2
Objectives that the new road link will have to accomplish .........................................................211
8.3
Alternatives .................................................................................................................................211
8.3.1
Alternative 1. Omorate South .................................................................................................212
8.3.2
Alternative 2. Machi ................................................................................................................213
8.3.3
Alternative 3. Omorate North ..................................................................................................213
8.4
9
Multicriteria Analysis Preferred Alternative ..............................................................................214
Reviewed documents ..............................................................................................................................217
10
Field work and interviews developed during the project ....................................................................220
11
Additional tables and information .......................................................................................................221

11.1
Main Ethiopian Cities and Towns ...............................................................................................221
11.2
ECX warehouses ........................................................................................................................222

11.3
Ethiopian External.......................................................................................................................223
11.3.1
By border post ....................................................................................................................223
11.4
Historical traffic counts in selected road links .............................................................................224
11.5
Details of Addis Ababa Djibouti Railway Project ......................................................................225
Index of figures
Figure 1: Population and GDP per capita in selected African countries in 2012 .............................................14
Figure 2: Ethiopian population 2002-2014 .......................................................................................................15
Figure 3: Population distribution by administrative zone and main urban centres (2012) ...............................15
Figure 4: Distribution of population in Ethiopia by region (2012) .....................................................................16
Figure 5: Ethiopian population projections 2014-2036 .....................................................................................16
Figure 6: Ethiopian GDP and GDP growth evolution 2000 - 2012 ...................................................................18
Figure 7: GDP structure for the fiscal year 2012/ 2013 ....................................................................................19
Figure 8: GDP and GDP growth evolution and projections ..............................................................................19
Figure 9: Distribution of agriculture production by type of primary crop, million tonnes (2012 / 2013) ............21
Figure 10: Distribution of total agriculture production by zone (2012) .............................................................23
Figure 11: Distribution of major crops production of grains (up) and fruits and vegetables (down) by zone (2012)
..........................................................................................................................................................................24
Figure 12: Distribution of major crops production of root crops (up) and coffee (down) by zone (2012) .........25
Figure 13: Distribution of major crops production of flowers by zone (2012) ...................................................26
Figure 14: Simplified supply chain for domestic consumption agricultural products ........................................27
Figure 15: Simplified supply chain for ECX trading system .............................................................................28
Figure 16: Operating ECX warehouses ............................................................................................................29
Figure 17: ECX warehouses vs. grains (left) and coffee (right) production .....................................................29
Figure 18: Distribution of livestock by type, number of heads (2011) ..............................................................30
Figure 19: Distribution of livestock by region, number of heads (total, left; by kind, right) (2011) ...................30
Figure 20: Livestock distribution by zone (excluding beehives) (2011) ...........................................................31
Figure 21: Location of mining and exploration zones in Ethiopia .....................................................................32
Figure 22: Evolution of gross value production and employment in Large and Medium Scale Manufacture ..33
Figure 23: Production value by industrial sector (2011-2012) ..........................................................................34
Figure 24: Gross value production and Gross value added by sector in small scale manufacture and cottage
industries (2007-2008)......................................................................................................................................35
Figure 25: Location of current industrial centres and planned Special Economic Zones ................................36
Figure 26: Location of current industrial centres and planned Special Economic Zones in Addis Ababa .......36
Figure 27: Ethiopian imports and exports 2000-2013 ......................................................................................38
Figure 28: Ethiopian exports by tariff chapter and main product 2013 ............................................................39
Figure 29: Ethiopian imports by tariff chapter and main product 2013 ............................................................40
Figure 30: Ethiopian external trade by origin/destination 2013 ........................................................................41
Figure 31: Ethiopian external trade corridors by volume transported (2013) ...................................................43

Figure 32: Ethiopian import trade corridors (2013) ..........................................................................................44

Figure 33: Ethiopian export trade corridors (2013) ..........................................................................................45
Figure 34: Ethiopian external trade border crossings and main products (2013) ............................................46
Figure 35: Registered and unregistered trade flows by Ethiopian Database ...................................................48
Figure 36: Road infrastructure and transport sector investment impact analysis ............................................51
Figure 37: Correlation disbursement for RSDP implementation and GDP per capita .....................................53
Figure 38: Compound Annual Growth rate (2011-2013) of the different GDP subsectors ..............................54
Figure 39: Growth of Classified Road Network ................................................................................................63
Figure 40. Ethiopia road network: Classification by road types .......................................................................63
Figure 41: Main Ethiopian road network ...........................................................................................................64
Figure 42: Historical evolution of road traffic demand ......................................................................................65
Figure 43: Historical evolution of demand on road transport network ..............................................................66
Figure 44. Main corridors of Ethiopias Road Network .....................................................................................68
Figure 45: Current traffic by type of vehicle......................................................................................................69
Figure 46: Demand prognosis for Ethiopias road transport network 2014-2025.............................................71
Figure 47: Links where traffic volume exceeds current road capacity (2014) ..................................................72
Figure 48: Links where traffic volume will exceed road capacity (2025) ..........................................................73
Figure 49: Map of identified black spots in federal road network by ERCC .....................................................75
Figure 50: Images of the most used trucks for domestic transport ..................................................................78
Figure 51: Main ports used for Ethiopian External trade (2013) ......................................................................80
Figure 52: Ports in the Horn of Africa ...............................................................................................................81
Figure 53: Aerial view DCT and HDTL (left) and PDSA (right) terminals .........................................................82
Figure 54: Djibouti City area with main logistics facilities .................................................................................83
Figure 55: Djibouti Port freight evolution 2009-2013 ........................................................................................84
Figure 56: Aerial view of Port Sudan ................................................................................................................84
Figure 57: Aerial view and pictures of Berbera Port .........................................................................................85
Figure 58: Cargo handled in the dry ports system ...........................................................................................87
Figure 59: Location of current and planned dry ports ......................................................................................88
Figure 60: Multimodal Imports process ............................................................................................................90
Figure 61: Imports handled by the multimodal system .....................................................................................90
Figure 62: Unimodal Imports process ..............................................................................................................91
Figure 63: Comparison logistics costs for Addis Ababa/Modjo Djibouti corridor for containers ....................92
Figure 64: Comparison logistics transit times for Addis Ababa/Modjo Djibouti corridor for containers ........94
Figure 65: Eastern Corridor variants for the international freight transport ......................................................95
Figure 66: Customs and border posts location.................................................................................................97
Figure 67: Projected railway network (Ethiopian part) ...................................................................................101
Figure 68: Passenger and Freight traffic evolution in Bole International Airport ............................................106
Figure 69: Passenger and Freight traffic in other domestic Airports (2013) ..................................................106
Figure 70: Main Ethiopian Airports .................................................................................................................107

Figure 71: Chart of dependencies and coordination relationships among public institutions and companies
........................................................................................................................................................................120
Figure 72: The three institutional elements ....................................................................................................122
Figure 73: Total CAPEX evolution ..................................................................................................................123
Figure 74: Transport investments evolution ...................................................................................................123
Figure 75: Evolution of the breakdown of financing sources in the transport sector .....................................124
Figure 76: Importance of foreign aid ..............................................................................................................125
Figure 77: Weight of the Transport sector in Capex 2013/2014, and the bodies participating in it ...............125
Figure 78 Share of Expenditure by Category, ERA 2013/2014 Budget .........................................................128
Figure 79: Road Fund Budget Maintenance Allocation .................................................................................130
Figure 80: Financing of the RSDP and Major Donors (1997/1998-2012/2013) .............................................132
Figure 81: Disbursement by Financiers ..........................................................................................................133
Figure 82: REC pillars of the African Economic Community ..........................................................................136
Figure 83: RECs in Eastern Africa .................................................................................................................136
Figure 84: East Africa Current Regional Projects Portfolio Composition by Sector (Million UA) ...................140
Figure 85: AfDB Ten-Year Strategy 2013-2022 .............................................................................................141
Figure 86: AfDB East Africa Regional Projects concerning Ethiopia .............................................................141
Figure 87: Trans-African Highways system (TAH) .........................................................................................142
Figure 88: Trans-African Highway 4, north of Addis Ababa ...........................................................................142
Figure 89: PIDA Transport Programme ..........................................................................................................144
Figure 90 Tripartite Selected Corridors ..........................................................................................................145
Figure 91: Djibouti-Ethiopia-South Sudan Corridor ........................................................................................146
Figure 92: Lamu-Southern Sudan-Ethiopia Transport Corridor (Lamu Port Southern Sudan-Ethiopia Transport
(LAPSSET) .....................................................................................................................................................146
Figure 93: New East African railway (forming part of the LAPSSET Corridor) ..............................................147
Figure 94: Total COMEX and COMESA share. Value (Million $), 2013 ........................................................149
Figure 95: Total COMEX and COMESA share. Weight (thousands of tonnes) .............................................149
Figure 96: Trade to and from COMESA evolution, in monetary terms...........................................................150
Figure 97: Trade to and from COMESA evolution, in weight terms ...............................................................150
Figure 98: Ethiopian exports to COMESA members by tariff chapter (2013) ................................................151
Figure 99. Ethiopian imports from COMESA members by tariff chapter (2013) ............................................152
Figure 100: Exports (left) and Imports (right) from and to neighbouring countries (2013, value terms) ........153
Figure 101: COMESA Export Intensity Index .................................................................................................154
Figure 102: LPI key dimensions 2014 ............................................................................................................156
Figure 103: Quality of infrastructures Index. GCI ...........................................................................................158
Figure 104: Logistic nodes, regional transport markets and main transport relations in Ethiopia .................163
Figure 105: Regional logistic areas ................................................................................................................165
Figure 106: Current international corridors (only dominant flows are shown) ................................................166
Figure 107: Current non-regular international routes .....................................................................................167
Figure 108: Potential international corridors...................................................................................................168

Figure 109: Domestic corridors ......................................................................................................................169

Figure 110: Transport and logistics corridors identification ............................................................................170
Figure 111: Central Eastern Corridor Gaps ....................................................................................................173
Figure 112: Southern Corridor Gaps ..............................................................................................................174
Figure 113: Central Western Corridor Gaps ...................................................................................................175
Figure 114: North-Western Corridor Gaps .....................................................................................................176
Figure 115: Northern Corridor Gaps ...............................................................................................................177
Figure 116: North-Eastern Corridor Gaps ......................................................................................................178
Figure 117: Proposed agrocenters network ...................................................................................................189
Figure 118: Proposed regional markets network ...........................................................................................190
Figure 119: Proposed network of logistics facilities .......................................................................................191
Figure 120: Proposed priority expressway sections .......................................................................................192
Figure 121: Security corridor concept ............................................................................................................193
Figure 122: Potential air routes to explore .....................................................................................................194
Figure 123: Proposed priority railway lines ....................................................................................................195
Figure 124: Proposed ring roads ....................................................................................................................196
Figure 125: Proposed alternative routes to main corridors ............................................................................197
Figure 126: Proposed truck center network ...................................................................................................198
Figure 127: Proposed border facilities to upgrade .........................................................................................200
Figure 128: Range of activities for the proposed International Ethiopian Service Centers (IESC) ................201
Figure 129: Central Eastern Corridor Proposals ............................................................................................202
Figure 130: Southern Corridor Proposals .......................................................................................................203
Figure 131: Central Western Corridor Gaps ...................................................................................................204
Figure 132: North-Western Corridor Gaps .....................................................................................................205
Figure 133: Northern Corridor Gaps ...............................................................................................................206
Figure 134: North-Eastern Corridor Gaps ......................................................................................................207
Figure 135. Geographical framework: Formal (to the left) and informal (to the right) trade corridors for
international trade ...........................................................................................................................................209
Figure 136. Logistic relations within the regional framework of the area under study (South-western corridor
highlighted) .....................................................................................................................................................209
Figure 137. Proposed alignment for Alternative 1 ..........................................................................................212
Figure 140. Multicriteria Analysis Chart ..........................................................................................................215
Figure 141: Classification of previous studies ................................................................................................217
Figure 142: Distribution of interviews and driven roads during the data collection process ..........................220

Index of tables
Table 1. Yearly production of main agricultural products .................................................................................21
Table 2: Ethiopias main trade buyers in 2013 (Exports) .................................................................................42
Table 3: Ethiopian main trade providers 2013 (Imports) ..................................................................................42
Table 4: International freight flow from Kenya to Ethiopia ................................................................................47
Table 5: Transport mode of the external trade (2013) .....................................................................................60
Table 6: Improvements in selected indicators from 1997 to 2013 ...................................................................61
Table 7: Status of URRAP projects (July 2013) ...............................................................................................62
Table 8: Total Checked Front and Rear Axles (2002/03 2012/13) ...............................................................76
Table 9: Main ports used for Ethiopian External trade (2013) ..........................................................................81
Table 10: Terminal and berths of Port Sudan ..................................................................................................85
Table 11: Current dry ports system ..................................................................................................................87
Table 12: Impact of the logistics costs of the Djibouti corridor (average values) .............................................93
Table 13: Characteristics of the Eastern Corridor alternative routes ...............................................................96
Table 14: Transport demand on the Djibouti Corridor in 2013 .........................................................................96
Table 15: New planned railway lines ..............................................................................................................100
Table 16: Demand potential of selected railway lines ....................................................................................103
Table 17: Freight Air Transport Demand 2013 (tonnes) ................................................................................105
Table 18: List of institutions with functions in the transport and related sectors ............................................117
Table 19: Functions of the main institutions by mode of transport .................................................................121
Table 20: General Government Capital Expenditures, budget allocated in Transport and % of road construction
(2007/8 - 2013/14) (USD Million) ....................................................................................................................124
Table 21: National budget allocation to the Ethiopian Civil Aviation Authority (USD Million) ........................126
Table 22: State Budget allocation to Ethiopian Airports Enterprise (USD Million) .........................................127
Table 23: National Budget allocation to the Federal Transport Authority (USD Million) ...............................127
Table 24 Physical and financial Implementation of RSDP (1997 2013) (ETB million) ................................129
Table 25: Road Fund Regular Budget Allocation and Actual Transfers (USD Million) ..................................129
Table 26: Summary of road fund revenue, budget & physical work 1997/98 2011/2012 (000 ETB) .........131
Table 27. COMESA Transport Projects Programme .....................................................................................138
Table 28. Doing Business Trading Across Borders Index 2014.....................................................................154
Table 29: Logistics Performance Index (LPI) evolution in COMESA and IGAD members ............................155
Table 30: Global Competitiveness Index. Global Rank evolution ..................................................................157
Table 31: Strategic proposals by main policy .................................................................................................187
Table 32. Multi-criteria evaluation: Main results .............................................................................................215
Table 33: Summary list of the identified documents ......................................................................................217
Table 34: List of unavailable documents at 25/07/2014 .................................................................................219
Table 35: Most populated cities in Ethiopia by region, inhabitants (2012) .....................................................221
Table 36: ECX operating warehouses ............................................................................................................222
Table 37: External trade by border post .........................................................................................................223

Table 38: AADT evolution for selected links (2002-2012) ..............................................................................224

Table 39: Detailed characteristics of the Addis Ababa Djibouti Railway project .........................................225
Index of boxes
Box 1: Population forecast................................................................................................................................16
Box 2: Economic forecast .................................................................................................................................19
Box 3: Ethiopian Commodity Exchange trading system ..................................................................................28
Box 4: Trade relations between Kenya and Ethiopia .......................................................................................47
Box 5: Future port developments .....................................................................................................................86
Box 6: ESLSE participation in the service provision in the Djibouti Corridor ...................................................92

10
PART A. Transport Assessment

11
1 Economic and Poverty Reduction Contributions by Transport Sector

1.1
Introduction
The objective of the current chapter is to analyse the size, distribution and dynamics of the basic components
of Ethiopias mobility demand: consumers (population), production (agriculture, mining, industry) and trade
(both imports and exports).
Subchapters 1.2 and 1.3 represent the first step in this regard, providing some hints on Ethiopias
demography and economy.
Ethiopia is a country of a remarkable size (actually the second most populated in the African continent)
representing a very large potential market for both consumption and production.
Although Ethiopias current GDP and purchasing power levels are below the African average level, its
economy (as well as its population) has shown an outstanding growth in the last ten years and both WB
and IMF expect this trend to continue in the upcoming years.
The foreseen demographic growth will lead to an increase of urban population. However, it is important to
note that Ethiopia is fundamentally a rural country and it will remain as such in the future. In effect, a
remarkable percentage of Ethiopias current GDP corresponds to agriculture and farming activities,
followed by trade (the second most important economic activity, with several agricultural products
representing key-export components).
Subchapter 1.4 focuses on the dynamics generared by the different productive sectors in Ethiopia.
A number of figures and maps will show the distribution of Ethiopias production (basically agriculture,
although mining and certain industrial sectors are also present). This will represent a fundamental basis
to understand the requirements of the countrys mobility dynamics.
Ethiopias agricultural and livestock production is widely distributed across a good part of its territory, with
a low degree of geographic specialization. This means that transportation demand for agricultural products
is present throughout most of Ethiopias territory. The logistics chains in this primary sector show
remarkable differences in efficiency and reliability: specific value-added export products are handled
through far more efficient logistics chains benefiting from scale economies and better organization. The
Ethiopian Commodity Exchange (ECX) aims at improving this situation through a new marketplace for
trading agricultural commodities, based on a network of warehouses distributed across the country.
Agro-industrial manufacturing represents Ethiopias main industrial sector, followed (with a much lower
weight in the overall Ethiopian industry) by other basic industries. In clear contrast with the primary sector,
this industrial activity is concentrated in the countrys main cities, fundamentally Addis Ababa. This sector
has registered a remarkable growth in the last few years and this trend is expected to continue, with a
further concentration in urban areas. Besides, the GoE has defined an ambitious plan to develop new
industrial zones in the short term, including eight Special Economic Zones (SEZ) to be located in Addis
Ababa and its surroundings, and additional ones to be located at Hawasa, Dire Dawa and Kombolcha.
Although this whole trend suggests an activity highly concentrated in the urban domain, the transportation
chains associated to these activity nodes have a cross-national dimension, considering both the provision
of agriculture, livestock and mineral raw products to the different industries and the commercialization of
the finished products for domestic consumption and exports. This whole scenario suggests a network of
relations between the different production areas and consumption and export centres of the country, with
the main industrial nodes as the pivotal elements of the system.

12
Subchapter 1.5 analyzes the mobility dynamics associated to trade, particularly the main transport
corridors used for the movement of import and export goods
Ethiopias economy, fundamentally based on agriculture and farming and with a low presence of
manufacturing activity, has led to a high imbalance of its external trade: the monetary value of its imports
is four times higher than that of its exports.
Ethiopias imports represent most of the freight transported throughout the country. Once these goods get
to the African continent through the ports of neighouring countries (Djibouti, Berbera, Sudan), they are
transported through the main Ethiopian land corridors until they reach the countrys main consumption
areas (Addis in the first place). Ethiopias exports follow the same routes, as well as the land corridor to
Kenya (Moyale).
The international corridor connecting Ethiopia and Kenya presents a remarkable potential for future
development, particularly if we consider the current informal trade between the two countries (which almost
duplicates, in monetary terms, the official trade registered by the Ethiopian Revenues and Customs
Authority) and the possibility of trade and economic integration agreements between the two countries.
Finally, Subchapter 1.6 explains the strong relation between transportation and economic growth
and poverty reduction
The analytical process of subchapters 1.2 to 1.5 leads to the identification of a key element for the
development of Ethiopias economy: transportation. This means transport axes for the movement of
production inputs and outputs; provision of good infrastructure all along these axes; provision of
transparent and efficient information platforms for commercial interchange along these axes.
However, the causality between transport and economy is not only based on the idea of channeling flows
of goods. There is actually a more complex relation between the development of a national transport
system and the improvement of its economy, as well as poverty reduction.
Subchapter 1.6 aims at explaining this. Both a direct and an indirect effect have to be considered: The
direct effect has to do with the access of population to goods and services; the indirect effect is linked to
the contribution of the transport infrastructure and services to economic growth.
One of the conclusions of this subchapter has to do with the main challenge to consider for the future: to
establish an integrated, multi-modal transport network consisting of an inter-connected system of corridors
(road, rail) and nodes (ports, airports). Only on the basis of such a scheme a smooth, highly efficient and
competitive transport system will guarantee the boosting Ethiopias economy.
In brief, Chapter 1 has the main aim of identifying the key elements of Ethiopias national mobility demand and
the role of transportation for its economic development. The subcoming chapters will explain all this in more
detail, with the support of abundant data and information, all of them obtained from official sources and
interviews with the most relevant stakeholders.

13
1.2
Socioeconomic hints on Ethiopia
Ethiopia is nowadays, in terms of population, the second largest country in Africa only behind Nigeria, with an
estimated population of 84 million inhabitants in 2012 1. Along with Egypt, it is one of the two most populous
countries in north-eastern Africa, almost doubling the population of its neighbours Kenya and Sudan.
Figure 1: Population and GDP per capita in selected African countries in 2012
Population (millions of inhabitants)
167
Nigeria
Ethiopia
84
Egypt
70
Congo DR
African countries
51
43
South
Africa
Kenya
36
Algeria
36
Uganda
35
Sudan
Landlocked african countries
11
Rwanda
Burundi
Eritrea
Botswana Djibouti
Northeastern African countries
A
L
N
84
However, Ethiopias Gross Domestic Product (GDP) per capita is currently below Africas average level, as it
can be seen in the figure below: according to the Organization for Economic Cooperation and Development
(OECD), Ethiopias GDP per capita was estimated in 1,192 USD/person (PPP valuation) 2 in 2012, while the
African average was of 3,204 USD/person.
GDP per capita (US$)
15.337
11.404
7.523
6.405
Africa's Regional Value:

2.704
Botswana
South
Africa
Algeria
Egypt
Nigeria
2.576
Djibouti
2.276
Sudan
1.780
1.420
1.323
1.192
791
Kenya
Uganda
Rwanda
Ethiopia
Eritrea
627
396
Burundi Congo DR
GDP per capita estimated on purchasing power parity (PPP)

Source: ALG based on African Economic Outlook 2013, OECD. Ethiopian figures based on CSA data
Ethiopias population has been increasing constantly during the last years at an average rate of 2.15% per
annum, reaching 88 million inhabitants in 2014. Only 19% of the Ethiopian population live in towns or cities,
which implies that only 16.6 million people live in urban areas, and more than 71 million are located in rural
areas.
1
2
Central Statistical Agency (CSA)

African Economic Outlook 2013

14
79.7
81.7
83.7
85.8
88.0
81.8%
81.4%
81.0%
Rural
75.5 77.7
83.3%
Urban
75.1 73.8
83.4%
69.1
73.0
84.0%
67.2
71.1
84.2%
80
84.5%
100
84.7%
83.9%
20
84.1%
40
83.6%
60
83.8%
Million inhabitants
Figure 2: Ethiopian population 2002-2014
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
*Population of 2013 and 2014 are estimated; figures rom 2002 to 2012 are census figures
Source: ALG based on ICPS 2012 (historical and projection data), Central Statistics Agency (CSA)
Based on the countrys Population Census, 39 towns/cities in Ethiopia have between 50,000 and 100,000
inhabitants; 8 cities have between 100,000 and 200,000 inhabitants (Bahir Dar, Dessie, Jimma, Shashemen,
Bishoftu, Harari, Sodo and Arba Minch) and only 6 cities have more than 200,000 inhabitants. These six
medium-big cities are Addis Ababa (3,040,740 inhab.), Mekele (273,601 inhab.), Adama (271,562 inhab.), Dire
Dawa (262,884 inhab.), Gonder (254,450 inhab.) and Hawassa (212,665 inhab.). All of them are represented
in the figure below.
Figure 3: Population distribution by administrative zone and main urban centres (2012)
Tigray
Adwa
Humera
Shire
Adigrat
Axum
Affar
Mekele
Amhara
Metema
Gonder
> 3,000,000 inhab.
Debre Tabor
Weldiya
Beneshangul
Gumuz
Semera
Asayta
Bahir Dar
Galafi
200,000 300,000 inhab.
Dessie
Kombolcha
100,000 200,000
50,000 100,000
20,000 50,000
< 20,000
Dewele
Kurmuk
Asosa
Debre
Markos
Nekemte
Debre
Birhan
Dire Dawa
Burayu
Ambo
Addis Ababa
Sebeta
inhab.
inhab.
inhab.
inhab.
Jig-Jiga
Harari
Bishoftu
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Jimma
Gambella
Ziway
Asela
Arsi Negele
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Background legend
Omorate
Negele
Somali
Yebelo
3,800,000 inhab.
SNNPR
Dolo Odo
0 inhab.
Oromia
Moyale
Note: background transparency is

proportional to the zonal population
Note: background transparency is proportional to the zonal population

Source: ALG based on ICPS 2012 Projection Report

15
Regarding the rural areas, population is distributed quite evenly throughout the country, but it is especially
concentrated in the states of Amhara, Oromia and S.N.N.P. as can be observed on the map. These states are
among the largest, but they also have a higher concentration of population than the othe states. Besodes, the
rural dominance of the population applies to all states except for the federal cities of Addis Ababa, Dire Dawa
and Harari.
Figure 4: Distribution of population in Ethiopia by region (2012)
Population (thousands of inhabitants)
20.000
Oromia
23%
SNNP
Somali
32.816
37%
Amhara
Urban/rural population distribution
40.000
20.019
Oromia
14%
86%
Amhara
16%
84%
SNNP
15%
85%
Somali
14%
86%
17.837
20%
6% 5.307
Tigray
Tigray 6% 4.960
Addis Ababa 4%3.195
Addis Ababa
Afar 2%1.678
Afar
24%
76%
100%
17%
83%
Benishan 19%
81%
Benishangul-Gumuz
976
Dire Dawa
427
Dire Dawa
Gambella 396
Gambella
Harari 226
Harari
63%
37%
31%
69%
55%
0,0%10,0%20,0%30,0%40,0%
45%
Rural
Urban
Source: ALG based on ICPS 2012 Projection Report, Central Statistics Agency (CSA)
The purchasing power of the Ethiopian population is limited despite its remarkable market size. The average
GDP per capita was 8,030 BIRR per capita in 2012, equivalent to an annual value of USD 453.6 per capita3.
On the basis of these figures, the country is classified by the World Bank as a low-level income country.
Box 1: Population forecast
Studies of the Ethiopian Central Statistical Agency (CSA) show that the countrys population is expected to
continue growing during the next 20 years, with a compound annual average rate of 1.96%. CSA projections
predict a total population of 100.8 million inhabitants in 2020, and more than 122 million in 2030. Most of
the population will continue to be rural, but the urban population is expected to grow at a higher rate than
the rural population (4.16% growth rate for urban population versus 1.26% for rural). Therefore the rural
population will decrease in percentage.
Urban
140
74.2%
73.1%
72.0%
70.8%
69.7%
134.8
75.3%
109.5
130.6
76.4%
105.2
126.5
77.4%
100.8
122.3
78.4%
-10
96.5
118.1
79.3%
40
92.2
113.8
80.2%
90
88.0
Rural
81.0%
Million inhabitants
Figure 5: Ethiopian population projections 2014-2036
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
*Population of 2013 and 2014 is a forecast; figures for 2002 to 2012 are real figures
Source: ALG based on ICPS 2012 Projection Report, Central Statistics Agency (CSA)
World Bank Database

16
MAIN CONCLUSIONS FOR CHAPTER 1.2
Ethiopia is the 2nd largest country in Africa in terms of population, with nearly 88 million
inhabitants. 81 % of Ethiopias population (more than 71 million people) is widely
dispersed in rural areas.
Ethiopias population is highly scattered around the country, with a very limited
concentration in towns/cities. Even urban population is mostly distributed in small towns,
with a very limited number of intermediate or big cities.
Future projections developed by CSA show that Ethiopias population is expected to

continue growing during the next 20 years at a compound annual average rate of 1.96%.
CSA expects the country population to reach more than 100 million inhabitants by 2020,
and 122 million by 2030.
Population concentration in towns and cities will increase steadily, since urban population
is expected to grow at a higher rate than rural population. However, in 2030 still a 73.1%
of the population is expected to be rural.

17
1.3
Ethiopian economy
As it has been said in the precedent chapter, Ethiopias current GDP level is below the African average.
However, the countrys economy has improved significantly in recent years. According to estimates of the
World Bank (WB), Ethiopias economic performance has been very good over the last decade, maintaining
GDP growth over (or close to) 10% practically every year4 (with the exception of the 2001-2003 period). As it
can be seen in the figure below, Ethiopia has kept growing at very high rates during the last ten years, even
during the global economic crisis of 2008-2009.
Figure 6: Ethiopian GDP and GDP growth evolution 2000 - 2012
GDP
25,000
16%
13,6%
23
11,8%
20,000
10,8%
11,5%
21
10,8%
15,000
8,3%
17
14
12
5,000
10
10
11
8,5%
9,9%
15
10,000
12%
20
18
14%
10%
8%
8,8%
7,3%
6%
10
4%
1,5%
GDP growth [%]
GDP [Constant billion USD]
GDP
2%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
*Base Year 2005.
Source: ALG based on data from the World Bank (WB)
A high percentage of Ethiopias population is distributed in rural areas, relying basically on the primary sector,
especially on agriculture. In effect, most of the 71 million rural inhabitants of the country rely on the primary
sector for a living. According to the figures of the Ministry of Finance and Economic Development (MoFED),
the primary sector accounts for 42.0% of its GDP, the agriculture sector alone representing 28.6% of the GDP.
Animal farming is also an important subsector, accounting for 9.7% of the GDP. These are remarkably high
figures and reflect the rural basis of Ethiopias demography and economy.
The second economic subector of the country is Trade (13.3% of national GDP). It is important to note that
this subsector relies strongly on transportation, which represents by itself 2.7% of the countrys GDP.
The trade subsector is followed by Taxes and adjustments (7.7%) as well as other groups of activities
belonging to the services sector such as real estate (6.9% of national GDP) and Public Administration,
Education, Health and Social Services (5.6%).
Finally, subsectors such as Manufacturing and Mining/Quarrying make a small contribution to the Ethiopian
economy, accounting for 3.6% and 1.2% of the GDP respectively.
WB data

18
Figure 7: GDP structure for the fiscal year 2012/ 2013
*Current prices
Source: ALG based on data from Ministry of Finance and Economic Development (MoFED)
Box 2: Economic forecast
According to WB projections, the economic prospects for Ethiopia are good for the forthcoming years,
although growth rates are not expected to be as high as during the last decade. The expected growth rates
will keep within a range between 6.6% and 9.7% until 2016. These are high figures, especially taking into
account the long period of growth recently experienced. The IMF expects similar growth rates for Ethiopia
until 2019 (between 6.5% and 7.5% per annum).
Figure 8: GDP and GDP growth evolution and projections
GDP
GDP Growth
GDP [Constant billion USD]
35,000
16,0%
13,6%
31
29
30,000
11,8%
10,8%
25,000
11,5%
8,8%
8,3%
20,000
25
10,8%
20
15,000
17
10,000
5,000
10
10
10
11
12
14
10,0%
21
18
15
12,0%
23
9,9%
14,0%
27
7,3%
9,7%
7,4%
7,0%
6,6%
8,0%
8,5%
1,5%
6,0%
4,0%
2,0%
0,0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
*Base Year 2005. Light green bars represent future projections, not real estimates.
Source: ALG based on data and projections from the World Bank (WB)

19
The Ethiopian population has a very limited purchase power, with a GDP per capita of 1.193
USD, below the African average.
However, Ethiopias GDP has grown significantly during the last 10 years, with annual growth
rates exceeding 10%.
Ethiopias economy relies fundamentally on the primary sector, especially crop production.
The primary sector accounts for 43.2% of the countrys GDP. The weight of agriculture is
remarkable, accounting for more than 28% of Ethiopias GDP. This economic structure is
highly consistent with its demographic distribution (81% of population being rural)
Industry accounts for 9% of the national GDP, whereas the services sector accounts for 40.1%
of Ethiopias GDP.
Ethiopian Economy is expected to continue growing at a high rate in the upcomning years with
a 7% annual rate according to the IMF.
In brief, the distribution of the population in, on one hand, one main city (Addis) and, on the
other hand, a high percentatge of rural population dispersed throughout Ethiopias territory,
leads to complex distribution chains to the final consumers.

20
1.4
Ethiopian production
The current sub-chapter introduces the main economic sectors of Ethiopia in terms of freight transport
generation. Agriculture and livestock, the mining industry and manufacture subsectors are analyzed in order
to understand the current transport needs of the economy so as to be able to propose a sound transport
strategy, with a deep positive impact on the economy, in the following sections of the project.
1.4.1
Agriculture
The agricultural sector is the main contributor to the national economy and, in a dominantly rural population,
the largest source of employment as well. Agriculture in Ethiopia is mainly a subsistence activity, since most
of the producers are small farmers that live from this activity, complementing it with some animal farming.
According to the Crop and Livestock product utilization survey 2012, almost 67% of the cereal production in
the country was for household consumption, 14% for seeding, and only 15% was for sale. For other products
such as vegetables, household consumption is even higher, reaching 78%. The most commercial group of
grain products are oilseeds, of which 37% is for household consumption and 47% is destined to be sold.
On the other hand, a remarkably commercial agricultural product (mainly for export) is coffee, which represents
the most important cash crop of the country (over 60% of exports).
In terms of production, in 2012 more than 29 million tonnes of primary crops were produced in Ethiopia.
According to the Central Statistics Agency (CSA), the production of cereals was the largest agricultural activity
in that year, representing 66% (19.65 million tonnes) of the national primary crop production. At a second level
of importance were pulses and root crops, with production of around 2.75 and 3.63 million tons respectively,
as can be observed in the following figure. These products, together with oilseeds, represent key-elements of
the Ethiopians diet. The table following the figure shows the detailed volumes for the most important
agricultural products (cereals, leguminous/pulses, root crops, vegetables, seeds, fruits).
Million tonnes
Figure 9: Distribution of agriculture production by type of primary crop, million tonnes (2012 / 2013)
25
20
19,65
15
66%
10
5
2,75
9%
Cereals
Pulses
3,63
7%
0,85
0,73
Oilseeds
12%
0,48
Vegetables Root Crops Fruit Crops
0,18
0,37
0,03
Chat
Coffee
Hops
1,04
Sugar Cane
Source: ALG based on data of Central Statistics Agency (CSA)
Table 1. Yearly production of main agricultural products

Yearly production
2012/2013 (tonnes)
Agricultural product
Cereals
Maize
Sorghum
6,160,000
Teff
Wheat
3,760,000
Barley
1,780,000

3,600,000
3,400,000
21
Yearly production
2012/2013 (tonnes)
Agricultural product
Leguminous crops
Beans
1,400,000
1,120,000
Peas
Root Crops
Sweet potatoes
1,190,000
Taros
1,180,000
Potatoes
863,000
Garlic
222,000
Onions
219,000
Vegetables
Ethiopian cabbage
370,000
Red peppers
316,000
Green peppers
85,000
Tomatoes
55,000
Seeds
Neug
212,000
Sesame
181,000
Groundnuts
124,000
Linseed
122,000
Fruits
Bananas
302,000
Mangos
69,000
Oranges
38,000
Papayas
35,000
Avocados
26,000
Although not so relevant interms of volume (tonnes), other agricultural products represent key export products.
The first of them, as said further above, is coffee. Flower farming is also an important export product which
cannot be measured in volume but generates important revenues to the country: In 2012 Ethiopia produced
2,260 million stems, which generated USD 187 million in revenues.
Regarding the geographical distribution of Ethiopias agricultural production, the three largest regions of the
country (Oromia, Amhara and SNNP) concentrate more than 92% of agricultural production. Oromia, which
concentrates 47% of the total production, produces 50% of Ethiopian cereals and 42% of pulses. Oromia also
leads the production of other products such as vegetables (42%), coffee (56%) and chat (67%). Amhara
comprises 27% of national production, mostly due to its significant share in cereal (30%) and pulse (42%)
production. Finally, SNNP region is the most important field for root crops (47%), for less important crops such
as sugar cane and fruits, and it also produce a significant share of cereals (9.1%) and pulses (10.4%).

22
Figure 10: Distribution of total agriculture production by zone (2012)
Background legend
Tigray
1,640,000 t.
0 t.
Affar

proportional to the zonal production
Amhara
Beneshangul
Gumuz
Oromiya
Gambella
Somali
SNNP
In order to summarize national production, the following maps show the location of production for the major
crops across the country.

23
Figure 11: Distribution of major crops production of grains (up) and fruits and vegetables (down) by zone (2012)
Main products
Teff
Wheat
Maize
Sorghum
Pulses
Oilseeds
Background legend
1,200,000 t.
0 t.
Main products
Ethiopian Cabbage
Tomatoes
Red peppers
Bananas
Mangoes
Orange
Background legend
135.000 t.
0 t.

24
Figure 12: Distribution of major crops production of root crops (up) and coffee (down) by zone (2012)
Main products
1.
Toro/Godere
2.
Sweet potatoes
3.
Potatoes
4.
Onion
5.
Garlic
Background legend
620.000 t.
0 t.
Background legend
70,000 t.
0 t.

25
Figure 13: Distribution of major crops production of flowers by zone (2012)

Background legend
135 M.USD
0 M.USD
M= million (10^6)
Source: ALG based on data of Ethiopian Horticulture Development Agency
The above maps show how agricultural production is widely distributed across the country, with some products
slightly concentrated in some zones, but most of them spread across the majority of the country (all states
except Afar Region and Somali Region have a remarkable agricultural production). Transportation needs
generated by agricultural production are therefore present across the whole country.
These transportation needs are strongly linked to the logistics of each product. It is important to note in this
regard that most of the agricultural production of Ethiopia has reduced added value and is mainly destined for
domestic consumption. Currently, just a few products are farmed for export: Coffee, flowers, some vegetables
(beans, chat) and oilseeds (sesame). Domestic consumption and exports products represent different
typologies of logistics chains.
The supply chain for the products destined for the domestic market varies slightly from product to product, but
is basically formed by various levels of intermediary agents of different sizes. Generally speaking, small
farmers sell their production to local traders or assemblers (or cooperatives sometimes), who act as
consolidators of local production and sell it to local retailers and to wholesalers (larger traders) or brokers.
Bigger producers such as commercial farmers may sell directly to wholesalers, brokers or to processing plants
(in the case of some cereals that are industrialized, for example). At the same time, wholesalers, brokers or
large traders sell the production to rural and urban retailers, and can also sell it to other traders serving areas
with a production deficit or to food processing industries. Assemblers, wholesalers and traders in general have
presence in local markets.
In general terms, an important part of the trading activity of most of the products occurs around local markets.
Some products, however, such as some cereals are usually concentrated and sold in large urban markets
(maize in Addis Ababa market, for example), since they are produced in bigger volumes and can have a more
specialized distribution chain. On the other hand, in some areas it is not rare to see local farmers selling their
production directly on the nearest road, beside the fields. In these situations, the product usually stays exposed
to the sun for a long time until an assembler, trader or direct consumer comes to the selling point.
Regarding transport, traders or brokers pay for the intermediate transport of the products by contracting
individual truck owners, and in some cases with their own fleet. This transport is usually carried out with small
trucks with capacities from 5 to 10 tonnes, even for long distance transport, and without adequate handling or

26
transport conditions. Cold chain conditions are never used for any domestic product, whether are needed or
not. For those products requiring cold chain, long distance transport is usually carried out at night, when
temperatures are lower.
Figure 14: Simplified supply chain for domestic consumption agricultural products
Rural
assemblers
Rural retailer
Rural consumers
Small producers
Urban retailer
Traders /
brokers/
wholesalers
Urban Consumers
Wholesalers in
urban areas or
other rural areas
Supermarket
State/ Commercial
farms
Exporters
Foreign
Consumers
Producers
Intermediaries
Consumers
Food processors /
Industry
Note: a general agricultural chain is represented. Variants may occur for every product. Additional trader levels or transactions may occur
for a part of the production.
Source: ALG based on supply chain studies from Agricultural Transformation Agency and own interviews
In general terms, this trading structure with several levels of intermediaries and the predominant transport
conditions make the supply chain inefficient. Although the Ethiopian Government has been working hard on
this issue through the Agricultural Transformation Agency (ATA) in recent years, transaction costs are still
high. In particular, transport costs are higher than they could be if the efficient concentration of production
increased economies of scale: bigger trucks could be used, reducing transport cost per unit transported, and
additionally conditions and specialization in the handling could improve product quality. The availability of
information (about price, for example) is also an important issue, since this multi-layer trading system is opaque
for producers, especially for smaller ones.
In order to improve trading conditions, in 2008 the Ethiopian Government created the Ethiopian Commodity
Exchange (ECX) 5, a public trading system that aims to help the agricultural sector improve its supply chain by
defining handling conditions, ensuring product quality and guaranteeing information about final prices and
product stock. The ECX trading system coexists now with the traditional trading system for the following
products: coffee, sesame, haricot beans, maize and wheat. This system has improved the logistic chain for
the mentioned products in recent years.
Regarding export-oriented products, the supply chain is generally more efficient than for domestic products.
In the case of coffee, all exports must be traded through the ECX system, which guaranties quality and
improves efficiency. In the case of flowers and high value vegetables, the domestic supply chain is fully
controlled by the producers, who are in general big enough to have that capability. In this case, the product is
usually transported by a specific cold chain fleet, owned and operated by the producer. In the case of oilseeds
and sesame, the producer usually also has a dedicated supply chain. Chat exports, however, use the
traditional trading system6.
Finally, Ethiopian agricultural output has been growing recently, and is expected to continue growing in the
coming years given the efforts of the Agricultural Transformation Agency in increasing productivity and yield.
For the purposes of this project, additional to the trending increase in production, one particular project must
be considered since it could qualitatively change production patterns in the future. This project is the
construction of the Millennium Dam on the Blue Nile, which would in the future allow the irrigation of new areas
of land, and might allow the development of new large scale agricultural projects. Although no information has
been obtained from the Ministry of Agriculture regarding detailed plans or projects, the Consultant considers
this project as a potential catalyst of the transport demand in the zone.
5
6
See Box 4
Chat is mainly exported to neighboring countries (Somalia and Djibouti).

27
Box 3: Ethiopian Commodity Exchange trading system
The Ethiopia Commodity Exchange (ECX) is an institutional initiative to create a new marketplace for trading
agricultural commodities. This new marketplace serves all market actors, from farmers to wholesalers or
brokers, and makes it possible to ensure product quality, transport and logistics efficiency and market
transparency. Currently, ECX works with the following products: coffee, sesame, haricot beans, maize and
wheat.
In practical terms, the ECX functions as a stock exchange, but with the peculiarity that the elements traded
are commodities. To be able to do this, the ECX has 16 warehouses distributed across the country that
allow farmers to deposit their products in good condition to start the trading process. The ECX works as
follows:
1. Farmers transport their production to any of the ECX warehouses (by their own means)
2. ECX receives the product as long as it fulfils the product standards. ECX classifies the product based
on its quality. To do this, ECX specialists sample the product, test and grade it, and finally certify its
quality.
3. Once certified, the farmer obtains the product property documents from ECX (stating quantity and
quality). At the same time, ECX stores the product under good conditions in the warehouse.
4. The farmer (or his/her representative) trades the product in the Commodity Exchange headquarters (in
Addis Ababa), with the trading process being fully transparent.
5. Once the transaction is done, the buyer must deposit the money and ECX checks that all documentation
is valid.
6. Finally, buyer can collect the product bought in the warehouse with the documentation (and using their
own transport means)
The following figure shows the process as a flow chart:
Figure 15: Simplified supply chain for ECX trading system
Wholesalers/
traders/ brokers
Small producers
Rural/ urban
retailer
Rural and urban

consumers
Exporters
Foreign
Consumers
ECX warehouses
State/ Commercial
farms
Quality assurance
Grading and certification
Storage
Information flow
Freight flow
Producers
Intermediaries
Food processors /
Industry
Consumers
Note: relations between brokers and exporters may exist, but they are not drawn for clarity reasons
Source: ALG
The entire trading process is electronic, and it allows supply and demand to be measured for the products
traded during the year. This information can further be used to balance supply and demand; giving
transparency and stability to the product price, and benefits both the farmers and the brokers.
The only functions of the ECX are therefore to certify product quality, to store the product during the trading
process, and finally to offer the required infrastructure and electronic tools to market the product. ECX
publishes online information about the market status, offering more information to farmers and
traders/brokers to do their business.

28
Currently, as it has been mentioned before, the ECX has 16 warehouses distributed throughout the country,
some of them dedicated to coffee and some to grains. The following figure shows the location and typology of
all these warehouses, and Annex 11.2 presents their capacity and distance from Addis.
Figure 16: Operating ECX warehouses
Ethiopia Commodity Exchange infrastructure
6
Axum
Humera
Adigrat
Shire
Adwa
#
13
Mekele
Metema
ECX coffee warehouse

ECX grains warehouse
ECX grains & coffee warehouse
12
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kurmuk
14
Debre
Markos
Asosa
Kombolcha
Dewele
Debre
Birhan
Dire Dawa
11
Nekemte
Awash
3
Weliso
Adama
Ziway
Hossana
Jimma
16
Asela
Shashemene
7
Sodo
Jig-Jiga
Harari
Gambela
Addis Ababa
Ambo
15
Robe
Hawassa
10
Dima
Imi
Dila
Arba Minch
Konso
Warehouse Location
Addis Ababa(Saris)
2
Dire Dawa
3
Nazareth
4
Bure
5
Nekempte
6
Humera
7
Hawassa
8
Jimma
Dhaga-Bur 9
Bedelle
10 Dilla
11 Gimbi
12 Gondar
13 Metema
Kebri Dehar
14 Assossa
15 Sodo
Gode
16 Bonga
1
Negele
Omorate
Yebelo
Dolo Odo
Moyale
Source: ALG based on ECX information
Figure 17: ECX warehouses vs. grains (left) and coffee (right) production
ECX infrastructure
ECX infrastructure
#
13
ECX coffee warehouse
ECX grains warehouse

#
Background legend
12
Background legend
1,200,000 t.
70,000 t.
0 t.
0 t.
14
11
5
1
3
16
7
15
10
Source: ALG based on ECX and CSA information

29
1.4.2
Livestock farming
Animal farming is another key component of Ethiopian economy. Based on the Agricultural Sample Survey7
2010/2011 from CSA, only 20.24% of the rural holdings in Ethiopia have no livestock. Thus, 79.76% of the
Ethiopian holdings have at least one head of livstock, and actually more than 50% have 3 or more. Livestock
farming is therefore an essential activity for Ethiopian rural population that complements the agricultural output.
In 2011, CSA estimated that the national livestock surpassed 160 million heads and 5.1 million beehives, which
mostly comprises cattle (32%), sheep (15%), goats (14%) and chickens (30%).
Million heads
Figure 18: Distribution of livestock by type, number of heads (2011)

60
53,4
49,3
50
40
30
25,5
22,8
20
6,2
10
5,1
2,0
0,4
1,1
Mules
Camels
0
Cattle
Sheep
Goats
Horses
Donkeys
Poultry
Beehives
Similarly to the case of crop production, livestock farming activity is concentrated in the Oromia, Amhara and
SNNP regions, which together represent 85% of the total livestock of Ethiopia. The Tigray region comes next,
comprising 8% of the total head of livestock in the country. The different types of livestock follow similar
geographical distributions, with the only exception being goat farming, where the Somali region plays a secondorder role.
Figure 19: Distribution of livestock by region, number of heads (total, left; by kind, right) (2011)
Somali:
Afar: 2%
2%
Tigray:
8%
Oromia
Tigray
Benisha
ngulGumuz:
2%
Cattle
Chickens
Oromia
39%
SNNP
19%
Amhara
27%
Amhara
Afar
43%
35%
Goats
33%
Asses
Others
25%
38%
Sheep
23%
42%
51%
SNNP
Somali
21%
7%2%
29%
21%
9%
34%
18%
5%4%4%
14%
36%
17%
13%
8% 6%
8%
17%
9%
3%4%3%
It considers sedentary population. The survey does not consider non-sedentary population of the three zones of Afar and six zones of
Somali regions.

30
The following map shows the zonal distribution of animal farming in Ethiopia, and shows graphically the
zones with greatest concentration of the different types of livestock. As previous charts have shown, all kinds
of livestock are found in most of the zones, so the icons only indicate a higher concentration.
Figure 20: Livestock distribution by zone (excluding beehives) (2011)
Main products
1.
Cattle
2.
Sheep
3.
Goats
4.
Horses
5.
Donkeys
6.
Poultry
7.
Camels
Background legend
160 M. heads
0 M. heads
M= million (10^6)

31
1.4.3
Mining industry
Mining and quarrying generates 1.2% of Ethiopias GDP. This primary subsector is not currently a pillar of the
Ethiopian economy, although in the future it could gain importance on the basis of the issuance of new
exploration and extraction licenses. There are currently 58 valid mining extraction licenses, while more than
200 licenses have been issued for exploration of mining sources.
The main source of investment in the Ethiopian mining industry is foreign: only 10 of the existing 58 licenses
are based on local investment, representing only 5% of the total capital invested in mining sites. 30 licenses
representing 93% of the total capital invested come from foreign sources. The rest of the licenses are founded
by joint ventures between local and foreign partners.
In terms of production, the data available shows that the main minerals extracted in Ethiopia are:
1.
2.
3.
4.
5.
Gold and tantalum

Iron
Potash and salt
Limestone, clay, gypsum and other cement inputs
Other construction materials (marble, basalt, other)
Gold and tantalum are basically export products, while other minerals are mainly used for national industries
and consumption. However, mining production in Ethiopia is in general terms not enough to satisfy the
countrys consumption demand; mineral products are amongst the main imports in terms of volume (as the
following subchapter will show).
In terms of transport needs, no detailed production data is available for the non-metallic mining sites, which
represent the highest volumes of minerals. Therefore their transport needs cannot be assessed. However, the
most important production sites are known at national level; this, combined with the existing traffic information,
will be useful for the identification of transport infrsatructure gaps (to be developed in the following chapters).
Figure 21: Location of mining and exploration zones in Ethiopia
Key of mining zones
Adigrat
Axum
Humera
Gold and Tantalum
Shire
Iron
Adwa
Potash and salt minerals
Mekele
Metema
Limestone, clay and gypsum

Gonder
Other construction materials

Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Muger
Nekemte
Bedele
Ambo
Addis Ababa
Weliso
Jig-Jiga
Harari
Adama
Dhaga-Bur
Agaro
Gambela
Hossana
Ziway
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Main Gold
mining zone
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG based on mining license database from the Ministry of Mines and Energy

32
1.4.4
Manufacturing
The industrial sector contributes to the Ethiopian economy with 3.6% of the GDP. Although it has a secondary
significance in terms of economic contribution at national level, it is a very important sector for urban centres,
where it employs 400,000 workers and produces around 6 billion USD 8 per year. Besides, the manufacturing
sector has a large potential for future development due to the relatively low costs that Ethiopia offers
internationally.
Ethiopias manufacturing sector is divided into 3 sub-sectors depending on the size of the establishments:
1. Large and Medium Scale Manufacturing (LMS manufacturing): comprises industries of 10 employees or
more
2. Small Scale Manufacturing: industries with less than 10 employees but using power-driven machinery
3. Cottage/ Handicraft Manufacturing: establishments that perform activities by hand (i.e. using non-power
driven machinery)
LMS manufacturing is the most important subsector in the country, representing 2.7% of national GDP. Small
Scale and Cottage manufacturing subsectors (SSC manufacturing) represent 1.2% of national GDP. In terms
of production, according to CSA manufacturing surveys developed in 2007 and 2008, LMS manufacturing
represents approximately 89% of the total industrial production and gross value added in the country, while
SSC contributes to 11%. However, both subsectors generate approximately the same number of employees.
Large and Medium Scale (LMS) Manufacturing
LMS manufacturing has been growing at high rates during recent years considering production, value added
and employment. In terms of production, for example, the Compound Annual Growth Rate (CAGR) between
the fiscal years 2007-2008 and 2011-2012 was 21.5%9, while employment grew at an average of 10.9%. In
2011-2012 the sector produced 5.3 billion dollars (93 billion BIRR) and employed more than 200,000 people.
6,0
Production value (USD)
5,0
187
4,0
176
5,3
200
150
132
150
3,0
2,0
250
Employment
3,2
2,4
3,3
100
2,7
50
1,0
0,0
Employment ['000
employees]
Production [billion USD

dollars]
Figure 22: Evolution of gross value production and employment in Large and Medium Scale Manufacture
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
Source: ALG based on Large and Medium Scale Manufacturing Survey 2011-2012, Central Statistical Agency
The main industrial sectors in the country are, as shown in the following figure, food and beverages with a
36.7% of the total production, followed by production of non-metallic mineral products (12%), leather and
footwear (8.6%), textiles (7.7%) and metal products (7.7%).
Within the food industry, the main subsectors are: grain mill products, processed meat, fruit and vegetables,
sugar products and soft drinks and water.
Regarding the main subsectors of non-metallic mineral products, these are cement manufacture and
cement/concrete articles production, representing a 6.4% and 3.4% respectively.
Amongst the leather and footwear manufactures, the leather industry is the primary one, its production
accounting for 6.8% of the national manufacture production.
ALG estimations for fiscal year 2011-2012 based on CSA manufacturing surveys from years 2007-2008 to 2011-2012
Excluding BIRR inflation. Production value considered in USD, using the annual average Exchange rate. CAGR of value production in
BIRR would be 41.9%
9

33
Agro-industrial product manufacturing is therefore the most important industrial sector, in accordance with the
prime position of agriculture and livestock farming. Additionally, it can be observed that in general terms,
industrial production is composed of basic industries (food, construction products, basic textiles, basic metal
products)
Figure 23: Production value by industrial sector (2011-2012)
500
Production value [million USD]

1.000
1.500
Food products and beverages
1.954
Other non-metallic mineral products
640
Leather and footwear
459
Textiles
413
Metal products, except machinery
410
Chemicals
394
Ruber and plastic products
291
Basic iron and steel
161
Paper, paper products and painting
146
Forniture
118
Wearing apparel
117
Cork, except forninture
106
Motor vehicles, trailers & semi-traileers
66
Tobaco products
55
Machinery and equipment
2.000
Source: ALG based on Large and Medium Scale Manufacturing Survey 2011-2012. Central Statistical Agency
As said further above, the Ethiopian industry is located in the countrys main cities, actually rather concentrated
around Addis Ababa. This city, along with its surroundings, concentrates around 60% of the national industrial
production, including all industrial subsectors. The second most important city in industrial terms is Mekele
(Tigray State) with 5.3% of the national industrial production and 11.2% of the added value. Other cities to
mentioned, with a more limited industrial production (representing less than 2% of national industrial
production) are Dire Dawa, Gonder, Hawasa, Agaro, Bahir Dar, Bedele, Harar, Adwa and Kombolcha.

34
Small Scale and Cottage Manufacturing

Small scale and cottage manufacturing has minor importance in the country in terms of production value, but
a very significant position in terms of employment generation. The most recent survey dating from the 20072008 fiscal year, shows a total of 138,951 employees (representing 51% of the total manufacturing employees
for that year) working in more than 43,000 establishments. The gross value added of this subsector for the
same fiscal year was almost USD 300 million (BIRR 2.7 billion), accounting for 10.8% of the total manufacturing
production in the country.
The main industrial subsectors for small scale and cottage manufacturing are similar to those of large and
medium scale manufacturing. Grain mill services, food products and non-metallic mineral products are still
very important sectors. Additionally, small scale manufacturing provides very significant production of furniture,
metal products and apparel that supplies the domestic market. The following figure shows the production
distribution and added value by sector.
Figure 24: Gross value production and Gross value added by sector in small scale manufacture and cottage industries
(2007-2008)
1.4%
1.0%
Grain mill services
0.2%
0.7%
Forniture
0.3%
1.7%
0.1%
0.3%
Metal products, except machinery

5.3%
Food products except mills
4.1%
4.2%
Other non-metallic mineral products

Wearing apparel and dressing
Textiles
11.1%
39.9%
4.9%
5.0%
Publishing, printing and media
42.0%
Luggage, handbags and footwear
Wood products
15.6%
15.0%
24.3%
22.8%
Gross Value of Production
Value added
Source: ALG based on Small Scale Report Survey 2007-2008. Central Statistical Agency
According to the available statistics, the manufacturing sector is one of the economic sectors that have
registered the highest growth in the last few years. This growth is expected to continue, with manufacturing
production increasing in urban zones in the upcoming years. This sector is a priority for the GoE, who aims to
establish a strong industrial capacity in the country. The GoE has an ambitious plan to develop new industrial
zones in the next few years under the figure of Special Economic Zones (SEZ), which will offer benefits to the
industries located there, facilitating sector expansion. The Ministry of Finance and Economic Development has
a plan for eight SEZ in Ethiopia, five of these being in Addis Ababa and its surroundings, and additional ones
in Hawasa, Dire Dawa and Kombolcha. Maps in Figure 25 and Figure 26 show the detailed locations.

35
Figure 25: Location of current industrial centres and planned Special Economic Zones
Production value by State
Axum
Humera
Adigrat
Shire
0.8%
Adwa
2.4%
ADDIS ABABA
1.5%
OROMIYA
TIGRAY
Mekele
4.9%
Metema
Gonder
AMHARA
SNNP
8.7%
DIRE DAWA
43.1%
Semera
Debre Tabor
HARARI
Weldiya
Galafi
SOMALIE
Bahir Dar
AFAR
38.3%
Kombolcha SEZ
BENISHANGULEGUMUZ
Dewele
GAMBELLA
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Muger
Nekemte
SEZ
Addis Ababa
Ambo SEZ
Bedele
Weliso
Jig-Jiga
Harari
Adama
Dhaga-Bur
Agaro
Gambela
Ziway
Hossana
Jimma
Asela
Shashemene
Robe
Hawassa
Sodo
SEZ
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Key
Dolo Odo
Industrial cities/towns
Moyale
Planned Special Economic Zones
SEZ
Source: ALG
Figure 26: Location of current industrial centres and planned Special Economic Zones in Addis Ababa
Key
Debre Birhan
Kombolcha
Mekele
Bahar Dar
Debre Markos
Industrial clusters
Sululta
SEZ
Beke
Planned Special Economic Zones*
Sendafe
SEZ
Ambo /
Nekempte
Holeta
GULELLE
Asko Area
Leg Taffo
SEZ
Menagesha
YEKA
Addis Alem
Merkato
KOFTE
KERANIO
Piazza
Megenagna
Mexico
BOLE
KIRKOS
SEZ
Bole
Lemmi
Mekanisa
NIRASSEZ
SILKA
LAFTO Saris
Sebeta
Alemgena
AKAKI
KALITI
Akaki
SEZ
Kaliti
Tefki
Welkite
Jimma
Gelan
Butajira
Hosaina
Arba Minch
Dukem
Modjo/Adama/ Awash
Zeway/Hawasa/ Moyale
Debre
Zeit
*Note: location of SEZ is approximated

Source: ALG

36

The agricultural sector is the main productive sector of the country, followed by livestock and
manufacturing industries. The mining sector still makes only a small contribution to national
production.
Agriculture and livestock farming:
In Ethiopia, agriculture and farming represents an important means of subsistence for a

significant part of its population. Ethiopian agriculture produces mostly products for domestic
consumption, with low added value. Although there is a high level of crop diversity, in volume
terms cereal production accounts for 66% of the total national production. Other important crops
are root crops and pulses.
In terms of value, sugar cane, coffee and oilseeds account for an important part of the production.
Coffee and oilseed are basically export-oriented. Flowers are also important export products.
Production is spread across the whole of the country, although the states of Oromiya, Amhara
and, to a lesser extent, SNNP account for 92% of production.
The current national distribution chain for agricultural products has a large number of
intermediaries (brokers or traders) of different sizes who consolidate produce and connect it to
consummers. However, for certain products, the logistics chain is more efficient thanks for the
Ethiopian Commodity Exchange (ECX), which provides a transparent commercialisation system
through a public warehouses network and an Exchange Centre.
Livestock farming relies basically on cattle, poultry, sheep and goats. Production is concentrated
in Oromia, Amhara and SNNP, accounting an 85% of the total heads of the country.
Manufacturing:
The manufacturing sector accounts for 3.7% of Ethiopian GDP, but its weight has grown
significantly in recent years. Moreover, this sector represents a major source of employment for
urban population since it generates over 400,000 jobs and produces about USD 6 billion per
year.
The most relevant industries are food production (agribusiness), metal products production and
textile and leather sectors.
Industrial production is currently concentrated around the capital city, Addis Ababa, with up to
60% of national production. The second industrial city in the country is Mekele, with 5.3% of
national production (and 11.3% of value added). Other centres with notable industrial levels are
intermediate cities such as Dire Dawa, Gonder, Hawassa, Agaro, Bahir Dar, Bedele, Harar, Adwa
and Kombolcha
The industrial sector is one of the priority development sectors of the GoE and its growth is
expected to continue. In addition, Special Economic Zones are currently planned in the main
industry nodes of the country and these will provide infrastructure and incentives for industrial
development
Current restrictionsand future opportunities

In brief, the predominance of the agricultural production in the countrys productive structure, together
with its geographical dispersion, increase the number of operations and the costs associated to the
distribution chains.
In addition, the high fragmentation and small size of producers leads to precarious transport services
and a low profitability of production.
However, Ethiopia has a remarkable potential for agrarian industrialization. Effective action in this
domain would lead to an increase of production concentration and therefore to the improvement of
the above issues.

37
1.5
Ethiopian foreign trade and trade facilitation
With an arable- and livestock-farming based economy, as well as a low presence of manufacturing activity,
Ethiopia relies on foreign trade for supply of those products that are not produced in the country (machinery,
vehicles and a large number of other manufactured goods, as well as fuel and oil products). In fact, the value
of imports in 2013 was four times that of exports (US$ 10.9 billion for the former against US $2.6 billion for the
latter) despite the fact that exports have increased at a 15% annual rate during the last decade. In terms of
volume, imports also represent the vast majority of the freight moved throughout the country.
Figure 27: Ethiopian imports and exports 2000-2013
Value (millions of US$)
Imports
CAGR 2003-2013 for imports: 15.2%

CAGR 2003-2013 for exports: 15.0%
Exports
11.659
1.268
482
2000
1.810
453
2001
1.595
2.665
642
553
897
2003
2004
2005
473
2002
3.036
3.796
4.521
8.202
7.623
999
1.183
1.543
1.494
2006
2007
2008
2009
5.093
323
2000
351
2001
2.147
2.542
2.741
2.591
2010
2011
2012
2013
CAGR 2003-2013 for imports: 3.7%

CAGR 2003-2013 for exports: 10.2%
7.444
2.727
8.327
5.327
Volume (thousands of tonnes)

Imports
Exports
3.370
10.955
8.758
3.833
4.414
4.185
8.465
8.133
6.959
7.310
7.343
4.888
2.595
561
2002
539
748
691
801
810
910
1.130
1.183
1.319
1.339
506
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: ALG based on data of Revenues and Customs Authority
As it can be seen in the figure above, imports totalled 7.34 millions of tonnes in 2013, while exports only
represented 1.34 million tonnes. Imports therefore represent more than 5 times the volume of exports,
generating a major imbalance between input and output freight flows in the country. This situation may have a
big impact on transport efficiency and costs, because in the best situation, 4 out of 5 trucks that enter into the
country have to leave Ethiopia empty, increasing the cost of international transport.
In the following sections, more detail is given about imports and exports and the main international corridors
of Ethiopia, in order to understand the most important economic sectors in terms of foreign trade and
international competitiveness.

38
1.5.1
Product analysis
Ethiopian exports are highly concentrated in a few agricultural and livestock products. Five of them account
for 85.5% of the total Ethiopian exports and 76.5% of their monetary value. The average value of Ethiopian
exports is USD 1,988 per tonne; excluding gold, this value decreases to USD 1,864 per tonne. These figures
show the limited added value of Ethiopian exports.
In terms of volume (weight), the most important exports are vegetables (including dried leguminous, potatoes
and chat), oil seeds (especially sesame seeds), coffee, live animals (bovines and camels) and flowers (roses).
In terms of value, additionally to the previous products, gold and raw leather (from goat and sheep) are also
very important exports.
The following chart shows the countrys main export volumes and weights registered in 2013. The most
relevant categories of products are those with outstanding export volumes/values and a value density higher
than 1,000 USD/ton: Gold and precious stones, flowers, coffee, live animals, oil seeds/oleaginous fruits,
preparations of cereals. Specific products standing out within their categories are specified in the Main
products column.
Figure 28: Ethiopian exports by tariff chapter and main product 2013
Main products
499,9
539,9
Edible vegetables
Dried leguminous, potatoes and chat
309,3
Oil seeds and oleaginous fruits
Sesame seeds
512,5
198,1
Coffee
636,3
104,5
180,8
Live animals
Flowers
42,9
Prepared animal fodder

8%
37,6
10,1
Wood and articles of wood
27,6
4,0
5% mineral
Cement and other
materials
26,7
3,0
Edible fruit and nuts
16,9
4,9
Coffee
Bovines and camels
Roses
187,6
Oilcake
Volume [ '000 tonnes]
Value [Million USD]
Wood
Cement, Marble, Quicklime
Bananas, citrus and Mangoes
15,1
39,2
Cotton yarn and carded
14,6
72,6
Meat of goat
Cereals
9,5
4,8
Wheat, sorghum and teff
Vegetable plaiting materials
8,3
1,1
Bamboos
Preparations of cereals
3,8
6,7
Fresh injera
3,7
12,6
Natural gums
Cotton
Meat and edible meat offal
Gums and resins

Raw hides and skins and leather
3,6
Beverages5%
and spirits
3,3
4,5
Gold and precious stones
0,0
Others
Prepared leather of goats and sheep
101,3
Beer, liqueurs and soft drinks

166,2
Gold
24,7
195,9
Source: ALG based on data from Revenues and Customs Authority

39
On the other hand, imports are composed of a large quantity of products since the country imports everything
that is not produced locally. These include all kinds of manufactured items, as well as fuel, inputs for agriculture,
and some basic food products such as cereals or sugar.
The main imports are, in terms of weight: Mineral fuels and derivatives, cereals, iron and steel products,
fertilizers and sugar.
Some high-value products such as machinery, vehicles, electrical equipment and pharmaceutical products
represent an important share of the import value.
The following chart shows the countrys main imports by tariff category in 2013.
Figure 29: Ethiopian imports by tariff chapter and main product 2013
Main products
Mineral fuels and and products of
their distillation
1.684,0
1.257,5
1.436,5
Cereals
589,6
836,5
644,9
Iron and steel
373,9
221,2
Animal or vegetable fats and oils
363,2
391,6
Plastics and articles thereof

8%
220,4
400,8
Sugar cane
Volume ['000 tonnes]

Value [Million USD]
Palm oil
Polymers and plastic products
218,4
Articles of iron or steel
439,0
Machinery and 5%
mechanical
appliances; parts thereof
Vehicles other than railway and
parts
193,3
1.686,5
189,1
1.281,4
Ceramic products
115,4
50,9
Electrical machinery and

equipment and parts
105,7
814,0
104,3
131,5
73,5
62,3
Glass and glassware
65,6
52,1
Products of the milling industry

and malt
61,5
43,5
Malt and wheat flour
54,2
155,4
Rubber and articles thereof
54,0
Inorganic chemicals; organic or

inorganic compounds of
5%
52,9
41,8
Pharmaceutical products
Steel bars and flat-rolled products
307,5
Sugars and sugar confectionery
Miscellaneous chemical products
Wheat and rice
593,4
Fertilisers
Paper and paperboard
Petroleum fuels, coal and petroleum coke
255,4
New pneumatic tyres
50,7
60,0
13,1
Others
Pasta and malt extract
527,1
517,8
1.755,3
Note: when no product is specified, there is no dominant product in the chapter, but several products imported

40
1.5.2
Commercial partners
Ethiopian trade relations are focused on Asia, Africa, the Middle East, a few countries in Europe and the United
States. This applies to both imports and exports, although in terms of imports the relation with the rest of Africa
is milder than in the exports.
Ethiopian trade is highly focused on a few countries: The 10 most important commercial partners for imports
account for 82% of the total import volume; the 12 most important partners for exports represent 71% of the
total export volume.
Figure 30: Ethiopian external trade by origin/destination 2013
EXPORTS: 1.4 million tonnes (2,591 millions USD)
IMPORTS: 7.3 million tonnes (10,955 million USD)
11.4%
(17.8%)
14.3%
(28.8%)
3.2%
(5.3%)
45.9%
(52.6%)
29.9%
(23.2%)
4.5%
(5.4%)
32.4%
(20.2%)
17.4%
(18.4%)
0.1%
(0.1%)
0.2%
(1.0%)
34.8%
(23.5%)
5.5%
(3.1%)
0.1%
(0.2%)
0.3%
(0.8%)
Regarding exports, Ethiopia sells an important part of its products to the neighbouring countries of Somalia,
Sudan and Djibouti, especially fresh vegetables, leguminous vegetables, live animals and chat. Amongst Asian
countries, China is the main partner, representing 13.22% of the exported weight, followed by Pakistan. China
imports from Ethiopia are centred around sesame seeds, as well as oilcake to a minor extent. Exports to
Pakistan, as well as to the major importers in the Middle East (Saudi Arabia, Turkey, Israel and UAE) are
composed of leguminous vegetables, sesame seeds, coffee and goat meat.
Finally, exports to Europe and America are concentrated on Germany, the Netherlands and the United States,
and the product matrix differs substantially from the exports to countries in other continents, being composed
basically of high value products, such as coffee, roses and oilseed. The following table summarizes the main
export partners in 2013 as well as the main export products.

41
Table 2: Ethiopias main trade buyers in 2013 (Exports)

Region
Africa
Asia
Middle East
Europe
North America
Destination
country
Somalia
% of exports
(weight)
% of exports
(value)
13.22%
11.93%
Chat, live bovine animals
Main products
Sudan
8.73%
3.50%
Leguminous veg., wood, coffee
Djibouti
6.28%
4.20%
Fresh vegetables and fruit, chat
China
13.22%
11.67%
Sesame seeds, oilcake
Pakistan
6.09%
1.83%
Leguminous veg.
Saudi Arabia
3.94%
6.19%
Coffee, meat of goat
Turkey
3.56%
2.89%
Sesame seeds, leguminous veg.
Israel
3.35%
3.50%
Sesame seeds
UAE
2.75%
2.89%
Leguminous veg., meat of goat
Germany
3.54%
6.73%
Coffee
Netherlands
3.37%
3.06%
1,339,000
tonnes
6.31%
4.84%
2,591 million
USD
United States
TOTAL EXPORTS
Roses
Oilseeds (others than sesame), coffee
Regarding imports, 33% of their volume and 38% of their value is originated in Asia, particularly China and
India. China supplies Ethiopia with fertilizers and all kinds of manufactured items, especially electrical
equipment, machinery and mechanical appliances, vehicles and articles of iron and steel. India, on the other
hand, supplies cereals, iron and steel products, pharmaceutical products, and to a minor extent several
manufactured products. Ethiopia buys palm oil in particular from Indonesia.
Middle East provides Ethiopia with fuel and petroleum derived products (plastic). Saudi Arabian, UAE and
Kuwait imports are mainly composed of these products. South Africa, additionally, provides coal.
Turkey and Ukraine, on the other hand, provide iron and steel products. Both countries, as well as the United
States also sell cereals to Ethiopia. Some other products are bought from a long list of countries in minor
quantities.
Table 3: Ethiopian main trade providers 2013 (Imports)
Region
Origin country
% of
imports
(weight)
% of
imports
(value)
India
18.72%
10.98%
China
15.04%
26.91%
Indonesia
Saudi Arabia
UAE
Kuwait
Turkey
Ukraine
South Africa
United States
4.32%
15.68%
4.74%
4.11%
5.05%
6.21%
4.15%
4.51%
3.23%
8.32%
3.13%
3.01%
4.32%
1.92%
1.21%
5.08%
10,955
million
USD
Asia
Middle East
Europe
Africa
North America
TOTAL IMPORTS
7,343,000
tonnes
Main products
Cereals, iron and steel products,

pharmaceutical products, other
manufactured products
Fertilizers, electrical equipment,
machinery and mechanical appliances,
vehicles, iron and steel items
Palm oil
Fuel and other petroleum derivatives
(plastic)
Cereals, iron and steel products
Cereals, iron and steel products
Coal
Cereals

42
1.5.3
International corridors and border posts
Ethiopia, as a landlocked country, does not have access to the sea, and therefore does not have a port of its
own. Thus, Ethiopian foreign trade has to use internal airports and ports from neighbouring countries for trade
with non-neighbouring countries. Since Eritreas independence and the closing of border posts with this
country, Ethiopia has mainly used the Port of Djibouti and to a lesser extent the Port of Berbera and the Port
of Sudan.
Figure 31 shows the distribution of Ethiopias external trade amongst its different corridors. Maps in figures 32
and 33 illustrate these corridors differenciating between exports and imports. Finally, Figure 34 focuses on the
main products traded via the border posts at the end of each corridor.
Figure 31: Ethiopian external trade corridors by volume transported (2013)
8.000
85.8%
7.000
'000 tonnes
6.000
5.000
4.000
3.000
2.000
3.9%
1.000
0.7%
1.6%
2.9%
0.6%
1.1%
2.6%
0.4%
0.3%
Currently, external trade is transported mainly via one corridor to Djibouti: the Addis Ababa Galafi - Djibouti
corridor (and also its ramifications to Kombolcha and Weldiya). During 2013, this route transported up to 7.6
million tonnes, comprising 86% of the countrys total foreign trade. This corridor is used for both imports and
exports with origins or destinations all over the country, with the exception of the eastern region (Dire Dawa to
Jijiga) and some specific exports originating in the northern part of Amhara and Tigray.
The second largest corridor in terms of volume transported also connects with Djibouti, through the Dewele
border post. This corridor supports an annual flow of 386,000 tonnes (4.4% of trade volume), but the freight
using this corridor is mainly destined to the eastern part of the country (from Dire Dawa to Jijiga). Only a small
share of the freight using this corridor goes to the central part of the country due to higher transport costs than
the Galafi corridor (see chapter 2.2 comparing the Djibouti corridor alternatives in terms of distance, transport
time and cost).
The third most important international corridor in terms of volume connects Ethiopia to Somaliland (Somalia)
through the Togo Wechale border post. This frontier post handled in 2013 252,470 tonnes and has a double
function: it is the main door for Ethiopian exports destined to Somalia and it is the entrance for imports using
the Port of Berbera in Somaliland (originating outside Somalia). In 2013, approximately 159,000 tonnes were
exports destined to Somalia, and the rest (93,000 tonnes) were imports coming from the Port of Berbera.

43
Figure 32: Ethiopian import trade corridors (2013)
Imports Trade Corridors

8.000
7.000
91.6%
'000 tonnes
6.000
5.000
4.000
3.000
2.000
1.000
0.4%
1.5% 3.6%
0.7%
1.3%
0.4% 0.1% 0.2% 0.3%
Rama
Humera
SUDAN
Zala Ambesa
0,2%
Metema
93.5%
1,5%
PORT OF DJIBOUTI
Galafi
93.1%
Almahal
97.35%
4.25%
0,4%
Dewele
Gizen
91,6%
Kurmuk
0,4%
0,7%
3,6% Teferi Bar
PORT OF BERBERA
1,3%
Togowechale
Addis Ababa
Airport
Jijiga Center
Customs
Gambella border
0,2%
Port / Airport
Port of Djibouti
Port Sudan
Berbera Port
Port of Mombasa
Other Somali ports
ADD Airport:
OTHER SOMALI
PORTS
Freight (000 tones)

7,211.9
0.6
93.6
2.7
11.1
26.6
Moyale
0,1%
KENYA

44
Figure 33: Ethiopian export trade corridors (2013)
800
Exports Trade Corridors
54.3%
'000 tonnes
700
600
500
400
300
15.2%
11.8%
200
2.3% 1.7%
100
5.4%
5.4%
2.1% 1.3%
PORT SUDAN
5,5%
6.7%
1,2%
2,5%
5,4%
Humera
Rama
Zala Ambesa
SUDAN
Metema
PORT OF DJIBOUTI
58,3%
1.7%
0.1%
56%
Galafi
2.3%
2%
1%
4%
Gizen
DJIBOUTI
Dewele
5.4%
0.1%
57%
1%
Almahal
54,3%
Kurmuk
5.4%
Addis Ababa Airport
Togowechale
0,1%
PORT OF BERBERA
11,7%
SOMALIA
Jijiga Center
Customs
Gambella border
0.15%
SOUTH
SUDAN
Port / Airport
Port of Djibouti
Port of Sudan
Port of Berbera
ADD Airport:
Freigh (000 tonnes)

776.43
87.8
1.36
72.81
Moyale
1.3%
SOMALIA
KENYA
2.1%

45
Two parallel corridors connecting to Sudan through the border posts of Humera and Metema are remarkable
international corridors. In 2013, Humera border post had transit of 109,421 tonnes of goods, basically exports
of sesame and coffee using Port of Sudan. On the other hand, the figure for the Metema border post was
107,708 tonnes, including imports of fuel (from Sudan) and exports of leguminous vegetables, wood and
sesame seeds, mainly destined to Sudan.
Finally, the fifth international corridor in terms of registered volume of trade is currently the only connection to
Kenya, the southern corridor to the border post of Moyale. In 2013, this corridor registered a total trade of more
than 38,000 tonnes, mainly Ethiopian exports to Kenya (28,000 tonnes). This corridor currently handles only a
small part of Ethiopian external trade, but in the future it could have a more important role if commercial
relations between Kenya and Ethiopia are favoured through trade and economic integration agreements (see
Box 4: Trade relations between Kenya and Ethiopia)10.
Besides the land corridors, it is important to highlight the role of the Addis Ababa Airport, channeling 5.4% of
Ethiopian exports and 0.4% of the countrys imports.
Figure 34: Ethiopian external trade border crossings and main products (2013)
Sesame seeds
Coffee
Leguminous veg.
ERITREA
8%
Leguminous veg.
Wood
Sesame seeds 6.6%
Humera
Rama
Zala Ambesa
0.2%
93.2%
Metema
SUDAN
Fuel
Galafi
0.1%
Bamboos
DJIBOUTI
Almahal
4.3%
5.4%
(21.3% value)
Gizen
Kurmuk
0.4%
(11.3% value)
Roses
Meat of goat
Fresh vegetables
Dewele
Electronics
Pharma products
Vegetables
Coffee
1.3%
11.8%
Togowechale
Spirits and liquors

0.2%
Leguminous veg.
Oil seeds
Coffee
58.4%
Live bovines, camels and sheeps
Oilcake

All kind of imports
Teferi Bar
Addis Ababa Airport
5.4%
All kind of imports
Cereals and preparations, sugar
Chat
Fresh vegetables
Live bovine animals
Jijiga Center Customs

(to/from Somalia through
South-East borders)
Gambella border
SOUTH
SUDAN
0.2%
1.4%
Fresh vegetables
Cereals, Sugar
SOMALIA
Key
Moyale
Imports
Exports
Percentages refer to the proportion (in volume)
of trade entering / exiting through this border
post
Chemicals
Cereals, Sugar
0.1%
2.1%
Leguminous veg.
Portland cement
KENYA
10
Based on the Customs Authority data, in 2013 only 13,517 tonnes were imported from Kenya (0.18% of total imports) and 29,227 tonnes
were exported (2.16%) in 2013. 82% of these flows went through Moyale (35,207 tonnes).

46
Box 4: Trade relations between Kenya and Ethiopia
Kenya and Ethiopia, despite being neighbouring countries with significantly large economies, do not have
a prominent trade relationship, according to official figures. In 2013, Ethiopian Revenues and Customs
Authority (ERCA) registered only 13,517 tonnes imported from Kenya (0.18% of total imports) and 29,227
tonnes exported to this country (2.16%). In terms of monetary value, imports from Kenya accounted for
USD 33.3 million (0.30% of total import value) and exports reached USD 16.9 million (0.63% of total export
value). 82% of these flows went through Moyale (35,207 tonnes), the only border post between both
countries, and the remaining 18% was shipped by sea through Djibouti port. Air transport was used for only
a few high-added value products, accounting for only 384 tonnes (0.9%) but with a monetary value of USD
7.2 million, representing 14% of the total traded monetary value between Kenya and Ethiopia. No trade was
registered through other border posts, for example going through Somalia.
These figures represent a very small share of the total external trade of Ethiopia (0.49%). However,
according to the interviews undertaken by the Consultant, they do not actually represent the total bilateral
trade between the two countries. Several stakeholders confirmed to the consultant that other non-official
trade flows exist between Ethiopia and Kenya.
It is not rare that two neighbouring countries with long terrestrial borders have a fraction of their bilateral
trade unregistered by Customs Authorities. Tariffs on imports increase costs on trade; in order to avoid
them, some of the trade flows may try to skip these costs by using alternative routes (routes that customs
authorities do not permanently control). Therefore it is not easy to estimate this contraband trade, it is hidden
from public authorities.
However, there is a way to get to an estimation, on the basis of a comparison between the trade databases
from both countries: Tariffs usually only apply to imports; what is import for one of the countries is an export
for the other; when considering contraband trade, it might be registered as export in the country of origin,
but not as an import in the destination country; therefore, the difference between these two records for the
same flow may indicate the hidden trade (hidden to the destination country authorities). This difference is
might also be due to errors or mistakes in any of the countries databases, but this rarely happens.
Based on data from the United Nations (UN COMTRADE), the following table shows the registered flows
in the Ethiopian and Kenyan customs databases for the trade flow going from Kenya to Ethiopia. It can be
observed that from 2007 to 2011, the registered value in the Ethiopian Customs Database is lower than the
Kenyan value. The difference between the two databases ranges from 43% to 110% of the original
Ethiopian registered value. Assuming that most of this difference is trade hidden to Ethiopian Authorities, it
can be concluded that the yearly flows from Kenya to Ethiopia is 1.5 to 2 times the ERCAs registered trade
(in terms of value).
Table 4: International freight flow from Kenya to Ethiopia
Database
of Origin
Indicator (000 USD)
2007
2008
2009
2010
2011
2012
Ethiopia
Declared imports of Ethiopia from

Kenya
35,808 30,494 31,823 32,843 35,050 40,579
Kenya
Declared export of Kenya to Ethiopia
51,027 63,915 55,882 55,310 55,021
Difference (either illegal trade or

error in databases)
Percentage on the registered trade
(in Ethiopia)
No
data
2013
No
data
No
data
15,219 33,421 24,059 22,467 19,971

43%
110%
76%
68%
57%
Source: ALG based on data of UN COMTRADE
Since the hidden trade flows are illegal and cannot be detected by the Ethiopian Authorities, they must use
alternative routes to the main international corridor (Moyale border post) controlled by Ethiopian Customs
Authority, which creates informal import freight corridors.

47
Milion USD
Figure 35: Registered and unregistered trade flows by Ethiopian Database

70
60
Unregistred flow from Kenya to Ethiopia
50
40
30
15,2
35,8
33,4
24,1
22,5
30,5
31,8
32,8
20,0
35,1
20
10
Registred flow from Kenya to Ethiopia
2007
2008
2009
2010
2011
Note: unregistered means that those flows are not registered by the Ethiopian Revenues and Customs Authority
Source: ALG based on data of UN COMTRADE

48
The current structure of Ethiopias economy, fundamentally based on agriculture and farming
and with a low presence of manufacturing activity, has led to a high imbalance of its external
trade: the monetary value of its imports is more than four times higher than that of its exports.
Ethiopian foreign trade has experienced notable growth in the last few years. The value of
exported goods has grown at a pace of 15% CAGR over the last ten years. In terms of weight,
imports have grown 3.7%per annum and exports have grown at a pace of 10.2% per annum.
Despite the higher increase in exports, these are still a small part of foreign trade and
Ethiopias imports represent most of the freight transported throughout the country.
The main export products are certain vegetables (legumes, potatoes and chat), oilseeds
(basically sesame seeds), coffee, live animals (bovines and camels) and roses. Other
important exported products in terms of value (but with less importance by volume or weight)
are gold, leather from goats and sheep, goat meat and cotton yarn. Most of these products
belong to the primary sector, and most of them have limited added value. The major
commercial partners are neighbouring countries (Somalia, Sudan and Djibouti) as well as
China, Pakistan and a few countries in the Middle East (Saudi Arabia, Turkey, Israel and the
UAE). High value products such as coffee, roses and oilseed are also bought by Germany,
the Netherlands and the US.
Imported goods cover a large number of products but among the most notable are: fuel,
cereals, iron and steel products, fertilizers, sugar, palm oil, plastic products, machinery,
vehicles and electrical equipment. The main suppliers are located in Asia and Middle East
(India, China, Saudi Arabia, Turkey, UAE ...). In the African continent, only South Africa
represents a significant supplier to Ethiopia, accounting for 4.15% of its imports.
Ethiopia is a landlocked country with no access to the sea. Therefore, it depends on the ports
of neighbouring countries for the transportation of its overseas exports and imports,
accessing them through specific land corridors. At present, the most widely used corridor,
channelling 85.8% of foreign trade, is the one connecting Addis Ababa with Djibouti through
Galafi. The second corridor in importance is the alternative corridor through Dewele.
Connections through the other neighbouring countries are much less used and are mostly
related to specific exports.
The international corridor connecting Ethiopia and Kenya presents a remarkable potential
for future development, particularly if we consider the current informal trade between the two
countries (which almost duplicates, in monetary terms, the official trade registered by the
Ethiopian Revenues and Customs Authority) and the possibility of trade and economic
integration agreements between the two countries.

49
1.6
Transport sector contribution to economic growth and poverty reduction
The Ethiopian territory is characterized by a complex orography and a rather dispersed population remaining
fundamentally rural. This fact, together with inadequate road network and transport services (which will be
described in Chapter 2) has resulted in weak spatial integration, predominance of rural settlements and a low
level of economic activity. This has constrained the growth process and compounded the poverty problem.
The role of transport is generally believed to be key for breaking this vicious circle.
Ethiopia is an agrarian economy where agriculture provides employment for about 80% of the population and
constitutes about 29% of overall GDP. The agricultural system in the country is mainly rain-fed subsistence
farming. Although poverty has been declining in Ethiopia, it still remains quite high at 30% of poverty rate in
2011 (MOFED, 2012). Ethiopias per capita income is below the Sub-Saharan African average of US$1225
(World Bank, 2012).
Ethiopia made the transition to a market economy in 1991 through successive economic reform measures
along the lines of the World Bank and IMF reform agenda. Key features of this reform during the early 1990s
involved liberalization and deregulation of the economy, greater private sector participation and
macroeconomic stabilization.
Ethiopias economy grew at an average 5% annual rate during the 1995-2002 period and at a rate superior to
8% per annum since 2002. This growth has been parallel to specific economic policies from the GoE: In
2005/06 the government designed and endorsed a plan for accelerated and sustainable development to end
poverty. This plan was to bring economic growth and to achieve the UN Millennium Development Goals, with
rural economic growth and poverty reduction as one of its main thematic objectives. This plan was updated in
2010, becoming the Growth and Transformation Plan (GTP)11.
The GTP was equally designed to achieve pro-poor growth as well as meet the Millennium Development
Goals. The major objective of the plan is to strengthen modern and productive agricultural economy in which
industries and technologies play a leading role (MOFED, 2010). In the framework of this plan, the Ethiopian
Government underlined the importance of expanding and providing appropriate infrastructure in order to
achieve the MDGs.
Transport infrastructure has been playing a substantial role in the economy especially since the federal
governments decision to launch a Road Sector Development Program in 1997. In the past few years, every
poverty reduction strategic plan has given priority to accessibility improvement, especially for the rural
households.
1.6.1
The role of infrastructure in poverty reduction
Transport is a crucial driver of development, bringing socio-economic opportunities within the reach of the poor
and enabling economies to be more competitive. Transport infrastructure connects people to jobs, education,
and health services; it enables the supply of goods and services around the world; and allows people to interact
and generate the knowledge that creates long-term growth. Rural roads, for example, can help prevent
maternal deaths through timely access to childbirth-related care, boost childrens enrolment in school, and
increase and diversify farmers income by connecting them to markets.
Poverty reduction is more likely to occur when communities have ready accessat all hours and in all kinds
of weatherto essential services and to markets.
Improvements in transport have the greatest impact on poor people when they are part of a cross-sectoral
development agenda. Efficiencies are also gained through a multi-modal approach, such as to improve
passenger and freight mobility. However, enhancing transport infrastructure and services is not enough. The
functioning of institutions and practitioners access to good knowledge are also crucial to effective transport
solutions.
High transport costs magnify the impact of distance and reduce trading opportunities, while good freight
services can make traded goods more affordable and help developing countries to build more complex supply
chains that facilitate trade.
11
See chapter 3. Policy and Institutional Framework

50
What exact impact the project would have on poverty reduction hinges on both the type of infrastructure or
services and the areas and people that the project serves. It also depends on the operating environment of
the project, particularly market structures and government regulations. In general, local access roads in poor
rural and urban areas make only a modest contribution to national income growth, but they are likely to have
a direct and significant impact on the daily life of the poor. On the other hand, inter-city transport modes such
as trunk roads, rail and shipping are of strategic significance to a national economy. They are provided with
the objective to stimulate and facilitate national income growth; their impacts on poverty reduction are likely to
be indirect.
In general, a transport project is expected to contribute to poverty reduction through its indirect impacts on
economic growth or its direct impact on personal welfare of the poor.
The indirect approach relies on broadly based economic growth to generate income-earning opportunities
for the poor, while the direct approach targets assistance to the poor for their specific basic needs, especially
food, health care, and education. Because both approaches to poverty reduction require adequate means of
moving people and goods, transport development becomes a crucial complementary factor in the process of
poverty alleviation.
It is important to note, however, that many of the effects of investment in infrastructure noted here are feedback
effects adjustments in prices and quantities in markets that are related to infrastructure markets. Thus, the
evaluation of the impact of investment in infrastructure on economic growth and poverty reduction requires a
general equilibrium approach. The impact of an infrastructure intervention on poverty will depend on the net
effect of outcomes in related product and factor markets on poor peoples livelihoods.
Investment in roads needs to be looked at in tandem with investments in transport operations as these
complement each other in bringing about the desired impacts.
Transport role is pervasive, having cascading effect, one leading to another, on different socio-economic
activities. It empowers people by providing them access to opportunities, markets and basic services and
reduces vulnerability to natural and man-made disasters. As such, it is viewed as critical for reducing poverty,
promoting socio-economic growth and administrative and political cohesion, and improving social network.
Figure 36: Road infrastructure and transport sector investment impact analysis
Road Corridor and
Linkages Investment
Accessibility
Employment
Opening up isolated
rural areas
Transport cost
Production
Patterns
Transport Sector
Investment
Motorized Mode
Stimulus to new
economic activities
Credit, Trade and

Market Access
Socio-economic interaction
between Communities
Travel time cost
Consumption
Patterns
Improved Mobility
Vehicle use
Social
participation
Employment
Generation
Service Frecuency
Migration &
Mobility
Service
Outcomes
Information
Flow
Income
Generation
Service Delivery
Income Effects
Improvement in Development Potential
Economic Growth
Poverty Alleviation
Improvement of Quality of Life
Source: Transport and Poverty Observatory Study. ERA, 2012

51
1.6.2
Analysis of previous studies relating the transport sector and poverty reduction in
Ethiopia
One of the goals that the Ethiopian government has set since the beginning of the development of the Road
Sector Development Project (RSDP) is the reduction of poverty, in line with the objectives of the Growth and
Transformation Plan (GTP) 2010 -2015.
Several documents have been prepared along the years with the aim of assessing the impact of road network
development on the quality of life of the Ethiopian population. There are two priority studies which stand out in
this regard:
The Transport and Poverty Observatory, which aims to undertake panel monitoring of social, economic
and environmental outcomes and the impacts of four road corridor projects.
During RSDP I-III the Ethiopian Road Authority made three TPO studies to monitor the contribution that
its roads were making to the country's goal of poverty reduction. ERA published its Final Findings
Report in 2012.
- It is currently conducting a Five-year Study, 2012-2016, within the RSDP IV period with 2012 as its
base year. Four new corridors are being analysed.
The "Road Sector Development and Economic Growth in Ethiopia" study prepared in 2011 by the
Ethiopian Development Research Institute. The study attempts to identify the trends, and takes stock of
achievements and the impact of the road network on economic growth in Ethiopia. To do this, descriptive
and econometric analyses are used. The econometric analysis is based on time series data extending
from 1971-2009. The findings reveal that the total road network has significant growth-spurring impact.
When the network is disaggregated, asphalt roads also have a positive sectoral impact, but gravel roads
fail to significantly affect both overall and sectoral GDP growth, including agricultural GDP. The author
points out some possible explanations:
- Road sector is not highly integrated with the agricultural sector in terms of accessibility to the rural
dweller.
- Other possible explanation would be that disaggregated roads fail to reach the threshold level, which
is required spurring agricultural GDP growth.
- Moreover, another plausible explanation ascribed for such unexpected finding might be the fact that
the rural area is not as such networked with asphalt and gravel road and access to these networks is
somehow thin which essentially proves lesser impact on agricultural GDP growth. Rather, in this area
community roads play a more significant role than these two types of road networks. As already
explained in the descriptive analysis section, community road is not well accounted by the road
authority for it to be in incorporated within the regression equation.
Other works may be mentioned, such as:
Dercon et al. The Impact of Agricultural Extension and Roads on Poverty and Consumption Growth in
Fifteen Ethiopian Villages, American Journal of Agricultural Economics,
Admasu Shiferaw et al. Road Networks and Enterprise Performance in Ethiopia: Evidence from the Road
Sector Development Program, International Growth Centre, London School of Economics, 2012
MOFED (2012) Ethiopias Progress Towards Eradicating Poverty: An Interim Report on Poverty Analysis
Study o Development and Poverty in Ethiopia
All the studies coincide on the positive effects that the development of the road network has had on improving
the living conditions for the people of Ethiopia.
1.6.3
Transport sector and poverty reduction. Direct approach
It is believed that often one of the underlying causes of rural poverty is poor accessibility, understood as the
ability (or, on the contrary, the level of difficulty) of rural people to use, reach or obtain the facilities, goods and
services they need to sustain their daily lives. Accessibility is inversely related to the time, effort and cost
necessary to reach those locations (facilities) where people can benefit from goods and services. It can be
improved in two fundamental and complementary ways: (i) through a better location of basic facilities and
services that rural people need to use (schools, health centres, markets, etc.); and (ii) through improving the
mobility of rural people so that they can travel faster, more easily, more conveniently and less expensively.
52
Rural welfare and accessibility are also closely related. Accessibility improvements generally contribute to the
improvement of living conditions and hence they reduce poverty.
The studies carried out to this day allow to conclude that the development of the road network in Ethiopia has
significantly improved accessibility in rural areas:
The total road network has expanded from about 26,550 km at the beginning of the RSDP to its current
63,083 km including woreda roads, increasing road density from 24.1 to 57.3 km per 1000 sq. km and
from 0.46 to 0.75 km per 1000 people.
- Accessibility, measured in terms of average distance from the road network and proportion of area
farther than 5 km from an all weather road, shows that substantial progress has been made in
expanding the road network. Specifically, due to the construction of new roads, the average distance
from a road has been reduced from 21km in 1997 to 8.7 km in 2012. The proportion of area farther
than 5 km from an all weather road, which was 79% in 1997, has been reduced to 56.4% in 2012
- The Rural Accessibility Index, RAI, measures the number of rural people who live within two kilometers
(typically equivalent to a walk of 20-25 minutes) of an all-season road as a proportion of the total rural
population. The average RAI for the whole country is currently around 32%, a significant improvement
when compared to the situation at the outset of the RSDP (13%).
- Improving the condition of the road network remains a challenge. In the first year of the RSDP, 52% of
the road network was in poor condition and only 22% was in good condition. The rehabilitation,
upgrading and maintenance intervention effort under the RSDP improved the percentage of the road
network in good condition to 64 percent, with only 14% remaining in a poor condition.
1.6.4
Transport sector and economic growth. Indirect approach. First findings
The relationship between the development of transport infrastructure and the growth of the economy is present
in most of the studies previously analysed. Through surveys and econometric studies the conclusion has been
reached that in most of the transport corridors analysed, the per capita income of the population has increased
notably.
In an attempt to find a relationship between the development of the road network in Ethiopia and the growth
of the economy, a comparison has been carried out between the investment made since the beginning of the
RSDP development, and the changes in GDP per capita over the same period. As it can be seen, a correlation
exists between them.
GDP per capita (constant

2005 US$)
Figure 37: Correlation disbursement for RSDP implementation and GDP per capita
350
300
250
200
150
100
50
0
600
5600
10600
15600
20600
25600
Disbursement for implementation of RSDP (METB)
30600
Source: ALG based on ERA and World Bank data
An analysis has also been made on the evolution of the importance of the transport and communications
sector, and additionally the construction sector, in the growth of Ethiopia's gross domestic product over the
last two years, with both sub-sectors being strongly linked to the development of the road network. As it can
be seen in the figure below, these are the two components of GDP showing the greatest growth, after Fishing.

53
Figure 38: Compound Annual Growth rate (2011-2013) of the different GDP subsectors
80%
77,7%
70%
60%
50%
40%
43,7% 42,6%
41,0% 40,8% 38,9%
36,0% 34,4%
29,8%
30%
26,6% 26,5% 24,9%

24,3% 24,0% 23,0%
21,5%
20%
15,9%
10%
0%
Source: ALG based on data from Ministry of Finance and Economic Development (MoFED)
In a general way, it can be noted that investment in infrastructure can contribute to economic growth through:
Growth of the sector itself:
creation of employment in transport and other infrastructure;
opening up new opportunities for entrepreneurs in transport and others
Transport infrastructure and services that will make existing businesses more profitable;
Execution of public works that provide employment, in a counter-cyclical measure to stimulate an economy
(or particular domains of the economy) in recession;
Reduction of the costs of production inputs for almost all goods and services;
Increase of productivity through time savings and, in general, a lesser effort in production processes;
The opening up of new domestic and international markets;
Reduction of the effective rate of protection of exports;
Esear response to changes in the location and components of demand.
According to the analyses performed in this regard for the particular case of Ethiopia, it can be concluded that
there has been an increase in competitiveness and economic growth in this country due to the development
of the RDSP12
The total vehicle operating cost and savings calculated for the with RSDP and without RSDP scenarios
show that the VOC savings associated to the RSDP represent 12% and 9% of the VOC of the paved and
gravel road networks respectively.
The annual household income in 2011 in the four project corridors (above mentioned with regards to the
Transport and Poverty Observatory) averaged US$ 1,710 per household (Birr 30,780). This means a per
capita annual income of US$ 270.55 (Birr 4,870.25). Compared to the baseline household average of US$
243, the reported income has shown a net increase of 604% in US$ terms (1,361% in Birr Terms).
12
Assessment of 15 years performance of road sector development program. Ethiopian Roads Authority (ERA)

54
The average annual expenditure per household in all the project corridors is about 754 US$ (Birr 12,662).
Compared to the baseline, the current level of expenditure is about 133% in US$ terms (255% in Birr
Terms).
There has also been an impact on the development of the local construction industry: Out of 887 contracts
awarded over the last fifteen years of the RSDP, 643 contracts were awarded to local contractors. The
value of civil works assigned to local firms was more then US$ 2 billion (Birr 36.5 billion) until June 2012.
Finally, road projects created employment: During the 2012/2013 period, some 502,300 workers took part
in the development of the RSDP, including all levels, from engineers to manual workers.
1.6.5
Transport sector and poverty reduction. Future vision
The development of road infrastructure in Ethiopia is having an important impact on the expansion of
opportunities for local people and their economic system. This road network will continue to develop through
the IV phase of the RSDP and the Universal Rural Road Access Program (URRAP). These plans will
undoubtedly improve accessibility (and therefore the quality of life) of the rural population.
However, in order to have a future vision of the impact of the transport system on economic growth, we must
take into account the development of railways as well as the improvement of port infrastructure and services
through which Ethiopia aims to improve its transport network and reduce transport costs.
The consolidation of an integrated and multi-modal transport system may open new opportunities for economic
activity through the opening of new markets, the reduction of transport costs (with a direct effect on production
costs), diversification, etc.
The table below presents the main effects that the development of an integrated transport system could bring
to Ethiopia, from the point of view of both its direct effects (better accessivility of the population to goods and
services) and its indirect effects (improving the country's competitiveness, and therefore, its economic growth).
Mode of
transport
Poverty reduction
Road
Improved
access
to
schools
and
health facilities
Improved
access to labor
market
Reduction
transport
costs/time for
the poor
Competitiveness
Rail
Improved
accessibility for
passengers
New
opportunities
for
employment

Access to markets
Higher firm performance (particularly for
improvements in travel distance and area
accessible within an hour drive from the
town where the enterprise/industry is
located).
Market expansin
Entry of new firms into the formal sector
Increased agricultural productivity
Better prospect of off-farm employments
Opening up production zones
Reduction of severe traffic congestion in
urban areas
Articulation of the internal market
Quality increase in main road corridors and
international port connectivity
o Interregional and international
trade
o New road services
o Cost reduction
Market expansion
Decreased trade costs and interregional
price gaps
Support to mining sector development
Development and expansion of a logistics
infrastructure network
Reduced transport costs
Firms benefit from reduced factor costs
More structured transport system on the
basis of good port connectivity
Economic Growth
Increased real income

levels
Access
to
income
earning opportunities
More consumption
More revenues for the
public finances
More evenly balanced
regional growth
Improvements
in
economic
growth
(GDP) and employment
Diversification
of
economic activity
Development of the
service sector
More revenue for public
financing purposes
55
Mode of
transport
Poverty reduction
Direct
Employment
Competitiveness
Port/maritime
transport
Economic Growth
Market expansion
International trade and international
competitiveness
Development and expansion of a logistics
infrastructure network
Port and international maritime services
development
Development of Logistics services
Reduction in transport costs
Reduction in the cost of production for
enterprises
Reduction of maritime logistics costs and
ship waiting time as a consequence of
deeper draft and full port mechanization
Transport is a crucial driver of development, bringing socio-economic opportunities within the

reach of the poor and enabling economies to be more competitive
The relation between the improvement of the transport system and economic growth and poverty
reduction has to be considered at two different levels: direct and indirect. The direct level relies the
access of people to their specific basic needs, especially food, health care, and education. The
indirect level relies on the generation of income-earning opportunities for the population, derived
from the existence of a complete and efficient transportation system.
Since 1991, the GoE has been working on the expansion of the transport sector. Since the
beginning of the RSDP, several documents have been prepared with the aim of assessing the
impact of developing the road network on the quality of life of the Ethiopian population,: the most
important being the Transport and Poverty Observatory, and the "Road Sector Development and
Economic Growth in Ethiopia" study, developed by the Ethiopian Development Research Institute
The aforementioned studies have identified indirect benefits such as: VOC savings, Increase of
per capita annual income and annual expenditure per household, development of Local
Construction Industry, employment created in road projects, etc.
On the other hand, the main direct benefit is the improvement of accessibility: The proportion of
area farther than 5 km from an all-weather road has been reduced from 79% in 1997 to 56.4% in
2012. This improvement has clear consequences in the Ethiopian populations quality of life.
Road network will continue to develop through the IV phase of the RSDP as well as through the
development of the Universal Rural Road Access Program (URRAP).
The challenge for the future is to establish an integrated, multi-modal transport network consisting
of an inter-connected system of corridors (road, rail) and nodes (ports, airports). Only on the basis
of such a scheme a smooth, highly efficient and competitive transport system will guarantee the
boosting Ethiopias economy.

56
1.7
Key issues
The main conclusions to draw from the previous subchapters lead to the identification of the key issues to
consider for the development of a national transport strategy for Ethiopia. Thesee key issues are presented in
the current subchapter, considering the main motors of the countrys mobility demand (and which have guided
the development of the current Chapter 1): population distribution, production structure (agriculture, industry)
and trade dynamics.
The impact of a dispersed population
Ethiopias population is distributed throughout the country, with a very high percentage of inhabitants living in
rural areas and the urban population mostly distributed in small towns, with a very limited number of
intermediate or big cities.
This limited concentration of population (and therefore consumers) causes higher distribution costs in supply
chains and in the provision of transport services in general. A national transport strategy for Ethiopia needs to
consider this territorial characteristic in order to provide efficient solutions to minimize the impact of population
dispersion.
Inefficiency of agrigultural products logistics chains
The Ethiopian distribution chains rely on a large number of intermediaries (brokers or traders) of different sizes
who consolidate the products and connect them to the final consumers. In many cases, high broker costs
reduce the producers' margins (brokers have a position of power in the chain because producers are usually
small, not associated and with hardly any direct access to markets), which leads to an increase of the price for
final consumers
For certain products, the logistics chain is more efficient thanks to the Ethiopian Commodity Exchange (ECX),
which provides a transparent commercialisation system through a public warehouses network and an
Exchange Centre regulated by the public sector. The ECX development is a very useful tool to reduce broker
costs and allow small producers to access markets in an efficient and economical way.
New challenges associated to industrial development
The industrial sector is one of the priority development sectors of the GoE and its current growth is expected
to continue. In addition, Special Economic Zones are currently planned in the main industrial nodes of the
country, which will provide infrastructure and incentives for industrial development.
Although the current and future industrial activity is concentrated in the urban domain, the transportation chains
associated to the main industrial nodes of Ethiopia have a cross-national dimension, considering both the
provision of agriculture, livestock and mineral raw products to the different industries and the commercialization
of the finished products for domestic consumption and exports.
Therefore, the national transportation strategy for Ethiopia will have to consider a network of relations between
the different production and consumption areas, as well as the main transportation nodes chanelling the
imports and exports of the country.
Strong commercial dependence on foreign countries
The Ethiopian economy is characterised by a strong dependence on foreign countries, due to two main
reasons: its condition of land-locked country and its trade imbalance, with 7.34 million tonnes of imports and
1.34 million tonnes of exports in 2013, in other words, five times more imports than exports in terms of weight
(and the same happens in terms of value). This situation has a direct impact on transport efficiency, since
freight imbalance leads to a high percentage of empty truck leaving Ethiopia back to the neoighbour foreign
ports.
It is true that the current dependence on a few ports and land corridors allows greater freight concentration
end the subsequent economies of scale through mass transportation (particularly rail) but this also brings some
risks for the country: the failure of a single corridor might leave Ethiopia without access to international markets,
limiting the evolution of the economy. This is another issue to take into account when developing the national
transport strategy.
Besides, it is also advisable that the strategy includes the required elements to maximise the corridors
efficiency, focusing on the reduction of transport costs and on the increase of the countrys competitiveness
through the introduction of a reasonable number of measures.

57
Transport development: Beyond the RSDP

The Ethiopian road network has been improved through the development of the Road Sector Development
Programme I (RSDP I), continuing with the implementation of RSDP II, III and now IV, together with the
Universal Rural Road Access Program (URRAP), which will undoubtedly improve accessibility, and therefore,
quality of life, for the rural population.
In future, the consolidation of an integrated multi-modal transport network consisting of an inter-connected
system of corridors (road, rail) and nodes (ports, airports) will open new opportunities for economic activity
through the opening of new markets, the reduction of transport costs, and, therefore, of production, economy
diversification, etc.
Only on the basis of such a scheme, which represents one step beyond the current road improvement
programmes, a smooth, highly efficient and competitive transport system will be established, allowing to boost
Ethiopias economy.

58
2 Transport Sector Developmental Status

2.1
Introduction
Chapter 1 has explained the most important elements of Ethiopias mobility demand: population distribution;
agricultural, mining and industrial production; as well as imports and exports dynamics. This whole analysis
has led to the identification of the main issues that the national transport strategy will have to tackle.
Chapter 2 will focus on the infrastructure and services support for this mobility demand, considering the
different transportation modes available. This will be done through the analysis if two main elements: (i) the
supply of transport infrastructure and services and (ii) the mobility demand that is channeled through them.
The main conclusion of this chapter will be the assessment of how the current transportation supply responds
to the demand, considering not only the current situation, but also the future, through specific demand
forecasts.
This chapter has been structured in different subchapters focusing on each transport mode:
Road transport
Maritime transport and international logistics
Railway transport
Air transport
The demand vs. supply analysis mentioned above will be undertaken for each one of these modes.
2.2
2.2.1
Road transport
Introduction
Ethiopia has a road network of nearly 86,000 km 13, distributed in three different administrative competences:
Road transport represents the main transport within the Ethiopian territory, considering both freight and
passengers.
Only air transport represents an alternative to road for domestic transport, especially when considering the
transportation of goods, although the high costs associated to this mode restrict its use to high value or urgent
cargo.
Railway transport cannot be considered as an alternative mode for domestic transport; this is due to its lack of
competitiveness with regards to road transport. However, this situation may change in the future because the
GoE is currently investing in a new railway network that will probably offer a competitive alternative to road
transport along certain corridors.
In terms of international transport, the situation is slightly different. In this case, air transport has a higher share
when considering the transportation of goods, but it continues having a reduced impact in terms of volume.
Maritime transport is the main mode used for international trade, but since Ethiopia is a land-locked country,
this mode relies inevitably on the road transport for the connection to the ports of neighboring countries, as it
has already been explained in Chapter 1.
13
Year 2013, last available data

59
Table 5: Transport mode of the external trade (2013)

Flow
EXPORTS
Mode
Volume (tonnes)
% value
865,620
64.1%
1,566
58%
Road
411,681
30.5%
545
20%
72,810
5.4%
572
21%
Total
1,350,112
100.0%
2,684
100.00%
Bimodal*
7,320,015
99.2%
9,878
88.4%
30,742
0.4%
28
0.3%
Road
0.4%
1,263
11.3%
Total
7,377,364
100.0%
11,169
100.0%
Bimodal*
8,185,635
93.8%
11,444
82.6%
442,424
5.1%
573
4.1%
99,416
1.1%
1,836
13.3%
100.0%
13,853
100.0%
Air
TOTAL
TRADE
Value (million
USD)
Bimodal*
Air
IMPORTS
% volume
Road
Air
Total
26,606
8,727,475
*Bimodal indicates the combination of 2 modes of transport: road transport from Ethiopia to the port and maritime transport from there.
This does not imply for the carrier any special formula of responsibility on the whole bi-modal chain
Due to its current importance, road infrastructure and road transport service provision will be analyzed in the
current sub-chapter, considering the following key-aspects:
Road infrastructure
Road transport demand
Road infrastructure supply vs. demand
Road safety and overload traffic
Road haulage services sector
Main conclusions
2.2.2
Road infrastructure
Ethiopia has a road network of nearly 86,000 km 14, distributed in three different administrative competences:
Federal Network (30% of the total network length), Rural Network (38% of the total network length and
managed by the different Regions), and Woreda/Community Network (32%).15
The Federal network, with more than 25,700 km, represents the primary road network connecting all the
regions and main cities of the country. It includes all the trunk and link roads, as well as the main accesses to
this trunk-link system and some collector roads. The Rural and Woreda networks provide accessibility to the
rural areas, connecting these with the federal network.
Ethiopian roads have improved notably during recent years due to the development of the Road Sector
Development Programme (RSDP) I-IV16. The table below shows the changes brought by the RSDP between
1997 and 2013, considering a selection of indicators (RSDP Assessment Report, 2013).
14
Year 2013, last available data

Source: RSDP 16 Years Assessment Report, Ethiopian Roads Authority
16
Road Sector Development Program started at 1997 with RSDP I, as a road investment plan which aimed at improving and extending
the national road network in order to increase accessibility, reduce transport costs and improve safety. Since 1997, ERA has developed
3 additional RSDP (RSDP II, RSDP III, and RSDP IV). 2013, last year with available information, is the third year of the five-year plan
RSDP IV. In 16 years, RSD programs have invested 142 billion ETB in 81,629 km. of roads.
15

60
Table 6: Improvements in selected indicators from 1997 to 2013

1997
Indicators
Type of road
(Beginning of
RSDP)
2013
(Third year
RSDP IV)
General road provision

Road length (in km) including URRAP Roads
26,550
85,966
17%
74%
25%
58%
21%
54%
Unpaved (earth)
95%
22%
70%
24 km
78.2km
0.49 km
1.0km
% of area more than 5 km from all weather road
79%
46%
% of population less than 2 km from all-weather

road (Rural Access Index)
13%
43%
Average distance to all weather road
21km
6.4km
Road condition (% of roads in good condition)

Paved (Asphalt)
Federal Roads
Rural Roads
Woreda roads
Unpaved all-weather
road (Gravel)
Unpaved all-weather
road (Gravel)
Total Road Network

Road density (km / area or population)
Km of road / 1000 km2
Km of road /1000 inhabitants
Road accessibility
As it can be seen in the table, the improvements in the road network are very apparent:
The GoE investments have led to a remarkable increase of the total road network length (more than three
times during the last 16 years);
Road quality has also improved notably, with much higher percentages of roads in good condition
(reaching 74% in the case of paved Federal roads; 54-58% in the case of unpaved Federal and rural roads;
most of Woreda roads; and 70% of the total road network);
Road density and accessibility have also increased remarkably. The Rural Accessibility Index (%)
represents a very good example in this regard: 43% of Ethiopias population has less than 2km distance
to the closest all-weather road.
Therefore, the GoEs economic efforts are leading to very direct and positive results for Ethiopians, facilitating
their access to goods and services. Although further improvements still have to come, it is clear that the GoEs
road network policy is on the right path.
It is also worth mentioning, with regards to the Rural road network, that the Universal Rural Road Access
Program (URRAP) has been launched as a part of the RSDP envisaging connecting all Kebeles (lower level
geographic administrative regions) by standard and affordable all-weather roads that provide year round
access. The program implementation period (currently undergoing) includes the construction of 71,523 km of
all-weather roads throughout the country at an estimated cost of ETB 26 billion. The program is fully financed
by the Government of Ethiopia.

61
Table 7: Status of URRAP projects (July 2013)

Plan (km)
No.
Accomplishment
(EFY 2003-2005)
Remaining
work
in % from
Region
5 Years
3
Years
km
3
years
plan
5
years
plan
km
Communit
Employt
y
Opportuy
Participati
(2012/13)
on (000)
Plan
for
EFY
2006,
(2012/
13)
km
SNNPR
14,003
7,840
5,939
76
42
8,064
58
3,193
121,885
5,800
Amhara
18,003
10,079
5,084
50
28
12,919
72
2,421
47,225
5,200
Oromia
30,007
16,800
15,275
91
51
14,732
49
7,138
216,402
14,000
Tigray
2,500
1,400
1,010
72
40
1,490
60
1,666
27,614
1,200
B/Gumuz
1,800
1,008
110
11
1,690
94
1,415
420
Diredawa
159
89
88
99
55
71
45
946
80
Harari
50
28
110
394
221
1,094
60
Gambella
200
112
12
11
188
94
74
80
Somali
3,001
1,680
3,001
100
60
10
Afar
1,800
1,008
1,800
100
Total
71,523
40,044
27,628
69
39
43,895
61
14,423
416,655
26,900
The impact of the newly constructed URRAP roads has already been reflected on the improved accessibility
situation of the rural population as the average hours households have to travel to get all weather road reduced
from 2.9 hrs (8.7 km) in year 2010/11 to 2.1 hours (6.4 km) in 2012/13. Despite this improvement and
encouraging progress, there is a long way to go; as in three years, only 39 percent of the 5 years physical plan
is accomplished.
To end with this general evaluation of Ethiopias road network and on-going road plans, it is interesting to note
that an important part of Ethiopias road network is still rather restrictive for traffic due to pavement typology:
the Federal road network has currently 11,301 km (43%) of paved (asphalt) roads and 14,455 km (57%) of
unpaved (mostly gravel) roads; The Rural Network consists mostly of unpaved all-weather roads (gravel).
Finally, the Woreda rural roads are unpaved earth roads.
Although gravel roads allow traffic circulation all-year round (as far as they are well-constructed and
maintained), their speed conditions are not comparable of those of paved roads; and earth roads only allow
traffic circulation in dry weather. These conditions lead to high costs for users, both in time and in monetary
terms.
The figures below illustrate this fact, showing the evolution of the different types of roads between 1997 and
2013 (gravel roads remaining as the predominant typology) and the current distribution map, where the
remarkable length of non-paved roads is well apparent.

62
Network Length [Thousand km.]
Figure 39: Growth of Classified Road Network
100
90
80
70
Woreda
Woreda
Rural
Rural
Federal - Gravel
Gravel
Federal - Asphalt
Asphalt
60
50
40
30
20
10
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2112 2013
Figure 40. Ethiopia road network: Classification by road types
Earth
Federal Gravel
Minor Gravel
Paved
Woreda
Source: Ethiopian Roads Authority

63
2.2.2.1 Road network base for the proposal of a national strategy

The above subchapters represent a very brief explanation on Ethiopias road network, which includes nearly
86,000 km of infrastructure.
However, in order to embark on a strategic proposal for Ethiopias national transport system, the Consultant
has defined a selection of all those road axes which are key for the structuring of the territory at a federal level,
regardless of their administrative competence.
Naturally, the selected network corresponds mainly to the Federal Network, containing trunk roads and links
especially. This network is shown in the figure below and it will represent the Consultants working basis for
proposal-making from now on.
Figure 41: Main Ethiopian road network
Key
Axum
Humera
Shire
Main roads
Adigrat
Adwa
Secondary roads
Mekele
Metema
Gonder
Debre Tabor
Weldiya
Semera
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG

64
2.2.3
Road transport demand
Freight and passenger transport demand in Ethiopia has grown steadily along with the economy during the
last 10 years. In effect, between 2002 and 2012, the average annual GDP growth, which has usually been
over 10%, has generated a significant increase in the Average Daily Traffic (AADT) of Ethiopias main roads,
with an average annual growth rate of 10.4%17.This has generated a higher pressure on the countrys road
infrastructure.
According to the annual road survey campaigns of Ethiopian Roads Authority (ERA), traffic has grown steadily
for all types of vehicles. This is reflected in the following figure, which shows the growth of the traffic flow for
most of the road links covered in the survey. It is important to note that the vehicle-kilometre unit is a suitable
measure of traffic flow, determined by multiplying the number of vehicles on the road network by the average
length of their trips (measured in kilometres):
traffic flow (million vehkm)
Figure 42: Historical evolution of road traffic demand

14
12
10
8
6
4
2
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Cars & Rovers
1,043
1,125
1,193
1,229
1,341
1,624
1,687
1,969
2,025
2,247
2,235
7.9%
Buses
1,013
1,142
1,328
1,441
1,741
2,093
2,357
2,822
3,093
3,555
3,619
13.6%
Trucks
2,052
2,336
2,479
2,639
3,062
3,461
3,580
4,482
4,574
5,119
5,264
9.9%
Trailers
785
901
844
1,024
1,137
1,338
1,375
1,677
1,575
1,881
1,983
9.7%
000 vehicleskm
Annual
growth
rate
2002- 2012
Source: ALG based on ERA data
In appendix 11.4.- Historical traffic counts in selected road links the traffic evolution for a selection of links is
presented from 2002 to 2012. Some links (including main corridors and secondary roads) have experienced
very strong growth (between 10% and 20%).
The maps below provide a visual representation of the evolution of total traffic for the years 2002, 2004, 2006,
2008, 2010 and 2012. The green lines on the map indicate the sections of the network on which survey data
are available, and the thickness is proportional to the AADT of the link. The links in red and pink represent
other roads for which there is no count data available and thus neither historical nor current traffic levels are
known.
17
2012 is the last year with data available. All data presented in the current chapter are based on ERA annual traffic surveys, publicly
available from 2002 to 2012.
ERA carries out three yearly traffic surveys across the whole country, each one representing the high, medium and low season for
agricultural-related economic activity. For each survey, the Average Seasonal Daily Traffic (ASDT) is computed for each count. The three
seasonal counts are further averaged to reach an Average Annual Daily Traffic (AADT). The periods are termed as cycle counts and each
cycle count is organized for the first seven days of the months of February, July and November. The traffic census is taken for seven
consecutive days for 12 hours (6:00 AM - 6:00 PM) supplemented with a full 24-hour count on two of the weekdays (i.e. one on market
day and the other on normal day) to determine a factor for the night time flows. The raw data are collected manually using eight vehicle
categories: Cars, Land Rovers, Small buses, Large buses, Small trucks, Medium trucks, Heavy trucks and Trailers.
The locations where the counts are taken are representative of the traffic characteristics of a particular area or link, and the indicators
obtained can be used to estimate the average traffic for those links. The surveys conducted in 2012 covered a road network of 16,516
km.. All major road links are included in these surveys.

65
It is important to note that most of the countrys south-east road network has not been covered by these official
surveys, probably because the resources of ERAs survey campaign have been concentrated on the roads
with most relevant levels of traffic demand.
On the other hand, the Addis ababa-Adama link, which is a major traffic axis, has not been represented in the
maps from 2004 because it would overlap the adjacent links, preventing us to see them.
Besides these particular issues and from a general point of view, it can be seen in the maps that the overall
traffic pattern of the country has remained more or less stable over these last 10 years of rapid growth.
Figure 43: Historical evolution of demand on road transport network
2002
2004
2006
2008
2010
2012

66
Note: links between Addis Ababa to Adama have been hidden from years 2004 to 2012. These links hold an AADT per direction from
7,500 vehicles/ day in 2004 to 23,000 vehicles/day in 2012, values that are much larger than the rest of the country links. They are hidden
in order to be able to appreciate the growth in other country links.
The current situation can be assessed having a look at the 2012 traffic flow figure, which clearly shows the
following main traffic corridors:
Addis Ababa Adama Corridor, with nearly 17,500 veh./day , with a 75% of trucks. This corridor
channels the travel demand associated to the intense economic activity of the area and to the
attractiveness of Addis Ababa as the main centre of consumption and distribution of goods in the country.
It continues to Awash, although with a lesser level of traffic (over 4,500 veh/day).
The Southern Corridor from Hawassa/Sheshemene to Modjo, with an ADT of more than 3,500 veh. / day
of which 50% are trucks. This corridor serves as a connection from the southern region of the country
(Oromia and the region of SNNP are important agricultural production areas) to the metropolitan area of
Addis Ababa and the north of the country.
The Central Western Corridor from Addis Ababa to Jimma carries between 1,300 and 3,000 veh/day,
with 40% of trucks. Most of this traffic is due to Jimas role as a key-regional distribution centre for the
areas agricultural production.
The North-Western Corridor, from Addis Ababa to Gonder (through Debre Markos and Bahar Dar) has
a traffic between 1,300 and 2,000 veh./day, with 50% of trucks. It is strongly influenced in its initial stretch
by the economic activity of northern area of Adis Addis Ababa; more to the west, it reflects the important
relationship between intermediate cities and the highly-productive agricultural areas located in the centre
of the country.
The Northen Corridor from Addis Ababa to Mekele and Addigrat has a traffic flow between 1,000 and
1,600 veh./day, 30% of which are trucks. The highest traffic levels are located between Addis and the
northern area of Debre Birhan, although the link between Mekele and the entire northern area of Tigray
has high traffic levels too. Mekele is an important regional consolidation and distribution centre for the
entire north of the country, given its distance from Addis and its importance in terms of consumption and
industrial production.
The Central Eastern Corridor is an international corridor connecting Addis Ababa with Djibouti with a
traffic of 1,000 veh/day. The predominant flow is that of trailers serving international freight routes. In the
section from Awash to the border, the flows of passenger vehicles are very low (10%), given its main use
as a pure freight traffic corridor to Djibouti.
Eastern Corridor, comprising a section of particularly high traffic (between 1,600 and 1,900 veh./day with
50% of trucks)., located in an area with strong economic relations (Dire Dawa, Harar and Jijiga). This area
shows economic dynamics that are relatively independent from Addis Ababa and, unlike the rest of the
country, uses the Dewele axis to connect with Somaliland and the port of Berbera for its foreign trade.
The Addis Ababa Gimbi corridor carries less significant vehicle traffic flows (500 to 1,800 veh/day).
Transversal connections around the Addis area, generally in worse condition than the aforementioned
radial corridors, and with lower traffic levels: Wereta Weldiya (721 veh./day; 50% of trucks), Welkite
Hosaina (890 veh/day; 55% of trucks), Shashemene Sodo (1,006 veh./day) and Zeway Butajira (779
veh./ day).
The following figure highlights the aforementioned corridors using the 2012 traffic flows figure as a base. It is
followed by another figure showing the main traffic patterns of the country by type of vehicle, also for 2012.

67
Figure 44. Main corridors of Ethiopias Road Network
Northern Corridor
1,000 1,600 veh/day
30% trucks
Central Eastern Corridor

1,000 veh/day
90% trucks
North-Western Corridor
1,300 2,000 veh/day
50% trucks
Addi-Gimbi
500 1,800 veh/day
Addis-Adama
17,500 veh/day
75% trucks
Eastern Corridor
1,600 1,900 veh/day
50% trucks
Central Western Corridor
1,300 3,000 veh/day
40 % trucks
Adama-Awash
4,500 veh/day
Southern Corridor
3,500 veh/day
50% trucks
Note: The Addis ababa-Adama link, which is a major traffic axis, has not been represented in the map because it would overlap the adjacent links

68
Figure 45: Current traffic by type of vehicle
Cars &
Rovers
Buses
Small &
medium
trucks
Heavy
trucks
Trailers
Key AADT
15 veh/day
1,000 veh/day
2,000 veh/day.
3,000 veh/day.
Small and medium-sized trucks are the most used vehicles for the consolidation and distribution of agricultural
and consumer products. This represents an important part of the countrys mobility, present throughout
Ethiopias territory; this fact is well-apparent in the previous figures, where the traffic flows for these vehicles
are quite relevant, particularly when compared with neavy trucks and trailers.
Heavy trucks, in turn, are more widely used in axes characterised by high flows of freight traffic and for specific
types of products (industrial produce such as cement, iron products, etc.). Trailers are also used for carrying
certain industrial products at national level, but are more widely used in the international corridor linking Djibouti
69
with Ethiopia (which represents the main axis for the mobility of import-export goods), as it can be seen in the
figure.
Passenger transport represents another important part of mobility, and the traffic flows corresponding to the
bus mode (followed by the cars and rovers category) are equally relevant. All the main consumption centres
of Ethiopia (mainly Addis and the Dire Dawa, Harar and Jijiga system), as well as those areas with strong
agricultural production generate mobility flows towards market centres and other basic facilities and services.
Given the high growth of traffic in the last few years alongside the improvement of the economy, it can be
expected that if this economic dynamic is maintained, traffic levels will continue to increase. For this reason,
in order to be able to plan the transport network in Ethiopia to a 2025 horizon, estimates should be made of
the levels that the main traffic flows could reach.
To do this, since there is no detailed transportation model available (understanding that a transportation model
consists of a trip generation and distribution model based on specific software), a baseline projection of the
demand has been made based on existing historical data (AADT from 2002 to 2012) and forecasts for
economic, population and trade growth expected for the coming years and until 2025. Projections from the
CSA, the IMF and the World Bank have been used. The projections have been made individually for each link
in order to capture the differences in the growth of traffic between the different areas of the country.
Based on the earlier calculations, a traffic growth trend has been obtained, as shown in the following maps for
the years 2014, 2020 and 2025. This makes it possible to contrast the available infrastructure capacity and the
demand. It should be noted that these projections do not take into account possible changes in the
transportation network. Some changes in the network that could affect the evolution of demand with respect
to the calculated baseline scenario might be: the construction of the new railway network, or a significant
improvement in links that are not currently part of the truck network (as a result of paving, for example). These
improvements have the ability to generate new traffic or divert existing traffic towards more efficient corridors,
and these effects cannot be estimated using a baseline projection.
Figure 46 maps show the evolution of the network traffics for which current data is available.

70
Figure 46: Demand prognosis for Ethiopias road transport network 2014-2025
2002
2012
2014
2020
2025
Key AADT
100 veh/day
5,000 veh/day
10,000 veh/day.
Note: links between Addis Ababa to Adama have been hidden for years 2012 to 2025. These links hold an AADT per direction from
62,000 vehicles/day in 2025, values that are much larger than the rest of the country links. They are hidden in order to be able to
appreciate the growth in other country links.
Source: ALG
Comparacin con capacidad marcar en rojo los tramos que tendrn algn dficit de capacidad con los
todava, esto va al final)
71

proyectos futuros (aqu no se plantean propuestas
2.2.4
Road infrastructure supply vs. demand
Road traffic in Ethiopia has grown very sharply over the last ten years (with an average annual growth rate of
10.4%), putting great pressure on the countrys road network. As a result, the current mobility demand already
exceeds road capacity in some cases. To respond to this situation, an appropriate set of proposals must be
defined, aiming at both the rationalization and the capacity increase of the road network, always aiming at an
efficient transportation system.
In the proposals phase, this study will identify those specific infrastructures that will need to be improved or
developed in order to better respond to Ethiopias mobility needs.
However, as a prior step, the current subchapter will identify the Federal network links where traffic is already
reaching full capacity (2014), as well as those other links where the mobility growth forecasts allow to anticipate
a saturation point by 2025.
The following maps show these critical links for the aforementioned time horizons, on the basis of the road
network defined in Subchapter 2.2.1.1. These links, marked in orange colour, have hourly volume that exceeds
75% of the current capacity. It is worth noting that in some cases the demand exceeds the current capacity
because there is a need for an additional number of lanes in the road, while in other cases, it is because the
road is not paved yet and its traffic level would make a proper pavement advisable.
As it can be seen in the figure for the 2014 time horizon, saturation problems occur in those roads with the
highest traffic level: the Addis-Adama and Adama-Awash axes, and the Southern Corridor to Sheshemene.
All of them strongly linked to Addis Ababa, the main centre of consumption and distribution of goods in the
country.
Figure 47: Links where traffic volume exceeds current road capacity (2014)
Axum
Humera
2014
Shire
Adigrat
Key
Adwa
Main road
Secondary road
Links with v/c>0.75
Mekele
Metema
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG

72
Figure 48: Links where traffic volume will exceed road capacity (2025)
Axum
Humera
2025
Shire
Adigrat
Key
Adwa
Main road
Secondary road
Links with v/c>0.75
Mekele
Metema
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
The 2025 map shows an extension of the saturation problems well beyond Addis Ababas influence, towards
the other main centres of production and distribution of Ethiopia, including the Eastern Corridor and the
international Central Eastern Corridor to Djibouti.
These critical links have been obtained on the basis of the current transport network and a baseline projection
of traffic growth (described in Box 7).
It is important to note that this projection does not take into account any changes in traffic patterns due to the
construction of mass transport infrastructures such as railways or new roads that may divert the existing traffic.
Such a task would require a four-stage-trip generation and distribution model based on specific software; the
development of such a tool is out of the scope of the current study.
However, the results obtained from this analysis are very useful if they are analysed against other modes of
transport as well as the economic and production forecasts. The links identified above will be studied along
with the proposed strategic improvements, with a view to identifying the road improvement proposals most
suitable for the economic and social development of the country. All this will be done in chapters 6 and 7.

73
2.2.5
Road safety and overload traffic
Road Safety
Road traffic accidents are the cause of significant human and economic resources losses worldwide, with 1.2
million fatalties and 50 million injured annually. More than 85% of these casualties occur in low and middle
income countries. Such a rate imposes a remarkable economic burden on developing economies, equivalent
to 1-2% of their Gross National Product.
Given the magnitude and geographical extension of the problem, the United Nations General Assembly has
adopted three resolutions calling on its member states, the World Health Organization, its five regional
commissions and international organizations to address the global road safety crisis.
In response to this, many road safety initiatives are being undertaken at international, continental, regional and
national levels in order to improve this situation.
Road accident rates in Ethiopia are amongst the highest in the world. Over 2,000 persons are killed in road
accidents every year in this country. The number of people who are injured by road traffic accidents annually
duplicates the fatalities figure18.
According to police reports, more than 90 per cent of the traffic accidents are caused by human errors, the
main causes being (by order of importance):
1) Failure to give way to pedestrians
2) Over speeding
3) Failure to give way to other vehicles.
The causes behind this kind of driver errors include: inadequate training (and, in general, lack of adherence of
the drivers to traffic safety regulations), driving under the influence of alcohol, or drugs and mobile telephone
chatting. It is important to note that mobile chatting used to be one of the critical problems in the Eastern part
of Ethiopia. However, its influence has now expanded throughout the country.
However, there are other reasons such as road design and conditions. In this respect, ERA has already
carried out an analysis of accident black spots identification on the existing road network as well as the
design of remedial action to improve safety at these sites, which will be undertaken by ERA.
The figure below shows a map with the blackspots identified in the road districts of Jimma, Adigrat, Dire Dawa,
Nekemt, Alemgena, Combolcha and Sodo. No information is available for Debre Markos, Gondar and
Shashemene; however, it can be observed from the map the high number of blackspots in the main federal
network.
A review of the accident data collected by ERCC district offices on the different black spots reveals that the
vehicles involved in these accidents are medium-sized Isuzu trucks transporting goods as well as minibus taxis
transporting passengers.
18
CASE STUDY: ROAD SAFETY IN ETHIOPIA United Nations Economic Commission For Africa. Published 2009

74
Figure 49: Map of identified black spots in federal road network by ERCC
Source: ERA
Overload traffic
Damage to the road pavement due to excessive axle load represents a cause not only for bad driving
conditions, but also for accidents.
Such a damage must be prevented, particularly on very strategic roads of the country, such as the main import
and export corridors. Understanding this, the Government of Ethiopia has been working for many years on the
establishment of stations for the control of vehicle axle load and size. This action has been accompanied with
all the necessary legislative framework.
Currently ERA has ten weigh bridge stations on trunk roads at different areas of the Country to control the
overloading of heavy vehicles.
To assist this action with effective enforcement, the operation of the weighbridge stations is under the direct
supervision of ERA. Ten stationary weighbridges operate at strategically important sites throughout the
country. They are the following:
Modjo
Shashemene
Awash

75
Kombolcha
Dengego
Jimma
Sendafa
Sululta
Alemgena
Holeta
The weighbridges operate full-time, 24 hours a day and 7 days a week and are located in such a way that they
cover most of the main routes. Two mobile weighbridges are also used to conduct spot checks on roads not
covered by the weighbridges. Two weighbridges are located on the Addis Ababa- Semera-Djibouti Corridor.
ERA is considering modernizing weigh bridges at its existing stations and opening 9 new stations in order to
improve the efficiency and transparency of axle load control, on the financial basis of a Japanese Government
grant.
Enforcement is further strengthened by employing the use of mobile weighbridges for random axle load control
activities. Three mobile teams are dedicated to this task, operating in different areas of the country and
covering those routes missed by the stationary weighbridges. Overloaded vehicles are required to re-arrange
or remove the cargo until they meet the regulations.
There is a special permit for Oversize and Overload Cargo, which is obtained on the basis of an application
that requires a study on the details of the loading procedure and type of vehicle to be used, to remain close to
the axle load regulations.
Data on individual axles of each heavy vehicle is recorded, with each station sending summary reports of the
recorded data to ERA headquarters. Reports are sent on a monthly basis and are collated and analyzed at
head office. A summary of the annual axle load information forms part of the annual road condition report.
These reports provide detailed information on the level of overloading at each station.
Table 8: Total Checked Front and Rear Axles (2002/03 2012/13)

Axles
Year
Total Checked
Illegal
Illegal %
302,401
113,708
38
228,528
316,955
109,987
35
105,476
309,422
414,898
149,145
36
2005/2006
113,876
320,997
434,873
157,688
36
2006/2007
99,477
317,303
416,780
136,944
33
2007/2008
115,565
378,107
493,672
159,598
32
2008/2009
141,359
459,950
601,309
179,181
30
2009/2010
148,046
485,947
633,993
89,940
14
2010/2011
142,253
473,406
615,659
76,013
12
2011/2012
132,344
493,160
625,504
36,897
2012/2013
173,024
556,258
800,504
71,222
Front
Rear
Total
2002/2003
86,122
216,279
2003/2004
88,427
2004/2005
Source: Ethiopian Roads Authority
From the table above it can be observed that the incidence of overloading has been declining steadily until
2011/2012. Although illegal axle loads have been reduced from an initial 38% in 2002 to 9% in 2012/2013, this
figure is still very high considering the magnitude of the truck traffic moving along Ethiopian trunk roads. The
76
current situation represents at least 1 every 10 vehicles are overloaded, with the subsequent stress on the
roads and high level of maintenance required. This percentage must be further reduced in order to be able to
make maintenance investment more efficient.
2.2.6
The road haulage services sector
As already mentioned, transportation by land represents the main mode for both domestic and international
freight. Therefore the trucking industry is of great importance to the Ethiopian economy, with a very direct
impact on the costs of all products and therefore on the competitiveness of the economy and the quality of life
of the population.
Land freight transport is regulated by the Federal Transport Authority, which provides norms for vehicle usage
and operating licenses to companies (and individuals) supplying road transport services.
The Ethiopian trucking industry is currently composed mostly of individuals who carry out transport activities
on their own or grouped into associations, and to a lesser extent by some medium-sized or large companies
with a significant fleet. The large companies are very limited in number, and are linked to major industrial
groups. This highly-fragmented general structure of the industry is accompanied by a low level of
professionalisation of services and limited financial or management capacity on the part of the suppliers, which
affects the quality of services offered.
Overall, the service quality is low, with high figures for transport times and uncertainty in delivery, older vehicles
whose state of maintenance is a hindrance to efficient operation, and very limited knowledge about freight
handling. The average age of the vehicles is very high, in part because fleet renewal is itself carried out with
second hand vehicles (the cost of importing new vehicles is very high) and the tariffs charged leave little margin
for the operator.
Despite the general characteristics mentioned, the sector is currently composed of two market segments with
distinct characteristics:
Domestic transport (internal)
International transport connecting with Djibouti Port
The above segments function in very differentiated ways and even the service characteristics vary slightly, so
a more in-depth description of each is made below. It has not been possible to obtain official figures with
respect to the number of vehicles currently in service, or the number of companies licensed 19.
Domestic market
The market for domestic freight transport is primarily served by small and medium-sized vehicles, with
capacities between 5 and 10 tonnes. These vehicles are used for agricultural freight consolidation and for the
distribution of consumer products at national level. These vehicles also perform long-haul transport, making it
impossible to generate economies of scale that would increase the efficiency of national transport.
The trucks are usually open, and in cases where the tray is covered this is usually just with tarpaulins, so the
protection given to the load is very limited. These vehicles are also used for the transportation of goods that
should be chilled, including pharmaceutical products and perishable agricultural products. Besides, they have
very low loading capacity and therefore very low efficiency in terms of transport efficiency.
These vehicles can often be found on national highways in an overloaded state, generating abundant accidents
and a lack of road safety.
Such vehicles are generally operated by individuals with a limited number of vehicles who work for traders
acting as intermediaries in the transportation chain.
19
The Federal Transport Authority has refused neither to be interviewed nor to provide any relevant information about the trucking industry
during the data collection process. Therefore, no detailed information about the road service providers and the current truck fleet is
available. All information available has been obtained through interviews with other important stakeholders (ESLSE, ERA) and with the
private sector (freight forwarders, transport companies)

77
Figure 50: Images of the most used trucks for domestic transport
Source: Addisfortune.net
In addition to small or medium-sized trucks, there is also a fleet of older vehicles (20 tonnes) and in some
cases trailers of 40 tons, also providing domestic transport services. This fleet (which can also serve the
international corridor to Djibouti), is in the hands of medium-sized companies and a few large firms. These
companies, especially the largest ones, transport intermediate products for specialized industries, such as
construction or metal products. These sectors generate a transport demand with flows that are concentrated
since only a small number of agents are involved in the chain and there is a high level of production (cement,
metal plates, etc.). Such services are, however, a minority in terms of their numbers in the domestic transport
sector.
Finally, at the national level some of the major consumer product companies also have their own fleets to
distribute their products.
International corridor Djibouti - Ethiopia
Road transport between Djibouti and Ethiopia, through the two optional routes of the corridor (via Galafi or via
Dewele), is served by large trucks or trailers with capacity of up to 35 tonnes. Containerised freight, bulk or
break bulk cargo is transported with general purpose vehicles. Specific platforms for containers are very limited
although container traffic is very significant, especially in recent years as multimodal transport has grown
considerably in imports (see sub-chapter 2.3.2.2).
The business structure of the subsector is not very different from that of domestic transport. To a large extent,
the service is provided by individuals with a very small number of vehicles and recently these have grouped
together into associations to serve the Ethiopian Shipping and Logistics Service Enterprise (ESLSE) in parallel
to the growth of multimodal transport. There are also some small or medium-sized companies, although they
are a minority according to industry sources. Some freight forwarders also have their own vehicle fleets
operating, with occasional subcontracting to individuals.
According to the information supplied by carriers, the productivity of the sector in the international corridor is
low due to the excessive travel times (including the time for loading/unloading, intermediate inspections,
release of freight by customs, etc.). From the data provided by some transport operators, 3 or 4 round trips
per month are possible, which would yield a rate of 75,000 km per annum (assuming there are no incidents
that would prevent working all year round). This rate is relatively low, when it is considered internationally that
a vehicle can reach a figure of 125,000 km. a year (cutting travel times in the corridor would allow about 6-7
trips per month, which would make it possible to reach 125,000 km a year). It should also be considered that
the significant load imbalance in the corridor (5 out of each 6 tonnes carried in the corridor are imports), causing
most trips to be made without a return cargo.
This situation, together with the existence of very tight tariff margins, limits the profitability of the transport
operation, and prevents any improvement in the quality of service or vehicles.
The cost of freight transport along the international corridor varies depending on the time of year and on
whether the transportation chain is unimodal or multimodal, whether the goods transported are imports or
exports, etc. as detailed in subchapter 2.3.2.2. However, an average the cost of transport can be estimated
in 0.05-0.08 USD/km/tonne, or the equivalent of 1 USD / km. for a container of 20 tonnes.

78
MAIN CONCLUSIONS FOR CHAPTER 2.2 (ROAD TRANSPORT)
Ethiopian road infrastructure has improved notably between 1997 and 2013, due to the
development of the Rad Sector Development Programme (RSDP) I-IV, with an increase in road
network length and quality, as well as general accessibility to the national territory.
However, an important part of Ethiopias road network is still rather restrivtive for traffic; this is
mostly due to the reduced length of paved roads.
Ethiopias road network has got quite a radial structure, with Addis Ababa at its centre. Different
corridors connect the capital of Ethiopia with the rest of the territory and also with neighbouring
countries. Some of these corridors have a remarkable level of traffic, but in general the most
remarkable characteristic of the network is the high percentage of trucks, between 30% and 90%
of the traffic along the main corridors.
Traffic demand is already generating a considerable pressure on the existing road infrastructure,
reaching high levels of congestion in the Addis-Adama and Adama-Awash corridors, as well as in
the Southern Corridor connecting Addis and Sheshemene.
These congestion problems will extend in the future to other corridors of the Ethiopian network,
well beyond Addis Ababas direct influence, towards the other centres of production and
consumption of the country, which will affect, amongst others, the Eastern Corridor (Dire Dawa)
and the international Central Eastern Corridor to Djibouti (through Galafi).
Besides road infrastructure and traffic levels, another key element of Ethiopias road transportation
system is road safety. Road accidents in Ethiopia are amongst the highest in the world. Although
human errors (due to lack of awareness or respect for traffic regulations, as well as driving under
the effects of alcohol or drugs) represent the main cause for accidents, road design and conditions
are another key issue, with the existence of a high number of black spots throughout the Ethiopian
territory.
Damage to road pavement due to excessive axle load represents a cause not only for bad driving
conditions, but also for accidents. The GoE has been working for many years in the control of axle
loads, achieving a remarkable improvement during the last ten years. However, 1 of every 10
vehicles circulating on the Ethiopian roads are still overloaded.
Finally, another key-element is the freight transport services sector, which is currently highly
fragmented, with old and generally inappropriate vehicles (especially for refrigerated
transportation) and with a low level of service professionalization on the drivers side. In general,
there is a low level of service quality and excessively long transportation times.
Domestic freight transportation is mostly carried out through intermediaries or brokers who
consolidate the transport sector. The vehicles used are small open-top cargo trucks of 5-10 tons.
This type of truck is even used for long-haul transport, resulting in low efficiency and zero
economies of scale.
Regarding international freight transportation, vehicles have a capacity of 20 to 40 tonnes. The
imbalance that exists between imports and exports means that empty returns are very frequent. In
addition, congestion and waiting time in some procedures limit vehicles' annual productivity
(approximately 75,000 km maximum are carried out) and, therefore, their profitability.

79
2.3
Maritime transport and international logistics
Maritime transport represents Ethiopia's key-mode of transport for the countrys imports and exports: In 2013,
it accounted for 93.8% of Ethiopias international trade in volumetric terms, 83% in monetary terms.
However, being a land-locked country, Ethiopia has limitations for accessing this mode, depending on
neighbouring countries. Ever since the independence from Eritrea, Ethiopia has prioritised the port of Djibouti
to access international markets and, to a lesser extent, the Port Sudan (Sudan) and Port Berbera (Somaliland).
On specific occasions, however, certain freight volumes use the ports of Mombasa in Kenya or other ports in
southern Somalia, but traffic tends to be minimal, as is shown in the following figure:
Million tonnes
Figure 51: Main ports used for Ethiopian External trade (2013)
9
8
Mt= million tonnes

tt= thousand tonnes
Imports
Exports
8.0 Mt
0.8
7
6
5
4
7,2
3
2
1
88 tt
Port of Djibouti
94 tt
2.8 tt
11 tt
Port of Sudan Port of Berbera Port of Mombasa

Other Somali Ports
Covering the distance that separates these ports from the major consumption centres poses a true challenge
for Ethiopian foreign trade, increases the costs of imports and erodes the competitiveness of exports. To
minimise these costs, it is necessary to rely on highly-efficient land transport corridors and logistics operations
in order to overcome the difficulties of being a landlocked country.
This subchapter includes a brief analysis of the maritime transport mode and the associated transport corridors
and logistics operations.
2.3.1
International maritime and logistics infrastructure
This subsection provides a brief overview of the regional portuary network within Ethiopias reach, as well as
the dry ports network designed to permit more efficient and economical transport connections in the country.
2.3.1.1 Regional ports

The landlocked condition of Ethiopia forces the country to use ports of neighboring countries. Currently, the
Port of Djibouti accounts for nearly 8 million tonnes of the total 8.18 million tonnes of Ethiopias international
trade using the maritime mode (this means 98% of its total maritime traffic and 91.5% of the country's total
foreign trade).
As mentioned before, other ports are also used, albeit to a lesser extent, such as Port Sudan (Sudan) and Port
of Berbera (Somaliland). Port of Sudan is used to export certain goods and the Port of Berbera is mainly used
for imports. Other ports, such as the one in Mombasa and other Somali ports are seldom used, and accounted
for less than 0.1% of the total trade in 2013.

80
Figure 52: Ports in the Horn of Africa
Port Sudan
SUDAN
ERITREA
Massawa
Assab
DJIBOUTI
Djibouti
Berbera
ETHIOPIA
SOUTH
SUDAN
SOMALIA
Mogadishu
KENYA
Kismayu
Mombasa
Note: The ports marked in red are not available

Source: ALG
The table below summarises the main foreign trade figures for 2013 regarding ports.
Table 9: Main ports used for Ethiopian External trade (2013)
Flow
EXPORTS
Mode
Volume (tonnes)
Value (million
USD)
% of Total
Ethiopias
import/export
value
Port of Djibouti
776,431
57.5%
1,388.99
51.8%
Port of Sudan
87,832
6.5%
174.93
6.5%
1,357
0.1%
2.47
0.1%
Port of Mombasa
0.0%
0.0%
Other Somali ports
0.0%
0.0%
865,620
64.1%
1,566.39
58.4%
7,211,893
97.8%
9,771.90
87.5%
641
0.0%
4.57
0.0%
93,622
1.3%
86.05
0.8%
2,757
0.0%
8.45
0.1%
Port of Berbera
Bimodal*
Port of Djibouti
IMPORTS
% of Total
Ethiopias
import/export
volume
Port of Sudan
Port of Berbera
Port of Mombasa

81
Flow
Mode
Volume (tonnes)
Other Somali ports
TOTAL
TRADE
% of Total
Ethiopias
import/export
volume
Value (million
USD)
% of Total
Ethiopias
import/export
value
11,103
0.2%
7.13
0.1%
Bimodal*
7,320,015
99.2%
9,878.09
88.4%
Port of Djibouti
7,988,324
91.5%
11,160.89
80.6%
Port of Sudan
88,473
1.0%
179.50
1.3%
Port of Berbera
94,979
1.1%
88.52
0.6%
2,757
0.0%
8.45
0.1%
11,103
0.1%
7.13
0.1%
8,185,635
93.8%
11,444.48
82.6%
Port of Mombasa
Other Somali ports
Bimodal*
*Bimodal indicates the combination of 2 modes of transport: road transport from Ethiopia to the port and maritime transport from there.
This naming does not imply a multimodal responsibility system for the carrier
There follows a brief overview of the three ports with the largest Ethiopian cargo volume: Port of Djibouti, Port
of Sudan and Port of Berbera.
Port of Djibouti
The Port of Djibouti is composed of 3 different port complexes in the vicinity of the City of Djibouti, capable of
handling all types of freight, from containers to live cattle. The complexes are: Port of Djibouti SA (PDSA),
Doraleh Container Terminal (DCT) and Horizon Djibouti Terminal (HDTL, also in the Doraleh area).
Port of Djibouti is the most traditional and oldest port in the country, and is located next to the city centre. Until
the start of operations of the other port complexes (HDTL in 2005 and DCT in 2009) this port mobilised the
bulk of freight in the country, as well as that from Ethiopia. With the opening of HDTL and DCT, the movement
of fuel and of containers was transferred to the new port complexes. At present, the focus of the traditional
port is on general and bulk cargo, but it also manages a small section of containers. Initially, the complex was
managed by DP World since 2000 under a 20-year concession agreement, but the concession was terminated
in 2011 and transferred to public management.
Figure 53: Aerial view DCT and HDTL (left) and PDSA (right) terminals
Note: images are not in the same scale

Source: Google Earth, adapted

82
The DCT is a modern container terminal that is under concession to DP World. The terminal is capable of
handling up to 1.6 million TEUs annually and can accommodate up to post-Panamax vessels. The pier has a
drought of 18 metres and is 1,050 metres long. In a second phase, the terminal will be expanded to handle up
to 3 million TEUs.
The HDTL terminal is a liquid fuel terminal that is very close to the DCT in Doraleh.
The following figure shows the location of all the logistics terminals in Djibouti City:
Figure 54: Djibouti City area with main logistics facilities
Key
Main roads
Other roads/streets
General port zone

Fuel/liquid port zone
Doraleh Oil
Terminal (HDTL)
Port of Djibouti
(PDSA)
Doraleh Container
Terminal (DCT)
Galafi /
Dewele
PK 12
Djibouti
International
Airport
Source: ALG
The whole complex of Port of Djibouti moved a total of 4.13 million tonnes of breakbulk, dry bulk, vehicles and
livestock, as well as 2.97 million of liquid bulk (fuels) and 794.731 TEUs in 2013.
The chart below shows the freight traffic evolution (distinguishing different types of freight and terminals) of
this port.
Most of the containers passed through the DCT (743 thousand) and the fuel traffic was moved by HDTL.
Approximately half of the containers moved by DCT are transshipment cargo.
The PDSA handled 4.13 million tonnes of breakbulk, dry bulk, vehicles and livestock, as well as 50,938 TEUs.
The main products handled by this port are wheat and fertilizers as dry bulk, steel and sugar as break bulk
and vehicles.

83
Figure 55: Djibouti Port freight evolution 2009-2013

3,0
800
Container traffic ('000 TEUs)
2,5
700
600
2,0
500
1,5
400
300
1,0
200
0,5
100
-
0,0
2009
2010
2011
2012
TEUs moved through

Port of Djibouti (PDSA)
Bulk/liquid traffic (Million tonnes)
900
TEUs moved through

Doraleh Container
Terminal (DCT)
Break bulk (t.)
Dry bulk (t.)
Liquid bulk Cargo (t.)
2013
Source: Port of Djibouti Authority
As mentioned previously, Ethiopian freight amounted to 7.98 million tonnes in 2013. This represents an
important part of the freight moved through the port of Djibouti 20.Actually, this port can be defined nowadays
as the key-maritime connection for most of Ethiopias imports and exports, which generate a fundamental part
of its traffic, as well as an international and refueling centre and transshipment hub.
Port Sudan
Port Sudan is the capital of the Red Sea State of Sudan, and located on the shore of the Red Sea, 1,200 km
from Khartoum and 932 km form the border at Metema and about 800km from the Humera border. This is the
nearest port to the northern area of Ethiopia given the fact that the borders with Eritrea are closed.
Figure 56: Aerial view of Port Sudan
Red Sea
20
There is no data available about the weight of the container traffic that would allow calculating the exact share of the Ethiopian cargo in
Port of Djibouti. However, based on the available figures for non-containerized cargo and liquid bulks, it is clear that it must be quite high.

84
Source: Google Earth, adapted
Port Sudan has more than 15 piers, with a maximum drought of 12.5 metres, which are divided into 3 different
terminals: the Northern Port, South Port and Green Port. Overall, the port moves all types of freight, but the
most typical freight is general or loose freight, containers, cattle, cement, cereals, vehicles and fuels.
Table 10: Terminal and berths of Port Sudan
Terminal
Northern Port
Southern Port
Green Port
Usage
Depth
Length
Berth
General Cargo & Molasses
8.7 m.- 10.7 m.
822 m.
1-5 A
General Cargo & Edible Oil
10.7 m.
365.8 m.
6 -7
General Cargo & Edible Oil
10.7 m.
365.8 m.
8-9
Sea Bulk Cement
8.7 m.
98.3 m.
11-11A
Bulk Grains
10.7 m.
198.6 m.
15
Ro/Ro P . Tanker
10.7 m.
128 m.
16
Containers & Tankers
12.6 m.
426.8 m.
Containers, dry bulk and seeds
14.2 m.
548 m.
17 - 18
Green
harbour
Source: Sudan Port, adapted
Port Sudan is used for export cargo produced in the north of Ethiopia, mostly sesame seeds. In 2013, Port
Sudan moved a total of 87,000 tonnes of Ethiopian sesame seeds to China (84%), Turkey (7%) and Saudi
Arabia (5%).
Berbera Port
Port of Berbera is a port located in Somaliland, about 310 km from Jijiga taking the route that passes the
Togowechale border, and 850 km from Modjo. The port has a terminal with 600 metres of pier and is capable
of handling containers and general cargo (including livestock). The port handles freight from Somaliland and
some cargo from Ethiopia (mainly imports, as exports are very small).
The main exported products handled are: livestock and skins. The main imports are commodities such as
sugar, rice, cereals, fuel and construction products.
In 2013, the port handled 94,979 tonnes of Ethiopian freight.
Figure 57: Aerial view and pictures of Berbera Port

85
Source: Google Earth (up), Berbera Port (down,left) and Somaliland Chamber of Commerce, Industry and Agriculture (down, right)
Box 5: Future port developments
The Government of Djibouti intends to develop new terminals that may increase the importance of Djibouti
as a hub port in the region in the coming years. The focus will be put on the countries of the Common
Market for Eastern and Southern Africa (obviously including Ethiopia):
Port of Tadjourah: the port in Dadjourah town will include: two linear quays of about 435 m in length,
featuring berthing and mooring facilities capable of accommodating 20,000 DWT General Cargo
Vessels; a typical Ro-Ro terminal about 190 m in length and with 12 m drough, and a surface of 30
hectare equipped with all port infrastructures. This port will be connected to Ethiopia via the new road
linking Balho and Tadjourah, and the planned Tadjourah-Mekele railway line. A second phase plans
that the port be able to accommodate mining terminals that handle the Ethiopian export of potash and
other minerals.
Livestock Terminal At Doudah: Livestock Terminal At Doudah: the construction of a specialised

terminal in Djibouti will make it possible to meet the requirements of livestock export operations and will
increase the port security.
Additionally, the Government of Djibouti plans to build a new port in Goubet for the export of salt and gypsum
from Lake Assal, although its impact on Ethiopian freight will be limited.
2.3.1.2 Ethiopian Dry Ports

Ethiopian foreign trade depends on various ports located at a distance of more than 700 km from the country's
major productive and consumption centre. This calls for the need of a system of corridors that provides efficient
connections with the ports and that minimizes transportation costs.
The aforementioned corridor system should include a system of dry ports, understood as inland intermodal
terminals connected to the seaport at the end of a corridor by road or rail, operating as transhipment centres
between the sea and the inland centres of production/consumption. These dry ports may also include facilities
for storage and consolidation of goods, customs clearance services, etc.
Such dry ports represent not only a relief in terms if space for storage and customs for the seaport, but also
an opportunity for a better organization of procedures and use of time before the goods are shipped. In other
words, to reduce trade costs and improve efficiency in the processes.
With this aim, the Ethiopian Shipping and Logistics Service Enterprise (ESLSE 21) operates a dry ports system
that mainly operates import cargo from the Port of Djibouti. This dry ports system permits moving the freight
from the Port of Djibouti very rapidly and introducing it into the national territory for custom checks and
inspections by means of a multimodal transport system (further explained in the following sections). This
21
Public enterprise that currently plans and manages the dry port system. ESLSE services are not limited to the management of this
system. It also manages the public shipping line, the multimodal transport system launched to connect with Djibouti Port, and it also offers
complementary services in the Addis Ababa Djibouti corridor, such as customs clearance, freight forwarding and uni-modal transport

86
procedure also reduces costs in foreign currency and creates jobs in Ethiopia. These dry ports mainly serve
containerised freight and vehicles, but also break bulk (sporadically).
The operation of these dry ports started in the 2009 fiscal year, and since then the cargo handled through this
system increased strongly until 2013. The system handled 60,799 full TEUs; 54,028 empty TEUs and 3,840
vehicles. That year marked the end of the handling of loose cargo and all containers started being mobilised
through the multimodal system (in previous years, the unimodal transport system also used dry ports, although
to a lesser extent).
Figure 58: Cargo handled in the dry ports system
Series1
Series2
4500
Series3
4000
120.000
3500
100.000
54.028
80.000
2500
2000
60.000
1500
40.000
20.000
3000
12.492
0
1.055
6.265
12.337
7.234
10.786
19.630
60.799
1000
Vehicles handled
Containers handled [TEUs]
140.000
500
0
5
Source: ALG
The dry port network consists of 7 terminals, the most important of which is located in Modjo, handling 70% of
the system's containers. The second most important dry port in terms of freight volume is that of Commet,
which moves about 18% of the containers. It is followed by the ports of Gelan (6%), Mekele (2%) and Dire
Dawa (2%). The characteristics of the dry ports are indicated in the following table.
Table 11: Current dry ports system
Terminal Area (Ha)
Static Capacity
in TEU (January
2014)
Annual Dinamic
Capacity in TEU
Total
before
January
2014
Total as
of
January
2014
In
three
high
In four
high
Average
Container
Dwell
Time
(days)
73 km.
16.1
20.1
11,819
15,758
40
141,826
189,101
No
30 km.
2,352
3,136
40
28,224
37,632
Semera
No
588 km.
2.5
2.5
1,470
1,960
40
17,640
23,520
Mekele
Yes
783 km.
1.5
1.5
882
1,176
20
10,584
14,112
Kombolcha
Yes
520 km.
1,176
1,568
25
14,112
18,816
Dire Dewa
Yes
520 km.
0.5
0.5
294
392
25
3,528
4,704
Commet
Yes
0 km.
2.2
2.2
1,294
1,725
25
15,523
20,698
28.8
32.8
19,287
25,715
31
231,437
308,583
Name of
Port &
Terminals
Tempo
-rary?
Distance
to Addis
Ababa
Modjo
No
Gelan
Total
In three
high
In Four
high
Source: ALG based on ESLSE data
At present, the dry ports of Mekele, Dire Dawa, and Commet Kmobolcha are temporary; they are not fully
established as regards to their location and final infrastructure. Modjo Dry Port, on other hand, is being
expanded, and based on the Modjo Dry Port Master Plan22 will reach 62 ha.
22
Modjo Dry Port Master Plan has not been provided by ESLSE to the Consultant, but the Inland Ports Department of ESLSE facilitated
this figure in a formal meeting

87
Additionally, the ESLSE plans to build new dry ports featuring definitive infrastructures in the aforementioned
cities. Finally, ESLSE plans to further expand Modjo Dry Port with additional 43 Ha, making for an inland port
of a total 105 Ha.
In addition to the current dry ports, the ESLSE plans to build 5 additional dry ports in new locations in the
medium term: Bahar Dar, Hawassa, Nekempte, Jimma and Jijiga. These new dry ports will represent a new
potential for more efficient connections with the Djibouti Port as well as the Port of Mombasa, opening new
possibilities of trade relations intensification with this country, which only represent nowadays a minimal part
of Ethiopias maritime trade exchanges.
Figure 59: Location of current and planned dry ports
Key
Axum
Humera
Adigrat
Shire
Permanent Dry Ports
Adwa
Temporary Dry Ports
Mekele
Metema
Planned Dry Ports

Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Djibouti
Dewele
Kombolcha
Kurmuk
Debre
Markos
Asosa
Nekemte
Debre
Birhan
Commet
Dire Dawa
Addis Ababa
Harari
Awash
Jig-Jiga
Gelan
Adama
Modjo
Dhaga-Bur
Gambela
Hossana
Jimma
Shashemene
Robe
Hawassa
Sodo
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
2.3.2
International transport and logistics services to Djibouti (DJI corridor)
As introduced in previous chapters and sections, the Port of Djibouti is essential for Ethiopia's foreign trade,
which accounts for 91.5% of the total trade passing through the port. If one considers that Djibouti is a major
buyer of Ethiopian exports (6.28% of exports interms of volume,that is 84,000 tonnes), it becomes clear that
the transport corridors and the provision of services to this country are of vital importance for Ethiopia. Amongst
all the Ethiopian road corridors, those leading to Djibouti moved more than 8 million tonnes of freight in 2013
(see Figure 31), i.e. 92.5% of the total volume of national foreign trade.
Taking these figures into consideration, a specific analysis of the corridors connecting with this country has
been undertaken. The main results and conclusions are explained in the upcoming subchapter.
2.3.2.1 Logistics providers

Investment by non-Ethiopians is not permitted under the foreign investment laws, so all service providers in
the corridor are local. Having said this, there are 3 types of main players with regards to transport and logistics
services along the Ethiopia-Djibouti corridor.

88
In the first place, there is the public company Ethiopian Shipping and Logistics Service Enterprise (ESLSE),
which has an elaborate structure andin addition to shipping servicesoffers freight forwarding, custom
clearance and transport management services. Additionally, ESLSE has a monopoly on multimodal transport
for imports (see the next section) and manages the operation of the dry ports (which, as already mentioned,
are closely linked to the operation of multimodal imports). This operator, however, competes with other private
operators in freight-forwarding (using unimodal transport for imports) and customs-clearance services.
Secondly, there are a large number of private freight forwarders who provide services for freight export and
unimodal imports. They are currently unable to work as operators under the multimodal mode, since the
ESLSE holds the rights of exclusivity. Although there are some major freight forwarders, with very significant
business volumes, most of them are small companies with financial and management limitations.
In addition, there are a set of agents offering custom clearing services. Generally, these operate as
intermediaries for customs clearance, often informally and offering cheap services.
Finally, as mentioned in Chapter 2.2 on Road Transportation, land transport services are provided by
companies, individuals and private partnerships that serve the freight forwarders in the Addis-Djibouti corridor
using vehicles of 20 or 40 tonne capacity.
2.3.2.2 Unimodal and multimodal operations

There are two types of transport across the Ethiopia - Djibouti corridor at present: unimodal and multimodal
transport. Exports use one transport mode exclusively, while imports can use the unimodal or multimodal
model, depending on the type of cargo. At present, the multimodal system is available for containerised and
vehicle ro-ro cargo, but it can't be used to import break bulk cargo, dry bulk or liquid bulk cargo.
The definition of unimodal and multimodal applied to the Ethiopian case refers not only to the number of
contracts involved in transporting goods when multiple transport modes 23 (road & maritime) are employed, but
it also includes the need for each transport type to use different procedures during customs clearance. This
translates into a variation in costs and transit times between the two alternatives.
Multimodal imports
Multimodal transport was designed by ESLSE in 2010 to reduce the long dwell times required for the customs
clearance of imports at the Port of Djibouti, a reality which also caused high demurrage costs payable in
international currency (USD) to the Port. This system uses a single bill of lading from the port of origin to the
dry port of destination, so that the customs clearance of cargo is carried out directly at the dry port of the
destination. A transit permit is used from Djibouti to Ethiopia, avoiding the need for cargo to be inspected by
the Djibouti authorities. This avoids the long stays in the port of Djibouti and reduces the logistics costs of the
import. According to the Maritime Affairs Authority24, the dwell time in ports in the multimodal system is an
average of 4 days, while the unimodal system requires 38 days.
The multimodal transport system is currently managed by the ESLSE at present, as no private operator is
capable of performing this function. The ESLSE controls all transport activity through this system:
The maritime leg is covered through its own maritime services (the former Ethiopian Shipping Lines), and
if no own route is available, the ESLSE subcontracts the required sections.
The ESLSE manages the port clearance and the start of the transit through its subsidiary in Djibouti
(Maritime and Transit Service Enterprise - MTSE). The MTSE subcontracts these processes to a Djibouti
transit freight forwarder through an allocation by the FF association (ATD Association des Transitaires
de Djibouti).
Once the port clearance is completed, the MTSE performs the automatic allocation of land transport among
the authorized Ethiopian transport operators.
The land transport service is provided and charged by the carrier once the container is delivered to the dry
port of destination. At present, there are 29 associations or companies authorised to operate multimodal
23
Multimodal transport, as defined by United Nations under the Multimodal Convention, is the carriage of goods by at least two different
modes of transport on the bases of a single multimodal transport contract from a place in one country to a place designated for delivery
situated in a different country. The multimodal operator who signs the multimodal transport contract is liable (in the legal sense) for the
entire carriage, even though it may be performed by different sub-carriers in every mode of transport.
24
National Logistics Strategy 2014, Maritime Affairs Authority

89
transportation. The multimodal transport rates are pre-established and agreed upon by the ESLSE and
the authorised carriers.
The operation of the dry port is performed by the ESLSE. The customs clearance by the Ethiopian
authorities takes place at the Dry Port
Lastly, the transport between the Dry port and the final destination is contracted and provided by the customer
or by a private freight forwarder, not by the ESLSE. The following flowchart illustrates the process:
Figure 60: Multimodal Imports process
Port of Djibouti
Port of Origin
ESLSE*
Djibouti
Ethiopia
ERCA (dry port)
Authorized
transport
Ethiopian Dry
Port (ESLSE)
Djiboutian Customs
clearance (NO inspection)
Transit initiation
Port Clearance
Border
Post
Border
auth.
Mille Customs
Check Point
Doc check
Customer
facilities
Free
transport
Transit termination
Ethiopian Customs
clearance
Possible un-staffing
(unusual)
Un-staffing
ATD - Djiboutian
Freight Forwarders
Port Clearance Management
Transit permit (unique for
Djibouti and Ethiopia)
MTS (ESLSE
delegation in DJI)
Assignment of port clearance
to GIE. Coordination with GIE
Inland transport assignment
ESLSE
Customer
Maritime transport management

Coordination with MTS
Customs clearance management
* In case Ethiopian Shipping Lines (ESLSE) does not serve the port of Origin, it subcontracts the maritime service to an international carrier
Source: ALG
Since the creation of the system in 2010, multimodal transport has steadily increased its share of both the
containers and vehicles which are moved along the transport corridor to Djibouti. While 12,000 TEUs were
moved through this system (full containers) in 2010/201125, in 2012/2013 the figure rose to 67,000. This value
accounted for 57% of the total TEUs moved by the ESLSE. In 2012/2013, the import volume operated by the
multimodal system was approximately 1.2 million tonnes (containers + vehicles), accounting for 16.2% of the
total Ethiopian imports passing through the Djibouti corridor 26.
Figure 61: Imports handled by the multimodal system
Containers handled
[TEUs]
Vehicles
5000
4.493
67.389
3.931
60000
4000
3000
40000
2000
27.309
20000
1000
12.216
264
0
2009/ 2010
2010/ 2011
Vehicles handled
{N.]
TEUs
80000
0
2011/ 2012
2012/ 2013
Source: ALG
25
26
Fiscal year. From July to the following June

ALG calculations based on ERCA and ESLSE data. Total imports reached 7.6 million tonnes the fiscal year 2012/2013

90
Unimodal imports
The unimodal system, unlike the multimodal, has two separate contracts for the same transportation: one
applies to the maritime leg, and the other one to land traffic between Djibouti and Ethiopia. In this case, the
customs clearance is carried out at the Port of Djibouti (after unstuffing the container) by the two countries'
customs authorities. This process can generate a check by each of the two customs authorities at the Port,
meaning that the original documentation must be available at Djibouti. As well, once the freight is given
clearance at the port of Djibouti, it can't continue directly to its final destination before receiving approval by
the ERCA office in Ethiopia. Below is a flow chart that illustrates the unimodal process:
Figure 62: Unimodal Imports process
Djibouti
Port of Origin
ESLSE*
Port of Djibouti
Ethiopia
Free transport
Un-staffing (containers)
Djiboutian Customs clearance
Ethiopian Customs clearance
Transit initiation
Port clearance
Ethiopia ERCA
Facilities
Free
transport
Customer
facilities
Transit termination
Border
Post
Border
auth.
Mille Customs
Check Point
Freight check/
Inspection
ATD - Djiboutian
Freight Forwarders
Port Clearance Management
Transit permit Djiboutian Customs
Transit permit Ethiopian Customs
Ethiopian Freight
Forwarder**
ESLSE
Maritime
transport
management
Customer
Coordination with ESLSE and

Djiboutian Freight Forwarders
Inland transport management
Customs clearance management
*In case Ethiopian Shipping Lines (ESLSE) does not serve the port of Origin, it subcontracts the maritime service to an international carrier
** ESLSE can also provide Freight Forward services
Source: ALG
Unimodal transport services can be provided by any private freight forwarder and there is free competition
among them. However, the ESLSE also provides freight-forwarding services through unimodal imports.
In fact, the public company has a significant share of the market, accounting for about 29% of the country's
total unimodal imports during the 2012/2013 fiscal year. Private freight forwarders say that in practice, they
only operate with bulk cargo, containers or vehicles for international organisations (or embassies), and with
project cargo. The regular imports are performed through the ESLSE due to the lack of credit if done otherwise.
Multimodal transport has the disadvantage of requiring clearance at the Port of Djibouti, but continues to
account for most of the import volumes, given that break bulk cargo, dry bulk and liquid bulk cargo must use
this system. In addition, some of the containers and vehicles still use the unimodal system, although the
volumes are decreasing every year.
In 2012/2013, approximately 6.2 million tonnes was imported via the unimodal system through the Djibouti
corridor, representing 84% of the freight imported through this corridor.
Exports (unimodal)
In the case of exports, the only system available is unimodal. This is managed entirely by the private freight
forwarders, although the ESLSE is planning to include freight forwarding services for export in order to capture
market share.
In this case the freight forwarders take responsibility for organising land transport services to the Port of Djibouti
for FOB exports and also the maritime section for CIF freight.

91
Box 6: ESLSE participation in the service provision in the Djibouti Corridor
As has been mentioned in the description of multimodal and unimodal systems, ESLSE has a very important
role in the flow of imports from the Djibouti-Ethiopia corridor (and thus of total imports, as this corridor
mobilizes 97.5% of the total volume imported). According to the ESLSE in the 2012/2013 fiscal year, this
public company moved 3.02 million tonnes of imports, 1.22 million of these through the multimodal system
and 1.8 million unimodal. In terms of products, 2.08 million tonnes were containers, break bulk (including
steel) accounted for 0.94 million and 0.1 million tonnes were vehicles. The total volume of imports through
ESLSE represents approximately 40.6% of the total volume imported through the corridor.
Regarding exports, ESLSE moved 1,082 tons for export, only 0.14% of the volume exported through the
corridor.
It can be seen, therefore, that the public sector involvement in the corridor is very significant in imports, but
very minor in exports. In total, since imports are much greater than exports, ESLSE's share of the total
volume of foreign trade through Djibouti corridor reaches 37% (34% of all of the country's foreign trade).
2.3.2.3 Logistics costs and transit times

The transportation chains used for imports and exports along the corridor generate their own logistical costs
and transit times.
For any import or export passing though the Djibouti-Ethiopia corridor, the cost and transport time can be
broken down into five components:
Port time/cost, which also includes the processes performed by local freight forwarders
Road transport time/cost
Border crossing time/cost
Time/cost for passing the Mille check point
Time/cost for freight management in the dry port
The Maritime Affairs Authority has analysed, in the framework of the National Logistics Strategy, the costs of
the corridor in detail, arriving at an average import cost of between $2,519 and $2,982 per 20 foot container,
including all the above components. Exports through the corridor have a logistics cost of $1,424 per container.
The following figure shows the main cost results obtained from this analysis:
Transit Costs [USD/TEU]
Figure 63: Comparison logistics costs for Addis Ababa/Modjo Djibouti corridor for containers
3.500
3.000
2.500
2.000
2,982 USD
2,519 USD
250
75
130
Dry Port
250
75
1,424 USD
1980
1.500
Border
250
1587
Check Point
1.000
Road
Port
925
500
677
477
249
0
Import Multimodal
Import Unimodal
Export
Source: National Logistics Strategy, Maritime Affairs Authority

92
As it can be seen in the figure, multimodal imports are cheaper than unimodal because multimodal has tighter
costs in the port and road traffic sections. The smaller number of procedures and checks reduce the cost in
the port section slightly; besides, the regulation of prices for multimodal road transport also brings down the
cost of road transport (actually significantly). On the other hand, the multimodal system also requires the
payment of an average cost of USD 130 per container for handling in dry ports. However, the savings
mentioned above compensate for this extra cost.
Exports, on the other hand, have a significant difference in cost thanks to port and road transport costs that
are much lower than for imports. The imbalance that exists between incoming and outgoing port cargo and the
simpler bureaucratic requirements for exports account for this lower cost. In the road transport section the gap
is particularly important, with prices for export goods on average 40% cheaper than for imports, making a major
impact on the total price. This is because carriers prefer to offer very low prices rather than making an empty
return load after an import (as it would mean income of $0).
These logistics costs represent a major handicap for the competitiveness of exports and for the country's
economy (which depends on imports), as well as an increased cost of living for the population. For imports,
taking into consideration that in 2013 they had an average CIF value of $1,491 /tonne, the logistics cost of the
corridor accounted for a 10.6% increase on value of the product at its origin.
For exports the impact of the corridor is smaller, but also significant: the logistics costs represented 4.1% of
the FOB sale price. This value can be decisive for the competitiveness of some exports, and thus it is
appropriate to seek greater efficiency in the corridor in order to reduce the cost to the maximum.
Table 12: Impact of the logistics costs of the Djibouti corridor (average values)
Indicator for 2013

Product value [USD/ton]
Logistics cost corridor *
[USD/ton]
Share of landbridge logistics
cost on original price [%]
Value (USD/tonne)
3.000
2.000
1.000
-
Imports
(CIF)
Exports
(FOB)
1,491.90
1,935.03*
158.75
79.11
10.6%
4.1%
Landbridge logistics cost

79,11
158,75
Product
value
(CIF):
1,491.90
Product
value:
1,855.92
Imports
Exports
The logistic cost has been calculated using the proportion of

unimodal and multimodal imports in order to compute an average cost for imports. The average load considered for any truck or container
is 18 tonnes.
* FOB prices include the transport to the port. The price of 1,935.03 internalize an average landbridge transport cost of 79.11 USD/tonne
Source: ALG based on National Logistics Strategy, Maritime Affairs Authority and ERCA data
Although the unitary cost of transport in the corridor is not excessively high by international standards,
efficiency could be increased with an improvement in the management of vehicles to avoid empty returns, and
the distance of the corridor route could even be reduced, as is proposed in the following subchapter.

93
Transit time [hours]
Figure 64: Comparison logistics transit times for Addis Ababa/Modjo Djibouti corridor for containers
1.200
1.000
min 192 h.
948 hours
956 hours
35
800
48 - 816
Dry Port
Check Point
600
Border
200
Port
95 hours
min 48
35
Road
912
400
32
96
Import Multimodal
60
Import Unimodal
Export
Source: National Logistics Strategy, Maritime Affairs Authority
Regarding transit times along the corridor, they are generally very high for imports. For multimodal imports,
the average time spent by a container from the moment it reaches the port of Djibouti until when it leaves the
dry port at its destination is 948 hours (39.5 days). However, this value often masks voluntary storage of the
container in the dry ports. Some importers keep the containers in dry ports because it is cheaper and safer
than finding alternative storage, and avoids having to pay import duties if the load is not yet required. When it
is desired to quickly remove the container from the dry port, this can be done in 2 or 3 days, so that the total
transit time in the corridor can be reduced to 192 hours (8 days).
Unimodal imports also require very high transit times, although in this case the major delay is concentrated at
the port (and customs) clearance in Djibouti. The cargo imported by the unimodal system requires an average
of 38 days to be cleared at the Port of Djibouti, so that the total transit time increases to 956 hours (39.8 days).
These average times are not in any case voluntary, unlike those mentioned above. According to date from the
ESLSE and some freight forwarders, the transit time may be even higher in some cases, as much as 60 days.
Exports, on the other hand, have a much shorter transit time. In total they need 95 hours (about 4 days) to
complete an average transit.
2.3.2.4 Alternative routes belonging to the Djibouti international corridor

There are different alternative routes within the corridor connecting between Addis Ababa with the Port of
Djibouti:
Kaliti-Galafi: This is the road used by the majority of the traffic. It connects Modjo, Adama, Awash, Mille
and Galafi. This corridor has a length of about 870 km.(taking Akaki Kaliti as its origin). The corridor is
paved in entirely, although carriers have reported that the state of the road between Mille and Galafi is
substandard. This is the alternative with the fastest driving time (13.4 hours from origin to destination) as
well as the cheapest. However it is not the shortest route between Addis Ababa and Djibouti (in terms of
distance).
Kaliti-Dewele (via Dengego): This alternative road follows takes a different path towards Awash and Dire
Dawa and then the Dewele Border Post. This road is 805 km long, and is therefore 65 km shorter, but
much longer in travel time. The section between Dire Dawa and Dewele is not paved, and the transport
time increases to 31 hours.
Kaliti-Dewele (via Erer): This is a similar alternative road that uses the unpaved road from Mieso to Dire
Dawa (through Bike and Erer). This alternative road is shorter in distance to the previous one. It represents
a 747 km journey between Addis Ababa and Djibouti, 123 km less than the road most currently used.

94
However, since this version has 373 km which are unpaved, travel time equals to 43 hours. This leads to
additional costs and stress on the vehicle.
East Ethiopia Dewele: Due to the difference in costs and driving time between variants, the Dewele
border crossing is only used by a minor part of the international freight traffic to Djibouti. However, this
crossing is very useful for the traffic with origin or destination at the east of the country (Jijiga - Harar - Dire
Dawa).
Figure 65: Eastern Corridor variants for the international freight transport
Axum
Key
Adigrat
Kaliti - Galafi
Adwa
Kaliti Dewele (va Dengego)

Kaliti Dewele (va Erer)
Mekele
East Ethiopia - Dewele
Semera
Debre Tabor
Weldiya
Galafi
Djibouti
Kombolcha
Dewele
Debre Birhan
Dire Dawa
Erer
Mieso
Awash
Addis Ababa
Jig-Jiga
Harari
Akaki
Kaliti
Adama
Dhaga-Bur
Ziway
Asela
Source: ALG
The existence of alternative roads that are shorter in length represents a very interesting option for the
attraction of traffic from busier roads. Appropriate investment for the improvement of their infrastructure would
allow the development of this potential.
The establishment of efficient alternative roads would reduce the operational costs of transport between Addis
Ababa and Djibouti, esulting in a reduction of the logistics costs of imports and exports. Considering that the
volume of goods transported annually along this corridor is very high, the potential savings would probably
justify economically justify the paving and improvement of these roads.
The following table shows the main characteristics for each alternative road, as well as a conservative
calculation of the operational cost savings that each alternative road could offer if road improvements were
undertaken and finally the cost reduction per tonne transported if freight transport trasferred from the current
corridor (via Galafi) to the new improved routes:

95
Table 13: Characteristics of the Eastern Corridor alternative routes
Length (km.)
870
Kaliti - Dewele
corridor
(via Dengego)
805
747
324
Length of paved road (km.)
870
585
374
104
220
373
220
Current transport time (hours)

Estimation of future transport time with
improved corridor conditions (hours)
Time reduction associated to improved
corridor (%)
13.38
31.00
43.05
23.60
13.38
12.38
11.49
4.98
0%
60%
73%
79%
Current transport cost per tonne (USD)

Estimation of future cost with improved
corridor per tonne (USD)
Cost reduction associated to improved
corridor (%)
Cost reduction un der the assumption of
traffic transfer from the current main
corridor (USD/ton)
Operational cost reduction (%)
70.77
109.90
136.07
70.77
70.77
65.48
60.76
26.36
0%
40%
55%
63%
5.29
10.01
N/A
0%
7%
14%
N/A
Kaliti - Galafi
Corridor
Sub-Corridor Characteristics
Length of non-paved road (km.)
Kaliti - Dewele
(via Erer)
East Ethiopia Dewele
Note: the costs are considered for imports being transported in 40 feet containers or bulk trailers of 40 tonnes. However,
this is the lowest transport cost that could be obtained for any tonne transported. This simple analysis is therefore being
conservative in the cost reduction.
Source: ALG
In 2013 the demand for transport along the corridors connecting with Djibouti represents over 8 million tonnes,
including both imports and exports, according to ERCA data:
Table 14: Transport demand on the Djibouti Corridor in 2013
Imports
(tonnes)
6,754,381
Exports
(tonnes)
733,289
Total traffic
(tonnes)
7,487,670
Kombolcha - Galafi - Djibouti
31,919
31,349
63,269
No
Weldiya - Galafi - Djibouti

East Ethiopia - Dewele Djibouti
Addis - Dewele - Djibouti
114,182
23,367
137,550
No
267,237
72,368
339,606
Yes
48,382
344
48,726
Yes
7,216,102
860,719
8,076,821
Demand 2013
Addis - Galafi - Djibouti
Total
Freight flow
being benefit?
Yes
Source: ALG based on ERCA data
It can be seen that if road improvements were made to the alternative corridor via Dire Dawa and Dewele, it
would yield benefits for 7.8 million tonnes of freight, a very high volume.
From the unit cost savings calculated in Table 13 and the demand figures in Table 14, an estimate can be
made for the total operational savings to be obtained if paving was carried out along the road stretches from
Dire Dawa to Dewele and from Mieso to Dire Dawa (through Bike and Erer).
Under this hypothesis, the operational savings using the shortest corridor (via Erer and Dire Dawa) would have
reached USD $88.1 million27.in 2013 This annual benefit would increase to about $172.1 million in 2020, and
up to $241 million in 2025, given the demand projections which have been made for foreign trade. Over 11
27
2014 USD, not current USD.

96
years, in the period between 2015 and 2025, the accumulated operational savings would reach USD $1.939
million28.
Finally, it is worth to note from Table 14 the important unbalance between import and export flows in all subcorridors. In the main sub-corridor for example, the Addis Ababa Galafi Djibouti, the difference between
imports and exports was higher than 6 million tonnes. This means that in the best situation 158,000 trucks
return empty from Addis Ababa/ Modjo to Djibouti (6 million tonnes of imports could be carried in 158 thousand
trips with 38 tonnes trucks). Probably, more of them do so.
2.3.3
Customs and border post
Ethiopia has an extensive network of border crossings with neighbouring countries and customs offices to
carry out the formalities required in foreign trade operations. The existing border crossings and offices are
shown in the figure below:
Figure 66: Customs and border posts location
Zala Ambesa
Rama
Key
Humera
Adigrat
Shire
Custom clearance offices
Adwa
Planned clearance offices
Mekele
Metema
Current border posts

Gonder
Planned border posts
Semera
Debre Tabor
Almahal
Weldiya
Galafi
Bahir Dar
Djibouti
Kombolcha
Dewele
Gizen
Kurmuk
Debre
Markos
Asosa
Nekemte
Debre
Birhan
Teferi Bar
Dire Dawa
Togowechale
Addis Ababa
A.A. Airport
Harari
Kality
Gelan
Modjo
Gambella border
Jijiga
Adama
Dhaga-Bur
Gambella
Hossana
Jimma
Shashemene
Robe
Hawassa
Sodo
Kebri Dehar
Dima
Imi
Dila
Arba Minch
Gode
Konso
Negele
Yebelo
Omorate
Dolo Odo
Moyale
Dire Dawa has two offices: one in the airport, and one in city center
Mekele has two offices: one in the airport (Alula Abanega Airport Customs) and one in city center
Addis Ababa has additionally the Customs Head Quarters and Parcel Post Customs
Mille has an auxiliary custom office that eventually makes cargo clearance
Source: ALG based on ERCA information
Infrastructure availability at border posts is very limited in all border crossings, including the busiest ones. This
situation has implications in the security and logistics operation domain. Urgent action (and investment) is
needed in order to complement the current customs infrastructure provision within the Ethiopian territory with
adequate facilities at its borders.
28
The above savings assume that all traffic will be transported by road, and thus no consideration is given to the emergence of alternative
modes that could lessen the freight volumes along this route (rail). This simplified analysis is for illustrative purposes, showing the
advantages of using the alternative corridors to the current route, since they could reduce transport costs very easily. The feasibility of the
road improvements suggested in this section must be analyzed in greater detail in subsequent planning stages.

97
MAIN CONCLUSIONS FOR CHAPTER 2.3 (MARITIME AND LOGISTICS)
Maritime transport represents Ethiopias main mode of transport for the countrys imports
and exports, accounting for 93.8% of this trade in volumetric terms and 83% in monetary terms.
However, Ethiopia is a land-locked country and uses the ports of neighbour countries for its
international commerce.
The Port of Djibouti represents the key-maritime connection for most of Ethiopias foreign
trade and is expected to strengthen this position in the future through the construction of new
terminals and a renewed commercialstrategy in the framework of the Common Market for Eastern
and Southern Africa, obviously including Ethiopia.
This means that the port availability for Ethiopias trade is ensured for the future but at the cost of
depending on its low efficiency (unimodal imports which are subject long waits, up to 60 days, with
an average of 38 days at the port).
Other ports such as Port Sudan or Berbera Port also participate in Ethiopias trade but to a far
lesser extent.
Given that the Ethopian foreing trade depends on foreign ports located at a distance of more than
700 km from the countrys major productive and consumption centres, a system of corridors
providing efficient connections with the ports, minimizing transportation costs, is deemed
essential:
o
Logistics facilities are still reduced and are limited to dry ports managed by the public
sector, mainly serving imports from the Port of Djibouti (Ethiopian Shipping and Logistics
Service Enterprise, ESLSE).
A significant proportion of these dry ports are temporary and have limited infrastructure
and equipment, as well as long length of stay for containers (40 days) since importers use
them as storage centres.
In addition to the current dry ports, the ESLSE plans to build 5 additional dry ports in new
locations, opening new possibilities of connections with the ports of Djibouti and Mombasa
There are no logistics activities with higher added-value such as inventory

management or storage in special tax-regime areas.
The establishment of alternative (and shorter) land routes to Djibouti could help
reducing transportation costs. Different routes leading to the Dewele border post could be
established as an alternative to the current route through Galafi, leading to very interesting
cost savings.
Regarding the current system of logistics services provision, the ESLSE has a monopoly on
multimodal transport for imports and manages the operation of the dry ports.
Freight exports are provided by a large number of private freight forwarders (small companies
most of them) who are unable to provide multimodal services such as the ones provided by
ESLSE.
Multimodal imports are cheaper than unimodal imports due to lower costs in the port and road
traffic sections of the logistics chain, as well as the smaller number of procedures and checks. This
represents a restriction for the private sectors development.
The current imbalance between incoming and outgoing port cargo leads to a large number
of empty returns and the increase of transport costs as well as the reduction of the transportation
services profitability. Efficiency could be increased through an improvement in the management
of services to avoid these empty returns.

98
2.4
Railway transport
At present, rail transport represents a small percentage of Ethiopian transport, despite having been present
for over 100 years. However, the Government of Ethiopia has ambitious plans to develop this mode of
transport.
The rail sector in Ethiopia is comprised of two differentiated networks:
The Ethio-Djibouti railway line: railway line between Djibouti and Addis Ababa (via Dire Dawa) built at the
beginning of 20th century, currently operating only partially
Ethiopian Railways Corporation railway network: this public corporation has the mandate to develop a full
new railway network of almost 5,000 km. in the following years. The network has started to be built with
the line from Djibouti to Addis Ababa, as it is explained below
The following sub-chapters detail the characteristics and current status of both networks.
2.4.1
The Ethio-Djibouti railway line
The Djibouti-Ethiopia railway line (Chemin de Fer Djibouto-Ethiopien, or CDE) was built at the beginning of the
20th century through an Ethiopian-French agreement. The railway line was built through very rugged terrain,
starting with the line connecting Djibouti with Dire-Dawa (309 km) started in October 1897 and completed in
December 1902. The line from Dire-Dawa to Addis- Ababa was completed in June 1917 and then full operation
of the railway line began.
In 1978 Djibouti gained full independence from France and a Treaty between the Governments of Ethiopia
and Djibouti established the CDE in 1981. However, the role of the CDE in the transport sector has since then
been relegated to a secondary position, with the Assab road playing a dominant role and replacing the CDE
as the major route for Ethiopias trade movements towards the port of Djibouti. This is mainly attributed to the
deterioration of the operating conditions of the railway line.
However, as approximately 30-35 % of the Ethiopian population and 70 % of the Djibouti population are
situated along the railway line, this is still considered a very important transport route for both Ethiopia and
Djibouti.
The Djibouti-Ethiopia railway line is approximately 780 km long and links Addis Ababa to the port of Djibouti
via Dire Dawa, Nazreth, Debre Zeit and Akaki.
The line is divided into the following two sections:
Line A: Djibouti Dire Dawa: 308.4 km
Line B: Dire Dawa Addis Ababa: 472.3 km
The railway track consists of narrow gauge (1000 mm), light rail (20 kg to 30 kg/m) with permissible axle loads
of less than 15 tonnes. During 2006 and 2007, a railway concessioning process was initiated, but it was not
completed A 40 million contract for a partial track upgrade was concluded with a European contractor.
However, the contract was terminated before the work was completed.
Currently, only Line A is operational with three passenger trips per week. No freight is currently transported
through the railway. The new Addis-Djibouti line under construction by the ERC (discussed below) is expected
to completely replace the old line.
2.4.2
Ethiopian Railways Corporation and the new national railway plan
The Government of Ethiopia decided to proceed with the planning of a new railway network, to be developed
as a modern state of the art system, with the objective of accelerating the growth of the Ethiopian economy
as a whole, rather than being driven by demand from a specific economic sector or major customer. The
Ethiopian Railway Corporation (ERC) was established for planning, developing and operating the new railway
network.

99
The Ethiopian Railways Corporation has identified eight railway corridors for study, design and subsequent
implementation, with a total estimated length of 5,060km. The eight railway routes are:
Table 15: New planned railway lines
Route
No.
1
2
3
Estimated
Length(km)
Route Name
Addis Ababa-Modjo-Awash-Dire Dawa-Dewanle
656
Modjo-Shashemene-Arbaminch-Konso-Moyale Including Shashemene-Hawasa

and Konso-Weyto
Addis Ababa-Ijaji-Jimma-Guraferda-Dima including Jimma-Bedele (direct to
Boma with further extension to south Sudan)
905
740
Ijaji-Nekemet-Assosa-Kumruk
460
Awash-Kombolcha-Mekele-Shire
757
Fenoteselam-Bahirdar-Wereta-Weldia-Semera-Elidar
734
Wereta-Azezo-metema
244
Adama-indeto-Gasera
248
Total
4,744
Source: ALG based on ERCA data
The first railway to be developed has been number 1 (Addis Ababa-Modjo-Awash-Dire Dawa-Dewanle), in
order to link the country to the Port of Djibouti. In 2011, a bilateral agreement between Ethiopia and Djibouti
was signed for the Development and Operation of a Standard Gauge Railway Network. The agreement states
that each country will be responsible for the financing, construction and operation of the railway track within
their own territory, and that the cross border operations shall be seamless.
Current status of the planning
A total of 2,395 Km railway lines are planned to be constructed during the GTP period. In 2012/13, priority was
given to the construction of the Addis Ababa-Djibouti national railway line (Route No. 1) and the Addis Ababa
Light Rail Transit. Accordingly, the construction works of the Addis Ababa/Sebeta-Mieso (317 km) and MiesoDewanle (339 km.) projects have been accomplished in a proportion of 22% and 20% respectively.
Feasibility studies and other pre-construction preparatory works of the AwashWoldiya/Hara Gebeya(389KM),
Woldiya-Hara Gebeya-Mekele(268 km.) Woldiya/Hara Gebeya Semera -Asaiyta (229 km and the AsaiytaTajura (210 km.) railway projects have been undertaken. Likewise preparatory works are in progress for Addis
Ababa/Sebeta-Ijaji-Jimma-Bedele and Mojo-Hawasa-Boditi-Woito railway projects.
In order to make the implementation process manageable, the NRNE projects have been divided into two
phases:
PHASE I (green lines)
1.
2.
3.
4.
5.
Addis Ababa Djibouti Railway Project

Mekele Weldya/Hara Gebeya - Semera-Tadjourah
Port Railway Project
Addis Ababa Ijaji-Jimma-Dima Including Jimma Bedele Railway Project
Awash- Kombolcha-Hara Gebeya Railway Project
Mojo-Shashemene-Arbaminich-Weyto
Railway
Project
PHASE II (red lines)

6.
7.
8.
9.
10.
Jimma-Guraferda-Dima diorected to Boma

Ijaji-Nekemet-Assosa-Kumuruk
Mekele-Shire
Fenoteselam-Bahirdar-Wereta-Weldia
Wereta Azazo-Metema
11. Adama-Indeto-Gassera-Ginir
The following figure shows a map with phase I and phase II identified. All planned stations are also included:

100
Figure 67: Projected railway network (Ethiopian part)
Key
Axum
Railway lines Phase I
Shire
Railway Stations Phase I

Mekele
Railway lines Phase II
Metema
Railway Stations Phase II
Aykel
Azezo
GendaWuha
Dichoto
Elidar
Wereta
Weldiya
Semera
Bahir Dar
Djibouti
Dewele
Kombolcha
Finote Selam
Kurmuk
Asosa
Dire Dawa
Nejo
Nekemte
Ejaji
Addis Ababa
Ambo
Mieso
Awash
Sebeta
Modjo
Bedele
Adama
Iteya
Seka
Ziway
Robe
Asela
Jimma
Indeto
Shashemene
Tepi
Sodo
Dima
Hawasa
Gasera
Ginir
Arba Minch
Boma
Weyto
Konso
Yebelo
Mega
Moyale
Source: ALG based on ERC information
Eastern Corridor Project: Addis Ababa Djibouti Railway Project

In September 2010, the Government of Ethiopia issued the Five Year Growth and Transformation Plan
(2010/11 2014/15), including an overall guideline for the improvement of the existing transport infrastructure
through the development of a standard gauge railway network. Amongst a number of lines considered for
construction, the Addis Ababa- Djibouti route was given priority considering that it is key for the increase of the
countrys competitiveness in the international market, through the reduction of logistics costs along the most
demanded international corridor of the transportation network.
The Route 1 railway will enable Ethiopia easy access to the port of Djibouti providing both passenger and
freight service, with a capacity for 3,500 tons of goods per service. When completed, the electrified railway is
expected to reduce the travel time from Addis Ababa to Djibouti by half, to less than ten hours with a designated
speed of 120km/hour. The Project will replace the existing meter-gauge railway that is obsolete and will
become the railway corridor to the sea from Addis Ababa to Djibouti.
The railway will have 17 major stations, passing through the major cities of Bishoftu, Adama, Metehara and
Dire Dawa. The 107 km. from Addis Ababa to Adama will be double track, whereas the rest will be a single
track rail. Starting from Addis Ababa/Sebeta, the projected line will run eastwards, ending at Nagad (front-port
station of Djibouti) via Indode(Akaki), Bishoftu, Modjo, Adama, Metehara, Awash, Mieso, Bike, Dire Dawa,
Arawa, Adigala, Aysha, Dewele, Queleleh, Ali Sabieh and Holhol. It will be 752.7km long and will use electric
traction.
It is important to note that one of the stations of this rail line will be of remarkable size and located adjacent to
the Modjo Dry Port. The complementarity between these two centres will represent a real intermodal freight
platform, combining the functionalities of the Dry Port with the needed facilities for road-rail modal shift. It will
offer very interesting potential for the attraction and concentration of agents (freight rail companies, storage
companies, road transport companies) and services (rail/road loading and unloading services, management
101
and storage of containers, customs services, storage services, custom agents and freight forwarders), leading
to scale economies and a growing relevance within the countrys logistics system.
This line has a total length of tracks within Ethiopia (Sebeta-Dewele) of about 670.7km; the length of main
tracks in Djibouti (Queleleh-Nagad) is about 82.0km. The tracks of railway-related works in the port area of
Djibouti are about 13.8km long and will use diesel traction.
The initial capital cost is being secured through the EXIM Bank of China. The Ethiopian Railway Corporation
and the Ministry of Transport and Equipment of Djibouti have signed commercial contracts with two Chinese
contractors respectively. CREC and ERC signed the Contract for Sebeta to Mieso (included) section and the
Contract Price is USD 1.639 billion. CCECC singed the Contracts for Mieso (excluded) to Dewele section with
ERC and for Djibouti Port to Gueleleh section with Ministry of Transport and Equipment of Djibouti. The
Contract Price of these two sections is USD 1.197 billion (Ethiopian side) and USD 505 million respectively
(Djiboutian side). The rolling stock will be provided by Norinco (China North Industries Corporation).
As at May 2014, overall progress of line construction has reached 37%. The project owner, Ethiopian Railways
Corporation (ERC) and the contractors expect the project to be completed by October 2015.
Mekele Weldya/Hara Gebeya - Semera-Tadjourah Port Railway Project
This is the second line that the Government of Ethiopia is working on. Currently, based on informations from
ERC, the public enterprise is looking for funding, negotiating with some governments and banks. No specific
information about the project status has been provided.
The main characteristics of this line are:
Total length of 675 km
Single track for the whole route
For both freight and passenger transportation
Fully electrified
Standard Gauge (1.435 meters)
Special Features of the Project:
It provides alternative Port access and thus contributes to the economic development of Ethiopias
hinterland.
Connects the Northern part to central part of Ethiopia
It is part of the National Railway Network of Ethiopia(NRNE) which connects Djibouti with Northern Sudan
(fostering regional development)
2.4.3
Preliminary demand estimations for new railway network
The extensive fieldworks carried out as a part of the preparation of this project have not permitted obtaining
specific data on the demand for the new lines planned by the ERC29. The public corporation has informed
about the availability of feasibility studies on some specific lines, although it has not confirmed the existence
of a national master plan backing up the proposed design of the national rail network.
Given the unavailability of specific official data regarding railway transport demand, the Consultant has
conducted a series of preliminary analyses based on the information available, which have enabled to quantify
a preliminary potential demand for these lines.
To do this, the Consultant has used the traffic counts conducted by the ERA between 2002 and 2012, as well
as the forecasts developed by the Consultant for the 2015-2030 period (see 2.2.3). At present, only road
transport meets the demand for transport, so rail demand would feed from there. This information can therefore
allow obtaining a rough estimation of the potential demand that any railway line could have in the country.
The process used by the Consultant to gather data consisted of:
29
The ERC has not facilitated any Railway Master Plan or any feasibility study for the lines currently being built or planned. No specific
details about the demand conditions that generated the network plan have been provided

102
Processing of the counts of the corridors equivalent to the proposed railway corridors in order to estimate
the total potential demand that would feed the rail corridor. The corridors or lines analysed were railway
routes 1, 2, 5 and 6, although some of them were only analysed partially:
- 1. Addis Ababa - Modjo - Awash - Dire Dawa Dewanle. Complete corridor
- 2. Modjo Shashemene Arbaminch Konso Moyale. Analyzed only from Modjo to Konso
- 5. Awash Kombolcha Mekele Shire. Analyzed only from Awash to Mekele
- 6. Fenoteselam Bahirdar Wereta Weldia Semera Elidar. Analyzed only from Wereta to Elidar
No other sections of have been analysed because the count data available did not contain consistent
information on the other corridors.
Based on the counts of the aforementioned corridors (historic and forecasts), the Consultant estimated
the cargo served by the corridors by type of vehicle (small medium or large trucks, trailers...).
The rails potential demand needs to be obtained for each corridor. However,there is neither detailed data
on the type of goods to be transported, nor information on their specific origins and destinations. Therefore,
the Consultant has considered an attraction ratio of 10% for domestic routes, and of 15% for international
routes connecting with Djibouti. These percentages are slightly higher than the current average market
shares of rail within the EU and represent a good target figure for a rail system under development such
as the Ethiopian, more particularly in the case of international corridors such as the one leading to Djibouti
(provided the rail and port operations are good). In the case of domestic corridors, their freight capture
potential depends greatly on the type of freight to be transported and the distances between the origin and
destination.
The obtained rail freight volumes have been used to obtain frequencies of daily train services, considering
the 2020, 2025 and 2030 tome horizons. The Consultant has considered a train configuration consisting
of 10 wagons with an average capacity of 85 tonnes each (i.e. the total capacity of the train would be 850
tonnes).
This assumption allowed obtaining rough estimations of the potential demand of the lines. However, the
purpose of this simple exercise is merely to provide an order of magnitude of the demand for these railway
lines. This demand does not permit knowing the feasibility of the railway, but can allow us to know which lines
would have more demand and would therefore require higher priority. The data obtained are included in the
following table:
Table 16: Demand potential of selected railway lines
Origin
Total freight corridor
Destination
2015
2020
2025
2030
Freight
share
of
railway
Total trains per day (per

direction)
2015
2020
2025
2030
Modjo
Adama
45,624
62,463
86,645
109,917
15%
8.05
11.02
15.29
19.40
Adama
Awash
45,624
62,463
86,645
109,917
15%
8.05
11.02
15.29
19.40
Awash
Dire Dawa
45,624
62,463
86,645
109,917
15%
8.05
11.02
15.29
19.40
Dire Dawa
Dewele
47,143
64,126
88,180
111,347
15%
8.32
11.32
15.56
19.65
Modjo
Sheshemene
28,876
39,415
53,974
68,010
10%
3.40
4.64
6.35
8.00
Sheshemene
Arba Minch
3,028
3,822
4,752
5,658
10%
0.36
0.45
0.56
0.67
Arba Minch
Konso
5,010
7,042
9,534
11,954
10%
0.88
1.24
1.68
2.11
Addis
(Awash)
Kombolcha
4,887
5,976
6,964
7,946
10%
0.57
0.70
0.82
0.93
Kombolcha
Weldiya
5,002
6,462
8,432
10,334
10%
0.59
0.76
0.99
1.22
Weldiya
Mekele
9,509
13,337
18,551
23,582
10%
1.12
1.57
2.18
2.77
Weldiya
Semera
5,097
7,093
9,908
12,620
10%
0.60
0.83
1.17
1.48
Semera
Tadjourah
5,097
7,093
9,908
12,620
10%
0.60
0.83
1.17
1.48
Wereta
Weldiya
6,963
9,674
13,530
17,241
10%
0.82
1.14
1.59
2.03
Source: ALG based on ERA traffic counts

103
As it can be seen, the corridor to Djibouti has the greatest demand. This line (with a market share of 15% of
the corridors demand) could accommodate significant rail traffic so as to make the line viable. However it is
not possible to assess the feasibility of the line; this would require specific financial studies that are out of the
scope of the current study.
Line number 2 (the stretch Modjo to Shashemene strictly) shows considerable demand levels for 2025 and
2030. Lines 5 and 6 have a much more limited demand based on the traffic forecasts available.
All the lines in the table require very detailed demand studies to permit learning about the specific
characteristics of the goods to be transported and to obtain a detailed estimation of the capture potential. The
high investments required to build any line make necessary to conduct detailed feasibility studies aimed at
reducing the risks of the investment and assuring the investment payback.
MAIN CONCLUSIONS FOR CHAPTER 2.4 (RAIL)
Rail transport represents nowadays a small percentage of Ethiopian transport, despite having been
present in the country for over 100 years.
The current rail system in Ethiopia consists of the Djibouti-Ethiopia railway line (Chemin de Fer
Djibouto-Ethiopien, or CDE), built at the beginning of the 20th century through an Ethiopian-French
agreement. The line is divided into the following two sections:
-
Line A: Djibouti Dire Dawa: 308.4 km
Line B: Dire Dawa Addis Ababa: 472.3 km
Currently, only Line A is operational with three passenger trips per week. No freight is currently
transported through the railway.
The Government of Ethiopia has ambitious plans to develop rail transport in the country, through the
development of more than 5,000 Km railway lines.
Priority has been given to the construction of the new Addis Ababa-Djibouti national railway line, for it
represents the most demanded international corridor and is expected to reduce the travel time from
Addis Ababa to Djibouti by 50%. Around 20% of this project has been executed to this day. Feasibility
studies and other pre-construction preparatory works are being undertaken for some of the other rail
lines planned by the GoE.
No studies justifying the design of the current plan from the demand point of view have been made
available to the consultant. Under the required technical assumptions, the consultant has
concluded that the international rail line to Djibouti would have the greatest demand of the new rail
network. The next line in importance would be the one connecting Modjo with Shashemene, with
considerable demand levels for 2025 and 2030. The rest of the planned rail lines would have a
much more limited demand.
However, the above estimations do not permit to infere any consequences regarding the feasibility
of the lines. Specific studies should be undertaken in this domain.
It is important to note in this regard that the only complete study that has been available for the
consultant states that a minimum of an additional USD 3.69 billion will be needed to enable the
Djibouti railway line to repay investment costs. Given that this is the rail line with highest
benefit/cost ratio the need to carry out extensive feasibility studies on the whole railway network is
deemed essential.
The operational structure of the new railway system is not known. The ERC has been given
responsibility on the new railway network although it is expected that it will advertise for a private
firm to provide the service operations

104
2.5
Air transport
In 2013, air transport moved 133,493 tonnes of international freight (including transit), a very low percentage
of the total 8,7million tonnes of Ethiopian external trade. Regarding the domestic market, the air transport
share is still lower, moving just 1,093 tonnes of freight in all domestic airports.
Table 17: Freight Air Transport Demand 2013 (tonnes)
Domestic traffic
(tonnes)
International
traffic (tonnes)
Bole International Airport
133,493
Other Domestic Airports
1,093
1,093
133,493
Class
Total
Source: ALG based on Civil Aviation Authority information
In terms of passengers, the figures are more relevant: a total of 5.8 million international passengers and 1.14
million domestic passengers use air transport every year in Ethiopia. Most of the passengers moved through
Ethiopian Airports used Addis Ababa Bole International Airport (6.25 million passengers).
Despite the modest figures of air cargo in Ethiopia, this mode has a strategic potential for the country, due to
the dimensions and geographic characteristics of Ethiopia. The following subchapters present the air transport
infrastructure and services system.
2.5.1
Airport network
The Ethiopian Airport network is currently owned and managed by the public company Ethiopian Airports
Enterprise (EAE)30. Currently, the Enterprise administers eighteen Airports and two airstrips across the
country. Four of the airports are of international standard (Addis Ababa, Bahir Dar, Dire Dawa and Mekele),
while the rest are domestic. Figure 70 provides the location of all airports based on the Civil Aviation Authority
information.
Regarding the international airports, Addis Ababa Bole is the major International and Domestic air transport
service provider, with a modern paved runway capable of handling aircrafts such as B747 and MD11. It has a
passenger terminal that can accommodate 2,929 passengers at peak hour operation. The Airport plays an
important role for the country as well as for the neighboring countries as a hub. It has served the nation as its
main International gateway for more than 45 years.
Furthermore, Addis Ababa Bole Airport is the busiest airport in East Africa with a capacity of providing a world
class passenger and cargo services to more than 6.2 million international and domestic passengers each year.
In terms of freight, it moved 133.4 thousand tonnes in 2013, all of them corresponding to international trade.
Based on Civil Aviation figures, no domestic freight was carried in Bole Airport that year. The demand in this
Airport has been increasing during last years, as can be observed in the following evolution chart.
30
EAE is established as a public enterprise by the council of Ministers regulation number 82/2003 on 24 January 2003

105
Figure 68: Passenger and Freight traffic evolution in Bole International Airport
160
140
Passenger (Number of passengers)
120
100
4
80
3
60
40
Millions of passengers
Thousand tonnes of freight
Freight (tonnes)
20
-
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
The other international Airport is Dire Dawa, located by the Dire Dawa town, in the eastern part of the country.
This airport has a modern runway that can accommodate Aircrafts like B767 and a passenger terminal capable
of handling 150 passengers at peak hour operation. No demand information has been obtained for this airport.
Additionally, and starting on June 7, 2008, EAE upgraded Mekelle and Bahir Dar Airports to international
service standards, but there are still no international flights operating from them. These airports are however
the busiest in terms of domestic passenger traffic (after Addis Ababa) and this can be seen in the following
chart.
Figure 69: Passenger and Freight traffic in other domestic Airports (2013)
Freight (tonnes)
Passenger (Number of passengers)
200
900
180
800
160
700
140
600
120
500
100
400
80
300
60
200
40
100
20
Thousands of passengers
Tonnes of freight
1.000
*No information available regarding Dire Dawa International Airport


106
Other relevant airports in terms of passenger operations are Gondar, Axum and Lalibella, which are important
touristic cities. In terms of freight, in 2013, Gode Airport, Assosa and Jijiga were the airports with a highest
traffic, followed by Bahir Dar and Mekele.
Figure 70: Main Ethiopian Airports
Humera
Axum
Key
Shire
International Airports
Mekele
Gonder
National Airports
Lalibela
Semera
Bahir Dar
Asosa
Dire Dawa
Addis Ababa
Jig-Jiga
Gambela
Jimma
Robe
Arba Minch
Currently various major projects are underway in different parts of the country to increase the capacity of
regional Airports. For example, Jijiga and Humera airports have just been completed to handle aircrafts like
B737 and AN124 respectively. Moreover it is being built passenger terminals in Jijiga, Assosa and Jimma
Airports capable of handling 150 passengers at peak hour operation.
Two additional airports are being constructed in Kombolcha and Jimma, each with a capacity to accommodate
aircrafts like B737.
2.5.2
Carriers
Currently, 15 operators operate from the international airport of Addis Ababa, and 6 national operators operate
within the domestic airport network. The international operators are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Ethiopian Airlines
Abyssinia Flight Service
Air Ethiopia
Sura Airways
Kenya Airways
British Midland International
Daallo Airlines
Egypt Air
Lufthansa
Yemenia

107
11.
12.
13.
14.
15.
Sudan Airways
Saudi Arabian Airlines
Turkish Airlines
Emirates
Etihad Airways
Domestic operators are:

1.
2.
3.
4.
5.
6.
Ethiopian Airlines
Abyssinia Flight Service
Trans Nation Airways
General System Engineering
Aquarius Aviaition
Air Ethiopia
The most important air transport operator in the country is Ethiopian Airlines, which is a public airline that has
been operating for 65 years. The following sub-chapter details the operations of this company covering an
important part of the air services provided in the country.
2.5.2.1 Ethiopian Airlines

Ethiopian Airlines has been in operation for over sixty-five years. Its current fleet of 59 airplanes includes 6
freighters. The airline has 37 orders for new aircrafts, 14 of them from Airbus.
Ethiopian aims at becoming the leading aviation group in Africa through the implementation of its 15-year
strategic plan called Vision 2025, on the basis of a new structure with seven business units: Ethiopian Domestic
and Regional Airline; Ethiopian International Passenger Airline; Ethiopian Cargo; Ethiopian MRO; Ethiopian
Aviation Academy; Ethiopian In-flight Catering Services; and Ethiopian Ground Service. Ethiopian is a multiaward winning airline with an average growth of 25% in the past seven years.
Ethiopian fleet includes Boeing 787, Boeing 777-300ER, Boeing 777-200LR, Boeing 777-200LR Freighter and
Bombardier Q-400 with double cabin.
The airline, with its hub in the Bole Airport in Addis Ababa, currently serves over 82 international and 17
Domestic destinations. The dedicated cargo planes are currently serving on dedicated scheduled (triangular)
services to 24 destinations (15 in Africa, 2 in Europe Liege and Luxemburg 4 in the Middle East and 3 in
Asia) and also as charter services.
Cargo services
Ethiopians freighter fleet consists of two 757Fs and the cargo holds of nine B767-300ER, six B757s and five
737-700 aircraft. In addition, the company has adquired two B777F to transport floriculture and horticulture
produces to Brussels thereby enabling Ethiopian commodities to reach the European market.
Outgoing cargoes from Addis Ababa include typically frozen meat products, leather, flowers, and rugs.
Incoming cargo includes chemicals, equipment and machinery, electronics, garments, pharmaceutical
products and tea.
Currently Ethiopian cargo operates dedicated 2-757, 2 MD-11 and 2-777 freighter aircrafts on a scheduled and
charter basis. Furthermore, Ethiopian cargo will soon open its cargo hub in Lome, Togo to serve over 10
destinations in West Africa like Douala (DLA), Accra (ACC), Bamako (BKO), Abuja (ABV), Malabo (SSG),
N'djamena (NDJ), Libreville (LBV), Ouagadougou (OUA), Port Harcourt (PHC), Cotonou (COO) and Abidjan
(ABJ) through its new hub in Togo.
Ethiopian Cargo flies to the following 22 destinations:
Africa (15): Abuja, Accra, Addis Ababa, Brazzaville, Bujumbura, Cairo, Dar es Salaam, Entebbe,
Johannesburg, Kigali, Kinshasa, Lagos, Libreville, NDjamena, and Pointe-Noire
Gulf, Middle East and Asia (7): Beirut, Chennai, Dubai, Hong Kong, Jeddah, Mumbai and Riyadh
Ethiopian owns and manages cargo terminals in Ethiopian Airports. Currently a new cargo terminal of
Ethiopian came into operation in Bole Airport has the following characteristics:

108
Apron area: 44,390 square meters
Terminal size: 14,000 square meters
Capacity: 350,000 tones of air cargo per annum
Cold room size: 2,000 square meters, cold room storage: 130 tones of palletized cargo
Office area:
Parking area: 19,200 square meters
4,500 square meters
Cargo facilities are supposed to be in Mekele Airport. However, Ethiopian has not provided detailed information
about the operation or traffic.
Based on the Vision 2025, the strategic objectives set for Ethiopian Cargo for an eventual transformation to a
full-fledged profit center are listed below:
Annual freight revenue of 2 billion USD
Annual total tonnage of 820,000.
Serving 37 International Freight Destinations.
Earning annual profit of US$ 200 million.
Operating 18 Jet Aircrafts.
Leader in Africa in Quality Cargo Services.
100% eAWB by 2015.
Fully implement IATA e-freight by 2016 as per revised IATA deadline.
Achieve Cargo 2000 (C2K) certification by 2015
MAIN CONCLUSIONS FOR CHAPTER 2.5 (AIR TRANSPORT)
Air transport currently plays a minor role in the Ethiopian freight transportation system, moving less
than 2% of the total international trade of this country.
However, its role is more relevant in the passenger transport domain, accounting for a total of 5.8
million international passengers and 1.14 million domestic passengers every year.
The most important air transport operator in the country is Ethiopian Airlines. This company aims at
becoming the leading aviation group in Africa, through the implementation of a 15-year strategic plan:
Vision 2025.
The Addis Ababa Bole airport is the major international and domestic air transport node in the
country. It is also the busiest airport in East Africa, with more than 6.2 million passengers per year.
The Dire Dawa airport also offers international services but plays a much minor role. Other airports
have been upgraded to international standards but they are not operating as such.
To conclude, the fact that Ethiopias air traffic is limited and Bole airport centralizes all of it makes
it very difficult to develop alternative airports.

109
2.6
Key issues
The analysis undertaken in the previous subchapters leads to the identification of a number of key issues
regarding the transportation system in Ethiopia. They can be summarized as follows:
Road sector: Need to improve infrastructure and transport services productivity
Despite the investment and improvement undertaken during the last ten years in Ethiopias road network, its
connectivity is still limited (except for the roads crossing Addis Ababa), a significant part of the network is still
not paved and even the paved roads are in a deficient state of maintenance. Besides, there is a problem of
road safety due to human errors in combination with deficient road condition.
These infrastructure issues are confronted with traffic pressure, which has grown dramatically in recent years
and will continue to do so in the future, in line with the countrys economic development. The current state of
congestion around Addis Ababa will extend to other productive and consumption areas of the country, making
the improvement of the road networks connectivity, capacity and condition an urgent task to undertake.
Freight transport services are poorly organized, lacking the levels of capacity and equipment (fleet age and
characteristics) that are needed in order to guarantee efficiency and specialization. Besides, the current
imbalance between imports and exports means that empty returns are very frequent. All these factors, together
with the congestion and waiting time in some of the logistics chain procedures lead to a low productivity.
Maritime and logistics sector: Need for sea access diversification, improvement of logistics facilities
and greater unification of logistics services and policy
Ethiopia depends largely on the Port of Djibouti for its foreign trade. This makes the country captive of the
services and service times of this port, in need of a notable efficiency improvement. Hence the need for both
the optimization of space and time in Djiboutis port (through the appropriate infrastructure) and the opening
of new transport corridors to other ports of the region.
The logistics chains between production and consumption centres, as well as the main imports/exports
transportation nodes, require specific facilities that are sparce in Ethiopa. Only a few dry ports managed by
the public sector serving mainly imports and with long lengths of stay. There is urgent need of a network of
logistics platforms as well as logistics infrastructure for domestic freight (particularly agro-centres).
Besides the infrastructure issues, there is a lack of unity and coordination at the logistics services level, with
many intermediaries and brokers involved in the distribution and commercialization of agricultural products,
together with a lack of specific logistics knowledge and training. These represent clear obstacles to the
provision of efficient services and the reduction of time and monetary costs.
Finally, a national or regional integrated view of logistics still has to be established and implemented.
Rail sector: an ambitious infrastructure plan, feasibility not clear
Rail can be a competitive transport mode for long distances (more than 500 km) that has been hardly
developed in Ethiopia.
The GoE has defined an ambitious plan to build a railway network of nearly 5,000 km. No studies concerning
the future demand of this railway network have been identified. In the absence of this kind of studies, rough
estimations allow to foresee a potential for the Addis Ababa/Modjo Djibouti corridor and the Modjo
Sheshemene/Hawassa corridor (Southern corridor).
However, according to the only complete study that the consultant has been able to consult in relation with this
plan estates that a minimum of an additional USD 3.69 billion will be needed to enable the railway line to

110
Djibouti to repay investment costs. The fact that this line, considered to be the most critical and with highest
benefit/cost ratio, might require additional financing to cover its costs is a clear sign of the the need for
extensive feasibility studies on the other upcoming projects of the plan.
Air transport sector: Limited presence and a potential to be assessed
Air transport has a good potential for high-value products (including perishables such as certain agricultural
products to be exported to Europe or the USA), particularly for a land-locked country like Ethiopia.
The development of such a potential requires adequate infrastructure and a competitive air transport sector.
Regarding infrastructure, air transport has a limited presence in the country and is highly concentrated in Addis
Ababa. There are some infrastructures for air cargo at Bahar Dar and Mekele airports, although apparently
demand for them is limited and they are not being used.
Regarding the air transport services, the information available on this sector is very scarce; the public
companies Ethiopian Airlines and Ethiopian Airports Enterprise, leading players in the aviation sector, have
refused to provide information on existing infrastructure and current demand. This has prevented the
consultant from making a rough assessment of the precise actions to be undertaken in this domain.

111
3 Policy and Institutional Regimes

This chapter provides a brief review of the current policies in the Ethiopian transport sector as well as the
existing institutional framework. The chapter is divided into three sections that, in subsequent phases, will
allow the identification of gaps and needs:
Development policy context: this section introduces the government's policy strategy, as established in
the Growth and Transformation Plan (GTP) 2010/11 - 2014/15, and specifically the strategies and plans
linked to the transport and logistics sector. The GTP is the national-level development plan from which all
sectoral policies are subsequently derived (in line with the GTP).
Current transport policy context: the current Ethiopia National Transport Policy, prepared by the Ministry
of Transport in 2011 is presented, along with the National Transport Master Plan Study conducted in 2008
for the Ministry of Transport. These are the existing sectoral policies at present, although according to
ministerial sources have not yet been implemented.
Institutional framework: the institutional organization of the transport sector is presented
3.1
Development policy context
The Growth and Transformation Plan document was drawn-up in 2010 by the Ministry of Finance and
Economic Development. The GTP (2010/11 to2014/15) follows the pace set by earlier development plans
(Plan for Accelerated and Sustained Development to end Poverty (PASDEP) from 2005/6 to 2009/10) and
SDPRP (2002/03 to 2004/5). These programs all aim at the main government agenda of poverty eradication
through accelerated economic growth. These plans also keep in mind and work in conjunction with efforts to
bring about meeting the aims of the Millennium Development Goals (MDGs) aimed to be brought to success
by 2015. Further to this, the government has designed these programs to serve as stepping stones to the
greater aim of making Ethiopia a middle income country by 2020-23).
The GTP gives special emphasis to certain economic sectors. In the context of this project, transport is a crosscutting issue that plays a major role in the effective achievement of targets for agricultural and rural
development, industry, and infrastructure, social and human development. The document sets specific targets
for each transport sub-sector.
Two growth rate scenarios are considered in the GTP, Base case and High Case scenarios. Under the Base
Case scenario, Ethiopia is expected to maintain the average annual economic growth rate of 11.2% that
prevailed during the time of the PASDEP. The base case scenario guarantees the successful attainment of
the MDGs. On the other hand, an average annual GDP growth rate of 14.9% is targeted under the high case
scenario.
Among the key sector macroeconomic targets of the GTP, total length of the road network is expected to grow
from the base case of 48,800kms to 64,500kms at the end of the GTP period. In addition, 71,523kms of new
all-weather rural roads are planned to be constructed under the URRAP program. In the railway sub-sector,
2,395 kms of new railway lines are planned to be completed by 2015.
The GTP does not have any stand-alone infrastructure development indicator for the marine and air transport
sectors. However, all sectors (road, rail, maritime and air) are addressed under transport services. Some key
indicators are as follows. Under road transport services, the average annual freight distance covered in
planned to grow from 80,000 to 120,00kms. Under the maritime sub-sector, a sea port utilization percentage
of 60/30/10 is planned for Djibouti, Berbera and Port Sudan as opposed to the almost 100% reliance on Djibouti
port at the start of the GTP. In addition the petroleum transporting capacity of Ethiopian ships is intended to
reach 3.6 billion tons. A national aviation capacity building program forms part of the GTP with projected aims
of increasing accommodation capacity of airports for passengers of international and domestic flights nearly
by eight-fold (800% increase). The construction of modern cargo terminals with refrigeration facilities for
perishable goods at domestic airports is also a key feature of the expansion plan in this sector.

112
To this end, the transport sector would require 161,704.5 million Ethiopian Birr of domestic financing and an
additional 107,247.75 million Ethiopian Birr equivalent in foreign currency to realise the goals of the GTP.
Vision of the next Growth and Transformation Plan (GTP)

The MOFED is currently in the process of preparing the next development plan (GTP II). Although no specific
details have been obtained of the strategies that will shape the development from 2015/16 because these are
confidential31, the MoFED has revealed some of the key guidelines expected. They are as follows:
In general terms, the focus of the new strategy will be on maintaining the quality of infrastructure, rather
than creating new infrastructure. Although important needs remain, the infrastructure network has grown
considerably in recent years thanks to the investment efforts, and maintaining this has now become a
challenge for the years ahead.
In relation to road transport mode, as well as a greater focus on maintenance, consideration is being given
to a "growth corridors" approach which is being developed in the National Logistics Strategy 2014 funded
by the United Nations. Concentrating investment in specific corridors that will have greater economic and
social benefits will make the investment more efficient.
In the maritime sector, diversification of the options for accessing this mode will be sought, via new ports
and agreements with third countries.
Improved efficiency of the existing trade corridors is also desired, by expanding the capacity of dry ports,
improving their efficiency and providing equipment and adequate infrastructure to the Customs Authority
in order to reduce processing times.
In the aviation sector, a priority is to enable the international airports of Bahir Dar and Mekele to
accommodate international flights.
3.2
Current transport policy context
3.2.1
Policy and Strategic Planning in Transport Sector
GoE, deeply committed to transport sector development, delegates on the Ministry of Transport the planning
and policy development, as well as the coordination of the dependent institutions.
The MoT Mission is Building the capacity of the sector; leading and backing the participation of the private
sector as well as scaling up efficent and fruitful transport network in an equitable manner accros the nation
within a short period of time, and the policies and strategies to get this mission are:
Developing Transport and Communications infrastructures which assessed the need of the beneficiary
society and the country's economic development;
Performing continuous system improvements in project designing, annual plan preparation as well as in
performance monitoring and evaluation;
Establishing an effective system that can facilitate the participation of stakeholders;
Improving project leadership and project administration capacities;
Developing human forces that have the desired expertise as of infrastructures in the Transport and
Communications sector;
Intensifying means of finance for infrastructure development projects
Ensuring a quality service delivery which is customer focused, prompt, affordable and reliable;
Ascertaining equitable service distribution between regions as well as between urban and rural;
Facilitating the existence of a proficient information center to the sector;
31
MoFED has declined to provide details about the forthcoming policy because it is currently under preparation and for privacy reasons

113
Providing intensive and progressive trainings as of principles of service provision and service leadership;
Developing cosmopolitan knowledge and experience in relation with the sector
Ensuring service safety;
Establishing sound regulatory and enforcement frameworks;
Developing legal capacity as of regulating infrastructure developments and service deliveries in the
Transport and Communications sector
Developing a desired level of regulatory and enforcement knowledge
Establishing effective and efficient system as of internal work processes within the Ministry,
Developing leadership skills;
Building employees competency and productivity; and
Ensuring the existence of efficient financial resource utilization
Based on interviews carried out with all stakeholders involved, the transport sector does not currently have a
sectoral policy or strategic document in force that lays down priorities. The GTP has been the guide to action
for the institutions involved in the sector in recent years as it contains the necessary level of detail.
3.2.2
Policy and Strategic Planning in Transport Sector: current and foreseen documents
However, there are a number of consulting and internal Ministry of Transport studies that were prepared with
the idea of developing specific sector policies:
National Logistics Strategy (2014), Maritime Affairs Authority y MoT. Financed by the United Nations (UN)
Ethiopia National Transport Policy (2011), Ministry of Transport. A draft version of this policy is available,
but not a final or approved version.
National Transport Master Plan Study (2008), Ministry of Transport. Study financed by the European
Union.
The National Logistics Strategy is currently in preparation, so neither the document nor the complete guidelines
are available. However, the National Transport Policy and National Master Plan Study are summarised below.
National Transport Policy (2011)

This document, produced by the Ministry of Transport in 2011, presents the transport policy for the country.
This Policy Paper intends to provide a framework within which other transport institutions - government,
statutory and private - should tailor their individual policies and strategies.
The document was prepared in-line with the governments vision for Ethiopia, i.e., the GTP. This National
Transport Policy states that it is the first of its kind. Interventions that revolve around the enhancement of
quality transport, passenger rights, ensuring competitiveness and facilitation for consumers with special needs
as well as integrating information and communication technologies in transport development and operations
are to be points of focus.
In the short run, the policy is expected to bring-about facilitative legal, institutional and regulatory framework
for the sector as well as to transport safety, security and efficiency. In the long run, it is anticipated that
expanded transport sector capacity will be laid out through infrastructure development, service provision at all
levels, through improved regional and multi-modalism.
The system is characterised by limited size and quality of the transport network, resulting in high transport
costs and low level accessibility to services and markets. Main reasons cited are;
Low level infrastructure development
High backlog of maintenance and rehabilitation
Inadequate institutional arrangements

114
Lack of proper laws, regulations and procedures conducive climate for investment and hence growth of
the sector
Inadequate capacity caused by low level of investment resources
Weak law enforcement
The document further proceeds to identify institutional/regulatory problems as follows.
Inadequate infrastructure and services in all aspects of modes;
Lack of coherent policy and guidance to those concerning with the planning and development of the
transport sector leading to disjointed and sometimes overlapping and/or contradictory in scope and
implementation plans and programs;
Sector management and planning responsibilities which are divided between various ministries
(responsible for Transport, Works and Urban Development, Ministry of Trade and Industry,);
Inadequate formalized coordination and consultation among principal actors;
Shortage of adequately trained and experienced personnel in the transport sector; and
Lack of competent regulatory regimes that are adequately equipped to enhance competition, fair
operational practices and complimentary of services in line with national, regional and international
standards.
On the basis of the initial diagnosis, the document lays down the policy principles or goals that guide the policy
development for every transport mode:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Responding to National Development Priorities

Meet Basic Needs of the Citizen
Ensuring Greater Accessibility and Mobility in Rural Transport
Enhance investment in transport infrastructure and operations in response to Market Needs of Transport
Promote Modal Integration
Developing and Maintaining a Safe and Secure Transport System
Ensuring Fair Competitiveness
Ensuring User Protection / Passengers Rights
Capacity Building in the Sector
Responding to Regional and Global Integration
Supporting Consumers with Special Needs
Sustainable Environmental Utilization
In accordance with these goals and the general issues identified, the document sets for 16 transport
modes/sectors the particular objectives, the main issues identified, and the policy directions and the strategies
that must be followed. The transport sector/modes considered in the policy are: (i) road network/infrastructure,
(ii) financing for transport infrastructure development and management, (iii) urban transport, (iv) inter-urban
transport service, (v) rural transport, (vi) non motor and intermediate means of transport, (vii) road freight
transport, (viii) rail transport, (ix) air transport, (x) maritime and transit transport, (xi) inland waterways transport,
(xii) gender and transport, (xiii) transport and the environment, (xiv) non-conventional modes of transport
(pipelines and cable-cars), (xv) institutional principles, (xvi) transport research & development and (xvii) federal
regional relationships.
The above strategy is quite extensive and addresses many issues and problems. As can be seen, it sets down
guidelines for many subsectors, but does not clearly establish how these policies and strategies are to be
implemented in the form of laws, programmes or prioritisation of infrastructure investment and maintenance.
The document available is a draft, although it is not known if a final version has been approved by the Ministry
of Transport.
National Transport Master Plan Study (2008)
The Master Plan Study document, initiated by the Ministry of Transport and financed by the European Union
in 2008 is an extensive document consisting of three main volumes and 13 appendix volumes. Volumes one
and two were received and reviewed by the consultant.

115
The National Transport Sector Strategy document (September 2007) explained Ethiopias situation at the time
and its overall development strategy, and, based the Master Plan in this document is designed to implement
the above-mentioned transport strategy over the 20-year period of the Master Plan (20082027).
While Volume 1 of the report is primarily concerned with the investment programme, the second volume, which
is more of a check list, contains the actions needed to ensure that the strategy can be carried out and the
objectives of the plan be achieved.
The master plan thoroughly reviews the existing transport scenario and makes bold recommendations aimed
at bringing-about improvement. Summarized by sector, the major ones are;
Road Transport
A number of measures are proposed in different areas to reduce the high transport costs and the high rate of
traffic accidents in the country. These are:
Putting measures in place to upgrade the vehicle fleet, which is old and inefficient;
The need for a professional commercial road transport industry;
Updating Road transport regulations, including speed limits and drivers hours;
Special provisions for the transport of animals and dangerous goods;
Enhancing the role of the transport associations;
Environmental concerns;
Road safety issues- creation of a national road safety council
Road user charges and the Road Fund strengthening to ensure adequate road maintenance financing
The study recommends that a Rural Access Development Authority (RADA) should be established at
federal level to guide and support the efforts in the RRAs and at all administrative levels in the regions.
This institution will be a parallel counterpart to the ERA, which is in charge of federal roads.
Air Transport
Opening up the service sector (lifting restrictions) for international and local private operators is suggested
in order to improve service delivery.
Increasing the number of international airports from two to ten, particularly in major towns with proximity
to neighbouring countries.
Railway Transport
The formation of a national railway organization (The ERC was not established at the time of the NTMP
preparation) is proposed by the masterplan.
The masterplan also emphasizes that for the Djibouti corridor, especially with multimodal system, the use
of rail to transport imported goods is much more preferable than that of road trucks.
Multi-Modal and International Marine Transport
The document also promotes liberalization of importers selection of multimodal operators (lifting the
restriction on importers to use only the state-owned Ethiopian Shipping Lines)
Dry Port Ownership and Management is also suggested to be under an independent institutional
framework leading to possible privatization.
Though not officially adopted by the Ministry of Transport, there are indications that some of the
recommendations in the masterplan have been implemented by the government fully or in part. A national road
safety council had been established. Efforts are underway to upgrade some domestic airports to international
level. The Ethiopian Railway Corporation has started a 5 year plan as part of the GTP) to construct over
5,000kms of railway lines.

116
A thorough review of these considerations is necessary as the NTMP spans the time period of the GTP and
that an important part of the issues arisen continue to be current.
National Logistics Strategy
In support of the Government of Ethiopias effort to enhance Ethiopias competitiveness in the global market
through improved national logistics system, UNDP partnered with the Prime Ministers Office to initiate a study
on a national logistics strategy. A major component of this comprehensive study, around 70 percent, was
completed in 2013 (Inception Report and Diagnosis) .The scope of the strategy is to support the government
in: (1) reviewing the overall logistics system relevant for Ethiopia, (2) developing a blueprint for a more efficient
and effective system, (3) identifying the interventions required for a logistics transformation, (4) designing the
implementation approach and set-up, (5) supporting the implementation process, including through progress
assessment and evaluation vis--vis pertinent measuring criteria, and 6) provide capacity building support to
Ethiopian Maritime Affairs Authority.
3.3
Institutional framework
Ethiopian transport sector in Ethiopia has a broad and complex structure, with an important number of
institutions and public companies regulating, governing and operating the transport sector (including logistics
and trade). Following is presented a table with all institutions identified, and their level within the administration
(Ministries, authorities and agencies depending on Ministries, and operating public companies):
Table 18: List of institutions with functions in the transport and related sectors
Level
Ministries or autonomous
agencies depending on
Prime Minister
Institutions
MoT: Ministry of Transport
MoFED: Ministry of Finance and Economic Development
MoTI: Ministry of Trade and Industry
ERCA: Ethiopian Revenues and Customs Authority
MoA: Ministry of Agriculture
ECEA: Ethiopian Commodity Exchange Authority
MoME: Ministry of Mines and Energy
MIT (JIB): Ministry of Transport (Djibouti)
FTA: Federal Transport Authority

ERA: Ethiopian Roads Authority
ERF: Ethiopian Road Fund
ECAA: Ethiopian Civil Aviation Authority
Planning and Regulating ERC: Ethiopian Railways Corporation (it is a public corporation that will also operate the
Institutions and authorities planned railway network)
MAA: Maritime Affairs Authority
ECX: Ethiopian Commodity Exchange
ATA: Agricultural Transformation Agency
EHDA: Ethiopian Horticulture Development Agency
EAE: Ethiopian Airports Enterprise
EAL: Ethiopian Airlines
Operational Public
EDRE: Ethio-Djibouti Railway Enterprise/ Compagnie du Chemin de Fer Djibouto-thiopien
Companies
ESLSE: Ethiopian Shipping and Logistics Service Enterprise
MTSE: Maritime and Transit Service Enterprise (ESLSE division in Djibouti)
Non- federal Government

Institutions
RRA: Road Regional Authorities (state level)

TB: Transport Bureaus (zonal level)
Sector
Transport
Other
Other
Other
Other
Other
Other
Transport
(DJI)
Transport
Transport
Transport
Transport
Transport
Transport
Other
Other
Other
Transport
Transport
Transport
Transport
Transport
Transport
Transport
Source: ALG

117
The main institution in the sector is the Ministry of Transport, on which the other authorities and agencies
with transport competencies depend. As said, The Ministry besides organising and carrying out planning and
policy development has the responsibility to coordinate the dependent institutions. Each of the authorities
develops, implements and regulates, according to the policies established at its sectoral level. Each sector
has one or more institutions that are responsible for the above functions.
3.3.1
Road transport institutional framework
The road transport sector is the area that has the greatest number of public institutions involved. The
institutions in this sector at federal level are the Ethiopian Roads Authority, the Ethiopian Federal Road Fund
and the Federal Transport Authority. Additionally, at regional level there are Regional Road Authorities and
local areas have their own Transport Bureaus. Below is a brief indicative description of each institution, to
provide an understanding of the main function of each:
Federal Transport Authority: The regulator of land transport services offered mainly by private players. Its
powers include both passenger and freight transport.
Ethiopian Roads Authority: executive body responsible for the expansion and maintenance of the federal
network. The main duties and responsibilities of ERA are network planning, the management of project
contracts and the enforcement of account operations. Additionally, ERA gives technical support to the nine
Regional Road Authorities.
Ethiopian Road Fund: road maintenance management body. The ERF collects taxes and fees that feed
the fund and distributed them among the agencies with executive control over the maintenance of road
infrastructure: ERA, RRA and Transport Bureaus. These bodies are those that directly or indirectly
(through maintenance contracts or specific tendering) perform the actions. The running costs of the Road
Fund are funded by public contributions, so that the funds collected by this body are used entirely for road
maintenance.
Regional Road Authorities: regional executive bodies (state level) that are responsible for the expansion
and maintenance of the road network under their jurisdiction (regional states).
Transport Bureaus: local bodies (area level) that are responsible for the expansion and maintenance of
the road network under their jurisdiction. The area TB is essentially responsible for local and rural road
network.
3.3.2
Rail sector institutional framework
Regarding the rail sector, there are currently two related institutions: Ethiopia Railway Corporation and the
Ethio-Djibouti Railway Enterprise:
Ethio-Djibouti Railway Enterprise: a bi-national public company based on capital from the GoE and the
Government of Djibouti. It is the owner and operator of the old railway between Addis Ababa and Djibouti
via Dire Dawa and Dewele (781 km., see subchapter 2.4). Currently a significant part of the line is
abandoned, and only operates passenger services between Dire Dawa and Djibouti, although with very
low frequencies.
Ethiopia Railway Corporation: it is a public corporation whose objectives are to plan and build a new railway
infrastructure network and to operate cargo and passenger transport services. The ERC has planned a
railway network of 5,000 km. (see subchapter 2.4) and it is currently overseeing the construction of the
first line between Addis Ababa and Djibouti via Dire Dawa. There is still rail operation on this network. The
Ministry of Transport is in charge of the supervisory authority of the ERC.
3.3.3
Aviation sector institutional framework
In the aviation sector, there are three prominent institutions or public companies: Ethiopian Civil Aviation
Authority, Ethiopian Airports Enterprise and Ethiopian Airlines:
Ethiopian Civil Aviation Authority: the regulatory authority for air transport air navigation in Ethiopia, under
the Ministry of Transport. Its responsibilities include, among others, the regulation and enforcement of air

118
operation, the issuing of licenses to staff and flight operators; and the provision of services and
aeronautical navigation information in Ethiopian airspace.
Ethiopian Airports Enterprise: public company responsible for the construction, maintenance and
management of airports and aerodromes.
Ethiopian Airlines: public company providing air freight and air passenger services. Ethiopian Airlines
currently provides most domestic flights and a significant proportion of the international flights departing
from or arriving at Bole Airport.
3.3.4
Maritime sector institutional framework
Finally, in the maritime sector and the management of logistics related to foreign trade corridors, there are
currently three key bodies:
Maritime Affairs Authority: regulator of maritime transport, the inland ports and international logistics
(import-export process). The responsibilities of this authority include supervision of the activities related to
the above sectors, but also the quest for improvements and greater in them.
Ethiopian Shipping and Logistics Services Enterprise: public company operating public maritime transport
services (former Ethiopian Shipping Enterprise), of the inland ports and the international multimodal
transport service. It also provides freight forwarding and multimodal transport. It is also responsible for the
planning and development of the network of dry ports or auxiliary logistics infrastructure to support foreign
trade. The ESLSE conducts its operations under the supervision of the MAA.
Maritime and Transit Service Enterprise: public company based in Djibouti, a subsidiary of ESLSE, which
carries out the part of the ESLSE operations requiring physical presence in the port of Djibouti. It also acts
as a freight forwarder in Djibouti, in competition with local private companies.
3.3.5
Other institutions with impact on transport sector
Other important ministerial level institutions not directly involved in the regulation of the transport sector but
having an impact on the sector are the Ministry of Finance and Economic Development, the Ministry of Trade
and Industry, the Ethiopian Revenues and Customs Authorities, the Ministry of Agriculture, the Ethiopian
Commodity Exchange Authority and the Ministry of Mines and Energy. The MoA and MoME are in charge of
sectors that generate major demands for transport and can have significant impact on freight transport chains,
although they have no direct powers over transport and logistics. The ECEA is an autonomous authority
dependent on the Prime Minister that regulates the activity of the Ethiopian Commodity Exchange, responsible
for commerce in certain agricultural products. Moreover, the MoTI and the ERCA regulate or have authority
over foreign trade, so they can also have a major impact on the transport sector, through their regulations.
Finally, the MoFED makes general policies through the GTP and the Ministry which determine the distribution
of public funding across all sectors including that of transport.
There are also agencies or authorities of importance under the umbrella of the aforementioned entities, which
can also have a major impact on the transport sector.
The agricultural sector has the Ethiopian Agricultural Transformation Agency (ATA) and the Ethiopian
Horticulture Development Agency The first one (ATA) is a federal agency for the promotion of transformation
in the agricultural sector through supporting the existing structures of government, the private sector and other
Non-governmental partners in addressing systemic bottlenecks and providing a priority schedule for achieving
national growth and food safety. This agency provides advisory to institutions with direct competencies or to
those intervening on the agricultural sector, and guides their actions towards improving their productivity and
efficiency. Among the activities related to the transport and logistics sector, these agencies have analysed the
production chains of the major agricultural outputs with a view to identifying improvement measures, including
commercial and supply chain aspects. The EHDA, on the other hand, is the agency responsible for promoting
and supporting investments in the agri-sector responsible for the export of vegetables and flowers, so they are
involved in the monitoring of new production projects that could generate significant demand for transport.
Finally, the Ethiopian Commodity Exchange is a public-private company that is promoted by the public sector
and facilitates the commercialisation of certain agricultural products, making the distribution more efficient.
Please refer to Box 4 for more details on the function of the ECX.

119
3.3.6
Institutional coordination
The chart below shows the main relationships between each one of the entities mentioned. It illustrates the
current dependencies between institutions, inter-ministerial coordination relations, and the relations and
coordination amongst the entities of lesser rank.
Figure 71: Chart of dependencies and coordination relationships among public institutions and companies
MIT
(DJI)
EAL
Transport
Sector
Federal
States
ECAA
EAE
EDRE
ERF
MTSE
ERC
RRA
ESLSE
ERA
Transport
Bureaus
MOT
MAA
FTA
ERCA
MoME
MoFED
MoA
MoTI
ECEA
Legend
Other related
sectors
ATA
Inter-Ministerial Relation
EHDA
Ministry of Transport (MoT) direct related institutions

FTA: Federal Transport Authority
ERA: Ethiopian Roads Authority
ERF: Ethiopian Road Fund
ECAA: Ethiopian Civil Aviation Authority
EAE: Ethiopian Airports Enterprise
EA: Ethiopian Airways
EDRE: Ethio-Djibouti Rail Enterprise
ERC: Ethiopian Railways Corporation
MAA: Maritime Affairs Authority
ESLSE: Ethiopian Shipping and Logistics Service Enterprise
MTSE: Maritime and Transit Service Enterprise
Dependence Relation
ECX
Coordination Relation
XX
Ministries or autonomous
agencies depending on the
Prime Minister
XX
Other public institutions
XX
Public companies
Other institutions with MoT dependant relation from

Federal Government Level
ERCA: Ethiopian Revenues and Customs Authority
ECEA: Ethiopian Commodity Exchange Authority
ECX: Ethiopian Comodity Exchange
MoA: Ministry of Agriculture
ATA: Agricultural Transformation Agency
EHDA: Ethiopian Horticulture Development Agency
MoFED: Ministry of Finance and Economic Development
MoME: Ministry of Mines and Energy
MoR: Ministry of Revenues
MoTI: Ministry of Trade and Industry
MIT (JIB): Ministry of Transport (Djibouti)
Other related institutions from Non- Federal Government Level

RRA: Roads Regional Authorities (state level)
TB: Transport Bureaus (zonal level)
Federal States
Source: ALG

120
As mentioned previously, the aforementioned transport-related institutions have some of the following
functions: institutional coordination and the creation of the policy, sectoral regulation, implementation of
policies and strategies, and operating the sector. The institutions described in each sub-sector or transport
mode are distributed as follows:
Table 19: Functions of the main institutions by mode of transport
Road
Railways
Ports & Log.
Air
Political
MoT
MoT
MoT
MoT
Regulation
FTA
MoT*
MAA
ECAA
Execution
ERF, ERA, RAA,TB
ERC
ESLSE
EAE
Operation
Private Sector
EDRE, ERC
ESLSE , MTSE +
Private Sector
EA + Private
Airlines
* Based on the Regulation No 141/2007, which established the ERC and was issued by the Council of Ministers, the Ministry of Transport
is the supervising authority of the ERC
Source: ALG
The higher level of coordination and policy generation is responsibility of the Ministry of Transportation i.e.
the agency ultimately responsible for all modes of transport. As far as regulations concerns, all sectors have
an entity that regulates their services, except in the case of rail. In this sector, the Ministry of Transportation
acts as the regulatory authority, although their scope of operation is very limited. However, the operation of
the newly planned rail network may require the creation of an independent authority to regulate the freight and
passenger rail services.
At an executive level, there are also a series of agencies, public authorities or companies. It is worth noting
that the executive institutions in the rail, maritime and air sectors are all state-owned, and are responsible for
planning and developing the infrastructure network and implementing the policies for their subsectors.
The graph above also shows how the GoE operates an important part of some sub-sectors, and in some cases
restricts the development of alternative private initiatives. The only sector purely operated by the private sector
is freight transport, but other transport modes are partially or totally operated by the public sector.
3.4
Key issues
The administration of the transport sector is shared between the federal government and the regional
states. Regarding the different branches of the transport sector, while the administration of road transport
is shared between the federal and regional government structures, the whole maritime transport branch is
under the jurisdiction of the Federal Ministry of Transport and Communications and the Federal Transport
Authority.
Currently there is no planning document on Transport policy and strategy for Ethiopia. However, the
National Transport Policy has been developed and the National Logistics Strategy is being carried out,
which mean san opportunity to establish the framework of public policies for the development of the
transport sector.
Nowadays the Ministry of Transport is the highest authority in transport sector, both in the Policy setting
and in the coordination of the different agencies involved.
The institutional organization centered in the MoT has improved in recent years, however there are still
some problems od lack of coordination and activity overlapping:

121
- Regional Roads Authorities report to Regional Government, not to the Ethiopian Roads Authority; the
regional transport bureaus also report to Regional Government rather than to the Federal Transport
Authority.
- The local Road Desks do not seem to have any guidance from the Ministry of Works or from the Ministry
of Transport; however ERA provides standard specifications for road construction and maintenance at
the sub-federal level.
- Most woredas (local administrative units) do not have a Road Desk.
The National Transport Policy highlights the need of strengthening the institutional framework for
infrastructure development. This will require not only institutional coordination, but also the training of
agents capable of proposing and undertaking these reforms, as well as modernizing the sector.
At present and in general terms, there is lack of capacity amongst the middle-ranking cadres of the different
transport administration entities in Ethiopia, which represents a weakness in the system.
Capacity building support in the sector is fragmented and to some extent also driven by donors. As a result
of the fragmentation, there is duplication of efforts and at the same time significant gaps. On the other
hand, there is a significant concentration of capacicity building support in the road sub-sector.
Therefore, it is essential to establish an institutional development plan for the transport sector in Ethiopia,
with capacity building as a key-transversal element.
The definition of institutional roles and responsibilities, the coordination of planning organizations, the
dialogue and information flow between public and private agents, amongst others, are key elements for
the success of any multimodal transportation institutional project
Figure 72: The three institutional elements
Entities for High Level Dialogue
and Coordination
Entities for management and

coordination at executive level
Entities for System Monitoring
Source: ALG
First of all, a transport and logistics strategy must be object of consensus amongst the different
stakeholders, both amongst the different public institutions (coordinating their policies) and between public
and private stakeholders. This task would be undertaken by one or more entities for High Level Dialogue
and Coordination. The resulting plans or policies should then be executed by a differentiated entity for
Management and Coordination. Finally the effectiveness of the system (which in principle should improve,
if the plans/policies have been adequately defined) will be assessed by another entity for System
Monitoring.
The key implication of this scheme is that three essential functions of the institutional framework are welldefined, guaranteed and separated but at the same time interconnected. This will avoid competence
overlaps that otherwise would make the definition and implementation of policies very difficult, and at the
same time facilitate the flow of information between the different stakeholders.

122
4 Financing the Transport Sector

4.1
Introduction to the financial status of the transport sector
The Ministry of Finance and Economic Development (MOFED) is the highest government body responsible
for the regular annual budget allocations of all economic sectors in the country. The budgeting process in
Ethiopia follows appropriate and financially-sound methods of fund allocation.
Since 1991, Ethiopia has been working hard to reduce poverty and achieve sustainable development through
the expansion of the transport sector. During this period, the allocation of funds has clearly shown the emphasis
given to the implementation of many capital projects in this sector.
As it can be seen in the figure below, the transport sector accounts 46% of the total Ethiopian Government
Capital Expenditure Budget.
Figure 73: Total CAPEX evolution
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
5.000
Million USD
4.000
3.000
2.000
1.000
0
2007/08
2008/09
2009/10
2010/11
2011/12
Total capital expenditure (USD Million)
2012/13
2013/14
Transport weight (%)
Source: ALG based on MOFED data
Million USD
Figure 74: Transport investments evolution
2.000
1.800
1.600
1.400
1.200
1.000
800
600
400
200
0
2007/08
2008/09
2009/10
Transports sector (USD Million)
2010/11
2011/12
2012/13
2013/14
Road construction (USD Million)

123
Between 2007 / 2008 and 2013 / 2014, the transport sector budget has increased 364% in Birr (175% in USD).
As can be seen, the roads subsector has a fundamental importance in the Transport sector and remains stable,
taking 97% of the total budget of the sector.
The historical data taken into account over the last six years (2007/2008 - 2013/2014) shows an upward trend
in the budget allocation to the transport sector in general, and to the road sub sector in particular. As shown in
the table below, the share of transport sector in the total federal budget ranges from 29 % in 2007/2008 to 46
% in 2013/2014. The average share of this sector during this whole period accounts for 36.3 % of the total
budget allocation. This clearly shows the priority that the Government has given to the development of this
sector over the last decade.
Table 20: General Government Capital Expenditures, budget allocated in Transport and % of road construction (2007/8 2013/14) (USD Million)
Total
CAPEX
Year
Transport
sector
Transport sector
(% CAPEX)
Road construction
(% Transport
sector)
2007/08
3.056
901
29%
97%
2008/09
3.610
1.086
30%
96%
2009/10
2.434
973
40%
97%
2010/11
3.571
1.071
30%
96%
2011/12
2.780
1.068
38%
96%
2012/13
3.049
1.267
42%
96%
2013/14
3.421
1.579
46%
97%
Source: Ministry of Finance and Economic Development (MOFED)
The Ethiopian Government's sources of finance for its Capital Expenditures are either the State or Foreign
Donors. The State is the major contributor to the budget, but in general its share is falling gradually and foreign
donors are increasing their share.
Figure 75: Evolution of the breakdown of financing sources in the transport sector
Million USD
GOE
External Donors
GOE weight
2.000
1.800
0,9
1.600
0,8
1.400
466
1.200
800
202
238
187
165
884
663
786
0,5
218
0,4
600
400
0,6
265
1.000
0,7
906
849
1002
1113
0,3
0,2
200
0,1
0
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
In the transport sector, foreign aid is increasing again after years of a fluctuating downward trend, and
accounted for 30% of sector financing in the last budget period.

124
The importance of highway financing as part of the total foreign aid is growing. Currently, it accounts for around
40% of the total aid allocated to Ethiopia.
Figure 76: Importance of foreign aid
1.500
100%
1.250
80%
Million USD
1.000
60%
750
40%
500
20%
250
0
2007/08
2008/09
2009/10
EXTERNAL DONORS TOTAL (METB)
2010/11
2011/12
2012/13
2013/14
0%
EXTERNAL DONORS ROAD (METB)
EXTERNAL DONORS ROAD (%)

As it has been explained above, the transport sector has an important weight in the Ethiopian state budget.
These budget expenditures are included as Capital Expenditures, and are broken down into two main
budgetary items: Transport and Communications and Construction (or Urban Development and Construction
for the years prior to 2013/2014).
The Transport and Communications sections include the budgeting for the Ethiopian Civil Aviation Authority,
as well as the Transport Authority, while the Construction section includes the budget of the Ethiopian Roads
Authority, the State's greatest contributor to the funding of the road network. There is also the Other
expenses32 item, which includes the budget of the Ethiopian Airports Enterprise.
Figure 77: Weight of the Transport sector in Capex 2013/2014, and the bodies participating in it
1,0%
0,3%
0,3%
Ethiopian Roads
Authority
46%
Others
Ethiopian Airports
Enterprise
Transport
54%
Ethiopian Civil
Aviation Authority
Transport Authority
98,3%
32
This item is not included in the analysis of the evolution of transport budget, since we have data only for the
last two budgetary periods (2012 / 2013-2013 / 2014)

125
4.2
Analysis of investments and maintenance
As it has been explained in the previous subchapter, there are several bodies participating in the Ethiopian
transport sector, and of those that are State-funded, the institutions most linked to the transport sector are the
Ethiopian Civil Aviation Authority, the Transport Authority, and the Ethiopian Roads Authority.
For the analysis of this particular issue, the budget breakdown for the years 2012/2013 and 2013/2014 will be
used, highlighting the main allocations for each transport mode.
4.2.1
Ethiopian Civil Aviation Authority
The Ethiopian Civil Aviation Authority has air safety as its objective.
The budget allocated by the State has increased by 160% in the last year, going from USD 3.29 million to USD
5 million in the last 2013/2014 budget. 100% of its funding comes from government sources.
The main budget items allocated in the last two financial years relate to improvements in terms of safety of
airport facilities, mainly control towers, as well as the purchase of equipment for air control.
Table 21: National budget allocation to the Ethiopian Civil Aviation Authority (USD Million)
Ethiopian Civil Aviation Authority - 2012/2013
3.29
Ethiopian Civil Aviation Authority - 2013/2014
5.00
Management & Administration
0.01
Aviation Safety Control
1.02 Aviation Safety Control
0.08
Diredawa Airport Tower Improvement & Facilities
0.16
Diredawa Airport Tower Improvement & Facilities
0.01
Humera and Jijiga Airport Tower Facility
0.15
Humera and Jijiga Airport Tower Facility
0.24
Airport Tower Asosa Construction and Air

Navigation Facility
Airport Tower Asosa Construction and Air

0.33
Navigation Facility
0.24
Semera Aiport Tower Construction Design Bid
0.02
Semera Aiport Tower Construction Design Bid
0.19
Combolcha Airport Tower and Air Navigation Facility
0.30
Combolcha Airport Tower and Air Navigation Facility
Gambela Airport Tower Construction
0.06 Gambela Airport Tower Construction
Air Navigation Services Improvement Programme
4.24
2.27 Air Navigation Services Improvement Programme

Addis Ababa Bole Airport Air Traffic Control U.P.S
Purchase
A.A Bole Airport Improvement
0.38
0.16
Purchase of Flight Data Processor
0.45
Purchase of Flight Data Processor
0.22
ADS-B Equipment Purchase and Installation
0.18
ADS-B Equipment Purchase and Installation
1.00
Flight Calibration Consul Purchase
0.41
Flight Calibration Consul Purchase
0.16
Purchase of Different Facilities for Airports
0.42
Purchase of Different Facilities for Airports
1.08
Bole International Airport Radar Improvement
0.42
Bole International Airport Radar Improvement
1.62
4.2.2
Ethiopian Airports Enterprise
Ethiopian Airports Enterprise (EAE) provides airport infrastructure, development and management services.
The company operates and manages 15 airports in Ethiopia.
The budget allocated to EAE in 2013/2014 has more than tripled with regards to the previous year, from 4.8
to nearly USD 16 million.
100% of its funding comes from government sources, and is intended for the construction of airport
infrastructure. This year work has begun on three airports, while work continues on two further airports. The
breakdown of the government budget for the body is:

126
Table 22: State Budget allocation to Ethiopian Airports Enterprise (USD Million)
Ethiopian Airports Enterprise - 2012/2013
4.80
Ethiopian Airports Enterprise -2013/2014
Airport Construction
4.80 Airport Construction
15.96
15.96
Jimma Airport Construction
0.24
Jimma Airport Construction
0.74
Kombolcha Airport Construction
4.56
Kombolcha Airport Construction
5.59
Jinka Airport Construction
2.13
Hawassa Airport
4.31
Robe Airport
3.19
4.2.3
Federal Transport Authority
Road haulage is regulated by the Federal Transport Authority, which provides vehicle usage and operating
licences to companies (and individuals) who supply road transport services.
The services funded by the state in its Capital Expenditures relate to the construction of transport terminals for
passengers and freight.
100% of its budget comes from the institution's own revenue.
Table 23: National Budget allocation to the Federal Transport Authority (USD Million)
Transport Authority - 2012/2013
Public Transport Services Capacity

Improvement
Adissu Gebya Terminal Construction
4,39
Transport Authority - 2012/2013
Public Transport Services Capacity

2,57
Improvement
0,08
Kality Terminal Construction
4,90
2,97
1,08
Kality Terminal Construction
1,22
Lame Buret Terminal Constraction
0,54
Lame Buret Terminal Constraction
0,06
Trafic Conplex Constraction
0,11
Construction of Diredawa Terminal
1,20
Construction Of Diredawa Terminal
1,24
Freight Transport Service Improvement

Djibouti Terminal Phase Two
1,82 Fright Transport Service Improvement
1,92
1,60
Djbouti Terminal Phase Two
0,43
Djibouti FluidTruck Terminal
0,21
Djbuti Terminal Asphalt Work
1,28
4.2.4
Ethiopian Roads Authority
Since 2011, Ethiopian Roads Authority has been reorganized by Government proclamation into two
independent institutions with different powers and responsibilities. These are: Ethiopian Road Construction
Corporation and the Ethiopian Road Authority (regulatory body). The corporation has operational responsibility
for road construction and maintenance, whereas the regulatory body is vested with the power and responsibility
to plan and manage the road network and supervise road works at national level. The ERA plays the regulatory
role in implementing the existing Road Maintenance Action Plan.
Over sixteen years of RSDP, physical works have involved the improvement and upgrading of trunks and links,
construction of new link main access roads, construction of rural roads & community roads and maintenance
of federal and regional roads. Those works have been carried out by the ERA, RRAs and Wereda road desks
as well as communities and municipalities.
ERA manages the development of RSDP, whose budget comes mainly from the Government of Ethiopia, with
additional funding from the Road Fund Office and foreign donors.

127
ERA's budget allocation from the Ethiopian state in 2013/2014 was 28,934 Million Birr (USD 1,539 Million), an
increase of 33% (in Birr, 26% in USD) over the previous year. The Government of Ethiopian provides 70% of
the budget, while the rest is contributed by foreign donors, mainly in the form of loans (90% of the amount
contributed).
ERA expenditure directly finances the spending linked to the federal network. It also directly covers the
maintenance of federal highways. The budget items included in its expenses are those defined in the RSDP.
Figure 78 Share of Expenditure by Category, ERA 2013/2014 Budget
2,3%
2,4%
1,1%
0,8%
Major Link Road Construction
11,4%
Major Link Road Upgrading
37,3%
Trunk Road Rehabilitation

Trunk Road Upgrading
13,0%
Policy Support and Capacity Building

Bridge Construction and Rehabilitation
Road Heavy Maintenance
31,5%
Feasibility, Design and Design Review
As it can be seen, the majority of the budget is allocated to major Link Road construction and Major Link Road
upgrading.
Investment projects
Amongst the transport subsectors, Road transport has the lions share of the capital budget allocation used
for the implementation of projects ranging from local community-level road projects under URRAP to the huge
expressway projects.
An efficient road transport system in any country is essential for sustainable economic development. This has
been recognized in Ethiopia and the country has been implementing a Road Sector Development Programme
(RSDP) since 1997 through four consecutive phases (RSDP I RSDP IV). Over the sixteen years of the RSDP
(1997 20013), physical works have been undertaken on a total of 81.629 km of roads excluding routine
maintenance work and community roads. It includes federal highways, the regional network and the Wereda
Roads network.
The total budget for the planned works during this period amounted to ETB 136 billion (USD 7.23 billion). The
total amount disbursed in the same period was 105% of the planned target. Table 7 below shows the overall
performance of RSDP during this period.
Rural access has also been streamlined as one of the key elements in attaining the overall development goals
of the country through an improved standard of living and poverty alleviation for the rural population. In this
regard the Universal Rural Road Access Program (URRAP) is under implementation as a major component
of the RSDP-IV, which was launched in 2010/11, aimed at connecting all Kebeles by standard and affordable
all-weather roads in order to provide them with access throughout the year. Within the program implementation
period (2010/11- 2014/15) it is planned to construct 71,523 km of all-weather roads throughout the country at
an estimated cost of ETB 26 billion (USD 1.4 billion). The complete implementation of the URRAP plan will
ensure close to 80% of the total rural population have year-round access to roads. The program will be fully
financed by the Government of Ethiopia.

128
Table 24 Physical and financial Implementation of RSDP (1997 2013) (ETB million)
Type of Work
Physical Plan Vs. Accomplishment

Plan
Actual
Financial Plan Vs. Disbursement
% age
Budget
Disbursement
% age
Total RSDP I
8,908
8,709
98
9,813.0
7,284.6
74
Total RSDP II
8,486
12,006
141
15,985.8
18,112.9
113
Total RSDP III
20,686
19,250
93
34,643.9
34,957.9
101
RSDP IV (three years)
54,747
41,664
76
75,549.6
81,765.70
108
Total RSDP (16 yrs)
92,827
81,629
102
135,992
142,121
105
Source: 16 Year Assessment of RSDP Performance. Ethiopian Roads Authority (ERA)
Road Maintenance
A very important proportion of the ERA budgets corresponds to the Ethiopian Road Fund (ERF), exclusively
dedicated to the maintenance of the network of federal, regional and municipal roads. ERA uses this funding
for the maintenance of the federal highway network.
The Ethiopian Road Fund (ERF) came into being in 1997 by government proclamation, with the objective of
the Fund [being] to finance the maintenance of roads and road safety measures. The ERF, since its
establishment, has been contributing significantly to road maintenance activities in the country by making
budgets available for highways, rural roads and municipal road maintenance expenditures, and also road
safety measures.
The current Office of Road Fund (ORF) is now responsible for the collection of revenues from various sources
and the fund is fully dedicated to the maintenance of all roads in the country, including federal roads
administered by ERA, regional roads and roads under municipalities. It was established in 1997 with the
objective of financing road maintenance works.
The sources of Road Fund revenues comprise levies on fuel consumption, vehicle license fees, overloading
fines and central government budgetary allocation. The RF revenue, allocations and actual transfer to different
road agencies during the period 2003/04 to 2011/12 are shown in Table below.
During the same period the total road fund revenue and budget allocations have shown average annual growth
rates of 24% and 28%, respectively.
Table 25: Road Fund Regular Budget Allocation and Actual Transfers (USD Million)
Fiscal Year Road Fund
Budget
Allocation
Actual
Transfer
% actual
transfer
Annual Increase (%)

Budget
Allocation
Actual
Transfer
2003/04
60
35
33
96%
2004/05
62
38
49
128%
11%
48%
2005/06
40
65
66
102%
69%
34%
2006/07
128
108
103
96%
66%
57%
2007/08
121
147
119
81%
36%
15%
2008/09
72
148
70
47%
1%
-41%
2009/10
111
122
110
90%
-18%
58%
2010/11
86
80
79
99%
-34%
-28%
2011/12
75
75
80
107%
-7%
1%
16%
18%
Average
Source: Office of the Road Fund (ORF)
The financial sustainability of a road network is highly dependent on the regular financing of proper and timely
road maintenance. At present routine maintenance of roads is regularly accomplished through the Ethiopian
Roads Construction Corporation (ERCC) and private contractors. ERA plays a regulatory role in the
implementation of the existing Road Maintenance Action Plan.

129
The GoE is highly concerned with the sustainability of the existing road network and is very focused on its
maintenance. The Office of Road Fund (RF) allocates annual budgets for road maintenance. During the period
2003/04 2011/12, 72.4% of RF budget allocation was allocated to federal roads (ERA), 19.7% to regional
roads and 7.9% to municipalities. It must be noted that the collected RF revenues are higher than its
allocations.
Figure 79: Road Fund Budget Maintenance Allocation
Source: ALG based on Office of the Road Fund (ORF) data
The detailed road fund revenue, budget and physical maintenance work during twelve years period is also
shown in the table below.

130
Table 26: Summary of road fund revenue, budget & physical work 1997/98 2011/2012 (000 ETB)
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
355,600
344,856
341, 051
515,317
525,645
248,758
1,029,402
1,092,791
1,166,081
1,320,061
1,137,204
1,071,624 9,148,390
55
223
230
221
123
437
287
289
186
658
534
744
3,987
146
1,317
633
1,112
9,201
9,014
729
1,313
687
1,040
1,240
1,240
27,672
355,801
346,396
341,914
516,650
534,969
258,209
1,030,418
1,094,393
1,166,954
1,321,759
1,138,978
1,073,608 9,180,049
Allocated
242,500
255,000
255,000
297,500
332,500 568,2600
938,873
1,166,412
1,326,344
1,462,295
1,425,594
1,452,304 9,722,582
Federal Road Agency (ERA)
169,750
178,500
178,500 208,2500
216,125
395,349
701,244
864,227
1,014,157
1,111,761
1,090,605
1,025,415 7,153,883
Rural Road Agency
48,500
51,000
51,000
59,500
83,125
124,611
171,348
225,321
225,323
265,534
264,634
305,526 1,875,422
Muncipal Road Agency
24,250
25,500
25,500
29,750
33,250
48,300
66,281
76,864
86,864
85,000
70,355
162,486
233,55
246,012
286,286
423,956
576,346
899,471
1,071,841
899,553
1,282,268
1,252,666
1,130,623 8,465,058
Federal Road Agency (ERA)
96,669
157,341
179,942
178,518
331,203
389,726
670,294
809,935
637,849
972,277
900,867
855,562 6,180,183
Rural Road Agency
45,437
53,888
42,479
70,334
59,200
140,040
165,854
206,673
193,675
241,954
268,725
200,964 1,689,223
Muncipal Road Agency
20,381
22,322
23,592
37,434
33,553
46,580
63,323
55,233
68,029
68,037
83,074
74,097
595,655
Percent (%)
67.0%
91.6%
96.5%
96.2%
127.5%
101.4%
95.8%
91.9%
67.8%
87.7%
87.9%
77.9%
87%
Plan
19,810
20,186
22,054
24,048
21,924
24,943
27,649
28,541
29,331
30,726
26,879
29,560
305,651
Performance
19,757
18,010
20,393
18,819
20,756
20,884
23,116
24,615
21,455
26,040
24,571
25,871
264,287
Percent (%)
99.7%
89.2%
92.5%
78.3%
94.7%
84%
84%
86%
73%
85%
91%
88%
86%
Description
TOTAL
Road Fund Revenue

RF Fuel Levy
Transit Fee (Ethio-Djibuti
Corridor)
Interest Income On Treasury
Bill
Total
Budget for Road maintenance
Transferred
121,363
693,277
Physical Work (K.M.)
Source: Office of the Road Fund (ORF)

131
4.3
Financing mechanisms
Around 77% of the RSDP sixteen years financing has come from internal sources: GoE financing ERA and
the federal governments, the Road Fund and the Community. The remaining 23% has been pooled from
development partners. The Government of Ethiopia accounts for the highest share at 66%.
Donors have supported RSDP over the past sixteen years, including the World Bank, European Union, ADB,
NDF, BADEA, OFID and the Governments of Japan, Germany, U.K. and Ireland. The Saudi Fund for
Development, the Kuwait Fund and the Government of China have also joined the financing partnership since
RSDP II. The most recent partner which joined this effort is Abu Dhabi Fund.
The World Bank is the international organization that provides most foreign aid for development of the road
network in Ethiopia. Its share in the overall aid for development of the network has been 38%, followed by the
European Union, which contributed 25% of aid. The 16% of all foreign aid contributed by China also stands
out and this figure is trending upwards.
Figure 80: Financing of the RSDP and Major Donors (1997/1998-2012/2013)
Source: Source: 16 Year Assessment of RSDP Performance. Ethiopian Roads Authority (ERA)
The dramatic increase in investments in the road network in the last few years has been possible thanks to
the investment effort made by the Ethiopian Government.
In the first development period of the RSDP, the GoE contributed 47.45% of the total investment, but in the
last years, the share has increased to 66%, passing from 3,455.5million Birr in 1997/1998 to the 36,299.3
million Birr in 2011/2012.
The donors share of money spent on the road network was not increasing as such in the face of the rising
road expenditure by the government and the expansion of the road network in the last years (see the figure
below).

132
Figure 81: Disbursement by Financiers
40
GOE
Road Fund
35
World bank
Others
30
EU
Community
Billion Birr
25
20
15
10
5
0
RSDP I (5 yrs)
RSDP II (5 yrs)
RSDP III (5 yrs)
RSDP IV (2 yrs)
Source: ALG based on 16 Year Assessment of RSDP Performance. Ethiopian Roads Authority (ERA)
However in the last two financial years, 2012/2013 and 2013/2014, the quantity of foreign funding in the ERA
budget has increased by 87%, from 4,696.7 ETB million (USD 263.9 million) to 8,764.9 ETB million (USD
466.5 million). This foreign aid as a proportion of the total ERA budget has risen from 22% to 30%. Most of
this external funding is in the form of loans (about 90% of the total).
Each funding body has its own method of furnishing this support for the development of the road network of
Ethiopia.
The European Union, for example, uses the Sector budget support method (centralised management). This
implies providing funds to the Ethiopian government to be used in the development of the RDSP, payable at
the end of the period on a conditional basis, once the expenses have been established. The general conditions
for the release of all tranches are based on: (i) progress in sector policy implementation, (ii) conducive macroeconomic situation (latest IMF reporting), (iii) satisfactory Public Finance Management, and (iv) minimum
budget allocations to the Ethiopian Roads Authority (additionally).
Additional conditions for the disbursement of the variable tranches based on achievement of performance
indicators related to progress in the sector: rural accessibility, road condition, road preservation, road safety
and domestic construction industry participation in RSDP. Prior to the release of variable tranches the GoE
will submit a comprehensive report, based on evaluation carried out by an independent consultancy, on the
achievement of these indicators including detailed explanation regarding sources and processing of data.
World Bank acts through IDA. The International Development Association (IDA) is the part of the World Bank
that helps the worlds poorest countries. Established in 1960, IDA aims to reduce poverty by providing loans
(called credits) and grants for programs that boost economic growth, reduce inequalities, and improve
peoples living conditions.
IDA lends money on concessional terms. This means that IDA charges little or no interest and repayments are
stretched over 25 to 40 years, including a 5- to 10-year grace period. IDA also provides grants to countries at
risk of debt distress.
In Ethiopia, the Bank has provided more than USD 1.4 billion to the GoE to support its efforts in improving and
expanding Ethiopias roads network. Currently, IDA USD 818 million is still committed. Over the past fifteen
years of implementation, the WB projects have helped Ethiopia to develop its roads network. The WB program
has also helped in strengthening the institutional capacity of the institutions responsible for transport
development in Ethiopia (e.g., the Ministry of Transport and the Ministry of Urban Development and
Construction) as well as institutions in charge of road sector development and maintenance (e.g., the Ethiopian
Road Authority as well as roads authorities at the regional municipal and woreda level).
The objectives of the Road Sector Development Program and Fourth Adaptable Program Loan Project for
Ethiopia are to assist the Government in strengthening and increasing its road transport infrastructure and its
reliability, and strengthening the institutional efficiency in road sector management. There are three
components to the project. The first component of the project is upgrading of federal link roads and related

133
supervision services. This component comprises upgrading of two link roads from an existing gravel surface
to asphalt surface, and one from an existing earth road to asphalt surface road as follows: (i) upgrading of
Mekenajo-Dembi Dolo Link road sub-project (181 km asphalt concrete); (ii) upgrading of Welkite-Hosaina Link
road sub-project (121 km asphalt concrete); (iii) upgrading of Ankober-Awash Arba Link road sub-project (89
km asphalt surface treatment); and (iv) construction supervision of these three roads including implementing
the associated environmental, safety, and resettlement plans and mitigation of adverse social impacts, as well
as sectional design review of Ankober-Awash Arba road.
The second component of the project is Ethiopian Roads Authority (ERA) modernization/sector capacity
building. This component various institutional strengthening/reform and capacity building activities will be
undertaken, comprising: (i) preparatory study toward establishing a highway engineering research center: and
(ii) technical advisory services (TA) to prepare and conduct Harmonized 'comprehensive capacity building'.
ERA staff training will also be included.
The third component of the project is network management studies. This component is conducted comprising:
(i) maintenance needs assessment and updating of road financing study; (ii) transport and poverty
observatories (TPOs); and (iii) preparatory studies for the IV phase of Road Sector Development Program
(RSDP) and the Universal Rural Road Access Program (URRAP).
4.4
Key issues
The main key issues identified in the financing analysis are summarized below:
The transport sector accounts for 46% of the total Ethiopian Government Capital Expenditure Budget and
the roads subsector represents 97% of the Transport sector budget.
The remarkable increase in road network investments in the last few years has been possible thanks for
the effort made by the Ethiopian Government.
Besides, foreign aid is currently growing in the transport sector, after years of fluctuating decrease. It
accounted for 40% of the sector financing in the last budget period.
However, despite the above facts, the GoE still faces a large financing gap for transport infrastructure
implementation.
Therefore, as GoE and donor countries are struggling to mobilise further public resources, new formulae
for increased private sector participation and investment should be analyzed in order to meet the
infrastructure financing gap.
Additionally, the investment effort should also focus on the improvement of the transport system (both
passengers and freight), aiming at the achievement of synergies and the improvement of Ethiopias
production and a steady economic growth.

134
5 Regional Context and Strategy

5.1
5.1.1
Regional integration context

Introduction to Regional Integration
In normal usage, the term integration means bringing an object into a complete whole, while the narrowest
economic term implies coordinating economic activities with the aim of enhancing the development of countries
or regions33.
Although regional economic communities differ in the composition of their members and their structure, all
share the common objective of reducing trade and non-tariff barriers among themselves. The extent of regional
integration ranges from removing tariff and non-tariff barriers to the liberalisation of trade and finance, and to
attaining a full economic union and the formation of common executive, judicial and legislative institutions.
In Africa the process of regional integration is being emphasised through the establishment of various Regional
Economic Communities. The RECs are deemed to be the regional blocs or the path to the attainment of African
Unity as envisaged in the Abuja Treaty34.
Regional integration remains a key strategy for African Governments to accelerate the transformation of their
fragmented small economies to expand markets and widen the regions economic space so as to reap the
benefits of economies of scale for production and trade, and thereby maximize the welfare of their nations.
African leaders have taken a number of initiatives, through various African Union Decisions aimed at advancing
the regional integration process in Africa.
These include: the transformation of the Organisation of the African Unity (OAU) into the African Union (AU),
the New Partnership for Africas Development (NEPAD), the development of Minimum Integration
Programmes, the rationalisation of the RECs through the moratorium on the creation of new RECs and the
recognition of only eight (8) RECs as the main building blocks of the African Union. They are: Economic
Community of West African States (ECOWAS), Common Market for Eastern and Southern Africa (COMESA),
Economic Community of Central African States (ECCAS), Southern African Development Community (SADC),
InterGovernmental Authority on Development (IGAD), Community of Sahel Saharan States (CEN-SAD), East
African Community (EAC), and Arab Maghreb Union (AMU).
33
UNECA. Mainstreaming Regional Integration into National Development Strategies and Plans, 2012
The Constituent Treaty of the African Economic Community (AEC), in 1991 came into force after the requisite
numbers of ratification in May 1994. It provided for the African Economic Community to be set up through a
gradual process which would be achieved by coordination, harmonisation and progressive integration of the
activities of existing and future regional economic communities (RECs) in Africa.
34

135
Figure 82: REC pillars of the African Economic Community
CEN-SAD
5.1.2
COMESA
EAC
ECCAS
ECOWAS
IGAD
SADC
UMA
RECs in Eastern Africa
Eastern Africa has the largest number of RECs and intergovernmental regional bodies. Nearly all of the
countries are members of four of the eight RECs. Most belong to at least two RECs while some belong to up
to four RECs/ IGOs. This multiple membership (Figure 83) often results in duplication of resources and
conflicting goals and policies. In addition, these countries are also members of development finance institutions
that span across different regional groupings. Among others, these include the PTA Bank, East African
Development Bank, and the Agency for Trade Insurance. Ethiopia belongs to two of them: COMESA and
IGAD.
Figure 83: RECs in Eastern Africa
Source: Eastern Africa. Regional Integration Strategy Paper. 2011 2015. ADB-ADF

136
5.1.2.1 Common Market for Eastern and Southern Africa - COMESA

COMESA was established in Kampala, Uganda in November 1993 and the treaty was ratified on 8 December
1994, replacing a Preferential Trade Area created in 1981. Its main objectives are to:
Achieve the sustainable growth and development of member states by promoting a more balanced and
harmonious development of production and marketing structures; and
Promote the joint development of all fields of economic activity and the joint adoption of macro-economic
policies and programmes in order to raise the standard of living of its peoples and foster closer relations
among member states.
COMESA has 19 members, namely Burundi, Comoros, Djibouti, the DRC, Egypt, Eritrea, Ethiopia, Kenya,
Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and
Zimbabwe. Six other countries Angola, Lesotho, Mozambique, Namibia, Tanzania and Botswana are
eligible for membership.
Not all COMESA members are members of its Free Trade Agreement (FTA). The countries that have not yet
joined the FTA are the DRC, Eritrea, Ethiopia and the Seychelles. They cite a range of reasons for their
reluctance to join, including the FTAs actual potential for boosting trade; possible revenue losses as a result
of the FTA; sensitive products; and the protection of key industries. Ethiopia is working towards joining the
FTA, and has conducted studies.
COMESA is Africas largest economic community, with a market size estimated to be over 500 million
consumers by 2015. It is strategically located, with economic and geographic diversity, and offers unparalleled
opportunities for African and International investors.
The COMESA Medium-Term Strategic Plan (MTSP) 2011-2015 outlines six objectives: (i) removing barriers
to facilitate mobility; (ii) building capacity for global competition; (iii) addressing infrastructural constraints; (iv)
peace and security; (v) cross-cutting issues; and (vi) institutional development. Over the years, COMESA has
achieved breakthroughs in its regional integration effort. Best practices include trade facilitation through
elimination of tariff and non-tariff barriers among member states and the establishment of a COMESA Fund to
facilitate implementation of infrastructure programs. COMESA is also in the process of creating a Multilateral
Fiscal Surveillance Framework with bank support.
COMESA Transport Infrastructure Projects
In order to ensure proper maintenance and management of the current and growing road infrastructure assets,
the COMESA countries have undertaken reforms in road sector management and funding. Most of them have
set up road funds and road development agencies in order to maintain both the regional and national road
networks, and Ethiopia is one of them.
The main source of funding for road maintenance is the fuel levy, while construction and rehabilitation are
funded from government budget allocations, borrowing from development banks and funds from cooperating
partners.
COMESA has adopted a holistic and corridor-based approach to infrastructure development based on three
key pillars i.e. policy and regulatory harmonisation, development of priority regional physical infrastructure
covering transport, information and communications technologies (ICT) and energy. The transport sector
covers civil aviation, surface transport (road and rail) and water transport covering maritime and inland water
transport subsectors The ICT comprises the telecommunications, broadcasting and postal services
subsectors, whilst Energy covers the electricity, fossil fuels and renewable energy subsectors 35.
In order to effectively address constraints related to the improvement of infrastructure and services, to reduce
the cost of doing business and also to enhance competitiveness in the COMESA region, a number of projects
in transport, energy and information and communications technology have been identified.
Transport infrastructure in terms of roads, railways and maritime transport facilities in the Eastern and Southern
Africa region has evolved slowly over the years and can be described as barely adequate in most countries in
terms of coverage compared with developed and middle income countries.
35
Comesa region key infrastructure projects. COMESA, 2013

137
The transport programmes seek to enhance regional infrastructure connectivity through the construction of
missing links, upgrading of current links in roads, railways and the development of maritime ports and inland
terminals along the major transport corridors
Table 27. COMESA Transport Projects Programme
Field
Project title
Participating
countries
Project description
Status of
implementation
Estimated
cost (millions
of US$)
El Damazin/ Elkurmuk
Road (149 km)
Sudan, Ethiopia
Upgrading the road from the

Ethiopian border to Damazin in
Sudan
Detailed
engineering
designs completed
90.0
Upgrading
Dewele/Dire
(220 Km)
Ethiopia, Djibouti
Construction of road running

parallel to the Djibouti/Addis
Ababa railway
Detailed
engineering
designs completed
250.0
Sudan, Ethiopia
Construction of road linking

Ethiopia and Sudan and a
feeder road link to the transAfrican highway
Engineering designs and

tender
document
completed
38.3
Upgrading of Mizani
/Dima/Raad
Ethiopia,
Sudan

Ethiopia and South Sudan and a
feeder road link to the transAfrican highway
Detailed
engineering
designs completed
115.0
Turbi Moyale Road
Kenya, Ethiopia

Ethiopia and Kenya. It is part of
the Cape to Cairo highway and
will also provide access for
Ethiopia to Mombasa port
Detailed
engineering
designs completed
160.0
Rehabilitation
of
Awasa
/Mega/Ageremariam/
Moyale
Ethiopia, Kenya
Construction of 495 KM of road

links to Ethiopia and Kenya that
forms part of the Cape to Cairo
highway. The links will also
provide access for Ethiopia to
Lamu and Mombasa ports
Addis Ababa-MiesoDire Dawa Djibouti

Railway
Djibouti-Ethiopia
Construction of an 872 KM
standard gauge railway line
linking Addis-Ababa to Djibouti
port.
Tender document under

preparation
Addis Ababa/Modjo/
Moyale Railway
Ethiopia
Completion of the segment

linking Lamu to Addis Ababa
Preliminary
undertaken
design
NA
Addis
Ababa/Jima
/Boma Railway (740
km)
Ethiopia
Construction of a 740 KM line

linking Addis-Ababa to the
border of South Sudan at Raad
Preliminary
design
undertaken
on
the
Jima/Boma segment
NA
Tadjourah-Galafi
Railway
Djibouti
Construction of new railway line

to transport minerals such as
potash from Ethiopia
Preliminary
undertaken
Raad
Railway
South
Sudan,
Ethiopia
Construction of rail segment

linking Juba to Addis Ababa
Feasibility study and

designs to be undertaken
Ethiopia, Djibouti
Construction of a 775 KM rail

line linking Northern Ethiopia to
Tadjoura port in Djibouti
Preliminary design work

undertaken
Kenya,
South
Sudan, Ethiopia
Construction of a railway line

that provides alternative routes
from South Sudan to Kenya and
Ethiopia
Feasibility study and

master plan completed
Elshowak/
Bracket/El
Road
Roads
Railways
of
Dawa
Um
Homora
Kapoeta
South
Galafi-Awash-Mekele
LamuIsiolo-MoyaleNadapal
310.0
design
4,500.0
600.0
NA
Projects that require funding

Projects that require funding for project preparation
Projects that are at the concept stage
Source: Comesa region key infrastructure projects. COMESA, 2013

138
5.1.2.2 InterGovernmental Authority on Development - IGAD

The Inter-Governmental Authority on Development (IGAD) is one of the regional integration arrangements in
Eastern Africa which came into existence in 1996 replacing the Intergovernmental Authority on Drought and
Development (IGADD), which was founded in 1986 with the aim of establishing a regional cooperation
arrangement and enhancing economic and social development of the region. Much of IGAD's attention is
directed at peace efforts in Somalia, Sudan and the tensions between Ethiopia and Eritrea.
The Economic Integration programme was scheduled to start with the creation of a Free Trade Area (FTA) in
2009 which hasnt been put in place owing to different problems. The IGAD Regional Economic Community
(REC) is designed to be in harmony with that of the COMESA.
IGAD Transport Infrastructure Projects
Among the IGAD countries, although transport projects are dealt with at bilateral level, the Agency has
continued to lobby for and mobilize funds for the following projects:
Nairobi - Addis Ababa corridor (Isiolo Moyale Addis Ababa road): various sections are at various stages
of implementation, under procurement, construction and rehabilitation, with financing from AfDB and the
European Union
Kampala Juba corridor: Nimule Juba sector under construction in South Sudan; Gulu Nimule
(Uganda) under procurement
Berbera corridor (Somaliland Ethiopia): feasibility study and detailed engineering design services under
procurement
Djibouti Addis Ababa corridor: remaining section of Arta Guelile road section in Djibouti under
procurement.
5.1.3
The Tripartite Free Trade Agreement
The COMESA-EAC-SADC Tripartite was established in 2006 with the main objective of strengthening and
deepening economic integration of the southern and eastern Africa region. This was to be achieved through a
number of initiatives aimed at harmonising the policies and programmes of the three RECs in the areas of
trade, customs and infrastructure development, implementing these in a coordinated manner and, wherever
possible, jointly. The Tripartite framework presented an opportunity for the RECs to collaborate on
programming interventions in trade and transport facilitation and to create a coordination mechanism for joint
implementation of projects at the regional level and along transport corridors.
The concept behind the Tripartite transport and trade facilitation programme is to implement a holistic
programme that addresses transport and facilitation issues in an integrated manner in such a way that the
interventions reinforce each other and contribute to the overall objective of reducing the costs associated with
transit movements in the eastern and southern Africa region.
COMESA, EAC and SADC are pursuing the tripartite FTA arrangement which will unify their combined market
space of over 500 million people, thus providing a strong springboard and impetus towards realising the
continental FTA by 2017. At their second summit, held in Johannesburg, South Africa in June 2011, the Heads
of State and Government of the three RECs signed a Declaration Launching the Negotiations for the
Establishment of the Tripartite Free Trade Area and adopted a road map for establishing the tripartite FTA as
well as a set of negotiating principles, processes and an institutional framework. The tripartite FTA will
comprise three pillars- market integration, infrastructure development and industrial development.
The COMESA-EAC-SADC Tripartite has recently launched the Comprehensive Trade and Transport
Facilitation Programme (CTTTFP) which is a series of initiatives from different RECs that have been brought
together into one large integrated trade facilitation programme:
Development of Regional Bond Guarantee Scheme and Transit Information Management System
Harmonising 3rd-Party Motor Vehicle Insurance
Harmonising Road User Charges
Harmonising Vehicle Regulations and Standards

139
Improving Customs Legislation and Procedures
Integrated Border Management
Joint Competition Authority on Air Transport
Promoting Self-Regulation through a Regional Transporter Accreditation System
Road Transport Market Liberalisation
Vehicle Overload Control
5.1.4
The role of AfDB in Eastern Africa
According to AfDB, Eastern Africa comprises 13 countries: Burundi, Comoros, Djibouti, Eritrea, Ethiopia,
Kenya, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda and, as of 9 July 2011, the newly
independent Republic of South Sudan.
As Africas premier financial institution, the AfDB plays an important role in the socio-economic development
and regional integration of Eastern Africa. The AfDB plays a major role in supporting the energy, water,
transport and ICT sectors and expects to continue to work closely with the regions governments to improve
service provision. The sectoral composition of the regions active operations is dominated by transport projects,
representing 37.6%.
Figure 84: East Africa Current Regional Projects Portfolio Composition by Sector (Million UA)
3,0%
5,1%
6,1%
Agriculture: 123.06
0,2%
Environment: 4.10
Finance: 146.82
37,6%
Multi-Sector: 769.00
32,0%
Power: 353.17
Social: 30.00
Transport: 904.93
Water Sup/Sanit: 72.98
1,2%
14,7%
Source: AfDB
In 2013 the AfDB adopted a Ten-Year Strategy 2013-2022 for the African continent. The strategy will rely upon
five priority channels to deliver results: infrastructure development, regional integration, private sector
development, measures to improve governance and accountability and human capital development (via
vocational education and training, technology acquisition and innovation).

140
Figure 85: AfDB Ten-Year Strategy 2013-2022
Source: AfDB
To support regional integration, the AfDB for East Africa (EARC) has developed a Regional Integration
Strategy Paper (RISP) 2011-2015 founded upon the twin pillars of infrastructure development and capacity
building. The challenge for regional integration is to simultaneously increase physical interconnectivity and
trade patterns among states while inducing them to move beyond the current sub-regional RECs and trading
blocs.
On the transport front, there are numerous projects of regional scale underway in the road, rail, maritime, air,
and pipeline subsectors. Many of these are being developed on a national basis (such as road segments within
national borders) but with the PIDA (see below) they are being implemented against a single planning vision
within a regional framework. Moreover, they are being developed on a multi-modal basis recognising that
networked logistical services must comprise links between road, rail, port and airport facilities.
Figure 86: AfDB East Africa Regional Projects concerning Ethiopia
Long name
Approval Date
Completion Date
Project
Countries
Beneficiary
Net loan (UA)
MOMBASA-NAIROBI-ADDIS
CORRIDOR II
07/01/2009
12/31/2015
Ethiopia/Kenya
85,000,000
MOMBASA-NAIROBI-ADDIS
ABABA III
11/30/2011
12/31/2018
Ethiopia/ Kenya
105,000,000
KAMPALA-JUBA-ADDIS
DJIBOUTI CORRIDOR
09/30/2013
06/30/2015
ABABA-
Uganda/South Sudan/Ethiopia
2,368,380
Source: Regional Integration Strategy Paper (RISP). AfDB
5.1.5
Infrastructure Planning Documents for Regional Integration
5.1.5.1 Trans-African Highways Network TAH

The Trans-African Highway Network comprises transcontinental road projects in Africa being developed by
the United Nations Economic Commission for Africa (UNECA), the AfDB, and the African Union in conjunction
with regional international communities. The concept as originally formulated in the early 1970s aim to promote
trade and alleviate poverty in Africa though highway infrastructure development and the management of roadbased trade corridors. The system consists of nine main corridors with a total length 56,683 km.

141
The Trans-African-Highway (TAH) system aims for completion by 2040 (see PIDA below). Within Eastern
Africa, TAH segments 4, 6 and 8 are of relevance linking Cairo to Cape Town, Djibouti to Ndjamena and
Mombasa to Lagos, respectively. In the 2020 timeframe, Eastern Africa is specifically working on a total of five
corridors covering 12,000 km.
Figure 87: Trans-African Highways system (TAH)
Source: Review of the Implementation Status of the Trans-African Highways and the Missing Links. AfDB
Figure 88: Trans-African Highway 4, north of Addis Ababa

142
Source: Review of the Implementation Status of the Trans-African Highways and the Missing Links. AfDB
5.1.5.2 Programme for Infrastructure Development in Africa (PIDA)

The aim of the Programme for Infrastructure Development in Africa (PIDA) is to connect all Africans and to
achieve the African Economic Community as outlined in the 1991 Abuja Treaty. To this end, the African Union
Commission (AUC), Planning and Coordinating Agency (NEPAD Agency), African Development Bank (AfDB),
United Nations Economic Commission for Africa (UNECA) and Regional Economic Communities (RECs) set
out to develop a strategic framework to provide a solid base for prioritising, harmonising, financing and
implementing effective regional and continental infrastructure projects. PIDA was adopted by the Heads of
State and Government in 2010.
PIDA aims to accelerate the delivery of current and future regional and continental infrastructure projects in
transport, energy, information and communications technology (ICT), and trans-boundary water.
There are 51 PIDA programmes and projects and 24 PIDA priority transport projects that will focus on
enhancing inter-regional connectivity and corridor modernisation, as well as the improvement of the continents
port, railway and air transport systems. Transport costs will be reduced significantly through the implementation
of the PIDA projects, which in turn will boost regional and global trade.
PIDA contains a framework for meeting infrastructure demand up to 2040 (2020 for ICT). It has components
addressing projected infrastructure gaps and bottlenecks based on supply and demand forecasts, institutional
deficiencies and options for identifying, preparing and funding projects. PIDA is organised on the basis of shortand medium-term targets running up to 2020 and 2030, as well as long-term projections to meet demand up
to 2040. Short-term projects and programmes are in a Priority Action Plan, for which the capital cost for 20122020 is estimated at US$68 billion (about US$7.5 billion annually over the nine years). Mobilising these funds
is a huge challenge.
The PIDA transport network is based on the ARTIN Corridors (that includes the TAH network and RECs
rail/road/air/ports projects).
The corridor concept, viewed as a platform to address logistical issues or a framework for investments, blends
well with the notion of regional trade and integration because both concepts focus on the interests of more
than one country.
Major increases in corridor efficiency are needed to handle future traffic flows. This could be partly achieved
through high visibility corridor efficiency monitoring and modern corridor design, accompanied by the
implementation of smart corridor systems and one-stop border posts (OSBPs) along ARTIN corridors.

143
Figure 89: PIDA Transport Programme
Source: Programme for Infrastructure Development in Africa (PIDA)
5.1.5.3 COMESA-EAC-SADC Tripartite Corridors

In the area of infrastructure, the COMESA-EAC-SADC Tripartite has launched a programme for Transport
Corridors. A regional approach to the development and rehabilitation of surface transport infrastructure along
corridors differs fundamentally from traditional, national approaches to project planning and implementation.
The efficiency and reliability of transport corridors are improved through addressing infrastructure constraints
and operational inefficiencies, improvements in policies and procedures, corridor institutional development and
the promotion of coordinated approaches to planning, programming and financing.

144
Figure 90 Tripartite Selected Corridors
Source: Tripartite Corridors E-GIS. The COMESA-EAC-SADC Tripartite
5.2
5.2.1
Current Ethiopian Regional Strategy

Ethiopias Regional Integration Policy
According to the Ethiopian government, the countrys regional development strategy today essentially depends
on the concept of a community of power to collectively secure peace and stability and to jointly integrate and
benefit from the current global and international market.
Ethiopia is committed to contributing to expedite regional integration in Eastern Africa, to achieve the goal of
an economically and politically integrated region as a central building block for the economic and political
integration of Africa.
Ethiopia is implementing regional infrastructure projects, notably the power interconnections with Djibouti and
Sudan, and road/rail linking corridors. The Government is also negotiating an Economic Partnership
Agreement with the European Union and has also embarked on the process of World Trade Organisation
(WTO) accession, though progress has been slow.

145
Regional Energy Projects

Ethiopia is also planning the collaborative exploitation of regional energy resources. Among others, it wanted
to source all its petroleum products from Sudan by 2010. Although this did not happen, its oil imports from
Sudan have increased significantly, from 4% in 2005 to more than 12% in 2011.
Ethiopia is also planning to supply neighbouring countries, including South Sudan, with electric power.
When Ethiopia and South Sudan develop their respective energy sectors, there could be some substitutability
that could threaten bilateral trade (as Ethiopia increases its reliance on hydropower and South Sudan
increases its reliance on fuel).
Regional Transport Corridors
The main Regional Transport Corridors crossing the Ethiopian territory are:
Figure 91: Djibouti-Ethiopia-South Sudan Corridor

Figure 92: Lamu-Southern Sudan-Ethiopia Transport Corridor (Lamu Port Southern Sudan-Ethiopia Transport
(LAPSSET)

146
In this regard, some bilateral agreements negotiated by the Ethiopian government are noteworthy:
1. Ethiopia, Kenya and South Sudan have embarked on joint transport projects that will enhance
economic co-operation. In November 2011, Ethiopia and Kenya signed a memorandum of
understanding to construct the Addis AbabaMombasa highway. The African Development Bank
approved a loan of $743 million for the project, which has been divided between the two countries. The
highway will enhance regional integration and will also be linked to the Trans-Africa Highway. It will
allow Ethiopia to use the Port of Mombasa and increase trade ties with southern African countries.
2. Another notable project is the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor,
which will stretch from the port of Lamu in Kenya to South Sudan and Ethiopia. It will comprise a 100
m-wide highway, a high-speed railway and an oil pipeline (to South Sudan). The route starts at Lamu
Port and splits into two to reach Moyale on the border between Kenya and Ethiopia, and Nakodok on
the border between Kenya and South Sudan. To connect to the West African coast, the highway will
link up with the Central African RepublicCameroon highway. The Moyale highway will continue
through Addis Ababa to Djibouti, and the South Sudan highway through Sudan to Port Sudan. Kenya,
Ethiopia and South Sudan launched the project on 2 March 2012. Upon completion, this corridor is
expected to enhance the economic growth of all three countries by facilitating trade, investment and
tourism. The $254-million project will bolster economic integration not only among Kenya, South Sudan
and Ethiopia but also with central and western African countries. Financing such a big project will be a
challenge, but commitments have already been made. In May 2012, the African Development Bank
agreed to contribute $12 million. It is scheduled for completion by 2016.
3. On 7 July 2013, Ethiopia and Djibouti agreed on the construction of the new Addis Ababa-DeweleDjibouti rail route. Both sides are committed to fast-track the construction of a new Tadjourah-Mekele
rail corridor. When completed, this rail line will facilitate potash exports from the Denakil depression to
the international market. Upgrading and maintaining the Djibouti-Ethiopian Railway is also underway
and a railway network from Juba-Addis Ababa-Djibouti is being considered. With reference to road
transportation, the Djibouti-Dire Dawa highway is being renovated and the Dorra-Balho Northern
Corridor is being constructed.
4. In May 2014, while Chinese Prime Minister Li Keqiang was visiting Kenya, an agreement was signed
in Nairobi between the Chinese government and the governments of Kenya, Uganda, Rwanda, Burundi
and South Sudan to build a new railway line in East Africa. The plan also includes a line connecting
Addis Ababa with the bigger East African railway.
Figure 93: New East African railway (forming part of the LAPSSET Corridor)
Source: Ethiopia, Regional Integration and COMESA Free Trade Area, SAIIA, 2014

147
5.2.2
The Regional Economic Integration of Ethiopia
According to several studies36, Ethiopias regional economic integration is limited. Insular policies arising from
domestic upheavals and regional friction are partly to blame but there are also concerns over revenue losses
and the negative impact on domestic industries, regarded to be less competitive than those of neighbouring
countries. Ethiopia has not ratified the COMESA Free Trade Protocol, although many other countries in the
region have.
The studies found that although membership in the COMESA FTA would enhance general welfare, the
negative impacts on the manufacturing sector (loss of jobs and job creation, although the loss will not be fully
offset and de-industrialisation may occur) as well as job and revenue losses (the government will lose a
significant amount of revenue due to a reduction in tax revenue from imports) would threaten economic growth.
While these findings need to be triangulated against other indicators, they do identify the correct trends.
Whilst trade liberalisation will have costs and benefits, Ethiopia is already bolstering regional development by
initiating more sustainable projects that will enhance regional economic integration. Any benefits to be gained
from joining the FTA would largely depend on the specific FTA agreements between Ethiopia and other
member states.
But, although Ethiopia has not yet joined the COMESA FTA, it has played an active role in COMESAs
formation and leadership. In 2002, Zenawi was elected to chair COMESA for a one-year period. Ethiopia also
introduced a 10% tariff reduction on goods imported from COMESA member states. Ethiopia is one of six
countries chosen for an oil seed development project in the region. It has also been chosen as COMESAs
centre for producing livestock medicine, the site of the COMESA leather institute, and a regional site for
manufacturing hand tools and spare parts.
All this confirms Ethiopias active participation in COMESA. However, membership of the FTA is obviously a
key issue.
5.2.3
Regional Foreign Trade
As discussed above, Ethiopias trade balance is uneven, with a superior figures (in both volumetric and
monetary terms) of imports than exports. This has been a growing trend in recent years.
Another trend to highlight is the participation of regional trade in Ethiopias total foreign trade. Although
Ethiopias regional trade has grown during the last years, its weight in relation with the countrys total
international trade has decreased ostensibly. Imports from COMESA countries have declined to the point
where they account for about 2% in terms of both value and weight. This is due to the fast and remarkable
increase of the imports from other regions of the world (namely South-East Asia).
As far as exports are concerned, the weight of regional trade is higher although the trend is slowing and
levelling off, accounting for 20% of both the value and the weight of all exports.
36
Ethiopia, Regional Integration and COMESA Free Trade Area, SAIIA, 2014 or AfDB Country Strategy Paper
2011-2015
148
Figure 94: Total COMEX and COMESA share. Value (Million $), 2013
14000
50%
12000
40%
10000
30%
8000
6000
20%
4000
10%
2000
0
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total Exports
Imports
Total Exports (% COMESA)
Imports (% COMESA)
Source: ALG based on COMESA data (COMSTAT Database)

Figure 95: Total COMEX and COMESA share. Weight (thousands of tonnes)
10000
50%
9000
8000
40%
7000
6000
30%
5000
4000
20%
3000
2000
10%
1000
0
0%
2005
2006
2007
2008
2009
2010
2011
2012
Total Exports
Imports
Total Exports (% COMESA)
Imports (% COMESA)
2013
Regional trade is very evenly balanced compared to the imbalance of foreign trade in Ethiopia. Regional trade
has grown in recent years, and the increase is seen in the value of both imports and exports. Although import
and export values are evenly balanced, the weight of exports is higher, which means that imports are bolstered
by higher value added products.

149
Figure 96: Trade to and from COMESA evolution, in monetary terms
700,0
286,2
600,0
391,1
289,4
236,3
324,0
Million USD
500,0
230,5
213,7
400,0
192,1
300,0
200,0
100,0
286,9
47,9
95,0
0,0
100,0
123,8
152,4
315,4
261,9
125,9
18,2
2004
2005
2006
2007
Export
2008
2009
2010
2011
2012
Import

Figure 97: Trade to and from COMESA evolution, in weight terms
800,0
519,0
700,0
437,8
375,6
373,2
600,0
000' tonnes
368,2
336,0
188,7
500,0
237,0
120,4
400,0
300,0
200,0
100,0
305,4
127,7 151,5
197,8
201,9
300,6
155,1
233,1
270,3
0,0
2004
2005
2006
2007
Export

2008
2009
2010
2011
2012
Import
150
As for the composition of regional foreign trade, slight differences are observed between incoming/outgoing
regional products and those coming from and going to the rest of the world.
The most important export products are arable and livestock products, representing most of Ethiopias
international export trade. Five of the products belonging to this group represent 84% of the exported volume
and 76% of the monetary value of Ethiopias regional trade.
It must also be noted that other products such as cement and other mineral material (marble, quicklime) and
mechanical machineries of Ethiopias industry (lifting, handling, loading or unloading machinery and vehicles)
also represent regional exports of Ethiopia.
Figure 98: Ethiopian exports to COMESA members by tariff chapter (2013)
125,72
Edible vegetables
92,80
39,82
Live animals
70,93
26,90
3,79
23,14
Coffee
Cement and other mineral materials
Edible fruit and nuts
Vegetable plaiting materials
Vehicles and parts
Nuclear reactors, boilers, machinery
and mechanical appliances
39,26
15,75
1,50
11,77
2,99
9,09
1,21
Voume ('000 tonnes)
0,75
14,48
0,44
18,77
Cereals
4,88
1,56
Oil seeds and oleaginous fruits
4,11
5,18
1,48
1,00
Beverages, spirits and vinegar
1,23
1,35
Iron and steel
1,00
0,92
Others
Value (Million USD)
4,85
22,04

151
Regional imports (as well as total international imports) consist of a wide variety of products. The most
important ones are oil and chemical products, including fertilizers, hygiene and cleaning products, plastics and
derivatives, pharmaceutical products, etc. Metals such as copper or aluminium are also relevant.
Figure 99. Ethiopian imports from COMESA members by tariff chapter (2013)
26,9
Mineral fuels and products of their distillation

18,3
Essential oils; perfumery, cosmetic or toilet preparations

14,1
Fertilizers
10,8
Electrical machinery and equipment
10,0
Miscellaneous manufactured articles

Copper and articles thereof
9,7
Plastics and plastic products
9,6
9,2
7,8
Soaps and washing preparations

Aluminium and articles thereof
6,3
Other made up textile articles
6,2
Paper and paperboard
6,2
5,8
Furnitures
5,0
Miscellaneous edible preparations

Products of the milling industry and malt
4,6
Organic chemicals
4,4
Pharmaceutical products
4,2
Miscellaneous chemical products
4,0
Animal or vegetable fats and oils
3,8
Nuclear reactors, boilers, machinery and mechanical

Articles of iron or steel
Optical, precision, medical or surgical instruments
Value (Million USD)
3,0
2,6
2,2
2,2
Others
17,5
Note: The analysis has been undertaken in value terms, for the COMESA Database does not provide disaggregated data
for imports in weight terms

152
Figure 100: Exports (left) and Imports (right) from and to neighbouring countries (2013, value terms)
South
Africa
Kenya 2%
3%
South
Sudan
1%
Djibouti
0,54%
Sudan
5%
Libya
7%
Egypt
8%
Sudan
15%
Swaziland
11%
Somalia
52%
Djibouti
18%
Kenya
17%
Egypt
59%
Two countries which are not COMESA members, Somalia and South Africa, stand out as the primary regional
trade partners. The main recipients of Ethiopias exports are neighbouring countries, specifically Somalia,
which is the recipient of 52% of Ethiopias regional exports comprised mainly of food and live animals, followed
by Djibouti and Sudan. Together, these three countries account for approximately 85 % of Ethiopias regional
exports.
Concerning the origin of Ethiopias regional imports, the main trade partmer within the African framework is
Egypt (the main provider of chemical products of the Region).
The weak trade relations between Ethiopia and Kenya, despite their vicinity, are also noteworthy. A possible
explanation to this facts could be found in the informal trade explained in Box 6.

153
Figure 101: COMESA Export Intensity Index
67,2
Rwanda
52,77
Djibouti
31,96
Kenya
24,89
Congo DR
Zambia
19,81
Uganda
19,43
17,92
Burundi
Malawi
17,00
Ethiopia
16,83
Egypt
10,56
Sudan
10,22
7,49
Mauritius
3,97
Madagascar
Zimbabwe
3,45
Swaziland
2,95
Comoros
2,86
Eritrea
2,08
Seychelles
1,26
Libya
0,45
20
40
60
80
100
In conclusion, Ethiopias Export Intensity Index of 16.5 is average compared to that of surrounding countries,
but well below that of its neighbours, Djibouti and Kenya.
This could be attributed to the poor state of transport corridors and weak trade facilitation (which result in high
trade costs), as well as slow progress in implementing trade liberalisation commitments.
5.2.4
Transport and Logistics Indicators
In this section we will compare Ethiopias situation to that of other countries in the region, primarily those which
are members of the COMESA and IGAD RECs, looking at the broadest-reaching indicators used to analyse
the logistics and infrastructure of the economies under study.
Table 28. Doing Business Trading Across Borders Index 2014
Country
Rank
Documents
to export
(number)
Time to
export
(days)
Cost to export
(US$ per
container)
Documents
to import
(number)
Time to
import
(days)
Cost to import
(US$ per
container)
Burundi
169
32
2.905
43
4.420
Comoros
144
31
1.295
24
1.295
Djibouti
56
20
885
18
910
Egypt. Arab Rep.
99
12
625
10
15
790
Eritrea
172
10
50
1.850
12
59
2.000
Ethiopia
168
44
2.380
11
44
2.960
Kenya
153
26
2.255
26
2.350
Libya
139
23
1.140
37
1.255
Madagascar
109
22
1.195
21
1.555

154
Country
Rank
Malawi
Documents
to export
(number)
Time to
export
(days)
Cost to export
(US$ per
container)
Documents
to import
(number)
Time to
import
(days)
Cost to import
(US$ per
container)
170
11
34
12
39
2.895
Mauritius
17
10
675
710
Rwanda
164
26
3.245
27
4.990
42
16
705
17
675
South Sudan
187
10
55
5.335
12
130
9.285
Sudan
162
32
2.630
46
3.400
Swaziland
127
17
1.980
23
2.245
Uganda
161
28
2.800
10
31
3.375
Zambia
177
51
5.165
53
7.060
Zimbabwe
180
53
4.265
71
6.160
OECD high income
10
1.080
1.100
East Asia & Pacific

Latin America &
Caribbean
Middle East & North
Africa
20
864
21
895
16
1.299
18
1.691
19
1.166
23
1.307
Europe & Central Asia
23
2.154
25
2.435
South Asia
33
1.922
34
2.117
Sub-Saharan Africa
30
2.200
37
2.930
Seychelles
Source: Source: ALG based on Doing Business Index data. World Bank Group
The Doing Business Trading Across Borders Index is one of the sub-indices of the Ease of Doing Business
Index developed by the World Bank Group. The number of documents, cost and time necessary to export and
import are used to calculate it.
Ethiopia comes in very low in the global ranking, 169th out of 189, although the regional group to which it
belongs encompasses many of the worlds lowest-ranking countries.
Ethiopia fares very poorly in terms of the number of days to import and export, longer even than the average
for Sub-Saharan Africa (the region of the world with the worst scores). The cost of importing and exporting is
close to the average for Sub-Saharan Africa and it is one of the regions land-locked countries with the lowest
prices.
Table 29: Logistics Performance Index (LPI) evolution in COMESA and IGAD members
Country
Burundi
Overall
Overall LPI
LPI rank
rank 2010
2007
113
Overall
LPI rank
2012
Overall LPI
rank 2014
155
146
107
120
85
143
159
145
126
154
154
97
92
57
62
Eritrea
124
154
147
156
Ethiopia
Kenya
104
76
123
99
141
122
104
74
Comoros
85
Congo, Dem. Rep.

Djibouti
Egypt, Arab Rep.
Libya

128
137
155
Overall
Overall LPI
LPI rank
rank 2010
2007
120
88
Country
Madagascar
Malawi
Overall
Overall LPI
LPI rank
rank 2014
2012
84
132
73
73
Mauritius
132
91
82
72
115
Rwanda
148
127
151
139
80
148
160
153
Somalia
Sudan
64
155
146
Uganda
83
66
Zambia
100
138
Zimbabwe
114
123
103
137
Source: Source: ALG based on LPI Dataset, World Bank
The Logistics Performance Index is the weighted average of the country scores on the following six key
dimensions: efficiency of the clearance process (i.e. speed, simplicity and predictability of formalities) by border
control agencies, including customs; quality of trade and transport-related infrastructure (e.g. ports, railroads,
roads, information technology); ease of arranging competitively priced shipments; competence and quality of
logistics services (e.g., transport operators, customs brokers); ability to track and trace consignments;
timeliness of shipments in reaching destination within the scheduled or expected delivery time. This measure
indicates the relative ease and efficiency with which products can be moved into and around a country.
The study looked at 160 countries. Ethiopia came in 104th in 2014 which was an improvement over 2012 when
it ranked number 141.
Ethiopia is in the regional average for most of the indicators analysed, but this is lower than the African average
except for timeliness, where it meets the national average. All of this indicates the performance deficiency of
its logistics.
Figure 102: LPI key dimensions 2014

Customs
Infrastructure
5
1,89
2,54
1,87
2,5
2,25
2,79
2,06
1,96
1,9
2,42
2,85
2,2
1,78
2,6
2,25
1,9
2,31
1,5
2,5
2,32
3,04
2,15
2,4
2,17
1,68
2,86
2,3
1,83
2,4
Africa 2,73
2,58
Africa 2,77
Timeliness
International shipments
Africa 3,25

2,25
2,13
1,75
2,78
2,63
2,63
2,38
3,15
2,5
1,9
2,87
1,8
1,7
2,6
Africa 2,86
2,51
2,93
2,91
2,33
1,88
3,34
2,88
2,99
3,07
3,58
3,17
2,79
2,99
2,74
2,04
2,37
2,76
2,23
156
Logistics quality and competence
Tracking and tracing
5
4
2,42
1,75
2,94
2,34
2,63
2,29
3,03
2,67
2,01
3,23
2,1
2,37
2,5
2,47
2,18
1,75
2,64
2,48
2,86
2,33
2,65
2,62
2,23
2,99
2,21
1,84
2,26
2,51
Africa 2,90
2,51
2,22
Africa 2,85
2,47
Average Africa
Average COMESA + IGAD
Source: Source: ALG based on LPI Dataset, World Bank
The Global Competitiveness Report (GCR) assesses the competitiveness landscape of 144 economies,
providing insight into the drivers of their productivity and prosperity. The different aspects of competitiveness
are captured in 12 pillars which compose the Global Competitiveness Index.
Table 30: Global Competitiveness Index. Global Rank evolution
Country
Burundi
20072008
20082009
20092010
20102011
20112012
20122013
20132014
Egypt
130
77
132
81
133
70
137
81
140
94
144
107
146
118
Ethiopia
Kenya
123
99
121
93
118
98
119
106
106
102
121
106
127
96
Madagascar
118
125
121
124
130
130
132
Malawi
Mauritania
Mauritius
119
119
125
117
129
136
125
131
127
135
137
134
141
60
57
57
55
54
54
45
80
70
63
66
76
80
Rwanda
Seychelles
Swaziland
126
134
135
124
129
Uganda
120
128
108
118
121
123
Zambia
122
112
112
115
113
102
93
Zimbabwe
129
133
132
136
132
132
131
Source: ALG based on GCI data platform, World Economic Forum
The twelve pillars of competitiveness are: 1. Institutions 2. Appropriate infrastructure 3. A stable

macroeconomic framework 4. Good health care and primary education 5. Higher education and training 6.
Efficient goods markets 7. Efficient labour markets 8. Developed financial markets 9. The ability to harness the
benefits of existing technologies 10. Market size, both domestic and international 11. Producing new and
different goods using the most sophisticated production processes 12. Innovation.
Ethiopia currently ranks 127th out of the 144 countries analysed, its worst outcome in the last seven years,
which means a step backwards in its global competitiveness.
Some of the elements considered in assessing the countries transport infrastructure are shown in the figures
below.

157
Figure 103: Quality of infrastructures Index. GCI

Transport infrastructure
Quality of roads
6
5
4
3,28
3,37
3,04
4,87
4,32
4,78
4,55
3,32
2,61
2,5
Africa 3,39
4,1
2,86
2,9
2,68
3,69
3,96
3,63
4,15
2,61
2,68
2,38
3,58
Quality of railroads
Quality of air transport
Africa 2,28
3,32
3,54
3,58
3,97
4,85
4,26
5,01
2,88
3,63
2,93
4,68
5,35
4,79
2,27
2,11
1,53
3,7
1,94
2,01
2,53
1,49
2,73
Africa 3,77
2,66
3,18
3,42
2,41
4,07
Africa 3,03
2,74
3,03
Average Africa
Average COMESA + IGAD
Source: ALG based on GCI data platform, World Economic Forum
Ethiopia is in line with the regional average for the general quality of its transport infrastructure. According to
these data, Ethiopia surpasses the regional average and the African average for air transport quality and
stands out as the regional leader in this area and in the quality of its highways as a result of the heavy
investments made in recent years. However, its rail infrastructure is clearly deficient and falls below the
regional and African averages.
5.2.5
Diagnosis of Ethiopias Regional Integration. Major Gaps
5.2.5.1 Ethiopias regional integration strengths
While land-locked, the country is strategically located in the Horn of Africa and is one of the largest on the
continent. It possesses large tracts of productive land with access to watermaking its transformation into
a regional food basket a real possibility.
Ethiopia also stands to gain from exploiting its regional comparative advantage in the production of
hydroelectric power. Ethiopia -the green energy tower of Africa- is now involved in a multi-billion dollar
climate-resilient green energy sector development which will lead to it becoming one of the main producers
and exporters of power in Africa.
It is already implementing an energy trading strategy among the Horn
Ethiopia is involved in many regional rail/road infrastructure projects.
Regional trade is growing, imports and exports are balanced and there is significant potential for growth
since these are developing countries with the potential to develop new sectors and in the process create
new market opportunities.

158
Ethiopia is exporting manufactured goods to countries in the region which is providing opportunities to its
industrial sector.
Although import volumes are small, some of the products namely oil and fertilisers are essential.
There are two regional transport corridors that traverse the country.
Addis Ababa has become a regional air transport hub due to rapid expansion of the national airline. This
offers opportunities for exporting high value horticultural products and tourism, as well as expanding trade
and investments links.
The RECs in general and COMESA in particular play an important role in the development of the corridors
from the perspective of the implementation of measures to facilitate trade, something which is provided for
in their FTAs.
The Governments recent emphasis on linking its infrastructure regionally, often with bank financing, is a
reflection of its keener interest in regional economic integration.
5.2.5.2 Ethiopias regional integration weaknesses
While Ethiopias exports have grown in recent years, trade volumes are still low relative to the size of the
economy.
Ethiopias integration to regional and global markets is limited. The volume of trade between Ethiopia and
other COMESA member states is small.
The constraints for trade expansion include high trade costs due to weak infrastructure links, poor transport
logistics and weak trade facilitation.
The past five years have seen an increase in the proportion of paved sections but the regional corridors
now are characterised by long transit times and high costs.
Logistics services and surface transportation costs are higher than in any other region in the world, mostly
attributable to administrative and customs delays at ports and hold-ups at check-points and national
borders. Ethiopia, as a landlocked country, suffers most from the consequences.
Slow progress in implementing trade liberalisation commitments.
Despite attempts to foster exports of manufactured goods, there is too much export of agricultural products
due to the interests of foreign investors.
Imports of capital goods which continue despite the governments efforts to promote domestic industry.
Implementation of infrastructure is always complex and even more so in the case of regional projects
with many stakeholders.
In addition, continental and regional organisations generally lack the capacity to borrow.
Too many planning documents from different regional and continental organisations.
Although the work done by RECs provides the framework for the development and investment in the
transport sector, it is the responsibility of each country to manage the implementation, including funding,
contracting, supervision and maintenance. There is a very high degree of dependence on outside funding.
The donors have had an important, if indirect, influence on the condition and future development of
corridors.
IGADs limited ability to manage infrastructure development.
All RECs have the mandate to improve trade facilitation and regional transport efficiency, but they have
very limited resources to assist Member States in implementing the agreed policies.

159
5.3
Recommendations to enhance the regional integration strategy
East Africa occupies one of the lowest positions in the world in terms of the leading indicators of the logistics
performance index and this is true of Ethiopia.
Regional Integration is a priority for the economic development of the African continent and this has been
established in all of the documents analysed.
As we have seen, regional integration is closely linked to infrastructure development and to facilitating regional
trade in order to reduce transit costs and improve competitiveness.
The link between infrastructure and economic growth has led to the development of the concept of transport
corridors. International freight corridors and the air transport systems are the gateways to Africa and the crucial
links between countries within the continent. The performance of these gateways determines the efficiency of
the international supply chains that use them and the cost of goods in Africa 37. Moreover, the Smart Corridors
concept as freight tracking systems with integrated border management, single windows and tracking of trucks
and drivers.
A commitment to regional integration must also address economic integration in the RECs, which must
necessarily move toward the development of a common framework for customs processing, trade
development, etc.
Within this context, Ethiopia must enhance the countrys regional integration strategy by focusing on two
priority measures:
Integration of the countrys transport system through the development of transport corridors
Commercial integration within its RECs.
The targets to be achieved in the first case would be:
Cost Reductions
Service Improvements
Facilitation Actions
These targets would apply to all modes of transport operating in the corridors: road, rail, air, sea (even though
Ethiopia is a landlocked country).
The second element is beyond the scope of this work but should focus on greater industrial diversification
based on competition, fostering differentiation and establishing an equitable framework for all member
countries of the REC.
The strategic objective to be pursued is, therefore, to effectively address constraints related to the improvement
of infrastructure and services in the region in order to reduce the cost of doing business and also to enhance
competitiveness through fostering physical regional connectivity and deepening infrastructure integration.
These targets will require closer relations with the RECs (COMESA and IGAD), although it will also be
necessary to redefine their responsibilities and management capabilities. Although African regional institutions
are facilitating this integration, the system is beginning to display a lack of real capacity to act from both a
financing and project management point of view.
In order to achieve these objectives, actions must be taken at the institutional level and the Ethiopian
government must implement policies designed to achieve greater regional integration by:
Enhancing the coordination between RECs and the countrys political and technical leaders;
Incorporating the corridor concept into transport policies;
Prioritising regional corridors;
Creating an effective transhipment network
Fostering the development of related soft elements
37
Africa Transport Sector Outlook 2040. PIDA

160
Aligning them with national and regional transport policy priorities
Designing mechanisms to mainstream and measure informal trade within regional integration.
Creating trained management teams: capacity-building

161
PART B. Transport Strategy

162
6 Diagnosis of the Transport Sector

Following the review and analysis of the economic situation, the transport system status, the policy and
institutional regimes, and the financing situation of the transport sector, this current chapter contains a
synthesis of the main needs identified and recommends directions that policy has to follow in order to address
these needs fruitfully in the coming years.
The chapter is divided into three subsections. The first of these presents the functional structure of the territory
in order to graphically summarise the economic relationships among the different nodes of the country,
identifying the major transport corridors that serve them.
The second subsection provides a summary of general transport needs identified, based on the previous
analyses. Finally, the third subsection gives a detailed diagnosis of all corridors.
6.1
Transport corridors and regional transport markets
The set of analyses conducted so far have identified the main economic relations among different parts of the
territory, the transport demand they generate, and how they are served by transport infrastructure and services.
In this section, the main logistics and transport relationships, the regional transport markets and, finally, the
main corridors are described in a summary which is then subsequently used to refine the diagnosis and
propose an integrated and multi-modal strategy.
Logistic relations and regional transport markets
Based on analyses of demography, production, trade, and transport services and infrastructure, the territorial
structure of Ethiopia has been identified in order to simplify the knowledge built up. The analysis of these areas
has made it possible to learn about the main functions of each of the country's regions and cities, and
particularly relevant to the projectto understand the importance of each of these for the development of
transport and logistics activity, as shown in the following figure:
Figure 104: Logistic nodes, regional transport markets and main transport relations in Ethiopia
Key
Humera
Axum
Adigrat
Main city
Adwa
Shire
Main logistic node

Mekele
Secondary logistic node
Metema
Consolidated transport relation

Regional Markets
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Kurmuk
Dewele
Assosa
Debre
Birhan
Debre
Markos
Nekemte
Ambo
Dire Dawa
Addis Ababa
Jig-Jiga
Harari
Awash
Metu
Weliso
Gambela
Hossana
Adama
Ziway
Jimma
Dhaga-Bur
Asela
Shashemene
Robe
Hawassa
Sodo
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG

163
The map above shows the major cities, logistics nodes and secondary logistics 38nodes in the country. For
demographic and economic reasons, the country's capital, Addis Ababa, is Ethiopia's main logistics hub. Addis
Ababa and its immediate area serve as a redistribution centre at domestic level, for both local production and
foreign trade. The towns of Debre Zeit, Modjo and Adama, within the capital's area of influence, also have a
great logistical importance, and together with the capital form a large regional transport market or logistics
region39.
At a second level, Ethiopia has a series of medium-size cities that act as redistributors in the region and that
also concentrate significant transport and logistics activity. These towns are located 400 to 800 km from Addis:
Mekele, Gondar-Bahar Dar, Jimma, Hawassa- Sheshemene and Dire Dawa-Harar. Of these cities, the ones
that are linked together with a hyphen correponsd to cities that are very close to each other geographically
and that act as a regional transport market due to their economic importance and commercial
interrelationships.
Third in importance are those medium-sized cities that are more distant and that also act as logistics nodes
but with a more limited scope. These nodes are Adigrat, the cities of Kombolcha and Dessie, Arba Minch and
Yebelo. There are also other important nodes such as: Adwa, Aksum and Shire in the north, Weldiya and
Debre Markos in the central area, Nekempte and Gambela in the west, Sodo, Sawla, Konso, Omorate, Robe
and Butajira in the south, and Jig-jiga in the east.
The map also marks the key interrelationships between the aforementioned, using blue lines. It can be seen
that Addis Ababa is a powerful centre for national redistribution. The interrelationships are mostly radial with
their origin in Addis, and with few cross-connections. This scheme of relationships highlights the country's
radial economic corridors, which are quite isolated from each other despite their economic weight. This
situation is possibly caused by the fact that the main infrastructure network also favours this radial scheme, as
the transversal connections between secondary cities have poorer infrastructure quality.
The direct relationships with Addis Ababa terminate with a second level of primary logistics nodes, and each
of these in turn articulates the relationship pattern with its region, as can be observed in the figure.
One of the few important transversal relations at present is that which links Mekele and the Gondar-Bahir Dar
node. These two regional transport markets have a relatively consolidated relationship.
The most important regional transport markets are the ones that serve the aforementioned logistics nodes.
Apart from the above, however, there are also a series of important markets with high growth potential. The
most important of these, due to its logistical importance, is located between the cities of Kombolcha - Dessie
- Weldiya and Mille. The second one is in the south between Arba Minch and Konso.
Due to the importance of agricultural activity in the country, these regional transport markets have influence
and an importance as consolidation centres for areas beyond the their own geographical markets. The figure
below shows the influence of these markets and the main nodes, by depicting the limits of the regional logistic
areas. As well, Addis Ababa's direct area of influence is marked by a green shaded area.
A broken red line marks the boundary of the irregular freight traffic, according to the findings of the market
study. This area of influence includes all of the Somali Region, southern Oromiya and the south-east of the
SNNP.
38
A logistics node is a City or area that concentrates significant transportation and logistics, as well as local, regional or national
redistribution activities
39
The regional transport markets are those areas of the territory that include several important logistics nodes, and which also have very
intense economic and logistical interrelationships. These areas or regions make up a single transport market capable of generating many
synergies and interrelations

164
Figure 105: Regional logistic areas

Key
Humera
Axum
Adigrat
Main city
Adwa
Shire
Main logistic node

Mekele
Metema

Regional Markets
Gonder
Semera
Debre Tabor
Weldiya
Regional logistic areas

Galafi
Addis direct influence area

Northern bundary of irregular traffic
Bahir Dar
Kombolcha
Kurmuk
Dewele
Assosa
Debre
Birhan
Debre
Markos
Nekemte
Ambo
Dire Dawa
Addis Ababa
Jig-Jiga
Harari
Awash
Metu
Weliso
Gambela
Hossana
Adama
Ziway
Jimma
Dhaga-Bur
Asela
Shashemene
Robe
Hawassa
Sodo
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
International and domestic corridors

As mentioned, the landlocked situation of Ethiopia is an element of great influence, especially on the transport
sector. This situation requires the country to have international corridors connecting with neighbouring
countries in order to be able to maintain economic relations with both them and the rest of the world. The
country has well-established international transport corridors connecting with Djibouti, Sudan, Somalia, and
Kenya.
The corridors connecting the country with Djibouti are the most important in terms of the volume of goods
transported, both imports and exports. At present, the main corridor is the one that connects Addis Ababa and
its surroundings (Modjo, Adama) with Djibouti through Awash, Semera and the Galafi border. This international
corridor also has alternative routes to the industrial areas of Dessie and Mekele-Kombolcha.
The second corridor or sub-corridor connecting to Djibouti passes through the border crossing of Dewele, but
only serves the regional transport market of Dire Dawa and Harar. This corridor does not serve Addis at
present, due to the high transport costs of operating on unpaved road sections.
Furthermore, the corridors connecting Sudan are exclusively used for the export activities of agricultural
sectors in the north, particularly in the vicinity of the city of Gondar. These corridors are also outside the reach
of the city of Addis as it is unprofitable to import or export through Port Sudan if the source of the cargo is the
south or centre of the country.
The connection with Somalia is mainly towards Somaliland, through the border crossing at Togowechele. The
corridor serves exports being carried to the east of the country, as well as some imports coming from Port of
Berbera, but the connection with Addis is very limited.

165
The country only has one single corridor connecting with Kenya at present, through Moyale, which is mainly
used for exports (registered), although it does carry some imports. This corridor is still only of minor use with
respect to official trade.
Finally, with the north of Southern Sudan there is only a single connection, through Gambela, although its
importance in terms of trade is still very limited, and thus it can be considered as a corridor yet to be
established.
Figure 106: Current international corridors (only dominant flows are shown)
Axum
Humera
Shire
Adigrat
Adwa
Import corridors
Mekele
Export corridors
Metema
Gonder
Semera
Debre Tabor
Galafi
Weldiya
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Ziway
Hossana
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
Besides the aforementioned corridors that allow the transport flow of registered and official trade goods, there
are also corridors for irregular trade, mostly imports. The existence of import tariffs generates an irregular traffic
which seeks to avoid taxes and uses alternatives to the major routes in order to enter the country. The following
maps show the international corridors and the main irregular trade corridors.
According to the research carried out, the irregular trade occurs especially with Kenya through the Moyale and
Omorate corridors, and with Somalia through the whole of the Somali Region. Because this traffic is irregular
and cannot be identified, the goods are redistributed in the first major cities to the south, and are redistributed
to the north via the internal distribution routes that reach Hawasa and Addis Ababa, as shown in the following
map.

166
Figure 107: Current non-regular international routes
Axum
Humera
Shire
Adigrat
Adwa
Main routes
Mekele
Metema
Internal distribution routes

Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
Finally, also linked to international trade, potential future corridors have been identified whose development
will depend on political relations with neighbouring countries, the stability of those countries, and the
commitments made to infrastructure development.
Among the most notable are the extensions of the already established corridors connecting Djibouti and
Somalia to the area of Addis Ababa, as well as new connections with Kenya and South Sudan through Omorate
and Dima. The potential of the corridors to South Sudan through Dima or Omorate (via Kenya) will depend on
the political and economic improvement of that country.

167
Figure 108: Potential international corridors
Axum
Humera
Shire
Adigrat
Adwa
Mekele
Potential corridors
Metema
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Ziway
Hossana
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
At national level, the current transport corridors have a radial structure originating in Addis Ababa determined
by the main logistics relationships. The city acts as a national clearing house due to its concentration of
population and productive activity.
The corridors for national distribution thus connect Addis with the major cities located at between 400 and
1000 km distance in all directions. These cities are Meleke in the north, Gondar Dar and Bahir in the northwest, Dire Dawa in the east, the Sheshemene - Hawassa node in the south, Jimma in the south-west and
Nekempte in the west. These cities act as redistributor centres and from them secondary corridors branch off
towards the regions farthest from the capital as already mentioned, and this is reflected in the corridor structure.
There is currently no established circular or transversal corridor linking the major cities on the second ring of
Addis Ababa.

168
Figure 109: Domestic corridors
Axum
Humera
Shire
Adigrat
Adwa
Main domestic distribution routes
Mekele
Metema
Secondary distribution
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
Definition of Ethiopian transport and logistics corridors

Based on the functional map and the synthesis of corridors presented, a grouping of the main national and
international corridors has been made as a basis for the diagnosis and definition of actions in the following
sections.
Six corridors that include all major national and international relationships have been defined. Based on the
economic and transport demand structures, these corridors are:
Central Eastern Corridor: includes the international corridors from Addis to Djibouti and the national
connection corridor between the regional markets of Addis and Dire Dawa. It also includes the international
connection of this last-named regional market to Djibouti:
Southern Corridor: Group of powerful domestic subcorridors from Addis to the entire southern area of
Oromia and the south eastern area SNNP. It is one of the most powerful domestic corridors due to the
economic relationships between Addis and this highly productive part of the country. It also includes the
international connection with Kenya as well as the unofficial trade routes with that country.
Central Western Corridor: a mainly domestic corridor connecting with the western part of the country:
Jimma, Nekempte and Gambela, plus the international connection to South Sudan.
North-western Corridor: includes one of the main national corridors between the capital and the regional
market of Bahar Dar and Gondar, as well as connecting with the international corridors that go from Gondar
to Sudan.

169
Northern Corridor: connecting Addis Ababa to Mekele, and Mekele with the Gondar area. Purely national
corridor, since no international corridors exist with Eritrea. The last segment of the corridor connects to
Shire passing through Adigrat and Adwa.
North-Eastern Corridor: international corridor connecting the markets of Mekele and Dessie-Kombolcha
with Djibouti via the Galafi border crossing.
The map below depicts all the corridors described:

Figure 110: Transport and logistics corridors identification
Axum
Humera
Shire
Adigrat
Adwa
Mekele
Metema
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Jimma
Asela
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Southern Corridor
North-western Corridor
Konso
Omorate
Negele
Northern Corridor
Yebelo
North-eastern Corridor
Dolo Odo
Moyale
Source: ALG

170
6.2
General transport needs and gaps
From the analyses conducted in the previous chapters, the basic characteristics of the country and its transport
system, as well as existing needs and gaps have been identified.The following is a summary of the most
relevant general aspects and a recommendation for the orientation that the transport sector should follow, with
the aim of improving the current situation:
Issue identified
Solution/ policy recommendation
Large number of inhabitants but a large part of

the population is rural and dispersed
Strengthen regional markets as centres of

aggregation
Limited purchasing power which pressures on

transport / logistics costs
Cost transparency. Promotion of long-term

contracts
Fragmented agricultural production, small

producers without commercialisation capabilities
Need to concentrate production
Limited industrial production, high dependence on

external suppliers
Prioritise the connectivity of the planned new

industrial developments
Low contribution of transport sector to social

inclusion and poverty reduction
Development of training programmes for

transporters
Significant gaps in road network' ability to cover

the growing demand
Structuring of the country into strategic

corridors with multi-modal potential
Road safety and truck overloading on major roads
Solution at critical points. Increased technical

checks on vehicles.
Very fragmented and untrained domestic

operators
Financial and training support for small

operators
Old domestic fleet. Serious safety risks
Need to introduce standards for the domestic

and multi-modal fleet
Landlocked country. Currently very dependent on

a single external port.
Need for other port alternatives. Strategic risk
Customs, trade and infrastructure limitations on

relationships with neighbouring countries
Greater openness to trade through

agreements and improved connection
infrastructures
Limitations to private sector participation in import

traffic and investment in infrastructure
Greater openness of the multi-modal

business to the private sector and to
investment in logistics and transport
infrastructures
Over-regulation of the transport and logistics

business inhibiting the creation of competitive
private groups.
Reduced regulation. Stimulus of Ethiopian

companies to invest abroad
Lack of infrastructure specialised in logistics and

transport (only dry ports and ECX)
Specialisation of new infrastructure

depending on demand
Costly and inefficient operations / Quality is not an

issue
Awareness raising and control of quality of

service. Use of ICT
Transport system heavily dependent on road
Promotion of alternative modes based on

demand

171
Issue identified
Solution/ policy recommendation
Return not expected on infrastructure

investments. Not enough maintenance carried
out.
Search for local or concession solutions to

ensure maintenance
Complex institutional structure, with competence

and capacity difficulties
Training, simplification and transparency
Infrastructure financing not sustainable over time.

High investment and debt costs
Improvement of contracting processes

Diversification of competitive financing
sources.
Little concern for the infrastructure environmental

impact
Greater control of construction contracts.

Improvement of administrative regulation.
The above mentioned elements can be summarised in the following needs that will guide the definition of
policies and proposed actions:
Need to increase the concentration of production and consumption in order to reduce transport costs
through support specialised infrastructure.
Strengthening of the strategic corridors and diversification of the port options. Promotion of multimodality
based on demand
Strengthening of regional nodes and their connectivity
Solution of the capacity gaps and accident black spots
Strengthening of operators' service capacity. Openness of the international service market and support for
the training and upgrading of the fleet
Re-focusing of the institutional capabilities to provide support to the private sector. Greater transparency
Increased presence in neighbouring markets, operational and trade agreements and greater connectivity
Financial, social and environmental sustainability

172
6.3
Gaps by corridor
In addition to the general needs / gaps, we have also identified certain needs or gaps associated with the
transport network that should be taken into account for the implementation of the action plan accompanying
the strategy. In order to structure the description of these and due to the functioning of the country by corridors,
we present the gaps identified for each of the corridors introduced in Figure 110: (1) Central Eastern Corridor,
(2) Southern Corridor, (3) Central Western Corridor, (4) North-western Corridor, (5) Northern Corridor and (6)
North-Eastern Corridor.
For each of the corridors mentioned, there is a close up map showing the main identified gaps during the
diagnosis process.
6.3.1
In the Central Eastern Corridor, several gaps to be considered in the preparation of the strategy/action plan
have been identified:
Road improvements are required in the main corridor connecting with Djibouti. In the section from Adama
until Awash, traffic will exceed capacity within the project's horizon
It is necessary to reduce costs in the corridor connecting with Djibouti through the reinforcement of the
shortest connection corridor with Djibouti: via Awash, Erer, Dire Dawa and Dewele. The unpaved sections
of this route must be upgraded.
Transversal connections by-passing Addis Ababa are required so as to strengthen and facilitate economic
relations between other centres.
The regional transport market of Dire Dawa Harar Jijiga has important economic potential and its
development and integration with other production areas of the country must be enhanced (northern zone,
Kombolcha, Mekele)
The country must be provided with connections to alternative ports. The Mekele Dire Dawa Jijiga
connection can be also used as an international corridor to Berbera Port
The following map shows the needs mentioned in graphic terms. Also, coloured nuts are used on the map to
show major economic hubs, to facilitate understanding of the identified connections.
Figure 111: Central Eastern Corridor Gaps
Opportunities for an
economic development
pole in Afar region
Northern corridor to
be maintained
Agricultural centre
Wereta
Djibouti ports
Semera
Semera
Industrial centre
Asayta
Bahir Dar
Commercial centre
Logistic centre
Strategic crossroads
Necessity to by-pass
Addis metropolitan area
to connect with other
main cities
International corridor
to promote
Faster road alignment
is needed to improve
connectivity
New railway line

to be operated in
2016
Future SEZ
Dire Dawa
Road section with

high density of traffic.
A double
carriageway
Debre Birhan
is required
Graved road section

to be improved
Dry Port
Addis Ababa
Dandago
Burayu
Holeta
Harari
Jij-jiga
Chiro
Sebeta
Bishoftu
Modjo
Dry Port
Adama
Dire Dawa / Harar / Jijiga
Meki
Ziway
Asela
Alternative road to
main corridor
Strong regional center, with

industrial and commercial
opportunities to boost.
Source: ALG

173
6.3.2
Southern Corridor
In the Southern Corridor, the specific gaps and needs identified are:
The development of the southern corridor to Moyale must be promoted in order to improve the international
connection with Kenya.
Also, the main volumes and the economic importance of the corridor allow the development of alternative
corridors through Butajira - Holeta - Sodo - Arba Minch - Konso and to Omorate to generate a new
international connection with Kenya and South Sudan
It is necessary to increase the transversal relationships among medium-sized cities without passing
through Addis Improving connections with other corridors is essential to integrate the transport network
and improve the cohesion of the country. This will also enable the development of medium-sized hubs, by
reducing social problems in Addis Ababa caused by immigration.
The regional transport market of Shashemene-Hawasa is identified as a major economic centre with
significant development potential. It is convenient to consolidate its development and enhance it.
The issues mentioned are shown in the map below, as well as other additional aspects.
Figure 112: Southern Corridor Gaps
Addis Ababa
Agricultural centre
Modjo
Dry Port
Nekemte
Alternative road to
main corridor
Industrial centre
Commercial centre
Logistic centre
to connect with other
main cities
Ambo
Butajira
Jima
Increasing
relations
between Shashemene /
Bonga
Hawassa and Jimma
/
Nekepte regions require a
shorter connection .
Asela
Alternative road to
main corridor
Ziway
Hosaina
Shashemene
Dodola
Hawassa
Robe
Sodo
Dila
Local accessibility
should improve.
Shashemene / Hawassa
Sawla
Emergent regional center,

with industrial and commercial
Arba
Minch
Jinka
Negele
to promote
Opportunities for a
new development pole
Konso
Yebelo
Turi
New international
corridor to develop
Moyale
Source: ALG

174
6.3.3
In the Central Western Corridor, the specific needs are:
As in the above cases, it is necessary to improve the transversal connections of this corridor with adjoining
corridors, particularly between the cities of Shashemene / Hawasa - Sodo - Jimma - Nekempte - Gondar /
Bahar Dar.
The zone of the Western corridor has an important potential for economic development, so that some of
its current transport markets such as the Jimma show a significant developement potential.
Opening a direct connection corridor with South Sudan through Dima could represent a strategic
opportunity for Ethiopia in order to leverage the economic development of the neighbouring country. The
connection through Dima would also improve the special accessibility to an area of the country which is
now quite remote, reducing transport costs and facilitating access to local production markets
In the accesses of the corridor to Addis. road capacity must be increased in order to guarantee the flow of
increased traffic and to encourage the development of this area of the country.
The map below shows the needs above as well as other additional ones:
Figure 113: Central Western Corridor Gaps
Increasing relations with
Gondar / Bahar Dar require a
shorter connection
More road capacity required

to improve accessibility to
Addis markets
Agricultural centre
Debre Markos
Asosa
Industrial centre
Addis Ababa
Gimbi
Nekemte
Commercial centre
Ambo
Addis Ababa
Logistic centre
Dembi Dolo
Welkite
Metu
Butajira
Agaro
Gambela
Ziway
Hosaina
to promote
Tepi
Bonga
Shashemene
Jimma
Dima
Dodola
Sawla
Jimma / Nekepte
Emergent
center
Hawassa
Sodo
Mizan Teferi
Robe
to Goba
connect with other
main cities
regional
Arba Minch
Increasing
relations
with
Adola
Shashemene/Hawassa require
Shakiso
a shorter connection
Hagere
Mariyam
Negele
A new border post

required
Source: ALG

175
6.3.4
North-Western Corridor
In relation to the North-Western Corridor the following needs have been identified:
The potential for development of the important regional transport market of Bahir Dar - Gondar requires
better local accessibility and alternative connections between the centres. The productive importance of
the area must be enhanced
The Gondar / Bahar Dar node has two corridors with options for development and consolidation: the
corridor to Djibouti through Weldiya-Mille-Galafi, and the corridor to Sudan from Bahir Dar
The transversal connections (or circular, bypassing Addis) in the country are also very important. The
connection with Nekempte on the South-Western Corridor and especially Mekele must be improved. The
productive nodes of Mekele and Bahir Dar-Gondar already have significant economic relations, but have
potential to become important. The connection between the two cities is still too long in relation to the
actual distance that separates them.
Figure 114: North-Western Corridor Gaps
Adigrat
Axum
Humera
Shire
Agricultural centre
Adwa
Wukero
Relations with Mekele

require
a
shorter
connection
Mekele
Industrial centre
Debark
Gonder
Metema
Maichew
Commercial centre
to promote
Alamata
Alternative road
Logistic centre
pole in North Tigray
Bahir Dar
to promote
Wereta
Weldiya
Debre
Tabor
Dangla
Mota
Chagni
A new border post

required
Bure
Debre
Markos
Asosa
Dejen
Opportunities
for an stronger
Dese
relationship between
Gondar
Kombolch
an Bahar Dar require higher
accessibility.
Gebre Guracha
Nekemte
Addis Ababa
Increasing relations with

Jimma /Dembi
NekemteMetu and
Dolo
Southern regions require a
shorter connection
Welkite
Addis Ababa
Necessity to by-pass Addis

metropolitan area to connect
with other main cities
Source: ALG

176
6.3.5
Northern Corridor
The main specific aspects of the northern corridor are:
The regional transport market in Mekele and the north of Tigray is very strong, and should be
strengthened. Improving rural accessibility and connectivity between the major nodes is necessary in
order to strengthen the market.
Relations with Weldiya and the Dessie/Kombolcha regional transport market should also be enhanced
through improved infrastructure.
The practical impossibility of providing a quick exit for exports to the north of the country through Eritrea
makes it advisable to strengthen the corridor to Sudan and Port Sudan through Humera. This corridor
would also favour further development of the Shire-Axum-Adwa-Addigrat axis.
The map below shows the above aspects and the links with the neighbouring corridors:
Figure 115: Northern Corridor Gaps
to promote
Adwa
Humera
Shire
Mekele
Adigrat
Axum
Main regional distribution

center. Local accessibility
should improve.
Wukero
Agricultural centre
Debark
Metema
Industrial centre
Relations between Mekele

and Lake Tana follow a long
path. A shorter connection is
required.
Mekele
Maichew
Opportunities for an stronger

relationship require higher
accessibility
Alamata
Commercial centre
Wereta
Weldiya
Bahir Dar
Logistic centre
Debre
Tabor
Dangla
Dessie
Dese
Kombolcha
Alternative road to main corridor
Dessie/Kombalcha
Debre
Markos
Gebre Guracha
Debre
Birhan

Addis Ababa
Nekemte
Welkite
Necessity to by-pass Addis

metropolitan area to connect
with other main cities
Source: ALG

177
6.3.6
North-Eastern Corridor
Finally, in connection with the North-Eastern Corridor, connecting Mekele-Kombocha

following needs have been identified:
with Djibouti, the
This corridor, and its extensions to neighbouring corridors could make possible improved relations
between key productive centres of the country that are located far from the city of Addis Ababa. For that
reason, there is great importance in the connections between the regional transport markets of Mekele,
Dessie/Kombolcha, Bahir Dar/Gondar and Dire Dawa-Harar-Jijiga.
The map below summarises these aspects:

Figure 116: North-Eastern Corridor Gaps
Axum
Bahar Dar / Gondar
Agricultural centre

opportunities to boost
Industrial centre
Mekele
Adigrat
Adwa
Main regional distribution center.

Local accessibility should improve
Wukero
Mekele
pole in Afar region
Debark
Commercial centre
Maichew
Gonder
Logistic centre
Sekota
Djibouti ports
Weldiya
Wereta
Semera
Dry Port
Debre Tabor
Bahir Dar
Desie
Mota
Kombolch
Dessie/Kombalcha
Dire Dawa

opportunities to boost
Ambo
to promote
Dire Dawa / Harar / Jijiga

Addis Ababa
Strong regional center, with industrial

and commercial opportunities to boost
Harari
Jijiga
Source: ALG

178
7 New Transport Strategy Ethiopia 2025

Once we have completed the analysis of Ethiopia's economic situation and the transport needs it generates,
as well as the study of the transport system itself in its multiple components (infrastructure, services,
institutional, financial, etc.), and the identification of the main existing needs, we will be ready to present the
New Transport Strategy for Ethiopia 2025. This strategy is conceived with the aim of addressing the problems
and gaps that affect the transport sector, taking into account Ethiopia's unique characteristics.
The strategy is presented through 4 sub-chapters:
7.1
What can transport and logistics do for Ethiopia?: This is an introduction to how the transport
sector can improve the country's competitiveness
Drivers of an efficient and competitive transport system: Identifies the elements which will
facilitate the development of a sector that is competitive and efficient in all its sub-systems, in contrast
with the current situation
Transport Strategy for Ethiopia 2025: Presents the sector strategy with a 2025 horizon. The strategy
consists of the vision, the strategies to follow, and the policies to develop those strategies.
Action Plan: Presents the elements necessary for the implementation of the strategy and the specific
actions recommended that will boost the development of the sector
What can transport and logistics do for Ethiopia?
The transport sector can contribute in various ways to the growth of the country's economy, increasing its
competitiveness and reducing poverty. Among the most important aspects, the transport sector can:
Improve competitiveness
of exports
Transport and Logistics can reduce the cost of imports and

exports, and can expand its services to third countries
Contribute to regional
development
Transport and Logistics attract investments, opens new opportunities

for connections, creates employment and avoids rural-urban
migration, increasing producers' margins
Create specialised
employment
Transport and Logistics create net, stable employment; job

specialisation favours employment stability
Reduce the cost to the

consumer
Transport and Logistics reduce distribution costs at national and

urban levels, and can favour the growth of locally specialised SMEs
Strengthen the country's

brand at international
level
Transport and Logistics could improve Ethiopia position as a

destination for investment, associated with the efficiency of its
production and services

179
7.2
Drivers for an efficient and competitive transport system
In order for the transport sector to maximize its contribution to growth and poverty reduction in Ethiopia, it is
required to be efficient: not just meeting the transport needs of the population through the infrastructure and
services available, but doing so in a way that is cost and time-efficient - keeping costs reasonable and avoiding
delays due to poor management of the system. The quality of the system is also a necessary objective linked
to efficiency and in particular can help with improving the system's competitiveness.
Taking into account the above elements and the current status of the transport system, several drivers that
should guide the strategy have been identified. All the drivers listed below would contribute to the creation of
a more effective and efficient transport system, and would allow the sector's contribution to national
development to be maximised:
Population and production concentrated in a limited number of urban areas (sufficient domestic demand)
Costumers purchase power that can internalize the costs of transport and logistics
Accessibility and connectivity provided by transport and logistic infrastructure
Reliable and efficient transport and logistic operations (on time logistics, competitive costs)
Sizeable and well organized transport companies with knowledge of logistic patterns
Institutional transparency and support
In addition, the Consultant believes that the strategy should be defined taking into account the following
strategic bases:
Should be focused on strategic multimodal corridors
Foster regional transport markets connectivity is a must
Freight consolidation through specialized infrastructures is needed
Incentives to transport sector growth, participation and competitiveness shall be provided
Needs to overpass inneficiencies and gaps
Institutional support is needed for: information / dissemination / transparency purposes
More productive and commercial integration with neighbor countries
Security for freight, security for people
Taking into account the above drivers and strategic bases, the following sub-chapter presents the strategy
prepared for Ethiopia.

180
7.3
Transport Strategy for Ethiopia 2025
The integrated transport sector strategy until 2025 is presented in the following subchapters. The strategy
consists of the following components:
Vision of the transport sector for 2025
Strategies to follow in order to achieve the vision by the target year. 6 strategies will be proposed
Main Policies to undertake in order to develop the above strategies
Actions and proposals to make the above the strategies and policies tangible, through the appropriate
implementation mechanisms. They will be explained in the Action Plan subchapter.
It should be noted that, in order to develop the strategy, an overview of supply and demand in multimodal
transport terms has been used, rather than an approach based on each mode individually. The inputs of all
transport modes have been taken into account (current demand, supply, future projects, etc.) and have served
to strategically understand the functioning of the transport sector as a whole, in order to propose a single
integrated strategy for the entire sector. This approach allows the particular features and characteristics of
each mode to be taken into account, as well as the synergies created between modes, or transfers of demand
from one mode to another 40. Based on this integrated strategy, each transport mode then develops specific
strategies through actions or sectorial policies (based on the contribution of each mode to the different
strategies).
To give one example before presenting the strategy, rail transport is a mode whose characteristics allow the
overland transport of very large freight volumes at a relatively low unitary cost compared to road. Rail fixed
costs are high (investment, equipment) but variable costs are very low per unit of freight. This means that for
very large freight volumes, unit costs may be lower than for road transport. However, precisely because of the
previous characteristic, the railway mode requires a high concentration of freight among specific origins and
destinations, or, in other words, a highly concentrated transport demand in certain corridors.
Besides, amongst all railway costs, loading and unloading costs have a major impact on the total cost. Due to
this, railway transport is particularly competitive for long distances (more than 400-500 km.), given that the
impact of loading and unloading is balanced by the lower transport cost per distance unit of the railway versus
road transport.
In short, rail is a very efficient mode of transportation for corridors with very high freight volumes and few points
of origin/destination that concentrate big volumes of cargo and are separated from each other by distances
between 400 and 1000 km. Therefore, this mode of transport can clearly serve to reduce transport costs along
specific routes with a very high demand (eg connecting Ethiopia with Djibouti), but it will not be useful to provide
general connectivity to the countryside or to areas with isolated rural populations.
The above example clearly shows how each strategy identified will require specific policies, some of which will
affect a single transport mode, while others affect several modes in an integrated way.
This approach makes it possible to generate an integrated, coherent and consistent multimodal strategy,
avoiding duplication between modes and unnecessary simultaneous investments in several modes.
40
It is important to note that the diagnosis and strategy have been developed without having a transport model that would allow a detailed
(and not strategic) analysis of the relationship between supply and demand. Therefore, we have constructed useful tools to assess the
supply and demand in each mode and the relationship between them has also been analysed strategically, in order to finally obtain a
single policy.

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7.3.1
Project vision 2025
The vision proposed for 2025 considers a transport sector accomplishing the following conditions:
To represent an engine for economic growth
To be greener and safer and improve the quality of life in our communities
To provide a multi-modal offer from which the users will be able to choose the most adequate option, in
terms of service and cost
To include specific local solutions allowing sustainable local transport choices, in the framework of
smaller-scale transport schemes encouraging growth and reducing local carbon emissions, while also
reducing road accidents.
In order to fulfill these conditions and move towards the creation of an efficient transport market, a unitary
vision and a common work strategy is deemed essential. The joint work by the public and private sectors must
include the definition of a common strategy, prioritisation of investments, joint funding and trade facilitation
agreements and business and institutional strengthening:
Policy vision
Effective trade agreements and real

opening of markets
Provision of infrastructure
Public
Institutional transparency
Sector
Simplification
procedures
Incentives for quality
of
permits
and
+
Private
A future vision, with a business ambition
Strategies of business concentration and

increased scale
Participation at both
international levels
Efficiency in operations:
price
Business and financial strengthening
Sector
regional
and
quality and
Having said this, the approach to logistics will be different for the public sector and for the private sector, even
in the framework of a public-private unitary vision and work strategy.
The Public Sector is responsible for the public interest. Therefore, the public sector must promote
regional integration and encourage concentration and efficiency through the implementation of the new
infrastructure:
The GoE should facilitate regional integration in an effective way, through the dismantling of trade and
commercial barriers.
The GoE should also support the private provision of specialised transport logistics infrastructure, together
with private sector participation in the international transport business.
Incentivising transport companies to improve their efficiency and current quality levels also requires a
decisive boost by the Public Sector

182
On the other hand, the private sector needs support for their improvements in efficiency, through new services
and a decisively global vision:
The main unresolved issue of transport in Ethiopia is operational efficiency, which reduces confidence and
increases the service price.
In parallel, transport and logistics service providers must gain scale in order to be competitive in the global
market.
The increase in scale should include a greater portfolio of services: not only to be more efficient and
productive, but also offering new products and services.
Therefore the key aspects of the different logistics visions of public and private sectors can be summarized
as follows:
KEY ASPECTS OF LOGISTICS VISION FROM PUBLIC AND PRIVATE PERSPECTIVE

Key aspects of the logistics vision from the public perspective
Agreements between countries
Strategic vision
Provision of specialised infrastructure and strengthening of connectivity and regional

accessibility
Transparency and procedures simplification
Key aspects of the logistics vision from the private perspective
Quality and differentiation
Price
Entrepreneurship and corporatisation
Skills, knowledge, versatility
Internationalisation, global vision: better relationship with Asia, with the rest of Africa...
Adaptability, innovation
A future vision, with a business ambition

183
7.3.2
Strategies and main policies
Taking into account all the elements of the logistics vision explained in the previous subchapter, six main
strategies have been defined for the transport sector:
Concentration. In order to seek economies of scale, reduce handling costs, optimize the capacity of the
transport vehicles and services and simplify transportation chains. This concentration will have to be
carried out at different levels: Production, consumption, distribution.
Connectivity and Accessibility. The transport system must consist of a multi-modal network of corridors
and distribution nodes, where the different users can chose the mode and route option that is most
adequate for their needs, with no restrictions in either capacity or accessibility and under acceptable safety
conditions (lesser accidents).
Quality of Services. The modern concept of logistics is strongly linked to timely, reliable (and, in some
cases, specialized) services. This is due to the high level of competitiveness during production and
distribution processes and the key-weight of transportation in the final cost for the consumer. Therefore,
the increase of quality in services and the operational skills of transport and logistics operators is deemed
essential.
Capacities and institutional strengthening. Even a technically perfect transport/logistics plan can not
succeed in its implementation without the appropriate institutional and capacity framework. The
implementation of a national transport strategy and action plan requires an optimal coordination and
(transparent) articulation between all the different government ministries and agencies, as well as an
adequate training and skills both at the public and private sector in order to respond to the new transport
network with an appropriate level of management and operation.
Integration and Competitiveness. In order to boost Ethiopias exports and reduce empty returns in freight
transportation, as well as develop its potential as a logistics distributor for other neighbour land-locked
countries, the GoE must focus on integration in regional markets and business facilitation.
Sustainability. Finally, all the actions to be undertaken for the improvement of the transport system need
to be sustainable, not only from the financial point of view (including implementation costs and also all the
operation and maintenance costs that will come along the years of service) but also social (not only without
public opposition, but also with public implication in the projects) and environmental.
Aiming at the implementation of these strategies in the upcoming years, between 3 and 5 main policies have
been recommended for each one of them:
POLICIES RECOMMENDED FOR EACH OF THE SIX STRATEGIES

Concentration (in production, consumption, distribution)
Concentrate cargo volumes of national production, overcoming the fragmentation of local
producers
Strengthen the role of intermediate cities as regional distribution markets
Diversify the transportation and logistics infrastructure based on the specific needs of each
market
Connectivity and Accessibility (multimodality, network capacity, less accidents)

184

Cover the gaps in infrastructure, prioritising the adaptation of the capacity to the demand needs
Strengthening of the national strategic axes, providing them with: advance information, security
and trade facilitation technology systems
Commitment to multimodal diversification
Direct connectivity between regional centres
Strengthening of the secondary road network and improvement of rural accessibility to the
regional centres
Quality (reliable and efficient services, security)
Promote competition in the logistics market and the diversification of added-value services
Support the professionalization, sustainability and development of the competitive capabilities of
domestic operators
Cargo security, people security
Capacities and Institutional Strengthening (coordination, dissemination, transparency)
Strengthening of the institutional capacities
Reorientation of the institutional management with a view to supporting private operators
Encourage private involvement in multimodal operations and in infrastructure investment
Establishment of mechanisms to ensure the continuous and constructive dialogue with the private
sector
Integration and competitiveness (in regional markets, business approach)
Diversification of the port access points to the international market
Commitment to the facilitation of trade at regional level through equivalent practices and shared
infrastructures
Development of Ethiopian infrastructures to support domestic operators and producers in third
countries
Encourage the creation of regional transportation / logistics groups
Sustainability (financial, social environmental)
Encourage the public-private involvement in transport and logistics infrastructure investments
Ensure the maintenance of roads through local participation mechanisms or through concessions
to private companies

185

Promote community participation in the monitoring of transport operations and in the enforcement
of environmental policies
The following sub-section describes the implementation mechanisms for the above policies, including the types
of actions and investment to be developed.
7.4
Action Plan
The implementation of the established strategy requires the definition of specific actions enabling the transport
industry to move towards the desired vision for the year 2025. This current subsection presents proposals and
specific recommendations resulting from the strategy and gaps identified in each of the corridors, the
implementation tools, and finally, a schedule and prioritisation of the proposed action plan.
7.4.1
Proposals and recommendations
We have defined two types of proposals and recommendations that will be analysed and prioritised in
subsequent sections, according to their contribution to growth, competitiveness and poverty reduction.
Firstly, deriving from the presented strategy, a set of actions with a national scope are defined. Some of the
actions are related to infrastructure, service improvement or institutions.
Later, a second type of action resulting from the analysis and diagnosis presented in 6.3. Gaps by corridor,
and which tackles particular aspects of each of the corridors. In addition, in order to portray the situation clearly,
this presentation by corridor also includes previous carried out strategic actions affecting the corridor, since
they are geographically located within its area of influence.
7.4.1.1 Strategic proposals

The following strategic proposals respond to the overall needs identified during the transport assessment and
which have been reflected in the strategy. However, the detailed definition of each of the measures presented
was carried out based on the knowledge of the country acquired after the extensive analyses conducted in
previous chapters and 4 months of field study in Ethiopia (see Annex in Chapter 10. Field work and interviews
developed during the project).
It should be mentioned that the proposals submitted respond to a strategic level of national planning, and
therefore, each of the actions will require specific pre-feasibility or feasibility studies in order to be implemented
and determine the details.
The table below presents the proposed actions for each of the strategies and policies:

186
Table 31: Strategic proposals by main policy
Strategy
Main Policy
Concentrate cargo volumes of
national production, overcoming
the fragmentation of local
producers
+ concentration
+ connectivity and
accessibility
Strengthen the role of intermediate

cities as regional distribution
markets
Diversify the transportation and
logistics infrastructure based on the
specific needs of each market
Cover the gaps in infrastructure,
prioritising the adaptation of the
capacity to the demand needs
Strengthening of the national
strategic axes, providing them with:
advance information, security and
trade facilitation technology
systems
Commitment to multimodal
diversification
Direct connectivity between

regional centres
+ quality, not just

increasing the
price
+ capacities and
institutional
strengthening
+ integration and
competitiveness
Strengthening of the secondary

road network and improvement of
rural accessibility to the regional
centres
Promote competition in the logistics
market and the diversification of
added-value services
Support the professionalization,
sustainability and development of
the competitive capabilities of
domestic operators
Cargo security, people security
Strengthening of the institutional

capacities
Reorientation of the institutional
management with a view to
supporting private operators
Encourage private involvement in
multimodal operations and in
infrastructure investment
Establishment of mechanisms to
ensure the continuous and
constructive dialogue with the
private sector
Diversification of the port access
points to the international market

Actions
1.1. Create a network of 24 Agricentres,
complementary to the premises of the
Ministry of Agriculture and ECX
1.2. Provision of modern market facilities to 10
major regional centres
1.3. Boost the concept of service concentration
through regional freight exchange services
1.4. Creation of specialised infrastructure
promoting concentration of production and
consumption
2.1. Enhance priority expressway sections to meet
the demand up to 2030
2.2. Implementation of Security Corridor concept
in Modjo-Djibuti and Mekele-Djibuti corridors
2.3. Entry into operation of new air routes
strengthening Mekele and Bahar Dar airports
2.4. Activation of the rail sections with sufficient
demand potential
2.5. Create a set of ring roads, which foster
regional connectivity and avoid passing
through Addis Ababa
2.6. Prioritisation of alternative routes to strategic
corridors as a second order network and
access to rural production centres
3.1. Implement a quality mark for service and
Encourage formalization of service contracts
in the mid-term
3.2. Development of training programmes for
transport operators
3.3. Credit lines and reduced import tax for
vehicles
3.4. Encourage the use of ITS applied to transport
and logistics operations, and improved
traceability of shipments
3.5. Creation of a support network of truck centres
4.1. Enhance access to public service through
training programmes in transport/logistics
4.2. Creation of a support office for transport
operators and companies
4.3. Creation and enactment of a law regulating
PPP investments in transport and logistics
infrastructure
4.4. Incorporation of the private sector to the InterInstitutional Board of Transport
5.1. Reach agreements on port use with Kenya,
Sudan and Somaliland
5.2. Establish a mechanism for joint management
of bi-national corridors (Corridor Authority)
187
Strategy
Main Policy
Commitment to the facilitation of
trade at regional level through
equivalent practices and shared
infrastructures
Development of Ethiopian
infrastructures to support domestic
operators and producers in third
countries
Encourage the creation of regional
transportation / logistics groups
+ sustainability
Encourage the public-private

involvement in transport and
logistics infrastructure investments
Ensure the maintenance of roads
through local participation
mechanisms or through
concessions to private companies
Promote community participation in
the monitoring of transport
operations and in the enforcement
of environmental policies
Actions
5.3. Implementation of 6 integrated border posts
and 2 new border posts
5.4. Development of Ethiopian infrastructure in
Djibuti and Mombasa ports
5.5. Creation of service centres for Ethiopian
producers in the destination markets
5.6. Expand the domestic market to serve other
landlocked countries like South Sudan
5.7. Stimulate the creation of joint venture firms
between transport companies from Ethiopia
and neighbouring countries
6.1. Generalise the figure of shared responsibility
with the private sector through "shadow tolls"
or "road availability" models
6.2. Study of best practices applicable by type of
road, location and local conditions
6.3. Training of local communities in activities

related to environmental enforcement
Source: ALG

188
The scope of the aforementioned actions is described below:

Create a network of 24 Agricentres, complementary to the premises of the Ministry of Agriculture and
the ECX (Action 1.1)
In an eminently agricultural country, with widely population scattered in the territory which is composed of small
farms, it is necessary to have freight consolidation points for agricultural products. At present, there is a small
warehouse network owned by the ECX but it only serves certain products. Therefore, we propose the
development of a national agricentres network at the points with larger agricultural production, as the following
map shows:
Figure 117: Proposed agrocenters network
Humera
Wukro
Key
Shire
Agro Centers
Gonder
Machew
Agro Center hinterland
Debre
Tabor
Gashena
Chagni
Debre
Markos
Debre
Guracha
Gimbi
Ambo
Harari
Ziway
Bedele
Gambela
Hossana
Goba
Sawla
Dodola
Jinka
Dila
Konso
Turmi
Source: ALG
Los agrocentros permitirn reducir los costos logsticos y de distribucin de los productos al consolidar
Agricentres will reduce products logistics and distribution costs due to the consolidation of production and the
improvement of medium and long-haul transport. This type of infrastructure also improves the product quality
and reduces losses thanks to appropriate warehousing conditions. Additionally, conditions for the development
of value-added agricultural products can be generated through job creation and the development and
professionalisation of small companies.
Provision of modern market facilities to 10 major regional centres (Action 1.2)
Improving the regional markets infrastructure will offer greater availability and quality of infrastructure to
products sold in those markets, thus enhancing the regional centres role. Given the important agricultural
production of the country, it is desirable to provide commercialisation infrastructure with appropriate conditions
to handle foodstuffs, and to offer possibilities for development to small traders and SMEs. Based on the current

189
situation of the existing infrastructure and the importance of regional centres, the following markets are
proposed:
Figure 118: Proposed regional markets network
Key
Mekele
Regional market
Gonder
Regional market hinterland
Dessie
Bahir Dar
Addis Ababa
Harari
Adama
Jimma
Shashemene
Arba Minch
Source: ALG
Boost the concept of service concentration through regional freight exchange services (Action 1.3)
A freight exchange service is a virtual meeting point for the supply and demand of transport and logistics which
is usually carried out with the help of electronic means. The purposes of a freight exchange service are to
promote the matching of the supply and demand for transport so that the movements are optimised; empty
returns and users and operators costs are reduced. Secondary, formal contractual relations can be generated
in the medium term, improving the long term situation of the transport sector (it becomes formalised and
enables fleet renovation, better quality of transport, etc.).
This service would allow greater efficiency and a reduction of transport costs at both regional and national
levels.

190
Creation of specialised infrastructure promoting concentration of production and consumption

(Action 1.4)
Besides the agricultural production concentration, we propose the development of other logistics infrastructure
to enable the concentration of industrial freight and consumption and boost the development of value-added
logistics activities. The logistics facilities proposed are:
Figure 119: Proposed network of logistics facilities
Key
Mekele
Dry Ports
Logistic Platforms
Bahir Dar
Kombolcha
Addis Ababa
Modjo
Dire Dawa
Jimma
Hawasa
Source: ALG

191
Enhance priority expressway sections to meet the demand up to 2030 (Action 2.1)
Based on the analysis of road demand, the expansion of some of the roads to dual carriageways is
recommended. These proposals respond to the analysis of demand forecasts and the strategic analysis of the
logistics relationships. The proposed sections are:
Figure 120: Proposed priority expressway sections
Humera
Adigrat
Key
Mekele
Expressway sections
Metema
Standard sections
Gonder
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Birhan
Debre
Markos
Asosa
Nekemte
Ambo
Dire Dawa
Addis Ababa
Harari
Jig-Jiga
Awash
Weliso
Gambela
Jimma
Adama
Ziway
Shashemene
Robe
Hawassa
Dima
Dila
Yebelo
Moyale
Source: ALG
Implementation of Security Corridor concept in Modjo-Djibuti and Mekele-Djibuti corridors (Action

2.2)
To improve efficiency and ensure the security of the trade flow between Ethiopia and the Port of Djibouti, we
propose the development of the security corridor concept through the implementation of technology along the
corridor that provides information and allows a proper management of the corridor.
The general objectives of the Security Corridor are to improve competitiveness and reduce user logistics
chains costs. The specific goals are:
Speed up foreign trade and traffic processes
Reduce transport times
Improve safety conditions
Provide information and facilitate anticipation
Increase transport efficiency

192
The construction of a Security Corridor involves the following actions:
Corridor management and coordination
Technological superstructure to improve security conditions, facilitate trade and provide real-time
information, allowing to anticipate processes
In addition, these corridors are supported by infrastructure improvements to maintain (or increase) the
infrastructure quality as well as the creation of logistics infrastructure and truck centres in the entire corridor.
However, in this case, particular logistical and infrastructure improvements have been considered through
other actions.
The following figure shows the Security Corridor.
Figure 121: Security corridor concept
Logistical
Portal
Logistical
Portal
Truck
centre
Outer-port
Logistical
Portal
Logistical
Portal
Port
community
Check points along the length of the

corridor
Systems on the corridor

1. Transponders that transmit information along the
length of corridor to expedite the border crossing (fast
track)
2. Surveillance cameras (CCTV and registration plate
readers)
3. Reference GPS
4. "Early" office / electronic stamp
5. Variable information panels in the corridor: congestion
levels, accidents en route, state of the truck centre
network, etc.
6. Console for driver with information in real time
7. Coordination with public bodies: customs, vehicle
inspection, wieghts and measures, others checks, etc.
8. Tolls
9. Electronic money / Cash card in truck centres
10.Communication with the Control Centre (radio) and
with other corridor users
Border
crossing
point
Types of corridors
International: the most complex, since it involves
customs issues, linking between systems of two or
more countries, possible regulatory differences per
country, etc.
Domestic: fewer requirements in equipment, and
possible greater difficulty to give a return on some
investments
Possibility of installing equipment by stages
E1 = Equipment only in the corridor
E2 = E1 + transponder in truck
E3 = E2 + communications console in truck
Source: ALG

193
Entry into operation of new air routes strengthening Mekele and Bahar Dar airports (Action 2.3)
In order to encourage modal diversification and allow the delivery of air cargo in Mekele and Bahir Dar
production zones, we propose to explore the feasibility of international routes with these cities airports. The
following figure shows potential routes:
Figure 122: Potential air routes to explore
To Dubai
To Jeddah
To Khartoum
To Europe
Key
Mekele
Northern stopover
Mekele
Current air links

Future air links
Main airports
Gonder
To Djiibuti
To Jeddah
Weldiya
Bahir Dar
Bahar Dar
Western
stopover
Kurmuk
Debre
Markos
Asosa
Dire Dawa
Addis Ababa
Nekemte
Dire Dawa
Jig-Jiga
Eastern
stopover
Adama
Addis Ababa
Asela
National
hub
Ziway
Gambela
Jimma
Hawassa
Arba Minch
Source: ALG

194
Activation of the rail sections with sufficient demand potential (Action 2.4)
In order to encourage modal integration and increased transport efficiency in those corridors with high volumes
of freight, we propose to activate rail routes along the corridors shown in the following figure. It is important to
mention that the viability of rail routes has not been evaluated in this study, and must be assessed before any
development. However, the traffic analysis based on available data shows a degree of potential in the routes
shown up until 2030, thus making it advisable to carry out a detailed study. We recommend performing detailed
feasibility studies to provide an in-depth analysis of the demand, so as to determine the financial and economic
viability of the infrastructure.
Figure 123: Proposed priority railway lines
Mekele - Awash
Second national priority.
Demand rises in 2020
Modjo - Hawassa
Enough demand for
an extension in 2020
Kombolcha - Djibuti
High level of demand in 2025
Djibuti - Modjo
Under construction
To operate in 2016
Source: ALG

195
Create a set of ring roads, which foster regional connectivity and avoid passing through Addis Ababa
(Action 2.5)
The current radial structure of the road network and the economic power of the intermediate regional cities
make it advisable to improve the road network connecting them. We propose to create ring roads around Addis
Ababa, which would make possible direct connection between major regional cities, encouraging the economic
development of these cities and the surrounding rural areas. Specifically, the proposed network is:
Figure 124: Proposed ring roads
Key
Inner Ring Road
Mekele
Ethiopia Ring Road

Outer Ring Road
Gonder
Semera
Weldiya
Bahir Dar
Kombolcha
Debre
Birhan
Debre
Markos
Asosa
Dire Dawa
Addis Ababa
Ambo
Nekemte
Harari
Jig-Jiga
Awash
Adama
Weliso
Ziway
Gambela
Asela
Jimma
Hossana
Shashemene
Sodo
Robe
Hawassa
Kebri Dehar
Dila
Arba Minch
Konso
Negele
Yebelo
Moyale
Source: ALG

196
Prioritisation of alternative routes to strategic corridors as a second order network and access to rural
production centres (Action 2.6)
For some of the main corridors, the development of parallel corridors is also possible (although with a reduced
level of infrastructure), thus allowing the broader development of the corridor. This concept is proposed for the
following corridors:
Figure 125: Proposed alternative routes to main corridors
Axum
Humera
Shire
Key
Adigrat
Adwa
Main network
Mekele
Secondary roads
Metema
Gonder
Semera
Debre Tabor
Weldiya
Galafi
Bahir Dar
Kombolcha
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Nekemte
Addis Ababa
Ambo
Jig-Jiga
Harari
Awash
Weliso
Adama
Dhaga-Bur
Gambela
Ziway
Hossana
Jimma
Asela
Shashemene
Robe
Hawassa
Sodo
Kebri Dehar
Imi
Dima
Dila
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG
Implement a quality mark for service and Encourage formalization of service contracts in the mid-term
(Action 3.1)
The limited quality of the transport and logistics services requires the implementation of measures to
encourage the development of good quality, efficient services. To achieve this, we propose a study of
implementation of a service quality mark or certification that would incentivise supplier improvement. Moreover,
since one of the major constraints to the development and efficient services is the informality of contracts, it
would also be advisable to encourage the development of medium and long term contracts, thus enabling
service providers to invest in vehicles and training and gradually improve their service quality.
Development of training programmes for transport operators (Action 3.2)
The low level of professionalisation among transport services is due to the limited training of its managers or
operators. We therefore propose the development of training programmes and plans for transport operators
that will enable an increase in the efficiency and quality of the service, and improved working conditions and
profitability for the carriers. These programmes should be targeted at individuals and small firms, offering them
management skills that will enable them to achieve sufficient returns from their work. These programmes

197
encourage the development of rural and SME transporters, improving the quality of life for the population
involved in transport.
Credit lines and reduced import tax for vehicles (Action 3.3)
Improving the quality and profitability of service also depends on the vehicles available and their cost. Credit
must be available for fleet renewal (in addition to the above measures), so that service providers can update
their vehicles.
Furthermore, the reduction of import tariffs on heavy vehicles would also reduce acquisition costs, encouraging
fleet upgrading to newer vehicles with lower operating costs.
Encourage the use of ITS applied to transport and logistics operations, and improved traceability of
shipments (Action 3.4)
The application of ITS to the supply chain and transportation improves the level of information available to
chain management, thus allowing the location of the cargo to be known in advance and permitting rapid
communication in the case of problems. They are also very useful for security applications.
Creation of a support network of truck centres (Action 3.5)
Truck centres or transporter service centres are nodal infrastructures installed on major transport corridors that
offer services to drivers, transport vehicles and cargos (security). The services offered by these centres can
vary, but should offer parking with security guaranteed for the cargo and a restaurant or place to rest for the
transporter. They may contain a hotel, a garage, refuelling areas, etc.
We propose the following network of truck centres in Ethiopia, located on high heavy-vehicle traffic routes in
at points where these vehicles tend to stop.
Figure 126: Proposed truck center network
Key
Shire
Truck Center
Metema
Maichew
Mille
Wereta
Weldiya
Injibara
Dejen
Debre
Birhan
Asosa
Dendago
Nekemte
Akaki Kaliti
JigJiga
Modjo
Welkite
Awash
Butajira
Gambela
Shashemene
Sodo
Mizan Teferi
Yebelo
Source: ALG

198
Enhance access to public service through training programmes in transport/logistics (Action 4.1)
Education and training in the public sector on areas related to transport and logistics and on organisational
and management capabilities would allow greater productivity in the public sector and the gradual improvement
of institutional capacities. We propose the creation of training programmes aimed at the public sector to enable
employees to improve their skills and job performance, while serving as an incentive and an element of prestige
in public service.
These programmes could be about the development of courses for skills closely related to public service work,
or else offering incentives to study for masters or postgraduate qualifications that would allow the employee to
reach a satisfactory career in the public sector.
Creation of a support office for transport operators and companies (Action 4.2)
To promote the development of the private sector, the support of the public sector is needed. We propose the
creation of an office aimed at supporting transport companies or operators by offering information about
administrative procedures and by providing tools for professional development (training, soft loans, advice,
etc...)
Creation and enactment of a law regulating PPP41 investments in transport and logistics infrastructure
(Action 4.3)
To facilitate private investment in transport and logistics infrastructure, a secure regulatory framework is
needed, offering incentives and security to private capital. The most common mechanism worldwide is the
passing of a specific PPP law, whether solely for the transport sector or for all sectors (telecommunications,
energy, etc.). We recommend developing a study aimed at creating a law to allow the entry of private capital
into infrastructures investments in Ethiopia. The success in this law would help developing important
infrastructures for the country development.
Incorporation of the private sector into the Inter-Institutional Transport Board (Action 4.4)
The private sector plays an important role in the operation of transport and logistics in Ethiopia, so an
institutional framework needs to be created to facilitate the transmission of its development needs and
constraints. The Inter-Institutional Transport Board is a good forum for these communication functions.
Reach agreements on port use with Kenya, Sudan and Somaliland (Action 5.1)
The dependency of foreign trade on a single port (Djibouti) makes it advisable for strategic reasons to explore
ways to provide alternatives in case problems should arise with the Port of Djibouti. The existence of
agreements with other neighbouring countries or the reinforcement of certain alternative corridors for some
cargoes does not imply a halt to investment in the Ethiopia - Djibouti corridor, and would reduce the country's
vulnerability to external shocks. Certain freight and some areas of the country could benefit from a port
diversification policy, which could reduce import/export costs in some areas far from central Ethiopia.
Establish a mechanism for joint management of bi-national corridors (Corridor Authority) (Action 5.2)
For bi-national corridors - those that affect several countries - the creation of a Corridor Authority would improve
their integrated management. Such an authority, recognised and formed by both states, would provide a simple
institutional organisation with the ability to interact with institutions of both countries and promote the interests
of the corridor (raising efficiency of the corridor flow). This would facilitate decision making and would promote
actions and improvements to increase the efficiency of the corridor.
Implementation of 6 integrated border posts and creation of 2 new border posts (Action 5.3)
Regional integration requires investments in border crossings in addition to institutional tools to improve the
management of the corridors. Thus, we propose the construction of 6 integrated border posts at existing
crossing points, and 2 new border crossings, as shown in the following figure.
These proposals correspond to the crossing points with highest goods flows and greatest strategic potential
for the country.
41
Public-Private Parterships

199
Figure 127: Proposed border facilities to upgrade

Humera
Key
Integrated Border Posts
Mekele
New border posts
Metema
Gonder
Standard border posts
Almahal
Galafi
Weldiya
Bahir Dar
Dewele
Gizen
Kurmuk
Asosa
Dire Dawa
Addis Ababa
Nekemte
Jig-Jiga
Gambela
border
Adama
Gambela
Jimma
Hawassa
Dima
Arba Minch
Omorate
Moyale
Source: ALG
Integrated border posts are physical transit zones between neighbouring countries that allow the creation of
common border infrastructure which are operated jointly by the two countries. The targets of these
infrastructures are:
Facilitate customs integration
Reduce duplicate procedures at border crossing points
Facilitate inter-institutional coordination
Reduce transit times and costs
Maintain security guarantees
Development of Ethiopian infrastructure in Djibuti and Mombasa ports (Action 5.4)

The dependence on third country ports to carry out foreign trade operations in Ethiopia is a major handicap for
the country. Also, the high flows of Ethiopian cargo at the Port of Djibouti, along with the existing efficiency
problems in the port, make it advisable for Ethiopia to have its own logistics infrastructure at the Port of Djibouti
through bilateral agreements with this country. The construction of a logistics platform or a dry port would
enable increased efficiency in port operations and in the corridors connecting to Addis Ababa and the rest of
Ethiopia.
Creation of service centres for Ethiopian producers in the destination markets (Action 5.5)
With the aim of facilitating Ethiopia's production development and increasing exports to equalise the trade
balance, we propose the development of Ethiopian International Service Centers which would be designed to

200
facilitate exports from Ethiopian producers. These centres would be located in the destination markets of the
main exports.
The services that could be potentially offered are multiple, although the figure below shows the services initially
considered:
Figure 128: Range of activities for the proposed International Ethiopian Service Centers (IESC)
Pre-Transaction
Service Users:
Services
destined to the
Freight
Service destined
to the Exporter
Service destined
to the Importer
Packaging design and tests

Label design
Verification of standards
Inventory management
Conditioning of samples
Commercial references
Market intelligence
Search for clients
Administrative support and
headquarters
Business/ marketing plan
Organization mission, etc
Commercial references
Support in negotiations
Evaluation of suppliers
Processing of shipment of
samples
Post-Transaction
During the Transaction
Transportation
Storage
Added-value services
Quality control
Origin/destination inspection
Inspection of returns
Inventory control
Return logistics
Shipment tracking
Commercial representation
Negotiation of services
Legal and tax-related
consultancy
Coordination of operations
Shipment tracking
Negotiation of services
Legal and tax-related
consultancy
Coordination of operations
Client follow up
Promotion of brands
Warranty / claim client service
Analysis of the competition
Client follow up
Promotion of brands
Warranty/claim client service
Analysis of the competition
Source: ALG
Expand the domestic market to serve other landlocked countries like South Sudan (Action 5.6)
Ethiopia's lack of access to the sea is a characteristic it shares with South Sudan, although this latter country
has even more difficulty in its access to the sea because of the greater distance involved.
Ethiopia could take advantage of this fact to provide service via its logistics and transport operators, not just
for its own local market, but also to third country markets like South Sudan. The development of a group of
strong logistics and private transport providers would enable services, as well as goods, to be exported.
However, to achieve this goal it is necessary to allow the development of the private sector in the domestic
market, and also to establish very efficient international transport corridors that would allow the country to
compete with its neighbours. In the case of the provision of services to South Sudan, for example, Kenya starts
with an advantage because it already has road infrastructure connecting the two countries' capitals and has
an important national port.
Stimulate the creation of joint venture firms between transport companies from Ethiopia and
neighbouring countries (Action 5.7)
The export of logistics services or expansion of the domestic market could also be carried out through the
creation of joint venture firms from two different countries aimed at operating at regional-scale. The provision
of such agreements would allow the creation of regional groups of transport and logistics service providers
that would significantly favour regional integration and increase economic relations between neighbouring
countries.
Generalise the figure of shared responsibility with the private sector through "shadow tolls" or "road
availability" models (Action 6.1)
To facilitate the increase of private sector investment in the sector, especially in the creation and management
of infrastructure, we propose the creation of mechanisms for shared responsibility between public and private
sectors, such as shadow tolls. These systems reduce the risk in private sector investment, favouring the

201
availability of capital and investment. These measures of shared responsibility could be articulated through the
PPP Law.
The shadow toll type of model is mainly used in highways, and consists of a private concession for the
construction and maintenance of a highway over a period of time (20-30 years). Income does not come from
tolls as in most road concessions, but rather the Government pays a fee for each vehicle using the road. That
is, the private concessionaire assumes the risk of demand, but this is not potentially penalized by the need for
a direct payment of the infrastructure each time it is used (rather, it is paid through the government budget).
On other hand, the model of road availability involves a concession similar to the previous case, but with
revenue coming from fees paid by government based on the level of "availability" of the infrastructure (rather
than on the demand). This availability is measured using quantifiable indicators (eg, quality of infrastructure,
pavement condition, etc ...)
Study of best maintenance practices applicable by type of road, location and local conditions (Action
6.2)
The maintenance of the road network is a major challenge for the Ethiopian Government in the coming years.
To meet the challenge we propose that a study is undertaken to identify best practices in maintenance for
different pavement types, traffic conditions and weather conditions. The study should establish maintenance
standards and orientative costs, and this would also enable public-private concessions to be granted for road
maintenance.
7.4.1.2 Strategic and specific proposals by corridor

The above strategic proposals are also linked to the improvement to most of the corridors. All the actions to
be taken for each corridor are presented below. Furthermore, specific actions are also presented for some
corridors derived from the specific diagnosis performed in chapter 6.3. Gaps by corridor.
The following map shows all proposals for the Central Eastern Corridor.
Figure 129: Central Eastern Corridor Proposals
Gonder
Sekota
Mille
Truck Center
Wereta
Galafi
Integrated
border post
Semera
Djibouti
Extra territorial
logistics platform
Debre Tabor
Asayta
Bahir Dar
Dawash
Integrated
border post
Dire Dawa
Logistics
Platform
Awash Dire Dawa road

New alignment
Dire Dawa Dewash road

Upgrading and re-paving
Dire Dawa
Debre-Birhan
Modjo
Awash
New highway section
Future SEZ
Integrated border post
Dandago
Agrocenter
Truck center
Dry port
Addis Ababa
Chiro
Sebeta
Harari
Bishoftu
Logistics platforms
Double carriageway
Jij-jiga
Burayu
Holeta
Regional markets
New road alignment

Road upgrading
New railway section
Jijiga
Truck Center
Dry Port
Adama
Modjo
Dry Port
Awash
Truck Center
Dandago
Truck Center
Harar
Regional Market
Jiyiga
Integrated
border post
Meki
Modjo
Asela
Logistics Platform
Ziway
Adama
Regional Market
Harar
Agro Center
Source: ALG
The specific actions proposed for the corridor that have not been mentioned as strategic proposals are:

202
Awash Dire Dawa road: new alignment
Dire Dawa Dewash road: Upgrading and re-paving
Southern Corridor
The following map shows all proposals for the Southern Corridor.
Figure 130: Southern Corridor Proposals
Modjo - Hawassa
New highway section
Modjo
Logistics Platform
Addis Ababa
Nekemte
Awash
Truck Center
Modjo
Dry Port
Ambo
Butajira
Truck Center
Adama
Regional Market
Butajira
Ring Road
upgrading
Ziway
Agro Center
Ziway
Hosaina
Hosaina
Bonga
Agro
Center
Asela
Shashemene
Regional Market
Modjo-Hawassa
New highway
section
Shashemene
Sodo
Truck Center

Agrocenter
Truck center
Dry port
Hawassa
Dodola
Dila
Sawla
Agro Center
4
Arba Minch
Regional Market
Jinka
Goba
Agro Center
Dodola
Agro Center
Sawla
Regional markets
Logistics platforms
Sodo
Arba
Minch
Hawassa
Dry Port
Double carriageway
New road alignment
Road upgrading
New railway section
Dilla
Agro Center
Jinka
Agro Center
Konso
New road links
Yebelo
Truck Center
Yebelo
Turmi
2
Turmi
Agro Center
11. Hawassa Arba Minch. New road link
Moyale
Integrated
border post
Konso
Agro Center
21. Omorate Turkana. New road link

31. Shashamene western bypass
41. Sawla-Jinka New road link
Omorate
New border
post
Moyale
Source: ALG
Hawassa Arba Minch. New road link
Omorate Turkana. New road link
Shashemene western bypass. New road link
Sawla- Jinka. New Road link

203

The following map shows all proposals for the Central Western Corridor.
Figure 131: Central Western Corridor Gaps
Asosa
Truck Center
Outer Ring Road

new section
Ring Road
upgrading
Debre Markos
Asosa
Gimbi
Agro Center
Nekemte
Truck Center
Ambo
Agro Center
Gimbi
Kurmuk
Integrated
border post
Nekemte
Ambo
Addis Ababa

Dembi Dolo
Agrocenter
Truck center
Dry port
Welkite
Metu
Gambella
Integrated
border post
Logistics platforms
Butajira
Agaro
Gambela
Gambella
Truck center
Tepi
Ziway
Hosaina
Bonga
Double carriageway
New road alignment
Road upgrading
New railway section
Bedele
Agro Center
Regional markets
Weldiya
Truck center
Robe
Shashemene
Jimma
Goba
Mizan Teferi
Truck center
Dima
Hawassa
Sodo
Mizan Teferi
Arba Minch
New road links
Future Corridor
extension
11. Ambo Waliso- New link
41. Ziway Asela. New link
Adola
Hagere
Mariyam
Shakiso
Negele
21. Addis Jimma. New highway section

31. Welkite Ziway. Road upgrading
Dodola
Jimma
Dry Port &
Sawla
Regional Market
Dima
Integrated
border post
Source: ALG
New Outer Ring Roads sections: between Gambela and Asosa, and between Asosa and Northern
Beneshangi Gumuz Region

204
North-western Corridor
In the North-western Corridor, the actions proposed are:
Figure 132: North-Western Corridor Gaps
Shire
Agro Center
Humera
Agro Center
Humera
Integrated
border post
Adigrat
Humera
Axum
Shire
Adwa
Meteme
Truck Center
Shire
Truck Center
Wukero
Gonder
Regional Market
& Agro Center
Debark
Metema
Maichew
Gonder
Metema
Integrated
border post
Alamata
Truck center
Dry port
Regional markets
Wereta
Truck Center
Wereta
Bahir Dar
Ring Road
upgrading
Agrocenter
Ring Road
new section
Weldiya
Dangla
Bahar Dar
Dry Port & RM
Debre
Tabor
Dese
Mota
Sudan new
border post
Bure
Logistics platforms
Double carriageway
New road alignment
Road upgrading
New railway section
Injibara
Kombolch
Truck Center
Chagni
Chagni
Agro Center
Asosa
Dejen
Debre Markos
Agro Center
New road links

11. Bahar Dar bypass
Nekemte
Dejen
Truck Center
Debre
Markos
Gebre Guracha
Debre Guracha
Agro Center
4
Addis Ababa
21. Bahar Dar-Dejen. Road paving and upgrading

31. Bahar-Dar-Gondar. New highway section
41. Addis Debre libanos. New highway section
Dembi
Dolo
51. Bahar Dar Sudan. Road upgrading
Metu
Welkite
Ring Road
upgrading
61. Nile Gorge Section. New bridge
Source: ALG
Bahar Dar bypass. New road
Bahar Dar Dejen. Road paving and upgrading
Bahar Dar Gondar. New highway section
Addis Ababa Debre Markos. New Highway Section
Bahar Dar Sudan. Road upgrading
Nile Gorge Section. New Bridge
New ring road section between Bahar Dar and Mekele (direct connection)

205
Northern Corridor
In the Northern Corridor the actions recommended to develop in the following ten years are:
Figure 133: Northern Corridor Gaps
Wukro
Agro Center
Shire
Agro Center & TC
Adwa
Shire
Adigrat
Axum
Wukero
2
Mekele
Metema
Ring Road
Debark
new section
Maichew
3
Gonder
Regional Market
Agrocenter
Debre Tabor
Agro Center
Mekele
Regional
Market & DP
Machew
Agro Center & TC
Alamata
Weldiya
Truck center
Wereta
Weldiya
Bahir Dar
Debre
Tabor
Dessie
Regional Market
Dessie
Truck center
Dese
Dry port
Gashena
Agro Center
Regional markets
Logistics platforms
Kombolcha
Kombolcha
Dry Port & LP
Debre
Markos
Double carriageway
New road alignment
Road upgrading
New railway section
Gebre Guracha
Debre Birhan
Truck Center
Nekemte
New road links
Addis Ababa
11. Wukro Adwa- Road upgrading

21. Mekele Wukro. New highway section
Welkite
31. Mekele Alamata. New highway section

41. Gashena Degolo. Road upgrading
Source: ALG
All actions for this corridor where presented as strategic actions. No further actions have been proposed.

206
North-Eastern Corridor
Finally, in the North-Eastern Corridor, the proposals are:
Figure 134: North-Eastern Corridor Gaps
Axum
Adigrat
Adwa
Shire
Mekele
Regional Market
& DP
Wukero
Mai Tsebri
Machew
Agro Center & TC
Mekele
Debark
Ring Road
new section
Wereta
Truck Center
Galafi
Integrated
border post
Maichew
Gonder
Sekota
Corridor
extension
Weldiya
Wereta
Debre Tabor
Bahir Dar
Bahar Dar
Dry Port & RM
Desie
Weldiya
Truck center
Agrocenter
Corridor
extension
Kombolcha
Ring Road
new section
Dessie
Regional Market
Truck center
Debre Markos
Dry port
Kombolcha
Dry Port & LP
Regional markets
Jijiga
Truck Center
Mille
Truck Center
Dire Dawa
Logistics platforms
Dire Dawa
Logistics
Platform
Double carriageway
New road alignment
Road upgrading
New railway section
Ambo
Dandago
Harari
Addis Ababa
Dandago
Truck Center
Jijiga
Harar
Regional Market
Jijiga
Integrated
border post
Source: ALG
New ring road section between Mille and Dire Dawa (direct connection)

207
ANNEXES

208
8 Pre-feasibility study of new/enhanced regional road linking South

Sudan, Ethiopia and Kenya
8.1
Introduction: Why this new regional road link?
The objective of this analysis is to undertake a pre-feasibility study of a new/enhanced regional road network
linking an area of 200 km radius centered at the point where the borders of South-Sudan, Ethiopia and Kenya
meet, around the Northern tip of Lake Turkana.
Given the location of the proposed area, at the confluence of the aforementioned three borders, it is clear that
the new road axis will be strongly linked to the international trade between Ethiopia, South Sudan and
Kenya. In order to ascertain the strategic importance of the new road in this key-context, the analysis should
begin under a wider geographical scope.
This wider regional framework, together with the specific area where the new road connection has to be
proposed, are highlighted in the maps of the figure below (with dotted and continuous circles, respectively),
which represent the main trade corridors of the country, both formal (to the left) and informal (to the right).
Figure 135. Geographical framework: Formal (to the left) and informal (to the right) trade corridors for international trade
Axum
Humera
Shire
Adigrat
Axum
Humera
Adwa
Import corridors
Mekele
Export corridors
Shire
Adigrat
Adwa
Main routes
Mekele
Metema
Metema
Internal distribution routes

Gonder
Gonder
Semera
Debre Tabor
Galafi
Semera
Debre Tabor
Weldiya
Weldiya
Galafi
Bahir Dar
Bahir Dar
Kombolcha
Kombolcha
Dewele
Dewele
Kurmuk
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Dire Dawa
Nekemte
Addis Ababa
Ambo
Nekemte
Jig-Jiga
Harari
Addis Ababa
Ambo
Weliso
Weliso
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Asela
Adama
Dhaga-Bur
Gambela
Hossana
Ziway
Jimma
Jimma
Shashemene
Sodo
Asela
Shashemene
Robe
Sodo
Hawassa
Robe
Hawassa
Kebri Dehar
Kebri Dehar
Imi
Dima
Imi
Dima
Dila
Dila
Arba Minch
Gode
Konso
Omorate
Jig-Jiga
Harari
Awash
Awash
Arba Minch
Gode
Konso
Negele
Omorate
Yebelo
Negele
Yebelo
Dolo Odo
Dolo Odo
Moyale
Moyale
Source: ALG
As it can be seen, the South-western region of the country is crossed by the formal corridors connecting
Ethiopia with Kenya (through Moyale) and South Sudan (through Gambela), as well as the informal corridors
connecting to these same countries through Omorale and Moyale.
Let us look a little bit closer into this region and start with the identification of the main functional elements that
will have to play a role in the new road connection osed. These are shown in Figure 113.
Figure 136. Logistic relations within the regional framework of the area under study (South-western corridor highlighted)
209
Bahir Dar
Kombolcha
Kurmuk
Dewele
Assosa
Debre
Birhan
Debre
Markos
Nekemte
Ambo
Dire D
Addis Ababa
Harari
Awash
Metu
Weliso
Gambela
Hossana
Adama
Ziway
Jimma
Asela
Shashemene
Robe
Hawassa
Sodo
Imi
Dima
Dila
Arba Minch
Konso
Key
Omorate
Main city
Negele
Yebelo
Main logistic node
Dolo Odo

Moyale
Regional Markets
Source: ALG
The area to be analyzed (also highlighted with a circle in Figure 113) is located at the end of one of Ethiopias
main trade and logistics corridors. It consists of a group of powerful domestic sub-corridors from Addis
to the entire southern area of Oromia and the south eastern part of SNNP, a highly productive part of
the country.
The most important activity centres within this region are Sheshemene and Hawassa, representing regional
re-distributors from the different production areas to Addis Ababa, concentrating significant transport and
logistics activity. It is important to highlight the industry already present in Hawassa, which is expected to grow
notably in the upcoming years. Also, a Special Economic Zone is planned in this location.
Arba Minch represents the following distribution point (of a more local scale) leading to our area of study. This
city also hosts a certain industrial activity concentrating on textile production and weaving, as well as
agricultural production.
The current transport relations link these key-nodes to Omorate through one of the main non-formal trade
corridors leading to South Sudan and Kenya.
It is important to note in this regard that South Sudan represents one of the main commercial partners for
Ethiopias exports, the agricultural products of the Oromia-SNNP states playing a key-part in this trade.
The interesting potential of this trade relation has not been provided with adequate infrastructure: As it has
been shown in Figure 112, Ethiopia only has one formal trade corridor connecting with South Sudan through
Gambela, which could hardly be considered a developed corridor; and a non-formal trade corridor (obiously
with sub-standard infrastructure) connects Ethiopia and South Sudan through the Omorate corridor.
Regarding Kenya, formal trade goes through the Moyale border post, but other non-formal trade relations take
place around this area too. As mentioned in Chapter 1.5.2, the yearly flows from Kenya to Ethiopia are 1.5 to
2 times the ERCAs registered trade, due to non-formal trade.
Trade relations with South Sudan and Ethiopia should not remain subjected to such a poor system of corridors,
with poor infrastructure and hosting mostly non-formal trade. This need is particularly urgent considering South

210
Sudan, a neighbour and land-locked country for which Ethiopia could become a regional distributor of both
imports and exports.
A sound and efficient connection within the area suggested in the terms of reference of the current study,
located within the area of influence of the current non-formal trade corridor to South Sudan and Kenya, could
represent a great opportunity for boosting Ethiopias exports as well as its development as a regional
distributor.
8.2
Objectives that the new road link will have to accomplish
The new road will have to accomplish specific objectives not only at the strategic level mentioned in the
previous subchapter, but also in other domains. These objectives will actually represent the basis for the multicriteria analysis to be undertaken after the definition of the different alternatives. They are listed and briefly
explained as follows:
Contribution to regional integration: As said in Chapter 8.1, the new road represents the current missing
link of an international trade corridor between Ethiopia, South Sudan and Kenya. A viable road axis
accomplishing this role efficiently will allow the development of official trade with Ethiopias neighbour
countries, which will lead to the development of its transport infrastructure and services to the level required
from a regional distribution centre.
Contribution to local development: The development of such a vital missing link must also be associated
to local development. Any potential areas to be benefited from the presence of such a powerful connection
will have to be taken into account. To set an example, if two possible alignments of similar length and cost
had to be chosen, it would be preferable to choose the alignment next to an existing development or to an
area that could host a potential development than along a deserted area with no possibilities for the
establishment of human activity.
Increase of accessibility: This can also be explained as the reduction of travel time for both travelers and
freight, under optimal travel conditions (including safety). The construction of a road link not leading to a
relevant improvement in travel time and/or design with regards to alternative (current) connections would
be of no use.
Minimization of construction cost: Public (or private) budget has a limit and the costs associated to the
construction of the new road must be reasonable. Therefore, a shortest path needing expensive bridges,
viaducts, tunnels, etc. might be discarded in front of a road of superior length but more reasonable cost;
likewise, an alignment implying high expropriation costs might be discarded in front of other options taking
much less private property.
Ease of implementation: Political issues are often linked to transportation projects crossing more than
one country. Even if the Government of Ethiopia is strongly interested in the road link, Ethiopia might not
be interested in the continuation of that particular axis within its territory (in other words, it will not be willing
to invest), or the current political situation in South Sudan will not be the most appropriate for a short-term
implementation of the project. This is a fundamental factor that might represent a major obstacle for the
full development of the project.
8.3
Alternatives
The need for such a new connection has already been pointed out in Chapter 6, with the proposal of
improvement of the Southern corridor through the establishment of a new road link through a border
post near Omorate.
Naturally this was only a pre-liminar proposal to be analysed in more depth in the current Annex, enlarging the
Omorate border post proposal with further alternatives.

211
In accordance with the main objectives established in the previous subchapter and taking into account the
orographic conditions of the study area, three main alternative alignments have been defined for the new road
connection:
Alternative 1 Omorate South

Alternative 2 Machi
Alternative 3 Omorate North
These three alternatives are described in the subchapters below.
8.3.1
Alternative 1. Omorate South
This alternative will follow the current alignment (240 km) of the road connecting road n.9 with Omorate, across
Ethiopian ground, near Magu National Park. This is already a paved road but 50% of its length (corresponding
to the stretch bordering the park and connecting to Omorate) has got little base and sub-base support and will
need thorough upgrade works which will almost represent th execution of a new road.
At the end of this road, a bridge has already been built over river Omo. From that bridge, 40 km of new road
(on flat ground) would connect Omorate with the beginning of road C47 next to Lake Turkana, avoiding Ilemis
Triangle. 25 km of this road would cross Ethiopian territory and 15 km would cross Kenyan territory.
A stretch of the C47 road, together with the road following the bank of Lake Turkana, would be upgraded down
to the final connection with road A1. This would represent an additional length of 180 km. It is important to note
that upgrade works will be necessary along this last stretches of road, particularly the Lake Turkana Road.
Figure 137. Proposed alignment for Alternative 1

To Addis Ababa
SOUTH
National Border
SUDAN
Proposal upgrading
Proposal new road
Trunk Road
Road n.9
Other links
Ilemi Triangle
SOUTH
SUDAN
Omorate
Juba
Road C47
UGANDA
ETHIOPIA
Bridge over river Omo
KENYA
Lake Turkana Road
A1 Road
To Mombasa
Source: ALG

212
8.3.2
Alternative 2. Machi
This alternative would connect the current on-going projects between Jima, Machi and the border with South
Sudan with the A1 road leading to Juba (South Sudan).
It will cross mostly flat terrain although an approximate 25% should be considered as hilly terrain.
An additional final stretch would consist on the upgrade of a 30 km of the road connecting the Kuron aerodrome
with the A1 road, across a flat terrain.
To Addis Ababa
Jima
SOUTH
SUDAN
National Border
Proposal upgrading
Proposal new road
Machi
On-going Project
Trunk Road
SOUTH
Other links
Ilemi Triangle
SUDAN
Juba
Local road to Kuron

aerodrome
Omorate
ETHIOPIA
KENYA
UGANDA
To Mombasa
8.3.3
Alternative 3. Omorate North
This connection will begin with the same alignment than Alternative 1, following the current road connecting
road n.9 with Omorate, representing 240 km of upgrade works across Ethiopian ground.
When arriving at Omorate, this connection would then go to the North using the current local road, which will
require 70 km of upgrade works. When reaching Mue (in a marshland area), the connection will turn to the
West, starting a new road of a 190 km length crossing South Sudan territory that will reach the current road
linking the Kuron aerodrome with the A1 road.
The Kuron aerodrome-A1 road will represent the final stretch of the proposed road link, representing 25 km of
upgrade works (on an easy flat ground) until the point where it reaches the A1 road.

213

To Addis Ababa
SOUTH
SUDAN
National Border
Proposal upgrading
Proposal new road
Trunk Road
Existing local road

to the North
Other links
Ilemi Triangle
SOUTH
SUDAN
Juba
Local road to Kuron

aerodrome
Omorate
ETHIOPIA
KENYA
UGANDA
To Mombasa
8.4
Multicriteria Analysis Preferred Alternative
The different alternatives have been evaluated on a qualitative basis, considering as the main criteria for
evaluation the five objectives explained in subchapter 8.2. It is important to note that, when estimating the
overall evaluation, each one of the five objectives has had the same weight. However, the Client should
consider a specific combination of weights (for example, if there is great concern on the political issues linked
to the ease of implementation a superior weight should be accorded to this particular obtective, etc.) the
Consultant will revise the evaluation accordingly.
A discrete range of evaluation marks has been considered, starting with 1 for the worst cases and ending with
5 for the best ones. The range of options is therefore the following: 1, 2, 3, 4, 5. The results of the evaluation
are shown in the table and figure below.

214
Table 32. Multi-criteria evaluation: Main results
Alternative 1
(Omorate South)
Alternative 2
(Machi)
Alternative 3
(Omorate North)
Weight
Contribution to
regional integration
Contribution to local
development
Increase of
accessibility
Minimization of
construction cost
Ease of
implementation
3.8
3.2
3.6
Objective
Final Evaluation
Figure 140. Multicriteria Analysis Chart

Regional integration
5
4
3
Ease of
implementation
Local
development
2
1
Construction cost
Accessibility
Alternative 1 (Omorate South)

Alternative 2 (Machi)
Alternative 3 (Omorate North)

215
The best global score has been accorded to Alternative 1. This has been mostly due to the high scores in
the regional integration, local development and ease of implementation domains: This road link connects
directly the highly productive area of southern Oromia and south eastern SNNP with both South Sudan and
Ethiopia, using local roads with potential for future development (particularly the coastal road associated to
Lake Turkana) and does not cross South Sudan territory, avoiding the current politival issues.
Having said this, it is necessary to point at a key issue regarding implementation: What is actually more
convenient? A road crossing Kenyan territory or a road crossing South Sudan exclusively? If we are thinking
about implementing the road in the short term, the current political situation in South Sudan does not allow an
immediate construction. However, Kenyas government might not be excessively interested in the execution
of a particular road link with Ethiopia across its territory, for it is currently focused on other international
corridors. At the end, the principle that has prevailed has been the existence (or not) of short-term political
issues.
Alternative 3 has been the one with the second best score. The best aspects of this alternative are the
fact that it improves Alternative 1 from the regional integration point of view, providing a short access to Juba
(South Sudan) from the aforementioned area of southern Oromia and south eastern SNNP, for a more
interesting construction cost. It is important to note in this regard that, although this alternative involves a
superior length of new road construction than Alternative 1, it also saves a good amount of kilometres of road
upgrade in not too easy engineering conditions. However, this new road would not contribute to local
development at all, and this has in a good way penalized its overall evaluation.
Finally, Alternative 2 has been the one with the worst evaluation. This has been due to the fact that it
does not contribute to local development and has not scored brilliantly in any of the other evaluation
criteria although it has been very similar to Alternative 3 in the accessibility and construction cost domains.
Alternative 1 would then be the chosen alignment for the new road link proposal. The total investment that
should be associated to this project would be around USD 377 million (205 USD million to be invested on
Ethiopian ground, USD 172 million in Kenyan ground). The same unitary cost has been considered for both
new construction road and the heaviest upgrade works (USD 1 million per kilometer, obtained as an average
value for flat/partially hilly ground). For the light upgrade works (current roads in acceptable condition) an
average unitary cost of USD 0.5 million per kilometer has been adopted. The time needed for the execution of
this project would be around 2 years.

216
9 Reviewed documents
The study team has been engaged actively in the collection of relevant study documents both from direct
stakeholders as well as other secondary sources. All-in-all, the data collection work has been a success as
most required documents were obtained.
The study documents identified have been classified into seven groups based on subject matter relevance and
also for ease of review. These seven groups are showed in the following figure.
Figure 141: Classification of previous studies
General and competitiveness studies
National Transport and Logistics Studies and Plans
Road Sector studies
Railway Sector studies
Other freight sectorial studies
Trade Facilitation studies
Sectorial Studies
and Plans
Source: ALG
All studies identified are listed and classified in the following table, indicating which ones have been possible
to obtain when this report have been written:
Table 33: Summary list of the identified documents
Classification
Study or Plan
Growth and Transformation Plan 2011 - 2015 (GTP) (2010), Ministry of Finance and
Economic Development (MoFED)
Annual Progress Report of the Growth and Transformation Plan 2012/13, Ministry of
Finance and Economic Development (MoFED)
African Development Banks Country Strategy Paper 2011- 2015 (2011), African
Development Bank
African Development Banks 10 Year Strategy 2013-2022, African Development Bank
1.
General
Competitiveness
Studies
Plan for Accelerated and Sustained Development to end Poverty (PASDEP) 2006- 2011
and (2006), Ministry of Finance and Economic Development (MoFED)
Survey on Perception of the level of Corruption By Foreign Investors in Ethiopia (2014),
World Bank
Development and Poverty in Ethiopia Period 1995/96-2010/11 (2013), Ministry of Finance
and Economic Development (MoFED)
Ethiopias Progress Towards Eradicating Poverty: An Interim Report on Poverty Analysis
Study (2010/11) (2012). Ministry of Finance and Economic Development (MoFED)
Road Sector Development and Economic Growth in Ethiopia (2011). Ethiopian Development
Research Institute
Assessment of 15 years performance of road sector development program (2013). Ethiopian
Roads Authority

Availability
217
Classification
Study or Plan
Transport and Poverty Observatory Study: Final Findings Report (2012). Ethiopian Roads
Authority
The Impact of Agricultural Extension and Roads on Poverty and Consumption Growth in
Fifteen Ethiopian Village (2008). Stefan Dercon et al. International Food Policy Research
Institute , 2008
Road Networks and Enterprise Performance in Ethiopia: Evidence from the Road Sector
Development Program (2012). Admasu Shiferaw et al. International Growth Centre
National Logistics Strategy (2014) , Maritime Affairs Authority
Transport and Poverty Observatory Study (2012), Ethiopian Roads Authority
2. National Transport
and Logistics Studies
and Plans
Ethiopia National Transport Policy (2011), Ministry of Transport

National Transport Master Plan Study (2008), Ministry of Transport
Republic of Djibouti: Transport and logistics in Djibouti: contribution to job creation and
economic diversification, World Bank
Road Sector Development Program IV (RSDP 2011-2015) and previous, Ethiopian Roads
Authority
Universal Rural Road Access Program (URRAP) report, Ethiopian Roads Authority
Evaluation of SPSPII in Support of Ethiopias RSDP and Contribution to the Potential
Follow-up under the 11th EDF (2013), The European Unions Programme for Ethiopia
Road Sector Development and Economic Growth in Ethiopia (2011), Ethiopian
Development Research Institute
3. Road Sector Studies
Modernization and Transformation Initiative (2013), Ethiopian Roads Authority

Consultancy for Updating RSDP + MDG 2011-2012, Ethiopian Roads Authority
Regional Road Network Development Plans, Respective Rural Roads Authorities
Consultancy Services for the Maintenance Needs Assessment and Updating of Road
Financing Study (2011), Ethiopian Roads Authority
Consultancy Services for Preparation of Federal Road Network Master Plan (2014),
Ethiopian Roads Authority
Railway Development Programme, Ethiopian Railway Corporation
Bankable Feasibility Concept Report for a Standard Gauge Railway Corridor between Addis
Ababa and Djibouti (Route 1) (2010), Ethiopian Railway Corporation
4. Railway Sector
Studies
5. Other freight sector

studies
6. Trade facilitation
Studies
Availability
Techno - Economic Feasibility Study Report on Addis Ababa/Sebeta - Djibouti Railway

Project (Original Feasibility Study Report), Ethiopian Railway Corporation42
Feasibility Study Report on New Standard-gauge Ethiopia/ Sebeta~Djibouti/ Nagad Railway

(Revised Feasibility Study Report), Ethiopian Railway Corporation
Final Evaluation Report on the Feasibility Study of Addis Ababa/Sebeta Djibouti Railway
Project (2012),China International Engineering Consulting Corporation
Feasibility Studies of other Railway Lines (various years), Ethiopian Railway Corporation
Airport Development Master Plan, Ethiopian Airports Enterprise
Dry Port and Multimodal Transport Development in Ethiopia- Facts & Figures; Ministry of
Transport (MoT) - Dry Ports Authority
Impact of WTO Accession on the Transport Services Sector of Ethiopia (2009), Ministry of
Trade
Source: ALG
42
Reports mentioned in the study Final Evaluation Report on the Feasibility Study of Addis Ababa/Sebeta Djibouti Railway Project
(2012),China International Engineering Consulting Corporation

218
As can be observed from the previous table, most of the studies identified have been obtained, especially for
competiveness and national transport and logistics studies. However, the major lacks are in the sector plans
and studies for the railway, the inland ports (dry ports) sector and the airport sector.
The reasons for the unavailability of these studies varies; in some cases the Consultant have found that the
institutions require some time to authorize, prepare and send the information; and some others are because
the relevant institutions have not been visited yet. The following table summarizes these reasons and the
responsible institutions from which the studies should be obtained:
Table 34: List of unavailable documents at 25/07/2014
Document
Institution responsible
National Logistics Strategy (2014) ,

Maritime Affairs Authority
Ministry of Transport
Railway Development Program
Ethiopian Railway
Corporation
Report in draft stage and not

made public yet
The responsible institution
have not provided the study
Ethiopian Railway
Corporation

Ethiopian Railway
Corporation

Ethiopian Railway
Corporation
Ethiopian Airports
Enterprise

Ethiopian Shipping and

Logistics Enterprise

Techno - Economic Feasibility Study

Report on Addis Ababa/Sebeta - Djibouti
Railway Project (Original Feasibility
Study Report)
Feasibility Study Report on New
Standard-gauge Ethiopia/
Sebeta~Djibouti/ Nagad Railway
(Revised Feasibility Study Report)
Feasibility Studies of other Railway
Lines (various years)
Airport Development Master Plan
Dry Port and Multimodal Transport
Development in Ethiopia- Facts &
Figures
Reason for Unavailability
Source: ALG
The unavailability of these documents has resulted in the reduction of depth of overview and understanding.
However, the team has partially supplemented these gaps through information gathered through interviews
and other secondary sources.

219
10 Field work and interviews developed during the project

The data collection process has consisted in four missions to the country during the first four months of project
development. During this time, the consultant have driven more than 5,000 km and developed more than 92
interviews for data collection purposes.
Figure 142: Distribution of interviews and driven roads during the data collection process
Key
Distribution of interviews by kind of

organization
Humera
Shire
Khartoum
6%
Public Institutions
Chambers and associations
Public and private companies
Multilateral Institutions
Adigrat
Axum
Mekele
Metema
40%
92
Driven roads
Gonder
42%
Semera
Debre Tabor
interviews
Weldiya
Bahir Dar
Galafi
Djibouti
Kombolcha
12%
Dewele
Kurmuk
Debre
Markos
Asosa
Debre
Birhan
Dire Dawa
Distribution of interviews by location

Addis Ababa
Nekemte
Addis Ababa
45
Mekele
Arba Minch
Hawasa
Weliso
Bahir Dar
5
4
Khartum
Djibouti
Modjo
Axum
Sheshemene
Ziway
Dewele Border
Konso
Gelan
Adama
Dhaga-Bur
Gambela
Ziway
Dire Dawa
Jig-Jiga
Harari
Jimma
Shashemene
Sodo
Hawassa
Kebri Dehar
Imi
Dima
Arba Minch
Gode
Konso
Omorate
Negele
Yebelo
Dolo Odo
Moyale
Source: ALG

220
11 Additional tables and information

11.1 Main Ethiopian Cities and Towns
Table 35: Most populated cities in Ethiopia by region, inhabitants (2012)
Region
Addis Ababa
Afar
Amhara
Benishangul-Gumuz
Dire Dawa
Gambela
Harari
Oromia
SNNP
Somali
Tigray
City/Town
Asayta
Gonder
Bahir Dar
Dessle
Debre Brehan
Debre Markos
Komboicha
Debretabor
Woldiya
Asosa
Gambela
Adama
Jimma
Shashemene
Bishoftu
Nekemte
Asela
Sebeta
Burayu
Ambo
Arsi Negele
Robe
Zeway/Batu
Hawassa
Sodo
Arba Minch
Hosaena
Dila
Jijiga
Gode
Semen Mekele
Debub Mekele
Adigrat
Shire Enidasilase
Axum
Adwa
Total
Population
3,040,740
22,548
254,450
191,016
147,592
80,167
76,807
72,100
68,326
56,703
37,365
262,884
59,393
110,457
271,562
149,166
123,879
123,230
92,759
82,955
60,834
60,273
59,404
58,320
54,732
53,841
212,665
102,923
101,339
94,728
80,051
147,482
50,655
156,889
116,712
72,974
59,917
56,576
51,320
6,975,734
Cities with more than 50,000 inhabitants have been considered in this table. In the case of Afar and Benishangul-Gumuz, the most
populated city has been included.
Source: ALG based on Central Statistics Agency (CSA) projections for 2012

221
11.2 ECX warehouses

Table 36: ECX operating warehouses
No
Location
Commodity Type
Capacity
Coffee
Grain
Quintals
Distance
From
Addis
Ababa
Km.
300,000
50,000
515
Addis Ababa(Saris)
Dire Dawa
Nazareth
165,000
90
Bure
135,000
410
Nekempte
100,000
330
Humera
300,000
988
Hawassa
200,000
273
Jimma
170,000
346
Bedelle
50,000
580
10
Dilla
280,000
390
11
Gimbi
135,000
450
12
Gondar
200,000
738
13
Metema
240,000
888
14
Assossa
50,000
685
15
Sodo
110,000
329
16
Bonga
110,000
450
Source: Ethiopian Commodity Exchange

222
11.3 Ethiopian External

11.3.1 By border post
Table 37: External trade by border post
IMPORTS
Border Post registered
Airport
A.A AIR PORT CUSTOMS
ALULA ABANEGA AIRPORT CUSTOMS
DIRE DAWA AIRPORT CUSTOMS
Djibouti
DEWELE CUSTOMS OFFICE
GALAFI CUSTOMS OFFICE
Eritrea
RAMA
ZALA ANBESSA
Kenya
MOYALE CUSTOMS OFFICE
Somalia
BARE CUSTOMS CENTER JIJIGA
BOH CUSTOMS CENTER JIJIGA
DOLOBAY CUSTOMS CENTER JIJIGA
DUDUB CUSTOMS CENTER JIJIGA
FERFER CUSTOMS CENTER JIJIGA
GASHAMO CUSTOMS CENTER JIJIGA
GELADIN CUSTOMS CENTER JIJIGA
Somaliland
TOGOWECHALE CUSTOMS OFFICE
South Sudan
GAMBELLA CUSTOMS OFFICE
Sudan
ALMAHAL CUSTOMS OFFICE
GIZEN CUSTOMS OFFICE
HUMERA CUSTOMS OFFICE
KUMRUK CUSTOMS OFFICE
METEMA CUSTOMS OFFICE
Internal
A.A KALITY CUSTOMS OFFICE
A.A KALITY GELAN SUB-BRANCH
A.A. PARCEL POST CUSTOMS
AWASH CUSTOMS OFFICE
BAHAMZA CUSTOMS CHEEK CENTER
COMBOLCHA CUSTOMS OFFICE
D.D LA GARE CUSTOMS OFFICE
HEAD QUARTER
JIJIGA CUSTOMS OFFICE
MEKELE CUSTOMS OFFICE
NAZARETH CUSTOMS OFFICE
SEMERA DRY PORT
Total general
Net Wt. (Kg)
EXPORTS
%
26,517,545 0.4%
26,509,980 0.4%
2,700 0.0%
4,865 0.0%
7,185,961,535 97.4%
313,787,279 4.3%
6,872,174,256 93.2%
- 0.0%
- 0.0%
- 0.0%
10,143,761 0.1%
10,143,761 0.1%
11,102,590 0.2%
5,357,220 0.1%
- 0.0%
170,000 0.0%
4,354,970 0.1%
149,300 0.0%
1,071,100 0.0%
- 0.0%
93,660,048 1.3%
93,660,048 1.3%
9,000 0.0%
9,000 0.0%
19,826,950 0.3%
- 0.0%
- 0.0%
1,877,473 0.0%
- 0.0%
17,949,477 0.2%
30,142,332 0.4%
10,682,460 0.1%
164,827 0.0%
88,476 0.0%
- 0.0%
- 0.0%
1,795,585 0.0%
1,831,923 0.0%
848 0.0%
2,248 0.0%
13,822,679 0.2%
1,645,635 0.0%
107,652 0.0%
7,377,363,760 100.0%
Net Wt. (Kg)

72,810,395
72,782,755
27,640
860,713,764
72,712,697
788,001,067
3,787
3,787
28,329,635
28,329,635
18,198,928
110,050
260,323
14,703,482
1,666,197
1,458,876
158,809,564
158,809,564
3,219,524
3,219,524
199,079,195
1,565,561
201,713
107,543,771
8,980
89,759,170
8,946,872
1,876
653
2
6,722,012
1,960,566
258,791
2,972
1,350,111,665
TOTAL
%
5.4%
5.4%
0.0%
0.0%
63.8%
5.4%
58.4%
0.0%
0.0%
0.0%
2.1%
2.1%
1.3%
0.0%
0.0%
0.0%
0.0%
1.1%
0.1%
0.1%
11.8%
11.8%
0.2%
0.2%
14.7%
0.1%
0.0%
8.0%
0.0%
6.6%
0.7%
0.0%
0.0%
0.0%
0.0%
0.5%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
Net Wt. (Kg)
99,327,940 1.1%
99,292,735 1.1%
2,700 0.0%
32,505 0.0%
8,046,675,299 92.2%
386,499,976 4.4%
7,660,175,323 87.8%
3,787 0.0%
- 0.0%
3,787 0.0%
38,473,396 0.4%
38,473,396 0.4%
29,301,518 0.3%
5,467,270 0.1%
260,323 0.0%
170,000 0.0%
4,354,970 0.0%
14,852,782 0.2%
2,737,297 0.0%
1,458,876 0.0%
252,469,612 2.9%
252,469,612 2.9%
3,228,524 0.0%
3,228,524 0.0%
218,906,145 2.5%
1,565,561 0.0%
201,713 0.0%
109,421,244 1.3%
8,980 0.0%
107,708,647 1.2%
39,089,204 0.4%
10,684,336 0.1%
164,827 0.0%
89,129 0.0%
2 0.0%
6,722,012 0.1%
1,795,585 0.0%
3,792,489 0.0%
848 0.0%
2,248 0.0%
14,081,470 0.2%
1,645,635 0.0%
110,624 0.0%
8,727,475,425 100.0%
Source: ALG processing based on ERCA data

223
11.4 Historical traffic counts in selected road links

Table 38: AADT evolution for selected links (2002-2012)
AADT per direction
Side 1
Side 2
2002
2004
2006
2008
2010
2012
ADDIS ABABA
DEBRE BERHAN
952
1,019
1,126
1,458
1,553
1,679
COMBOLCHA
DESSIE
738
906
987
822
1,415
1,622
WELDIYA
MAICHEW
178
456
428
482
817
784
MAIMEKDEN
ADIGRAT
510
572
392
531
763
996
MILLE
ASSEB
652
695
966
1,021
1,107
1,066
ADDIS ABABA
COMANDO
736
943
1,428
1,534
2,129
1,917
D/MARKOS
BURIE
192
389
624
892
1,358
1,717
BAHIRDAR
WERETA
363
348
696
1,234
1,649
1,663
GONDAR
DABATE
216
216
392
388
525
625
SHIRE
ADIABUN
344
393
501
436
619
780
ADDIS ABABA
AKAKI
7,283
17,135
14,911
15,841
19,641
23,134
AKAKI
D/ZEIT
7,512
9,553
10,805
16,358
19,272
21,913
D/ZEIT
NAZRETH
6,521
5,730
7,438
9,812
15,584
17,496
NAZRETH
AWASH
1,187
1,670
1,999
2,440
3,203
4,529
DENGEGO
HARAR
1,666
2,219
1,733
1,714
2,264
1,818
HARAR
JIJIGA
693
524
648
718
1,431
1,717
ADDIS ABABA
AMBO
876
928
1,192
1,410
1,866
1,847
NEKEMPTE
GIMBI
170
243
296
531
523
541
ASOSSA
KURMUK
MODJO
SHASHEMENE
YABELLO
MOYALLE
ADDIS ABABA
GHION
JIMMA
No included
No included
No included
No included
No included
1,465
1,860
2,301
2,717
2,935
3,534
94
173
209
204
245
245
1,492
1,829
1,560
2,722
2,933
2,943
BONGA
380
422
326
361
437
523
ALEMGENA
BUTAJIRA
237
423
531
1,190
1,212
1,800
SODO
A/MINCH
285
405
416
433
395
402
WELKITE
HOSANA
289
352
515
620
753
890
AWASH
MILLE
625
635
1,009
1,217
1,216
1,503
AZEZO
METEMA
159
288
407
528
706
838
WERETA
WELDIYA
212
254
286
399
546
721
JIJIGA
DEGEHABUR
285
343
409
1,054
994
790
JIJIGA
TEFFERI BER
No included
316
282
326
NEKEMPTE
ARJO
57
80
40
155
204
126
ARJO
BEDELLE
192
222
151
216
365
355
SHASHEMENE
DODOLA
208
343
449
518
559
536
GORE
GAMBELLA
94
123
199
319
396
472
ZEWAY
BUTAJIRA
172
242
321
676
588
779
No included
No included
207
Source: ERA

224
11.5 Details of Addis Ababa Djibouti Railway Project

Table 39: Detailed characteristics of the Addis Ababa Djibouti Railway project
TECHNICAL ITEM
REQUIREMENT
TRACK
Track Length
Circa 780 Km (To be finalized in Detailed Design)
Gauge
1,435 mm
Passing loops
*3-km long at = 30km intervals approximately or at stations (Subject

to capacity assessment and performance modelling)
Rail section
UIC 54 or 60 kg rails CWR on concrete sleepers at 60 cm spacing
Turnouts and Passing loops
Suitable for 100 kph in the loop line
Alignment
Where possible, construct as open route (ie in cutting/

embankment, on bridges/viaducts as much as possible). Where
tunnels are required, these to be as short as possible.
Formation Width
*Double Track or Single Track (Suitable for Future Double Track)
Horizontal curvature
> 2,000 meters minimum (in urban areas and approaching

developed cities, lower radii can be permitted).
Ruling gradient
<1.0% (In exceptional conditions 2% maximum gradient will be

permitted to minimize extent of cut/fill + tunnelling works),
Maximum passenger train speeds
160 kph (with future provision for 200/225 kph operation)
Maximum freight train speeds
120 Kph
Permanent speed restrictions
<10% of the route mileage
Axle loading
25 Tonnes Maximum
Structure Gauge
UIC Compatible
Track Drainage
Pipe with Filter Material or Open Channel (Finalise With

AAU/Detailed Design Consultants Where Risk of Flash Flooding).
ELECTRIFICATION(ii)
Traction supply
25 KV 50 Hz via Overhead Line Equipment See Typical Section
Sub-stations supply
From two separate sources
ROLLING STOCK
Passenger rolling stock
EMU and Locomotive hauled passenger trains
Mainline locomotives
6,000 HP Electric Traction for passenger train operation, circa

9,600 HP Electric Traction for freight train operation.
Freight rolling stock
100 Tonnes gross weight. Examine option for double stacking

containers. Freight train length circa 775m
Maintenance locomotives
2,500 HP Diesel Electric Traction (Can be used for project

construction train operations, initial revenue earning services and
operational perturbations recovery).
Shunting locomotives
1,000 HP Diesel Hydraulic Traction or similar
Braking System
Dual Air Pipe (Operation and Fail Safe) or similar
Coupling Type
Buck Eye or similar automatic type.
SIGNALS AND COMMUNICATION

Signalling
Fixed block + Lineside Signals + In Cab Technology. ERTMS/ETCS

Level 1 + 2 or equivalent standard compatibility. (Moving Block
signalling technology option to be assessed).
Communication
GSM- R or similar fibre optic based. Fixed + mobile telephones.
Train control
CTC, ATC, ATS, remotely controlled points machines

225
TECHNICAL ITEM
REQUIREMENT
OPERATION
Trailing Load (Freight)
*3000 Tonnes Gross (2250 Tonnes Payload) Maximum. (Eg 30 No

x 100 Tonne Petroleum Products/Aggregates/Metal Products/Bulk
Cement etc or 40 No Mixed Container/Grain/Livestock/Farm
Products etc.
Trailing Load (Passenger Train)
*600 Tonnes (10 x Passenger Coaches (@ 23m) + DVT/Baggage
Predicted
D/Dawa
Journey Time
Addis
to
Passenger Train 4 Hours (Fastest Train)
Predicted
D/Dawa
Journey Time
Addis
to
Freight Train 8 Hours (Fastest Train)
Predicted Journey Time D/D to Djibouti
Passenger Train 3 Hours (Fastest Train)
Predicted Journey Time D/D to Djibouti
Freight Train 6 Hours (Fastest Train)
INFRASTRUCTURE
Can GIS/Alignment Team Assess This ASAP Muluken Follow Up
Overbridge (Road over Rail)
*Work in Progress
Underbridge (Rail over Road)
*Work in Progress
Intersection Bridge (Rail over Rail)
*Work in Progress
Culvert
*Work in Progress
Viaduct
*Work in Progress
Tunnel
*Work in Progress
Earthworks
*Work in Progress
MISCELLANEOUS
Level crossings
To be avoided use grade separation wherever possible. Where

necessary in urban/developed areas, remote controlled and
monitored by CCTV.
Lineside Fencing
Animal proof fence to be provided in the open country with

accommodation crossings or elevated sections to suit environment
and wildlife.
Marshalling Yards
Simple layout (to suit current capacity requirements with provision

for future capacity aspirations).
Strategic Maintenance Depots
Addis Ababa (Gelan) or Adama (to be decided on completion of

AAU Transport Planning Studies and associated Capacity
Assessment + Rail Infrastructure Requirements) and Dire Dawa.
General Maintenance Depots
At intervals of about 90 km, or convenient town or city. Provision to

be made for stabling of on track maintenance plant (tamping /rail
grinding machines etc., provision also to be made to stable diesel
rescue locomotives for recovery of broken down trains.
Towns served
See Route Corridor Schematic Diagrams.
Station structures
Platforms (length circa 300m, number to be determined by capacity

assessment/performance modelling), ticket offices, train
maintenance/cleaning sheds, shopping complex at main stations.
Environment
Compliant with national regulation. Pay particular attention to wild

life conservation, forests and water ways and water towers.
Source: ERC

226
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Tnger 98, 3 planta
08018 Barcelona (Espaa)
Tel: (+34) 93 430 4016
Fax: (+34) 93 363 0623
alg@alg-global.com
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Analytical Work on Ethiopia's Transport Sector

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Analytical Work on Ethiopia's Transport Sector

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Analytical Work on Transport Sector in Ethiopia:

Growth, Competitiveness and Regional Integration

1st Draft Final Report

Jos Enrique Prez

Economic and Poverty Reduction Contributions by Transport Sector ......................................................12

Socioeconomic hints on Ethiopia ..................................................................................................14

Ethiopian economy .......................................................................................................................18

Ethiopian production .....................................................................................................................21

Livestock farming ......................................................................................................................30

Product analysis .......................................................................................................................39

Commercial partners ................................................................................................................41

International corridors and border posts ...................................................................................43

Transport sector contribution to economic growth and poverty reduction ....................................50

The role of infrastructure in poverty reduction ..........................................................................50

Transport sector and poverty reduction. Direct approach ........................................................52

Transport sector and economic growth. Indirect approach. First findings................................53

Transport sector and poverty reduction. Future vision .............................................................55

Ethiopian foreign trade and trade facilitation ................................................................................38

Key issues ....................................................................................................................................57

Transport Sector Developmental Status ...................................................................................................59

Road transport ..............................................................................................................................59

Road infrastructure ...................................................................................................................60

Road transport demand ............................................................................................................65

Road infrastructure supply vs. demand ....................................................................................72

Road safety and overload traffic ...............................................................................................74

The road haulage services sector ............................................................................................77

Maritime transport and international logistics ...............................................................................80

International maritime and logistics infrastructure ....................................................................80

International transport and logistics services to Djibouti (DJI corridor) ....................................88

Customs and border post .........................................................................................................97

Railway transport ..........................................................................................................................99

The Ethio-Djibouti railway line ..................................................................................................99

Analytical Work on Transport Sector in Ethiopia:

Preliminary demand estimations for new railway network .....................................................102

Development policy context ........................................................................................................112

Current transport policy context ..................................................................................................113

Policy and Strategic Planning in Transport Sector .................................................................113

Institutional framework ................................................................................................................117

Road transport institutional framework ...................................................................................118

Rail sector institutional framework ..........................................................................................118

Aviation sector institutional framework ...................................................................................118

Maritime sector institutional framework ..................................................................................119

Other institutions with impact on transport sector ..................................................................119

Institutional coordination .........................................................................................................120

Key issues ..................................................................................................................................110

Policy and Institutional Regimes .............................................................................................................112

Air transport ................................................................................................................................105

Key issues ..................................................................................................................................121

Financing the Transport Sector ...............................................................................................................123

Introduction to the financial status of the transport sector ..........................................................123

Analysis of investments and maintenance .................................................................................126

Ethiopian Civil Aviation Authority ............................................................................................126

Ethiopian Airports Enterprise ..................................................................................................126

Federal Transport Authority ....................................................................................................127

Ethiopian Roads Authority ......................................................................................................127

Financing mechanisms ...............................................................................................................132

Key issues ..................................................................................................................................134

Regional Context and Strategy ...............................................................................................................135

Regional integration context .......................................................................................................135

Introduction to Regional Integration........................................................................................135

RECs in Eastern Africa ...........................................................................................................136

The Tripartite Free Trade Agreement .....................................................................................139

The role of AfDB in Eastern Africa..........................................................................................140