- East Africa
Ethiopian economy highly affected by Djibouti port tariffs
Landlocked Ethiopia advised to build more dry ports
Exorbitant charges, among other factors, incurred by Ethiopia at the Port of Djibouti, have seen the landlocked eastern African country’s economy hit the doldrums, a draft study financed by African Trade Policy Centre (ATPC) of UNECA has revealed. The Economic Commission for Africa has undertaken a feasibility study that could see the construction of more dry ports in Ethiopia.
High cost of charges, reduced free time for imported cargos and inadequacy of storage facilities are some of factors that exaggerated Ethiopia’s total logistic cost for its import and export of commodities, according to the study.
The port currently has over 600,000 tons of cargo on the ground or in the holds of ships. This is creating a congestion and hampering transit operations and costing the country huge sums of money.
“The estimated total transit costs have been consuming over 16 percent of Ethiopia’s foreign trade value which is about two million dollars per day, which literally bleeds the economy”, the study revealed on Tuesday, November 24, 2009, read.
If the situation is allowed to continue, it will recur with even more serious losses coupled with the country’s scarce foreign currency, according to the study.
Ethiopia imports goods worth 76.6 billion birr and exported commodities worth 28.3 billion birr during the year 2008 alone, according to the report.
Ethiopia’s dependent on imported goods made the port serve 98 percent of Ethiopian traffic which is about 85 percent of the whole port traffic.
Meanwhile, the Economic Commission for Africa, (ECA), has announced its intention to undertake a feasibility study for dry ports in the country on behalf of the Ethiopian Dry Ports Services Enterprise.
ECA experts have revealed that, "with a dry port, goods being transported to a landlocked country, rather than undergoing customs procedures at the seaport, would instead be transported directly to the country’s dry port, where customs clearance would take place."
Studies by the Commission have also shown that, keeping distance constant, transport costs for landlocked countries are on average $2000 USD higher than those for non-landlocked countries owing to delays at seaports and border posts.
The construction of new dry ports as well as the expansion of the two existing dry ports in Mojo and Samera could be envisaged in the near future.
“The ability of landlocked countries to trade does rely on the existence of efficient and easily accessible transit corridors of which dry ports constitute a vital component [...] The benefits of efficient dry ports could be enormous for Ethiopia," said Stephen Karingi, Chief of Trade and International Negotiations at ECA.