The Management of Commercial Road Transport

in Ethiopia

May 2009

Sida

Produced and distributed by the Addis Ababa Chamber of Commerce and

Sectoral Associations with �inancial support from the Swedish Agency for

International Development Cooperation, Sida

© Private Sector Development Hub/Addis Ababa Chamber of Commerce and Sectoral Associations, 2009

P. O. Box 2458, Mexico Square, Addis Ababa, EthiopiaTel: +251(0) 115 504570/ 542405, Fax: +251 (0) 115 542404,

Email: psdhub@addischamber.com

All Rights Reserved.

No part of the publication may be produced or transmitted in any form or by any means without the prior permission of the copyright holder. The only exception is for a reviewer, who may quote short excerpts in a review.

Disclaimer:- The views expressed in the study do not necessarily reflect the views of PSDHub or Addis Ababa Chamber of Commerce and Sectoral Associations or Sida. They are solely the responsibilities of the authors.

Acknowledgementshe study on The Management of Commercial Road Transport in Ethio-pia was initiated by the Private Sector Development Hub in response to the problems encountered by transport companies, associations, and individual operators with respect to operating environment, costs and

margins; and by transport service users in relation to effi ciency, price and reli-ability with its impact on competitiveness.

W.T Consult Pvt. Ltd. Co. was contracted to undertake the study and produced the draft report. The report was further reviewed, enriched and fi nalized by David Shelly of BKP Development Research and Consulting GMBH.

Throughout the report, “Consultant” refers to W.T Consult, while “Review Team” refers to BKP and David Shelly who have fi nalized the report.

ContentsAcknowledgements

Acronyms

Chapter One Introduction 9

Chapter Two Transport Sector and Macroeconomic Background 13

Macroeconomic Scenarios and Development 13Highways and Roads 16Road Traffi c and Composition 18Road Safety 22Vehicle Fleet and Travel Characteristics 25Railway Mode 33Shipping: Need for Choice in Multimodal Transport 34Air Cargo Mode 37Development of the Multimodal Transport Industry in Ethiopia 38Ports of Entry 41Dry Ports 41

Chapter Three Road Freight Transport 45

Categories of Operation and Capacity 46International Road Freight Operations (Import and Export Traffi cs) 47Freight Transport Demand and International Freight Transport Service Delivery 49Interurban Domestic Road Freight Operations 56Urban Freight Operations 57Road Transport Maintenance Planning and Facilities 61Road Freight Terminals 61Warehousing 62Freight Transport Vehicle Productivity and Costs 62Road User Costs 68Freight Tariffs 70Freight Forwarding 73Vehicle Overloading 74The Potential for Road-Rail Inter-Modal Transport 76Current Status of Commercialization 77Freight Transport Service Forecast (2006-2015) 77

Chapter Four Road Passenger Transport 79

Passenger Transport Fleet Utilisation 81Urban Transport 81Level of Service: Intercity and Urban Bus Operations 88Taxi Fleet and Level of Service: Operations in Addis Ababa 91Travel Demand/ Patronage 93Passenger Transport Vehicle Productivity and Costs 94Competition and Effi ciency 95Entrance to Market 96Public Transport Maintenance Facilities 97Road Passenger Terminals 97Anbassa Depot Sites 98Fares and Tariffs 98

Status of Commercialization 102Passenger Transport Service Forecast 103

Chapter Five Institutional Arrangements in Road Transport 107

Political Context: Institutional Structure Including Allocation of Powers between Jurisdictions 107Other Relevant Government Institutions 108Road Freight Transport Industry Structure 110Road Freight Transport Industry Organizations 112Road Passenger Transport Industry Structure 115Road Passenger Transport Industry Organizations 118Road Safety 119Access to the Profession 119Human Resource Development and Management Capacity 120Some Institutional Issues 121

Chapter Six Legal Framework and Road Transport Regulations 123

Legal Framework 123Road Transport Regulations 124Operation and Regulation of Road Passenger Services 126Operation and Regulation of Road Freight Services 127Findings of Road Transport Regulations Study 127Findings of National Transport Master Plan Study 128Findings of Other Studies 130Key Legislative Issues 132Key Regulatory Issues 133

Chapter Seven Banking and Transport Industry Insurance 135

Financial Performance and Sustainability 135Motor Vehicle Insurance 137Key Business, Finance and Management Issues 139Key Banking and Insurance Issues 140

Chapter Eight Analyses of Some of the Principal Road Transport Issues 141

Overview of Road Passenger Transport 141Overview of Road Freight Transport 142Some Important Challenges in Road Transport 143Some Measures to Improve Road Safety in the Road Transport Industry 145Some Measures to Improve Urban Transport Organisation in Addis Ababa 147Some Measures to Enhance International Road Freight Business 147Some Measures to Enhance Dry Port Operations 148Some Measures to Combat Vehicle Overloading 150

Chapter Nine National Transport Masterplan Study Framework and Strategic Directions 151

Specifi c Action Plan Components: Road Freight (Excluding Import/ Export Corridor Traffi c) 152Possible Free Trade Zone 157Specifi c Action Plan Components: Road Freight Import/ Export Corridor Traffi c 158Specifi c Road Transport Action Plan Components: Intercity and Urban Transport 161

Chapter Ten Synthesis of Study Recommendations 163

Vision Statement 163Policy Statements 163Adoption of Specifi c Actions for Road Transport Sub-sector 165Development of Wider Action Plans by Implementing Institution 166Possible Follow-up Process 171

Annexes

Annex 1 Minibus Taxi Service Supply Characteristics 175

Annex 2 Competition and Effi ciency – Road Freight 181

Annex 3 Bus Fares and Tariffs 183

Annex 4 Road Freight Industry Structure 188

Annex 5 Public Transport Industry Structure 194

Annex 6 Access to Credit/Loans 199

Annex 7 Free Trade Zone 202

Annex 8 A WTO Accession 204

Annex 8 B Developments in the Freight Industry - World Experiencs 205

Annex 9 National Transport Master Plan 207

Annex 10 Specifi c National Transport: Master Plan Priorities 208

Annex 11 Road Transport: Action Plans for Principal Actors with Timeline 210

List of Tables Table 2.1 Annual GDP Growth Estimates (2006/07 – 2026/27) 16

Table 2.2 Regional Development Scenarios 16

Table 2.3 Summary of Daily Traffi c on ERA Network (1994–2004) 19

Table 2.4 Growth in Daily Traffi c (in Vehicle-Km) on ERA Network, 1994-2004 19

Table 2.5 Estimated Traffi c Flows on Selected Routes in 2004 19

Table 2.6 Traffi c Growth (2003-04) 20

Table 2.7 Road Network Compositions, Km (2008) 21

Table 2.8 The Magnitude of Road Traffi c Accidents (RTA’s) in Ethiopia 23

Table 2.9 Traffi c Accident Deaths by Road User Type 24

Table 2.10 Accident Involvement of Vehicles in the Year 2004/5 24

Table 2.11 Growth of Ethiopian Road Vehicle Fleet (2000/01 - 2004/05) 26

Table 2.12 Annually Inspected and Registered Vehicles by Type of Services 26

Table 2.13 Road Passenger and Freight Fleet Data-Total Vehicles by Capacity (Year 2007) 27

Table 2.14 Imported Freight Transport Vehicles 28

Table 2.15 Annual Growth of Minibus Taxi Fleet by Seat Capacity (1998/99-2004/05) 29

Table 2.16 Growth of Passenger Fleet by Seat Capacity 29

Table 2.17 Annual Growth of Public Road Passenger Vehicles by Seat Capacity (2005 – 2008) 30

Table 2.18 Occupancy Rates for Passenger Vehicles (2006) 30

Table 2.19 Loading of Goods Vehicles in MT (2006) 31

Table 2.20 Truck Commodities Carried and Average Load Per Truck in Tonnage 31

Table 2.21 Average Truck Journey Times from Survey 32

Table 2.22 Distribution of Vehicles between Regions 33

Table 2.23 Estimate of Transit and Transport Costs of Export 37

Table 2.24 Estimate of Transit and Transport Costs of Import 37

Table 3.1 Growth in Cargo Traffi c (1999-2005) 50

Table 3.2 Growth of Annual Liquid Bulk Cargo Traffi c (1999-2005) 55

Table 3.3 Good Vehicle Access and Loading Objectives in Urban Areas 60

Table 3.4 Cargo Delay Values (2004/05) 65

Table 3.5 Fuel Retail Price Structure, Birr /Cents Per Litre (August 2006) 65

Table 3.6 Countrywide Retail Pump Prices in Birr Per litre (December 2006) 66

Table 3.7 Indicative Truck Financial Operating Costs Per Tonne Km (Birr) 67

Table 3.8 Comet Truck Break-even Operating Costs in Birr (2006) 67

Table 3.9 Import Duties and Excise Taxes on Vehicles 69

Table 3.10 Fuel Retail Price Structure in Birr Per Litre (August 2006) 69

Table 3.11 Freight Transport Tariffs, 2005/06 (Ethiopian fi scal year 1997) 71

Table 3.12 Loading of Goods Vehicles (2006) 74

Table 3.13 The National Transport Master Plan Study Truck Forecasts 78

Table 3.14 Review Study Truck Forecasts 78

Table 4.1 Services of Anbassa City Bus Entrprise (1991-2001) 82

Table 4.2 Annual Growth of Road Transport Passenger Volumes and Pax-kms 2005-2008 93

Table 4.3 Indicative Bus Financial Operating Costs Per Passenger Km (Birr) 94

Table 4.4 Occupancy Rates for Passenger Vehicles (2006) 95

Table 4.5 Long Distance Bus Passenger Tariffs (2005/06) - Ethiopian fi scal year 1997 99

Table 4.6 The National Transport Master Plan Study Passenger Vehicular Fleet Forecasts 103

Table 4.7 Review Study: Passenger Vehicle Fleet Forecasts 104

Table 4.8 Annual Growth of Road Transport Passenger Traffi c & Pax-Kms (2005-2008) 104

Table 4.9 Review Study Passenger Traffi c Forecasts 105

Table 5.1 Commercial Trucks Licensed by Transport Authority (2006) 111

Table 5.2 Comet Haulage Performance, by Year 115

Table 5.3 Intercity Bus Seats (2006) 116

Table 5.4 Organizations and Composition of Staff Per Qualifi cation 121

Table 10.1 National Transport Master Plan Specifi c Actions for Road Transport 165

Table 10.2 Action Plans: Recommendations by Principal Actors 167

List of FiguresFigure 2.1 National Transport Network 2007 17

Figure 2.2 National Road Network After Completion of RSDP-III 18

Figure 2.3 Growth of Road Network and Vehicle - Km (2008) 21

Figure 2.4 Commodities Carried by the Trucks in 2007 32

Figure 4.1 Population Densities in Ethiopia 79

Figure 4.2 Modal Split of Addis Ababa City Passenger Traffi c 84

Figure 8.1 Strategies Proposed for Improving Urban Public Transport in Ethiopian Cities 148

Acronyms

AACRA Addis Ababa City Roads Authority AACTO Addis Ababa City Transport Organisation (proposed) ADLI Agricultural Development-Led Industrialization ADR Agreement on Dangerous Goods by RoadAETR Agreement Concerning the Work of Crews of Vehicles Engaged in International Road TransportASYCUDA Automated System for Customs Data (an UNCTAD computer program for customs) CAA Civil Aviation Authority CCA Customs Clearance AssociationCDE Ethio-Djibouti Railway (Chemin de fer Djibouto-Ethiopien) CNG Compressed Natural Gas COMESA Common Market for Eastern and Southern Africa CPC Certifi cate of Professional CompetenceCRA Community Roads Authority (alternative name for RADA) CRMC Community Road Management Committee DGSA Dangerous Goods Safety Adviser (management of depots with ADR drivers operating)DPPB Disaster Prevention and Preparedness Bureau (Regional level)DPPC Disaster Prevention and Preparedness Commission (Federal Government level)DPPD Disaster Prevention and Preparedness Department (Zonal level)EADA Ethiopian Airports Development Authority (proposed) EAE Ethiopian Airports Enterprise EAL Ethiopian AirlinesEDF European Development Fund EFFSA Ethiopian Freight Forwarders and Shipping Agents Association

EPE Ethiopian Petoleum EnterpriseERA Ethiopian Roads Authority ERTTP Ethiopian Rural Travel and Transport Programme ESL Ethiopian Shipping LinesEU European UnionFCL Full Container LoadFEU Forty-foot equivalent unit (2 x TEU)FIATA International Federation of Freight Forwarders Associations GDP Gross Domestic Product IATA International Air Transport AssociationICC International Chambers of CommerceICD Inland Container Depot or Inland Clearance Depot ICT Information Communications TechnologyILC International Logistics CentreIMT Intermediate Transport IRU International Road Transport UnionIU Implementation Unit (proposed) LCL Less than Container LoadMoARD Ministry of Agriculture and Rural Development MDG’s Millennium Development Goals

MoFED Ministry of Finance and Economic Development MoTC Ministry of Transport and CommunicationsMT Metric TonMoTI Ministry of Trade and IndustryMTSE Maritime Transit Services Enterprise MoWUD Ministry of Works and Urban Development NGO Non-Governmental OrganisationNRSC National Road Safety Council (proposed) NTC National Transport Council (proposed) NTMP National Transport Master Plan NTSS National Transport Sector Strategy PASDEP Plan for Accelerated and Sustained Development to End Poverty PPESA Privatization and Public Enterprises Supervising Authority PSO Public Service Obligation RADA Rural Access Development Authority (proposed) RF Road Fund RRA (Regional) Rural Roads AuthorityRSDP Road Sector Development Programme SAD Single Administrative Document, a combined customs formSNNPRS Southern Nations, Nationalities and Peoples’ Regional StateTA Transport AuthorityTB/L Through Bill of LadingTEU Twenty-foot equivalent unit (standard ISO container, 20’ long)TIR International Transport by RoadUNCTAD United Nations Conference on Trade and DevelopmentUN-EUE United Nations - Emergencies Unit for EthiopiaVoR Vehicle off the RoadWCO World Customs OrganisationWFP World Food ProgrammeWTO World Trade Organisation

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Chapter One

IntroductionContext of the Study The Addis Ababa Chamber of Commerce and Sectoral Associations (AACCSA) is playing an increasing role by way of engaging in dialogue with the relevant Authorities in the Government of Ethiopia for reform to address underlying constraints to competitiveness and building a foundation for sustained development and ending poverty. Key to this is the strengthening of the connection between Government and the private sector, thereby reducing the cost of doing business. Improving the business environment in Ethiopia requires a turn-around in productivity, which together with reduction of the cost of input and the delivery price of outputs strengthens the competitive position of fi rms. Firms operate in a global market and the cost of doing business provides them with the ability to respond effectively to the challenges.

The Addis Ababa Chamber of Commerce and Sectoral Associations (AACCSA) has been aware of the constraints to the reduction of transaction costs, particularly the cost of commercial freight transport. The cost and time associated with the entire logistics chain in international trade along land transport corridors, including the time and cost for cross-border procedures and moving cargo through seaports has received greater attention in view of the implications of the globalization of world trade. Land border crossings, customs operations, transfer and consolidation of cargo, inland transport, insurance or pilferage and damage, documentation and forwarding as well as bank processing for Letter of Credit are some of the most important indicators in freight movement. The competitiveness of Ethiopia's export trade remains vulnerable to high transport costs and the public passenger transport is unable to meet the increasing demand for mobility.

Currency of Reporting All monetary fi gures used in this report are expressed in Ethiopian Birr. At the time of writing in February 2009, the rate of exchange of the Birr to the US Dollar was 11.2 to 1.

Some Important Defi nitionsSome pertinent defi nitions are provided below:

Hire and Reward: Vehicles working for other companies for a payment, with the cargo not owned by themselves. These “for hire-carriers” typically include conventional bus, minibus and trucks.

Own-account: Vehicles working to move cargo owned by the company itself. There are usually private carriers that provide their own carriage, in the sense of movement by their own fl eet.

Dry Port: A place for handling containers or conventional bulk cargo; usually connected to a seaport by rail or road. A dry port is an inland inter-modal terminal which has services including storage, consolidation, reloading depot, maintenance of containers and customs clearance.

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Multimodal Transport: The transport of goods in one and the same loading unit or vehicle by any transport means. It usually implies a deep sea movement with a rail interfaces prior to a road delivery by container or swap body.

Intermodal Transport: Usually understood as the transport of goods in freight units using more than one inland mode. The freight units involved can be maritime containers or swap bodies, or accompanied trucks, or unaccompanied trailers. The modes involved are road and rail or sometimes road and inland waterway.

Study Focus and DirectionThe subject area covers a great variety and range of salient topics each of which could form the focus of more detailed later investigation. The main study components include a review of urban public transport, international road freight transport and intercity public transport and freight transport. The Consultant focused on these specifi c key areas, in order to be able to further elaborate the pragmatic recommendations made under the National Transport Master Plan Study.

The primary division in the road transport sector in Ethiopia lies between public transport operations and road freight operations. In each of these two main sub-sectors road transport services are provided, ranging from urban services, interurban services and services provided at the local (rural) level. In this report only brief reference is made to services provided at the local (rural) level. For the latter area, the reader is referred to a number of recent studies1. The timeline for the analyses are the short to medium–terms, although due consideration has been made of longer-term policy and infrastructure proposals emanating from the National Transport Master Plan Study.

Urban Public TransportThe capital city of Addis Ababa is both a focus for urban bus and taxi operations and for urban goods distribution by road. Because of their substantially smaller size, and their lesser stage of development, only brief references have been made to urban transport development in other cities in Ethiopia. Importantly, because of respected data sources, particularly in Urban Public Transport, the study does not expend substantial study resources on investigating road transport development in this fi eld; rather it has borrowed and built upon past work.

International Road Freight TransportIn terms of international road freight service, the Djibouti corridor is currently the main focus of both import and export road freight operations. Therefore developments in this corridor have been investigated in detail, whilst the recommendations made in other main corridors rely to a much greater extent on the fi ndings and data provided by the National Transport Master Plan Study. Ethiopia has a choice of Ports for Import and Export road freight traffi cs and this important aspect has also been investigated.

In terms of future development of road freight services in the Djibouti corridor, a key consideration will be the likelihood and timing of the improvement and upgrading of the existing railway line between Djibouti and Addis Ababa. Though substantial investment plans were earlier underway, it is understood that the Concessionaire has withdrawn and that there is now some uncertainty over short-term railway development prospects in the corridor.

1 The EU funded National Transport Master Plan Study for Ethiopia, in particular Draft Master Plan Appendix 1.4 Community Roads; and The Ethiopian Rural Travel and Transport Programme (ERTTP).

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It is also understood that other Consultants are investigating this component, under the aegis of the WTO accession agreements.

Intercity Public Transport and Freight Transport In terms of relative balance between road passenger and road freight transport services, the study has expended more time on the latter, due to perceived greater challenges and since the road passenger market is more researched, particularly urban passenger operations in the capital. The National Transport Master Plan Study has further confi rmed the importance of the Capital and the Djibouti corridor as the focus of the long distance Freight Transport component.

Study Data ResourcesFor some of the detailed areas of investigation, there is either a substantial amount of data in the public domain or important studies have been carried out within the past fi ve years. The National Transport Master Plan Study for Ethiopia has already been cited as a major reference study for overall sector policy and for in-depth analysis of some issues of relevance to road transport. In addition, there are several major studies of urban transport operations in Addis Ababa2 which are current, topical and that have contributed considerably to urban passenger transport policy development.

Furthermore comparative analyses are provided with urban passenger transport operations in other African cities and this benchmarking can also be used as a tool in policy formulation. Because of these respected data sources, the study did not expend substantial resources in investigating transport development in these areas. Conversely, there are certain areas for which, although some research has been undertaken, a relative paucity of data and analyses exists. In particular, key aspects of the international road freight industry remain under-researched, although some ongoing work is in process. Thus, in cases where only a partial analysis is presently possible, a limited number of recommendations for further research in specifi c areas have been made.

2 Such as, inter alia, PPIAF, Study of urban public transport conditions in Addis Ababa, Ethiopia IBIS Transport Consultants Ltd March 2005.

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Chapter Two

Transport Sector and Macroeconomic BackgroundBefore a description of the road transport industry in Ethiopia can be elaborated, it is important to understand the developments in the Macroeconomic situation in Ethiopia and in the wider Transport sector.

Macroeconomic Scenarios and DevelopmentIntroductionThe overview of the Macroeconomic Development and Master Plan GDP Forecasts are reproduced from Appendix 1.2 of the National Transport Master Plan Study. Taking Gross Domestic Product as a whole, and in line with the short term projections made by the Ministry of Finance and Economic Development, coupled with recent economic performance over the past decade and a half, estimates of future economic growth (for three cases, and two development scenarios), were compiled.

General Economic Overview The economy of Ethiopia is characterized by the dominance of the agricultural sector, which directly supports the bulk of the country’s estimated 75 million population, 84 percent of whom live outside of urban areas through largely peasant-based subsistence farming. Employment is largely provided by agriculture with 80 percent of the country’s economically active population being employed in the sector. Although it has been declining, intra-rural migration remains the dominant form of in-country movement within Ethiopia (38 percent in 1999) followed by rural-urban migration (at 24 percent).

Industrialization of the economy is relatively low with the industrial sector accounting for less than 15 percent of the total value of domestic production. The services sector expanded rapidly in the 1990s and is steadily growing in importance. The manufacturing sector provided permanent employment for some 78,000 people on the basis of sample survey data for the second quarter of 2005/06. The Ministry of Finance and Economic Development reported a 24:76 formal to informal sector employment ratio

from the 1999 Labour Force Survey.

Overall economic performance is therefore generally determined by the performance and productivity of agriculture, which in turn is heavily dependent on the extent and timing of rainfall. Drought has affected the country approximately once in every ten years over the past century, this frequency increasing to as high as once in every three years over the period since 1990.

These climatic shocks underpin the high volatility that has been characteristic of Ethiopia’s macroeconomic environment, noticeably evident in the extreme fl uctuations in agricultural performance in just the recent three year period between 2001/2 and 2003/4 when the sector recorded an 11.9 percent fall in value-added in 2002/3, rebounding with an 18.9 percent rise in 2003/04. This volatility is further induced by fl uctuations in terms of trade and in commodity prices, especially those of coffee, which has long been the country’s major export and key foreign exchange earner. The economy has a high dependence on rain-fed low productivity subsistence agriculture.

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Investment Opportunities and Short Term Economic Growth Projections Investment opportunities embrace a wide range of agricultural and related activities that extend into agro-processing, horticulture and fl oriculture as well leather, textiles and other sub-sectors of the economy. These are briefl y summarized in the following paragraphs, together with constraints and issues highlighted in the World Bank’s “Ethiopia: Country Economic Memorandum Background Report” on export growth potential in Ethiopia.

Coffee and tea continue to offer potential for production, processing and export opportunities to private investors. In fl oriculture, the combination of relatively low unit production costs, the relative proximity to European markets, an ideal climate of warm temperate days with cool temperate nights and the Ethiopian “summer” coinciding with the European winter, all serve to make this fast growing sub-sector a highly attractive industry for the non-traditional export market. From just three fl ower producers fi ve years ago, the number of producers has now grown to more than 30 and it was estimated that the value of fl ower exports could reach some 100 million USD by 2007.

Similarly, in horticulture, high value fresh produce sold to markets in Europe continues to present signifi cant export earning revenues.

Constraints in the sub-sector, however, relate to relatively low yields and quality and potentially a shortage of water. The lack of post-harvest cold storage facilities (from farm to airport) and an insuffi cient number of refrigerated trucks present important problems for high value perishable produce and fl ower exporters. In addition to these high value exports, chilled meat exporters also used to face major constraints in the form of insuffi cient air cargo space and refrigeration facilities at Bole International Airport. However, liberalization of aviation policy has recently opened up Ethiopian skies to charter cargo companies resulting in increased frequency and reliability of fl ights to Europe. A new cargo terminal has also been opened with adequate facilities.

Apicultural production – around 25,000 tonnes of honey in 2003 – is relatively small but has the potential for commercial exploitation.

In forestry, some 80,000 ha of industrial forest have been established for limited sustainable exploitation, enabling commercial forest-based production of gum, incense, pulpwood, matchwood and structural timber. Around 100,000 ha of the Awash Valley is under cotton, and signifi cant opportunities exist for its production and processing through expansion of cotton cultivation in the various major river basins of the country. Export opportunities also exist in the markets for sugar and spices.

In the livestock sub-sector, besides the export of live animals and high-value animal skins and hides, investment opportunities exist in ostrich, civet cat and crocodile farming. Sheepskins and hides from the Ethiopian highlands provide a strong base for semi-processed leather, fi nished leather and leather products. The strategy for this sub-sector is to raise the level of processing to fi nished – shoe, jacket and bag – products. In fi sheries, estimated annual freshwater fi sh production is of the order of 45,000 tonnes.

Nonetheless, reported constraints in the livestock and meat products sub-sector include poor quality and sanitation, prevalence of disease, delays at border posts in the counting of live animals, insuffi cient facilities for the loading and unloading of live animals at the port of Djibouti and lengthy bureaucratic export procedures and high embassy approval costs.

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The dairy industry suffers from old equipment and machinery, low-producing old dairy breeds and the absence of milk collection, processing and marketing regulations. Low levels of domestic consumption do not justify establishing milk processing plants.

Outside the agricultural and agro-processing sectors, tourism, hydro-electric power and mining all offer potentially signifi cant private sector investment opportunities. Manufacturing opportunities also exist in glass and ceramics, chemicals and chemical products, drugs and pharmaceuticals, plastic products and building materials.

Foreign private sector perceptions of investing in Ethiopia highlight infrastructure, especially telecommunications, as being an area in particular need of improvement. Given the country’s low rate of urbanization, road improvements between main towns – whilst laudable – is considered insuffi cient in the absence of accompanying progress in power and telecommunications. State monopolies in shipping and telecommunications, and preferential treatment for non-private sector enterprises, also constitute impediments to a conducive private investor environment in terms of cost and quality effectiveness.

In recent years, economic growth has begun to be more broad-based with the key non-agricultural sectors of the economy - industry, construction and services - registering growth rates of 6.9 - 7.0 percent, 8.2 percent, and 6.2 - 6.3 percent respectively in 2003/4. The Economist Intelligence Unit reported growth in 2004/5 of 12.3 percent in agriculture, 6.3 percent in industry and 5.3 percent in the services sector. Overall real GDP growth was anticipated to be around 7 percent in 2005/6 due to good rains and a third consecutive bumper harvest.

Economic Forecasting and Scenarios Introduction The preparation of a 20-year-investment-plan for the transport sector requires that forecasts be estimated for the future development of the Ethiopian economy. The starting point in the forecasting process is to consider domestic economic activity and output as a whole, as measured by Gross Domestic Product (GDP). Short term GDP forecasting (between 18 and 36 months), provides the basis for estimating economic growth and performance and for guiding the country’s fi scal planning and budgeting in the context of its medium term (three to fi ve year) macroeconomic framework.

GDP Growth Rate Estimates Subject to the boundaries of the overall GDP forecasts, sectoral forecasts are also prepared for the three major sectors of the economy – agriculture, industry and services – together with sub-sectoral forecasts as appropriate. In Ethiopia, the overarching framework for the period 2006/7 to 2010/11 is the Plan for Accelerated and Sustained Development to End Poverty (PASDEP) prepared by the Ministry of Finance and Economic Development (MoFED) in September 2006. This document sets out various targets for economic performance by 2009/10, the last year of the fi ve-year PASDEP programme.

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Table 2.1 Annual GDP Growth Estimates (2006/7 – 2026/27)

Short term Medium term Long term

Economic development scenario 2006/7 –2009/10 2009/10 – 2016/17 2016/17 – 2026/27

A-1 status quo 7.7% 6.8% 6.0%

A-2 regional urbanization 10.1% 8.1% 6.7%

Source: Consultant’s estimates.

Regional Development Scenarios Low, medium and high growth estimates were provided for the short, medium and long terms, covering the 20-year horizon of the Transport Master Plan period, to 2027.

Besides estimating economic growth rates for forecasting purposes, a distinction has also been made between two principal scenarios in terms of their likely impact upon future choice and patterns of trade routes and transport modes, as follows:

Scenario A: Regional urbanization (outside of Addis Ababa) Development and growth of towns, cities and urban centres in the regional states

Scenario B: External land access to sea ports In addition to the present-day availability of the ports of Djibouti and Berbera, the availability of the Eritrean ports of Assab and Massawa for exports and imports.

Table 2.2 Regional Development Scenarios

A-1 Status QuoUrban development and growth predominantly in Addis Ababa

A-2 Regional urbanizationUrban growth in regional towns, cities and urban centres

B-1 Status QuoInternational trade all through Djibouti (and Berbera) ports

B-2 External sea ports access50% international trade via Djibouti/Berbera and 50% via Assab/Massawa ports

Highways and Roads

IntroductionThe current standard and condition of the road network is a constraint to the development of an effi cient road transport system. This is being addressed through major road building and rehabilitation projects now underway under the Road Sector Development Programme (RSDP). Unfortunately, this pace of change can lead to other road transport problems if action is not taken now on new enforceable laws and resources to implement them.

Such action is needed to counter the inevitable increase in average road speed as a direct consequence of better roads and vehicles being driven faster that will lead to even more accidents. Road safety, and the need for safer road designs, are discussed in the context of the National Transport Master Plan, but is an important issue for the road transport industry.

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A feature of the present road network is the substantial number of gravel roads, many of which are in poor condition. The paved road network is very small by world standards. Even the best gravel roads increase vehicle operating costs by a third or more, and reduce the productivity of the fl eet. Over the past few years, the improved condition of the road network through rehabilitation and upgrading, and more intensive maintenance has resulted in the reduction of vehicle wear, consumption of fuel lubricants, spare parts, tires, etc., on the improved routes.

Road Network Development Strategy The Ethiopian Roads Authority (ERA) is responsible for around 19,300 km of federal road. This includes 5,485 km of trunk roads, and associated link roads that generally link two trunk roads with one another. It also includes main access roads that join other important locations to the network. The regional states have their own Rural Roads Authorities (RRA’s), which have a combined network of about 20,300 km of road, and there are also municipal (urban) roads. Community-level roads are presently unclassifi ed and receive only irregular and unplanned maintenance by communities, with occasional assistance from Woreda or NGO funds.

The total classifi ed road network (the ERA and RRA networks) amounts to some 39,500 km. Given the size of Ethiopia and its population, the road network is very small by world standards. Only 5,000 km (13percent) of the classifi ed network is paved. Some 14,300 km (36 percent) consists of main gravel roads and the regional roads are generally graveled. The current road network is shown in Figure 2.1 below.

Figure 2.1 National Transport Network (2007)

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Only half the paved roads are reported to be in good condition, together with 40 percent of ERA’s gravel roads and one-third of the rural roads. These fi gures show a marked improvement over those of eight years ago, due to the implementation of the ongoing 10-year Road Sector Development Programme (RSDP), which is being extended for another fi ve years to 2012 (RSDP-III). The introduction of the Road Fund has helped greatly in providing fi nance and other resources for road maintenance. After the conclusion of RSDP-III, scheduled for 2012, the main road network is expected to become as shown in Figure 2.2 below.

Figure 2.2 National Road Network After Completion of RSDP-III

The Road Sector Development Program is having important implications for commercial road transport in Ethiopia. First and foremost, the rural population is benefi ting from improved access to transport services increasing mobility. This in turn leads to higher demand for commercial road transport, which in turn results in an increase in the number of commercial road vehicles and vehicle-kilometres travelled. This improved access improves network connectivity and enhances the integration of markets. It is noted that the topography of Ethiopia is challenging and presents especial problems in terms of road construction, maintenance and higher vehicle operating costs. The topography of the country is a major constraint on the development of some modes of transport, such as railways.

Road Traffi c and CompositionRoad Traffi cTraffi c count data for the main federal roads show fl ows of the order of 10,000 vehicles per day (vpd) on the main road from Addis Ababa to Adama, but much lower levels elsewhere, seldom exceeding 2,000 vpd, and often reaching only a few hundred vpd, even on the main arteries. Over most of the rural network, trucks and buses are the predominant vehicle types. In 2004 trucks and truck-trailers accounted for 57 percent of all traffi c in vehicle-kms, buses (including minibuses) for 23 percent, and cars for only 20 percent.

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ERA has undertaken regular counts over the country’s federal rural road network since 1993. Total daily traffi c fl ows for this network, in vehicle-km per day, are summarized for the years 1994, 1999 and 2004 in Table 2.3. Derived annual growth rates for the four specifi ed vehicle groups are shown in Table 2.4. It may be seen that in 2004 trucks and truck-trailers accounted for 57 percent of all traffi c in vehicle-kms, buses (including minibuses) for 23 percent, and cars for only 20 percent. Corresponding proportions in 1994 were 60, 17 and 23 percent respectively, with the biggest shift in composition over the following ten years being that for buses from 17 to 23 percent.

Table 2.3 Summary of Daily Traffi c on ERA Network (1994–2004)

Vehicle-km '000 per day 1994 1999 2004Car 737.0 933.7 1,245.4Buses 523.3 1,007.4 1,375.5Trucks 1,397.8 1,832.4 2,596.4Trucks and Trailers 489.1 726.0 875.4Total Flows 3,147.2 4,499.5 6,092.7

Table 2.4 Growth in Daily Traffi c (in Vehicle-Km) on ERA Network (1994-2004)

Annual growth rate in % 1994-1999 1999-2004 1994-2004Car 4.8 5.9 5.4Buses 14.0 6.4 10.1Trucks 5.6 7.2 6.4Trucks and Trailers 8.2 3.8 6.0All Traffi c 7.4 6.2 6.8

Source: Ethiopian Roads Authority.

Traffi c is concentrated on a few major routes, including many radiating from Addis Ababa, with around 80 percent of traffi c in 2004 moving on half the surveyed network. The all-weather network has a length of 6,593 km, thus comprising 49 percent of the surveyed ERA network for 2004. Over these (15) all-weather roads estimated traffi c movements were 4,717 million vehicle-km per day, or 79 percent of the total surveyed traffi c in 2004.

Table 2.5 gives details for 2004, based on the ERA counts, but with an adjustment to reduce the stated length of 368 km for the Mille-Assab section to 183 km for the distance Mille-Galifi , since most traffi c on this route presently turns off at Dobi to continue to Djibouti rather than Assab.

Table 2.5 Estimated Traffi c Flows on Selected Routes in 2004

(’000 vehicle-km per day)

Routes Cars Buses Trucks Truck & Trailers

All Vehicles

Addis Ababa - Adama (98 km) 252.5 184.9 306.5 110.9 854.9Adama - Awash (125 km) 31.6 31.8 73.0 72.4 208.8Awash - Mille - Galifi (491 km) 33.9 17.2 77.0 194.4 322.5Total: Addis Ababa - Galifi (714 km) 318.0 233.9 456.5 377.7 1,386.2Other All - Weather Roads (5,879 km) 668.8 914.4 1,462.6 286.5 3,332.2Total: All - Weather Roads (6,593 km) 986.8 1,148.3 1,919.1 664.2 4,718.4Other Surveyed Roads (6,945 km) 246.7 224.5 637.1 137.4 1,245.7All Surveyed Roads (13,538 km) 1,233.5 1,372.8 2,556.2 801.6 5,964.1

Source: Consultant’s analysis, based on ERA Traffi c Report.

20

Trucks and truck-trailers accounted for 55 percent of traffi c on the main all-weather roads and for 62 percent on other roads. Buses, including minibuses, accounted for 24 percent of traffi c on the all-weather roads, but only 18 percent on other roads.

Over most of the main all-weather network of 6,593 km, the truck proportion of total traffi c did not vary greatly, lying between 45 and 65 percent on more than three quarters of the network. The principal exception was along the main truck route to Djibouti, where the truck proportion was much higher at 70 percent between Adama and Awash, and 84 percent from Awash to the Djibouti border at Galifi . The whole 704-km route from Addis Ababa to Galifi accounted for 18 percent of truck movement over the surveyed network, for 47 percent of truck-trailer movement, and for 25 percent of total movement by all trucks.

Bus shares of total traffi c were more variable, lying between 15 and 35 percent on over three quarters of the main all-weather network. Low bus proportions were found along the main route to Djibouti beyond Awash (5 percent), and on some remoter roads in the west. High proportions were recorded over roads close to Addis Ababa and between Dire Dawa and Harar (42 percent).

Road Traffi c GrowthThe 2004 ERA Traffi c Report also compares 2003 and 2004 ADT fi gures for most of the main all-weather network (excluding the 330 km of the A 9 route between Alemgena and Sodo), and also some other roads. After adjustments to refl ect reduction of the Mille-Galifi section length from 368 to 183 km, a breakdown of traffi c movement for the two years may be made as in Table 2.6. It should be borne in mind that there was a substantial increase in the length of the surveyed network.

Table 2.6 Traffi c Growth (2003-2004)

Roads

Road Length (km) Daily Traffi c ('000 veh-km) 2003 2004 2003 2004

All-weather network 6,263.0 6,263.0 4,340.0 4,595.0Other specifi ed main roads (a) 683.0 683.0 114.0 151.0Other surveyed roads, 2003 5,721.0 --- 995.0 ---Other surveyed roads, 2004 --- 6,592.0 --- 1,218.0All surveyed roads 12,667.0 13,538.0 5,449.0 5,964.0

Note: (a) Dodola–Goba, Yabelo–Moyale, Mekenejo–Asosa and Shire–Rama. Source: ERA Traffi c Report, 2004, with Consultant’s adjustments.

The indicated traffi c growth rates are 5.9 percent for the all-weather network, and 32.7 percent for the other four specifi ed roads; this gave an overall increase of 6.6 percent for all the 6,946 km where detailed information was available. For the remainder of the network there was a traffi c increase of 22.4 percent over a total road length which itself increased from 5,721 to 6,592 km, indicating a rise in average traffi c fl ow from 174 to 185 vehicles per day (by 6.3 percent). It seems reasonable to conclude that, in respect of common lengths of road, the average growth of traffi c was about 6.5 percent (as against 9.5 percent for the total surveyed network whose length grew by 6.9 percent).

ERA data can also be used to give growth data for the longer period 2000/4 over a selection of roads from the all-weather network with a total length of 4,101 km. Over these roads total traffi c increased from 2.870 million vehicle-km in 2000 to 3.642 million vehicle-km in 2004, at a rate of 6.1 percent per annum. This again is well below the corresponding rate of 8 percent over the same period for the whole surveyed network, which was infl ated by a continuous increase in network length.

21

Corresponding rates for the vehicle classes between 2000 and 2004 were 6.4 percent for cars, 6.8 percent for buses, and 5.7 percent for trucks and truck-trailers.

Road Development PlansA summary of Ethiopia’s Road Network Composition is provided in Table 2.7.

Table 2.7 Road Network Compositions, Km (2008)

Class of Road Paved Unpaved TotalFederal Roads 6,066.0 14,363.0 20,429.0Regional Roads - 23,930.0 23,930.0Subtotal (classifi ed roads) 6,066.0 38,293.0 44,359.0Rural Roads (unclassifi ed roads) - 70,038.0 70,038.0Total 6,066.0 108,331.0 114,397.0

Details of Growth of Road Network and Vehicle-Km are provided in Figure 2.3.

Figure 2.3 Growth of Road Network and Vehicle-Km (2008)

260

240

220

200

180

160

140

120

100

Growth of Classifi ed Road Network & Vehicle-Km

Vehicle-KmClassifi ed Roads(km)

1997

/98

1998

/99

1999

/00

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

Gro

wth

Inde

x (r

elat

ive

to 1

997/

98)

The total road sector expenditure (including all fi nancing sources) has substantially increased from ETB 3.1 billion to ETB 8.67 billion (nominal) in 2008. The share of the Government in the total road expenditure, especially after 2005, has increased with a spike – which necessitates close monitoring of the macro-economic situation throughout the project implementation.

Road Network Expansion and Improvement

The Ethiopian Roads Authority has prepared the Road Sector Development Program Phase III (2008 to 2012), which has the objective of continuing the restoration and expansion of the road network. In spite of the recent growth, the road network is one of the least developed in Africa, with a density of 35.9 kms per 1000 square kilometres and 0.53 km per 1000 population, compared to the African average of over 50 km/1000 square kilometres (Africa Trade Policy Center: September 2000). The Ethiopian National Transport Master Plan proposals for road network development are listed below:(1) Reaching the un-served Woredas is the main priority for most regions and this is the most urgent

task. The aim should be for all-season roads, suitable for buses and goods vehicles, to Woreda capitals. For those Woredas that already have all-weather access, the priority task is to go further and ensure the provision of all-season roads to the Kebeles.

22

(2) Sealing or paving the busiest gravel roads helps the economy. International studies show that trade growth is very sensitive to transport cost reduction, and paved roads reduce transport costs by a third or more. Sealed roads are also regarded as important by public transport operators and by many tourists. Roads carrying more than 100 vehicles in a day should be considered for sealing.

Gravel roads with suitable low-cost structures will be most appropriate to ensure access between the Kebeles and the Woredas for light buses, pickups, intermediate and animal transport.

(3) The need to amend the road design standards. Present-day traffi c conditions give a need for greater room for pedestrians, cyclists and non-motorised or agricultural traffi c. Shoulders should be paved. Another need is the separation of road and rail traffi c by effective protection for road and rail users at level crossings on the busy parts of the road network.

(4) Need for clear responsibilities for ownership and maintenance management. The national road network has to reach down to Kebele level. The regional states should be responsible for the non-federal roads down to Kebele level.

Further, a nation-wide administrative system should be established that will provide technical assistance to local communities and Woredas for the design, tender and supervision of Woreda–Kebele and community roads.

Community access will generally be earth roads or improved tracks and trails built with labour contribution from within the Kebeles, while the Woreda roads will be graveled and fi nanced by the Road Fund. Support for community roads should only be considered once fi rm and binding commitments to regular maintenance are in place.

(5) Development of labour-based contractors. Conventional contracts using heavy plant can be used for the roads to Woredas that need to support heavy vehicles, but for the links to the Kebeles there is great scope to develop labour-based contracts using light equipment and newly-developed and trained small local contractors.

In both cases the contractor can be given responsibility for maintaining the road during 3-5 years after completion. This ensures a single point of responsibility in the event of a pavement failure, with the contractor responsible for repairs (without extra payment). Where foreign contractors are used on major projects, they may appoint a local contractor for remedial works but under the responsibility of the foreign contractor.

(6) Roads to borders. These should continue to have a high priority in the interest of regional economic development. Links with southern Sudan, which is expected to grow rapidly, are particularly weak. Such roads can sometimes take advantage of specifi c fi nancial instruments, as the international community gives great importance to promoting international links within Africa. If linked with a modernisation of the road transport agreements with neighbouring states, this policy will give new opportunities for the development of transit traffi c across Ethiopia by road. Such traffi c will generate revenue for the economy as a whole and for the Road Fund in particular.

Road Safety Despite the fact that Ethiopia has a low number of road vehicles, it is almost the fi rst country in Africa in terms of its traffi c accident rate. Historical data for Road Traffi c Accidents (RTA’s) in Ethiopia are presented in Table 2.8 below.

23

Table 2.8 The Magnitude of Road Traffi c Accidents (RTA’s) in Ethiopia

Type of ac-cident

Year of Traffi c Accident Recording 1996/7 1997/8 1998/9 1999/00 2000/1 2001/2 2002/3 2003/4 2004/5

Light injury 2080 2444 2173 2120 2134 2196 2365 2705 2731Heavy injury 1618 1762 1642 1771 1697 1712 1790 2072 2368Property dam-age

6512 7783 6560 6666 6684 7188 8563 10569 10822

Death (of fatality)

1314 1313 1283 1274 1261 1659 1888 2111 2176

Total 11524 13302 11658 11831 11776 12755 14606 17457 18097Percentage share of death

11.4% 9.9% 11.0% 10.8% 10.7% 12.1% 12.9% 12.1% 12.0%

The traffi c accident rate in Ethiopia is growing at alarming rate especially since 1996/97. In 1996/97 the number of registered traffi c accidents was 11,524, but this reached 17,457 in year 2003/4. Out of these total registered accidents, fatalities have amounted to 12 percent, on average. In Africa, Ethiopia is second highest, next to the Central African Republic, having 195.1 traffi c accidents per 10,000 vehicles. The prevalence of an extremely alarming number of road traffi c accidents has created large negative socio-economic costs in actual and opportunity costs.

The situation is likely to be even more severe than shown in the statistics due to the possible signifi cant under-reporting. Not only are these rates high, with the average vehicle evidently having a more than 10 percent chance of accident involvement each year, but they appear to be also rising faster than the growth of the vehicle fl eet.

On the other hand, the fatality risk per head of population was one of the lowest, at 3 per 100,000 in 1994/5, due to the low level of motorization. The reasons for this situation include poor driving standards, ineffective enforcement of driving regulations, poor condition of vehicles, and inadequate road design. Pedestrian fatalities are high, partly because adequate sidewalks are often absent. Responsibility for safety is diffused between several bodies, including the Transport Authority, the Ethiopian Roads Authority (ERA), the regional and municipal roads authorities, the traffi c police, and the Road Fund which devote a proportion of their funds to its improvement.

In 2002 ERA commissioned TRL and Ross Silcock to undertake a road safety study leading to an Action Plan. This led to the establishment of an Interim Road Safety Committee and an Interim National Road Safety Co-ordination Offi ce, while Road Safety Units are also up at federal and regional levels. The recommended National Road Safety Council has yet to be set up.

While these institutional measures will no doubt have some benefi cial effects, it is also clear that some fundamental improvements in road discipline and in police enforcement will also be required. It is encouraging that the Transport Authority is now working on a new driving code, which will represent the fi rst revision of the existing code since 1956.

RTA’s: Road User IncidenceThe accident rate per vehicle-km in Ethiopia is very high. Most accidents are caused by drivers; most casualties are pedestrians, many of them young ones.

24

Table 2.9 Traffi c Accident Deaths by Road User Type

Ethiopian Fiscal Year

Drivers Passengers Pedestrians Number Percent Number Percent Number Percent

2001/2 102 6.3 674 41.4 852 52.32002/3 117 6.5 731 40.3 965 53.22003/4 153 7.5 838 39.7 1,120 53.12004/5 149 6.8 791 36.2 1,248 57.0

Vehicle Safety Record by TypeTable 2.10 shows the types of vehicles and their involvement in road traffi c accidents in 2004/5. Without looking into the mileage travelled of the different types of vehicles, it appears clearly that taxis are accident prone, followed by buses, both of which are public transport.

Nearly half the fatal accidents involve trucks, including Isuzu trucks, which are well known for their accident proneness by the public. Taxis and buses again are highly involved in fatal accidents.

Table 2.10 Accident Involvement of Vehicles in the Year 2004/5

Types of vehicle

No. of inspected & registered vehicles

Fatal accident Total acci-dents

Risk per 100 vehicles

Percentage involvement

Number Percentage Number PercentageCar 71,672 43 362 20 6,786 9 38Taxi 14,504 9 259 14 2,707 19 15Bus 14,152 9 204 11 2,373 17 13Trucks 61,170 37 869 48 5,363 9 30Others 4,271 3 117 6 493 12 4

166,309 100 1,801 100 17,722 11 100

Driver TrainingDriver training in Ethiopia is being improved. There are many new ideas planned that include the desire to reduce the maintenance element of the current driving training scheme, to privatize the implementation of the scheme, and to introduce training in fl eet management. This would be an ideal platform to launch CPC training.

Vehicle TestingA key to improving safety standards, as well as effi ciency, is to ensure that commercial vehicle fl eets are safe and well managed. At present, vehicles are required to be licensed and tested annually, although the tests are not effective. The overall technical condition of vehicles is very poor, and contributes to traffi c accidents.

The annual road vehicle test is not effective. A more realistic test is needed, covering general condition, proper brake and steering testing, mechanical condition and the condition of tyres. The lack of a law specifying the legal tread depth on a tyre is noteworthy.

The Transport Authority is considering importing new testing equipment that would demonstrate the required service level required from the now privatized testing stations and a new law that would enforce the change. Failure to pass the new test until repairs are done would remove some of the

25

more dangerous taxis, goods vehicles and buses and would also help to improve the availability of the vehicle fl eet. There are agreed international standards for testing vehicles under UN/ECE rules.

There is no real second-hand market for vehicles, with older vehicles used on short runs, for local traffi c, shunting, etc. Vehicles tend to be run “into the ground” and safety is a big issue when such old and poorly maintained vehicles are involved.

Legislation and InstitutionsLegislation and enforcement is weak in road traffi c management and road safety and it needs the formation of the National Road Safety Council to provide a focus for action. Road transport must be safe and cause minimum damage to health.

Commercial Focus Commercial operators are registered in the same way as other businesses but there is no specifi c extra requirement for those involved in the transport business. The road trucking associations are not seen as effective and do not aid road safety.

The proposed National Road Safety Council (NRSC), intended to lead to a systematic and coordinated approach to the problem, remains to be created after several years. There is an interim Road Safety Coordinating Offi ce, which is trying to move forward some of the recommendations of a road safety study made some years ago, but implementation cannot be fully effective until the permanent body is formed.

The traffi c police are very weak. Their status and budgets need to be upgraded urgently. They are generally placed within the crime investigation and prevention function and focus primarily on whether or not to prosecute offenders, rather than leading an effort to reduce the number and severity of accidents.

Each region has road safety committee. This includes stakeholders such as the traffi c police, the transport authority, the rural roads authority, etc. Most regions report that it is not very effective and they await the formation of the NRSC and its associated regional structure. One problem at present is that ERA is seldom an active member of the regional committees, as its district maintenance organisation is based at 10 sites across the country which often does not coincide with regional capitals.

The proposals of the road safety study need to be implemented and are included in the master plan. The formation of the NRSC is a needed early step. At the same time the Transport Authority could start implementing the measures aimed at commercial road transport operators, as recommended above, and preparing draft new road transport regulations to be considered by the NRSC, when it is set up, as well as the National Transport Council and other bodies.

Vehicle Fleet and Travel Characteristics IntroductionThere has been a steady growth of the road vehicle fl eet using the Ethiopian road network over the last 15 years. Table 2.11 gives the latest available data from the Transport Authority, indicating growth in the total vehicle fl eet from 118,732 in 2000/01 to 166,309 in 2004/05, at an average growth rate of 8.8 percent per annum. This rate falls slightly to 8.6 percent, if motor cycles are excluded, and to

26

8.3 percent if trailers are also excluded. It may be inferred that the vehicle fl eet has been growing at around 9 percent per annum for nearly 15 years, thus more than tripling in size over that period.

Table 2.11 Growth of Ethiopian Road Vehicle Fleet (2000/01- 2004/05)

2000/1 2004/5 Annual Average Growth Rate (%)

Private cars 42,586 59,785 8.9

Station wagons 6,984 11,887 14.2

Taxi 10,311 14,504 8.9

Sub-total Light Vehicles (LV's) 59,881 86,176 9.5

Buses 11,967 14,152 4.3

Trucks 37,587 50,444 7.6

Truck-tractors 1,278 1,736 8.0

Tankers 1,453 1,936 7.4

Sub-total, Trucks 40,318 54,116 7.6

Total: LV’s buses and trucks 112,166 154,444 8.3

Trailers and semi-trailers 4,396 7,594 14.6

Motor cycles and special vehicles 2,170 4,271 18.4

Total Vehicle Fleet 118,732 166,309 8.8

Source: Transport Authority.

The fl eet total of 166,309 for 2004/5 indicates an overall vehicle ownership rate of only some 2.25 per thousand people. Since a high proportion of these vehicles are owned and operated in the Addis Ababa area, vehicle ownership rates in rural areas are very low indeed. If the country’s economic development goals are achieved on a sustained basis, however, rapid growth of the fl eet from this low base may be expected to continue for many years to come.

A breakdown of annually inspected and registered vehicles by types of services for 2007 is provided in Table 2.12 below.

Table 2.12 Annually Inspected and Registered Vehicles by Types of Services

Year Government Commercial Taxi Private Others Total

1997 14,239 30,315 6,524 39.001 6,423 96,502

1998 12,983 34,033 9,847 40,608 5,409 102,880

1999 15,356 34,615 9,598 40,611 5,670 105,850

2000 15,573 39,122 9,858 41,985 5,684 112,222

2001 15,750 42,724 10,325 43,770 6,163 118,732

2002 16,165 44,647 11,571 47,362 6,154 125,899

2003 17,070 43,176 12,506 53,540 6,646 132,938

2004 17,424 50,211 12,,395 58,696 7,081 145,807

2005 20,013 65,034 14,523 58,221 8,528 166,309

2006 18,588 64,177 18,625 61,342 9,325 172,057

2007 23,013 73,066 20,040 65,118 9,130 190,367

Source: MoTC

27

A disaggregation of Fleet by Types of Services for 2007 is provided in Table 2.13 below.

Table 2.13 Road Passenger and Freight Fleet Data-Total Vehicles by Capacity (Year 2007)

Types of Vehicles

Non Rental For Rental Service Grand

Total Govern-ment Public Org.

UN , AU & C.D.

Private Comm. Private Total Commercial Taxi Total

Passenger Transport

5 seats 2982 609 1380 4444 48031 57446 4541 8222 12763 70209

6-8 seats 1025 174 91 826 2446 4562 1259 906 2165 6727

Station Wagon 3396 471 3395 1799 6241 15302 1999 - 1999 17301

Double purpose (5 men, 5 qnt)

4877 345 950 2478 3195 11845 2811 - 2811 14656

9-12 seat ( minibus) 493 123 152 965 833 2566 4183 8724 12907 15473

13-29 seat (midi-bus ) 331 88 49 439 140 921 2782 2 2784 3705

30-45 seat (midi-bus) 191 53 2 64 - 310 1857 - 1857 2167

Above 45 seats (maxi-bus) 89 121 2 1 - 213 1030 - 1030 1245

Subtotal 13384 1984 6021 11016 60760 93165 20462 17854 38316 131481

Freight Transport (quintals)

Dry cargo

Pickup/180 6 - - 1 - 7 99 - 99 106

Trailer 131 16 43 35 16 241 4902 - 4902 5143

Road tractor 117 3 17 23 2 162 1023 - 1023 1185

Semi-trailer 3 - - 17 5 25 435 - 435 460

Subtotal 5158 198 751 5971 3386 15464 32194 - 32194 47658

Liquid cargo (liter)

14,000 53 - 1 - - 54 665 - 665 719

Trailer 1 - - - - 1 424 - 424 425

Semi-trailer - - - - - - 103 - 103 103

Subtotal 444 16 24 154 30 668 2357 - 2357 3025

Other

Motor cycles 3851 58 67 370 896 1391 357 2186 2543 7785

Agricultural tools 61 - - 16 16 32 39 - 39 132

Others (spec. equip.) 115 7 4 50 30 91 80 - 80 286

Subtotal 4027 65 71 436 942 1514 476 2186 2662 8203

Grand total 23013 2263 6867 17577 65118 91825 55489 20040 75529 190367

Source: MoTC

28

Truck Fleet Size and CapacityCommercial for-hire trucks registered in 1999 were 18,010. In 2005, the total number of freight transport fl eet reached 23,724, at an average annual growth rate of 4.5 percent. From the total number of dry cargo vehicles, about 22 percent were in the range of 30-40 ton load capacity and operate on the Addis Ababa-Djibouti corridor. The remaining vehicles are below 18-ton load capacity, and operate on medium and short distance routes, outside the major corridor. In 2007 the number of trucks had risen to 47,658, including trailer and semi-trailers, hence growth rates have increased in recent years.

Data for imported freight vehicles are provided in Table 2.14 below.

Table 2.14 Imported Freight Transport Vehicles

Year Less than 19 quin-tals (Qts)

20-90 Qts More than 91 with trailer and without trailer

Liquid cargo vehicles

TOTAL

1987/88 0 74 71 86 231

1988/89 2 33 73 71 1791989/90 24 146 17 16 2031990/91 199 425 32 7 6631991/92 423 716 283 23 1,1451992/93 217 985 270 32 1,5041993/94 243 969 621 138 1,9711994/95 416 1,327 1,078 184 3,0051995/96 651 1,791 1,286 139 3,8671996/97 308 1,205 844 144 2,5011997/98 254 600 366 39 1,2591998/99 197 616 476 312 1,6011999/00 309 941 1,379 544 3,1732000/01 528 2,070 2,633 91 5,3222001/02 381 2,040 1,181 46 3,6482002/03 316 3,277 1,608 46 4,931Average annual new vehicle

279 1,076 764 120 2,219

% share since 1992 13% 48% 34% 5% 100%Note: Ethiopia, compared to many countries, has a low proportion of multiple-axle trucks in its fl eet.

Bus Fleet Size In 1999, all categories of public passenger commercial vehicles registered by the Transport Authority were 8,923, which increased to 14,577 in 2005 with an annual growth rate of 9.4 percent.

Out of the total fl eet of public passenger transport vehicles registered in 1999, conventional buses over 45-seat capacity were 751. This increased to 1,381 in 2005 and about 1,500 in 2006/07. In 2007 the number of large buses had dropped to 1245, which seems a notable decrease.

The total fl eet of conventional buses included among others, over 520 Anbassa city buses and 114 over-aged Walia intercity buses. These two organizations alone accounted for over 44 percent of conventional bus fl eet. No fl eet replacement and expansion has been made in recent years. Hence availability and utilization of Anbassa buses has dropped markedly. Recent information shows that the number of daily operational vehicles was hardly 400, indicating that over 25 percent of the fl eet is perpetually under maintenance.

29

Table 2.15 Annual Growth of Minibus Taxi Fleet by Seat Capacity (1998/99-2004/5)

Seat Capacity

Year 9 TOTALGrowth

in %1999 3163 - - - - 9598 -2000 4364 38.0 6435 -14.8 12 9858 2.7

2001 4815 10.3 5482 0.3 10 10325 4.7

2002 5192 7.8 5500 15.8 11 11571 12.12003 5845 12.6 6368 4.4 13 12506 8.12004 6963 19.1 6648 -18.5 13 12395 -0.92005 6893 -1.0 5419 43.3 12 14673 18.4

Average annual growth 12.4 7768 4.4 7.0

Source: Transport Authority.

The minibus taxi fl eet grew from about 9,600 vehicles in 1999 to some 5,419 vehicles in 2005. In 2007 the total number of minibus taxis had risen to 15,473, an increase of some 800 vehicles.

In East Africa, the most popular minibus models are Japanese, imported second-hand through traders in the Gulf. In Nairobi and Kampala most are now diesel powered because of their relative economy of operation, but altitude and terrain mean that gasoline engines are preferred in Addis Ababa. Vehicle age varies widely, but 10 to 15 years is typical. Body corrosion is the main determinant for scrapping.

The city fl eet in Addis Ababa has received regular investment over the past ten years, mostly supported by bilateral assistance from the Netherlands and Belgium. Truck-based passenger chassis (made by DAF) are employed, but with imported European bodywork, despite the presence of local manufacturing capability. There has been entry of technically inappropriate vehicles, such as rear engine vehicles, into Ethiopia’s commercial road transport service market. There has also been a lack of fl exibility concerning the introduction of new categories of services at higher prices, which has resulted in the modifi cation of old trucks into buses.

Bus Fleet CapacityDetails of the road passenger fl eet, by type of bus are provided in Table 2.16.

Table 2.16 Growth of Passenger Fleet by Seat Capacity

YearSeat Capacity

9< Growth in % 9~12 Growth in % 13~29 Growth in % 30~45Growth

in % >45Growth

in % TOTALGrowth

in %

1999 2396 - - 4765 1011 751 8923 -

2000 3738 56 2290 - 1252 -73.7 1102 9.0 713 -5.1 9095 1.92001 4486 20 4665 103.7 1680 34.2 1388 26 876 22.9 13095 44.02002 2352 -47.57 3615 -26.51 1838 9.4 1390 0.01 788 -10.0 9983 23.02003 2909 23.7 3190 -11.8 1622 -11.8 1250 -11.1 920 16.8 9891 -0.92004 6430 121 3526 10.5 1687 4.0 1296 3.7 531 -42.3 13470 36.22005 5873 -8.7 3450 -2.2 2230 32.2 1643 26.8 1381 160.1 14577 8.2A v e r a g e a n n u a l growth

23.5 10.5 -5.7 7.8 20.3 9.4

Source: Federal Transport Authority.

30

More up-to-date Public Road Transport Commercial Vehicle Data (for 2007) are provided in Table 2.17 below.

Table 2.17 Annual Growth of Public Road Passenger Vehicles by Seat Capacity (2005–2008)

Seat CapacityYear 9< 9-12 13-29 30-45 >45 Total

2005 17975 9739 1849 562 1748 31873 2006 19840 10556 2196 597 1800 24989 2007 22357 11558 2417 627 1874 388332008 25195 12009 2960 724 1940 428282009 25791 12471 2997 733 1955 43947

Source: Compiled from Road Transport Authority data.

Vehicle Age Trucks below fi ve years of service are only 17 percent of the fl eet; while over 43 percent are 16 and above fi ve years. Similarly, tankers below the age of 5 years are only 7.5 percent and those with 16 and above fi ve years of service are 32 percent. In both cases the number of old fl eet is quite signifi cant.

Signifi cantly, more than 50 percent of the public passenger commercial vehicle fl eet is more than 20 years old and now need replacement. Since there is no vehicle replacement policy there is a slow pace towards modernization. Many of the buses currently in service are either imported used vehicles that have completed their useful life in the country of origin or old trucks modifi ed into buses.

Passenger Loading The results from the project traffi c surveys (National Transport Master Plan Study) showed that passenger vehicles indicated generally high occupancy rates of 80 to 90 percent. Some results from the project traffi c surveys are reproduced from the Master Plan Study. Firstly, occupancy data for passenger vehicles may be summarized as in Table 2.18, indicating generally high occupancy rates of 80 to 90 percent for commercial passenger vehicles.

Table 2.18 Occupancy Rates for Passenger Vehicles (2006)Vehicle Type Average No. of Pas-

sengersAverage No. of Seats Occupancy Rate (%)

Motor-cycle rickshaws 3.0 3.5 86

Private cars 3.7 5.9 63

Minibuses (up to 15 seats) 9.2 11.2 82

Small buses (16-30 seats) 21.6 24.3 89

Large buses (over 30 seats) 44.2 49.0 90

Source: Consultant’s survey.

The survey also confi rmed that short passenger journeys are made by smaller vehicles, with longer journeys being made in larger buses. Average journey times reported by passengers were one hour for motorised rickshaws, 4.6 hours for private cars, 1.6 hours for minibuses, 3.4 hours for small buses, and 9.2 hours for large buses.

Since passenger transport vehicles in general, short and medium distance buses in particular, do not depart from terminals or stations unless all seats of the vehicles are occupied, road passenger transport vehicles load factor until very recently has been assumed to be 100 percent.

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However, as passenger traffi c shifts from scheduled long distance cross-country buses to short distance minibuses, latest surveys show that the average load factor of passenger transport vehicles has declined possibly to 70 percent, or less.

Truck Loading Reported loading data for goods vehicles was captured. The high rate of empty running was notable, especially for larger vehicles, refl ecting traffi c imbalances and seasonal variations, especially on the main import and export route to Djibouti. Reported loading data for goods vehicles are summarized in Table 2.19. The high rate of empty running is to be noted, especially for larger vehicles, refl ecting traffi c imbalances and seasonal variations, especially on the main import and export route to Djibouti. The effect is to reduce average load factors to around 50 per cent, with consequent increase in operating costs. These problems have also been widely reported by truck operators.

Table 2.19 Loading of Goods Vehicles in Metric Ton (t) in 2006

Trucks, (2-axles)

Trucks, (3-axles)

Trucks(4+axles)

Average carrying capacity (t) 5.9 16.4 28.4

Average load, loaded vehicles (t) 5.0 14.3 25.5

Proportion of vehicles loaded (%) 68.3 57.1 56.3

Average load, all vehicles (t) 3.4 8.2 14.4

Load factor, loaded vehicles (%) 85 87 90

Load factor, all vehicles (%) 58 50 51Source: Consultant’s survey.

The effect is to reduce average load factors to around 50 percent. The average load of Loaded 2 axle trucks was 5t, that of 3-axle trucks 14.3t, and of 4+ axle trucks 25.5 t. Agricultural products, foodstuffs, fuel, construction materials and machinery accounted for nearly 79 percent of all traffi c being carried in the surveyed trucks. The high proportion of nearly 18 percent for perishable foodstuffs is notable, since it is essential that these products be carried to their destinations without delay. Of the total cargo being transported in surveyed trucks, 65 percent was carried in vehicles of four or more axles, 12 percent in 3-axle trucks, and 25 percent in 4-axle trucks.

Commodities Carried Information was also sought on commodities being carried by trucks, with the following percentage breakdown being found by tonnage. Reported commodities being carried by goods vehicles are summarized in Table 2.20.

Table 2.20 Truck Commodities Carried and Average Load Per Truck in Tonnage

Agricultural products, inc. coffee and tea 22.3Perishable foodstuffs 17.8Construction materials 16.7Machinery and equipment 8.5Oil products 6.8Processed food and drink 6.7Other commodities 21.2Total 100.0

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Agricultural products, foodstuffs, fuel, construction materials and machinery accounted for nearly 79 percent of traffi c being carried in surveyed trucks. The high proportion of nearly 18 percent for perishable foodstuffs is notable, since it is essential that these products be carried to their destinations without delay (See Figure 2.4 below).

Figure 2.4 Commodities Carried by Trucks in 2007

7%

4%0%

2 %

8 % 3 %

19 %

18 %

1 %3 %1 %

7 %9 %

1 %

17 %

Goods Transported by trucks on the Ethiopian Network

Coffee or TeaWater (Plain)Oil

Other Agri. Prod.Processed food or drinkChemicals, fertilizer

Pershable foodMachinery, equipmentMedicine

LivestockLogs or LumberMisc-Household

Fuelwood or CharcoalConstruction MaterialsUnknown

Of the total cargo being transported in surveyed trucks, 65 percent was carried in vehicles of four or more axles, 12 percent in 3-axle trucks, and 25 percent in 4-axle trucks. Two-axle trucks are most often used for transporting agricultural products.

Journey Times During the course of the extensive Transport Master plan Roadside Interview Surveys, truck drivers were asked about the total average journey time of their trips. The answers were as follows:

Table 2.21 Average Truck Journey Times from Survey

Vehicle Journey Time(in Hours)2 X T 9.823 XT 12.234 X T Others 33.88

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These times include the rest periods of the truck drivers, as well as the time spent waiting at each customs point along the roads. The average journey time of 2 axle trucks was 9.8 hours, that of 3-axle trucks 12.23 hours, and of 4+ axle trucks 33.9 hours.

Average journey times reported by passengers were 1.6 hours for minibuses, 3.4 hours for small buses, and 9.2 hours for large buses.

Distribution of Vehicles between Regions Partial data for the passenger fl eet, provided by the Transport Authority, indicated that for a total of 46,897 passenger vehicles, comprising around 40 percent of the passenger vehicle fl eet in 2006, the distribution of vehicles between regions was as follows (in percentage terms).

Table 2.22 Distribution of Vehicles between Regions

Addis Ababa 56.1Oromia 10.3Amhara 4.4SNNP 3.4Tigray 2.9

Dire Dawa 2.3Carried forward 79.3Other regions 2.6Ethiopian Govt. 10.4Other organizations (UN, AU, Aid, etc) 7.7

Total 100.0

Trends in Vehicle-Kms When performance is compared with countries like Tanzania, Pakistan and Indonesia, whose average annual performance of a truck are 60,000, 110,000 and 80,000 kilometres respectively, a truck in Ethiopia covers circa 60,000 kilometres p.a.. Generally, the annual veh-kms traveled by high capacity vehicles should be higher than that of small and medium capacity vehicles, since the former operate on relatively longer but low terminal time routes, whilst the latter operate on short distance high terminal time routes.

In Ethiopia there is a generally low average level of vehicle utilization for the long distance high seat capacity cross-country scheduled buses (45-62). Although the medium range regional buses of 44 upper limit seat capacity also have higher, but still relatively low, average vehicle utilization, both categories of medium and large bus travel considerably less distance per annum than the smaller capacity vehicles (minibuses).

Railway Mode IntroductionThe Ethio-Djibouti Railway (CDE) owns the 781-km rail route, of which 681 km is in Ethiopia, and has signed an agreement with INECO Sp (Spain) for supervision and administration of 114 km of rehabilitation which includes all bridge work between Addis Ababa and Djibouti and various lengths of replacement track.

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The Ethio-Djibouti Railway Authority gives its transport services twice a week from Dire Dawa to Djibouti, while it transports people and goods to Kaliti, the industrial town found 25 km from Addis Ababa, only once a week ever since the work on Gotera Road Inter Exchange project began.

The Ethio-Djibouti railway rehabilitation project was expected to get completed by June 2009. The project includes the changing of old and damaged tracks and bridges of the 114 km of line. On this project, nine concrete bridges will be replaced and another forty metal bridges will be strengthened. The line that is to be replaced and strengthened is from Hurso to Lassarat. When this rehabilitation project is completed, the speed of the trains will increase and the derailment reduced. Currently the strength of this 114 km railway line is 20 kg/m and this will increase to 40 kg/m, increasing the carrying capacity and speed of trains.

What will be of critical importance for the short to medium term development plans for the international road freight industry in Ethiopia will be the timing of the investments in rail sector multimodal operations to and from Djibouti Port. These proposals are currently on hold.

Rail is very cost effective for transport of products in bulk and also of high value container cargo in dry freight containers and ISO tank containers, where it is also a very secure means of transport. Fuel oil by rail would normally be handled by 60-tonne capacity rail tanks (cisterns). This is not possible in Ethiopia. Dry freight containers need to remain unstuffed in the condition in which they were loaded at the point of origin for as long as possible and ideally right up to the customer’s door. True multimodal transport is dependent on rail for effi ciency on journeys of more than about 600 km. A higher carrying capacity with greater motive power would have resulted in a more fl exible freight operation, with a capacity to handle 1.8 million tonnes a year, with heavier trains. The plan under the previously planned concessionaire agreement was to import 46 new locomotives and 600 wagons.

The lack of such a service between Djibouti and Addis Ababa remains a severe constraint on the cost effectiveness of multimodal transport in Ethiopia.

New port developments in Berbera in Somaliland are being evaluated by the private sector (although there are no fi rm detail fi ndings to date) and rail links to the port could be considered for future development, once the main line is operating effi ciently. In the meantime the development and improvement of road access to alternative ports would be necessary. Because of topography, the international railway network in this part of Africa remains relatively undeveloped, in contrast to neighbouring Sudan where the terrain is fl atter and more amenable to railway construction.

Shipping: Need for Choice in Multimodal TransportShippingEthiopian Shipping Lines (ESL) is state-owned and is seen as a strategic transport asset of Ethiopia. Government requires that it, and the state-owned Maritime and Transit Services Enterprise (MTSE), provide government-controlled services to the transport industry and in particular are the sole conduit for all Government contracts. In this situation any inherent ineffi ciency in the operation by either Company limits the ability of the industry to seek the best commercial route and rates. The two organizations have been proposed as the sole conduit for the operation of the proposed new Through Bill of Lading. Recent debate is understood to have led to a modifi cation of this idea, but the details are not yet known.

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In 1977 the Government liberalized freight forwarding and shipping agency with 36 companies including the state owned Maritime and Transit Services Enterprise (MTSE) involved. Ethiopian Shipping Lines and MTSE are considered as strategic enterprises and still in the hands of government.

The Ethiopian Shipping Lines (ESL) owns 8 ships with total lifting capacity of 79,000 Gross Registered Tons (GRT). It has placed a fi rm order for acquiring two new ships. The total tonnage lifted by the ESL was 1,154,703 ton in 2004/5 accounting for one third of seaborne trade, thus it plays an important role in the development of Ethiopia’s external sector. The Government has negotiated with the Government of Djibouti to implement Through Bill of Lading Procedures that will allow Ethiopian Shipping Lines to handle the land transportation of imports up to the dry port in Ethiopia as from 2007.

Freight ForwardingFreight forwarders act as intermediary between the shipper and the operator on a commission basis. Freight forwarders could play a critical role in improving logistics for a more effi cient delivery of cargo. Of particular signifi cance, they can serve in strengthening the partnership of businesses and truck operators for creating distribution networks that consolidate loads. This achieves economy in the transportation of goods, with implications for enhancement of competitiveness in the global environment. In general, the role of freight forwarders is related to business logistics. Business logistics planning activities address carrier selection, pricing (freight rates), and the level of service to be provided, vehicle routing and the problem of allocation.

The freight forwarding businesses have not been well developed to have a major impact on performance in terms of consolidating shipments and transfer in order to maximize effi ciency. In Ethiopia, where shippers move irregular consignments, freight forwarders could promote commercial road transport effi ciency and enhance the competitiveness of Ethiopia's export trade.

Logistic improvements that increase freight delivery effi ciently can provide fi nancial savings for shippers. All in all, transport-intensive manufacturing plants, exporters, shipping fi rms, for-hire carriers have interest in the improvement of freight management. Central to freight management is the focus on minimizing shipper’s costs, which involves not only inland movements but also inter-modal transfers.

Ethiopian Freight Forwarders and Shipping Agents Association (EFFSA)The Ethiopian Freight Forwarders and Shipping Agents Association (EFFSA) is recognized as an international organisation by the International Federation of Freight Forwarders Associations (FIATA) and the International Air Transport Association (IATA). It has 33 full members in an industry where it is thought some 44 companies operate. Precise numbers are not recorded as there is no active legislation at present.

There used to be legislation to require prospective freight forwarders to receive training from both Customs and the previous transport ministry, and to have a minimum bank account of 1.5 million Birr, but this has been discontinued. It is recommended that EFFSA offer the International Federation of Freight Forwarders Associations (FIATA) training. The training should be available in the country. Re-establishment of a training requirement before a license to operate is issued may be premature as many European countries still have no such requirement. In addition EFFSA has expressed interest in offering CPC training and they would be well placed to represent the road haulage industry to Government. EFFSA is the only internationally recognized association in the industry and should

36

be seen by MoTC as a voice worth listening to. With their wide daily contact with the international freight industry they could assist in proposing and reviewing transport legislation that would promote trade facilitation.

The freight forwarding industry is represented well by the Ethiopian Freight Forwarders and Shipping Agents Association (EFFSA) who have FIATA and International Air Transport Association (IATA) recognition. A decision on the Through Bills of Lading is said to have been made by MoTC and passed on to EFFSA. The agreement details and response from EFFSA were not known at the time of writing. Until the decision is implemented and the consequences are known, the limitation on the choice of shipping line to be used by Ethiopian import and export companies will have a direct effect on the use of multimodal transport, the Through Bills of Lading and the ability of EFFSA to secure the best sea freight rates for its customers. Unconfi rmed reports suggest that given more freedom to operate, ocean shipping rates could be 10-40 percent lower to Djibouti, providing much needed assistance for the objectives of growth and poverty reduction.

Customs BrokersCustoms clearance is the procedure of complying with customs rules and regulations and the payment of customs levy, as well as the securing of clearance for cross border transport using one or more modes of transport.

The Customs Clearance Association (CCA) has an offi ce but no direct access to Automated System for Customs Data (ASYCUDA ++) as the telephone system cannot provide the dedicated line where they are. They may relocate to a new location to access the system. They represent 300 members who used to be licensed by Customs (operating under MoTI) and who had to be trained on a three-month course, have access to funds of Birr 1 million and operate from a regular offi ce. It is unclear if this system still operates, but if not it should be re-established.

EFFSA, which represents the freight forwarding industry, can also operate as customs broker. Due to the overlap in activities the Customs Clearance Association (CCA) is said to be approaching EFFSA to join with them. CCA is strongly in favor of Ethiopia joining the World T