Summary
Winning domestic firms due to start operations in six months
Foreign companies missing from the Government Roll out.
The list of companies awarded the first batch of multimodal logistics operator licenses in Ethiopia features a conspicuous lack of foreign entities as the government’s efforts to liberalize the sector are dogged by security concerns and worries about favoritism.
Three separate domestic joint ventures received licenses during a ceremony at the Sheraton Addis this week, out of eight domestic bidders looking for a piece of a lucrative market that has long been under the monopoly of the state-owned Ethiopian Shipping and Logistics Services Enterprise (ESLSE).
It is the culmination of a federal policy revision and executive directive issued by the Ethiopian Maritime Authority (EMA) in 2021, announcing plans to grant multimodal operator licenses to up to five firms including ESLSE.
The authorities initiated a bidding process in 2022 only for it to fail before the second attempt ended with three licenses granted this week. Panafric Global Logistics Plc, Tikur Abay Transport Plc, and Cosmos Multimodal Operator S.C. are the recipients.
“The bidding process was open to foreign companies as well. Besides the capital, infrastructure and human resource requirements in the directive, what we mainly required was that the company has to be registered in Ethiopia and form a joint venture,” Abdulber, one of the Ethiopia's Government official said.
Global logistics giants such as French-based companies CEVA Logistics and Bollore Africa (now Africa Global Logistics) began forming joint ventures with Ethiopian firms in 2019 following an extended period of serving clients in the country through local agents.
These joint ventures appeared keen to take part in the bid for multimodal operator licenses when the tender was first announced in 2022, with Bollore officially taking part in the first round of bidding. However, the interest appears to have dried up for the second round.
“We didn’t prohibit foreign companies from competing,” said Abdulber.
All three bid winners have met the minimum requirements listed out in the multimodal directive prepared by the authorities. These include 350 million birr in paid-up capital and five hectares of land under lease or ownership, of which three hectares are to be used to develop a terminal with a minimum of 3,000 square meters of bonded warehouse space.
The companies have been granted a six-month window to finalize preparations and begin operations. Failure to meet the time constraint could see administrative measures including the revocation of licenses.
Elizabeth Getahun being the CEO of Panafric Global and President of the Ethiopian Freight Forwarding and Shipping Agents Association noted the lack of foreign participation in the bidding process. She says,
“I think the foreign companies made their own business decisions by not taking part in the bid,” ..... “But it’s a big deal for domestic firms to get the licenses.”
A logistics expert who spoke to the media on condition of anonymity observes the disinterest from foreign firms might have stemmed from an “inevitable high favoritism on the side of the government towards ESLSE.”
The expert says that security concerns also likely played a role in discouraging foreign interest.
“No peace means no logistics at all,” said the expert.
