Ethiopia, China in talks to upgrade Ethio-Djibouti Railway

World Bank approves USD 700mln for Mieso-Dire Dawa Expressway

Ethiopia and China are in talks over a proposal to make major upgrades to the Ethio-Djibouti Railway, with officials looking to Beijing for financial backing.

The proposed extensive infrastructural upgrade along the 760-kilometer railway linking Addis Ababa with Djibouti reportedly includes the construction of additional bridges, fences, livestock overpasses, stations and other facilities, as well as procuring additional locomotives.

Finance Minister Ahmed Shide disclosed the plans during a panel discussion on railway infrastructure and regional integration on August 1, 2025.

“The EDR [Ethio-Djibouti Railway] needs additional financing. This was one of our talking points with the Chinese government recently. We agreed that the EDR lines need upgrading,” said the Minister.

– Advertisement –

He stated that frequent collision incidents involving livestock have repeatedly led to confrontations and friction with local, often pastoral, communities along the railway, citing it as part of the reason the government is mobilizing to upgrade EDR.

During the discussion, officials also disclosed that Ethiopian operators have assumed full control of the railway’s operation from their Chinese counterparts.

“The operation of EDR has been transferred fully to Ethiopian and Djiboutian citizens. This is a big achievement. We thank the Chinese government, BRI [Belt and Road Initiative]and FOCAC[ForumonChina-AfricaCooperation”saidAhmed“ChinahasseenthroughitsrolewhichwasbuildingandtransferringtheprojectItwastediousanddifficultworkIwasTransportMinisteratthetimeTherewasahugeamountofbackandforthSoIalsohaveanemotionalattachmenttothisproject”[ForumonChina-AfricaCooperation”saidAhmed“ChinahasseenthroughitsrolewhichwasbuildingandtransferringtheprojectItwastediousanddifficultworkIwasTransportMinisteratthetimeTherewasahugeamountofbackandforthSoIalsohaveanemotionalattachmenttothisproject”

The panel discussion was centered around the need to make EDR more efficient to improve domestic and regional logistics systems.

“Improving the efficiency of this company is critical. It is owned by the two countries so interfacing and joint operation is crucial. EDR’s carrying capacity needs to be reworked. In the future, all of Ethiopia’s economic activity will be saturated along railway corridors,” said Ahmed, pledging to back efforts to upgrade the railway through policy.

Central bank Governor Mamo Mihretu, who also took part on the panel, stressed the need to mold EDR into a profitable enterprise.

“The Ethiopian government has invested billions of dollars in the railway. We are still repaying the loans taken for railway projects. If the railway cannot improve the logistics system and benefit the economy, all those loans we took have been a waste, and the whole thing is a loss,” said the Governor. “A lot has to be done, though the beginnings now are good and must be appreciated.”

Panelists highlighted the need to implement interfacing logistics administration systems in Ethiopia and Djibouti, as well as other neighboring countries, as a crucial step towards improving EDR’s efficiency.

“Almost all of Ethiopia’s international trade relies on Djibouti. The logistics procedures in Djibouti and Ethiopia need to be aligned and interfacing. We have been working smoothly, so far, based on brotherly spirit. This needs to continue,” said Alemu Sime, minister of Transport and Logistics.

He says there is a need to speed up the establishment of a joint port corridor administration with the Djiboutian government.

“The initiative has already started but it needs to be finalized,” said Alemu, stating that South Sudan and Uganda will also be included in the joint ‘DESU’ administration.

“Unless all of these countries align, the logistics cannot be efficient. The alignment also includes interfacing working hours of all. For instance, if Djibouti works at night, Ethiopia also must work at night. This means customs, banks, and logistics companies have to work at night to interface with these countries,” said Alemu.

The discussion also touched on the construction of an expressway linking Ethiopia and djibouti. Alemu disclosed that work is already underway on the first section between Adama and Miweso, a town located 300 kilometers East of Addis Ababa.

The second phase will see the expressway inch its way over to Dire Dawa using USD 700 million in funding from the World Bank, according to the Transport Minister.

“We have good roads from Dire Dawa to the Djiboutian border, but it needs expanding,” said Alemu.

The notion of accessing ports outside of Djibouti—a subject that has been at the core of regional friction for the past year-and-a-half—was also brought up during the discussion.

“We are working to increase and diversify the number of ports. The current Djibouti port was built taking into account the state of Ethiopia’s economy twenty years ago. Ethiopia’s economy has grown exponentially,” said Alemu.

The Minister claimed Ethiopia’s import volumes are in decline owing to an end to wheat imports.

“But our export volume surged, because our demand for capital goods has surged,” he said.

Alemu stated that Djibouti’s capacity to handle Ethiopia’s trade volume demands is under serious scrutiny.

“We have to collaborate with the brotherly country of Djibouti, to expand the capacity of Djibouti port. The other alternative is diversifying our ports to increase logistics efficiency,” he said.

The Minister spoke about the need to make operational changes.

“Last year, we had only one multimodal operator. Today, there are seven multimodal operators in Ethiopia,” said Alemu. “Yet, overall logistics reform is crucial. Work is underway. Customs must reduce the time it is taking to search cargo. An electronic cargo system is a must to reduce the long wait times,” said Alemu.

The Customs Commission is gearing up to implement an electronic system, which Alemu says will eliminate checkpoint searches between Djibouti and inland destinations.

The Minister also revealed that changes in US foreign and trade policies since Donald Trump took office in January have resulted in “speed bumps” in relation to financing for a massive digitization drive in the transport sector.

“We’re solving the problems. Once we secure the financing and finalize digitizing the sector, logistics efficiency will improve significantly in Ethiopia,” said Alemu.

Mamo sees the success of Ethiopia’s macroeconomic reforms depends heavily on enhancing the country’s logistics industry.

“Export competitiveness is impossible without improving the logistics sector. Logistics is very backward, and the distance from ports is long. Improving logistics is the top priority,” stressed Mamo. “We need to see EDR as a company, a holistic logistic provider. It needs to see what the customers need, not just moving goods. We should stop thinking narrowly. We cannot change the long distance between Ethiopia and Djibouti, but we can make our logistics efficient. Making profits is not enough for EDR. It needs a commercial mindset,” said the Governor.

He expressed his confidence in the Abilities of Takele Uma, former Minister of Mines and current Ceo of the Ethio-Djibouti Railway Share Company. Edr has undergone a series of changes since Takele Tok The help in January

Alemu praised the CEO for overhauling operations at EDR, improving security along the rail line, and synchronizing administrative systems in Djibouti and Ethiopia.

“Now, all the locomotives are in operation. But they’re insufficient for Ethiopia. We have to increase the number of locomotives. EDR also needs to establish its own rail maintenance institution to serve Ethiopia as well as neighboring countries. We need the Ministry of Finance’s support on this. Private railway operators will join in the future. EDR must be competitive,” said Alemu.