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Winning domestic firms due to start operations in six months

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.

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Alemu Sime (PhD), minister of Transport and Logistics, his deputy Dhenge Boru, and Abdulber Shemsu, EMA director-general, presented the licenses to the firms during the ceremony this week.

Abdulber disclosed his office had not received any bid documents from foreign-based or funded firms. He said he was also not aware of any foreign involvement in the three joint ventures that have received licenses.

“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 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 is the CEO of Panafric Global and President of the Ethiopian Freight Forwarding and Shipping Agents Association.

She is confident the firm she leads will be up and running in less than six months’ time. Tasks left on the agenda for Panafric include gaining certification from various government institutions and other paperwork.

Elizabeth has also noted the lack of foreign participation in the bidding process.

“I think the foreign companies made their own business decisions by not taking part in the bid,” she told The Reporter. “But it’s a big deal for domestic firms to get the licenses.”

Elizabeth is hopeful about the opportunities presented to Panafric and the other two winning firms by the multimodal operator licensing.

“We consider the opportunities more than the challenges we will face,” she said about the tough competition awaiting the firm from ESLSE. “I’m hopeful that the policies that benefit ESLSE will also benefit us. If not, this will be one of the things we’ll present to the government.”

Among the investors in the Panafric joint venture is the Belayneh Kindie Group.

A logistics expert who spoke to The Reporter 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.

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