Transport Federation Mulls Legal Action Over Unpaid Bills For Wartime Services

Illegal taxation, extortion, kidnapping, EV policy remain headaches for transporters

The Ethiopian Transport Employers’ Federation is considering taking legal action over unpaid dues owed by the Ethiopian National Defense Forces (ENDF) for services provided during the northern conflict.

The overdue payments were a central point of discussions during the Federation’s general assembly on September 20, 2024, when its members, who include the owners of thousands of cross-country buses, heavy trucks, and taxis, met to mull over the sector’s most pressing issues.

Those present raised a number of issues, including the dues owed by ENDF, security concerns and kidnappings carried out on roads by armed groups, illegal taxation and extortion in regional states, as well as challenges they continue to face in Djibouti, among other things.

The federal government’s decision to ban the import of combustion engine vehicles was also a topic of discussion.

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Members of the Federation say they are still awaiting payment from ENDF for services rendered during the northern conflict. Transporters had provided these services based on a credit contract agreement, but the bills have yet to be settled.

According to data the Federation collected from its members, ENDF owes the owners of cross-country buses 59 million birr, while truck owners who provided dry cargo services are owed 210 million birr.

“Bus and truck owners were asked to provide transport services to ENDF and the government for the last three years. Some provided these services under contractual agreement while others did so under orders for a national call of duty,” reads a statement from the Federation.

It goes on to say that while some have been paid for their work, the majority are still awaiting settlement.

“These transport businesses and owners have families to feed. Some have been unable to continue in the business because they have not been paid. We have repeatedly asked ENDF and the government to settle the payments, but they have not responded,” reads the statement.

Berhane Zeru, president of the Federation, says bureaucratic hurdles are making it difficult to claim the dues.

“We respect ENDF. The top officials at ENDF and the Ministry of Transport are keen to make the pending payments. But administrative hurdles at the lower end of the [bureaucratic] structure are making it difficult. There is no transparent payment system,” he said.

Transporters say their cross-country services are facing serious threats from armed groups haunting their routes.

“Cross country transport drivers are being stopped constantly by armed groups and at illegal tax checkpoints. Drivers are being kidnapped. They are killed if they don’t pay ransoms. Illegal taxes are imposed at every turn. Drivers cannot pass from one area to another unless they pay,” said Berhane.

The federal government’s electric vehicle (EV) policies also pose problems.

The Federation opposes the ban on the import of combustion engine vehicles, arguing the move is rushed. The government has also decided to bar heavy trailer trucks with more than 30 years of service from the roads.

“Globally, finding heavy EV trucks with reliable technology remains an issue. The government must allow a grace period instead of ordering fuel-run heavy trucks to retire immediately,” said Berhane.

He says the Federation is working with its members to facilitate a shift to EVs, but argues the process will take time.

“We don’t oppose the decision to shift to EVs. We’re saying we need time to prepare an exit strategy. The government introduced the policy without an exit strategy,” said the President.

He disclosed the Federation has placed requests with the Transport Ministry for permission to import EVs duty free.

“We also asked for supply credit. Minister Alemu Sime accepted our points and directed them to advisors but it’s taking time,” said Berhane.

The Federation would like to see rectifying measures for what it describes as unfair and unclear tax legislation.

The Ministry of Finance has introduced a directive that obliges transporters with over half a million birr in transaction volume to provide receipts and supporting documents.

However, transporters argue this is hardly feasible.

“It’s bureaucratic and takes time for drivers to stop and get receipts for everything they purchase on their routes. Second, transporters and drivers make unnecessary payments demanded by armed groups and illegal tax collectors in regional states. It’s difficult to provide documents for these,” said Berhane.

He said neither the Ministry of Finance or Ministry of Revenues are willing to amend the directive.

“They even joke about us,” said Berhane.

The President notes that Ethiopian transport drivers and logistics companies continue to face difficulties in accessing entry permits to pick up or deliver goods in Djibouti.

These issues will be included in a final appeal to the Transport Ministry, according to the President.

“If the Ministry fails to provide solutions, we will go on to the next alternative. Transport is crucial to the economy but it isn’t getting due attention. We are bearing problems beyond our capacity,” said Berhane.