Authorities at the National Bank of Ethiopia (NBE) have given commercial banks the nod to issue letters of credit (LCs) to close to 170 importers interested to bring in 3,200 cargo trucks.

It is an extension of a decision from the National Logistics Council, a 10-member body, including representatives from the ministries of Transport and Trade, the Transport Authority and the Freight Forwarding & Shipping Agents Association, to import cargo trucks in a bid to alleviate logistics hurdles and avoid congestion at the ports in Djibouti.

The latest instructions were issued after the central bank approved the applications, brought to its officials' attention through the Federal Transport Authority. The importers have secured suppliers credit for over two years to import these trucks. They have to deposit the value of the imports with the dollar exchange rate at the end of the maturity period. Banks would issue letters of credit, and during the time of the settlement period, the central bank will transfer the equivalent amount in foreign currency.

It is a rare move in a country with a critical shortage of foreign currency, with reserves only sufficient to cover two and a half months worth of imports.

Officials at the Authority believe the letters of credit permit would be instrumental in solving bottlenecks in logistics, which is under duress due to a shortage of shipping containers and a surge in shipment costs, adding to pre-existing problems, including the congestion of ports.

"Even though it may not solve the logistics hurdles for good, it's part of the solution for the challenges facing every actor," said Abdulber Shemsu, deputy director at the Authority.

Not many trucks have been imported in recent years because of the shortage of foreign currencies. That has been causing a rise in the prices of commodities the government considers strategic, including fertiliser and wheat, and delay of food aid. About 13,000 trucks, each with a load capacity of 250 quintals, are available in the country. The trucks to be imported are expected to double this capacity.

"There are times when operators of freight forwarding trucks are forced to transport strategic items on government orders," said Elizabeth Getahun, president of the Shipping Agents Association.