Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and farming have their vehicles stranded at the Djibouti ports, following a policy shift by the federal government banning the imports of vehicles that are not electric-powered. Although importers of these vehicles have raised concerns with the authorities, no satisfactory response was provided until two weeks ago, when the Ethiopian Investment Commission (EIC) intervened.

Two weeks ago, Commissioner Hanna Arayaselassie wrote to Alemu Sime (PhD), minister of Transport & Logistics, asking for clarification and discussion of the pending concerns.

Domestic and international investors are concerned about the decision to prohibit imports of vehicles powered by gasoline fuels. They see the decision, targeting urban pollution and promoting sustainable development, lacks clear legislation and effective enforcement mechanisms, creating operational issues and uncertainty for businesses.

Hanna is also concerned about business disruptions if immediate intervention from the authorities is not forthcoming. According to her, foreign and domestic investors have been bewildered by the lack of clear policy.

"There were no directions over which vehicles have been banned," she told Fortune. "Receiving clarity is crucial. If not, businesses will be at risk."

The Commissioner believes that a rapid shift to electric vehicles would be incompatible with the current infrastructure limitations and the limited number of manufacturers worldwide.

The ban on fuel-powered vehicles has not only created logistical bottlenecks but has also stifled economic activities across various regional states, particularly outside Addis Abeba, where electric power infrastructure such as charging ports is inadequate. The availability of electric-powered heavy-duty vehicles remains limited globally, with advancements in this technology being recent.

Despite ongoing efforts to build infrastructure and promote electric vehicles through 250 registered electric vehicle importers, there are currently close to 46 charging stations scattered across the country.

"Forcing investors to adopt these vehicles prematurely could lead to operational inefficiencies and increased costs," said the Commissioner in her letter. "Ultimately, it discourages investment."

Minister Alemu announced the policy shift to Parliament back in February this year. He cited rising fuel costs as the reason for reevaluating the country's dependence on conventional vehicles and exploring alternative options. His administration seeks to curb carbon emissions, promote cleaner air, and encourage the adoption of greener technologies in the automotive sector by discouraging the import of fossil fuel-powered vehicles.

Leaders of the European Chamber in Ethiopia have raised the issue with the Ethiopian Investment Commission over the past few months. Representing 180 businesses, the lobby group has pleaded for changes to be made for investors struggling due to the fuel-vehicle ban.

According to Bahiru Temesgen, the chamber's executive director, the ban on combustion engines is unfounded without adequate infrastructure. He said over 10 companies from different sectors have been affected, with tractors, cold trucks, and field vehicles stranded at Djibouti ports.

"This is putting investment at risk," he said.

Bahiru said such changes could discourage the foreign direct investment (FDI) the country needs.