Sunday with Eden | Jul 17,2022
The Ministry of Transport & Logistics has introduced new requirements for foreign multimodal transport operators, setting a paid-up capital threshold of one million dollars and mandating at least three years of experience in shipping, air transport, or port administration. The directive, issued by the Ministry, revises earlier rules that limited foreign participation in freight forwarding to joint ventures with local investors and capped foreign ownership at 49pc.
The reform follows a meeting of the investment committee attended by Finance Minister Ahmed Shide, Ethiopian Investment Commission commissioner Zeleke Temesgen (PhD), Transport Minister Kassahun Gofe (PhD), and Industry Minister Melaku Alebel, development bank of ethiopia board chairman Tekeleweld Atenafu and Abera Tola the President of Ethiopian Red Cross Society , where officials agreed to remove the foreign capital ceiling for multimodal investment.
The Ethiopian Investment Commission (EIC) led by Zeleke stated that it is pursuing broader reforms to improve the investment climate, with this decision forming part of that effort.
Policy makers say opening the sector to foreign investors is expected to improve logistics efficiency, reduce national transport costs, and encourage technology and knowledge transfer, while also strengthening the competitiveness of domestic operators.
Beyond capital requirements, the directive introduces other infrastructure obligations. Operators must maintain a head office or at least a branch in Ethiopia, secure at least one hectare of fully developed land for a logistics terminal, and construct a secure facility with a closed concrete warehouse. They are also required to own five cross-border trucks, each with a minimum capacity of 300 quintals, and have access to heavy equipment such as cranes or reach stackers.
Governance requirements have also been tightened. Each operator must establish a board of directors with between three and thirteen members, at least half of whom hold a bachelor’s degree and have a minimum of three years’ experience in fields such as insurance, banking, or maritime law. Companies are also required to present legal proof of partnership with a foreign agent responsible for handling international cargo operations. The Ministry has also introduced a fixed licensing cycle, requiring operators to renew permits every three years.
Djibouti’s unexpected decision to bar non-vessel-owning multimodal transport operators from issuing bills of lading has sent shockwaves through the region’s emerging logistics market, exposing the fragility of cross-border coordination and the gap between regulatory reform and geopolitical constraints few months ago.
Implemented without prior notice, the restriction has effectively halted operations for newly licensed firms intended to compete with the state-owned Ethiopian Shipping & Logistics Services Enterprise (ESLSE), which has long dominated the sector. The bill of lading serves as both a receipt for shipped goods and a critical legal document for customs clearance, insurance, and international trade compliance, and its absence has disrupted cargo movement.
The government’s decision last year to license private multimodal operators was initially seen as a major step toward dismantling entrenched market concentration and improving efficiency in a sector long characterised by high costs and delays. Licensed operators such as Ethio-Djibouti Railway S.C., Ethio-Railway Logistics Plc, and Gulf Ingot FZC Multimodal Operator were joined by new entrants including Pan-Afric Global, Tikur Abay Transport, and Cosmos Multimodal Operation.
Cosmos Multimodal Operation CEO and Ethiopian Freight Forwarders Association (EFFA) President Dawit Wubshet raised concerns over the new directive permitting foreign entry. He noted that his company has blocked 350 million Br in capital for six months and invested heavily in staffing for the past three years, yet has remained unable to commence operations for nearly three years. He added that foreign firms are now being allowed into the market under requirements significantly lower than his own initial investment threshold.
He also questioned the attractiveness of the sector for new entrants, given the prolonged delays in operationalising multimodal services and a market that has yet to exceed a 300,000-container capacity. He pointed out that while domestic authorities encouraged readiness, no corresponding progress has materialised on the Djibouti side, and frequent policy shifts, including the removal of the 49pc foreign ownership cap.
He warned that small and medium enterprises risk being sidelined, noting that his firm has continued paying salaries for three years despite the absence of operations.
Gashaw Hailu, a veteran logistics expert and former CEO of one of the licensed multimodal transport operators, argued that opening the sector to foreign investors could generate significant benefits for both the economy and existing operators. He noted that many licensed companies face capacity and financing constraints, and that liberalisation would enable partnerships with experienced foreign firms.
“Working jointly with them would boost local companies’ capacity,” he said.
He added that liberalisation should be accompanied by strong regulatory oversight, arguing that emphasis should be placed on attracting investment rather than imposing excessive entry barriers. Instead of rigid pre-entry restrictions, he said compliance should be enforced through strict post-entry monitoring and supervision.
Officials argue that the new infrastructure and governance requirements are intended to raise service quality and ensure that operators possess the financial strength and technical expertise required for multimodal logistics across transport modes.
Yet the combination of Djibouti’s unilateral restrictions and prolonged delays in domestic operational licensing highlights a persistent gap between policy ambition and execution. As SMEs await full market access and foreign entrants prepare to test the regulatory environment, the sector faces a critical question of whether reform will deliver genuine competition or reinforce existing structural imbalances.
PUBLISHED ON
May 31,2026 [ VOL
27 , NO
1361]
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