Customs Commission Unshackles Container Deposits

Customs Commission Unshackles Container Deposits

Sep 27 , 2025. By NAHOM AYELE ( FORTUNE STAFF WRITER )

The Ethiopian Customs Commission has ended its decades-old practice of requiring importers to post large cash deposits before containers are moved from ports into the country. Effective last week, the new rule replaces cash with letters of guarantee, an administrative change circulated to all branches by Commissioner Debele Kabeta.

The Ethiopian Customs Commission (ECC) has ended its long-standing policy requiring importers to lodge large cash deposits or financial guarantees before moving shipping containers from ports into the country, replacing the rule with a simpler system based on letters of guarantee.

The change, which took effect last week with a circular signed by Commissioner Debele Kabeta and sent to all customs branches, marks a notable shift for importers, who have described the former rules as burdensome and outdated.

For years, the Commission insisted on up-front financial securities, arguing that such measures were necessary to ensure containers, technically considered “goods,” were returned after unloading. Since containers are classified as temporary imports, no duties are paid on them. The deposit policy, in theory, safeguards against misuse and delays. In practice, however, it immobilised millions in working capital, was applied unevenly across branches, and created frustration and confusion among importers.

Officials now hope the new approach will remove some of those obstacles. Letters of guarantee, they argue, will allow the Commission to maintain oversight of container returns while freeing up cash that importers can use for customs duties, taxes, or business operations.

“The previous procedure created unnecessary complications,” said Yonas Teklewold, head of the Customs Operations Division. “Containers are not commodities, but equipment. Locking up cash on this end only hurts business.”

The main challenge for customs has always been late returns. Importers have a 15-day window to unload cargo and send containers back, but many struggle to meet the deadline due to logistical issues, transportation bottlenecks, and unforeseen costs. Under the revised rules, the Commission would enforce penalties for late returns, but would no longer hold deposits upfront.

“With the new system, importers and the Commission agree through a letter of guarantee on the container’s return,” Yonas said. “It eases the pressure without sacrificing accountability.”

The change applies to unimodal shipping, where containers are moved under a single shipping document. Importers using the Ethiopian Shipping & Logistics (ESL) for multimodal services still have to put up cash guarantees. The national liner requires a deposit of 100,000 Br for a 20-foot container and 200,000 Br for a 40-foot unit. If importers miss the deadline, fines start at six-dollar per day for a 20-foot container and eleven dollars for a 40-foot container after the grace period, rising to more than 38 dollars daily if the delay stretches beyond two months.

According to Dereje Ketema, division manager for ESL’s Europe and Africa trade routes, the company is considering similar changes to scrap the cash deposit requirement.

“We want to strike a balance between ensuring containers return and easing importers’ financial stress,” he said.

The company handled 437,241 containers (TEU) in the three quarters of 2024/25, while 22,400 TEU were locally packed for exports during the same period of the previous year. The Douraleh Container Terminal in Djibouti registered a record-breaking performance of exceeding 1.2 million containers in 2024. Close to 95pc of Ethiopia's external trade passes through ports in Djibouti.

The Commission’s decision has been welcomed by many importers who see it as a much-needed fix to a long-standing problem that drained liquidity and slowed business.

“This is a big relief,” said Michael Mekonnen, CEO of Menkem International Business Plc. “When handling large volumes, the required deposits ran into millions of Birr. It restricted the cash we needed for taxes or operations. Recovering deposits was slow and complicated. This change allows us to focus on business rather than bureaucracy.”

The financial impact of the old system was sometimes overwhelming. Anwar Edris, a construction materials importer, recalled depositing 800,000 Br for four containers at Mojo Dry Port.

“That kind of money could have gone directly to duties and taxes,” he said. “The new policy finally acknowledges the reality of how much this weighed on us.”

However, Anwar argued that the unchanged 15-day deadline for returning containers remains a concern.

“It doesn’t reflect conditions on the ground,” he said. “Delays happen because of roadblocks, fuel shortages, or logistical snags. Extending the return period would make the system even more effective.”

Experts have also weighed in, praising the wider benefits for the economy. Matiwos Ensermu (PhD), an associate professor of logistics and supply chain management at Addis Abeba University, believes eliminating deposits would accelerate trade, reduce bureaucracy, and improve liquidity for importers and exporters.

“Businesses already face high port fees, transport costs, and taxes,” Matiwos said. “Adding cash guarantees on top of that drained resources. The new system is more rational. It speeds up clearance, reduces red tape, and releases working capital that companies can reinvest in operations.”

But Matiwos pressed for further steps.

“The Commission needs to focus resources on combating smuggling and modernising customs systems," he said. "Technology and stronger oversight will deliver more efficiency than tying up importers’ cash ever could.”

Officials argue that the change also creates greater uniformity across the Commission’s various branches, which had previously interpreted the deposit rule differently. By standardising procedures, they say, the Commission can improve service delivery while still holding traders accountable.

PUBLISHED ON Sep 27,2025 [ VOL 26 , NO 1326]