Ethiopian Economy’s Bottleneck

Daniel’s Reflection on ‘Logistics Deficit: A critical Challenge for the country’s competitiveness’ By Berihun Mekonnen

This is part II to my previous post titled Ethiopian Business Review (Part I). Taking 8 pages of the  Ethiopian
Business Review’s (EBR) magazine, Senior Editor Berihun Mekonnen, dives in to explore logistics challenges in Ethiopia. Including an interview with Akakas Logistics PLC’s Director of Transit, Shipping and Transport Kassahun Abberu (PhD). Out of the many, here are few of the points.

• According to the World Bank, in the organization for Economic Cooperation and Development (OECD) aka high income developed countries it takes 10 days to import and export, 31 and 37 days in Sub-Sahara countries to import and export respectively. In Ethiopia it takes 42 days to export and 44 days to import (about twice as long as it takes in Kenya, Vietnam and China)
• Ethiopia uses the port of Djibouti for nearly 90% of its import export; accounting for more than 120,000 containers a year
• After the 8 days of grace period, the fee per container per day at the Djibouti port is USD 11
• The average cost of logistics and transportation on the total price of imported goods is 40% (in other words if an individual pays 100 Birr for something that was imported, the 40 Birr levied on the price of the item was due to the logistics and transportation cost that the importer added on)
• A business man says a container which should be released with in a week from the port usually stays for a month or more, costing his company more than Ethiopian Birr (ETB) 50,000
• An addition of 2,000 – 2,500 trucks are needed to ease up the Ethio – Djibouti corridor
• Ministry of trade announced for the FY 2012/2013 export decreased from previous years
• Importing a container to Ethiopia compared to Tanzania and Kenya costs USD 1,095 and USD 310 more respectively (it is USD 2,000 when compared to south east Asian countries such as Vietnam)
• The World Bank’s 2007-2012 Logistics Performance Index (LPI) shows Ethiopia ranked 141 out of 150 countries. Dropping 37 places from its previous 104 ranking in the 2003 – 2007 ranking period
• The privates sector urges the government to privatize the sector but the government argues modernization of the sector needs huge investment, which the government is working on, and the government believes the private sector does not have the capacity to cover the needs, hence why it cannot be liberalized.  

The take away point: Ethiopia is landlocked country and logistics are bound to be a huge challenge. However if we Ethiopians give ourselves a tap on the shoulder and only choose to use where the country was yesterday as a reference and compare that with where the country is today, other countries will continue to have the competitive edge on this sector. Ethiopia has to use other exemplary countries’ as a model and either adapts their ways or find alternate solutions to be on their level. Business as usual and resting our full hope and faith that it will be better soon is not really a solution. We have to judge our competitiveness on the facts on the ground today. Import export delivery taking 10 or more days than the average of the Sub-Sahara African countries is really disheartening. Let us not be in self-denial and be content on the hopes of tomorrow. Because, if today we are rest-assured on where we will be tomorrow, there is no guarantee we won't wake up to find ourselves following way far behind yet again. As we plan to modernize the challenges one step at a time, we must keep in mind so are others. Response to address some of the basic and simpler issues should be prioritized. We got to do better.

In this day and age where globalization is not a choice but a matter of survival, where regional and continental economic integration is a race to stay competitive; partnerships with neighboring countries is a necessity. There need not be a love relationship, but at the very least a working relationship based on a mutual interest. Ethiopia & Eritrea seriously need to go back to a working relationship. Both countries would benefit tremendously from the Eritrea's under-utilized ports. Any grudge and stance of bravado needs to die off. We are both better of looking at the big picture and envisioning for the long term. Don’t think others aren’t quietly laughing at us; to the outside world, it matters less who is the aggressor and who is the victim of of the agression. They are always happily prepared to sell us their expensive goods and services; and even bullets and ammunitions if our ignorance leads us there. Our leaders must remember the limitations of our resources and must not lose focus of their priorities.  The driving force to having leaders, who perform their duties and responsibilities based on the public’s interest however, depends on the existence of an engaged and vigilant public.

Read the full article here.  

Daniel’s Reflection on ‘Business Cards: No insignificant Matter’ by Abebe Mulu

In a 2 page article Abebe explains the importance of business cards and how it is the pinnacle of first impression. An article by PSOW states that, the use of business cards dates back to the 15^th century referred as ‘Visiting cards’ by Chinese elites. Introduced to Europe in the 17^th century, and become to be known as “Calling cards” two centuries later. Entrepreneurs and business card experts say Business cards come in all different sizes and colors. While Business cards promote your company, they should not be used, as means of advertisement and you should always treat the card as you would of the cardholder.

Read the full article here.

Cheers,

Daniel