This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 11/5/2018

Overview

Ethiopia’s road network has been improving each year. As of the end of FY 2017/18, Ethiopia had 120,171 kilometers (74,670 miles) of all-weather roads – about 32% of the required road network in the country. In FY 2017/18, the Government of Ethiopia (GOE) invested 33.9 billion Birr ($1.24 billion) in road construction. The Ethiopian Roads Authority plans to build an additional 10,000 kilometers of road at a cost of 41 billion Birr ($1.5 Billion) during the coming year. In the past fifteen years, the GOE has been vigorously engaged in new road construction as well as expansion of the existing road network through Ethiopia's Road Sector Development Programs (RSDP).
During the GTP II period covering 2015/16 to 2019/20, the GOE anticipates a further expansion of the country’s road network to 220,000 kilometers (136,701 miles). In the past, U.S. firms have bid on tenders for road design, construction and supervision services. However, most of them have not been price competitive. Ethiopia will continue to need construction vehicles (bulldozers, cranes, trucks, and forklifts), vehicle attachments, and mechanized and non-mechanized equipment to level and pour construction materials. Most projects open for international competitive bidding are funded either by the GOE or major international financial institutions, such as the World Bank’s International Development Association (IDA) and the African Development Bank (AFDB).  

Ethiopia is aggressively working on building an extensive rail network. As a landlocked country, Ethiopia primarily uses the port of Djibouti as a gateway for the vast majority of its internationally traded goods (90% to 95%), with most of the goods essentially transported to and from the port by trucks. This situation has made Ethiopia’s trade logistics very expensive and uncompetitive. Ethiopia’s reopening of diplomatic relations with Eritrea creates the potential for expanded logistics operations via the Eritrean ports of Assab and Massaewa.

The GOE established the Ethiopian Railways Corporation (ERC) under the Ministry of Transport with a mandate to create a modern nationwide railway network, replacing the Franco-Ethiopian railway that is no longer in service. ERC recently completed a 656 kilometers railway network construction project that links the capital city Addis Ababa to the port of Djibouti. This railway expansion project was carried out by two Chinese companies, State-owned China Railway Group and the China Civil Engineering Construction Corporation. The new rail system started commercial operation in mid-2018. The two Chinese companies will operate and manage the $3.4 billion railway line for the next six years as local employees are trained to takeover in due course.

This infrastructure project will significantly improve Ethiopia’s international trade by reducing traders’ logistical costs and time of delivery. The new electric railway cuts transport time from Djibouti to Modjo (a dry port city 70 kilo meters away from Addis Ababa) from the current 84 hours to just 10 hours. Cargo capacity on the rail network is 3500 to 4000 tons of freight per train, with ERC anticipating 6 to 7 million tons of cargo per year in its first year of operation. Cargo volume will increase to 10 million tons in the mid-term.
 
U.S. companies have several market opportunities in this sector, including transit oriented planning, development, and design for railway projects, and the supply of rail technologies such as locomotives and smart rail ticketing systems. The Addis Ababa Modjo rail network is the first phase of a master rail network development plan that aims to connect Ethiopia with all of its neighboring countries outside of Eritrea and provide access to three ports (Djibouti and Tadjoura in Djibouti, and Mombasa in Kenya) in two phases. The second leg of this network, the railroad from Awash (one of the stops on the Addis–Djibouti railway line) to Mekelle is currently under construction by a Turkish company, Yapi Merkezi, and a Chinese contractor, China Communications Construction Company (CCCC), with completion expected by 2019. The third leg is the connection between Weldeya and Tadjoura; while the contract has been awarded to two contractors, one Chinese firm, CCCC, and one Indian company, Overseas Infrastructure Alliance (OIA), the financing for this project has not yet been finalized. The fourth step will be to connect Addis Ababa with Konso via Hawassa and Arba Minch, for extension in phase II to Mombasa, Kenya, via Moyale and Nairobi. The final leg of Phase I is the link from Addis Ababa via Ambo, Ejaji and Jimma to Bedele (to be extended to South Sudan in the second phase). In phase II, the network would be extended to Axum, Shire, Bahir Dar and Assosa and, in addition to the links to Kenya and South Sudan mentioned above, to Metema and Kurmuk on the border to North Sudan. Priorities have been set based on the need to move commodities such as potash and coffee out of the country and import capital and consumer goods.

The Government of Ethiopia is currently implementing a $2 billion National Logistics Development (NLD) strategy, which was incorporated into GTP II to alleviate trade logistic hurdles. Under this strategy, the GOE aspires to expand its rail network, targeting enhancement of the country’s export competitiveness by significantly reducing trade logistic costs. As a part of the NLD plan, the GOE will further expand its railway network to roughly 1,545 km (960 miles) linking all the seven major dry ports and towns of the country. U.S. companies can bid for upcoming projects in railway design, construction, and supervision services. As these infrastructure projects have limited financial resources, foreign bidders with project financing proposals get preference. U.S. companies can approach The U.S. Overseas Private Investment Corporation (OPIC) and the U.S. EXIM Bank to develop an attractive funding proposal for these upcoming projects.
Road Network                                                            Unit: Kilometers

 

2016

2017
 

2018
(Estimated)

2019
(Estimated)

Total Market Size113,066120,171138,000150,000
Total Local Production*  60,000  65,000 70,000  75,000
Total Exports -  
Total Imports** 53,06655,171 68,000 65,000
Imports from the U.S.***      2,000   4,000

Source : National Bank of Ethiopia

‘* indicates length of road projects carried out by local contractors.
‘** indicates length of road projects carried out by foreign companies.
‘*** indicates estimated length of road projects that can be constructed by U.S. companies.

 
Leading Sub-Sectors

•           U.S. firms have opportunities in the road and railway construction sectors and may also offer engineering design, consultancy and supervision services in partnership with a local company.
•           U.S. exports of construction machinery, chemicals, locomotives, railway machinery and equipment and building materials are highly valued in Ethiopia.

Opportunities
There are opportunities for U.S. companies through government tenders for road and railway construction projects. U.S. companies can also provide engineering design, consultancy and construction supervision services in the road and railways sector to the administrating agencies or the contracted companies. Other potential opportunities are the sale of railways locomotives, machineries and equipment, construction vehicles (bulldozers, cranes, trucks, and forklifts), vehicle attachments, and mechanized and non-mechanized equipment to level and pour construction materials. Companies should refer to the Project Financing section of Chapter 7: Trade and Project Financing for specific project opportunities.

Web Resources

Web Resources
U.S. Foreign Commercial Service, 
Teddy.Tefera@trade.gov
Office.AddisAbaba@trade.gov
www.export.gov

African Development Bank 
http://www.afdb.org

Export-Import Bank of the United States: http://www.exim.gov
Country Limitation Schedule: http://www.exim.gov/tools/countrylimitationschedule/

Overseas Private Investment Corporation (OPIC): http://www.opic.gov

Trade and Development Agency: http://www.ustda.gov/

Office of International Trade: http://www.sba.gov/oit/

U.S. Agency for International Development: http://www.usaid.gov

Ministry of Transport
http://www.motr.gov.et/home

Ethiopian Roads Authority 
http://www.era.gov.et

Ethiopian Railways Corporation
http://www.erc.gov.et

World Bank 
http://www.worldbank.org
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Ethiopia Design and Construction Trade Development and Promotion