Ethiopia’s economy is set to receive a huge boost from the construction of the World Bank funded second transport corridor.
The African Development Bank (AfDB) last week agreed to lend Kenya Sh12.5 billion for tarmacking 123 kilometres between Marsabit and Turbi, along the highway to Moyale town which borders Ethiopia.
The Ethiopian government has already tarmacked the road from Addis Ababa to Moyale to connect with the one to be constructed by the Kenyan government.
The construction will be good news to the Ethiopia government, which is currently incurring huge costs by importing through Djibouti port according to a recent study.
The loan will be used to tarmac 123 kilometres between Marsabit and Turbi, along the highway to Moyale town which borders Ethiopia.
The fund will also be used to construct one-stop border post at Moyale including equipping it with security outposts.
Lack of good roads connecting Kenya and Ethiopia has hampered trade between the two nations, especially the use of Mombasa port as an alternative for the Ethiopian sea trade.
Ethiopia’s dependence on imported goods has shifted 98 per cent of its traffic to Djibouti port which is about 85 per cent of the whole port’s traffic.
A recent study by the African Trade Policy Centre (ATPC) indicated that exorbitant charges incurred by Ethiopia at the Port of Djibouti, have seen the landlocked eastern African country’s economy hit the doldrums.
The high charges involved, reduced free time for imported cargo and inadequacy of storage facilities are some of factors that have ballooned Ethiopia’s total logistics cost for its import and export of commodities, the study said.
When the study was concluded last month, the port had over 600,000 tons of cargo on the ground or in the holds of ships which was creating congestion and hampering transit operations and costing the country large sums of money.
“The estimated total transit costs have been consuming over 16 per cent of Ethiopia’s foreign trade value which is about $2 million per day, which literally bleeds the economy,” the study said.
The Economic Commission for Africa, (ECA), has already announced its intention to undertake a feasibility study on behalf of the Ethiopian Dry Ports Services Enterprise, for establishment of more dry ports as one of the measures to reduce the cost.
Dry ports will hasten the time required to clear the cargo since goods will be transported to the dry port, where customs clearance will take place, rather than undergoing customs procedures at the seaport which is leading to delays and high costs.
“The construction of new dry ports as well as the expansion of the two existing dry ports in Mojo and Samera could be envisaged in the near future,” the commission said.
However, the long term solution to the Ethiopia transport problems lies in the construction of the second port in Lamu, which is expected to commence next year and be completed by 2015.
Firms that pre-qualified to carry out feasibility studies on the construction of the second transport corridor submitted their proposals last month to the Ministry of Transport.
The ministry requested for the proposals on the development of the Lamu port and Lamu- Southern Sudan- Ethiopia Transport Corridor (LAPSSET).
Ethiopia has a population of over 80 millions and Southern Sudan, also to be served by the Lamu port, has a population of 12 millions.
Kenya has close to 40 million people while Uganda, which is currently relying on Mombasa port, has roughly 24 millions people.
Taken together, the four countries have a population which is over 150 million.
At a rough growth rate of 3 per cent, according to Dr Mutule Kilonzo, the lead government consultant on the second transport corridor, population in the four countries will rise to over 300 millions in 30-40 years.
The developmental infrastructure that is put in place presently should have the capacity to serve such a huge market in the years to come and Mombasa port, Mutule said, cannot sufficiently deal with this demand.
He added that Ethiopia has in the past challenged Kenya to open up a road linkage through the Moyale border town.
Indeed, Ethiopia did complete the building of a good tarmac road from Addis Ababa to Moyale quite a while ago and studies for the establishment of a standard gauge railway line are complete.
The new corridor will also connect Ethiopia and Southern Sudan to Mombasa port.
From Lamu, the corridor will pass through Bura to Garissa where a branch will go to Nairobi to join the existing Northern Corridor that is served by the Mombasa port.
The other branch from Garissa will go to Archer’s post-Marsabit-Moyale at the Ethiopian border where the corridor will join that being constructed by the Ethiopia authorities.
Ethiopia is similarly searching for a way to link up with Southern Sudan, according to Mutule.
But, in view of the difficult terrain on the borders of the two countries, that linkage is best made through Kenya.
The two will be linked through Moyale - Marsabit - Archer post - Maralal - Lodwar - Lokichoggio then Juba.