Ethiopia to Open Logistics Sector to Foreign Investors Amid Local Operator Concerns

Government Moves to Liberalize One of Ethiopia’s Most Restricted Industries

The Ethiopian government is preparing to open the country’s logistics sector to foreign investors as part of its broader economic liberalization agenda, ending decades of exclusive protection for domestic operators.

According to sources familiar with the matter, a new directive allowing foreign companies to operate freely within Ethiopia’s logistics industry is expected to take effect at the start of the upcoming budget year. The legal process to liberalize core logistics operations is currently underway within relevant government institutions.

The move marks another major shift in Ethiopia’s ongoing economic reform program, following previous liberalization efforts in the telecommunications and financial sectors.

Government Pushes Ahead With Reform Agenda

Government officials reportedly view logistics liberalization as part of Ethiopia’s broader transition toward a more competitive and investment-driven economy.

Foreign investors and international business groups have long identified logistics inefficiencies as one of the biggest obstacles to doing business in Ethiopia. Industry stakeholders say costly transport systems, lengthy cargo handling procedures, limited competition, and infrastructure bottlenecks have continued to affect trade efficiency and investment attractiveness.

The government has already introduced partial reforms in recent years, including ending the multimodal transport monopoly previously held by the state-owned Ethiopian Shipping and Logistics (ESL) and allowing additional operators into the market.

Authorities also previously opened parts of the logistics sector to allow up to 49 percent foreign ownership, leading global firms such as DHL, CEVA Logistics, and Bolloré Logistics to enter joint ventures linked to Ethiopian Airlines.

Local Operators Raise Concerns

Despite the reform momentum, the decision has triggered concern among local logistics providers.

Industry players argue that the government failed to adequately strengthen and support domestic logistics companies before opening the market to foreign competition. Operators cite limited access to financing, land shortages, insurance challenges, and weak institutional support as longstanding obstacles affecting the sector.

Dawit Woubeshet, CEO of Cosmos and President of the Ethiopian Freight Forwarders and Shipping Agents Association, confirmed that Ethiopia’s Minister of Finance recently discussed the liberalization decision during an industry event.

According to Dawit, local stakeholders questioned what direct economic advantages the country would gain from opening the sector without first building local capacity.

Some logistics experts also argue that Ethiopia’s cargo market remains relatively small compared to major global logistics hubs. Analysts estimate Ethiopia currently handles fewer than 300,000 containers annually, a volume some experts believe may not be attractive enough for large international operators.

Questions Over Investor Interest

Several analysts remain skeptical about whether the liberalization will immediately attract major foreign investment.

Experts point to Ethiopia’s high logistics costs, limited cargo volume, foreign exchange constraints, and slower-than-expected foreign direct investment inflows as factors that could discourage global logistics companies from entering the market aggressively.

According to the Office of the United States Trade Representative’s 2026 National Trade Estimate Report, logistics costs in Ethiopia account for approximately 22 to 27 percent of final product prices, while shipping and freight costs are estimated to be around 60 percent higher than in neighboring countries.

Some observers also believe the liberalization may partly be connected to Ethiopia’s ongoing efforts to accelerate accession into the World Trade Organization (WTO), where logistics sector openness is often viewed as an important reform benchmark.

Sector Faces Critical Transition

Ethiopia remains one of the world’s largest landlocked economies, making logistics efficiency critical to trade competitiveness, industrial growth, and private sector expansion.

While supporters argue that increased foreign participation could improve efficiency, technology transfer, service quality, and competition, critics warn that local operators may struggle to compete against large multinational firms without stronger institutional support.

The government has indicated that complementary legal frameworks covering dry ports, freight forwarding, and broader logistics services are expected to be finalized before the end of December as part of the reform rollout.

Source: Capital