Ethiopia opens freight forwarding sector to foreign investors

The government’s latest move to liberalize the freight forwarding sector has drawn mixed reactions from industry experts. While some players fear that a handful of investors may take over the business,others believe the decision creates opportunities for the sector and brings several economic advantages, including a smoother market system and help in tackling inflation.

The Ethiopian government has moved to fully liberalize the country’s freight forwarding sector, allowing foreign investors to operate without local partnership requirements for the first time. The decision, approved by the Ethiopian Investment Board chaired by Ambassador Girma Biru, economic advisor to the Prime Minister, takes immediate effect.

The move overturns Investment Regulation No. 474/2020, issued six years ago, which restricted foreign participation to joint ventures with domestic investors and capped foreign shareholding at 49 percent. According to a statement from the Ethiopian Investment Commission (EIC), the previous framework failed to attract the desired level of new investment, and the Board’s new decision is expected to address those shortcomings.However, logistics experts remain sharply divided over the timing and potential impact of the liberalization.

Some industry insiders argue that Ethiopia’s logistics market is too small and underdeveloped to attract significant interest from major international players.
One veteran expert, speaking on condition of anonymity, suggested the government may have acted partly to regularize existing practices.

“Some local freight forwarders have already sold all or a majority stake of their companies to international operators informally, against the 2020 regulation,” he said. “I think the government pushed this decision to ease that situation.”

He also echoed concerns that foreign interest will be limited given the modest scale of Ethiopia’s logistics market.“Very few big players can be accommodated. I suspect companies will enter mainly by acquiring major shares in existing local firms,” he added.

For small freight forwarders, the decision could spell trouble, while those that have already structured back-to-back deals, such as 90–10 percent arrangements with foreign partners, stand to benefit.
Dawit Woubeshet, CEO of Cosmos and president of the Ethiopian Freight Forwarders and Shipping Agents Association, also believes international interest will be constrained.

“The market can only accommodate a limited number of large operators,” he said.
One expert drew parallels with Ethiopia’s recent telecom and financial sector liberalizations, noting that Safaricom Ethiopia’s entry did not unfold entirely as expected, while foreign financial firms have shown only muted interest in taking stakes in local banks.

“The logistics sector will likely follow a similar pattern,” the expert predicted.
But Worku Lemma, Director of the National Logistics Transformation Office (LTO) and a key architect of the reform, rejects that comparison.

“The telecom case involved a new operator competing with a dominant incumbent and needing to use existing infrastructure — a far more complex situation. The financial sector has just opened, and foreign firms are already exploring entry, but that takes time because of the detailed reworking required,” he told Capital.Worku, who prepared the Board document, is optimistic that foreign logistics firms will enter and intensify competition.“The sector needs knowledge, cross-border expertise, technology and resources. We believe this decision will help reduce logistics costs, cut delays and improve predictability and market trust,” he said.

He noted that weaknesses in the logistics system have contributed to inefficiency, domestic inflation and a lack of price competitiveness for Ethiopian exports.
“Higher costs are a sign of limited competition,” he added.
Maritime lawyer and logistics expert Yared Shiferaw called the decision timely.