Ethiopia and Djibouti unlock markets with new railway line

Agency Staff  | October 06 2016 | Business Day

ADDIS ABABA — With Chinese conductors at the helm, a fleet of new trains has begun plying a new route from the Ethiopian capital, Addis Ababa, to the Red Sea port city of Djibouti in a major boost to both economies.

The 750km railway, built by two Chinese companies, was inaugurated on Wednesday at a newly built station just outside the Ethiopian capital.

Ethiopian Prime Minister Hailemariam Desalegn and Djibouti President Ismael Omar Guelleh were welcomed by the uniformed Chinese personnel who will operate the trains until their local counterparts have been trained.

“This train will [speed up development of] our country’s manufacturing industry and it will provide huge benefits to the industrial parks and modern farms that will be built in the future. It will give employment opportunities for our citizens,” Desalegn said at the ceremony.

While coffee production remains Ethiopia’s biggest earner and agriculture its main employer, the country is working to diversify exports and boost its manufacturing industry.

The new railway will take products between Ethiopia and Djibouti in about 10 hours, a far cry from the current excruciating multiday trip along a congested, potholed road.

“It takes two or three days for a truck to come from Djibouti,” said Ethiopian importer Tingrit Worku. “The train could make a huge difference.”

At present about 1,500 trucks a day lumber along the road, which carries 90% of imports and exports from landlocked Ethiopia to the port — a key trading hub to Asia, Europe and the rest of Africa.

“This train is a game changer. Ethiopia is one of the fastest-growing economies in Africa.

“The connection to the ports will give a bounce, and our economy will grow faster,” said Mekonnen Getachew, project manager of the Ethiopian Railways Corporation.

The country was the world’s fastest-growing economy in 2015 at 10.2%. However, the IMF estimates that the worst drought in 30 years is likely to send this growth rate plummeting to 4.5% in 2016.

Both countries benefit from integration, with Ethiopia gaining access to the sea and Djibouti gaining access to Ethiopia’s market of 95-million people.

The inauguration will be followed by a three-month test period, with no paying passengers and only cargo being carried along the line.

“We have a management contract with Chinese staff for five years, with Ethiopians in training,” said Getachew.

The $3.4bn railway, with its red, yellow and green trains evoking the Ethiopian flag, was 70% financed by China’s Exim Bank and built by China Railway Group and China Civil Engineering Construction.

A high-level Chinese delegation in Addis Ababa for the inauguration on Tuesday signed agreements worth $100m for the construction of roads, the state-controlled Fana Broadcasting Corporation reported.