The Management of Commercial Road Transport in Ethiopia

Home , Dessie, Nekemte, Transport in Ethiopia

May 2009

Produced and distributed by the Addis Ababa Chamber of Commerce and the Swedish Agency for Sida © Private Sector Development Hub/Addis Ababa Chamber of Commerce and Sectoral Associations, 2009

P. O. Box 2458, Mexico Square, Addis Ababa, Ethiopia Tel: +251(0) 115 504570/ 542405, Fax: +251 (0) 115 542404, Email: [email protected]

No part of the publication may be produced or transmitted in any form or by any means without the prior permission of the copyright holder. The only exception is for a reviewer, who may quote short excerpts in a review.

Disclaimer:- The views expressed in the study do not necessarily reflect the views of PSDHub or Addis Ababa Chamber of Commerce and Sectoral Associations or Sida. They are solely the responsibilities of the authors. Acknowledgements

he study on The Management of Commercial Road Transport in Ethio- pia was initiated by the Private Sector Development Hub in response to the problems encountered by transport companies, associations, and individual operators with respect to operating environment, costs and ability with its impact on competitiveness.

W.T Consult Pvt. Ltd. Co. was contracted to undertake the study and produced Shelly of BKP Development Research and Consulting GMBH.

Throughout the report, “Consultant” refers to W.T Consult, while “Review Team” !"#$

Contents

Acknowledgements Acronyms

Chapter One Introduction 9

Chapter Two Transport Sector and Macroeconomic Background 13 Macroeconomic Scenarios and Development 13 Highways and Roads 16 %& '( Road Safety 22 Vehicle Fleet and Travel Characteristics 25 Railway Mode 33 Shipping: Need for Choice in Multimodal Transport 34 Air Cargo Mode 37 )*+ /( Ports of Entry 41 Dry Ports 41

Chapter Three Road Freight Transport 45 Categories of Operation and Capacity 46 *%08;*+<= >? Freight Transport Demand and International Freight Transport Service Delivery 49 Interurban Domestic Road Freight Operations 56 Urban Freight Operations 57 Road Transport Maintenance Planning and Facilities 61 Road Freight Terminals 61 Warehousing 62 Freight Transport Vehicle Productivity and Costs 62 %@& J( Freight Tariffs 70 Freight Forwarding 73 Vehicle Overloading 74 The Potential for Road-Rail Inter-Modal Transport 76 &$& ?? 0$0;XYYJXY'Z= ??

Chapter Four Road Passenger Transport 79 #0@ (' @ (' [$\*@!8 (( Taxi Fleet and Level of Service: Operations in Addis Ababa 91 Travel Demand/ Patronage 93 Passenger Transport Vehicle Productivity and Costs 94 &+ ^Z Entrance to Market 96 Public Transport Maintenance Facilities 97 Road Passenger Terminals 97 _$ ^( 0 ^( $& 'YX Passenger Transport Service Forecast 103

Chapter Five Institutional Arrangements in Road Transport 107 Political Context: Institutional Structure Including Allocation of Powers between Jurisdictions 107 8%j* 'Y( Road Freight Transport Industry Structure 110 %0*8 ''X Road Passenger Transport Industry Structure 115 %#*8 ''( Road Safety 119 Access to the Profession 119 Human Resource Development and Management Capacity 120 Some Institutional Issues 121

Chapter Six Legal Framework and Road Transport Regulations 123 Legal Framework 123 Road Transport Regulations 124 Operation and Regulation of Road Passenger Services 126 Operation and Regulation of Road Freight Services 127 Findings of Road Transport Regulations Study 127 0q)#$ 'X( Findings of Other Studies 130 Key Legislative Issues 132 Key Regulatory Issues 133

Chapter Seven Banking and Transport Industry Insurance 135 Financial Performance and Sustainability 135 Motor Vehicle Insurance 137 Key Business, Finance and Management Issues 139 Key Banking and Insurance Issues 140

Chapter Eight Analyses of Some of the Principal Road Transport Issues 141 Overview of Road Passenger Transport 141 Overview of Road Freight Transport 142 Some Important Challenges in Road Transport 143 Some Measures to Improve Road Safety in the Road Transport Industry 145 Some Measures to Improve Urban Transport Organisation in Addis Ababa 147 Some Measures to Enhance International Road Freight Business 147 $)+#8 '>( Some Measures to Combat Vehicle Overloading 150

Chapter Nine National Transport Masterplan Study Framework and Strategic Directions 151 $_#&\%0;+<*z+<&= 'ZX Possible Free Trade Zone 157 $_#&\%0*z+<& 'Z( $%_#&\*@ 'J'

Chapter Ten Synthesis of Study Recommendations 163 Vision Statement 163 Policy Statements 163 _$_%$ 'JZ Development of Wider Action Plans by Implementing Institution 166 Possible Follow-up Process 171 Annexes

Annex 1 Minibus Taxi Service Supply Characteristics 175 Annex 2 &+M%0 '(' Annex 3 Bus Fares and Tariffs '(/ Annex 4 Road Freight Industry Structure '(( Annex 5 Public Transport Industry Structure 194 Annex 6 Access to Credit/Loans 199 Annex 7 Free Trade Zone 202 _<(_ WTO Accession 204 _<(! Developments in the Freight Industry - World Experiencs 205 Annex 9 National Transport Master Plan 207 Annex 10 $q\)## XY( Annex 11 Road Transport: Action Plans for Principal Actors with Timeline 210 List of Tables

X'_j#j+;XYYJzY?MXYXJzX?= 16

Table 2.2 Regional Development Scenarios 16

X/$+%_q};'^^>MXYY>= 19

X>j;~"=+%_q}'^^>XYY> 19

XZ+0$%XYY> 19

XJj;XYY/Y>= 20

X?%q}&";XYY(= 21

X()%_;%_R=+ 23

X^_%@ 24

Table 2.10 Accident Involvement of Vehicles in the Year 2004/5 24

X''j+%~0;XYYYzY'XYY>zYZ= 26

Table 2.12 Annually Inspected and Registered Vehicles by Type of Services 26

Table 2.13 Road Passenger and Freight Fleet Data—~&;XYY?= 27

Table 2.14 Imported Freight Transport Vehicles X(

X'Z_j)<0$&;'^^(z^^XYY>zYZ= 29

Table 2.16 Growth of Passenger Fleet by Seat Capacity 29

X'?_j#%#~$&;XYYZMXYY(= 30

X'(8%#~;XYYJ= 30

X'^[j~);XYYJ= 31

Table 2.20 Truck Commodities Carried and Average Load Per Truck in Tonnage 31

Table 2.21 Average Truck Journey Times from Survey 32

Table 2.22 Distribution of Vehicles between Regions 33

Table 2.23 Estimate of Transit and Transport Costs of Export 37

Table 2.24 Estimate of Transit and Transport Costs of Import 37

/'j&;'^^^XYYZ= 50

/Xj_[!}&;'^^^XYYZ= 55

Table 3.3 Good Vehicle Access and Loading Objectives in Urban Areas 60

/>&~;XYY>zYZ= 65

/Z0%#$!z&#[;_XYYJ= 65

/J&%##!#;XYYJ= 66

/?*}08&#";!= 67 /(&}!}8&!;XYYJ= 67

Table 3.9 Import Duties and Excise Taxes on Vehicles 69

/'Y0%#$!#[;_XYYJ= 69

/''0XYYZzYJ;+'^^?= 71

/'X[j~;XYYJ= 74

Table 3.13 The National Transport Master Plan Study Truck Forecasts ?(

Table 3.14 Review Study Truck Forecasts ?(

>'$_&!+;'^^'XYY'= (X

>X_j%#~#<}XYYZXYY( 93

>/*!08&##";!= 94

>>8%#~;XYYJ= 95

>Z[!#;XYYZzYJ=+'^^? 99

Table 4.6 The National Transport Master Plan Study Passenger Vehicular Fleet Forecasts 103

Table 4.7 Review Study: Passenger Vehicle Fleet Forecasts 104

>(_j%##<";XYYZXYY(= 104

>^%$#0 105

Z'&}[_;XYYJ= 111

Table 5.2 Comet Haulage Performance, by Year 115

Z/*!$;XYYJ= 116

Z>8&$# 121

'Y'q)#$_% 165

Table 10.2 Action Plans: Recommendations by Principal Actors 167

List of Figures

Figure 2.1 National Transport Network 2007 17

Figure 2.2 National Road Network After Completion of RSDP-III '(

0X/j%q}~";XYY(= 21

Figure 2.4 Commodities Carried by the Trucks in 2007 32

Figure 4.1 Population Densities in Ethiopia 79

0>X)$__&# (>

0('$#*@#+& '>( Acronyms

AACRA Addis Ababa City Roads Authority AACTO __&8;= ADLI _[* ADR Agreement on Dangerous Goods by Road AETR Agreement Concerning the Work of Crews of Vehicles Engaged in International Road Transport ASYCUDA _$&;@q&_= CAA Civil Aviation Authority CCA Customs Clearance Association CDE +%;&+= CNG Compressed Natural Gas COMESA Common Market for Eastern and Southern Africa CPC &#& CRA &%_;%__= CRMC Community Road Management Committee DGSA j$_;_%= DPPB ##!;%= DPPC ##&;0j= DPPD ##;= EADA +__;= EAE Ethiopian Airports Enterprise EAL Ethiopian Airlines EDF European Development Fund EFFSA Ethiopian Freight Forwarders and Shipping Agents Association EPE Ethiopian Petoleum Enterprise ERA Ethiopian Roads Authority ERTTP Ethiopian Rural Travel and Transport Programme ESL Ethiopian Shipping Lines EU European Union FCL Full Container Load FEU 0;X<+@= FIATA International Federation of Freight Forwarders Associations GDP Gross Domestic Product IATA International Air Transport Association ICC International Chambers of Commerce ICD Inland Container Depot or Inland Clearance Depot ICT Information Communications Technology ILC International Logistics Centre IMT Intermediate Transport IRU International Road Transport Union IU *@;= LCL Less than Container Load MoARD Ministry of Agriculture and Rural Development )jR Millennium Development Goals MoFED Ministry of Finance and Economic Development MoTC Ministry of Transport and Communications MT Metric Ton MoTI Ministry of Trade and Industry MTSE Maritime Transit Services Enterprise MoWUD Ministry of Works and Urban Development NGO Non-Governmental Organisation NRSC q%$&;= NTC q&;= NTMP National Transport Master Plan NTSS National Transport Sector Strategy PASDEP Plan for Accelerated and Sustained Development to End Poverty PPESA ##+$_ PSO Public Service Obligation RADA %__;= RF Road Fund RRA ;%=%%_ RSDP Road Sector Development Programme SAD Single Administrative Document, a combined customs form SNNPRS $qq#R%$ TA Transport Authority TB/L Through Bill of Lading TEU ;*$8XYR= TIR International Transport by Road UNCTAD United Nations Conference on Trade and Development UN-EUE United Nations - Emergencies Unit for Ethiopia VoR Vehicle off the Road WCO World Customs Organisation WFP World Food Programme WTO World Trade Organisation

Chapter One

Introduction Context of the Study _ _ & & $ _ ;__&&$_= increasing role by way of engaging in dialogue with the relevant Authorities in the Government of Ethiopia for reform to address underlying constraints to competitiveness and building a foundation for sustained development and ending poverty. Key to this is the strengthening of the connection between Government and the private sector, thereby reducing the cost of doing business. Improving the business environment in Ethiopia requires a turn-around in productivity, which together with reduction of the cost of input and the delivery price of outputs strengthens the competitive position of 0} to respond effectively to the challenges.

__&&$_;__&&$_= constraints to the reduction of transaction costs, particularly the cost of commercial freight transport. The cost and time associated with the entire logistics chain in international trade along land transport corridors, including the time and cost for cross-border procedures and moving cargo through seaports [ border crossings, customs operations, transfer and consolidation of cargo, inland transport, insurance or pilferage and damage, documentation and forwarding as well as bank processing for Letter of Credit are some of the most important indicators in freight movement. The competitiveness of Ethiopia's export trade remains vulnerable to high transport costs and the public passenger transport is unable to meet the increasing demand for mobility.

Currency of Reporting _<+!_ February 2009, the rate of exchange of the Birr to the US Dollar was 11.2 to 1.

$\ Hire and Reward: Vehicles working for other companies for a payment, with the cargo not owned by themselves. These “for hire-carriers” typically include conventional bus, minibus and trucks. Own-account: Vehicles working to move cargo owned by the company itself. There are usually private carriers that provide their own carriage, in the sense of movement by their \ Dry Port: A place for handling containers or conventional bulk cargo; usually connected to a seaport by rail or road. A dry port is an inland inter-modal terminal which has services including storage, consolidation, reloading depot, maintenance of containers and customs clearance.

9 Multimodal Transport: The transport of goods in one and the same loading unit or vehicle by any transport means. It usually implies a deep sea movement with a rail interfaces prior to a road delivery by container or swap body. Intermodal Transport: Usually understood as the transport of goods in freight units using more than one inland mode. The freight units involved can be maritime containers or swap bodies, or accompanied trucks, or unaccompanied trailers. The modes involved are road and rail or sometimes road and inland waterway.

Study Focus and Direction The subject area covers a great variety and range of salient topics each of which could form the focus of more detailed later investigation. The main study components include a review of urban public transport, international road freight transport and intercity public transport and freight transport. The &} recommendations made under the National Transport Master Plan Study.

The primary division in the road transport sector in Ethiopia lies between public transport operations and road freight operations. In each of these two main sub-sectors road transport services are provided, ;=* ;=0 area, the reader is referred to a number of recent studies1. The timeline for the analyses are the short M proposals emanating from the National Transport Master Plan Study.

Urban Public Transport The capital city of Addis Ababa is both a focus for urban bus and taxi operations and for urban goods ! only brief references have been made to urban transport development in other cities in Ethiopia. Importantly, because of respected data sources, particularly in Urban Public Transport, the study < rather it has borrowed and built upon past work.

International Road Freight Transport In terms of international road freight service, the Djibouti corridor is currently the main focus of both import and export road freight operations. Therefore developments in this corridor have been investigated in detail, whilst the recommendations made in other main corridors rely to a much greater <q)#$+ #*+< investigated.

In terms of future development of road freight services in the Djibouti corridor, a key consideration will be the likelihood and timing of the improvement and upgrading of the existing railway line between Djibouti and Addis Ababa. Though substantial investment plans were earlier underway, it is understood that the Concessionaire has withdrawn and that there is now some uncertainty over short- term railway development prospects in the corridor.

1 The EU funded National Transport Master Plan Study for Ethiopia, in particular Draft Master Plan Appendix 1.4 Community Roads; and The Ethiopian Rural Travel and Transport Programme (ERTTP). 10 It is also understood that other Consultants are investigating this component, under the aegis of the WTO accession agreements.

Intercity Public Transport and Freight Transport In terms of relative balance between road passenger and road freight transport services, the study has expended more time on the latter, due to perceived greater challenges and since the road passenger market is more researched, particularly urban passenger operations in the capital. The National )#$& corridor as the focus of the long distance Freight Transport component.

Study Data Resources For some of the detailed areas of investigation, there is either a substantial amount of data in the q Transport Master Plan Study for Ethiopia has already been cited as a major reference study for overall sector policy and for in-depth analysis of some issues of relevance to road transport. In addition, there are several major studies of urban transport operations in Addis Ababa2 which are current, topical and that have contributed considerably to urban passenger transport policy development.

Furthermore comparative analyses are provided with urban passenger transport operations in other African cities and this benchmarking can also be used as a tool in policy formulation. Because of these respected data sources, the study did not expend substantial resources in investigating transport development in these areas. Conversely, there are certain areas for which, although some research has been undertaken, a relative paucity of data and analyses exists. In particular, key aspects of the international road freight industry remain under-researched, although some ongoing work is in process. Thus, in cases where only a partial analysis is presently possible, a limited number of

2 Such as, inter alia, PPIAF, Study of urban public transport conditions in Addis Ababa, Ethiopia IBIS Transport Consultants Ltd March 2005. 11

Chapter Two

Transport Sector and Macroeconomic Background Before a description of the road transport industry in Ethiopia can be elaborated, it is important to understand the developments in the Macroeconomic situation in Ethiopia and in the wider Transport sector.

Macroeconomic Scenarios and Development Introduction The overview of the Macroeconomic Development and Master Plan GDP Forecasts are reproduced from Appendix 1.2 of the National Transport Master Plan Study. Taking Gross Domestic Product as a whole, and in line with the short term projections made by the Ministry of Finance and Economic Development, coupled with recent economic performance over the past decade and a half, estimates ;=

General Economic Overview + }R?Z(> of urban areas through largely peasant-based subsistence farming. Employment is largely provided (YR sector. Although it has been declining, intra-rural migration remains the dominant form of in-country +;/('^^^=;X>=

*'Z percent of the total value of domestic production. The services sector expanded rapidly in the 1990s and is steadily growing in importance. The manufacturing sector provided permanent employment for ?(YYYXYYZzYJ) of Finance and Economic Development reported a 24:76 formal to informal sector employment ratio from the 1999 Labour Force Survey.

Overall economic performance is therefore generally determined by the performance and productivity of agriculture, which in turn is heavily dependent on the extent and timing of rainfall. Drought has affected the country approximately once in every ten years over the past century, this frequency increasing to as high as once in every three years over the period since 1990.

} +R < \ performance in just the recent three year period between 2001/2 and 2003/4 when the sector recorded ''^XYYXz/'(^XYY/zY> \ R<}< economy has a high dependence on rain-fed low productivity subsistence agriculture.

13 Investment Opportunities and Short Term Economic Growth Projections Investment opportunities embrace a wide range of agricultural and related activities that extend into \< \ !}R O+\ & + ) !} Report” on export growth potential in Ethiopia.

Coffee and tea continue to offer potential for production, processing and export opportunities to *\ proximity to European markets, an ideal climate of warm temperate days with cool temperate nights and the Ethiopian “summer” coinciding with the European winter, all serve to make this fast growing <}0\ /Y \<'YY@$XYY?

Similarly, in horticulture, high value fresh produce sold to markets in Europe continues to present <

Constraints in the sub-sector, however, relate to relatively low yields and quality and potentially };= } \<*<< ! *_+ }\+ A new cargo terminal has also been opened with adequate facilities.

_MXZYYYXYY/M potential for commercial exploitation.

* (YYYY exploitation, enabling commercial forest-based production of gum, incense, pulpwood, matchwood _ 'YYYYY _ ~ opportunities exist for its production and processing through expansion of cotton cultivation in the various major river basins of the country. Export opportunities also exist in the markets for sugar and spices.

In the livestock sub-sector, besides the export of live animals and high-value animal skins and hides, investment opportunities exist in ostrich, civet cat and crocodile farming. Sheepskins and hides from + M} M*>ZYYY tonnes.

Nonetheless, reported constraints in the livestock and meat products sub-sector include poor quality facilities for the loading and unloading of live animals at the port of Djibouti and lengthy bureaucratic export procedures and high embassy approval costs.

14 The dairy industry suffers from old equipment and machinery, low-producing old dairy breeds and the absence of milk collection, processing and marketing regulations. Low levels of domestic consumption do not justify establishing milk processing plants.

Outside the agricultural and agro-processing sectors, tourism, hydro-electric power and mining all ) exist in glass and ceramics, chemicals and chemical products, drugs and pharmaceuticals, plastic products and building materials.

Foreign private sector perceptions of investing in Ethiopia highlight infrastructure, especially jR MM in the absence of accompanying progress in power and telecommunications. State monopolies in shipping and telecommunications, and preferential treatment for non-private sector enterprises, also constitute impediments to a conducive private investor environment in terms of cost and quality effectiveness.

In recent years, economic growth has begun to be more broad-based with the key non-agricultural sectors of the economy — industry, construction and services — registering growth rates of 6.9 - 7.0 (XJXJ/XYY/z>+*@ reported growth in 2004/5 of 12.3 percent in agriculture, 6.3 percent in industry and 5.3 percent in the services sector. Overall real GDP growth was anticipated to be around 7 percent in 2005/6 due to good rains and a third consecutive bumper harvest.

Economic Forecasting and Scenarios Introduction The preparation of a 20-year-investment-plan for the transport sector requires that forecasts be estimated for the future development of the Ethiopian economy. The starting point in the forecasting process is to consider domestic economic activity and output as a whole, as measured by Gross #;j#=$j#;'(/J= R <;=}

GDP Growth Rate Estimates Subject to the boundaries of the overall GDP forecasts, sectoral forecasts are also prepared for the MM forecasts as appropriate. In Ethiopia, the overarching framework for the period 2006/7 to 2010/11 #_$+#;#_$+#= )0+;)0+=$XYYJ XYY^z'Y#_$+# programme.

15 Table 2.1 Annual GDP Growth Estimates (2006/7 – 2026/27)

Short term Medium term Long term Economic development scenario XYYJz?MXYY^z'Y XYY^z'YMXY'Jz'? XY'Jz'?MXYXJzX? A-1 status quo 7.7% J( 6.0%

_X 10.1% (' 6.7% Source: Consultant’s estimates.

Regional Development Scenarios Low, medium and high growth estimates were provided for the short, medium and long terms, XY)#XYX?

Besides estimating economic growth rates for forecasting purposes, a distinction has also been made between two principal scenarios in terms of their likely impact upon future choice and patterns of trade routes and transport modes, as follows: Scenario A: %;__= Development and growth of towns, cities and urban centres in the regional states Scenario B: External land access to sea ports In addition to the present-day availability of the ports of Djibouti and Berbera, the availability of the Eritrean ports of Assab and Massawa for exports and imports.

Table 2.2 Regional Development Scenarios

A-1 Status Quo A-2 Regional urbanization Urban development and growth predominantly in Addis Urban growth in regional towns, cities and urban Ababa centres

B-1 Status Quo B-2 External sea ports access *;!= 50% international trade via Djibouti/Berbera and 50% via Assab/Massawa ports

Highways and Roads

Introduction } road transport system. This is being addressed through major road building and rehabilitation projects %$#;%$#=@ change can lead to other road transport problems if action is not taken now on new enforceable laws and resources to implement them.

Such action is needed to counter the inevitable increase in average road speed as a direct consequence of better roads and vehicles being driven faster that will lead to even more accidents. Road safety, and the need for safer road designs, are discussed in the context of the National Transport Master Plan, but is an important issue for the road transport industry.

16 A feature of the present road network is the substantial number of gravel roads, many of which are in poor condition. The paved road network is very small by world standards. Even the best gravel roads \8 past few years, the improved condition of the road network through rehabilitation and upgrading, and more intensive maintenance has resulted in the reduction of vehicle wear, consumption of fuel lubricants, spare parts, tires, etc., on the improved routes.

Road Network Development Strategy +%_;+%_='^/YY} Z>(Z}}}}} one another. It also includes main access roads that join other important locations to the network. The %%_;%%_R=} XY/YY};=& occasional assistance from Woreda or NGO funds.

};+%_%%_}=/^ZYY}j +}8ZYYY };'/=}$'>/YY};/J= gravel roads and the regional roads are generally graveled. The current road network is shown in Figure 2.1 below.

Figure 2.1 National Transport Network (2007)

17 8>Y+%_R } of eight years ago, due to the implementation of the ongoing 10-year Road Sector Development # ;%$#= < XY'X ;%$#***= %0 maintenance. After the conclusion of RSDP-III, scheduled for 2012, the main road network is expected to become as shown in Figure 2.2 below.

Figure 2.2 National Road Network After Completion of RSDP-III

The Road Sector Development Program is having important implications for commercial road +0 to transport services increasing mobility. This in turn leads to higher demand for commercial road transport, which in turn results in an increase in the number of commercial road vehicles and vehicle-kilometres travelled. This improved access improves network connectivity and enhances the integration of markets. It is noted that the topography of Ethiopia is challenging and presents especial problems in terms of road construction, maintenance and higher vehicle operating costs. The topography of the country is a major constraint on the development of some modes of transport, such as railways.

\'YYYY;= on the main road from Addis Ababa to Adama, but much lower levels elsewhere, seldom exceeding 2,000 vpd, and often reaching only a few hundred vpd, even on the main arteries. Over most of the rural network, trucks and buses are the predominant vehicle types. In 2004 trucks and truck-trailers Z?};=X/ cars for only 20 percent. 18 +%_}R}'^^/ \}}'^^>'^^^ XYY>X/ X>*XYY>}}Z? };=X/XY& proportions in 1994 were 60, 17 and 23 percent respectively, with the biggest shift in composition over the following ten years being that for buses from 17 to 23 percent.

!"#$%&&'M++',

Vehicle-km '000 per day %&&' 1999 ++' Car 737.0 933.7 1,245.4 Buses 523.3 1,007.4 1,375.5 Trucks '/^?( '(/X> 2,596.4 Trucks and Trailers >(^' 726.0 (?Z> Total Flows 5%'8 '5'&&; 6,092.7

'=">$?>@J,!"#$%&&'@++',

Annual growth rate in % %&&'@%&&& %&&&@++' %&&'@++' Car >( 5.9 5.4 Buses 14.0 6.4 10.1 Trucks 5.6 7.2 6.4 Trucks and Trailers (X /( 6.0 8' 6.2 6.8 Source: Ethiopian Roads Authority.

__ (YXYY>}} has a length of 6,593 km, thus comprising 49 percent of the surveyed ERA network for 2004. Over ;'Z=>?'?} ?^XYY>

Table 2.5 gives details for 2004, based on the ERA counts, but with an adjustment to reduce the stated /J(})_'(/})j _

;W"++'

(’000 vehicle-km per day) Routes Cars Buses Trucks Truck & All Vehicles Trailers ___;^(}= 252.5 '(>^ 306.5 110.9 (Z>^ __;'XZ}= 31.6 /'( 73.0 72.4 XY(( _)j;>^'}= 33.9 17.2 77.0 194.4 322.5 Y@=$8%'#, 318.0 233.9 ';Z; 377.7 1,386.2 8_%;Z(?^}= JJ(( 914.4 1,462.6 X(JZ 3,332.2 Y@[>$Z5;&#, 986.8 %5%'\ 1,919.1 ZZ' '58%\' 8$%;J^>Z}= 246.7 224.5 637.1 137.4 1,245.7 ]$%5;\#, %5; 1,372.8 5;;Z 801.6 ;5&Z'%

19 }}ZZ JX!X> '(

8}JZ^/}} not vary greatly, lying between 45 and 65 percent on more than three quarters of the network. The principal exception was along the main truck route to Djibouti, where the truck proportion was much ?Y__(>_ j?Y>}__j'(} movement over the surveyed network, for 47 percent of truck-trailer movement, and for 25 percent of total movement by all trucks.

!'Z/Z of the main all-weather network. Low bus proportions were found along the main route to Djibouti _;Z= __;>X=

="> XYY>+%_%XYY/XYY>_ };<//Y}_^_$= _\)j/J('(/ }}XJ* borne in mind that there was a substantial increase in the length of the surveyed network.

Z=">$++@++',

Road Length (km) $^+++]>@#, Roads 2003 ++' 2003 ++' All-weather network 6,263.0 6,263.0 4,340.0 4,595.0 8;= J(/Y J(/Y 114.0 151.0 Other surveyed roads, 2003 5,721.0 --- 995.0 --- Other surveyed roads, 2004 --- 6,592.0 --- 'X'(Y All surveyed roads 12,667.0 %5;\+ ;5''&+ ;5&Z'+ q\;=MjM))}M_$M% !"#$%

Z^}/X? JJJ^>J} 0} of 22.4 percent over a total road length which itself increased from 5,721 to 6,592 km, indicating a \'?>'(Z;J/=* JZ ;^Z}J^=

ERA data can also be used to give growth data for the longer period 2000/4 over a selection of roads }>'Y'}8 X(?Y}XYYY/J>X}XYY>J' ( }\}

20 &XYYYXYY>J>J( percent for buses, and 5.7 percent for trucks and truck-trailers.

Road Development Plans _+R%q}&X?

8!"#5J$++\,

Class of Road Paved Unpaved Total Federal Roads 6,066.0 14,363.0 20,429.0 Regional Roads - 23,930.0 23,930.0 $, 6,066.0 38,293.0 ''5;&+ %%;= - ?YY/(Y ?YY/(Y Total 6,066.0 108,331.0 %%'5&8+

Details of Growth of Road Network and Vehicle-Km are provided in Figure 2.3.

W_=">!"#?>@J$++\, j&%q}~"

260 240 220 200 Vehicle-Km '(Y &%;}= 160 140 120 100 j*<;'^^?z^(=

'^^?z^('^^(z^^1999/002000/012001/022002/032003/042004/052005/062006/07XYY?zY(

<;= +!/'+!(J?;=XYY(j <XYYZ}M of the macro-economic situation throughout the project implementation.

Road Network Expansion and Improvement +%_%$##***;XYY( XY'X=<} In spite of the recent growth, the road network is one of the least developed in Africa, with a density of 35.9 kms per 1000 square kilometres and 0.53 km per 1000 population, compared to the African ZY}z'YYY};_#&\$XYYY= Ethiopian National Transport Master Plan proposals for road network development are listed below: (1) Reaching the un-served Woredas is the main priority for most regions and this is the most urgent task. The aim should be for all-season roads, suitable for buses and goods vehicles, to Woreda capitals. For those Woredas that already have all-weather access, the priority task is to go further and ensure the provision of all-season roads to the Kebeles.

21 (2) Sealing or paving the busiest gravel roads helps the economy. International studies show that trade growth is very sensitive to transport cost reduction, and paved roads reduce transport costs by a third or more. Sealed roads are also regarded as important by public transport operators and by many tourists. Roads carrying more than 100 vehicles in a day should be considered for sealing. Gravel roads with suitable low-cost structures will be most appropriate to ensure access between the Kebeles and the Woredas for light buses, pickups, intermediate and animal transport. (3) The need to amend the road design standards. # $ _ rail users at level crossings on the busy parts of the road network. $', ! "> _ The national road network has to reach down to Kebele level. The regional states should be responsible for the non- federal roads down to Kebele level. Further, a nation-wide administrative system should be established that will provide technical assistance to local communities and Woredas for the design, tender and supervision of Woreda– Kebele and community roads. Community access will generally be earth roads or improved tracks and trails built with labour contribution from within the Kebeles, while the Woreda %0$ commitments to regular maintenance are in place. $;,]@Conventional contracts using heavy plant can be used for the roads to Woredas that need to support heavy vehicles, but for the links to the Kebeles there is great scope to develop labour-based contracts using light equipment and newly-developed and trained small local contractors. In both cases the contractor can be given responsibility for maintaining the road during 3-5 years after completion. This ensures a single point of responsibility in the event of a pavement failure, ;<= are used on major projects, they may appoint a local contractor for remedial works but under the responsibility of the foreign contractor. (6) Roads to borders. These should continue to have a high priority in the interest of regional economic development. Links with southern Sudan, which is expected to grow rapidly, are particularly weak. $} community gives great importance to promoting international links within Africa. If linked with a modernisation of the road transport agreements with neighbouring states, this policy will give +$ generate revenue for the economy as a whole and for the Road Fund in particular. Road Safety +_ %_;%_R=+ presented X(

22 \>`_$R,>

Type of ac- z_ cident 1996/7 1997/8 1998/9 1999/00 2000/1 2001/2 2002/3 ++{' ++'{; Light injury XY(Y 2444 2173 2120 2134 2196 2365 2705 2731 Heavy injury 'J'( 1762 1642 1771 1697 1712 1790 2072 X/J( Property dam- 6512 ??(/ 6560 6666 JJ(> ?'(( (ZJ/ 10569 'Y(XX age Death (of 1314 1313 'X(/ 1274 1261 1659 '((( 2111 2176 = Total %%;' 13302 %%Z;\ 11831 11776 %8;; %'Z+Z %8';8 18097 Percentage %%'| 9.9% 11.0% 10.8% 10.7% 12.1% 12.9% 12.1% 12.0% share of death

+'^^Jz^?*'^^Jz^? ''ZX>'?>Z?XYY/z>8 these total registered accidents, fatalities have amounted to 12 percent, on average. In Africa, Ethiopia <&_%'^Z''YYYY < negative socio-economic costs in actual and opportunity costs.

} under-reporting. Not only are these rates high, with the average vehicle evidently having a more than 10 percent chance of accident involvement each year, but they appear to be also rising faster than the \

On the other hand, the fatality risk per head of population was one of the lowest, at 3 per 100,000 '^^>zZ standards, ineffective enforcement of driving regulations, poor condition of vehicles, and inadequate road design. Pedestrian fatalities are high, partly because adequate sidewalks are often absent. Responsibility for safety is diffused between several bodies, including the Transport Authority, the +%_;+%_= the Road Fund which devote a proportion of their funds to its improvement.

In 2002 ERA commissioned TRL and Ross Silcock to undertake a road safety study leading to an Action Plan. This led to the establishment of an Interim Road Safety Committee and an Interim q % $ & 8 % $ @ regional levels. The recommended National Road Safety Council has yet to be set up.

some fundamental improvements in road discipline and in police enforcement will also be required. It is encouraging that the Transport Authority is now working on a new driving code, which will <'^ZJ

RTA’s: Road User Incidence The accident rate per vehicle-km in Ethiopia is very high. Most accidents are caused by drivers; most casualties are pedestrians, many of them young ones.

23 &>}

Drivers Passengers Pedestrians Ethiopian Fiscal Year Number Percent Number Percent Number Percent 2001/2 102 6.3 674 41.4 (ZX 52.3 2002/3 117 6.5 731 40.3 965 53.2 2003/4 153 7.5 (/( 39.7 1,120 53.1 2004/5 149 J( 791 36.2 'X>( 57.0

Vehicle Safety Record by Type X'YXYY>zZ Without looking into the mileage travelled of the different types of vehicles, it appears clearly that taxis are accident prone, followed by buses, both of which are public transport.

q}*}} accident proneness by the public. Taxis and buses again are highly involved in fatal accidents.

%+]]?>>z++'{;

Types of No. of inspected & registered Fatal accident Total acci- Risk per 100 Percentage vehicle vehicles dents vehicles involvement

Number Percentage Number Percentage Car 71,672 43 362 20 J?(J 9 /( Taxi 14,504 9 259 14 2,707 19 15 Bus 14,152 9 204 11 2,373 17 13 Trucks 61,170 37 (J^ >( 5,363 9 30 Others 4,271 3 117 6 493 12 4 166,309 100 1,801 100 17,722 11 100

Driver Training Driver training in Ethiopia is being improved. There are many new ideas planned that include the \ platform to launch CPC training.

Vehicle Testing _}\ are safe and well managed. At present, vehicles are required to be licensed and tested annually, although the tests are not effective. The overall technical condition of vehicles is very poor, and

The annual road vehicle test is not effective. A more realistic test is needed, covering general condition, proper brake and steering testing, mechanical condition and the condition of tyres. The lack of a law specifying the legal tread depth on a tyre is noteworthy.

The Transport Authority is considering importing new testing equipment that would demonstrate the enforce the change. Failure to pass the new test until repairs are done would remove some of the 24 more dangerous taxis, goods vehicles and buses and would also help to improve the availability of \@qz+&+

There is no real second-hand market for vehicles, with older vehicles used on short runs, for local ~OP and poorly maintained vehicles are involved.

Legislation and Institutions [} formation of the National Road Safety Council to provide a focus for action. Road transport must be safe and cause minimum damage to health.

Commercial Focus &< requirement for those involved in the transport business. The road trucking associations are not seen as effective and do not aid road safety.

q%$&;q%$&= approach to the problem, remains to be created after several years. There is an interim Road Safety &8 study made some years ago, but implementation cannot be fully effective until the permanent body is formed.

} generally placed within the crime investigation and prevention function and focus primarily on whether or not to prosecute offenders, rather than leading an effort to reduce the number and severity of accidents.

+ } transport authority, the rural roads authority, etc. Most regions report that it is not very effective and they await the formation of the NRSC and its associated regional structure. One problem at present is that ERA is seldom an active member of the regional committees, as its district maintenance organisation is based at 10 sites across the country which often does not coincide with regional capitals.

The proposals of the road safety study need to be implemented and are included in the master plan. The formation of the NRSC is a needed early step. At the same time the Transport Authority could start implementing the measures aimed at commercial road transport operators, as recommended above, and preparing draft new road transport regulations to be considered by the NRSC, when it is set up, as well as the National Transport Council and other bodies.

Vehicle Fleet and Travel Characteristics Introduction \+} 15 years. Table 2.11 gives the latest available data from the Transport Authority, indicating growth \''(?/XXYYYzY''JJ/Y^XYY>zYZ (((J< 25 (/<*\ ^'Z

%%=">>?>W$+++{+%@++'{+;,

Annual Average Growth 2000/1 ++'{; Rate (%) Private cars >XZ(J Z^?(Z (^ Station wagons J^(> ''((? 14.2 Taxi 10,311 14,504 (^ Sub-total Light Vehicles (LV's) ;&5\\% 86,176 &; Buses 11,967 %'5%; ' Trucks /?Z(? 50,444 7.6 Truck-tractors 'X?( 1,736 (Y Tankers 1,453 1,936 7.4 Sub-total, Trucks '+5%\ ;'5%%Z 7.6 Total: LV’s buses and trucks 112,166 %;'5''' 8.3 Trailers and semi-trailers '5&Z 85;&' %'Z Motor cycles and special vehicles 2,170 '58% %\' Total Vehicle Fleet 118,732 166,309 8.8 Source: Transport Authority.

\'JJ/Y^XYY>zZXXZ per thousand people. Since a high proportion of these vehicles are owned and operated in the Addis _*R \ base may be expected to continue for many years to come.

A breakdown of annually inspected and registered vehicles by types of services for 2007 is provided in Table 2.12 below.

Table 2.12 Annually Inspected and Registered Vehicles by Types of Services

Year Government Commercial Taxi Private Others Total 1997 14,239 30,315 6,524 39.001 6,423 &Z5;+

1998 'X^(/ 34,033 ^(>? >YJY( 5,409 102,880

1999 15,356 34,615 ^Z^( 40,611 5,670 %+;5\;+

2000 15,573 39,122 ^(Z( >'^(Z ZJ(> 112,222

2001 15,750 42,724 10,325 43,770 6,163 118,732

2002 16,165 44,647 11,571 47,362 6,154 %;5\&&

2003 17,070 43,176 12,506 53,540 6,646 132,938

++' 17,424 50,211 12,,395 Z(J^J ?Y(' %';5\+8

++; 20,013 65,034 14,523 Z(XX' (ZX( 166,309

2006 '(Z(( 64,177 '(JXZ 61,342 9,325 %85+;8

2007 23,013 73,066 20,040 JZ''( 9,130 190,367

Source: MoTC

26 A disaggregation of Fleet by Types of Services for 2007 is provided in Table 2.13 below.

Table 2.13 Road Passenger and Freight Fleet Data-Total Vehicles by Capacity (Year 2007)

Non Rental For Rental Service Grand Govern- UN , AU Private Total Types of Vehicles Public Org. Private Total Commercial Taxi Total ment & C.D. Comm.

Passenger Transport 5 seats X^(X 609 '/(Y 4444 >(Y/' 57446 4541 (XXX 12763 70209 J( 1025 174 91 (XJ 2446 4562 1259 906 2165 6727 Station Wagon 3396 471 3395 1799 6241 15302 1999 - 1999 17301 Double purpose (5 men, 5 >(?? 345 950 X>?( 3195 ''(>Z X('' - X('' 14656 = ^'X;= 493 123 152 965 (// 2566 >'(/ (?X> 12907 15473 '/X^;= 331 (( 49 439 140 921 X?(X 2 X?(> 3705 /Y>Z;= 191 53 2 64 - 310 '(Z? - '(Z? 2167 _>Z;<= (^ 121 2 1 - 213 1030 - 1030 1245 Subtotal %\' %&\' 6021 11016 60760 &%Z; +'Z %8\;' 38316 %%'\%

0;= Dry cargo Pickup/<15/ 2241 111 414 '?(J 3159 7711 3419 - 3419 11130 Trucks/15-35/ 763 9 25 2927 111 /(/Z ((?> - ((?> 12709 Trucks /36-70/ J(( ( 'X( 1012 40 '(?J /Z(( - /Z(( 5464 Trucks /71-120/ (>Y 46 112 155 ( 1161 Z?(Y - Z?(Y 6941 }z'X''(Yz 369 5 12 15 45 446 4074 - 4074 4520 '(Y 6 - - 1 - 7 99 - 99 106 Trailer 131 16 43 35 16 241 4902 - 4902 5143 Road tractor 117 3 17 23 2 162 1023 - 1023 ''(Z Semi-trailer 3 - - 17 5 25 435 - 435 460 Subtotal ;%;\ 198 8;% ;&8% 3386 %;'Z' %&' - %&' '8Z;\

[;= <10,000 Z( 1 7 19 11 96 517 - 517 613 10,001-13,000 X(J 15 16 135 19 471 613 - 613 'Y(> 13,001-14,000 46 - - - - 46 35 - 35 (' >14,000 53 - 1 - - 54 665 - 665 719 Trailer 1 - - - - 1 424 - 424 425 Semi-trailer ------103 - 103 103 Subtotal ''' 16 ' %;' 30 668 ;8 - ;8 +;

Other Motor cycles /(Z' Z( 67 370 (^J 1391 357 X'(J 2543 ??(Z Agricultural tools 61 - - 16 16 32 39 - 39 132 8;= 115 7 4 50 30 91 (Y - (Y X(J Subtotal '+8 Z; 71 'Z &' %;%' '8Z 2186 2662 8203

Grand total 23013 2263 6867 %8;88 Z;%%\ &%\; ;;'\& ++'+ 8;;& 190367

Source: MoTC

27 Truck Fleet Size and Capacity & } '^^^ '(Y'Y * XYYZ \X/?X>>Z0 of dry cargo vehicles, about 22 percent were in the range of 30-40 ton load capacity and operate on the __'( on medium and short distance routes, outside the major corridor. In 2007 the number of trucks had >?JZ(

Data for imported freight vehicles are provided in Table 2.14 below.

%'W_>?>

Year Less than 19 quin- 20-90 Qts More than 91 Liquid cargo TOTAL tals (Qts) with trailer and vehicles without trailer '^(?z(( 0 74 71 (J 231

'^((z(^ 2 33 73 71 179 '^(^z^Y 24 146 17 16 203 1990/91 199 425 32 7 663 1991/92 423 716 X(/ 23 %5%'; 1992/93 217 ^(Z 270 32 %5;+' 1993/94 243 969 621 '/( 1,971 1994/95 416 1,327 'Y?( '(> 5++; 1995/96 651 1,791 'X(J 139 3,867 1996/97 /Y( 1,205 (>> 144 5;+% '^^?z^( 254 600 366 39 %5;& '^^(z^^ 197 616 476 312 1,601 1999/00 309 941 1,379 544 3,173 2000/01 ZX( 2,070 2,633 91 ;5 2001/02 /(' 2,040 ''(' 46 5Z'\ 2002/03 316 3,277 'JY( 46 '5&% Average annual 279 1,076 8Z' 120 2,219 new vehicle % share since 1992 13% '\| '| ;| 100% &#%%#"%'*+\

Bus Fleet Size In 1999, all categories of public passenger commercial vehicles registered by the Transport Authority (^X/'>Z??XYYZ^>

8\'^^^ >Z?Z''/('XYYZ'ZYYXYYJzY?*XYY? the number of large buses had dropped to 1245, which seems a notable decrease.

\ZXY_''> >> \q\< _}% >YYXZ\ is perpetually under maintenance. 28 %;=">`W$%&&\{&&@++'{;,

Seat Capacity Growth Growth Growth Year <9 9 ~ 12 >9 TOTAL in % in % in % 1999 3163 - - - - ^Z^( - 2000 4364 /(Y 6435 '>( 12 ^(Z( 2.7 2001 >('Z 10.3 Z>(X 0.3 10 10325 4.7 2002 5192 ?( 5500 'Z( 11 11571 12.1 2003 Z(>Z 12.6 J/J( 4.4 13 12506 (' 2004 6963 19.1 JJ>( '(Z 13 12395 -0.9 2005 J(^/ -1.0 5419 43.3 12 14673 '(> Average annual %' 7768 '' 7.0 growth

Source: Transport Authority.

<\^JYY'^^^Z>'^XYYZ* XYY?<'Z>?/(YY

In East Africa, the most popular minibus models are Japanese, imported second-hand through traders in the Gulf. In Nairobi and Kampala most are now diesel powered because of their relative economy of operation, but altitude and terrain mean that gasoline engines are preferred in Addis Ababa. Vehicle age varies widely, but 10 to 15 years is typical. Body corrosion is the main determinant for scrapping.

\ _ _ supported by bilateral assistance from the Netherlands and Belgium. Truck-based passenger chassis ;_0=+} manufacturing capability. There has been entry of technically inappropriate vehicles, such as rear +R}} \< }

Bus Fleet Capacity \X'J

Table 2.16 Growth of Passenger Fleet by Seat Capacity

Seat Capacity Year Growth Growth Growth Growth 9< Growth in % 9~12 13~29 Growth in % 30~45 >45 TOTAL in % in % in % in % 1999 2396 - - 4765 1011 751 8923 - 2000 3738 56 2290 - 1252 -73.7 1102 9.0 713 -5.1 9095 1.9 2001 4486 20 4665 103.7 1680 34.2 1388 26 876 22.9 13095 44.0 2002 2352 -47.57 3615 -26.51 1838 9.4 1390 0.01 788 -10.0 9983 23.0 2003 2909 23.7 3190 -11.8 1622 -11.8 1250 -11.1 920 16.8 9891 -0.9 2004 6430 121 3526 10.5 1687 4.0 1296 3.7 531 -42.3 13470 36.2 2005 5873 -8.7 3450 -2.2 2230 32.2 1643 26.8 1381 160.1 14577 8.2 Average annual 23.5 10.5 -5.7 7.8 20.3 9.4 growth Source: Federal Transport Authority. 29 )#%&~;XYY?= 2.17 below.

%8=">_?>$++;M++\,

Seat Capacity Year 9< 9-12 13-29 +@'; '; Total ++; 17975 9739 '(>^ 562 '?>( 31873 2006 '^(>Y 10556 2196 597 '(YY '&\& 2007 22357 ''ZZ( 2417 627 '(?> 38833 2008 25195 12009 2960 724 1940 '\\ 2009 25791 12471 2997 733 1955 '&'8 Source: Compiled from Road Transport Authority data.

Vehicle Age }'?\>/'J $}Z?Z'J /X*\

$ZY\XY years old and now need replacement. Since there is no vehicle replacement policy there is a slow pace ) }

Passenger Loading ;q ) # $= (Y^Y$ )#$0 X'( (Y^Y

Table 2.18 Occupancy Rates for Passenger Vehicles (2006)

Vehicle Type Average No. of Pas- Average No. of Seats Occupancy Rate (%) sengers Motor-cycle rickshaws 3.0 3.5 (J Private cars 3.7 5.9 63 );'Z= 9.2 11.2 (X $;'J/Y= 21.6 24.3 (^ [;/Y= 44.2 49.0 90 Source: Consultant’s survey.

journeys being made in larger buses. Average journey times reported by passengers were one hour for motorised rickshaws, 4.6 hours for private cars, 1.6 hours for minibuses, 3.4 hours for small buses, and 9.2 hours for large buses.

Since passenger transport vehicles in general, short and medium distance buses in particular, do not depart from terminals or stations unless all seats of the vehicles are occupied, road passenger transport vehicles load factor until very recently has been assumed to be 100 percent.

30 distance minibuses, latest surveys show that the average load factor of passenger transport vehicles has declined possibly to 70 percent, or less.

Truck Loading Reported loading data for goods vehicles was captured. The high rate of empty running was notable, \ <% X'^\ < The effect is to reduce average load factors to around 50 per cent, with consequent increase in operating costs. These problems have also been widely reported by truck operators.

Table 2.19 Loading of Goods Vehicles in Metric Ton (t) in 2006

Trucks, Trucks, Trucks (2-axles) (3-axles) $', _;= 5.9 16.4 X(> _;= 5.0 14.3 25.5 #;= J(/ 57.1 56.3 _;= 3.4 (X 14.4 [;= (Z (? 90 [;= Z( 50 51 Source: Consultant’s survey.

The effect is to reduce average load factors to around 50 percent. The average load of Loaded 2 axle trucks was 5t, that of 3-axle trucks 14.3t, and of 4+ axle trucks 25.5 t. Agricultural products, foodstuffs, ?^ }'( since it is essential that these products be carried to their destinations without delay. Of the total cargo being transported in surveyed trucks, 65 percent was carried in vehicles of four or more axles, 12 percent in 3-axle trucks, and 25 percent in 4-axle trucks.

Commodities Carried Information was also sought on commodities being carried by trucks, with the following percentage breakdown being found by tonnage. Reported commodities being carried by goods vehicles are XXY

Table 2.20 Truck Commodities Carried and Average Load Per Truck in Tonnage

Agricultural products, inc. coffee and tea 22.3 Perishable foodstuffs '?( Construction materials 16.7 Machinery and equipment (Z Oil products J( Processed food and drink 6.7 Other commodities 21.2 Total 100.0

31 Agricultural products, foodstuffs, fuel, construction materials and machinery accounted for nearly ?^}'( perishable foodstuffs is notable, since it is essential that these products be carried to their destinations ;$0X>=

W_'#++8

Goods Transported by trucks on the Ethiopian Network

( 3 %

2 % 0% 4% 19 %

17 %

1 % 1 % 1 % 3 % 9 % 7 %

Coffee or Tea Other Agri. Prod. Pershable food Livestock Fuelwood or Charcoal ;#= Processed food or drink Machinery, equipment Logs or Lumber Construction Materials Oil & Medicine Misc-Household Unknown

Of the total cargo being transported in surveyed trucks, 65 percent was carried in vehicles of four or more axles, 12 percent in 3-axle trucks, and 25 percent in 4-axle trucks. Two-axle trucks are most often used for transporting agricultural products.

Journey Times During the course of the extensive Transport Master plan Roadside Interview Surveys, truck drivers were asked about the total average journey time of their trips. The answers were as follows:

Table 2.21 Average Truck Journey Times from Survey

Vehicle Journey Time(in Hours) 2 X T 9.82 3 XT 12.23 '> 33.88

32 These times include the rest periods of the truck drivers, as well as the time spent waiting at each X<}^(/< trucks 12.23 hours, and of 4+ axle trucks 33.9 hours.

Average journey times reported by passengers were 1.6 hours for minibuses, 3.4 hours for small buses, and 9.2 hours for large buses.

Distribution of Vehicles between Regions #\_ >J(^?>Y\XYYJ ;=

Table 2.22 Distribution of Vehicles between Regions

Addis Ababa 56.1 Oromia 10.3 Amhara 4.4 SNNP 3.4 Tigray 2.9 Dire Dawa 2.3 Carried forward 79.3 Other regions 2.6 Ethiopian Govt. 10.4 8;@q_@_= 7.7 Total 100.0

?>@J }#}* }JYYYY''YYYY(YYYY}} Ethiopia covers circa 60,000 kilometres p.a.. Generally, the annual veh-kms traveled by high capacity vehicles should be higher than that of small and medium capacity vehicles, since the former operate on relatively longer but low terminal time routes, whilst the latter operate on short distance high terminal time routes.

*+ ;>ZJX=_>> categories of medium and large bus travel considerably less distance per annum than the smaller ;=

Railway Mode Introduction +%;&+=?('}J('}+ *q+&8$;$=''>} rehabilitation which includes all bridge work between Addis Ababa and Djibouti and various lengths of replacement track.

33 The Ethio-Djibouti Railway Authority gives its transport services twice a week from Dire Dawa to Djibouti, while it transports people and goods to Kaliti, the industrial town found 25 km from Addis Ababa, only once a week ever since the work on Gotera Road Inter Exchange project began.

The Ethio-Djibouti railway rehabilitation project was expected to get completed by June 2009. The project includes the changing of old and damaged tracks and bridges of the 114 km of line. On this project, nine concrete bridges will be replaced and another forty metal bridges will be strengthened. The line that is to be replaced and strengthened is from Hurso to Lassarat. When this rehabilitation project is completed, the speed of the trains will increase and the derailment reduced. Currently the strength of this 114 km railway line is 20 kg/m and this will increase to 40 kg/m, increasing the carrying capacity and speed of trains.

What will be of critical importance for the short to medium term development plans for the international road freight industry in Ethiopia will be the timing of the investments in rail sector multimodal operations to and from Djibouti Port. These proposals are currently on hold.

Rail is very cost effective for transport of products in bulk and also of high value container cargo in dry freight containers and ISO tank containers, where it is also a very secure means of transport. 0JY};= possible in Ethiopia. Dry freight containers need to remain unstuffed in the condition in which they R JYY} _\< '( previously planned concessionaire agreement was to import 46 new locomotives and 600 wagons.

The lack of such a service between Djibouti and Addis Ababa remains a severe constraint on the cost effectiveness of multimodal transport in Ethiopia.

New port developments in Berbera in Somaliland are being evaluated by the private sector (although =} * improvement of road access to alternative ports would be necessary. Because of topography, the international railway network in this part of Africa remains relatively undeveloped, in contrast to $\

Shipping: Need for Choice in Multimodal Transport Shipping +$[;+$[=+ j)$+;)$+= provide government-controlled services to the transport industry and in particular are the sole conduit j* Company limits the ability of the industry to seek the best commercial route and rates. The two ![% are not yet known.

34 * '^?? j /J ) $ + ;)$+= + Shipping Lines and MTSE are considered as strategic enterprises and still in the hands of government.

+ $ [ ;+$[= ( ?^YYY j %;j%=* lifted by the ESL was 1,154,703 ton in 2004/5 accounting for one third of seaborne trade, thus it plays +R<j with the Government of Djibouti to implement Through Bill of Lading Procedures that will allow Ethiopian Shipping Lines to handle the land transportation of imports up to the dry port in Ethiopia as from 2007.

Freight Forwarding Freight forwarders act as intermediary between the shipper and the operator on a commission basis. 0 8 truck operators for creating distribution networks that consolidate loads. This achieves economy in the transportation of goods, with implications for enhancement of competitiveness in the global environment. In general, the role of freight forwarders is related to business logistics. Business ;= to be provided, vehicle routing and the problem of allocation.

The freight forwarding businesses have not been well developed to have a major impact on performance <*+ shippers move irregular consignments, freight forwarders could promote commercial road transport +<

[ _ < carriers have interest in the improvement of freight management. Central to freight management is R modal transfers.

Ethiopian Freight Forwarders and Shipping Agents Association (EFFSA) +00$__;+00$_= *000_;0*__= *__;*__=*// it is thought some 44 companies operate. Precise numbers are not recorded as there is no active legislation at present.

There used to be legislation to require prospective freight forwarders to receive training from both Customs and the previous transport ministry, and to have a minimum bank account of 1.5 million Birr, but this has been discontinued. It is recommended that EFFSA offer the International Federation 00_;0*__= Re-establishment of a training requirement before a license to operate is issued may be premature as many European countries still have no such requirement. In addition EFFSA has expressed interest in offering CPC training and they would be well placed to represent the road haulage industry to j+00$_ 35 be seen by MoTC as a voice worth listening to. With their wide daily contact with the international freight industry they could assist in proposing and reviewing transport legislation that would promote trade facilitation.

The freight forwarding industry is represented well by the Ethiopian Freight Forwarders and Shipping __;+00$_=0*__*__;*__= recognition. A decision on the Through Bills of Lading is said to have been made by MoTC and passed on to EFFSA. The agreement details and response from EFFSA were not known at the time of writing. Until the decision is implemented and the consequences are known, the limitation on the choice of shipping line to be used by Ethiopian import and export companies will have a direct effect on the use of multimodal transport, the Through Bills of Lading and the ability of EFFSA to secure @ to operate, ocean shipping rates could be 10-40 percent lower to Djibouti, providing much needed assistance for the objectives of growth and poverty reduction.

Customs Brokers Customs clearance is the procedure of complying with customs rules and regulations and the payment of customs levy, as well as the securing of clearance for cross border transport using one or more modes of transport.

&&_;&&_=_$ &;_$&@_= they are. They may relocate to a new location to access the system. They represent 300 members &;)*= !'* if this system still operates, but if not it should be re-established.

EFFSA, which represents the freight forwarding industry, can also operate as customs broker. Due to &&_;&&_=+00$_ &&_+8;8= &8;&8=*< agreed standards.

Freight Agents or Freight Brokers Freight brokers or consolidation agents operate in Ethiopia to seek return loads for hire and reward } * +} scheduling desk within a well run transport operation. It is not a job to delegate, and certainly not a job that can be successfully accomplished by amateurs.

Cargo Loss and Damage One serious problem shipper's face in freight transport operation is cargo loss and damage. For this reason, users constantly look for the improvement of logistics management and reduce the extent of damage as a result of improper handling and disappearance of goods in transit. In order to overcome the situation, the demand for quality freight transport service that ensures safe and reliable movement of goods is increasing through time even if the cost share of these logistics expenses in the value of 36 ~;=+ @;+@='>/'^(? to 10.1 percent in 1992, with further drop to 9.1 percent in 1997. In North America it ranges between ZXY}&/Y>Y$ such data for Ethiopia, comparative analysis has not been possible, except the magnitude of share of inland road freight transport cost for import and export goods as indicated below.

Table 2.23 Estimate of Transit and Transport costs of Export (as % of export value)

Export Volume Export Transit and Total cost Year (ton) Value Transport (Birr ’000) % (Birr ’000) Cost (Birr ’000) 2001 306,522 XJ(Z/Z( 105,454 X?^Y('X /?( 2002 524,535 3,170,176 '(Y>>Y 3,350,616 5.39 2003 413,195 3,573,706 142,139 /?'Z(>Z /(/ 2004 Z'((YZ 4,206,767 '?(>J^ >/(ZX/J 4.07 2005 J^Y^/( 6,645,199 X/?J(X J((X((X 3.45 2006 /''('' /Z(Z/J> 'Y?X(? 3,692,651 2.91 Note: At constant transit and transport cost of Birr 344.00/ton.

'$|],

Transit and Year Import Volume Import value Total costs % Transport costs 2001 //?//(Y 13,713,210 3,234,397 16,947,607 '^Y( 2002 2,565,303 ''^^(''X 2,459,613 14,457,725 17.01 2003 5,074,223 20,905,219 >(JZ'JZ XZ??Y/(> '((( 2004 /(X/YX/ X/X(?(X( 3,665,515 26,953,344 13.60 2005 4,532,492 31,277,444 4,345,753 /ZJX/'^( 12.20 q\_XY!^Z(YY

Air Cargo Mode General For the development of the road freight industry the most important connection is with the Addis _R!*_

Customs use the ASYCUDA++ and cause no real delay. There is no pre-clearance, all goods being cleared on arrival.

< <\chat, textiles and vegetables. Flowers are checked by Customs and phyto-sanitary services on farms and loaded to chilled trucks. Some trucks are provided by the growers but there is an expanding privately run collection service using special refrigerated vehicles.

;=_ ;!=X(YYXYY>zZ 'YYYYXYY?z(

37 Growers are generally within 2-3 hours of the airport so cargo delays are not a big problem and freight forwarding services are not yet used. In future the special needs of this growing industry will demand more specialist customs clearance services, more chilled storage and more transport, all of which can be provided by the private sector.

The freight forwarding industry is aware of this potential business. The support for this industry by j< private vehicles to be imported duty free. This policy by the government has increased employment in the industry assisting growth of the economy and helping to reduce poverty. A number of growers have relocated from Kenya and Uganda.

__R!*_} system for rapid load transfer to aircraft. There is much room for improvement to increase capacity and although a good racking system is in place it is limited by the old-style fork lift trucks that are used. It has been reported that freight dwell times have been up to six days or more at Bole, but customers report that improvements are being made all the time.

Development of the Multimodal Transport Industry in Ethiopia Introduction Multimodal transport is an important part of the dynamic transport industry and new issues are addressed and new solutions to problems are found all the time. The developments in the multimodal transport industry are regarded as of critical interest to the future development of the freight road transport industry in Ethiopia. Without a full understanding of these multimodal developments, it } transport industry.

International multimodal transport covers the door-to-door movement of goods under the responsibility of a single transport operator. The concept of multimodal transport was developed with the container revolution initiated in the late 1950s. The coming of the container technology and the multimodal transport concept facilitated international trade. Trade and transport are inextricably linked i.e., * implies the use of various modes of transport and interfaces, each mode and interface corresponding to a transfer, storage or transport operation either in the country of origin, in a transit country or in modes of transport operators, but it does not always make clear as to who is responsible for delivering cargo at destinations in a safe condition, according to agreed schedules.

Considering the variety of cultures, languages and commercial practices at both ends of a trade and the resulting complexities of assembling such an international transport operation, it would appear ) goods where the multimodal operator accepts the corresponding responsibility from door to door. With technological development of transport operations, as well as communications, coupled with _})

38 of Transport and Communications, moving towards this advance system of operation is considered imperative.

Main Issues +R____ \")} and between Addis Ababa and other main towns.

The Addis Ababa - Djibouti Corridor is a transport corridor where sea and road modes of transport operation are carried out. Imports and exports from and to Djibouti are transported using long haul }+$[;+$[=)$+ ;)$+=}+$[)$+ multimodal transport operators. The ESL will transport commodities from their point of origin by sea be the Comet- bonded warehouse. The document for taking delivery of the cargo will be the Bill of Lading issued by ESL at the port of loading. In this example, customs formalities at the intermediate points of transshipment could perhaps be avoided, thereby saving time for the inland carrier.

Truck delays are experienced during loading and unloading of goods, particularly at the port of Djibouti, where the truck parking area is inconveniently located away from the cargo stacking port area. The source of the problem is * level of the shippers' awareness of the carriers' problem which affects truck productivity.

In general, trucks and tankers operate at low load factors (60 percent for trucks and 50 percent for }=;}= ;}=*} exceeds the volume of export, forces vehicles to travel empty in most of their out bound trips to the port. In the case of tankers, the special nature of the activity makes one-way empty haulage unavoidable.

Transport Policy j\ but transit income and easy access to neighbouring countries can provide a useful source of revenue, so it is in their best interest to ensure that trade can be facilitated easily.

@+OP good rules and regulations they have not been implemented to make them work.

Some international bilateral and multilateral agreements have been accepted by Ethiopia but there is also a need to accept a series of international conventions for the development of trade in order not to re-invent legislation but to adopt widely accepted conventions for trade facilitation. There is a need to ensure that such international agreements are passed into practical use by their adoption into domestic law.

There exists a growing understanding between governments that any strategic transport plan they develop meets not only their own transport needs, but also considers the aspirations of their neighbors, an essential ingredient for long term sustainability.

39 Ethiopia has only recently emerged from a command economy and is now in the process of establishing its transport needs under a demand economy where the wishes of the customer are paramount. This transition is not easy and many policies and practices have to be changed, both in law and in application at “grass roots” level.

Multimodal transport should be seen as an integral part of this process to make sure that the very best use is made of all the transport resources and that mistakes made by other countries are not repeated. _ modes; it is a new way of thinking about transport policy to enable the government of a country to facilitate trade. As international trade is often the lifeblood of the economy of any country, it deserves a lot of attention to be given to the detail on how this is to be achieved.

Legal Considerations Laws regarding transit and multimodal transport have been concluded between Djibouti and Sudan. _q)#;q)#= General Transport Law, details of which are located on the Master Plan Study website.

A transit agreement of the sort proposed by UNCTAD would assist in future to establish a corridor from many deep sea ports to landlocked countries in the region with access through Ethiopia.

$ the feasibility of developing a single intermodal framework covering such issues as insurance liability rules, the use of modern techniques for data provision, payments and invoicing methods, together with measures for cargo tracking and tracing across the different modes.

Customs Authorities Procedural and Administrative Obstacles and Delays & } of reasons: As a general rule any port or cross border operation is a potential bottleneck to future rail intermodal growth, and therefore the action of customs in the port or border can Where possible pre-clearance of containers arriving at a port or border crossing should be sought (as is becoming common practice in many deep sea ports such a Singapore (Y = * + available. Once a container is loaded onto a train any subsequent customs requirement to investigate that container is bound to delay other containers on the same wagon and in many cases the whole train. For containers by road where one lorry load is checked it has no impact on the others. In many cases Customs staffs do not offer a 24-hour service whereas terminals are open from as early as 0700. This means that regardless of how much earlier than 0900 a container is ordered by a customer to be forwarded inland, and regardless of how much earlier than 0900 it can actually be loaded and depart the port gate, the process <} until that time. This is a potential problem to be avoided in future.

40 Although road and rail modes can be equally affected by the actions of customs, rail <0

Multimodal Transport Industry in Ethiopia covers issues of the sea ports of entry where the concentration of container activity normally takes place, moves on to the inland clearance depots ;*&R=} crossings by rail and road on the multimodal transport mode.

Ports of Entry +R international road freight industry and ancillary industries such as freight-forwarding, etc. Ethiopia #*+< foreign country, makes Ethiopia very vulnerable to any unexpected interruptions in supply. The heavy dependence on Djibouti for foreign trade and fuel distribution is disturbing.

The choice of ports includes Djibouti Port, Port Sudan, Berbera Port, Ports of Assab and Massawa. A detailed appraisal of the different port options is provided in Chapter 9 of the report under the title “Dependence on one country and port”. The Eritrean ports of Assab and Massawa are needed by Ethiopia, but so long as they are inaccessible alternative ports must be sought. Development in +R freight industry and ancillary industries such as freight-forwarding, etc.

Dry Ports The establishment of the dry ports will facilitate the export/import transaction more and more and help ease the congestion at the port of Djibouti. Two dry ports under construction in Ethiopia are at Modjo in Oromia Regional State and another at Semera town of Afar Regional State. The two insurance companies and maritime transit.

*< can estimate that the price paid per container at the dry ports would be about half of that at Djibouti #< reduction of cost since it will also help reduce the foreign currency being paid at the port of Djibouti, ;=

*} the goods in time. The establishment of the dry ports will curb such a problem. It will also help avoid <q ports will be facilitating the logistics associated with export/import shipments.

The economy is growing, meaning that the volume of exports and imports is increasing. The port of Djibouti, the major outlet for the country's export/import shipment, is not expanding at the rate that the export/import transactions are growing. This leads to the congestion of import/export goods at the port. The dry ports will reduce that challenge by allowing a timely inland shipment of imports from < of export items will be completed at the dry ports. Currently, a truck carrying exports stays at the port < 41 Demurrage and opportunity costs incurred by Ethiopia due to delay in clearance of goods is partly attributed to the congestion of the port of Djibouti as a result of the increase in the volume of goods imported and exported by Ethiopians, the largest users of the port. Therefore, the construction of these dry ports is expected to alleviate this problem.

_)&;)&=XYYJzXYY? +R+ Council of Ministers endorsed the establishment of a state agency responsible for administering the ) +R annually, is based on the Djibouti corridor. The volume of its import and export cargoes has been on XYY?XYY(

Modjo Dry Port Currently the dry port at Modjo, some 75 km east of Addis Ababa is nearly completed. The Modjo Dry Port, which spans 61 hectares of land is about to go operational, gearing up to start operations in XYY^$ +&;+&=++#& ;++#&=##+ $_;##+$_= agreements which should be put in place in order to allow the commencement of the operation of the

The new site at Modjo seems a little far from customer demand and would add to the transport costs and the number of vehicles on the Modjo-Addis Ababa road3. A site at Modjo would be good for the south of Ethiopia, but at present only 1.1 percent of imports go to the south.

A future customer requirement is bound to be for customs clearance at their own premises when volume dictates, as customers will increasingly want delivery of their goods from sealed containers within their own premises. At present it is possible for this to happen but it does not happen often. All multimodal transport documentation and agreements are in place waiting for the start date to be announced by Government.

Semera Dry Port $< +#+$_%$ZZ(} the east of Addis Ababa and some 100 km from Djibouti.

The construction of the dry port is carried out by the state-owned Water Works Construction Enterprise ;&+=XJ!'YY designed to serve as a depot for incoming goods from the northern part of the country. On top of this, the proximity of the area to the port of Djibouti is expected to facilitate the import-export business. The project includes construction of fences, warehouses, inland roads, container depots and customs in January 2009. It is hoped that Semera Dry Port will serve as a clearance site for commodities coming from the north.

3 This is because inbound and outbound containers may be stripped and stuffed at the site, for distribution among different customers in Addis Ababa. #+###%% 42 Other Dry Port Location Proposals The two ports at Modjo and Semera will accommodate up to 20,000 containers per year during their initial phase. The country's annual imports alone stand at 113,000 containers. In order to fully accommodate imports and exports, additional dry ports will be constructed along the major export/ import corridors. There is a proposal for a dry port at Mille. An additional site to serve the north of ;}'Z= same disadvantage of remoteness from the customer.

Mekele, which has an expanding industrial base, may be a good choice when the Eritrean border is open and Massawa port can be used, as well as Djibouti or Port Sudan. In the meantime a drop-trailer operation in the Mille area could be envisaged to increase the rate at which cargo for the north can be evacuated from Djibouti.

Chapter Three

Road Freight Transport In the road freight transport sub-sector services are provided ranging from urban services, interurban ;=* ;=0 industry in Ethiopia it is helpful to identify three main areas, namely: *;<= Interurban domestic road freight operations; and Urban freight operations.

*+*+<*XYY> ?Y>}__j'(} surveyed network, for 47 percent of truck-trailer movement, and for 25 percent of total movement by all trucks'*<XYY( <;(Z)=;JZ)XYYZ=

In terms of international road freight services, the Djibouti corridor continues to be the main focus of import and export freight operations. Logistics developments in this corridor therefore have needed to be investigated in detail. A key consideration in the main import/export corridor is the likelihood and timing of the improvement and upgrading of the existing railway line between Djibouti and Addis Ababa which would affect modal split.

_ + * +< 0 *+<* ^Y*+<XYY( for the development of the Ethiopian Road Freight Industry, for instance inter alia accounting for )[!} 0\ they are also affected by several other important factors.

_\}< _ *+< industry. Each of these key aspects is elaborated in turn below.

In each Master Plan development scenario there is a mooted transfer some 17 percent of present }XY'? that the pace of rail freight development/ line concessioning might be slower than was anticipated a few years ago, when the Transport Master Plan was formulated. In the short term, in particular, there }

47+89<=>7?@G>9%H

45 +#_# *+< +R rural areas. Average altitude is high and the terrain is mountainous in parts.

The recommendations made in respect of interurban road freight operations in the other main corridors +<)# Study. However, since volumes of movement are much lower, lesser focus has been adopted in the present study.

The capital city, Addis Ababa, is a focus for urban goods distribution by road. Because of their road freight transport developments in each of the other cities in Ethiopia. Urban road freight transport operations in Addis Ababa, whilst important, are not regarded as a priority area for this study.

Even though the road freight transport has a number of advantages, it also has many disadvantages, some of which include: # weight, not by the prevailing technology and economics as with other modes; # R} limitations which are also controlled by legislation (maximum permitted road = # Roads are not used exclusively by one form of transport and congestion can occur which interfaces with schedule planning and time keeping.

Categories of Operation and Capacity Ownership in Ethiopia is generally mixed between the private and public sector, as well as "regional development associations." There needs to be a clearer and separate consideration of “own-account” OP

$}\ working to a different standard than transport companies working for third parties only. The bottle ;}= \<OP$ examples of different operations follow.

Previous reviews of the transport industry in Ethiopia have sometimes assessed all the different types of road transport as a single entity, leading to a lack of clarity regarding differing situations that affect each separate part of the industry. This leads to misunderstanding that can result in the conclusion that nothing is good within the industry, which is not the case.

O P ; R = ;, such as those conveying container and bulk transport from Djibouti to Addis Ababa, have costs per tonne-km that are not much greater than those of other East African countries with direct sea access6$ 5#8#*O%%#8P#%#O"'P %"##V#"V##"8#8"8#% H#V8"X$%YZ='+%[\9*<]"#%^8 Y_H'+%`[%%j8#V"j8#k8#\jq]# 46 Tanzanian data is undated. load factors, the amount of empty running, etc., vary between countries. In Ethiopia there is a major imbalance of import tonnage over export tonnage, which means that load factors are low through no 8+\ drivers driving excessively long hours.

OP;}= } are operating beyond any reasonable life expectancy, and operations are poorly regulated and often seemingly unsafe. A safe operator with a modern vehicle would not be able to compete and would go out of business fast.

Tightening the legislation and its enforcement so that modernisation is possible may be counter to the desire for poverty reduction. A more in-depth study of comparative costs between old and new vehicles would be desirable but could not be attempted here. There needs to be a carefully phased transition where unsafe vehicles and operations are eliminated.

Reasonably new vehicles operated on own-account, such as by beer and soft drinks companies that are ;= }

W_>$, In terms of international road freight services, the Djibouti corridor continues to be the main focus of import and export freight operations. Logistics developments in this corridor therefore needed to be investigated in detail. A key consideration in the main import/export corridor is the likelihood and timing of the improvement and upgrading of the existing railway line between Djibouti and Addis Ababa which would affect modal split.

There is no doubt that the industry has undergone considerable change. It has evolved from a heavily

For the market economy to work effectively, competition needs to be on an equal basis so that the

$j} follow no clear pattern of use and cross over from “own account” to “hire and reward” as demand dictates, confusing an already confused market, while operating with vehicles donated free from many sources. When they do this they have an unfair advantage in the market and in effect “steal”

As a general rule current government policies and the tax regime do not create an incentive for private

} Vehicles are very costly and ideally should be available for 95 }(Y bad roads, border delays, weighbridge checks, customs delays at roadside and at destination, poor 47 scheduling for loading and unloading, road accidents, single driver operation and congestion all _;= };'ZXY=} for the same reason. In addition old vehicles cost more in fuel and maintenance, as modern vehicles

For truck operations in Ethiopia overall, on average only some 55,000 km/year of paid-for transport JXZYY&(YYYY_'XYYYY _XYYYYY+_&JXZYY}z for the main Addis Ababa to Djibouti run they should be able to achieve more than this.

[}; =}*OPO_PO!P } } } road movements for “hire and reward”.

%+/Y ;~%= ![;!z[= $_;$_= but customs and police checkpoints on the road may continue to cause delays.

In addition, weighbridge delays can be long and although checks are necessary they could be better managed. Idle time at checkpoints also means that drivers and other crew members are being paid to wait around. The rather porous Somali border seems a major problem for Customs but may be }M& liability assurance from the truck owners.

*;=}'J some of the driving is done by other crew members who are not licensed to drive. We have no direct OP } to Addis Ababa. Assuming a constant supply of work it should be possible in 240 days work in a year ^JYYY}z!\ could be addressed by training within the CPC.

*R the labour law would be possible now, and this should be done for bus and truck drivers. This would having vehicles with sleeper cabs and two drivers.

It is understood that the introduction of a Through Bill of Lading, which the Ethiopians have *&;= +$[ transport to Ethiopia, from issuing the bill of lading and becoming the only multimodal operator able to function in the corridor, thus also gaining sole control of the land route in addition to the sea routes. 48 For Djibouti, the Through Bill of Lading and multimodal transport can only function, and are only acceptable, in the context of open competition.

In these areas, it will be important to ensure that the rules applied in Ethiopia and in Djibouti are compatible, and that the international rules and standards on information processing and exchange are a constant feature of the practical solutions taken.

Design of a single customs document covering the transit of goods through the corridor would allow both countries' road hauliers to operate under conditions of equality.

} *}& should go ahead as soon as possible.

Entrance to Market Although domestic costs are somewhat competitive, weak contestability of the market is a limit for

Presently there are also government policies in place that restrict investment in transport by foreign investors which inhibits the free market principles found to be effective in many other countries, in Africa and elsewhere.

associated with a monopoly on transport. For liquid goods, mainly gasoline, the Government of +;j+=*j+ +$)< _j+ the option of choosing their transport companies. The contract lasts for 3-5 years and is indirectly regulated by the Government. For oil from Sudan only companies belonging to a government approved association may move gasoline.

Freight Transport Demand and International Freight Transport Service Delivery

Introduction Since international trade is the major source of freight transport demand, it is necessary to have a closer look at some of the major import commodities and their characteristics.

_JY?Y the Djibouti corridor is mainly break bulk. As the Ethiopian economy develops further, the demand for road freight services increases with the extension and interaction of activities, and hence, the domestic and global economy.

49 Overall Trends *'^^^>(*(ZXYYZ an average annual growth rate of 9.5 percent. The ton-kms performed in 1999 and 2005 were 1,529.5 /Y^(^;$/'=! }<JY

%=">_$%&&&@++;,

Dry Cargo Foreign Trade Year In '000 tons Growth J Growth Import in Export in Total in % Million in % '000 ton '000 ton 1999 >('YJ 1529.5 - 2000 4913.1 2.1 '?(Z? 'J( 2001 >(^YX -0.5 '(JJX 4.5 >XZ(^ 306.5 4565.4 2002 5232.5 7 2090.1 12 3539.4 524.5 4063.9 2003 5272.3 Y( XYZ(Y -1.5 6037.0 413.2 6450.2 2004 6104.3 'Z( 2913.0 41.5 4999.4 Z'(( ZZ'(X 2005 (Z>Y/ 39.9 /Y^(^ 6.4 Z('X/ 690.9 6503.2 2006 4321 710 5031 2007 ZY(? (/X 5919 XYYY( 7643 (/Z (>?( Average Annual Growth 9.3 %%' Rate (%): Source: Transport Authority.

Historical data on the volume of the country's foreign trade between 1991/92 and 2005/06 showed <'XJ//('^^'z^XJ^>Z^^ tons in 2005/6. During the same period, the annual volume of imports (excluding petroleum and \ }= ^Z/>? '^^'z^X />JZ/ZY XYYZzJ }};}= Z>>/J^'^^'z^X>J^>>X(XYYZzJ

_'^^'z^X\ ;}= preceding years and in the period since 1991/92, import volumes have generally been 4 to 11 times those of exports.

_XYYZzJ_%q!}+ }}

*;'^^Yz^''^^Xz^/'^^>z^Z= combined exceeded 70 percent of total annual import volume. The persistence of this trend over the past three decades has shown the heavy reliance of the Ethiopian road freight transport industry on ;=

The slight downturn observed over the years 2004 and 2005 (46 percent and 35 percent of the total =

50 >?ZZZXYY>''/Y>>Z 2005 is an important development.

Load Factors The prevalence of a structural imbalance (with low volume of exports on one hand and the fast =<< volumes. The outcome of this trend is a further decline or little improvement in truck load factors. The } the demand for commercial for-hire common carrier trucks.

The widening gap between volume of exports and imports has increased the vulnerability of the dry cargo transport industry, contributing to lower average load factors, due to the need to make empty haulage in the direction of the ports.

Interviews held with transport operators in Addis Ababa, Adama, Awash, Dire Dawa, Gondar, Dessie and Kombolcha showed that outgoing empty trips or low load factors are prevalent due to \ and the pace in the growth of exports, continues in a situation when the Addis Ababa-Djibouti railway is not yet able to participate effectively in freight movement.

The Ethiopian economy is predominantly agricultural. The seasonal nature of demand for freight \ outside the peak season, during which time there is a downward trend in freight rates.

This is exacerbated by the higher increase in imports compared with exports, which generally reduce the load factor of trucks, particularly on the major international trade corridors due to imbalance between front haul and back haul movements. In recent years, the respective ratios of quantity of exports to quantity of imports have been between 1 to 4 and 1 to 11 (Central Statistical Agency: XYYJ= + < \ intermediate and capital goods in imports.

)__M \) these problems will not in general be feasible, but there may be limited actions that can be taken, for

The lack of back-loads is caused by the heavy imbalance between imports and exports, which is unlikely to change quickly, but may be ameliorated in time as results are achieved from export < } _\ _}} } costs.

51 Dry Cargo Principal Dry Cargoes

Road Freight for Humanitarian Aid Introduction The following section refers to: 2008 Ethiopia Food Crisis Logistics Planning Part I of II: Information Collection, Analysis and Supply Recommendations qXYY(*[

Long Haul Transport The major transport contracting hubs are around Shashemene and Adama in the centre of the country. [;}z=XX>Y) + empty.

There is no reported capacity problem. Information from Ethiopian Roads Authority indicates that total number of overland trucks that work at Djibouti corridor is 5,000 with average capacity of 35 MT each. This is however, contested by most contracting agencies as too high. The WFP has contract >>\X'??} (Y??Z)

The only possible complication is the export of the coffee harvest in November, December and January which takes up around 20-30 percent of available trucks. Companies should be carefully selected for overland transport between Djibouti and Ethiopia. Providers used by ICRC are Comad, Tana, Tesco “Trans”.

Secondary Transport There is a large variation of short-haul trucks in terms of pay-load capacities (e.g.,between 0.5-12 ) = } * ? capacity issues dependent on location of operation. The selection of short-haul trucks needs to be based on regional availability and road conditions. [In 2003 ICRC used Emergency Relief Transport +;+%+='Y)><>}<j} with a joint management from DPPA].

Food Aid Supply Chains There are three main food supply chains in operation, namely: ;= The Ministry responsible for disaster preparedness holds a 400,000 MT strategic cereal reserve for emergencies. ;= A food safety net programme is operated by the Ministry of Agriculture and % ;)_%= mechanisms of vulnerable populations with marginal livelihoods with food and cash. This programme is intended to operate for three months between harvests. It is largely supported by the Government, World Bank and NGOs.

52 ;= MoARD is also responsible for the emergency relief food supply targets assisting J>XYY(Z>XYY^_ ;q=jz* carries out a countrywide nutritional and harvest survey. The number and locations of people who will require food aid in the following year is analysed. The difference between the requirements and the Government capacity is then the subject of various appeals. The consolidated pipeline of Government plus donated food is managed through the Ministry of Agriculture and Rural Development, and priorities, food ration quantities are set, with input from a committee made up of humanitarian actors and donors.

The activities of the main contributors to the relief supply chain are outlined below.

Government Pipeline j0#;0#= Government is currently importing food itself to be used in its strategic buffer. In addition it is } control measure. A 200,000 MT shipment for this purpose is expected early next year.

WFP Pipeline The WFP food pipeline enters Ethiopia via Djibouti Port in bulk vessels and currently provides around (Y&}+ WFP will provide the food from the central warehouses for collection or deliver to the distribution point. The capacity of the WFP supply chain is around 90,000 MT per month. This equates to around '( number of challenges with the supply chain. ;= _ } \ Waiting time for the vessels can go up to two to three weeks. ;= Demurrage cost for vessel immobilisation needs to be considered for calculation of total logistics cost. ;=&0#}JYY

Other Actors The other key player is USAID. They have set a parallel supply chain and were also expecting shipments of more than 200,000 MT at the start of 2009. The food would be distributed using a consortium of NGOs as distributing partners, in cooperation with the Government.

Grain imports are not suitable for multimodal transport dry port operations. Bulk ships deliver grain to bulk port facilities and can operate to a number of ports. Grain is taken from bulk stock and loaded in bags for direct delivery to the place of need. This can be anywhere in Ethiopia and will usually be required at short notice. There are sixty three 5,000 ton storage facilities throughout Ethiopia, from where grain can be distributed.

53 Few storage sites are located near the existing railway between Djibouti and Addis Ababa and none of the bags are needed to be loaded into containers, since there is no mechanical handling equipment at the warehouses. All loading and unloading is done by manual labour and due to the sporadic nature \ transport is problematic and forecasting becomes almost impossible.

As Ethiopian agricultural production grows, and more grain and staple products are produced in <* 0#;0#= +>YYYYY'( 0# j __;ZYYYYYj= beyond repair. There is thus no available bulk storage on the railway line in Addis Ababa.

Road Freight for Fertilizers 0!}} ports where bagging silos can be positioned. Such silos are mobile, so they can be moved to any port }ZY} planting season to save inventory cost and to achieve the best bulk price.

_+ from a wide variety of local raw materials, or through an increase in the quantity of 400,000 tonnes of bulk or intermediate bulk container systems are not viable so all bag handling is done by direct labour.

Transit Cargo Transit across Ethiopia, between Djibouti and southern Sudan, would seem to be an important future \

Road Freight for Other Imports The dry port operation in Addis Ababa therefore would have little or no relevance for the import and 0) and/or Dire Dawa areas may be more suitable, once customs approval is obtained.

Liquid Cargo Historical Trends *}'^^^XYYZ?^Y/YY 'X?^(YY#z}ZJY'^^^ JJ'JXYYZ;/X=

54 =">#_$%&&&@++;,

Liquid Bulk Cargo Year In '000 tons Growth in % Ton km in million Growth in % 1999 790.3 560.0 2000 (JZ' 9.5 577.4 3.1 2001 ((ZZ 2.4 Z(^Z 2.1 2002 974.1 10 600.0 '( 2003 ^JX( -1.2 J'>( 2.5 2004 1176.4 22.2 635.0 3.3 2005 'X?^( (( 661.6 4.2 2006 ''Y( 372 Average Annual Growth Rate (%) 8' ' Source: Ministry of Transport & Communications and Annual Statistical Bulletin 2004/2005.

Operations Fuel imports are unsuited to multimodal transport dry port operations. Road fuel tankers now collect some 10 percent of fuel imports from Sudan and the remainder from Djibouti. From Sudan gasoline _j"

The remaining fuel import is by sea, and bulk fuel tankers deliver to specially designed portside };=} + locations in Ethiopia. There is a limited stock in strategic storage, and essential supplies are delivered as near to the consumption centres as possible.

Fuel oil tankers operate in accordance with shippers dispatch schedule. This has prohibited them from making not more than two monthly trips to Djibouti and not more than one to Sudan. This shows that \ dispatch of vehicles.

cargoes has exposed truck operators to hinterland excess load penalties and associated delays in the processing of documents. Furthermore, the truck maintenance centres are inadequate, which is attributable to low level of infrastructure development.

The recent decision by Tana to withdraw from liquid bulk transport suggests that the industry has away from rapidly increasing cost without any return on capital employed.

Some Other Future Options for Liquid Cargo Transport Rail Fuel by rail tanker may be possible in future to Awash, where an existing bulk store is available as part of the strategic stock for Ethiopia. This store is situated close to the railway and could later be connected to it by a pipe distribution system.

55 Pipeline A direct pipeline may be possible in future for fuel to Awash, but annual tonnage between Djibouti and Awash alone would need to exceed 1 million tonnes to justify the expense of building such a pipeline. At present some of the import comes from Sudan and the Eritrean port of Assab may be used @ to justify a pipeline in this case.

Urban Cargo Urban cargo or goods movement refers to the transportation of goods, generally by trucks, but also by vans, pick ups and automobiles. The circulation of humans and pack animals carrying goods also constitutes urban goods movement. Urban goods movement, which involves the internal distribution of goods is a neglected area of service, as shippers also provide their own carriage. Although trucks ;__=

@} deliveries. The mix of urban and inter-urban functions, generally driven by complex business oriented economic, trade and logistical considerations are not well understood. There are also shortcomings in developing a perspective on the future of the movement of goods by road, air and rail. It seems that land use decisions do not adequately consider direct and indirect impact on the ability of businesses to move goods.

Information would be required on the physical distribution pattern of freight, so that the role of

The complexity inherent in the logistics associated with the movement of goods in all economic sectors, which in turn are linked to complex systems of local, regional and federal government decisions regarding facility location, modal choice, etc., remain a major challenge.

Additionally, the transportation of high-value, low-weight goods by air via Addis Ababa Bole International Airport is an important aspect of freight movement, and should be considered in detail.

Urban goods movement is considered as central to Addis Ababa's economic vitality and should therefore be included in the transport planning process in a comprehensive manner.

Interurban Domestic Road Freight Operations ++R remains something of an obstacle, particularly for freight transport in highland and rural areas. The average altitude is high in the central part of Ethiopia and the terrain is mountainous in parts. There is seasonal unbalanced demand and supply of freight.

Domestic road transport, as distinct from international transport, also needs to have segregated thinking and data collection in future.

?Y\ + 56 export competitiveness. In particular poorly maintained vehicles are often assigned onto rougher routes and vehicle operating costs are high.

_#[&(?}\_ for small yet independent trucking operators. Most associations have been formed from former “Ketena” members. The Associations are allowed to operate countrywide; however, many tend to 8}} the loose structure that binds membership and the in general weak human capital among members. +} provide limited services for their mindbenders and customers are restrictive and have monopolistic tendencies. They hinder the development of independent operators and most probably limit the operational advantages in belonging to an association.

Freight Transport Demand and Interurban Freight Transport Service Delivery Transport demand is a derived demand depending upon the demand for the commodities carried [} mainly by the elasticity of demand of the goods being transported and by the proportion of transport costs in the value of the delivered product. This is particularly important in Ethiopia where a large proportion of the freight movements are generally of low-value agricultural products.

+ commodities and manufactured goods. Not all goods transported from the port are consumed in Addis _ of the country. Industry is also another important user of transport. For instance, most factories j+\

j)}8} inland road transport does not seem to be a serious constraint to the movement of goods. Prices seem to be a function of the quality of the road and this increases only when triggered by external factors }

Urban Freight Operations The capital city, Addis Ababa, is a focus for urban goods distribution by road. In most cases goods movements within an urban area are likely to be made by road because the trip distance will be relatively short and for reasons of connectivity. For shipments into and out of the urban area there is more scope for some degree of modal choice but road is still by far the dominant mode. Road freight vehicles clearly play an important role in the functioning of cities, distributing goods to numerous locations that are vital to urban life. These vehicles undertake a number of types of urban movement, including shipments of goods into an urban area for consumption, shipments out of an urban area of goods produced and waste materials, and collection and delivery operations within the urban area. Many goods are also temporarily stored in warehouses and storerooms within the urban area prior to use or sale.

57 There are no reasons to suggest that the urban freight market is restrictive or the business for small }*}}

Urban Freight Transport Service Delivery In Addis Ababa mobility is low the city, which has close to three million people, most journeys are made on foot. Car ownership is (Y _ vehicle access and loading/ unloading in urban areas worsen and more attention will need to be paid in order to maintain service delivery levels.

_@&&;@&&= } @&& Addis Ababa.

@&& *\ j environmental credentials of such vehicles in terms of pollutant emissions, noise and other factors, it can be possible to allow them to access and make deliveries in the urban area at times when delivery vehicles are usually prohibited, including during the night.

The European Co-ordination Action on “BEST Urban Freight Solutions” (BESTUFS7= +&;j+=XYYYXYY( objective was to identify, describe and disseminate best practices, success criteria and bottlenecks of urban freight transport solutions. Although the research has been undertaken in European cities, z___ particular.

The Urban Freight Transport Problem Until the mid-1990s, researchers and policymakers paid relatively little attention to the increasingly severe freight transport problems facing urban areas. More recently this has changed, and there is growing interest in the logistics of collection and delivery services in town and city centres in particular.

On the one hand, urban areas must be attractive places to live, work, shop and spend leisure time. In these respects they face increasingly severe competition, notably from out-of-town retail parks. If effective manner.

Why Is Urban Freight Transport Important? In most cases goods movements within an urban area are likely to be made by road because the trip distance will be relatively short and for reasons of connectivity. For shipments into and out of the

q |YjG9GYj8#\#}#G|"\[YV Westminster) 58 urban area there is more scope for some degree of modal choice but road is still by far the dominant mode. Road freight vehicles clearly play an important role in the functioning of cities, distributing goods to numerous locations that are vital to urban life. These vehicles undertake a number of types of urban movement including shipments of goods into an urban area for consumption, shipments out of an urban area of goods produced and waste materials, and collection and delivery operations within the urban area. Many goods are also temporarily stored in warehouses and storerooms within the urban area prior to use or sale. j \\z inadequate road infrastructure, and poor driver behavior

Agencies Which Can Introduce Change in the Urban Freight System It is important to distinguish between the two different groups who are capable of implementing changes to the urban freight system, namely; urban authorities and fright transport companies.

Urban Authorities Changes occur through the introduction of policy measures that force or encourage companies to change their actions. Strategies available include improvements in signage and information provision, z developments, and road pricing.

Freight Transport Companies They tend to implement initiatives that will reduce the impact of their freight operations, because they } environmental stance. Instances of company-led initiatives include increasing the vehicle load factor through the consolidation of urban freight, making deliveries before or after normal freight delivery in-cab communications systems, and improvements in collection and delivery systems. Some of these their operations, and some involve change in the supply chain organisation.

Main Research Findings Introduction There are three focal areas in urban freight operations namely: Goods vehicle access and loading/unloading in urban areas; Last mile solutions; and Urban Consolidation Centres.

Goods Vehicles Access and Loading in Urban Areas The following table shows approaches to bring about different goods vehicle access and loading objectives in urban areas.

59 Table 3.3 Good Vehicle Access and Loading Objectives in Urban Areas

Objectives Approaches available Gaining freight industry support for freight strategies and initiatives &Freight transport partnerships

Improving journey time reliability of goods vehicles &Telematics for urban goods transport &Signing &Urban freight information and maps &Road pricing &Allowing night deliveries &Lorry lanes or no car lanes Assisting the journey of goods vehicle drivers and reducing goods &Telematics for urban goods transport vehicle trips and kilometres &Signing &Lorry routes &$ &Urban freight information and maps &Urban Consolidation Centres Assisting freight transport companies at the point of delivering and &Providing on-street loading bays collection &q_;+[#= &Urban consolidation centres

Reducing environmental impacts and the risk of accidents involving &~ goods vehicles tions &Time regulations for goods vehicle access and loading &Allowing night deliveries &+ &Lorry lanes &Infrastructure improvements &Encourage use of environmentally-friendly vehicles &Enforcement

Last Mile Solutions O[ P ; O P= ; M!X&&X&= television shopping companies, and deliveries from retail outlets. 1. Deliveries may be made to: # R # R # Reception/delivery boxes # Collection points # Locker banks 2. Most deliveries are of: # #};}&= # [;= # Food

60 Compared to “traditional” distribution channels there are two fundamental characteristics of “last mile” approaches: most approaches cut out the middleman and instead rely on direct business contact with consumers; but, more importantly, involve developing a supply chain that allows each consumer $ the customer can have a substantial impact on product quality and price.

Urban Consolidation Centres )@ &&;@&&=%}@&& their costs and reduce their control of their supply chains.

Although much thinking on UCCs focuses on retail activities, they also have a potential role in other

An Urban Consolidation Centre offers freight transport companies the opportunity to deliver goods }

@&& *\ j environmental credentials of such vehicles in terms of pollutant emissions, noise and other factors it can be possible to allow them to access and make deliveries in the urban area at times when delivery vehicles are usually prohibited, including during the night.

Road Transport Maintenance Planning and Facilities \@ vehicle maintenance has not received the priority it has deserved, and maintenance standards and \ perform properly over its service lives.

Structured interviews administered with freight transport operators evidenced that maintenance also problems of genuine spare parts. Preventive maintenance, in which vehicles are serviced in order to prevent failure while in use, is not widely practiced. In general, maintenance is undertaken only when failures are observed. Inspections are not conveniently scheduled or on a regular basis. The regulations with respect to safety considerations are not effectively enforced, and deferred preventive maintenance has become costly, with rapidly escalating expenditures. Facilities for heavy maintenance are lacking, and the existing ones are limited to established dealers, public enterprises and regional development associations owned for-hire operators.

Additionally, there is high concentration of maintenance facilities in Addis Ababa and its environs, while such facilities are lacking in the rest of the country, particularly in the small towns and rural parts of major transport corridors.

Road Freight Terminals Concerning urban freight movement and cargo terminals, centres equipped with loading and unloading facilities and adequate stacking area hardly exist, except at the Kaliti customs clearing station. The 61 absence of well-established cargo terminals has compelled truck operators to load and discharge goods at individual warehouses. Most of these warehouses are not easily accessible and lack equipment and trained labour. Besides these problems, vehicles operating within the city of Addis Ababa have established certain locations within the city where clearing and distribution activities are carried [_#);$=_ <}>@ Transport Study and Preparation of Pilot Project for Addis Ababa have recommended the location of Freight Handling Complexes at strategic locations.

In general there is an absence of and unbalanced distribution of terminals and facilities especially } garages and warehouses in Addis Ababa and Adama.

Currently there are no road freight transport terminals available for truck operators. The lack of these facilities at strategic production and distribution centres is another area of activity for private warehousing and stacking areas, equipped with loading and unloading facilities are needed for cargo booking, consolidation and effective handling, thereby leading to an increase in truck productivity. ! } regulated by pre-set standards can contribute to an improved quality of service and can reduce cargo damage, pilferage and loss. Modern terminal operations that make effective use of Information ;}= evolution, from a simple trucking business to a full logistics service provider, involving a chain of activities such as customs clearance, inspection, documentation, consolidation, transport, inter-modal transshipment, storage, packaging and door-to-door product distribution by a third party can ease the shippers burden. As conditions become favorable and the economy grows, logistics management necessary regulatory provisions.

Warehousing There is a well established and long standing food distribution warehouse infrastructure in Ethiopia. These have historically belonged to the Government and been used by distributing agencies free of % fee. A warehouse capacity assessment in 2006 estimated at 2,027,991.4 MT warehousing capacity all over Ethiopia. Private companies account for 200,234 MT, NGOs for 243,974 MT and the rest is with government agencies.

Freight Transport Vehicle Productivity and Costs Introduction The different transport cost components derived from the National Transport Master Plan Final Report are presented here. Comparative Road and Rail transport costs are also presented. The level of )#O P0XYY^

62 Road Vehicle Operating Costs Vehicle operating costs are one of the key components in road project appraisal or evaluation at _~8&;~8&= \XYXZ R terms of the VOC savings between the with and without project cases.

_ deterioration, various vehicles operating cost relationships have been derived from extensive research carried out over the past 30 years. This research effort resulted in the development of detailed ; }= *!}R)%+ commonly used in donor funded road feasibility studies.

The principal vehicle operating cost elements in the HDM model distinguish between three distinct data components, these being: Basic vehicle characteristics; ~ +

* collected through survey work undertaken within Addis Ababa, together with reference to various studies carried out for ERA in recent years. The survey work entailed interviews with the major vehicle and tyre dealers as well as with the larger bus and freight haulage companies and enterprises. The survey results have been analysed, collated and in cases where multiple information for any one vehicle type was obtained, averaged for each of the vehicle types as appropriate.

Ethiopian customs tariffs, in the form of duties on imported goods, are: 35 percent of the CIF value for motor cars, minibuses and pick-ups/utility vehicles; 'Y&*0;'Z=}; = Vehicle spare parts attract an import duty of 20 percent and chassis with engine 10 percent.

For labour — maintenance labour, driver and crew costs — )0+ conversion factors for skilled and unskilled labour have been applied.

! ~8& information that is required relates to the value of time for passenger travel and for cargo transport. The price of fuel is also required.

Value of Passenger Travel Time In the case of travel time values, several approaches are possible. The approach using a countrywide !Y(';@$YY^=OP value without distinguishing between income groups. This countrywide value is based on the average expenditure per person as a proxy for income, calculated from the Household, Income, Consumption +<;*&+='^^^zXYYYXYYZzJ 63 \;!'J?J=} ;XY(Y=

_&$_;&$_=M/'> [0$;[0$=)XYYZM} !'Y>;@$Y'X=&$_ <XYY/z>;!J(=XYYZzJ

would be Birr 1.22 ;@$Y'>=

Excluding unpaid family workers, that is, taking only those persons designated as being employed in ;'>?= !XX';@$YXZ=

The differentials between the average equity-based expenditure per person and total employment ;}=X' X?OP 8'Z[0$'/ being self-employed. Within this class, there very likely exist wide differentials in earning power between small-scale, informal stall keepers on the one hand and larger-scale entrepreneurs on the other.

From the HICE data, expenditure on transport was extremely low in rural households (0.9 percent of =>X@< proxy for income, average per capita income in 2000 was Birr 2,401 in urban households and Birr 1,244 in rural households, indicating a minimum differential of 1.93. National per capita average <!'>'X;!'J?JXYYJ=

Estimating the magnitude of income differentials is necessary in order to apply different values of time between users of public passenger transport and users of private cars. Whilst the HICE data gives the distribution of households by domestic expenditure group, the issue is where to apply the income distinction for this purpose. Given that medium to longer distance bus services generally operate between towns and the larger cities, it is reasonable to assume that such users are largely urban dwellers and are already higher up the income scale. The reference average per capita income ;<}=@ <<<!>Z(? 2006.

Examination of the data used in recent studies indicates that the car: bus value of time differential ranges from around 2.9 to 3.2 up to 7.7 and as much as in excess of 13.

Taking into account all of the above, and for purposes of the NTMP modal split and economic appraisal analyses, an income differential of 6.57 has been adopted and the following values of time have therefore been assumed: #;=\!Y(' #;=\!Z/>

Value of Cargo Delay Time In the case of freight transport, the value of time refers to the value of the goods in transit on a per 08;8= 64 the value per tonne hour was determined with reference to the annual export, import and industry values of each commodity using 2004/5 data. This is shown in Table 3.4.

In terms of expressing the value of cargo delay time per vehicle hour, this would be given by the value of the main cargo carried multiplied by the average load carried, as recorded in the OD surveys. For economic evaluation purposes, the average cargo delay value (of Birr 0.3037 per tonne work hour, or @$YY/>^=}

'_?`$++'{;,

Industry Export Import Value/ Delay value/tonne value value value tonne work hour Commodity Tonnes Coffee, tea 161,343 2,922 '(''Y YZ( Other agricultural products 1,202,793 3,146 2,616 YY( Perishable food 611,707 '/( 226 '(( Livestock 'Y/^Y( 114 1,097 0.04 Processed food/drink ?Z'(X( 3,996 5,315 0.17 Machinery/equipment 'ZJZZ( 5,236 33,444 1.07 Construction materials 1,521,954 2,531 1,663 0.05 8;= '?YY('^ ZX(/ 3,106 0.10 Household consumables 170,215 1,351 7,937 0.25 Notes: 'Y;<=};'X} XJY}= # | ~~< [8 % V !@=] ~!Z [8 \% \8?V!]#%##j8!@==@H estimates.

Fuel Prices The structural composition of vehicle fuel retail prices is given in Table 3.5 for regular gasoline ;=

;W5{$_++Z,

Motor Gasoline Regular Component (Benzene / Petrol ) (MGR) Automotive Diesel Oil Ex-Sudan Ex-Djibouti (ADO) 1. Price at Metema / Djibouti port >(>(^ =

Table 3.6 Countrywide Retail Pump Prices in Birr Per Litre (December 2006)

City / Town Region Gasoline Diesel Nekemte 8;= (/X Hq ZZ( !Z Asosa !j (^Y q 5.52 Bahir Dar Amhara (XX 5.50 Addis Ababa ('? H=_ 5.44 !q_ __;0XYY^= 7.47 7.13

q\*q}___ August. They have been adjusted upward on the basis of the percentage increase for Addis Ababa. V

taxes and subsidies, are therefore 0.69 and 1.04 respectively. For lubricants, the prevailing retail price !X?$&0YJY }'Y;)0+RAppraisal G99$=

Fuel prices are now being adjusted every month by MoTI, depending on import prices. The current ;0XYY^=?>??'/z __XYY^(/??^'z

XYY^_ Ababa gas stations are nearly 10 percent lower than 2006 prices at same gas stations. It appears that the diesel /gas differential has however disappeared since, even with the current lower price of a ;/Y=XYYJ

The price of diesel at the pump in Addis Ababa has notably declined by 10 percent between February and January 2009. It is not clear whether the full impact of the dramatic decline in oil prices, from USD 150-USD 35 per barrel, is still being worked through and is progressively being passed back to the consumer in Ethiopia, or whether there is some lag, or perhaps the tax-take on diesel fuel has been adjusted upwards. More research is therefore suggested in this area and the pump price of diesel in Addis Ababa should in particular be closely monitored since this element is critical to the performance of the road transport industry.

Financial Vehicle Operating Costs – Trucks The Transport Master Plan study derived Truck Transport Operating Costs as indicated in Table 3.7.

66 8]#W_5J$,

2-axle medium 2-axle medium to Multi-axle truck- Terrain / road type and condition truck heavy truck 3-axle truck trailer (Isuzu NPR) (Isuzu FSR) Flat terrain, good paved road 0.93 0.67 Y(' Y(/ Flat terrain, fair gravel road 1.20 0.94 1.14 1.19 Mountainous terrain, good paved road 1.00 Y(Y 1.00 1.09 Mountainous terrain, fair gravel road 1.46 1.23 1.53 1.66

No\_;8=)XYYJ/ZX<} ^X/<}'>Y};}= Source: Consultant’s estimates.

&}\;_}=XYYJJX>YY kms. The Transport Master Plan assumed an average annual productivity of 72,000-75,000 kms p.a. for Medium to Heavy trucks.

&R <}__ }/(less than half the estimates derived from the vehicle operating cost calculations, which is very likely due to under- calculation of overheads and the application of historic rather than replacement cost depreciation.

Table 3.8 Comet Truck Break-even Operating Costs*, Birr 2006

Fixed costs Birr Variable costs Birr Salary per driver per month 996 Spare parts per km per truck 0.91 Salary per driver per year 11,450 Average annual km 62,400 Vehicle registration fee 500 Spare parts cost per truck per year ZJ?(> Insurance premium 7,350 0;}= 2.1 Depreciation Z?Y(> Pump price per litre 5.44 Subtotal Fixed costs 8Z5\' Fuel cost per truck per year 161,646 ;}= Y(^ Tyre costs per truck per year 55,536 Fixed and variable costs \&5+;+ Driver per diem 90 Administration costs, estimate 3% Work days per month 21 Administration costs 11,671 Driver per diem per truck per year XXJ(Y Total operating costs per truck '++58% Driver assistant salary per trip 245 Round trips per month 3 Average load factor 60% Driver assistant per truck per year ((XY Average payload (tonnes) 30 Djibouti port entrance fee 10 Tonne km 1,123,200 Port entrance cost per truck per year 360 Djibouti Road Fund per trip 190 Break-even cost per tonne-km, Birr +;8 Road Fund cost per truck per year J(>Y Break-even cost per tonne-km, USD ++'% Subtotal variable costs 312,666 q\ 0)};Z<=} %8#8>X%t.

67 Road User Costs Introduction Past studies have shown that heavy vehicles cause more wear and tear on the roads, and hence cause higher marginal road maintenance costs than they pay in taxation and user charges. Thus they are

Situation in 2006 In 2006 the retail price of diesel oil was 6.44 birr/litre in Addis Ababa whereas it was 5.44 birr/litre, including distributor margins. VAT is payable on diesel fuel, as is the road fund levy and a municipal <%0!'z \< but it is likely that its resources will be depleted before long. Thus diesel-powered vehicles and heavy }} being travelled. The axle load management study attributed 96 percent of variable road maintenance }J( overall. The study proposed a vehicle circulation license fee of USD 55/axle for this type of vehicle.

In economic terms, if a heavy vehicle creates a cost for the rest of society (a road maintenance cost, =}8 be social or developmental reasons for a subsidy. But in such cases the subsidy should be transparent _XY+z;' <??=' subsidy to diesel fuel is costing the country some 22 million USD/year.

Another issue is that over 90 percent of the Road Fund income comes from the value-added tax on ;= and overloading fees as envisaged when the Road Fund was set up. This is effectively another subsidy to vehicle users, as VAT is paid on other goods and services and would normally go to the general Government budget. Non-road-users of fuel do, of course, also pay VAT, which goes into the Road Fund. The Road Fund has in fact not generated very much additional income for road maintenance purposes, over and above the VAT which would be collected anyway.

Present Road User Charges This section describes the current taxes that road users pay. These taxes also include general taxation, such as VAT and import duties, as some of these contribute directly to the revenue of the Road Fund.

Import Duties Motor vehicles for transport of persons are subject to a duty rate of 35 percent, with the exception of vehicles carrying 15 or more persons, which are subject to a reduced duty rate of 10 percent. Motor vehicles for transport of goods are subject to a duty rate of 35 percent if the carrying capacity does not exceed 1,500 kg and 10 percent if it exceeds 1,500 kg. Motorcycles are subject to a 30 percent duty, and bicycles to a 20 percent duty.

The duty rates for specialist motor vehicles are in general higher than the above rates if the vehicle is considered luxurious, and lower if it serves a special purpose (for instance, concrete lorries are only Z=

68 Excise Taxes The excise tax is an additional tax on luxury items. Currently, it applies to motor vehicles designed for <;'Y =<*'/YY cm3</Y'/YY'(YY3<JY'(YY3 the tax 'YY<</^

Table 3.9 Import Duties and Excise Taxes on Vehicles

Cars Motorcycles Bicycles <1,300 cm3 1,300-1,800 cm3 >1,800 cm3 Import duty 35% 35% 35% 30% 20% Excise tax 30% 60% 100% 0% 0% Buses Small trucks Large trucks Import duty 10% 35% 10% Excise tax 0% 100% 0%

For vehicles driven by electric accumulators, as well as other vehicles designed for the transport of ;<=<</Y

Fuel Taxes Taxes on fuel currently consist of excise duty, VAT, municipality tax, a levy for the Road Fund, and a $0/'Y shows the different steps in the calculation of the taxes ;=0<<</Y &*0;='Z~_ on the total of the CIF value and the excise tax. Diesel oil is subject to considerably lower taxation as <<;%0=_<< $0<%0.

Table 3.10 Fuel Retail Price Structure in Birr Per Litre (August 2006)

Motor Gasoline Regular (MGR) (Benzene/ Automotive Diesel Oil Components Petrol) (ADO) Ex-Sudan Ex-Djibouti 1. Price at Metema / Djibouti Port >(>(^ =

Freight Tariffs < < }+< <8j)} __

<< for the carriage of road freight are no longer controlled in the dry cargo sector, although on key routes _8 \<}

70 W_>Y#$++;{++Z, Tariff rates for road freight transport are shown in Table 3.11.

%%W_>5++;{Z$>%&&8,

Origin Destination Birr/tonne km Addis Ababa Hawasa 0.37 Bale Robe 0.46 Debre Markos 0.62 Dessie 0.52 Djibouti Y'( Dire Dawa 0.41 Gonder 0.66 Jimma 0.64 Mekele 0.53 Metu YZ( Nekemte 0.53 Hawasa Addis Ababa 0.34 Bale Robe 0.31 Debre Markos Y>( Dessie 0.30 Djibouti 0.46 Dire Dawa 0.39 Gonder 0.47 Jimma 0.49 Mekele 0.43 Metu 0.42 Nekemte Y/( Note: Freight tariff data from TA surveys.

W_>Y#$++&, Some representative tariffs for 2009 freight from Comet are as follows: Djibouti- Addis Ababa: Birr 65/ quintal or Birr 0.70 per ton-km __M\!/Zz!Y/(}

Current minimum price charged as per private freight transport operators are as follows: __M\!/Zz;YJ?z}= M__\!>Yz;Y??z}=

These freight rates have risen considerably over the past three years. For instance the rate per tonne- km has risen from 0.42- 0.46 per tonne-km in 2005/2006 to 0.70 per tonne-km in 2009.

Long Haul Routes The rate per tonne-km from Djibouti to Addis Ababa has risen from 0.42-0.46 per tonne-km in XYYZzXYYJY?Y!}*;<=} __Y'>Y'(}XYYZzXYYJY/(! tonne-km in 2009.

71 Short Haul Routes The rate per tonne-km from Dire Dawa to Addis Ababa has risen from 0.36-0.39 per tonne-km in 2005/2006 to 0.77 Birr per tonne-km in 2009. In the reverse direction, the rate per tonne-km from __Y/((Y>'}XYYZzXYYJYJ?! tonne-km in 2009.

A common practice followed by many, if not all commercial road transport operators, is over-loading or over-charging or both above the legal limit. Such illicit behavior of regional truck operators in areas }<< convenience. Operators generally state that the market cannot serve as a means to allocate resources

W_>Y#$++;{++Z, _<) and Industry as a component of the controlled price of fuel. Fuel transporters are normally directly engaged by the oil companies. There is, for instance, a designated transport allowance of Birr 0.33 __ Y(X^X?}!Y>/} It is thus very similar to the dry cargo import rate quoted by TA for 2005, though this may mean in practice that the rate is less favorable than the corresponding dry cargo rate, since there is no prospect of a back-load for fuel.

W_>Y#$++&, The Association of Ethiopian Petroleum Transporters recently submitted a letter to the Ministry of Trade and Industry urging a three-fold rate adjustment in rates, from 0.25 birr to 0.75 birr per tonne- km. At the same time the Petroleum Dealers Association wrote a letter to Oil Companies, the Ministry *+ $_} introduced E-95 ethanol blended fuel distribution and take appropriate measures.

Structural Issues Affecting Transport Prices Introduction For freight haulage, the tariffs set out by the Transport Authority suggest that, in general, operating ;= vehicle roadworthiness standards.

As a land-locked country with a large and relatively sparsely populated land area, Ethiopia faces } }+< Value. For instance, in a study of the garment trade in 2004 it was found that transport costs formed X(~_#0< '(*XYY> transport costs formed some 10 percent of the value of one ton of coffee.

support the needs of exporters. Since Ethiopia imports so much more than it exports, there is plenty of back haul capacity and most trucks travel empty to the port. 72 Major Pricing Issues: The Impact of Food Aid and Fertilizer Imports on Transport Costs 0_ \0+ faces massive food shortages and is forced to depend upon imports of food aid. Secondly, the import j+R road haulage.

The transport industry is affected by the price peak periods caused by bunched arrival of imports j+R*} waiting trucks is systematically preferred by the truckers. The import peak also often coincides with } prices have jumped from over two to three times average prices, whilst in non-peak time prices have dropped by a third. The WFP is a price market maker, since it is by far one of the largest importers in Ethiopia.

_<) and Industry as a component of the controlled price of fuel. Fuel transporters are normally directly engaged by the oil companies.

their non-peak operations by price rises during peak delivery times. It is clear that better coordination j+ } __&&$_0

Present Relationship between Fares and Operating Costs The detailed work on Vehicle Operating costs elaborated by the Transport Master Plan Team estimated };!XYYJ=+

The Association of Ethiopian Petroleum Transporters has applied to the Ministry of Trade and Industry ;)*=YXZY?Z km.

};@$/Zz= At current freight rates and estimates of Vehicle Operating Costs, this Review Team @ the conclusion made by the Transport Master Plan Consultant that: For freight haulage, the tariffs set out by the Transport Authority suggest that, in general, operating costs are not being fully recovered on ##%>#%"V# and replacement.

73 In Ethiopia, where shippers move irregular consignments, freight forwarders could promote <

Vehicle Overloading Introduction For improved road safety, fair competition, lower transport operating cost and lower road maintenance cost reasons it is essential to ensure that gross weight and axle weight overloading of all commercial vehicles is eliminated as far as possible. The current control system where such vehicles have to visit all weigh stations on route causes excessive delays, as all commercial vehicles have to form a queue on the access road and main road, waiting to get into the weigh station and on to the weighbridge. A 'YY} are small, so in practice the exercise has little value.

Better control can be established by a better understanding between Government and industry by }OP between the TA and major operators, and random testing by the introduction of addition mobile weighbridge equipment operated by trusted inspectors in the Transport Authority. This would work on the main route to and from Djibouti but not be as effective on domestic short movements. There is also the problem of illiteracy with some drivers, but this is most likely in local domestic movements. Control will be more effective if we treat the different types of vehicle operation as separate entities as discussed in the main document.

(Y XY(Y\XY is usually the case.

Average load factors appear low. The larger vehicles of 4+ axles experience lower load factors, caused mainly by the export/ import imbalance.

Table 3.12 Loading of Goods Vehicles (2006) Trucks, Trucks, Trucks (2-axles) (3-axles) $', _;= 5.9 16.4 X(> _;= 5.0 14.3 25.5 #;= J(/ 57.1 56.3 _;= 3.4 (X 14.4 [;= (Z (? 90 [;= Z( 50 51 Source: Consultant’s survey.

8 +%_< and mobile weighbridges, but it is stated in the Eight-Year Review of the Road Sector Development #;%$#=+ \ can have an adverse impact on road safety, and secondly because excessive loads can cause great premature damage to roads designed and constructed under the assumption that there will be adequate control of the problem.

74 Extent of Overloading The overall extent of overloading decreased from 2003 to 2004 after the introduction of the penalty of \<)XYY>

The highest overloading of rear axles have been recorded at Sululta 71 percent; 65 percent at Alemgena and 62 percent at Jimma station. On the other hand the least overloading are recorded at Kombolcha 20 percent, Awash 35 percent and Modjo 43 percent.

Most of the vehicles recorded as overloaded at Sululta, Alemgena and Jimma stations are two-axle ;}><XX<<<= most of the vehicles recorded at Kombolcha, Awash and Modjo are with multiple axles (often 6 x 4 J<X<=

<<;><X= <}% different stations show that the fewer the number of axles, the higher the chance of individual axles being overloaded. This is to be expected.

Loads can cause great premature damage to roads designed and constructed under the assumption _< _M _M__ years ago. This may be attributed to the passage of heavy trucks at low speed on the steep gradients. +R %$#;%$#=} of premature road failure, attributable largely to overloading of trucks, which have occurred at great cost to the community and to the economy in most other countries of eastern and southern Africa. As Ethiopia moves to rehabilitate and expand its main road network, it simply cannot afford to allow avoidable cases of premature road failure to occur.

The Impact of the Planned Increase of Containerization of Cargo to the Axle Load The increasing movement of goods in containers will have implications for axle-load management. Average gross container weights are in the region of 16 tonnes and 29 tonnes for 20 ft and 40 ft boxes respectively. Containers at these weights can be carried without overloading. 20 ft boxes can be carried on rigid trucks and drawbar trailers but legally only on the larger vehicles which have twin rear axles.

In practice there are wide variations with weights of a 20 ft box exceeding 20 tonnes and a 40 ft box perhaps exceeding 40 tonnes. At these extremes there will be overloading implications and }< vehicles.

With the re-establishment of rail transport for containers from Djibouti some freight forwarders will

75 Summary Several issues must be borne in mind, including the following: = Although Ethiopia is a member of COMESA, it has not yet formally adopted the COMESA norms for axle loads and gross vehicle weights. This should not prove a problem as far as axle loads are concerned, since both Ethiopia and COMESA have already adopted <'Y are different. It should be noted also that, on economic grounds, the axle load study performed by WSP and TRL in 2000 recommended raising of the permissible axle load ''Z;+@= 0&8)+$_ be achieved as soon as possible, so as to prepare for the time when vehicles from these countries will more regularly cross borders and travel over the Ethiopian road network;8 = Once any revision of vehicle loading norms is effected in Ethiopia, road and bridge design standards must also be amended if necessary so that roads will be constructed to ;<= =The highest priority must be given to effective enforcement of vehicle weight and axle load restrictions. This will mean education of truck operators, drivers, weighbridge attempts at evasion by any of these parties. Where evasion is detected, it must be punished \ users, of excessive road deterioration caused by overloading.

The Potential for Road-Rail Intermodal Transport Road and rail are the two transport modes that can compliment, and at the same time compete with }} following features that distinguish rail from road transport:- The infrastructure cost of railway is much higher than road. But rail operating costs are relatively low. The minimum volume of cargo required to justify railway transport investment is high, Rail is preferable for long haul freight operations and the carriage of low-value bulk goods. Road is suitable for break-bulk goods and for relatively short-haul operations. Since railways only serve the main production and distribution centres, door-to-door service in railway transport necessarily involves truck and intermediate handling costs. Thus, depending on the route distance, a shipper can decide upon the modal choice. If the route is relatively short and the shipper feels the cost of extra handling exceeds the differential between road and rail freight rates, movement of cargo from origin to destination entirely by road is advantageous. For long-haul routes, in which case the cost of handling is lower than the difference in the freights rate, rail is an appropriate mode of transport.

Usually a detailed analysis of the nature of demand and of the structure of costs is required to determine the comparative advantages of road and rail transport for any particular freight movement. 0 + +R over the past decade has raised the demand for freight transport, especially for imports. There is no apparent trucking supply constraint. In the longer-term however, as the business becomes less 8|##>\#V8*< 76 }+ <

@R and where the structural problems of foreign trade may not change its current pattern in the short-run, _ could offer is an inter-modal piggyback service; a system in which a truck with its trailer or a semi trailer with tractor can be transported on a railway wagon. One advantage of such a system on the Djibouti route or for any sea port having reliable road and rail links is to enable trucks to save part of their variable cost while travelling empty for the return load; at the same time it can reduce empty }$ two modes jointly provide for the import trade can enable direct delivery of goods from ship to rail } truck operator, the railway company, the importer and the economy as a whole.

Current Status of Commercialization &; <=8;!}$= be slated for privatisation. Current actions taken include the disbanding of bulk fuel transport associations that operate in a way that has hampered widespread distribution of fuel throughout the country.

W_>]W$++Z@+%;, Introduction The future patterns of economic performance and population must generally be derived before future * } freight transport must be made well in advance of the actual provision of supply.

What is required for the Review Study is to give some idea of the magnitude of the likely evolution of _ growth with estimates produced by other similar and recent studies.

*}\ trucking technology and expansion, is required to match with the pattern of change in the nature of demand. Furthermore, measures to restrict import of used vehicles and replacement with obsolete trucks will tend to reverse the present distribution of old trucks. It is expected that there will be a shift towards modern multi-axle trucks, which currently account for a relatively low proportion of the }\*<} to be sustainable increase in economic activity.

Considering the strong positive performance of the Ethiopian economy in recent years and taking into account that it is in the earlier stages of transition to a full market economy, the increase in road \

77 Fleet Forecasts }\XYY(Z>YYYOPJY the total [c. 37, 000 vehicles], with “own account” vehicles making up the remainder.

q)#$;$ $=/'/

Table 3.13 The National Transport Master Plan Study Truck Forecasts

Transport Master Plan Study Truck Fleet Growth p.a. Up to 2012 2013- 2027 $ $ 7.0% Z;| Urban Development Scenario 9.0% (Z

%$R}; =\ '= 0 } \ XYY( XY'? accurate; X= [ /= _j%;j%=};}= >= _ \ approximately constant over time; Z= Freight transport forecasts by type of cargo and growth rate by type of ownership and appropriate categories is not recommended; and J= The freight transport forecasts assume no change in the import/export imbalance or the ratio <

%']"#W

Review Study Truck Fleet Growth p.a. Up to 2012 2013- 2027 Base Case Scenario 7.0% 6.0%

*}\J? 2009 to 2027.

\XY'?'YYYYYOP JY¢J(YYY£*}\ <\XYX?'(YYYYO PJY¢'XYYYY£*}\ will thereafter have almost doubled between 2017 and 2027.

*q)#}\ enough to forecast tonnages and ton-kms for 2017. One of the key anomalies that skews the result is that the grain import requirements does not follow time series data, they are driven by weather ;= for the purpose of the recommendations, such details are most probably not required. In addition, if a concessionaire invests substantially in the Djibouti- Addis Ababa Railway line, there could be some lessening of truck growth rates in the period 2015 +, when a proportion of the forecast corridor truck

78 Chapter Four

Road Passenger Transport In the road passenger transport sub-sector services are provided ranging from urban services, ;=* ;=

Many of Ethiopia's rural villages are not yet connected with all - weather roads to market centres and other basic facilities and services. Most public transit technologies are uneconomical to operate in a rural environment, where the demand for mobility is generally quite low. Demand there would not normally justify public passenger services such as conventional or even minibuses. In addition, in such areas there are no well engineered roads so that the operation of conventional buses, minibuses and similar other types of public commercial transport systems could take place.

The option of using more appropriate means of transport such as Intermediate Means of Transport ;*)R= needs in rural Ethiopia. The rural transportation problems and needs are closely correlated with +%#;+%#= +%_Woreda *$;*#=* consider the population density.

At present the main population appears to inhabit the main corridors which, in theory, should be well suited to intercity bus operations.

)<} of produce as well as people is important. Their seating is much more cramped than for the minibuses, and the carriage of produce often affects odor and cleanliness. They are also generally older than the minibuses, having been developed locally to meet emerging demand at a time when minibus imports were not possible.

For the purposes of focusing on the study of the road passenger industry in Ethiopia it is helpful to concentrate on two main areas, namely: *;= Urban passenger operations.

79 This study includes an appraisal of both Interurban and Urban passenger transport services. The latter includes conventional bus services, minibus services and taxi services. The former is restricted to the

Addis Ababa is a focus for urban bus and taxi operations. Urban Passenger Transport in Addis Ababa ! only brief reference is made below to road passenger transport developments in one other city in Ethiopia. In Dire Dawa an “Urban Scope Transportation Study”, performed for Dire Dawa Council by the Physical and Spatial Planning Team, reports that a municipal bus company operates three buses (YY) municipality is provided by 700 minibuses, small taxis and three-wheeler motor rickshaws, carrying a total of 130,000 passengers per day.

There are several current, topical and major studies of urban transport operations in Addis Ababa9 that contribute considerably to urban passenger transport policy development. Importantly, because of these respected data sources, the present study does not expend substantial study resources to investigating road transport development in these areas; rather it borrows and builds upon past work. (Furthermore comparative analyses are provided with urban passenger transport operations in other _}=

+_''}0j United Kingdom combined. It consists of rugged terrain and the fourth highest mountain peak, Ras ;>JXY=_XYYYXY }>YYY\ However for high value passengers, particular on longer trips to the Northern, Eastern, and Western/ Southern regions of Ethiopia, domestic air travel remains the only realistic means of travel, due to considerable time savings versus road travel. It is expected that intercity bus passengers represent ;= +R passenger transport in rural areas.

Passenger Transport Fleet Utilisation One of the performance measures in commercial road transportation is vehicle productivity, in terms of kilometres covered in a year, month and week. Kilometres covered by a vehicle or in aggregate for \z and distribution of demand.

Throughout Africa, the limited evidence available indicates that average distances of around 190 kilometers per day are typical for large buses and minibuses alike. In some cities, however, the average distances covered by large buses and minibus differ widely. In Addis Ababa, for example, minibuses '(Y}z'/(}z

Z Such as, inter alia, PPIAF, Study of Urban Public Transport Conditions in Addis Ababa, Ethiopia IBIS Transport Consultants Ltd., March 2005.

80 8 terminal time and increase frequency of trips. In the case of interregional conventional buses, the @

As the schedule of interregional conventional bus service is controlled, their operating time is restricted to 15 days a month, on average round trip distance of 1,250 kms. On the other hand, regional buses of up to 44 seat capacity have 20 average operating days in a month. As a result, cost per seat of a 44-seater bus is estimated to be lower than that for conventional buses.

The average annual performance for 11-seat minibuses is about 36,600 kms/year and 60,000 kms/ year for 24 to 62 seat capacity buses. This productivity is generally low when compared with estimated 'YYYYY}*?YYYY

& *\ of vehicle operating costs and improvements in revenue-kilometres. It should be stressed that not only low vehicle productivity, but low average load factor for scheduled long distance conventional buses has contributed to low revenue-kilometres.

Urban Transport Introduction The main cities of Ethiopia are Addis Ababa, with some 3 million inhabitants, and Dire Dawa, with nearly 300,000. Urban mobility is very low. Even in Addis Ababa, most journeys are made on foot. #(Y

+X?;XYY?=__ extends over 540 square kms, at an altitude of 2,500 meters a.s.l. The city government holds greater power than do most other cities in Africa. The urban areas need city transport at an appropriate scale for the transport demand. It is very clear that Addis Ababa should be the focus of improvement in urban public transport services.

Addis Ababa — Background Situation Buses __\/ZY_& This is unable to meet the demand and is supplemented by private minibus services. There are also

Data showing the services of Anbassa City Bus Enterprise from 1991 to 2001/2 is provided in Table 4.1.

81 '%]Enterprise (1991-2001/2)

Addis Ababa Jimma Year Passenger in (’000) Distance traveled in Passenger in Distance traveled in (million) kms (’000) (million) kms 1991/92 'Y(>?^ (Z^( 2,091 290 1992/93 'YX('J (?>/ 1,674 313 1993/94 ^(X// (/^Y '(Y? 355 1994/95 ?>Z(? Z(>? 1,761 320 1995/96 Z/(^Y 4,646 '/(> 262 1996/97 100,936 ((ZZ 1,265 306 '^^?z^( 162,764 15,337 1,396 322 '^^(z^^ 190,394 '(/(? 1,312 305 1999/0 XY(X>/ 19,642 1,230 311 2000/1 XYY/(> '((Z/ ''Y( 250 2001/2 '(JYJZ '(^'' 1,407 232

XYYYXYYJ the shortages of public transport in the city. The responsibility was subsequently given to the Ministry &;)&=0_;0_=

Accordingly, Anbassa City Bus Enterprise signed an agreement with the HIGER in June 2006 on behalf of the Authority for the procurement of the 500 buses. Only 90 of the buses have arrived in +#_&!+R ^Y&

The government, through Anbassa City Bus Enterprise, has procured the 25-seat capacity buses at a cost of 13.2 million US dollar from HIGER Bus Company Ltd. The agreement also obliges the company to provide maintenance services. Anbassa Buses decided to sub-contract it to a local company instead of setting up a new maintenance facility from scratch. According to the accord, HIGER is also required to supply eight million US dollar worth of spare parts with the buses.

\_&!+_ Ababa. Anbassa is legally bound to operate in a commercial manner, but it lacks the freedom to set '^^X} _ <

Minibus Taxis *_R\__'YYYY< provide service of far higher quality. Minibus taxis are not restricted in terms of the routes or areas in which they may operate. Indeed, operators are free to choose their routes. The fares are, however, controlled by the city government, but are two to three times those of city buses. The absence of ;''= minibuses. Operators have converted Toyota pickups into minibuses or obtained second-hand buses from Europe and the Middle East. Discipline in the terminals is maintained by self-styled regulators known as “marshals” who collect, on average, 3 to 4 birr per trip from each vehicle.

82 Urban Planning ___@)#'^((XYYX@ plans need to be respected in all transport sector interventions in Addis Ababa and other towns, and similarly transport sector interests and users must be consulted in plan preparation.

An urban transport study recommended development of some of the main Addis Ababa transport corridors for rapid transport, by bus or light rail. Bus priorities were proposed for particular localities \) transport planning, management and operations in the city were also recommended.

In the case of Addis Ababa, there is a need to match modes to service requirements, depending on the level of density of travel corridors. The Urban Transport Study and Preparation of Pilot Project for Addis Ababa explored options, and formulated a Multi-Year plan, comprising short-range plan ;YZ=;Z'Y=;'YXY=__ ##);#)=$& the rejuvenation of Anbassa City Bus Enterprise, introduction of medium capacity PMT Technology comprising Bus Rapid Transit /Light Rail Transit System along major corridors, and promotion of Minibus Taxi Services. *__ the city, which has close to three million people, most journeys are made on foot. Car ownership is (Y +_< and the introduction of new bus services in Addis Ababa. Authorities are now questioning whether <_

Experience with demand-responsive minibus services over the past decade has indicated that this is not a panacea for Addis Ababa's urban transportation problems. Improvements have to be made so that operational reliability and cost effectiveness of more traditional urban bus operations can improve.

;[%= ___R *''* along hilly terrain. This has given the opportunity for unrestricted growth of minibus taxis which have

Modal Share in Addis Ababa *_&&! minibuses have respective shares of 10.9 percent and 20.6 percent, whilst the share of private cars Z;JYZ=}/ others, as shown in Figure 4.2.

_};>YY}= the current pattern of movement will change.

83 W_'`_

3% 5%

11%

Walking Taxi Anbassa City Bus Private Others

21%

60%

The Strategic Plan prepared by the Transport Authority-Addis Ababa Branch estimated the average daily number of travelers in the City to be 3.4 million. Out of the total number of daily passenger 'J?>^ percent respectively. It is estimated that the highest share of travel is related to school trips by students ;/YX=

A recent study on Improving Urban Transport "Through Private Partnership in Addis Ababa" indicated } z_;/Z=;XY=;?= < ;Z = ;/ = } ;/Y = ;q [ @\XYY>=

Regulation of Urban Transport The market for passenger transport services in Addis Ababa was deregulated by the Transitional Government in 1992 through the Proclamation to Provide for the Regulation of Road Transport. !<;Ketena=_ determined by administrative control. Only Anbassa, a federal enterprise, had the right to operate large buses. Since deregulation, entry conditions have been limited to the roadworthiness of the vehicle and _N formality as long as the other conditions are met. For administrative convenience the Bureau for Trade and Industry Development has delegated responsibility for issuing business permits to the _''Y;@$''= JY;@$J= with regard to routes or areas of operation. 84 < ;ZYY?ZY= taxi association so as to prevent the emergence of monopolies, as in some other jurisdictions (Ghana, @=_ represents only a relatively small proportion of the industry. Nevertheless, it is with these bodies that the Authority negotiates all regulatory matters, particularly the fare structure.

* } conventional bus services as well. Thus the government-owned Anbassa can no longer be considered to hold an exclusive franchise in the city, but no competitor has emerged to challenge it.

R} services when their vehicles are between scheduled departures; these provide useful additional capacity at peak times. This increment of supply is purely opportunistic, however, and cannot be considered as part of the formal network.

Future Plans In Addis Ababa, this means an enhanced city bus service will be required using more large vehicles M}M space, and allow the existing street network to be used more effectively. The expansion of the bus network, together with greater consideration of pedestrian needs, would seem to be the measures that ! operate than minibuses, and can offer lower fares, as well as causing less congestion.

*\ be contracted out to the private sector, to develop skills that can later be harnessed in the development $ __

An additional fuel levy on petrol and diesel for sales in Addis Ababa (and later, for other cities, when =_ ;=ZY\ZY countries.

The Urban Transport Study and Preparation of Pilot Project for Addis Ababa estimated patronage in the scenario of normal load based Public Transport Services for the year 2020 to be composed Z(<>X walking in modal split is estimated to be 45 percent at that time.

Integrated Public Mass Transportation System for Addis Ababa 0< << _ system would be necessary to sustain economic activity. One of the major problems of public passenger 85 transportation system in Addis Ababa has been its inability to keep pace with the population growth. To cater to the rising demand, the existing transport system will have to be improved along with the

Several corridors in Addis Ababa would require in the medium to the long term, transit services which operate at higher speeds and with higher capacity than conventional buses can provide. Bus Rapid < Y(}z [%$\<< } Under these conditions, electric power must be obtained from overhead wires instead of a low-level third rail.

The guiding principle for public passenger transportation in Addis Ababa is system integration, which is based on the matching of modes/means to service requirements. In this regard, high capacity, long- !%;!%=[% density corridors, while conventional buses and minibuses can be used in a complimentary manner on other corridors. Support facilities such as bus stops, interchanges, terminals, transit shelters, parking, etc., should be implemented simultaneously. As Addis Ababa and its environs expand, its population increases and the economic activity system intensify, it is imperative that planning for urban transport has to start.

` ___<XY journeys will become unsupportable for a greater and greater number of people. The strategy for the City thus contains the following elements: '= A commitment to give priority to the improvement of public transport to meet the } The interim target should be to keep at least 60 percent of motorised trips on public ;XYX?=__& 8;__&8= measures must be proposed to ensure that this target continues to be exceeded and if possible raised; X= _ < capacity and other designs of vehicle better suited to urban mass transport; /= _%;%= __ (usable also by conventional and }= ;= \<_ >= __&8 and planning measures; Z= Transfer of ownership of the Anbassa bus company from PPESA (under the Ministry *=__ policy under AACTO; J= A continuing city roads programme to meet the development needs of the city and a 86 <\

Electric trolleybuses would be well suited to Addis Ababa, once Ethiopia has a larger electrical ;<XY''= ¢&q}j;&qj=£)} good acceleration and are more economical in cost and use of road space than articulated single- deckers. Trolleybuses may also be double-deck.

_XY'Z//( XXJ(*XYXY>>JXXJ( would be needed. In broad terms, conventional and minibus services shall be part of an Integrated #)$;#)$=!%;!%=+ &XY'Z[%$;[%$=XY'Z!% Transit with Bus Lanes along North West Corridor; Bus Rail Transit with bus lanes along Southern Loop Corridor; Light Rail Transit Mono Rail system along Central Business District Link Corridor; and Light Rail Transit/Mono Rail system between Leghar and Bole airport.

]__]>> This programme should include the following: '= Transfer the ownership of the Anbassa company to the Addis Ababa city administration ;= X= &__&8;__&8=} overall responsibility for mobility in the city; /= #10 the Walia intercity operations and retain its depot and other facilities for future use for urban bus operations; >= Convert the completed or incomplete/proposed outer bus terminal sites to sites for bus \< Z= &_R secondary depots; J= *\_ ?= Private investors may be invited to buy or lease these new buses (except those for _= The ban on foreign investors in commercial road transport should be lifted. (= AACTO to franchise routes based on the most advantageous tenders from Anbassa or other companies. Competition for the franchises should be the main spur to improved

Additional Proposal for Funding of City Buses and Bus Depots The Master Plan proposed the purchase of city buses and the construction of new bus depots in Addis ___ \ the plan period 2007-27 was estimated as USD 670 million or an average of USD 33.5 million per annum. ;= XYY?z(

10?##"+Z 87 approximately 200 million litres of petrol and 1,050 million litres of diesel. It is estimated that around 65 percent of petrol sales and 20 percent of diesel sales are made in Addis Ababa, indicating annual __XYY?z('/YX'Y* surcharge of say 0.50 birr per litre was to be imposed on these sales in Addis Ababa, then the potential yield would be as follows: From petrol sales 65 million Birr; From diesel sales 105 million Birr.

The total of 170 million birr is equivalent, at an exchange rate of 9 Birr to the US dollar, to USD '(^_J} increase to USD 31.9 million by 2016/17 and to USD 57.2 million by 2026/27. Total yield of the surcharge over 20 years would reach USD 695 million, thus giving a total tax take slightly exceeding the estimated cost of the depots, though with a different distribution over time.

< } operations to a neighbouring region where the surcharge would not be in force. An alternative strategy could be to extend the range of the tax nationwide, so as to lower the impact of the tax on the fuel price, remove the opportunity for evasion of the tax by the transfer of fuel sales to other regions, and allow similar funding of buses and bus depots in other growing cities, such as Dire Dawa, Bahir Dar and Mekele. The tax could be designated as a municipal public transport tax. A reduced overall rate YXY!}XYY?z(\ Petrol sales 0.20 Birr on 200 million litres = 40.0 million Birr; Diesel sales 0.20 Birr on 1,050 million litres = 210.0 million Birr.

*<XZY!XYY?z( @$X?(@$'YXXXY_</Y }} cities other than Addis Ababa. The additional tax would be equivalent to some 2.5 to 3.5 percent of pump prices.

Level of Service: Intercity and Urban Bus Operations There are three main parameters measuring Public Transport Service Delivery, namely Access, _ 11. Each parameter is reviewed in turn below. Although the main reference document refers primarily to urban transport within Africa (with a focus on large buses, midibuses =

From passenger perspective, the public transport changes are viewed differently in urban public and interurban public transport service provision. If one looks at the situation over the period 1992-2003,

In terms of urban public transport, the expansion of service is very limited only to Addis Ababa and !_* of urban public transport in Addis Ababa12_&! Enterprise and minibus services.

11+Y$%j|7|+}_ 12 The capital and the centre are by far the most important urban bus operation in Ethiopia. 88 Access For urban bus services, one may consider the extent to which any particular user is within easy geographic reach of a bus line. While direct evidence was scarce in the sample cities, the low density of paved roads, coupled with unplanned growth, poor road surfaces, and narrow streets, suggests that the geographic reach of bus services is seriously circumscribed in most African capitals.

$\ can be converted into an indicator of seat availability per thousand urban residents. Most of African cities have 30-60 bus seats per thousand residents. In Addis Ababa, the indicator falls to no more than 10 seats per thousand. The average number of large-bus seats in the city sample is only 6 per thousand. As a point of comparison, the average number of large-bus seats per thousand urban residents in the middle income countries of Latin America, Asia, the Middle East, and Eastern Europe is in the range /Y>Y!}R@*

N__ The numbers also suggest that access to intercity bus services in Ethiopia remains very low.

Affordability _ varies widely with income and the distance to be travelled. For most people, moreover, transport is essential rather than discretionary, so the necessary funds need to be found in the household budget. Anecdotal evidence from limited surveys demonstrates that rising transport fares can isolate some people from employment opportunities, but this effect does not appear to be widespread. However, the fact that budgets are tightly balanced is often illustrated by the sharp drop in ridership following fare increases, although ridership often rebounds after a few months.

Most low-income households live on the outskirts of developing cities, often in shanty townships, and make an implicit trade-off between the costs of housing and travel. Comparing bus fares across operators to effectively raise fares by shortening route segments, thus requiring customers to pay multiple fares to reach a given destination.

The affordability of the fares needs to be gauged in relation to household income. Data were collected < that they meet all their transport needs by walking. The share of household budgets spent on transport JZN the household budget spent on transport is just 3 percent in Addis Ababa. When expressed in absolute terms, the amount that households in African capitals spend on transport is much more consistent across cities, at about USD 12 - 16 per month. The exceptions are Addis Ababa and Kinshasa where spending is about a third of that level.

There is evidence to suggest that average household budgets would be lower in provincial cities than __ ___ bus fares would be prohibitive for many rural dwellers. 89 +XJXYY( 0.12325 Birr per pax-km (up from 0.11 Birr per pax-km, and that on gravel roads 0.14966 Birr per <};Y'>!<}= of commuters and in line with the subsidy the government continues to make on fuel imports.

Quality of Service No formal quality-of-service statistics are available for urban transport in Africa, but formal and informal surveys of users undertaken in 14 sample cities suggest widespread customer dissatisfaction with bus services. Frequent complaints include poor quality of roads, overcrowding of buses, unpredictable and irregular service, and inadequate terminal facilities. On average, passengers report walking for around 10 minutes to reach a bus, and typically waiting around 30 minutes at the bus stop before being able to start their trip. Trip times are in the 30-45 minute range.

8N# Anbassa in Addis Ababa suggests peak load factors as high as 150 percent of rated capacity. Three in four passengers interviewed rated overloading as their primary concern.

To a greater or lesser extent in each of the cities surveyed, the networks of paved roads and associated ;} =* }\ the cost of vehicle maintenance, owing to additional wear and tear. The condition of many roads is so poor that it would be impossible to reintroduce conventional bus service until the roads have been _ the cities studied tried to promote public transport over the use of private cars by creating dedicated bus lanes or tightening controls on parking.

*& ;=}} &

Mass transit systems in Addis Ababa are non-existent or are unable to cater to demand imposed on } has led to congestion and parking problems which further adversely affect urban public transport operations.

__&_}M travel corridors. While this is considered important, a more radical approach might be required to \ % ;=__ supply.

No formal quality-of-service statistics are available on intercity bus services. There is no reason to doubt however that the quality of service levels pertaining in Addis Ababa would be better than those generally pertaining on intercity bus services in Ethiopia.

90 The Transport Authority is planning to subcontract or franchise some long-distance routes to operators who will become responsible, acting within TA guidelines, for the regular scheduling activities currently performed by TA. This will relieve the Authority of some of its routine workload. The designated operators will be permitted both to operate the routes themselves, and to subcontract them to others.

Taxi Fleet and Level of Service: Operations in Addis Ababa *_R\__'ZYYY< service of variable quality. Minibus taxis are not restricted in terms of the routes or areas in which they may operate. Indeed, operators are free to choose their routes. The fares are controlled by the city government but are two to three times those of city buses. The absence of restrictions on entry has led ;''=

The 15,000+ minibus taxis have about 105 operational routes. Not all the registered taxis are on the road at any given time. A number of them left the trade, due to old age, rising running costs and the absence of proper regulations governing the sector.

) < < JYYYYY ;'YYXYY}(YXYY= time at terminals. They are inappropriate for high-density travel corridors and their services are )\ is impossible. They also have excess capacity during off-pick hours, which creates congestion in the city.

__O<P city. The latter vehicles are pick-ups converted to passenger carriage by the addition of a canopy over as for the minibuses, being restricted to 11 persons other than the driver by regulation, but space and access are considerably more restricted.

The sector carries over half the urban passengers but meets slightly less than half of travel demand when the shorter average boardings compared to buses is taken into account. These shorter average boardings arise from manipulation of the fare structure, particularly at peak times, so that longer trips are broken into shorter stages at intermediate stations. Any passenger wishing to continue with the vehicle then has to pay an additional fare.

Minibus services can be regarded as high quality in comparison with conventional buses, as their interior layout is spacious (9 seats in the main saloon, compared to a minimum of 12 in most other =} can be seen as a premium peak service supplement to the core all-day passenger services provided by the city bus operator. However their aggregate volume of supply is in the same order as the core 8} }

_< _'Y( }'Y}^Y(/

91 'X;= vehicle, with the passenger load factor being slightly lower when the crew is taken into account.

Access Currently, some 14 to 20,000 taxis serve the over 2.7 million inhabitants of the metropolis, where more than one million people are transported in 105 lines each day. The taxi sector has created 25,000 direct and 12,500 indirect job opportunities. However, the plate number of the taxis in the streets of the metropolis has already gone beyond 20,000.

$&)<$& company, which launched new and modern business meter taxi cabs to operate on a system using

<<#'ZY expected to be delivered in a couple of months, will have "state-of-the-art" features. Apart from the taximeter for pricing and receipting, they would have a radio communicator. Customers can also call the central dispatcher to get door-to-door service.

Affordability Y'X@$\ demand and can be more than this, especially when taxi line interchanging is considered. One of the reasons why minibuses are so popular in Addis Ababa is that household spending is limited and the average fare for minibuses are quite low.

Quality of Service As to the operation of minibus taxis in Addis Ababa, studies have found that service capacity available }*} 0 < an operator's ability to replace vehicles.

8 vehicles, as long as fares can still be collected under such circumstances. Overloading in minibuses is somewhat controlled in most cities, through the terminal management practices, although standards in some cities fall away once the vehicles leave the terminal, especially after dark. Some of these problems can be traced to the institutional regime governing minibus operations. Minibus services R< < consequences for the quality of service. One consequence is the rigidity of the route network. Routes R be adjusted to meet passenger demand. The result is that a high proportion of passengers must change buses at least once to reach their destination, increasing the duration and cost of their trip. Even with several changes, the point at which passengers alight is often some distance from the desired destination, particularly in the central business district.

} Chief among these is the practice of waiting for the assembly of a full load before setting out, which often forces passengers to sit in the vehicle under the sun in order to retain their place. Waiting times 92 at terminals can exceed an hour off peak, extending waiting times along the route and making it secure a seat, many passengers walk to the terminal.

By loading vehicles in strict rotation, the unions also prevent intending passengers from rejecting vehicles that fail to meet expected standards of cleanliness or physical condition. This, in turn, lowers the incentive for vehicle owners to improve their performance. Investment in a premium-quality vehicle also becomes impractical under these circumstances.

Additional details of minibus operations are provided in Annex 1: Minibus Taxi Service Supply Characteristics.

Travel Demand/ Patronage Growth rates of minibus and midi-bus passengers and pax-kms have been particularly impressive over the last three years.

The study on improving urban transport in Addis Ababa carried out detailed loading surveys at a < roughly at three-quarters of the level of those on the large buses. However the average trip length on in passenger numbers being up to 50 percent more than on Anbassa.

The urban transport study attempted to estimate passenger numbers carried by the minibuses and < ranging from 132 to 312. The situation in Addis Ababa is complicated by the authorised fares structure. In effect, this provides an incentive for drivers to break their trips at peak hours so as to charge an < * } discounted, then the true number of passengers is likely to be nearer to the average of these estimates and would be consistent with international experience for this type of transport.

_XYYZXYY? as shown in Table 4.2, indicates a more rapidly changing commercial road passenger transport market. From 2005 to 2007, passenger volumes increased by some 25 percent per annum, and pax-kms by some 32 percent p.a. There were particularly large increases in minibus and midi-bus passengers and pax-kms.

'=">_?@J$++;@++\,

MiniBus Midi-Bus Maxi-Bus* Total Year Passengers in Passenger Passengers Passenger Passengers in Passenger Passengers in Passenger RYYY Km in Mil- RYYY Km in Mil- RYYY Km in Mil- RYYY J lion lion lion million 2005 >JYY( 2,070 X(?Z/ '(J^ 5,565 2,504 80,326 Z5''' 2006 >(YXZ 2,161 >(JZY 3,162 4,921 2,214 %+%5;&; 85;\ 2007 (Y>>J 4,022 46,425 3,250 ZZ(Y 2,567 %5';% 9,839 * A maxi-bus has 45 or more seats. Source: MoTC

93 Passenger Transport Vehicle Productivity and Costs The National Transport Master Plan study derived Passenger Transport Operating Costs as indicated in Table 4.3.

']W__J$,

Terrain / road type and condition Minibus Small bus Large bus Flat terrain, good paved road 0.21 0.09 0.09 Flat terrain, fair gravel road YX( 0.12 0.12 Mountainous terrain, good paved road 0.22 0.10 0.11 Mountainous terrain, fair gravel road 0.34 0.15 0.17 q\_;8=)MXYYJ Source: Consultant’s estimates.

& *\ of vehicle operating costs and improvements in revenue-kilometres. Low vehicle productivity plus sometimes low average load factors for scheduled long distance conventional buses, has contributed to low revenue-kms.

*__<'(Y}z '/(}z

q\< of large Anbassa buses has dropped markedly. Recent information shows that the numbers of daily >YYXZ\ \ structural measures such as transforming Anbassa to a business entity operating along commercial \<

#\ } area. They have the capacity to gather information necessary to plan service demand and to constantly @ networks. In addition to these features, which are beyond the capacity of individual operators and associations, one major advantage of such establishments is the potential economics of scale that <}} purchase of input, etc.

* degree of competition, especially when there are excess vehicles compared to demand, will lead the \@ 94 will expose such operators to an unavoidable risk of losses. Unreliable service on such routes will increase passengers' inconvenience, reduce comfort and passenger safety concerns.

Average vehicle occupancy rates seem high. In practice in urban areas the crush factor is considerable and in peak time occupancy rates are considerably higher.

''_?>$++Z,

Vehicle Type Average No. of Passengers Average No. of Seats Occupancy Rate (%) );'Z= 9.2 11.2 (X $;'J/Y= 21.6 24.3 (^ [;/Y= 44.2 49.0 90 Source: Consultant’s survey.

_ Ababa has put a heavy pressure on the already constrained urban transport network, thus adversely affecting productivity.

Introduction For the market economy to work effectively, competition needs to be on an equal basis so that the !} economy, as the assets remain and will be used by others. The threat or reality of bankruptcy is an

The Government does not yet insist on realistic standards of vehicle condition that would eliminate the driver, pedestrians or other road users.

As a general rule current government policies and the tax regime do not create an incentive for <;\=< transparent.

Restrictions on Foreign Investment Presently there are also government policies in place that restrict investment in transport by foreign investors, which inhibits the free market principles found to be effective in many other countries, in Africa and elsewhere, in boosting the economy through joint ventures.

The following areas of activity are exclusively reserved for domestic investors: Car hire and taxi-cabs; and Commercial road transport.

95 It is natural for the government to want to protect local transport industries but by doing so they protect a road transport industry which cannot progress, for the reasons already given, to the detriment of the economy as a whole.

Commercialization Public ownership is not the real issue; but if they have privileges denied to the private sector they

and this should be proceeded with as quickly as possible. Government policy on transport should additionally be to introduce internationally acceptable rules and regulations and then to enforce them.

__<X\&+ Mj*

Entrance to Market The governing legislation for urban passenger transport is the 1992 Proclamation to Provide for the Regulation of Road Transport. Subsequent legislation allows each Regional administration (including &__=} been availed. In effect, this proclamation deregulated the supply of such transport in line with the prevailing orthodoxy of the time.

It was anticipated that new market entrants would be attracted to the business opportunity so created, its provision. However, public administrators had regarded the monopoly franchise held by Anbassa as not having been affected by the proclamation, and so spurned approaches by potential investors.

Any intending operator can readily procure a business permit from the City administration (the _!*= _'^^X sector on an area basis, this was not made a condition of the license. The three owners associations that have since emerged draw their membership from across the city.

It should be noted that existing legislation only places requirements on the driver and the vehicle providing transport services, and not on the owner. In order to raise standards in the industry, there reward. Such a license would be applied to the person keeping or using the vehicle, and not to the $ of maintaining the vehicle in a roadworthy condition appropriate to passenger services. Ideally the } of Anbassa, and a range of premium products designed to segment the public transport market and proving capable of attracting car users. Existing minibuses are too small for the former role, and may

96 No information is available for market entrance in the intercity bus market. Fleet ownership is more common in the intercity passenger transport services sector, since it is seen as being more lucrative. There is no reason to doubt that the conditions for market entrance are similar in intercity bus services as in urban bus services.

Private investment could be attracted to the sector if the appropriate regulatory and enabling framework were put in place. Unfortunately, though, this has not been encouraged so far.

Public Transport Maintenance Facilities \@ vehicle maintenance has not received the priority it has deserved, and maintenance standards and \ perform properly over its service lives.

) There are also problems of genuine spare parts. Preventive maintenance in which vehicles are serviced in order to prevent failure while in use is not widely practiced. In general, maintenance is undertaken only when failures are observed. Inspections are not conveniently scheduled or on a regular basis. The regulations with respect to safety considerations are not effectively enforced, and deferred preventive maintenance has become costly, with rapidly escalating expenditures. Facilities for heavy maintenance are lacking, and the existing ones are limited to established dealers, public enterprises, etc.

Road Passenger Terminals % R$ station located at Mercato, were constructed by the Transport Authority and have facilities for ticketing and dispatching of vehicles. The Mercato station has two parts designed to serve long distance cross- __ This station, which is already over 30 years old, is unable to meet the increasing demand of passenger and vehicle movements.

Uncontrolled entry of individuals, lack of central information service to guide the passengers, and poor lighting system have exposed travelers to different types of risks. Terminal projects at Gurd $ the central station.

__ for passengers and vehicles are necessary to increase convenience and safety. From the pattern of the R\[ Kaliti-Legehar and Hayat Old Airport routes. Hence, as proposed by the Urban Transport Study and Preparation of Pilot Project for Addis Ababa, developing the station to multimodal city transport R*[ _}}

97 road based terminals at Mercato, Piassa, Ayertena, Megenanga, Kaliti, Ambo Road, Entoto Road, Ayat, Bole and Mekanissa.

#R arrival and transfer. These terminals were constructed by the Transport Authority and have facilities for ticketing and dispatch of vehicles.

Anbassa Depot Sites Anbassa operates out of three sites; its headquarters complex at Yeka to the east of the city, a second depot at Shegole to the northwest, and a newer depot at Mekanisa to the south.

The Yeka depot is seven hectares in area, excluding the bus-building workshops complex of Abay Technical Services that is immediately adjoining. The operating depot has facilities for 300 buses to be based there, but currently less are deployed. The site also includes the central workshops for ; = depot is sited immediately adjacent to the recently completed city ring road, providing for effective workshops are well equipped, and housekeeping standards are high. The fuel station has adequate \q

The second depot at Shegole is 5.4 hectares in area, but the yard is not surfaced. This facility has its own fuel station, and light maintenance and running repair facilities as well as a spare parts store operated on a satellite basis from Yeka. 300 buses could be based here, but at present less are } leading to some loss of control. Operating standards would be improved by surfacing the yard, but it 8 investment is required.

The third depot at Mekanisa is more recent. It has a site area of 7.3 hectares, which would be more /YYXYYZ0 outstanding investment need is for the yard to be surfaced.

Fares and Tariffs Introduction Bus fares have now been deregulated for small and medium buses in the intercity sector. For long- distance they remain controlled by the Transport Authority, though TA will duly consider requests made by the associations for an increase.

98 In January 2004 these rates were revised upwards by just over 10 percent to Birr 0.1095 and Birr 0.1265 respectively. They have been revised again in September 2006 by between 9 and 10 percent, !Y'XYY!Y'/(Y_ ;XYY?=

Prices for premium services are not controlled and may be set by the operator. This applies for instance to the premium long-distance bus services recently introduced by Selam Bus Line, where the fare must be agreed between operator and passenger.

';__$++;{Z,{>%&&8

Road Surface Birr/passenger – km

Asphalt 0.11 Gravel +%'

q\#_;_= Source: Transport Authority.

Anbassa Bus Fares Fares on Anbassa buses range from 0.25 Birr for up to 9 km to 2.25 birr for 32-47 km. Almost 95 percent of passengers pay between 0.25 Birr and 0.50 Birr. Some exceptions apply to recently introduced routes. For example, one new 40 km route has a fare of 3.00 birr.

__ dropped in recent years. The subsidy is presently 0.10 Birr per trip; the total amount paid is based on records of numbers of tickets sold. Fares on Anbassa buses are collected by conductors. Paper tickets are used, with different colors for inward and outward journeys. Ten-trip tickets are also issued. !}R R}_ it is common practice for conductors to collect fares from passengers through the bus window before they board the bus.

The company estimates that 5 to 10 percent of revenue is lost through fare evasion and conductor malpractice, despite the presence of ticket inspectors. The fares charged for express services are Y'Y!$\ of 0.15 Birr. In 2006 the trip over 45 km from Addis Ababa to Debre Zeit cost Birr 2.25, at a cost of Birr 0.05 per km.

Tariff systems vary between buses and taxis. For the former there is an approved fare for each route irrespective of the length of the individual boarding made on it. This fare is correlated to, but not directly dependent on, the length of the route. Variances will occur depending on how recently the route has been introduced or revised, or whether the services are nominally limited-stop. Previous studies have estimated that, taking a weighted average of fares applicable to the core network, fare rates approximate to Birr 0.046 per kilometre for those riding the full length of the route and proportionately more for those making shorter boardings. At current exchange rates, this fare rate equates to 0.53 US cents per kilometre representing some of the cheapest travel in the world. Fares are low both because of the subsidy provided to users (roughly 25 percent of the fare actually paid, =<;'YY= of crush conditions in the peak.

99 &_\ costs of its operation, but do include a depreciation charge relating largely to capital expenditures not actually made by the enterprise at a rate set by tax legislation and not economic life considerations. Notwithstanding these reservations, recorded costs are some Birr 5.3 per kilometre, or Birr 0.053 <}'YYYJ'@$ exchange rates. Even though these historical cost/tariff estimations are a little dated they clearly _

The tariff in force from 2004 showed rates for individual city routes varying from Birr 0.25 up to !/YY& !YXJ'^^^!YY(XYY?

Bus Fares: Recent Changes Intercity Bus Fares The Transport Authority under the Auspices of the Ministry of Transport and Communications of Ethiopia has announced new tariffs on cross-country bus transport services a day after announcement by the Trade and Industry Ministry of fuel retail price readjustment amidst ever-rising cost of petroleum products in the global market.

__XJXYY( new tariff on asphalted roads is 0.12325 Birr per pax-km (up from 0.11 Birr per pax-km, and that Y'>^JJ ! <} ; Y'> ! <}= made in consideration of average incomes of commuters and in line with the subsidy the government continues to make on fuel imports.

Anbassa Bus Fares *XYY^__!/(Y! YY(Z}_<}} transport available to all.

Historical Minibus and Taxi Fares The fares for minibus taxis ranged from 0.60 birr for up to 2.5 km to 3.00 birr for 25 km. The minimum fares for minibus journey are shown as follows: Up to 2.5 km Birr 0.65 Up to 5.0 km Birr 1.25 Up to 7.0 km Birr 1.65 Up to 9.0 km Birr 2.25

Previous studies have estimated that, approved fares for taxis are directly related to the length of the <} in certain anomalies with regard to fare rates, with these being far higher for trips up to 4 kilometres J}_} ;}=} 100 higher rate as being applicable to the large majority of journeys, taxi fare rates work out at about Birr 0.26 per kilometre. At current exchange rates, this fare rate equates to some 3 US cents per kilometre. $_\ small authorised capacity of the vehicles being used and greater control of overloading.

For taxis, operating margins are hard to determine in such a dispersed ownership system. However ( ('Z} !YX'<}X>@$ per kilometre. Even though these historical cost/tariff estimations are a little dated they illustrate the <# be set by the operator. This applies for instance to the private taxis in Addis Ababa, where the fare must be agreed between operator and passenger.

Minibus and Taxi Fares: Recent Changes The Transport Authority under the auspices of the Ministry of Transport and Communications of +<XJXYY(

The taxi fare on a 2.5 km distance rises by 5 to 70 cents. The fare on a 7-km taxi trip rises to 1.35 Birr 'XY!'Y}'(Y!'JY!'X}XYY! 1.75 Birr and on a 15-km distance to 2.50 Birr, from 2.20 Birr per passenger.

Further details of International Urban Bus Fares in African Cities and Affordability Indices are provided in Annex 3: Bus Fares and Tariffs.

Taxi Fares The Transport Authority under the auspices of the Ministry of Transport and Communications of +<XJXYY(

The taxi fare on a 2.5 km. distance rises by 5 to 70 cents. The fare on a 7-km taxi trip rises to 1.35 !'XY!'Y}'(Y!'JY!'X}XYY! from 1.75 Birr and on a 15-km distance to 2.50 Birr from 2.20 Birr per passenger. Prices for premium services are not controlled and may be set by the operator. This applies for instance to the private taxis in Addis Ababa, where the fare must be agreed between driver and passenger.

Present Relationship between Fares and Operating Costs The detailed work on Vehicle Operating costs elaborated by the Transport Master Plan Team estimated <};!XYYJ=+ current bus passenger tariffs for road transport are provided in Annex 3: Bus Fares and Tariffs.

Intercity routes In 2009 the new passenger tariff on asphalted roads is 0.12325 Birr per pax-km (up from 0.11 Birr <}=Y'>^JJ!<};Y'>!<}= ~8&!YY^Y''<}~8& of Birr 0.12-0.17 per pax-km on gravel roads.

101 Anbassa: Addis Ababa – Debre Zeit Route *XYY^__!/(Y! YY(Z}~8&!YY^<}q _ documented elsewhere.

Minibus Routes The tariff for a 5 to 7 km trip has risen from 1.25 Birr in 2005/2006 to 1.35 Birr in 2009.

Therefore, at current fares and estimates of Vehicle Operating Costs, this Review Team @ the conclusion made by the Transport Master Plan Consultant that: For bus passenger transport, the V"##8%%

Status of Commercialization #+<XYY^

*XYYY+#_}_} & * < have been carried out only partially, with the result that the enterprise remains encumbered by debts that no prospective purchaser would be prepared to accept.

_&!+ ;<Z=\ in a capital city is a national priority, and that it is incumbent on the Government to ensure that it is q__ there is great need to increase their supply, and thereby reduce both overall transport costs and the __ };=_ __ _} the capital.

At present the transport sector, both for passengers and goods, is reserved only for Ethiopian investors. market for Addis Ababa, where substantial investments will be required in replacement and expansion \ of the industry and this should be proceeded with as quickly as possible. Government policy on transport should additionally be to introduce internationally acceptable rules and regulations and then to enforce them.

102 Passenger Transport Service Forecast The future patterns of economic performance and population must generally be derived before future * } public passenger transport must be made well in advance of the actual provision of supply. What is required for this study is to give some idea of the magnitude of the likely evolution of demand. The trends, let alone in forecasting.

_ other similar and recent studies.

*}\ technology and expansion, is required to match with the pattern of change in the nature of demand. Furthermore, measures to restrict import of used vehicles and replacement with obsolete buses will tend to reverse the present distribution of old buses. It is expected that there will be a shift towards \ Considering the strong positive performance of the Ethiopian economy in recent years and taking into account that it is in the earlier stages of transition to a full market economy, the increase in road \

Fleet Forecasts XYY(#~0'>XYYYOP 70 percent of the total [c. 100, 000 vehicles], with “for hire” vehicles making up the remainder. This Z( <\X/YYY'?

q)#$;$ $=>J.

'Z>!`_?>WW

Passenger Fleet Growth p.a. Up to 2012 2013- 2027 Small Bus 7.0% ;+| Large Bus 7.0% 5.0%

The Review Study truck forecast includes the following assumptions (some of which are relatively =\ '= \XYY(XY'? most accurate; X= [ /= _O8_POP\ stays approximately constant over time; and >= _;=\ stays approximately constant over time.

\XYY(XY'? Table 4.7.

103 '8]"Y_?>WW

Review Study Passenger Fleet Growth p.a. Up to 2012 2013- 2027 Base Case Scenario (Y 3.5%

It is therefore assumed that the Passenger Vehicle 0(Y the short to medium term with a substantial slackening of growth rates thereafter.

\XY'?X(YYYYOP form some 70 percent of the total [some 200,000 vehicles]. In other words, the Passenger Vehicle 0<<\ would be some 50,000, or 17 percent, of the total.

\XYX?>YYYYYO8_P ?Y¢X(YYYY£*\ >YXY'?XYX?<\ 70,000, or 17 percent, of the total.

\ \<}<\ could be partly due to the removal of over-aged vehicles from service, either for conversion to suit other market needs, or due to a lack of spare parts.

*q)#}\ forecasts does not appear possible.

Public Transport Passenger Forecasts The pax-km data is not considered accurate enough to make a very detailed passenger forecast up to the year 2017.

<} XYYZ XYY( >(

'\=">_@J$++;@++\,

Minibus Midi-Bus Maxi-Bus Total Passenger Passenger Year Passengers in Passenger Km Passengers Passengers Passenger Km Passengers Km in Km in mil- RYYY in million RYYY inRYYY in million RYYY million lion 2005 >JYY( 2070 X(?Z/ '(J^ 5,565 2,504 (Y/XJ 6,444 2006 >(YXZ 2,161 >(JZY 3,162 4,921 2,214 101,595 ?Z/( 2007 (Y>>J 4,022 46,425 3,250 ZZ(Y 2.567 132,451 ^(/^ Source: MoTC

The number of total passengers follows a clearly rising trend, especially since 2002. In particular, ZYYYYXYYJ(YYYYXYY?/YYYY ;=<}* __

104 It is observed that the recent passenger growth rates have been exceptionally high; an average increase in total bus passengers of 26 percent p.a. over the past three years. The average annual growth in total bus pax-kms is also very high, at 21 percent p.a., over the past three years.

Clearly such high growth rates cannot be projected into the medium term with a great degree of )}\} economy and a level of pent-up demand for public transport in the major cities.

8'Z( 8} of 10.6 percent.

The bus passenger forecast of this study includes the following assumptions (some of which are =\ '= XYY(XY'? most accurate; X= [;= /= _O8_PO0P\ stays approximately constant over time; and >= _;=))[! \<

\XYY(XY'? Table 4.9.

'&]"_W

Review Study Passenger Growth Up to 2012 2013-2017 2018-2027 All Passengers Annual Growth Rate 12.0% (Y 4.0% Passenger Numbers in 2012, 2027 233,424 342,976 ZY?J(^

The overall passenger numbers in 2012 is estimated as some 223,000 pax., up from 132,000 in 2007. The overall passenger numbers in 2017 is estimated as some 342,000 pax. The passengers carried will have more than doubled over the next ten years.

The overall passenger numbers in 2027 is estimated as some 500,000 pax. In other words, the passengers carried shall increase by some 1.5 time between 2017 and 2027.

105

Chapter Five

Institutional Arrangements in Road Transport Introduction In recent years, a myriad of issues have beset all forms of commercial road transportation services. These issues have to be resolved through greater emphasis on improvement of management of the industry in general. The administrative framework in which the industry is operating and facilities are provided and maintained is a critical issue.

If there is failure to address these issues, there will be far reaching implications for satisfying the <+R competitiveness. One of the sectoral measures recommended for developing exports to promote growth was to improve the business environment and facilitate global integration. In the sections is presented.

Political Context: Institutional Structure Including Allocation of Powers Between Jurisdictions 0 % + ;0%+= relatively short provenance. In 1991 was formed the Transitional Government that laid the basis &_ 1994, and took effect in 1995.

The federal arrangement, established under the Constitution, has guaranteed the rights of the Regional States to administer their own affairs. They are empowered to formulate policies that are appropriate for their respective development; to lay the foundation for economic and social infrastructures; to participate directly in sectors that are critical for their economic development; and to safeguard law and order in their own areas.

The Federal Government and the Regional States have legislative, executive and judicial powers. The 0%+M#R%0M nine Regional States who have powers to formulate policies and administer their respective states. #R%0j Regional State Councils have powers to legislate and act upon issues that are under their jurisdictions.

The President of FDRE is the head of the republic and is elected by a joint session of both houses for a term of six years. The highest executive powers of the federal government are vested in the Prime )&)#R%

The Constitution requires the establishment of independent judiciary, and supreme federal judicial authority is vested on the Federal Supreme Court. The judicial powers for the federal and state levels are vested in the courts. Elections are held in the country through the guidance and execution of a q+!#R%

107 0%+;0%+=0j governments of the Regional States. The republic consists of nine regional states that were established on the basis of settlement patterns, language, identity and the consent of the people concerned. In __

Addis Ababa is divided into 10 sub-cities for administrative purposes, and these are each further subdivided into Kebele ;= ^^ Kebeles following some recent consolidation. The Transport Authority plans to use the sub-city as its basic unit for organisation of the public transport sector.

Other Relevant Government Institutions The highest level relating to commercial road transport is the Federal Government of Ethiopia, responsible for determining national policies and strategies, as well as developing regulatory framework in the form of basic laws. To this effect, special organs of the federal government have been established. These authorities are discussed below.

;=%; =&z paragraphs.

Ministry of Transport and Communications (MoTC) )&;)&= the overall national transport policy and the preparation of basic laws and directives governing commercial road transport.

Transport Authority The organisation with prime responsibility for control and regulation of road transport is the _;_=%_ in 2005 to also include rail and maritime transport activities. Despite this widening of the TA scope, regulation of road transport has remained the dominant function. In fact some maritime functions which were transferred to the TA have now been re-assumed by the parent Ministry of Transport and &;)&=

_0 #q>J(zXYYZ_R )&_R }\ + Ensuring that passenger transport services are safe and reliable; + #RR Monitoring passenger and freight tariffs on major routes; )\ Maintaining relations with neighbouring states, and in particular implementing agreements with Djibouti. 108 $ sector.

The Transport Authority performs the above functions at a federal level. Each region has its own Road !;%!=*! performing similar functions within the region. There are no direct functional relations between TA and the regional bureau, although there is an internet network through which vehicle registration data _

_\ Planning, Research and Information Department; Technical and Vehicle Procurement Department; Drivers and Mechanics Training Centre; Driver and Vehicle Affairs Department; and Road Safety Department.

Since 2005 the Addis Ababa Transport Authority and the Dire Dawa Transport Agency have been _;}____=

The total number of staff employed by the Transport Authority is about 550. As was elaborated in the 2002 “Study on Transport Regulations” by SPT and Central Assessors, there is a need for greater @ occur under present arrangements, for instance presenting obstacles for an operator wishing to run bus services between two towns in adjacent regions, or even between two towns in the same region where the route between them must pass through another region. In this case the regions concerned obtain a federal license from Addis Ababa. The result may be that travel between the two towns will only be possible using several different services over an indirect route, or that a direct service will not be able to pick up or set down passengers over a section of the route.

Problems mentioned by the Transport Authority as being presently of particular concern included: +R The poor condition of many old vehicles; and Lack of capacity for effective enforcement of driving codes and road laws by the

Ethiopian Roads Authority (ERA) The Ethiopian Roads Authority is a federal government institution with responsibilities for providing, ;}}=

The Federal Police Commission The Federal Police Commission is entrusted, among other functions, with the management of road %#&

109 Regional Bureaus of Transport and Communications The Regional Bureaus of Transport and Communications have been empowered to administer the regulations of road transport, including registration and technical inspections of motor vehicles and regulating commercial road transport services within their geographic jurisdictions.

This came into effect in accordance with Proclamation No. 7/1992 (Transitional Government of +\ '^^X= % # & Regional Executive Organs of the Transitional Government of Ethiopia (Transitional Government of +\'^^/=

Regional Rural Road Authorities The Regional Rural Road Authorities have responsibilities for providing roads that are functionally

City Administrations/Municipalities The third level/type of governmental commercial road transport functions relate to city administrations/ municipalities. City administrations, particularly Addis Ababa, have substantial commercial road } However, city transport authorities with comprehensive roles have not yet begun to appear.

Road Freight Transport Industry Structure +R}_ j taken, in particular, with analysis and forecasting.

The following sections include data on organisational structure as obtained from the survey.

0+0&;+0&= \'YYY}*'^^Y+0& companies: Comet Transport; Bekelcha Transport; Shebele Transport; Woyra Transport; and Addis Mechanical Enterprise.

8 transporter, and Addis Mechanical Enterprise a specialist provider of spare parts and maintenance services. All these companies now come under PPESA, with all except Comet having been included & ;=8;!} $=<&!} $} operated by a number of commercial companies still in the state-owned sector.

As in the passenger sector, there are now also many private operators, acting either as members of associations, individual commercial truckers, or private companies. 110 <#[&$&, Publicly Owned +_;&=0 %_* ;= z\z

}_XYYJ'YZJ? Z'

;%#>$++Z,

!# Trucks Trail- Operator Group Trucks Semi trailers Others Total ers _;JJ= 4,729 1,231 310 1,323 85;& *;'X>= 123 (Y 30 20 ; #;JJ= 56 ((Z 239 (? 1,267 +;/= 3 32 131 --- 166 +;/= 740 25 ( 73 \'Z j 197 '^( 46 1 '' $'_, ;5\'\ 5';% 8Z' %;+' %+5;Z8 Source: Transport Authority.

The data cover both “private” and “public” commercial operators, licensed respectively to carry their } own account.

*XYYJ'YZJ??Z^/;?X= 'J^';'X=

Fuel trucks are not included in the table, since supervision of fuel transport operations is not currently within the domain of TA. At present this activity is directly organised by the oil companies, using }\ to the Authority.

Intercity/International Road Freight Market ;& !} $= 'JJ } !}$/YY?X <}\& +0&\XXZ}

complaints for the private sector with regards to the public enterprises and endowment companies. < but this process is slow.

However, there are signs of increasing market share by companies (Share, Private Limited and 8 % _= < \;= 111 come under pressure. The associations make up for great share of intercity freight transport and they are particularly dominant outside the major import-export corridor.

Road Freight Transport Industry Organizations Introduction _XYYY'?(/ (Y^(^/ /(/'/^

The one-time lifting capacity of associations in 2000 was 46,373 tons, while companies and parastatals >(ZXZ>Z

* XYYZ 'Y((Y ??X> ;?' = 'J^';'ZZ=* \^^'>?>}XYYY XYYZ\

Transport Associations The largest freight transport associations may have 200 to 300 members, operating 300 to 400 trucks, but many are much smaller; on average, however, there are over 100 trucks per association. Eighteen associations operate more than 100 trucks.

One of the largest associations stated that most individual members owned no more than three trucks, with single trucks sometimes even being shared between two or more members. Most individual commercial operators also own only one to three trucks.

Associations provide a legal umbrella for small yet independent trucking operators. Most associations have been formed from former “Ketena” members. The associations are allowed to operate 8 the key weaknesses of associations is the loose structure that binds membership, and the general weak human capital among members. Each member is often independent-minded, which make them restrictive and have monopolistic tendencies. They hinder the development of independent operators are no economies of scale, or operational advantages, in belonging to an association.

Freight transport is generally uncontrolled. Licenses are needed for the business and for the vehicle. Operators are encouraged to join associations, but these have only a small role to play as operators are free to conduct their business as they wish. Despite the proliferation of local transport associations there are no national bodies that represent the operators, other than the Ethiopian Freight Forwarders $__;+00$_=

Nationwide trade associations for road hauliers are needed to act as communication chains, to \}j They would contribute to the growth in professionalism within the industries.

Associations are merely gatherings of owner-operators acting together for securing cargo in the form } 112 0

z;= \ Associations are groupings of in general a small number of vehicle owners; Associations act as brokers facilitating prompt loading to their members and collecting commissions for the services they render; As associations are not registered companies, but are groups of independent operators, \ $8 & reasonably skilled personnel; * Associations are preoccupied with day-to-day management of operations; They do not engage in business planning, study of costs, revenues, tonnages and other on problems of common interest; In general, a shortage of skilled staff, a lack of proper facilities and ineffective management, an absence of rationale for pricing, the instability of demand, poor asset } that were sampled; Some associations have simple structure and some functional structures, which are replicated from both the parastatals and private limited companies. On the contrary, on purpose; _ M ;}= innovative one, but changes have not been forthcoming to shift from just "grouping" of individual operators to companies managed on the basis of business lines. There j _ interim period many steps could be taken to improve the management and performance of Associations.

Private Companies The Private [& — workshop, terminals, and

113 stores, than the associations. They have better data management systems, although most companies were not willing to provide access to records for commercial reasons.

\ control in order to be sustainable within a competitive environment. In order to adopt a competitive \ 8 for private transport carriers to establish their business objectives in terms of vehicle productivity, } _ continues to change, the dependence of passengers and shippers on a limited number of common ;=$ } \_ particularly the associations have to be much more responsive to the needs of shippers.

Private companies operate on average nearly 20 trucks, and the largest, such as Tana Transport and Trans-Ethiopia, have up to 200. Endowment companies are owned and operated by different EPRDF +<+;+$&8=!q& +$&8'^^/+ It is involved in dry and liquid bulk transport, engineering workshops and garaging services, import and selling of vehicles, spare parts, tyres etc.

New private companies have entered the bulk oil transport market, increasing supply in response to increasing demand for petroleum products.

Private sector participation and owner-operator businesses have grown, which have resulted in increased competition, thus ensuring that some of the savings in vehicle operating costs from better roads will be passed on to customers.

Details of the historical development of the Road Freight Transport industry are provided in Annex 4: Road Freight Industry Structure.

Parastatals: Comet and Industrial Fleets — mix of professionals with }\<\ # operational and functional units; Management job descriptions that describe the role, responsibility and accountability of management members; < and accountability, to investigate disciplinary offences and arrive at judicious conclusions, etc; _ etc.; Better data management systems — maintenance management system; and Their own facilities — workshops equipped with basic maintenance equipment, 114 terminals, parts and supplies stores, fuel depots and other required property at their premises for the smooth operation of the business.

&XXZ};''Z>Y''Y/Y= (/?/Z XYYY'(YYYZ>Y8& ZX

;_z

Year Throughput (tons) 2004 1,042,260 2005 ^(X'(Y 2006 ''J^'(? 2007 ''X^^J( XYY( 1,240,169 jj$8+R&!} Transport Enterprise, Shebele Transport Enterprise, Comet etc. These public enterprises are very j+ <\}

For most of the enterprises, the existing facilities have become supplementary income generating sources by rendering interrelated services to customers engaged in the commercial road transport industry.

)j+\ import of a large quantity of road motor vehicles has had an impact on the capacity and operational M} might not have necessarily been intended to reduce cost of transport, but primarily was to avoid the risk of high quay rent at the port of Djibouti in case a shortage of supply of trucks develops. Some \} R hire commercial trucks.

Road Passenger Transport Industry Structure Introduction < carriers who provide their own carriage. These include private limited companies, share companies, ; = for-hire transport business entities of Regional Development Associations. Because of the diversity among share companies, private limited companies and associations, it is not possible to establish a single structure to represent the commercial road transport industry in Ethiopia.

In the past bus transport was operated by the state-owned Public Transport Corporation. This was then split in 1994 into three components, namely: #+;= _&!+;__= _$+;= 115 _&!$__''>_0 buses were transferred to Walia intercity bus services.

Abay was formed with the function of providing heavy maintenance for both Anbassa and Walia, and to supply parts to all operators.

Commercialization 8_## +$_;##+$_=_ answers to PPESA, but is to remain Government-owned for the time being.

$<XYY^ * \_ +XYYZ labour force of nearly 900.

Intercity Bus Market _X( ;=;$![j$ &&=JZ(?>'^( >/'X^J>>>??^/>( 60 seats, and 300 with capacity of 61 or more seats.

#$\ reorientation of activities away from rapidly increasing cost without any return on capital employed. The state-owned Walia Intercity Bus Service Enterprise has been selected to carry out after sales ZYY&! for sale in addition to rendering maintenance services in its workshop off the Smuts Street. Walia Bus [&&!}+;&!+=R} Mercedes vehicles. For the maintenance of the new buses, HIGER will also send six mechanics from China.

Some 15 of the above stated operators are engaged primarily in long-distance bus transport, including '' ;= >>

;$++Z,

44-47 seats 393 >(JY 779 61 seats and over 300 Total %5'8

The other buses, including around 4,200 buses with up to 43 seats and 900 buses with 44 to 47 seats, are primarily engaged in short-and-medium distance interurban transport.

116 }'^^> operated largely by associations of small operators. While most individual operators own only one to three buses, the combined membership of an association may together own 200 or more. More recently private companies have also started operating on some long-distance routes. Private companies operating large buses include Selam Bus Line, based in Mekele, and GTS Commercial and Transport Company, based in Addis Ababa. A group of businessmen associated with one of the larger associations is also reported as planning to acquire buses to operate a private company. Selam <<\/> over the country.

Urban Bus Market Urban transport services in Addis Ababa and Dire Dawa are regulated by the respective transport ;____=_*__ operated by Anbassa, with public transport also being provided by numerous minibuses and taxis, organised into associations.

_'^ZX#&;#&= after 1974. It was re-established as a separate entity when PTC was broken up in 1994 and now (^JYYYYY\Z/Y maintenance problems, only 345 of these are currently operational.

Originally a private enterprise that held an exclusive franchise for passenger transport services in _'^?>#& ;#&=#& ;=*'^^J#&}_ to its previous status as a freestanding commercial enterprise. Since then the workshop component of _$;#&=_ which it shares a depot in Yeka.

Besides personal taxis at the higher-cost end of the market, the main competition, catering now for a \< areas, especially around main minibus stops. Although not always popular with passengers, they provide faster and more frequent services than the buses.

In Dire Dawa a recent “Urban Scope Transport Study”, performed for Dire Dawa Council by the Physical and Spatial Planning Team, reports that a municipal bus company operates three buses (YY) municipality is provided by 700 minibuses, small taxis and three-wheeler motor rickshaws, carrying a total of 130,000 passengers per day.

Road Passenger Transport Industry Organizations Introduction Following change in the regulatory environment during the transition period, the role of Ketena's was 8 As a result of this restructuring, Ketena’s were replaced by private associations.

117 Associations # ;'YYXYY}= operated by larger buses. The Transport Authority licenses and supervises operators on inter-regional routes throughout the country. For operators working on routes within regions, the corresponding functions are performed by the regional transport bureaus.

Some characteristics of the sample public transport associations/operators are as follows: '=_ X=_ /=_

In passenger transport, although companies are allowed, individual operators are expected by the Transport Authority, and the regional transport bureaus, to join a passenger transport association. The associations set the schedules and the fares. This is anticompetitive as it generally means that operators take turns on a rotating schedule, so that over a certain period the income is shared equally. There is no incentive to improve the service or the vehicle with such kind of operation, and there is no effective competition on price, quality or frequency. (A draft General Transport Law proposes to =

The fragmentation and overlapping of responsibilities obscure accountability which in turn leads to j of the regulatory burden, as they act as a kind of enforcement and control mechanism. There will need _} in the interests of the passengers and to maintain safety.

Nationwide trade associations for bus operators are needed to act as communication chains and represent the interest of the operators to Government at all levels. They would contribute to the growth in professionalism within the industries.

A few associations negotiate with insurance companies and secure better premium for their members. For instance, an association operating over 130 medium and small buses has an agreement with one of the private insurance companies to pay an annual premium of Birr 750 for an 11-seat capacity minibus for third party motor insurance coverage. The premium for a 44-seat capacity bus is Birr 1,350. If the policy is to cover passengers, the driver and his assistant, the annual payments go up to 900 Birr and 1,750 Birr for 11 and 44-seater buses, respectively. Details of the historical development of the bus passenger transport industry are provided in Annex 5: Public Transport Industry Structure.

Taxi Service The Addis Ababa Taxi Service, formerly under the control of the Public Road Transport Corporation < \< < through reduced waiting times, without drastic improvements to allow the market to determine the number of minibuses with the introduction of other types of services, it would not be possible to achieve a well-functioning Demand-Responsive System.

118 );= 0 regional short distance services and Addis Ababa city taxi services are dominated by this category of vehicle.

Metered Taxi Service $&)<$& company, which launched new and modern business meter taxi cabs to operate on a system using

\ of 1,000 Birr each with a 9 percent premium, to expand its capital base to 50 million Birr. The sale 8'JXYY(0'XXYY^ extension.

Road Safety Road safety constitutes a serious problem area in Ethiopia, as the accident rate per vehicle-kilometre < accidents has created large negative socio-economic costs in actual and opportunity costs.

_R ;&#&=} the transport industry is known and respected.

Access to the Profession Introduction When the Master Plan Team met with representatives of the industry it was apparent that the level of transport knowledge in even the large government-owned companies is not as high as it should be. This is not only an Ethiopian problem and a way of introducing more formal training would be to &#&;&#&= operations. The CPC training would be tailored for domestic and international trucks and domestic buses with a section on international bus operations for the future.

The lack of detailed knowledge exists at every level of transport where local truck operators working even within an association may well have simply purchased or been given a family-owned truck without any formal understanding of how to operate it. Then, working on the principle that they can }M* < would go out of business. Instead they continue to operate unsafe vehicles. It was clear to the Master Plan Team that access to the profession is not properly regulated and as a result there are many enthusiastic amateurs operating in Ethiopia as there are few restrictions. 119 Access to the Profession in 2007 To operate a commercial road vehicle in 2007 one needed the following: _ ) * ;)*= renewal; __;_= A driving license of the correct grade from the TA; __ ;0=_

All are obtained on payment of a small fee with the exception of the driving license which requires ;=q OP maintenance practice.

In practice anyone can be a bus or truck operator with little knowledge of what they are doing, or of the law. The lack of effective legislation leads to unsafe practices that may be a factor in Ethiopia having one of the worst road accident and death records per vehicle in the world. Therefore urgent action is needed.

Human Resource Development and Management Capacity *} transport professionals association and gaps in professional and managerial skills.

A large number of association personnel are unskilled, whilst the professional attainment of the }} of the commercial road transport industry. Educational institutions and the transport profession have not come up with training programs that are tailored to the needs of the industry.

are recommended: The Ministry of Transport and Communications takes the lead in the establishment of the Ethiopian Transport Professionals Association; The Ministry of Transport and Communications, Transport Authority and Regional 8 effective capacity building program, so as to develop skills required to improve industry performance; and AACCSA to chair a Forum for discussion of issues and for making proposals for # representatives of the Forum could be drawn from the Ministry of Transport and Communications, Ministry of Trade and Industry, Transport Authority, Regional 8800

Another possible area of intervention of AACCSA is capacity building, which is central to improving the management of commercial road transport, through upgrading human resources of the industry,

120 ;\=}

__&&$_;__&&$_= _)* })[& of the delivery of goods.

The enterprises and private limited companies are better equipped with professional staff than the associations. Out of 1,355 employees working in three enterprises, 40 are graduates, while out of 973 staff employed in three private limited companies, 32 are graduates. Rather, as revealed in Table 5.4, each of the enterprises or private limited companies on the average, have 10 to 13 graduates, which could serve at supervisory and upper management levels.

;'_>

O rganizations Respondents Graduates Nongraduates Total Employees Parastatals 3 40 1315 1355 Private Limited Co. 3 32 941 973 Associations 20 25 Z(> 609 Total ; 97 \'+ 2937 Source: Responding Parastatals, Private Limited Companies and Associations.

_Z>JY^}XYXZ management. Most associations have redundant unskilled personnel, which is a major factor for high labour cost, a constraint to enhancing the competitiveness of transport operation, with implications for transaction costs, particularly in domestic and external trade.

A professional road transport industry is needed. A plan includes measures to introduce a system of R;8=j }O&#&P ;&#&= an O license.

Apart from the increase in skills and professionalism that would result, one big advantage of the O license concept is that the license could be suspended or withdrawn for persistent infringement of the *<

Some Institutional Issues Although the institutional arrangements emanate from constitutional provisions and diversity can be healthy, there is a situation of fragmentation of commercial road transport responsibilities, and lack of clarity concerning the roles of the Ministry of Transport and Communication, the Transport _%!8;\ =

}} } regulatory framework.

121 It would seem sensible for the Transport Authority, in consultation with associations, to initiate an institutional reform program to improve the operations of associations. Associations could then start along conventional corporate lines.

122 Chapter Six

Legal Framework and Road Transport Regulations

An improvement of the policy and regulatory environment in which the road transport industry is operating and in which transport facilities are provided and maintained is paramount.

This chapter refers in detail to three pertinent studies, namely: The “Study on Road Transport Regulations” completed by the Italian consultants SPT, working in association with Central Assessors of Ethiopia, in June 2002; The Study entitled “Management of Commercial Road Transport (Passenger and 0 =\ & $ * # ) }P&#[&XYY( The “Transport Master Plan for Ethiopia”; completed by the Danish/German &8*zj8#_XYY(

Legal Framework &#q>J(zXYYZ #'>z'^^X rail and maritime transport services as well as the objectives, powers and duties of the Transport Authority.

In principle, deregulation consists of the withdrawal of government's restraining hand and opening commercial road transport to competition. In Ethiopia, the process of deregulation began with the Road Transport Regulation. The proclamation has resulted in a dramatic rise in entry to commercial road transport industry.

*#q>J(zXYYZ three: Those that aim to protect public interest from the safety viewpoint; Those that relate to ensuring reasonableness of rates, as well as the continuity, regularity and reliability of services.

There is a certain degree of consensus that a “reasonable” degree of regulation of safety and operating aspects certainly is called for, but economic control for the most part is better exercised through the mechanism of the market.

Road Transport Regulations Historical Developments: Deregulation and Regulation Before the establishment of the Road Transport Administration by Proclamation No. 256/1967 to control and regulate travel and transport on the Road, driver and vehicle licensing, annual inspection

123 and registration and issuance of route permit for long distance public passenger transport vehicles were carried out by Land Transport Division of the Imperial Ministry of Transport and Communications.

'>\>Z

Anbassa was one of these private companies providing long distance interurban service. Individuals with a limited number of buses could be registered with any one of the enterprises as associates, mainly to get scheduling and dispatching services. During this period, the public road transport fare ; = }_ capacity to buy a vehicle and obtaining a route operating permit.

*;= there was a ceiling on fares, since there were no controls on pricing. As a result, the passenger fare, which was initially more than two cents per pax-km, had declined to 1.5 cents per pax-km. However, the intense competitive pressure had adversely affected passenger convenience and safety.

In an attempt to overcome the problems associated with weaknesses in control over prices charged, quantity and quality of services, the Road Transport Administration was established in 1967, as an autonomous agency. Its main functions were to control public road transport fares and reduce barriers affecting an expansion of services.

[%_;= by extensive regulation of commercial road transport involving entry to and exit control from the (the Ketena’s=< it had resulted in the distortion of the normal market mechanism, and forced carriers to charge rates below what was commercially sensible. This led to serious consequences in the long-run, since many maintain the quality of services at a satisfactory level.

_\;'Z =\;(=8 of the issues raised by private operators following commercial public passenger transport industry % Transport Bureaus, whilst others are obliged to comply with the rates set by the Transport Authority.

In contrast to commercial freight transport, fares for public passenger services have not been \< More importantly, there has been technological stagnation in the area of passenger transport.

Freight Transport Regulations and Existing Rules *'^^Xj+;j+= transport. Under Proclamation No. 14/1992, operators were allowed to join a trucking association, form a company or register as an independent operator. Initially, freight rates had risen, for instance from Birr 0.22/ton-km to Birr 0.26 and from 0.26 to 0.40/ton-km on the Addis-Assab corridor.

124 In recent years, freight rates have generally shown a declining trend, particularly on the Addis- Djibouti corridor and on the improved trunk roads. Tariffs continue to be regulated for bulk oil < level of average fares levied on export routes, trunk roads, major link and regional roads. There has been an upward trend in vehicle operating costs, primarily due to increases in the prices of input such as vehicles, fuel, spare parts, etc.

TIR is an international Convention devised under the Economic Commission for Europe of the United q;@qz+&+= } country to ensure customs duty will be paid.

The TIR Convention is in two parts. One deals with the approval of vehicles and containers for use under TIR and the other with the operation of the system and documentary rules governing the issue of the TIR Carnet.

A Contracting Party *% & Convention and agreed to abide by the TIR Convention 1995 rules. However for TIR to operate in any country it has to haveq_%;q&_= administer the system and an international guarantee system. Ethiopia has no such system at present.

The International Guarantee System was devised to ensure that Customs duties and taxes + during a transit operation are protected at any moment by a national guaranteeing association, if for any reason, the TIR transport operator cannot be held accountable.

The operation of the guarantee system only works through a National Carriers Association and is usually backed up by the national insurance market.

8 & administration of that country, guarantees payment within that country of any duties and taxes that may become due in the event of any irregularity occurring during the TIR transport operation. This includes lost cargo, missing vehicles and the risk that goods have entered into free circulation without duty being paid.

In effect there is a national partner to which the customs authorities can address themselves in case of any irregularity. The system can be considered as a succession of national transit movements that rely on internationally valid guarantees, rather than on national guarantees.

In the event of an irregularity and a need to claim, the Customs authorities should seek payment from the person directly liable. Failing that, they will approach the guaranteeing association in the country where the irregularity took place in order to resolve the issue within the country. That guaranteeing *%@;*%@= through the international insurer pool.

$ZYYYY@$*%;= of up to one year in which to make a claim.

125 Without an international guaranteeing system in place goods cannot legally be discharged in that country.

The issuing of TIR Carnets is done by the IRU to the national guaranteeing associations under conditions set out in the contractual commitment signed with the IRU. Each guaranteeing association in turn issues the TIR carnets to carriers in its country in accordance with the conditions set out in the declaration of commitment signed by the carrier with the association.

Without an international guaranteeing system in place no TIR carnets can be issued. The above system is a simple paper driven one with a set of documents carried by the driver from which sections are torn out /removed at each border.

Operation and Regulation of Road Passenger Services Services are regulated either by the Transport Authority, the regional transport bureaus, or the _ smaller bus operations, and a high proportion of larger buses with 44 or more seats. Associations are basically responsible for allocating routes and services to their members, for preparing schedules, and for providing services to their members. These services are performed in exchange for a small * )*;)*=

Then, in order to obtain a bus operating license, he must apply to the Transport Authority for a letter introducing him to an association. Normally he will be able to secure an introduction to his chosen association, though sometimes this may not be possible (for instance one large association already has the stipulated maximum number of 200 members, and is therefore not permitted to acquire new =8 R behalf to TA for an operating license for his bus or buses.

_};}= testing stations designated by TA. Dispatch schedules are prepared on a monthly basis by members delegated from the various associations, which are agreed with Transport Authority representatives stationed in the main bus stations and thereafter enforced by the Authority.

* ; /ZY>YY }= ;'ZYXYY}=;'ZYXYY}= } Individual associations then follow established procedures for fair allocation of schedules between their members. If additional demand is evident, then the schedules may be augmented by agreement with the TA representative. Conversely a bus service with only few passengers can be cancelled, but this is not permitted if 30 or more passengers wish to travel.

_ on the main long-distance routes. Other operators, including private companies and enterprises, are also expected to run services to a schedule approved by the relevant licensing authority. In the case _} passengers in Addis Ababa often prefer to use minibuses, even if fares are higher.

126 The Transport Authority is planning to subcontract or franchise some long-distance routes to operators who will become responsible, acting within TA guidelines, for the regular scheduling activities currently performed by TA. This will relieve the Authority of some of its routine workload. The designated operators will be permitted both to operate the routes themselves, and to subcontract them to others.

Operation and Regulation of Road Freight Services In order to operate a goods transport service, an operator must obtain a business license from the )*;)*=}R _ _ O account” operations where the carrier transports his own goods and for “public carrier” operations where he transports on behalf of another shipper. As with passenger transport, regional road authorities can also issue licenses for operation of goods services, but only for routes within their regions.

The functions of the associations are similar to those in the passenger sector, and include the obtaining of business, allocation of trips to members, and provision of services to members. The allocations of jobs to members follow association procedures which should be in accordance with TA guidelines. The associations also collect revenues from customers, and distribute them to members. Commissions are deducted from the revenues paid out to members to cover the costs of services provided.

_'^ around the country, while retaining overall responsibility for this important requirement. Inspections must be carried out annually for all vehicles. The Transport Authority is also responsible for setting standards for new vehicles, which must be met by importers. In recent years many new vehicles of }

__MR< already been noted. Operators report a number of problems on this route, including a lack of backloads __} release of cargo from Djibouti Port.

Findings of Road Transport Regulations Study The “Study on Road Transport Regulations” was completed by the Italian consultants SPT, working in association with Central Assessors of Ethiopia, in June 2002. This study has in principle been _ prospective implementation.

One major issue frequently encountered is how the Ministry of Transport and Communications ;)&=

127 problem is particularly serious in countries where the police have the responsibility for activities such as vehicle inspection and registration, and driver licensing. In these cases it is not uncommon for )&\ degree to which technical standards in road transport are being adhered to, even though the ministry has clear responsibility for setting these standards.

Ideally in most cases the responsibilities for routine activities such as vehicle inspection and registration should be carried out by agencies reporting to the Ministry of Transport and Communications — this could even be assigned to private companies who are contracted or licensed to carry out these functions. Separating responsibilities for vehicle inspection and on-the-road enforcement is also desirable, because it increases the accountability of the vehicle inspectors: enabling the police to _ responsibility between the police and MoTC in the area of road transport. Possible ways are through inter-ministerial protocols and agreed management information system procedures implemented at _

1) Relationship between Transport Authority and Regional Transport Bureaus A clear functional relationship should be established between the federal and regional & inter-regional and international transport services in both passenger and goods sectors. 2) Road Safety Road safety must be improved by implementing recommendations of the Road Safety $;%[z%$}XYYX= road signage, improved roadworthiness of vehicles, implementation of procedures for transport of dangerous goods, and better enforcement of all road safety and vehicle inspection requirements. Establishment of a National Road Safety Council was also recommended. 3) Regulation of Road Goods Transport } with the creation of a truly open market both between larger trucking companies and within the road transport associations. It will also be important to implement measures < penalties to effective deterrent levels. ', Regulation of Road Passenger Transport Measures must be taken to ensure affordable availability of essential bus services in rural areas, with provision of dedicated subsidies for franchised operators on remote routes. Better advertisement of schedules should result from improved co-operation between the federal and regional transport authorities.

Findings of the National Transport Master Plan Study The National Transport Master Plan for Ethiopia was completed by the Danish/German consultants &8*zj8#_XYY(_ back to 1942. Proposals for change are being implemented only slowly.

128 1) General Regulations There is a lack of clarity as to the speed limits for different vehicle types }'^J( changed since then, reference to different proclamations is needed to understand the regulations. *} }

There is the lack of a law or regulation on the condition of tyres. This is needed urgently. The weak }< driving permits, as an example known to the consultants, and no doubt other matters too. Another problem that each regional state is empowered to make its own regulations and this causes confusion _ rather than piecemeal reform.

There is high preponderance of over-aged vehicles that has resulted in low availability and high spare parts requirements, resulting in high vehicle operating costs. The tax regime is still prohibitive for private vehicle ownership in Ethiopia, encouraging many to buy old vehicles. Recently, in order to match the transport supply with demand, the private sector has received assistance from the government through credits and other incentives that include tax exemptions to enable the expansion \_ jR approval.

2) Logbooks and TachographsR for professional operations using heavy vehicles. There are reports of drivers driving long hours, up to 16 hours a day, and trying to keep awake by using the stimulant chat. This is banned in many countries and can interfere with driving ability.

3) Road Safety _ R ;&#&=} the law and good practice in the transport industry is known and respected. NRSCO has produced }%0_8 ;%0_8=</

',Regulation of Road Goods Transport _R +}( >(}\<'Y} Authority and the police should begin immediately to implement the labour law strictly for bus and truck drivers.

;,Regulation of Road Passenger Transport In Addis Ababa, Anbassa should be restructured management in the capital must also be improved.

Findings of Other Studies $O)&%;#0=\ Current Situation, Issues and Problems, and Measures to be taken” was completed by W.T Consult #[&XYY(¢$!"#&j}%

129 $XYY^£_ out below.

1) General Regulations In transport service management, there is a need for a certain degree of to remove any restrictions on market entry. But the effectiveness and enforcement of procedures depends heavily upon the level of awareness and acceptability of rules and regulations by users, operators and the public combined.

When a regulatory system provides the operator with little economic incentive and leaves the service to uncontrolled and unfair competition, acceptance of regulations by the operator and better service seeking users will be low. Similarly, if rules and procedures properly address the interest of concerned bodies and give economic incentive to the main actors, the problem of enforcement is reduced, unless inhibited by own internal problems of the regulating authorities.

There should be effective enforcement of existing road transport rules and regulations. The Transport _ % 8 ;= other countries and service bench-marking.

The Ministry of Transport and Communications should, in consultation with the relevant public )&_% to address operational impediments related to the fragmentation of responsibilities and the overlapping of regulatory functions.

_ $ #;= in term of broad categories, from taxis to long-distance conventional buses. A systematic overview of the categories on types of characteristics of services is fundamental for improving quality and comprehensiveness.

The capacity of the regulatory bodies (Ministry of Transport and Communications, Transport _%8= and regulations; development and implementation of a capacity building program for Monitoring and Evaluation. The Authorities should also develop a set of performance indicators to measure the $ indicators might be: ~;}= Cost and quality services; and Revenue and expenditure, etc. The Monitoring and Evaluation process shall provide input to the policy formulation and regulatory + __&&$_;= work in collaboration with the regulatory bodies and become involved in the study, formulation and monitoring of commercial road transport policy.

130 2) Environmental Protection The Transport Authority should develop criteria, standards and guidelines to protect the environment from pollution relating to vehicle emissions.

3) Regulation of Road Goods Transport The regulatory authorities should introduce measures to encourage dry cargo transport operators to address the issue of undesirable and unsustainable competition, particularly on the major import-export corridor.

_ < commercial arrangement in the transport of bulk oil products be set by competitive market forces,

\< opportunity of choice, by putting the emphasis on safety, convenience and comfort. A sensible approach would be to develop a strategy to guide the delivery of public passenger transports on the basis of nature and level of demand, capacity, user cost, level of service and other considerations. The costs of services have to be kept as low as possible and therefore conventional bus and minibus and other services have to be tailored to serve only desired trip purposes, users and geographic areas. __&&$_;__&&$_= shippers together by creating a forum to identity management, operational and technical problems and search for solutions.

; = Providing a vehicle ready for loading at the point of origin on time is the duty of the carrier; whilst ;=* process, if one of the two parties fails to comply with his commitments, the adverse effect is not solely 0 arrive and affect the timely delivery of goods at the destination would cost the shipper, as well as the carrier himself. Similarly, delays created during loading and unloading should cost both sides, even if the shipper is the source of the delay. The slow-loading of shipments increases the time required for the entire operation and reduces truck productivity; whilst delay of the shipment affects the shipper. This issue needs a common understanding and joint efforts by the shipper, the carrier, the regulator }

', Regulation of Road Passenger Transport + particularly for long-distance conventional buses should be investigated. One important aspect of OP;= The regulatory authorities have the responsibility to facilitate the coordination of services in order to ;= and at the same time ensure that a range of additional service alternatives be provided.

} \ services. In the case of long-distance conventional bus services, it could aim at encouraging desirable \<;= ;= other prospective systems. In this manner, capital and other costs can be kept low. The challenge that regulatory authorities face is to develop combination of services that are compatible with respect

131 demands, provides for customer choice of different service levels and different costs, and result in <

An important objective in public commercial passenger transport is to improve the structure of _ have limited capital resources and management expertise, and they are preoccupied with their own operations, they are not able to undertake lobbying efforts to improve the industry's performance. As ;=< } ;=

Urban Ethiopia, particularly Addis Ababa, faces an enormous un-met demand, principally basic parastatal providing conventional bus services and the fragmented minibus services.

There is no clearly articulated policy to guide the regulatory framework and investment in road __ thin routes.

_ % 8 # enforcement of regulations for the provision of safe, reliable services and for improvement of passenger security. The Ministry of Transport and Communications should explore the possibility ;<=_ investigate full public transport tariff deregulation and should help form subsidy policy.

__&&$_;__&&$_= sector, should play a leading role in raising the level of awareness of the concept of free market, to } control of inter-regional bus service scheduling, which inhibits new entrants to the market.

J_] +%_%%_ function needs to be separated from the crime prevention and investigation function, and given the authority, training, resources and equipment to do their job properly. The resources of the Road Fund could be used to greater effect in this respect, but the national budget must also take the needs of

_} \ _ R ;&#&=} to ensure that the law and good practice in the transport industry are known and respected.

international agreements on road transport, the transport of dangerous goods, etc., for safety reasons and to ensure that Ethiopia plays its full part in the development of transport in the wider East African region.

132 < };= to allow easy checking. Vehicle weighing should not be limited to the heaviest vehicles but should include any goods vehicle to ensure their safety in terms of acceleration and braking capacity, etc., in respect of the vehicle load. A greater use of mobile weighing equipment is required.

J_ % formulating and implementing policy regulations, commercial road transport coordination, and there are capacity limitations to give systematic thought to the longer-range interrelationships among energy, environment, socio-economic development, poverty reduction and commercial road transport.

} are weaknesses in the uniform and effective enforcement of commercial road transport regulations ;=

There is weak enforcement of existing regulations in “Ensuring Road Safety, Security and Reliable Services and protecting the Environment“. Vehicle condition and the overall quality of service are unsatisfactory.

};=} and other interested parties.

The private sector should be encouraged by the regulatory authorities to develop terminal facilities, modern vehicle maintenance workshops, warehouses and other related facilities.

133

Chapter Seven

Banking and Transport Industry Insurance Overview The road, rail, air, inland water and maritime transport industry in Ethiopia is a complex structure made up of many diverse parts, and in the road transport industry in particular, some of the parts seem well run. However, as no company accounts are published and private companies are a recent < openly and evenly.

Much of the evidence gathered is anecdotal and this could lead to confusion and misunderstanding. Information in this report has been checked from more than one source but reliability cannot always be assured.

This chapter refers in detail to two pertinent studies, namely: $O)&%;# 0=\&$*#) taken”;&#[&XYY( The “Transport Master Plan for Ethiopia”, completed by the Danish/German &8*zj8#_XYY(

Financial Performance and Sustainability Access to Credit/Loan _z the commercial road transport industry. An inability of most transport operators to generate surplus from their activities for reinvestment is one of the major inhibiting factors in the improvement and +

_;} =&%< of the operators engaged in the business, questionnaires were distributed to ten banks, nine insurance _ to the questionnaires.

Data collected from the commercial banking system showed that loans to the commercial road transport industry have been increasing, reaching cumulative amount of Birr 976 million. The interest rate falls in the range of 7.5 to 11 percent p.a., whilst the maximum loan tenure is 5 years.

\<;= economy. 135 All of the banks surveyed, except the Development Bank of Ethiopia, provide credit facility for partial ;=$ /><&!}+;&!+= which has several years of experience in providing loans for the industry had suspended the credit < payments. However, CBE reinstated the credit facility at the beginning of 2006 and provided loans !'^Y)} not detailed enough to provide a basis for meaningful analysis.

Since CBE reinstated the credit facility in 2006, the magnitude of the loan balance in 2006 was much higher than for the preceding years. Although banks consider trucking as a high-risk business, the ;q#[=} q#[*}q#[;q#[= }? <'Z;q!}= NPL hurdle of 10 percent.

Even those loans reported as “Non Performing Loans” by some banks, have been settled through the accordingly or are credit worthy. This is a fundamental issue when considering the future upgrading \ operating costs.

Most banks have the same terms and conditions for both urban and rural transport commercial vehicles. )} have non-default status; no record of any mal-operational practice of checking account in the banking industry; Applicants are expected to have: - $< - <*q # }'YY by creditors. # }} - $}}'Y than 45 seats. - 8 } /YY tanker with 40000 litres loading capacity and a bus with at least 30 seats. - Some banks require that the motor vehicle to be purchased meets the standard _ The maximum tenure of the loan is 4-5 years; and If the loan is sought for the procurement of tanker, some banks require a tripartite agreement, involving the borrower, the oil company and the bank.

_!}$XYY( Annex 6: Access to Credit/Loans. 136 Financial Constraints } }0}

&\}< There is an urgent need for more banking services and the establishment of leasing services. Cash \\}< It is usual that cash income from transport activities exceeds direct cash expenses (particularly in =<< depreciation purposes.

The excess cash generated will often be spent on peripheral activities and not re-invested, leading to \_< ;=

In this situation vehicles have to literally last the lifetime of the owner. Performance in the industry could be improved with new training in management skills. This could be done through aid funding at low cost and quite quickly.

*;= } } replacement buses and trucks remains uncertain.

;>Z=\ ;('Y=

0 as an industry. There are serious weaknesses in the development of databases and their management which could generate valuable business information.

Motor Vehicle Insurance An effective insurance industry has a critical role in improving the safety of the commercial road transport system. The Ethiopian Insurance business, when compared with other neighbouring }"_ + \ Consultant.

The Ethiopian insurance industry is not yet well developed, with relatively limited offerings and coverage. According to data collected from most of the private insurance companies, about 60 percent of the revenue generated by the industry is from "Motor Policy Insurance". One of the key issues raised by transport operators is that there is no sound rationale for the valuation of property. It has _ } number of commercial road transport vehicles with motor insurance policies is about 69,531, or about >Y\<'Z?'(^XYY>zZ 137 * < \ $}} insurance policy, the absence of statute of limitations, the lack of thresholds for making claims, the lack of any provision to expand choices of services, and weaknesses in the development of databases.

About 60 percent of the revenue generated by the insurance industry in Ethiopia emanates from the “Motor Insurance Policy”. Even then, according to the survey, most insurance companies do However, they do have “Comprehensive Motor Policy” account, whereby records of every insured motor vehicle are kept. On the other hand, they exclusively have an extension cover for corridor transport for third party liability insurance for vehicles crossing the territory, which emanates from the agreement between the COMESA member countries. COMESA has introduced the third party motor ;&= and destination states including medical bills for crew. The rationale for such a scheme relates to } ;_#&\$XYYY=

The premium structure of comprehensive motor insurance cover of the commercial road transport vehicle differs from company to company and generally depends on the following factors: Age of the vehicle; Use of the vehicle; Value of the vehicle; and Carrying capacity of the vehicle.

$ < commercial vehicle varies among the insurance companies. There are few insurance companies who < have ranges of minimum and maximum rates for each category of commercial road transport vehicles ;}=

Most of the insurance companies could not provide complete statistical data on commercial road OPR in such manner. According to information collected from some insurance companies, the total number of commercial road transport vehicle that are insured over the last 5 years is to be about 69,531 or >Y\'Z?'(^XYY>zXYYZ This shows that 60 percent of the vehicles on the road are without any type of insurance cover.

Almost all insurance companies have taken some underwriting measures by the form of premium <};*$@@}=< due to repetitive accidents by the drivers, which resulted in substantial increase in compensations settled. Some insurance companies have even ceased to insure ISUZU vehicles at all.

Third party insurance in commercial road transport industry is long overdue. According to #q'>z'^^X;%%0%+_XYYZ=_ empowered among others to “ensure that all motor vehicles have third party insurance coverage; and in consultation with the appropriate organs, issue and enforce directives relating to the provision of insurance policy coverage for passengers and cargo”.

138 According to the information derived from the survey, all insurance companies support the implementation of compulsory third party motor insurance policy in the sector. Draft legislation for compulsory third party motor insurance has been submitted to the Council of Ministers, reviewed and #R%0%+

J5W`_ measures are recommended:

commercial freight transport industry, by consolidating many movements between origins and destinations, after performing their own pick-up and delivery services, and then shipment of the entire collection of freight, via another for-hire carrier.

\ of services. The commercial freight industry is not yet effectively responsive to logistical requirements for new export products, for example. There is no evidence of a tendency towards } with an increase in capacity brought about by the introduction of multiple-axle trucks.

\}} forthcoming, except a few, to shift from just "grouping" of individual operators to companies j _ most desirable approach, during an interim period many steps could be taken to improve the management and performance of associations.

* road transport associations, which will include assessment and determination of optimum \ environment and improve service quality. AACCSA could support the associations in the enhancement of their capacity, in improving their use of resources to enable them to effectively competitive environment.

There should be a programme developed to assist Transport Companies, Associations and Enterprises, in introducing modern management techniques in the areas of business planning, \ ) &;)&=_;_=* Centre to guide investment decisions by the private sector, and to provide input for the regulatory and regulatory environment.

139 The Transport Authority, in partnership with the Addis Ababa Chamber of Commerce and Sectoral Associations, should encourage the private sector to participate in the development of cargo consolidation centres and terminals, as an essential component of the transport system, to accommodate vehicle storage, maintenance and assignment, and the myriad of processing functions involved in weighing, packaging, collecting proper charge for freight movements, physical loading and unloading, routing, determining of special handling as required, preparing billing and documents to travel with shipments, etc.

J#_ Banking The banking system should evaluate the requirements of the commercial road transport industry for access to credit, in order to make it responsive in a more open operating environment. The basic objectives of improvements in access to credit are to make the industry more commercially viable. } and the development of competitive market structures within the sector are areas that should be investigated further.

In addition, banks need to explore possibilities for relaxing tenure period of the loans to the commercial road transport industry as they do for the other industrial establishments.

Insurance Generally, the insurance business has to expand its service with insurance products, which have to be tailored to the needs of the commercial road transport industry. Stricter requirements (a Comprehensive #[0}=_ improve road safety. The insurance industry should adopt its offerings to meet the changing needs of ; =

_ _ & & $ _ ;__&&$_= } the initiative to develop a proposal for improvements of the tenure period and interest rates, and ;}=;}= transport operators could meet, discuss and jointly resolve important industry issues through mutual consent.

140 Chapter Eight

Analysis of Some of the Principal Road Transport Issues In this chapter some of the issues raised in preceding chapters are analysed further and conclusions drawn. This is not exhaustive. Chapter Eight refers in detail to pertinent studies, namely: “ The National Transport Master Plan for Ethiopia”, completed by the Danish/ j&8*zj8#_XYY( O$}\@_P_"0! !}XYY(

Overview of Road Passenger Transport * distance sector, the existing price controls should be removed as soon as possible; otherwise there is }\

heavy losses which must ultimately be met by Government. It is understood that this is set for 2009.

The position of Anbassa must be evaluated with some care. Like Walia it is suffering from serious O$%%P$#&_XYYX } promote competition. Although it is administered by PPESA, the Government stated in 2005 that _\ transport in a capital city is a national priority, and that it is incumbent on the Government to ensure

Nevertheless, there is an evident shortage of large buses in Addis Ababa, and there is great need to in the streets. At the very least it will be necessary to restructure Anbassa and equip it to achieve } ;=_ urban bus service must in any event be a central policy aim for Addis Ababa. An adequate supply of }

The role of the Transport Authority in allocating routes and in determining schedules may require review. It is appropriate for the Government to ensure that adequate services are offered on all routes in terms of capacity and frequency, but scarcely necessary to be involved in detailed scheduling. The aim should be for the Government to provide overall guidelines to which operators must adhere,

141 appears to be a step in the right direction.

Road passenger transport is almost entirely private. Exceptions include Anbassa, which operates the city bus services in Addis Ababa, and Walia, which operates long-distance bus services around the country, in competition with the private sector. Road passenger companies appear able to make encouraged.

The road passenger industry prognosis is a very positive one. Some developments are foreseeable, such a major population increase from about 75 million now to perhaps 130 million people in 2030. Urgent action is required in terms of urban transport operational improvements in Addis Ababa. + M

Overview of Road Freight Transport General Issues in Road Transport '?XYZ?XYYZzJ*XYYYz'\ grown at an average of 7.7 percent a year. All motor fuel is imported, some 950,000 tons in 2005/6. \)\'^MXY \XZ* + is a poor country and incomes are low. The effect would be to reduce vehicle imports and this could \<} for longer.

The average age of the imported vehicles appears to be much less than the average age of the current \*'X \< the end of their economic life.

} 0 *< }\

The road freight industry prognosis is also a positive one; however the immediate challenges are far greater than for passenger transport. Some wider developments are foreseeable and/or essential for Ethiopia's development, and these have been referenced, such as a major population increase from 142 about 75 million now to perhaps 130 million people in 2030, the increased exploitation of natural economy with membership of WTO and the strengthening of economic links with neighbouring countries and strong stimulus to the agricultural sector from these developments.

Some Important Challenges in Road Transport +R8_ Agreement (in terms of freight transport, maintenance and repair services, storage and warehousing, = $ completed studies as follows:

Lack of motorised transport $(Y\__+ transport. Transport of goods by pack animal is widespread. Most urban journeys are made on foot, __ transport, especially on unpaved roads. Measures are needed to encourage public transport services and intermediate transport.

Poor Vehicle Productivity # \

Poor Safety The road safety situation is serious and will become more so. Ethiopia has one of the highest accident rates, per vehicle-km, in the world. More than half of those killed in roads accidents each year are pedestrians. This is further discussed below.

Increasing Air Pollution Since the Brundtland13 Commission report the central importance and inter-connected dimensions of sustainability have become understood. Not only is this a necessary national goal, it has become an urgent global&¢jj£ changing the energy mix have particular implications for the transport sector that remains heavily dependent on CO2-intensive fuels. Solutions require a holistic approach to land use development and

Pollution is a growing problem in Addis Ababa. Reducing the sulphur content in diesel fuel would in the recently imported vehicles. A project is needed to ensure such change goes smoothly. Looking further ahead, the use of domestic electricity, biomass or natural gas for transport needs to be investigated and implemented over time as opportunities arise.

13 |[%%j#|%%>*YV9

143 Need to Consider Transport Fuels for the Future #;=+ from Sudan and from the Middle East through Djibouti. In the next 20 years the price of such products can be expected to continue to rise, either steadily or in step changes.

Ethiopia has three opportunities to reduce dependence on oil for transport: ;= Use the electricity that should become available after 2011 to electrify the main transport corridors, e.g., trolleybuses, light rail or metro systems in Addis Ababa and this, an urban metro system in the future, etc. ;= @;<= to produce ethanol. This could substitute for up to perhaps 20 percent of petroleum < ;=@8;$%= Gas could be piped to Addis Ababa and compressed there for use as a transport fuel. Ethanol and CNG production would require expensive plant and distribution < + however, should be feasible by 2011 as the national generating capacity expands. A _ Ababa.

Worsening Urban Transport Organisation and Operations in Addis Ababa Government attempts to promote the use of larger buses, often with bilateral assistance from supplier N _ replacement of aging buses. Few private operators are able to raise the capital needed to acquire larger buses. Under current conditions, it is doubtful that even those who could raise the required sums invest in urban bus operations, given the removal of the suppression of fares on large public buses. It is noted that important changes are being proposed in respect to Road User Charges.

Underdeveloped International Road Freight Business The need to implement COMESA loading standards has been mentioned elsewhere. As the African road network develops, and as trading links also develop with neighbouring states, there will be an increasing need to plan for regular trips by Ethiopian vehicles into neighbouring countries, and by foreign vehicles into Ethiopia. At present there are only two or three restricted bilateral agreements with the neighbors, with for instance vehicles from Djibouti and Kenya only rarely entering Ethiopia.

A more liberal outlook on the admission of foreign vehicles to Ethiopia (with reciprocal facilities ++=} of transit routes across Ethiopia to other landlocked countries such as southern Sudan, the north of Kenya, and possibly parts of Uganda.

144 Underdeveloped Dry Port Concept Dry Port Ownership and Management: Effective management of a multimodal dry port requires knowledge of international shipping and forwarding practice as well as a clear focus on customer requirements.

Through Bills of Lading: The dry port concept requires the use of through international shipping < port or border crossing. The necessary agreements and legislation are currently being put in place.

Vehicle Overloading For improved road safety, fair competition, lower transport operating cost and lower road maintenance cost reasons it is essential to ensure that gross weight and axle weight overloading of all commercial vehicles is eliminated as far as is possible. The current control system where such vehicles have to visit all weigh stations on route causes excessive delays, as all commercial vehicles have to form a queue on the access road and main road, waiting to get into the weigh station and on to the weighbridge.

Some Measures to Improve Road Safety in the Road Transport Industry Logbooks and Tachographs Safety is a paramount issue for the driver and all other road users and although eight hours could be considered as a nominal maximum working time, driving time needs also to be controlled as there }

For reasons of public safety, many jurisdictions have limits on the working hours of drivers of certain vehicles, such as buses and trucks. A tachograph can be used to monitor this to ensure that an }}

The introduction of logbooks for drivers would be a low-cost initiative for all commercial vehicles, until other devices are available. There are already in existence. International United Nations rules and the use of logbooks and tachographs could be phased in.

Tachographs are installed on all new trucks imported. In Europe electronic tachographs are to be introduced, and it may be possible for Ethiopia to move directly to such a system after some years of experience in enforcing the legislation by inspection of logbooks. Logbooks could be introduced +}R! interim measure, they would not have to wait even for that.

_};= } 0 } the records when completed have to be retained by the vehicle owner for six years during which time they could be checked for infringement of the driving laws. In future logbooks could be phased out ;=

145 Hazardous Materials Movement ; <= international standards.

_j%;_%= It is updated every two years by publication of two massive volumes of text, so the law and the detail are only available in English and Russian.

Annex A_%}}; =

Annex B of the ADR is concerned with types of vehicles and the form of transport, vehicle marking, loading, stowing and unloading, driver training, emergency procedures and the use of Transport +&;=

Class 1: Explosives, through Class 3: Flammable Liquids, to Class 9: Miscellaneous dangerous substances.

+&&)R0 ;&+0*= to be taken in an emergency. These have to be written in the language of each of the countries through which the vehicle travels on its journey and copies retained in the cab of the vehicle.

<_% _%} $;=+ to ensure that carriage of all dangerous goods is properly managed. Dangerous Goods Safety Adviser ;j$_=* ;_%=

< } companies and has resulted in some international companies closing their operation in Ethiopia. Some } M to short cuts being taken in safety and on road routes that has led to accidents. It is recommended not to continue in this manner. There needs to be more freedom from such restrictive practices to improve safety.

Livestock Movements Livestock transport is important in Ethiopia and strict rules should be in place for animal welfare in transit. This is important not only on compassionate grounds but also to keep the livestock in good condition and ensure that there is no resistance in overseas markets towards buying Ethiopian animal products.

146 Some Measures to Improve Urban Transport Organisation in Addis Ababa Controlled competition in the form of government concessions for the right to operate bus services & can be introduced by consolidating the informal sector into larger units or associations, thereby enabling them to participate in the competition for concessions. The exclusion from the corridor of wasteful competition should serve to reduce congestion and raise speeds of operation, so that larger buses become commercially attractive. This approach is premised on a franchise duration that is commensurate with the investment payback period, and on a system of tariff regulation that ensures recovery of reasonable costs over time and provides some insulation from political pressures. The

_NN low by global standards. At the same time, fares are too high as a share of typical household incomes + buses along the route and must wait long periods for buses to leave their terminals. Once on board, riders must tolerate severe overcrowding during peak periods.

A strategy is proposed for improving urban public transport in Ethiopian cities. The strategy consists } reach. Short-term steps include increasing road funding, enforcing existing regulations, controlling overcrowding, and strengthening vehicle inspections.

) ;= service along those routes through controlled competition, as discussed above.

The long-term goal is to consolidate gains in all these areas through the creation of a metropolitan transport authority with jurisdiction over roadways and vehicles. The proposed strategy is illustrated 0('

Some Measures to Enhance International Road Freight Business Measures should be taken to establish regional agreements with neighbouring countries in accordance &8)+$_< operators. Agreements should also be implemented to open up new port corridors besides the main existing one to Djibouti. Steps should be taken to adopt the UNCTAD trade and transport facilitation programme.

These detailed proposals can in general be endorsed, as important steps in the establishment of a free and competitive transport market for Ethiopia. They have been largely accepted by Government, and a number of new proclamations and regulations are reported to be due to come into force during the next twelve months. It is important that the envisaged measures should in fact be implemented as now intended, since four years have already passed since submission of the report on which they are based.

)__M \) these problems will not in general be feasible, but there may be a series of limited actions that can be }R } 147 Figure 8.1 Strategies Proposed for Improving Urban Public Transport in Ethiopian Cities

POLICY STREAMS Infrastructure $ Network Management Development Short Term Measures

Increase Enforce Road Existing Funding Regulations

Improve Control Improve Road Over Vehicle Maintenance Loading Inspection

Medium Term Measures

Road Develop New Management Rehabilitation Routes Structure Measures Set Minimum Service Standards Issue Route Licences

Formation of Route Assoc. Cooperatives Set Frequency, 08 Service Conditions Put Route Franchises out to Tender

Long - Term Institutional Change

Metropolitan Roads Metropolitan Public Authority Transport Authority

Metropolitan Transport Authority

Source: SSATP 2005. Some Measures to Enhance Dry Port Operations While the public sector may be involved in the terminal planning process, mainly for infrastructure and planning reasons, it is not ideally suited for taking part in the day-to-day operations. In the case of Addis Ababa, the dry port is being developed by an Agency under MoTC. The state-owned Comet Company is primarily engaged in road transport to and from Djibouti Port.

148 &;=}_ \ Open and closed warehouse service; and &;=

It closely works with Customs Authority which has a facility in the centre. The Ministry of Trade *;)*=@$JJ/YYYY base within the main operating yard of the state-owned Comet Company in Addis Ababa, close to the Southern Ring Road. It will be equipped with additional modern container handling equipment to supplement what it already has. It was planned to be fully operational from mid 2007. This is in addition to the existing dry standing on the remainder of this 500,000 square meters freight yard where many freight operations have been conducted for many years.

Within the Comet site will be customs personnel able to operate the proposed new Single Administrative ;$_= &8)+$_;!z[= } !} and repair and maintenance facilities will also be available. In fact, all the services formally located M

The Comet yard has an estimated capacity of over 9 million tonnes of dry freight a year, well in excess / __<; <=&jR_ near the Comet yard, in Addis Ababa. No other one area of the country accounts for more than 2 ;\=

&R*_ _X USD, as the railway is close by.

Having made the investment and given its experience, it is logical that Comet should remain the *&R; = * <+R of state-owned ports.

Through Bills of Lading. The dry port concept requires the use of through international shipping < port or border crossing. The necessary agreements and legislation are currently being put in place.

0 of the journey. Expensive delays or problems of loss or damage need to be avoided. For this reason, shipping lines often prefer rail for the inland leg of multimodal movements. The Master Plan provides for rail access to the dry port. Another requirement is for Ethiopian customers to have free choice of shipping line and not be burdened with extra costs imposed by ESL. Many of the international shipping lines are now greatly experienced in multimodal operations. 149 Some Measures to Combat Vehicle Overloading The Transport Authority ensures that weigh-bridge facilities are provided at Djibouti so that the problem of overloading of cargo could be handled at port of entry. Better control can be established j check at a weighbridge on route, plus a self regulating “pact” between the TA and major operators, and random testing by the introduction of addition mobile weighbridge equipment operated by trusted inspectors in the Transport Authority. This would work on the main route to and from Djibouti but not be as effective on domestic short movements. There is also the problem of illiteracy with some drivers, but this is most likely in local domestic movements. Declaration of integrity (integrity pact) - All transport companies operating on this route would be advised of this simple scheme in order for them to sign a commitment to conform to the axle and gross weight limits. As the owners would have signed such a pact the penalties for failing to conform to the pact would be set initially at a modest level rising to a high penalty for persistent offenders. Drivers of law. Owners found to be encouraging overloading would face severe penalties leading to 8R[;=z vehicles. Marking of maximum weights on vehicles To aid inspection it will be required that the maximum axle load allowed for each axle or group of axles will be clearly marked in painted letters on the vehicle, above the axle concerned.

In addition the maximum gross weight permitted on the vehicle would be displayed on the driver door. The transport law may need to be revised to make this possible. In no case should the maximum permitted gross vehicle weight exceed that recommended by the manufacturer.

(Y XY(Y\XY is usually the case.

[;}XY= }#OP checking. Those that appear overloaded, or are unknown to the police and a random sample of all vehicles will be directed into the weighbridge station to be checked. Attention will be focused on <;><X= clarify that the gross vehicle weight on the driver door is the maximum permitted weight and not the ('Y<<><X'( (;'J=

There is also a need to control the gross vehicle weight, however, and only the lower of these two values should be acceptable: '=The sum of the permitted axle weights; and X=The maximum GVW as rated by the manufacturer. Vehicles are designed with acceleration and braking characteristics to match this weight. Ignoring this fact in Ethiopia would appear to be a frequent cause of accidents on older vehicles and light trucks.

150 Chapter Nine

National Transport Master Plan Study Framework and Strategic Directions General Improvements Need for Fresh Thinking This Chapter refers in detail to much of the analyses and outcomes of a current pertinent study: The “National Transport Master plan for Ethiopia”, completed by the Danish/German &8*zj8#_XYY(

The main priorities for road transport aspects of the “National Transport Master Plan for Ethiopia”, +R}\ "# ] to complete and upgrade the national network, reduce freight transport costs, enhance national competitiveness, improve safety, and give greater opportunities for mobility and development of natural resources and industry; Reduction in shipping costs by the development of dry ports and multimodal transport to facilitate transits and retain as much as possible of the value added from port activities within the national economy. There is also a need to diversify shipping routes +$[ in shipping can be obtained. Opening up new roads to borders and facilitating international road transport shipping routes.

Further details of the strategy and priorities for the Road Transport established by the “National Transport Master Plan for Ethiopia” are provided in Annex 9: National Transport Master Plan: Stratagic Directions for Road Transport.

The Coordinating Committee for the National Transport Master Plan project, and others, requested * of the ideas listed below were not fully discussed. Many of these ideas are not new but some sensible ideas have not yet been implemented to date. At least, initially there are opportunities to pick and choose those interventions that are most likely to lead to quick success, so-called “quick wins”.

A notable feature of many of these ideas is that they could be carried out by private investors, with a little facilitation by Government%'. Therefore, the Addis Ababa Chamber of Commerce and Sectoral _#$;#$=} facilitating and dissemination of information role.

14 #8#"88

151 Tax Breaks for New Vehicle Imports The government could introduce tax incentives and reduce import tax for new vehicles (import tax >Y~_=<* addition soft loans could be provided.

Improvement of Overall Maintenance Standards of All Vehicles !M }M from the roads. It seems that certain vehicles are given this treatment with new minibuses and taxis imported duty free and tougher annual tests for all vehicles may be proposed. No timescale is available

YW_>$_{ , Introduction *}\ of truck technology is required to keep up with the increased demand. Furthermore, measures to restrict the importation of used vehicles and replacement with obsolete trucks could help to improve the present distribution of trucks. It is expected that there will be a shift towards modern multi-axle }}\* <} activity together with the encouragement for investment in terminals and parking depots.

_<} low transport service costs but require heavier investments in infrastructure and logistical support. !\ it would be possible to achieve reduction of shipping costs of goods with the ultimate objective of enhancing Ethiopia's competitive position in the global economy.

The freight forwarding businesses have not been well developed to have a major impact on <* Ethiopia, where shippers move irregular consignments, freight forwarders could promote commercial +<

It is recommended that EFFSA should offer FIATA training. EFFSA are the only internationally )& With their wide daily contact with the international freight industry they could assist in proposing and reviewing transport legislation that would promote trade facilitation.

&&_;&&_=_$&@_ the telephone system cannot provide the dedicated line where they are. They represent 300 members &;)*=+00$_ forwarding industry can also operate as customs brokers. Due to the overlap in activities the Customs Clearance Association are said to be approaching EFFSA to join with them. CCA are strongly in favor +8;8=&8 ;&8=<

152 Privatization 0

The trucking industry in Ethiopia is complex. A few private and Government owned enterprises } } majority of the business for small truck owners comes from what they call “leftovers” from the large companies. &&;)$+= should ensure that the private sector is able to compete on an equal footing and foreign investment

Need to Control Overloading of Goods Vehicles [} carry 3 ton loads, are said to be often loaded up to 5 tons or more, and frequent accidents with this type of vehicle are said to occur. Thus there is a need to check loads against the rated gross weight << This also applies where in tractor-trailer operations the tractor is not designed for the amount of load being hauled.

The maximum permissible gross vehicle weight should be marked on the outside of the vehicle (as =} such markings on all goods vehicles when they are subjected to their annual test. Vehicle weighing should not be limited to the heaviest vehicles but should include any goods vehicle to ensure their safety in terms of acceleration and braking capacity, etc., in respect of the vehicle load. A greater use of mobile weighing equipment is required.

Road transport plays a key role in the conveyance of imports and exports to and from the seaports. At present it faces many obstacles through interference in the allocation of loads, Customs checks, unnecessarily frequent weighing of vehicles on some routes, and other checks by the roadside. These \}_ and transport facilitation sub-committee should be created to report to each meeting of the National Transport Council. This should aim at eliminating all unnecessary non-physical barriers to the free <q& Government agencies and other stakeholders, can then institute action as necessary.

Regulatory Improvements Commercial transport has clearly shifted from central control of partial competition. Regulatory measures are proposed by the Road Transport Authority; however the transport regulatory function in the regional states is weak. It often comes under the Regional Trade, Transport and Industry Bureaus, or similar. Yet vehicle safety and operating regulations should apply nationwide as vehicles may cross state boundaries at any time. This is different from regulating other commercial activity. There needs to be a formal and strong link between the Transport Authority and its counterparts in the regional states.

153 Under the Constitution the development, administration and regulation of road transport is a function _Z';^= _Z';'/= #_@_Z';/= Federal Government is also entitled to establish national standards for public health and technology, among other things.

Unless the Constitution is to be changed it seems that two measures are needed to make transport regulation more effective nationwide: The Transport Authority should become a service agency to help the States develop their capacity for the regulation and control of vehicle safety and operations. It should also set national standards that must be adhered to; At the same time the States should raise the status of the Regional Transport Bureaus so that they become fully independent from the trade and industry ministry or other functions. They will also need more resources as tasks are devolved from federal

Training will be needed for the Transport Authority and the regional transport bureaus to ensure an effective implementation of this new policy.

Future Access to the Profession in Ethiopia One solution could be to introduce and phase in the concept of the CPC in both bus and truck }};8= licensing system, a minimum requirement for any O license renewal would be that the owner/operator must have a CPC obtained from an approved training school. This will provide evidence of detailed knowledge of the requirements of the profession.

This was a practical solution to similar problems facing Europe 40 years ago. The CPC system has helped to improve safety and instill a sense of professionalism into the industry. It now forms the base from which all O license applications are made. Thus the CPC could herald the introduction of a new O licensing system for Ethiopia. This would be a start in removing some of the unskilled operators and dangerous practices now experienced in both passenger and freight transport.

Access to the profession is not regulated and as a result there are many “enthusiastic untrained drivers” operating in Ethiopia with few restrictions. Greater professionalism is needed in the industry, and professional operators, and the general public, need protection against those who operate illegally in an unsafe manner.

* 8R ;8= [ and for own-account operators in order to prevent these entities from providing services for hire and reward without the correct license. A major virtue of such a system is that the license can be \ an unfair advantage over responsible operators.

The awareness of internationally accepted rules on access to the profession and the need to strengthen the domestic legislation is clearly understood.

154 The key features of improving access to the profession are: jN issued. 0N and domestic transport and involve third parties in the application procedure. +<N<< system through approved with quality course providers.

“Intermediate” Multimodal Transport For short distance transport in remote areas where some mechanical equipment is currently operating, a trial drop-trailer operation using agricultural tractors could be established. This has been proven to work in Malawi. A 275 hp tractor can pull a 10-ton rigid chassis-braked semi-trailer following local tracks or footpaths, where few roads exist. Provided that an automatic braking system is used (a }\<} }='Y pick-up trucks cannot operate with 2 tons over shallow hills and through mud and deep water.

< <R} engage. This means the tractor can pick up a fully loaded trailer and should there be a mechanical failure the trailer will “fail safe”.

For remote collection the tractor takes an empty trailer and drops it for loading. It returns to base and ! picks up the full trailer and returns. Unloading is much quicker than loading. The system could also work in the reverse direction with a loaded trailer leaving a depot and returning to pick up a second loaded trailer.

This system is effective for 10 tons to a distance of about 40 km. Its main use is in clearing or delivering cargo from/to remote areas to a main road storage site or railway station yard for later collection by conventional road vehicles or rail wagons. Possible trial areas are wherever tractors now operate to provide mechanical support. With experience the locations can be extended. When M takeoff. Further details of the scheme are available on request.

q_# produce over 100 tractors a year. In time they could rehabilitate old tractors to save foreign exchange and produce the trailers, all made and serviced in Ethiopia.

Drop-Trailer Operations and Logistics Centres A secure, level, compacted gravel surface parking site of about 30,000 square meters could be established at either Mille or Dire Dawa or possibly both, close to the main trunk road. Secure it with / Line the outside with concrete blocks at axle height to deter ram-raiders. Provide security and perhaps Customs personnel to deter smuggling but not to provide customs clearance here. Facilities provided

155 on the site could extend to customs bonded areas for storage on trailers, but the idea would not be to unload goods here.

The purpose would be to establish an articulated truck and semi-trailer “drop trailer” operation so that goods can be taken by trailer to this location and the trailer dropped for collection by another articulated truck for delivery. One or more articulated trucks could take empty trailers from here to the port and shuttle goods to this secure site for onward delivery. The number of trailers, drivers and vehicles would be determined by the transport requirement.

& if not going to Addis Ababa. This would eliminate the “12-km syndrome” where vehicles queue 12 }

A name for the new location could be “Logistics Centre”. The plan would be to gradually extend ;=} IT systems to act as coordination centre between Djibouti Port, Dry Port 1 at Comet yard in Addis Ababa, Customs, etc., as required. Customer interface would also be provided at a later stage along with ASYCUDA. The facility is to be run by private enterprise and possibly managed through the freight forwarders association.

Allow Change of Driver at Remote Depots Drivers are an expensive item in transport costing but not as expensive as an idle truck. Remote depots could be established where relief drivers could be based and used to create 24-hour truck operations. Possible locations include Mille and Dire Dawa.

This has been tried in Ethiopia before and called “Relay” but it was based in a location central __\_ ___

Interim Arrangements for Customs Clearance Prior to Dry Port Operations Further dry ports at Dukem, Modjo, Mille and Dire Dawa have been proposed by various parties. } rail operation for some years, it is proposed that drop-trailer operations should be considered for ;0&[=& 0;[&[=#' &<

Urban Freight Operational Improvements There are three focal areas in urban freight operations. Some examples from Cities in Europe, namely: Goods vehicle access and loading/ unloading in urban areas; Last mile solutions; and Urban consolidation centres.

It is recommended that urban planners, representatives of the urban road transport authorities in Addis Ababa, and private sector representatives, large businesses start to consider and map out some of the delivery and distribution /logistical options available. PSD Hub could take a leading role in this.

156 Possible Free Trade Zone The National Transport Master Plan Study investigated the various Types of Free Trade Zone that could be considered. The Legal options include the following:

Free-Trade/Export Processing Zone ;0=<;+#= of land which contains production, display or storage units, importation to which is free of domestic << market, but may be exempted for exports.

Special Economic Zone ;$+=+#& }<$"_+# is the Administrative EPZ.

Free Port/Free Zone to a few hundred hectares. Here goods of any description can be imported and stored under customs control, free of customs duties and tax.

Production or processing of the goods is generally not permitted, although the goods can be repackaged <$OP economy is a preferable alternative.

Local Free Trade Zone _} best known international examples, albeit now historical examples, might be those border towns and villages, such as Andorra and Cervigno, on the borders of France and Spain, and France and Italy respectively, which offer, or offered in the latter case, duty-free shopping to visitors, and which

Bonded/Customs Warehouse The more traditional bonded, or customs warehouse. This type of facility usually has customs < consignments for re-export.

Distribution Centre Finally, there is the pure distribution centre, which is, generally, located in a particular place to < point, within a given geographical, institutional and supply chain framework, for the distribution, or importation and distribution, of a particular commodity, or commodities. Whilst, they can have a bonded warehouse on site, dependent on whether the intended market is national or international, although the standard distribution centre serves a domestic market.

157 It is recommended that a customer survey be conducted to obtain more concrete data on precise __<?\0$ would normally be operated by the private sector with full customs participation.

YW_>{ Introduction );^Y=+R# $ Khartoum and agricultural exports via Port Sudan. There is little trade by road with Kenya or other $ though not often detected.

The needs of Addis Ababa dominate at present. This is where 92 percent of Ethiopia's imports clear Customs, and where 76 percent of exports, including coffee, start their export journey. Other towns __} dominance anytime soon.

Issues needing to be considered are: '= X= /=+$[;+$[= >=&

1. Dependence on One Country and Port The dependence on one port, in a foreign country, makes Ethiopia very vulnerable to any unexpected interruptions in supply. The heavy dependence on Djibouti for foreign trade and fuel distribution is disturbing.

The Eritrean ports of Assab and Massawa are needed by the country, but so long as they are inaccessible !#$<M perhaps Lamu in Kenya also in the future, if this is developed. The Master Plan included measures to increase the viability of alternative ports for Ethiopia. Development in the neighbouring ports is of +R industries such as freight-forwarding, etc.

Djibouti Port: Shared political will is explained by the fact that both Ethiopia and Djibouti have __ + (Y?Y+ thus in prime position as the logical and favored partner. A favorable commercial climate has existed at Djibouti for decades.

Port Sudan:8_j"} makes any economic sense.

Berbera Port: A study in September 2003 concluded that much work remained to be done there for

158 the Port to compete with Djibouti Port. Attempts to use the port for project cargo and containers in the last few years have not been a success.

Port of Assab: The Port would need a lot of rehabilitation and access is uncertain in the near future. storage tanks, however, are still there and could be used in the future. For both Assab and Berbera Port in the recent past, the containers consigned to each port were transshipped through the Djibouti hub.

Mombasa Port: The route to Ethiopia is through Moyale border crossing. The distance to Addis Ababa by road is around 2,000 km, making for a costly supply operation. (As an indication the }>}#=

2. Location and Connectivity of the Inland Clearance Facilities Some 70 percent of +R)+$[ has been considering a plan to develop an inland clearance depot ;*&OP=__ At present Comet, another state-owned enterprise, provides such a depot, and has invested in a major development.

The establishment of through bills of lading and adoption of a multimodal transport law are pending, after which the methods of operation can be streamlined to take advantage of the new facilities. The &<'Y< located by the ring road. It lacks a rail connection, and proposals for this were included in the National Transport Master Plan.

Additional dry ports elsewhere are being considered at the present time. MoTC has proposed dry ports at Modjo and Mille.

As over 90 percent of imports are cleared in Addis Ababa, the viability and purpose of additional dry ports needs to be carefully evaluated. The core of dry port infrastructure is a good concrete base \<

3. The Role and Financing of Ethiopian Shipping Lines Djibouti is an international port +$[;+$[= wholly owned by the Ethiopian Government.

There is a Government requirement that imports must be shipped on an ESL bill of lading, which effectively gives the line a semi-monopoly of Ethiopian trade. At ports of origin where there is no ESL service, shipment has still to be arranged by the ESL agent, where there is one. Otherwise a @$JYY(YY

_}+$[ _ M M z< } their choice, without any penalty in time or cost. This will reduce costs and allow improved services to develop. The key issue to be dealt with is the present system and the privileged position of ESL and MTSE, which adds directly to transport costs. It also reduces the opportunities for international 159 + port facilities and multimodal transport through the operation of international through bills of lading.

The role of ESL needs to be re-thought. If ESL is to continue as a national carrier, particularly for Government cargo, its policies and planning need to be more closely attuned to the needs of the transport sector as a whole. ESL needs to be transferred to MoTC, which could seek joint-venture partners for it in the medium term. These measures should ensure that the private sector is able to economy.

'>!W International road transport is hardly developed and Ethiopia is not yet a signatory of several useful _0 };<= be taken as an important objective.

& clearance at the Comet depot. This is sometimes due to incomplete documentation and lack of funds &$ documentation in the form of the COMESA single administrative document has been agreed but not implemented. There are also Customs checks along the roads which add to costs and delays.

;= on a through bill of lading and be Customs cleared only in Ethiopia. This would reduce delays at the port and have advantages for the Ethiopian economy as clearance and cargo handling (stripping = distribution and consolidation.

There would thus be more container movements in and out of the country than is the case today. Using the multimodal through bill of lading shipping companies would take responsibility for the multimodal transport between the overseas point of origin/destination and the dry port within Ethiopia. This will give opportunities for more transport by rail in future.

8 & Ethiopia rather than in Djibouti.

*OP< +\& to be based at perhaps Mille and Dire Dawa.

At present road transport faces many obstacles through interference in the allocation of loads, Customs checks, unnecessarily frequent weighing of vehicles on some routes, and other checks by \ peak periods. A trade and transport facilitation committee should be created as a sub-committee of the National Transport Council. This should aim at eliminating all unnecessary non-physical barriers <

160 8'Z/X^ +8R)_\ )M'/ areas of trade in goods; j_$;j_$=M trade divided into 12 main sectors; and _%*#%;%*#$=— agreement covering 7 intellectual property rights.

8)'JXYY(0}#+R8 _+R8_\ It serves as a tool to lock in reforms; It ensures market access for Ethiopian exports; It provides for a transparent and predictable regulatory framework; It prohibits arbitrary and discriminatory restrictions on foreign trade; *+R* +8R with other WTO members; and It provides a platform to integrate Ethiopia in the multilateral trading system.

Details of the WTO [Developments in the Freight Industry — World Experiences] are provided in _<(_(!\8_

Y} Transport Passenger transport outside the cities is provided by private bus and minibus operators, organised into passenger transport associations. The associations decide the routes, the schedules, and propose the fares for state approval. They normally rotate the schedules to share the work and income equally among all the members.

Possible issues for discussion include the following: Allocation of bus routes to operators.

Urban Transport Improvements in Addis Ababa *__ the city, which has close to three million people, most journeys are made on foot. Car ownership is (Y

+_< and the introduction of new bus services in Addis Ababa. Authorities are now questioning whether they <_+< with demand-responsive minibus services over the past decade has indicated that this is not a panacea for Addis Ababa's urban transportation problems. Improvements have to be made so that operational reliability and cost effectiveness of more traditional urban bus operations can improve.

161 In Addis Ababa, this means an enhanced city bus service will be required using more large vehicles M}M space, and allow the existing street network to be used more effectively. The expansion of the bus network, together with greater consideration of pedestrian needs, would seem to be the measures that ! to operate than minibuses, and can offer lower fares, as well as causing less congestion. The city *\ contracted out to the private sector, to develop skills that can later be harnessed in the development $ __

A proposal has been made for the purchase of city buses and the construction of new bus depots in ____ ;XYY?MX?@$ J?Y@$//Z=

Reform of Associations The system of sharing the work among transport association members leads to a perpetuation of low levels of vehicle productivity and service standards. The system has no inherent mechanism that will lead to service improvements and/or lower costs through greater productivity. No one individual }

If all operators have the same revenue and operate the same schedules, doing the same job, the incentive is simply to do this job cheaply, and never mind the state of the vehicle. Idle time between trips becomes simply a fact of life. Investments in improvements simply cannot pay for themselves, and the overall standard remains that of the lowest. The system of sharing the work in transport associations is thus anticompetitive and needs to be phased out, so that the market economy can be allowed to work and success in the business can be rewarded, and failure punished. Vehicle productivity can be improved, standards raised and a cadre of professional transport managers can become mandatory.

The passenger transport associations should still have a role to play in providing services for their members, but they should not be allowed to decide routes or schedules. These should be prepared by the individual operators for approval by the Transport Authority.

Addis Ababa City Transport Organisation A second main institutional change is proposed for Addis Ababa, where the many tasks are divided between agencies and there is no overall responsibility for making and implementing integrated combined Addis Ababa City transport planning and management authority is proposed. It is named __&8;__&8= Authority, which would of course retain its regulatory role.

162 Chapter Ten

Synthesis of Study Recommendations other recent studies, many of which have been focused on Road transport sub-sector in Ethiopia. This approach relies, to a certain extent, upon the relevance and the accuracy of the research and analyses research are suggested, these have been added to the proposed Action Plans and Timelines.

Vision Statement +R } resulting in high transport costs and a low level of accessibility to services and markets. The transport +;= will contribute to the overall national objectives by creating development opportunities (by expanding }=; = protecting the environment.

* Vision Statement, to set the frame and direction for the improvement of road transport operations in Ethiopia. A possible initial frame could be along the lines of the following:

The strategy aims to: Develop strategic options for the road transport system to promote an integrated inter-modal transport system based upon comparative economic advantages, and to enable the release of the full potential for private sector involvement in the sub-sector.

Policy Statements There is no formally declared transport policy, aside from the statements in the Economic Policy during the Transition Period in November 1991 and proclamations governing Road Transportation. In principle, however, the Economic Policy signaled a major departure in the role of the state as regulator and operator to a regulator only, with key role played by the market.

_##;=@&+$ India. COWI/GOPA Consultants engaged in developing policies and strategies for the different modes of transport, as part of the National Transport Master Plan Study. This framework permits the Government to design policy for commercial road transport, based on diagnosis of the situation in relation to likely trends in macroeconomic performance, international trade prospects, domestic trade, agricultural output, market integration, the overriding focus on poverty reduction, and other factors such as the elasticity of demand as well as the price of petroleum in the international market.

Once policy on road transport is declared by the Government, it would be possible to more effectively address the role of the private industry in providing passenger and freight transport services. The

163 commercial road transport.

The objectives of a well-elaborated commercial road transport policy (elaborated in more detail in Annex 9: National Transport Master Plan: Strategic Direction for Road Transport, is expected to include the following: # of both the rural and urban population; * purpose of enhancing competitiveness; Make public passenger transportation services affordable to the population; Compliment the sectoral objectives of agriculture and rural development, food security, road development, water resources development, urban development and environmental protection etc; Ensure that the role of private sector is enhanced by matching demand and supply, and <\ _< Give particular attention to the development of conventional bus and mass transit services meet the transport needs of urban centres, of which Addis Ababa is the most important. Also, determine the most appropriate means of transport and service levels for all urban + \ Improve road safety by further promoting driver related, user related, vehicle based, Introduce measures to reduce fuel consumption by encouraging the use of better technology vehicles so as to address the burden of increasing the import bill; Strengthen enforcement of axle load regulation to reduce the overloading of commercial transport vehicles and avoid premature distress on road pavements and further increases in road maintenance and vehicles operating costs; Improve ambient air quality by reducing the level of emissions of oxide of Nitrogen, Sulphur Dioxide and Carbon Monoxide to address respiratory health problems associated with air pollution. This requires establishment of norms for pollution control and \ Strengthen the policy formulation, planning, regulatory and quality control capacities of federal and regional transportation institutions.

@ *%_Oq Transport Master Plan for Ethiopia” ;%= XYY?zXYY( 0;'>=$ _'Y'

164 %+%!`

Objective Action Description '= Introduce CPC, ADR, DGSA and Customs training for With assistance from EU fund a programme to introduce national “Train the Trainers” and cascade to establish courses and international CPC to raise the awareness of the changes needed for MoTC staff, transport managers, commercial driv- in legislation to reduce accidents and improve commercial vehicle ers, etc. } X= +};8= &Establish a system of control, and review the policy and law on licensing and access to the profession, to manage qual- access to the profession to gradually introduce the international ity and safety of truck and bus operation in Ethiopia. 8

&Introduce a requirement for approved parking sites when not in use to ensure safety of vehicles and pedestrians and to limit vehicles parked in residential or unsafe areas. /= Strengthen the vehicle testing regime for all vehicles Strengthen the testing procedure by changes to the law and re-estab- to ensure they comply with a new law on Construction lish private testing stations equipped with internationally compliant and Use to be introduced. equipment to check all aspects of vehicle roadworthiness. Enforce XY hicles over 15 years next and gradually extend the enforcement to >= Establish the Road Safety Council with authority to act. @<\} New legislation planned. practice of the enforcement agencies to implement the law. Establish #+%_ Z= Insurance, banking, lending and leasing reforms. % investment sources to look in more depth at the constraints facing the transport industry. Investigate leasing opportunities. J= Identify preferred locations for future dry ports, bus By government tax incentives encourage private investment or pub- ;*[&R= lic-private partnerships in approved facilities when needed. Ensure through market research that investment is matched to demand and customer requirements. ?= Establish compulsory CPC testing before license issue Training to be established at Kaliti and other key locations for na- for truck and bus operators. tional and international CPC's. Regional training courses to be established. (= Establish compulsory ADR training prior to license Establish ADR in law for drivers and compliance of vehicles. Re- } quire license to be issued to each driver after training, renewable ucts. every three years. Vehicle testing to comply with ADR to be phased oldest vehicles.

^= *R The new test would be based on best practice requiring written and road vehicles. driving experience that is compulsory and unable to be obtained by payment alone. This to include a retest of drivers prosecuted for ; = 'Y= * For new cars this could be introduced immediately and for older ve- belts. hicles phased in. Non-compliance will result in a failed vehicle test. ''= */ Bring legislation in line with best practice. If insurance is not pos- theft for cars. sible due to vehicle condition it has either to be repaired or scrapped.

'X= Introduce a driver logbook system for all heavy R commercial vehicles over 3.5 gross tons followed by trolled with immediate effect and enable the authorities to limit the / driving hours of freight and passenger bus vehicles. (Digital tacho- years old. = '/= International Driving Permits. Establish in law the status of such permits for tourists and other visitors to prevent the considerable confusion that exists today (there should be no need for tourists on visits less than 90 days to apply for +=

165 Objective Action Description '>= Introduce improved road markings and signs in Addis &Road markings on paved roads should be applied consistently. Ababa and on the rural road network The application of double white centre lines needs special care and training, as if not related to sight distance the system falls into disrepute. More signs are needed on gravel roads where road markings are impracticable.

&The use of “box junctions” in Addis Ababa should be considered as these are a low cost way to reduce blockage at junctions and could have immediate effect.

&) tourists and other visitors, to avoid loss of time and fuel.

It is understood that most of these proposals have been accepted as policy by the GoE. The National Transport Master Plan recommendations for this sub-sector provided above have been elaborated in _<'Y\q)#$_% Industry, which incorporates details of proposed Timescale and Initiator/ Responsibility against each Action.

Development of Wider Action Plans by Implementing Institution In a second step, the present study assimilated the detailed proposals for the Road Transport prepared by the National Transport Master Plan for Ethiopia XYY?zXYY( _ # been considered quite carefully. If the Action Plans were to be expanded to become mere “Wish- lists”, they would lose credibility and would never be implemented. In this study, the consultant carefully adopted the Ethiopian National Transport Master Plan approach. These proposals have been presented to the GoE and other Stakeholders in Workshops and are understood to, in most parts, have been subsequently accepted as policy by the GoE.

The Action Plans need to be read in conjunction with the principal road transport sub-sector strategy. The Action Plans are organised not by transport mode, nor even by type of activity (policy = to ensure that the road transport sub-sector interventions are successful.

A reasonably limited number of targeted Action Plans have been incrementally expanded, in particular #q^\#$__&&$_R#$¢#$£ Hub.

$;^Z=_<;'J= 'YX$} by the Addis Ababa Chamber of Commerce and Sectoral Associations, Private Sector Development ;#$=_#q^_# Annex 11: Action Plans for Principal Actors with Timelines.

166 Table 10.2 Action Plans: Recommendations by Principal Actors

1. Action Plan: Ministry of Transport and Communications

Activity Indicators/Goals/Targets

'= Introduce operator licensing #q>J(zXYYZ

X= Make CPC a requirement for new operator licenses #q>J(zXYYZ

/= q &$ &Regulations on tyre condition, seat belts and mobile phones in place &%R &Regulations on fuel quality and vehicle emissions updated and coordinated &Regulations on amounts of alcohol and chat allowed in bloodstream adopted

>= Create Implementation Unit Unit created and fully staffed

Z= New General Transport Law Law enacted

J= Create National Transport Council Council created, meeting twice yearly under Prime Minister

?= *}+ Frame established sector (= [With the Transport Authority and Regional Transport Of- Capacity building program established £\!

^= Prohibit restrictive practices by transport associations; al- #q>J(zXYYZ

'Y= Study for new system of providing interurban bus ser- Study completed, trial started vices, and introduction of trial

''= Implement rail line to Doraleh and branch into Comet [ Yard 'X= Create Railway Infrastructure Authority Authority created and staffed '/= Study of Sudan rail links and possible Berbera and Assab Studies completed connections, international road links

'>= Develop international road transport (bilateral/interna- Agreements to be signed and implemented =8

'Z= Establish National Road Safety Council Council established and reporting to Prime Minister

2. Action Plan: Ministry of Finance and Economic Development

Activity Indicators/Goals/Targets '= Strengthen oversight of transport sector; approve investment _ studies and back-checking (post-evaluation of project success =

X= Permit a public transport levy on fuel to support public trans- Levy approved port in Addis Ababa and other cities (could replace municipal <%0=

167 3. Action Plan: Addis Ababa City

Activity Indicators/Goals/Targets '= &__&8;__&8= AACTO created and fully operational and subsume AACRA and others into AACTO

X= +__&8 Plans and budgets /= Assume ownership of Anbassa from PPESA Ownership transferred

'Y_$,

Activity Indicators/Goals/Targets '= Establishment of AACTO AACTO created and fully operational X= $#+#_ Tasks completed and Anbassa /= $< ! >= +M Solutions proposed and implemented Lagar station Z= Addis Ababa Transport Plan Plan approved and implemented to schedule J= Air quality monitoring system Monitoring and reporting system in place ?= Purchase of new buses or trolleybuses; provision of bus depots, Progress as per Master plan including arranging technical assistance for new bus operators ¢q\_ZYY buses in 2009] (= &;= Progress as per Master plan ^= Create new bus service subsidy and franchising arrangement Arrangements in place and proclaimed by regulation 'Y= Continue road network expansion, while increasing expenditure Progress as per Master plan (as adapted by future Addis _#= ''= Study on the regulatory arrangements needed for urban bus and Study completed, trial started minibus operations

;Y>@>

Activity Indicators/Goals/Targets '= Install line into Doraleh port [ X= Install line into Comet Yard [ /= Agreements with oil companies Agreements completed >= Tank depot sidings $ Z= Continue rehabilitation Staged programme for full rehabilitation J= Install three-year management contract if no concession agree- Contractor assumes management role ment [Note: No progress on concession agreement as at March 2009] ?= %;= Permanent solution in place (= q_}}_}}M__j $[ ment for 20 years use ^= Provision of new rolling stock Orders placed. Deliveries completed 'Y=Communications, train control and ticketing Orders placed. Facilities installed and in operation

6. Action Plan: Comet Transport Share Company

Activity Indicators/Goals/Targets '= Create separate accounting/business units for trucking and dry port Units created and functional operations X= Create separate companies for each unit Companies formed

168 Activity Indicators/Goals/Targets /= #} }¢q\# ;< years] >= Enter into joint venture for dry port operations Joint venture entered into

7. Action Plan: Ministry of Labour Affairs

Activity Indicators/Goals/Targets '= Make plan with TA on how to enforce existing legal maximum Plan accepted by TA working hours for road transport sector workforce ;_=

X= %_R Plan accepted by TA ;_=

8. Action Plan: Ministry of Trade and Industry

Activity Indicators/Goals/Targets '= #)$+ +¢q\ ;<£ X= +##+$_} Measures completed. [Note: The Walia Public Transport and Walia bus company, and transfers Anbassa to Addis Ababa and +XYY^£ Jimma cities

/= %+$[ Proposals agreed by NTC private sector >= Study of optimal future ownership of ESL; implement same Proposals agreed by NTC

9. Action Plan: Private Sector, including AACCSA’s Private Sector Development [PSD] Hub

Activity Indicators/Goals/Targets '= Chair a Forum for discussion of issues and for making proposals for Forum established

X= Implement Capacity building, with emphasis on business planning, Capacity building established

/= 8}) 8} Logistics >= Develop transport and logistics services in all modes Value-added in transport and logistics sectors

Z= Establish passenger and freight transport user associations Associations established and invited to NTC deliberations

J= Undertake a seminal Study of Urban Freight Operations in Addis Study completed Ababa

?= @}$0_0 Study completed etc., on Transport costs

(= $)+ Database established

^= Investigate commercial opportunities for drop trailer operations Study completed

'Y=Private Sector encouraged to develop terminal facilities, modern Increase in Private Sector investment in these activities vehicle maintenance workshops, warehouses and other related facilities, etc

''= Improvements in loan tenure period and availability of credit rates for industry loans to industry

169 10. Action Plan: Privatization and Public Enterprises Supervisory Authority (PPESA)

Activity Indicators/Goals/Targets '= Transfer Anbassa bus company to Addis Ababa and Jimma Anbassa transferred cities X= #};} 8¢q\# &= ;<£

/= Restructure Comet as dry port operator in joint venture with Comet restructured private sector

11. Action Plan: Regional Transport Bureaus

Activity Indicators/Goals/Targets '= Introduce operator licensing All commercial road transport operators to be licensed by 2010 X= Create CPC system and approve training institutions in all Trainers trained and schools licensed by 2009/10 z /= Make CPC a requirement for new operator licenses All new licenses, and all license renewals, after 2012 to depend on CPC >= Enforcement of labour laws for all commercial vehicle driv- &Log books introduced and regularly checked. ers &Number of inspections, violations and prosecutions Z= # % regulations J= Prepare routes for night operation Routes agreed with ERA/RRA's and night operations permitted

?= Prohibit restrictive practices by transport associations; allow Implementation of revised proclamation

(= Construct New bus terminals Terminals constructed as needed; paved surfaces and good passenger facilities

12. Action Plan: Transport Authority

Activity Indicators/Goals/Targets '= Introduce operator licensing All commercial road transport operators to be licensed by 2010 X= Create CPC system and approve training institutions in all re- &XYY( zR licensed by 2009/10 /= Make CPC a requirement for new operator licenses All new licenses, and all license renewals, after 2012 to depend on CPC >= Enforcement of labour laws for all commercial vehicle drivers &Log books introduced and regularly checked. &Number of inspections, violations and prosecutions Z= # % tions J= Introduce mandatory third-party motor insurance, with agreement $ of Ministry of Health

?= Prepare routes for bus night operation %+%_z%%_R (= Promote new bus terminals in Addis Ababa and elsewhere Addis Ababa terminal complete when bus way opens. Other cities as required. ^= Prohibit restrictive practices by transport associations; allow li- Implementation of revised proclamation %<

'Y=Sub-contract or franchise some long-distance routes to operators Implementation of route franchises

''=Develop international/bilateral road transport agreements Number of relevant agreements entered into; number remaining; number implemented and in force

170 13. Action Plan: Ministry of Education

Activity Indicators/Goals/Targets

'= Work with NRSC to promote universal road safety educa- Schools visited and number of hours per visit and children ad- tion dressed X= Work with MoTC, TA and RADA to develop appropriate Transport sector training needs assessment completed; courses academic and professional education in the transport sector designed and introduced; numbers of teachers and students compared with plan; pass rates and international benchmarking of standards

%'Y!$!,

Activity Indicators/Goals/Targets

'= Formation of Council Council formed X= Council to develop its database of accidents and causes, and its Plans approved and implemented to schedule short and long term plans based on analysis

%;Y

Activity Indicators/Goals/Targets

'= + _ and training ment plan prepared. The implementation of this plan must be monitored. NRSC to be involved in plan development. X= Develop means to identify unsafe levels of chat in blood- Report produced on safe/unsafe levels and regulations in ;= place

/= +} Number of violations of each key element. Penalties and ;q%$&= ;q%$&=

>= Develop means to measure harmful emissions from road Report produced and measures in place vehicles

Z= }__&8 Desk established and equipped; memorandum of understanding agreed with AACTO on roles of each body

16. Action Plan: Road Fund Administration

Activity Indicators/Goals/Targets '= Gradual increase of fuel levy, to reduce dependence on value- &Percent of revenue received from each funding source. added tax, and to ensure income increases in parallel with &Amount of revenue compared with demands from road road maintenance and safety funding needs authorities and NRSC X= Public transport levy on fuel to support public mass transport Levy agreed. Amount of revenue collected and disbursed in in Addis Ababa and other cities (could replace municipal tax, relation to public transport plans %0=

Source: National Transport Master Plan Study for Ethiopia, Consultant’s estimates.

Possible Follow-Up Process *<z main area of possible follow-up suggested falls under the category of review of the budget envelope ;=

Review of the Budget Envelope (Approach to Financing) Ethiopia's development creates large demands for transport investment in all sub-sectors for ! * 171 *;%0= ;#$#=

#$#}MZ'Y period it seems inevitable that sub-sector funding will need to be a combination of: 0<< Utilising donor funds where available; and Preparing the PSP environment, building capacity quickly, assisted by experimenting with PSP concessions.

Developing Budget Envelope !+ existing road transport sub-sector strategy. Its strategic output would be:

The formulation of a Core Sub-sectoral Investment Strategy consistent with a “low” budget ;OP= Rough prioritisation of and “extra” investments or interventions, to be implemented if higher levels of spending become available. This could be called the Core+ investment/intervention strategy.

OP } 8} account the credit crunch, further discussions could be made with appropriate parties to look in more detail at some of the additional information raised in this study.

172 ANNEXES

ANNEX 1: Minibus Taxi Service Supply Characteristics Introduction )&R taxi operations are of great importance in the capital, and consequently there are some important reference documents for urban bus operations in Addis Ababa, and the reader is referred to these, notably the detailed: “ Study of Urban Public Transport Conditions in Addis Ababa, Ethiopia” Public Private Infra- structure Advisory Facility PIAF, World Bank, IBIS Transport Consultants Ltd March 2005; and “ Diagnostic Evaluation of Public Transportation Mode Choice in Addis Ababa” Mintesnot Gebeyehu and Shin-ei Takano Hokkaido University, Sapporo, Japan Journal of Public Trans- portation, Vol. 10, No. 4, 2007

For ease of analysis, the Annex is sub-divided as follows: Urban minibus taxi operations; and Metered taxi operations.

Operational Characteristics – Minibus Services Routes Operated 'YJ__ the operators break these routes down into smaller sections, particularly at peak times, in order to exploit the <_ many as 300 route segments, but has not carried out a detailed analysis.

There are two consequences of this multiplicity of routes within the urban network. First the level of service $} have a high overlay on other routes that increases the potential for on-road competition even within a regulated system.

The Transport Authority is planning regulatory reform for this sector, but this will not take the form of route franchising or service contracting. Rather the development of strong area-based owner associations will be }

Scheduled Timetables Minibus taxis do not operate to scheduled timetables. Rather, the practice in the industry is for each vehicle ;OP= This can provide a good level of service throughout the day on more busy routes, but often results in excessive waiting time in the off-peak period for quieter routes.

Service accessibility along the routes also suffers, as vehicles passing intending passengers near to the terminals will mostly already be full. As a result, passengers are forced to walk to the terminal even if another boarding point would be more convenient for them.

?>J

Obtaining estimates for minibus kilometres is not at all easy. Owners have no clear idea of what their drivers R} R}};= 175 ;!=! and assumed rates of consumption under Addis Ababa operating conditions.

The study on improving transport interviewed both the owner associations and a number of drivers at three of ;#)$=8XYY }OPJ( age route length of 14 kilometres. Given that the weighted average trip length for minibus users surveyed was 5.5 kilometres, this would appear to be on the high side.

ZY'JY} J'Y}%)\} ity, possibly involving the carriage of produce as well as people, their data should probably be ignored. Figures '>Y};#= ?Y}};$=

Owners and drivers associations were more consistent in their estimations of fuel spend, with this ranging only from Birr 120 to 140 per day. This is broadly consistent with estimates given by the Transport Authority of 30 ;!'X^'JZ=

} <(Z}_ Ababa operating conditions. Implied distances run therefore range from 240 to 110 kilometres. Observation suggests, though, that the large majority of minibus taxis are still petrol engined (vehicle age, reported country }}= and so the implied distance operated would be at the lower end of this range.

R #!'/Y'XY} assumed consumption for petrol-engined vehicles and this would be consistent with their kilometre estimates. $!^Y(Y}# haps the average rate of fuel consumption is slightly higher without much off-peak operation out of congested

'(Y}J'Z} <* came from an arithmetical mean of observed route lengths, and not the geometric mean of 11 kilometres that is probably more appropriate. On the latter basis, daily kilometres would be around 135.

Fuel consumption was estimated at 25 litres of petrol daily, suggesting a distance operated of about 125 kilometres at the assumed consumption given earlier. Combining the two estimates would result in a typical daily '/Y}_ and with the earlier analysis.

8(Y?ZYY }(YYYYY0/Y< XX};$= kilometres run by Anbassa, and would be consistent with a broad equality in their transport volumes allowing for the difference in their respective passenger capacities.

176 Driver Training and Control <&/ tion and testing than for a private car. Drivers of larger buses require a Class 4 license, with even more stringent } bus. These requirements do provide the potential for a better standard of driving of taxis and minibuses than

However the Transport Authority advises that the current design of driving licenses can easily be tampered with, and relevant details altered or the photograph replaced. As such, a new more secure design of license is to be introduced with tenders for the necessary equipment already having been issued.

Pending the introduction of this technology, the Transport Authority is severely hampered in its enforcement activities. In particular, the more severe range of penalties applicable to repeat offenders becomes impossible to apply if license details are altered.

Vehicle Maintenance Practices No operators interviewed claimed to undertake any preventive maintenance for their vehicles. Rather, their general practice is to undertake essential repairs only when absolutely necessary to ensure continued operation. Requirements for roadworthiness assumed a low priority under this regime, and no real pressure was felt from the enforcement agencies.

_ }'(< tive sanctions against transgressions of their duties.

Service Monitoring There is no body, either within the local civil administration or the operator associations, that monitors and controls service delivery on a formal basis. However the Transport Authority has a small research group that monitors services on an ad hoc basis in order to improve its understanding of the workings of the sector.

+}R ! }}_ will receive complaints, but again on an ad hoc basis.

_ R turing on an area basis. Responsibility for operational control will rest with the associations, but the Authority would still monitor service delivery.

Bus Terminal Management Minibus terminal management is provided by self-appointed +, literally taxi-order attendants. These are referred to in the referenced studies as “marshals”, and that term will be used throughout this report.

The urban transport study reports that the marshals have formed into informal “community co-operatives” or “unions” based on terminals. Membership fees are reputed to be as high as Birr 2,000 per year, which is both \

It seems most unlikely that the cooperatives would need to collect such sums for their own immediate purposes, _ 177 detailed investigation would be needed to quantify the problem.

Minibus drivers make payments to the marshals either for the right to use the terminal for the day if operating <\}&!YZ'Y and could result in payments up to Birr 10 per day as a consequence, according to the urban transport study.

$} also taken into account, and might even reach Birr 20 per day. If so, the extraction from the operating industry would be around USD 2.3 per vehicle per day. This would still place it towards the bottom of the range falling _;@$'?=";@$'Y=

__ reforms. The proposed structure would require the marshals to be employed by, and reporting to, the owners associations. The Authority considers that it has the necessary powers to instigate such a relationship, and to * }

Operational Characteristics: Minibus Services );= 0 services and Addis Ababa city taxi services are dominated by this category of vehicle.

)XY _ and the associations are weak to promote improved service quality and accountability.

}< $}%8 have opened the way for minibus operators to be engaged in long distance contract service at a relatively high rate not affordable by the poor. Furthermore, the extension of minibus services to long cross-country routes and covering the distance in a very short time, coupled with poor driving skill have raised serious safety concerns.

&?ZY}__j(< on how a lack of regulatory control can expose life and property to high rates of accident. The uncontrollable movement of minibuses and unfair competition have led to reckless driving and poor discipline, excessively long hours of driving thereby endangering safety.

Taxi Development in the Capital City Residents of Addis Ababa have had to face great inconveniences, as well as additional costs to the daily trips to their various destinations. Taxi drivers and their conductors often take undue advantage of the acute shortage of public transport in the city to determine both the length of their routes and the fares they charge.

___R* M'X< 500 midi-buses that seat 22 to 27 people which are fairly new entrants yet getting increasingly popular, and the /YY;/Y?Y=M public's demand for city transport.

The particular acute dearth of the service during peak hours causes despondency among those who really need }* <}* 178 ance the daily revenue expected from them, as the hours in between the peak periods are spent predominantly in unproductive use.

Often passengers must wait for a taxi for more than half an hour at the "taxi terminal" near Mexico Square. __ << 8;= with commuters to go the longer distances at a slightly higher fare.

The minibuses are the main culprits of some peak hour extortionate fare levels. Taxis often take advantage of the shortage of public transport. However, some drivers of minibuses argue that the main reason they cut trips

_<j)<$/YY!<_'Z 45 Birr in extra income depends on how much over the driver sets daily on the 100 birr revenue target that he has to hand to the owner of the minibus.

With a daily extra income on average of 15-20 Birr, trip cutting will result in daily income as high as 40-45 !)}$ would enable minibuses to increase the current average six trips a day to seven, and would help generate more for service providers, whilst also serving the longer trips.

works currently ongoing on almost every part of the city. In the meantime, with no immediate solutions in sight to absorb the increasing number of commuters, the apparently unregulated minibus operators may continue to operate in any way they choose, something most commuters believe is tantamount to abusing residents, as they have to pay extra money to get to their destinations.

According to the 2005 Urban Transportation Research Project Report by the Addis Ababa City Transport Au- thority, residents of the metropolis make 3.4 million trips every day. Of this, students' trips account for 30.2 'J?} tions. Some 4.9 percent are business trips.

%0___!8//J Anbassa city buses that are now operating to handle the vast majority of about 1.2 million commuters, while the nearly 500 midi-buses service 700,000 commuters. The second largest group of commuters (1.1 million in =XYYYY<# JYZ

<\ absence of a policy and strategy to regulate the transport system; the increase in demand for transport stem- ming from population growth; the shortage of vehicles to cater for the demand; and in sharp contrast, an in- }

XYYYY<;'XZYYXYYZ='YZq the chairman of the Taxi Owners Association stated that not all the 20,000 taxis are on the road at any given time. A number of them left the trade, due to old age, rising running costs and the absence of proper regulations governing the sector. It is estimated that the taxis currently operational do not exceed 14,000.

A further reason for some owners going out of the business is the alleged swindling by the drivers and their assistants. In addition to covering their meal expenses from the daily income, drivers and their assistants get 20 to 30 birr in pocket money each day, but they can also take an additional 50 to 60 birr a day on the sly. Drivers and their assistants often make the extra money from customers' side of the business, through cutting trips and charging extra during peak hours. 179 Operational Characteristics: Metered Taxis Sheger City Meter Taxi S.C. is a recently established urban transport private company, which launched new and modern business meter taxi cabs to operate on a system using distance meters.

Under the meter-based system, fares are determined based on the distance the taxi travels through to get to its destination regardless of the types of roads. The meter taxis will not be limited to a certain designated areas as in the case of the present taxis according to the Manager of the Federal Transport Authority, Addis Ababa !8<<#'ZY vehicles, expected to be delivered in a couple of months, will have "state-of-the-art" features. Apart from the taximeter for pricing and receipting, they would have a radio communicator. Customers can also call the central dispatcher to get door-to-door service. They also have a built-in DVD and LCD for broadcast commercials and entertainment. Each of these custom-made vehicles is expected to cost 230,000 Birr, according to promoters.

When these vehicles start business, after six months, the already crowded streets of Addis Ababa would have to handle more cars, while city residents will have another option to urban transport with the meter taxis being exclusive to the capital. Sheger, however, envisages expanding the business to other towns as well.

Currently, some 14 to 20,000 taxis serve the over 3.6 million inhabitants of the metropolis, where 1.2 million people are transported in 105 lines each day. The taxi sector has created 25,000 direct and 12,500 indirect job opportunities. However, the plate number of the taxis in the streets of the metropolis has already gone beyond 20,000.

180 ANNEX 2: CNGeneral Issues Introduction For the market economy to work effectively, competition needs to be on an equal basis so that the most ef- !} the assets remain and will be used by others. The threat or reality of bankruptcy is an essential part of the

The Government does not yet insist on realistic standards of vehicle condition that would eliminate some of the or other road users.

$j} no clear pattern of use and cross over from “own account” to “hire and reward” as demand dictates, confusing an already confused market, while operating with vehicles donated free from many sources. When they do this }OP

This is a matter of balance. There is a need to protect the “equal rights” of the commercial road haulage indus- }\< extent possible. Licensing such operations for hire and reward purposes would at least allow the extent of the problem to be diagnosed.

*O8R[P_ wish to offer an additional hire and reward service should apply for the hire and reward license.

There are also “endowment” companies in Ethiopia funded and operated in a manner that may get advantages over private Ethiopian operators, although this may change in time, as some endowment funds seem not to

As a general rule current government policies and the tax regime do not create an incentive for private compa- < ;\=<

Restrictions on Foreign Investment Presently there are also government policies in place that restrict investment in transport by foreign investors which inhibits the free market principles found to be effective in many other countries, in Africa and elsewhere, in boosting the economy through joint ventures.

The following areas of activity are exclusively reserved for domestic investors: Car hire and taxi-cabs; Commercial road transport; Inland water transport; and Customs clearance services.

In addition, only Ethiopian nationals may invest in air transport services using aircraft with 20 seats or less.

It is natural for the government to want to protect local transport industries but by doing so they protect a road

181 transport industry which cannot progress, for the reasons already given, to the detriment of the economy as a whole. The result is an adverse effect on growth and poverty reduction.

+$[;+$[=) $+;)$+=$+R 8;8=

Commercialization Public ownership is not the real issue but if they have privileges denied to the private sector they reduce overall +$[ way of funding that organisation needs to be found.

Some operational constraints are seen where government departments with government contracts for the movement of goods are obliged to use only state-owned shipping and freight forwarders and state-owned freight who belong to transport associations.

In practice this leads to a cascade effect when large government contracts are awarded, leaving only crumbs of work for the private owner-drivers who are at the bottom of the pile. This policy also limits the ability of

should be proceeded with as quickly as possible. Government policy on transport should additionally be to introduce internationally acceptable rules and regulations and then to enforce them.

182 ANNEX 3: Bus Fares and Tariffs Introduction _< of the road passenger transport industry.

Historical Bus Fares Intercity Bus Fares Bus fares have now been deregulated for small and medium buses in the intercity sector. For long-distance they remain controlled by the Transport Authority, though TA will duly consider requests made by the associations for an increase. From January 2001 to December 2003, fares were set at Birr 0.09195 per passenger-km on asphalt roads, and Birr 0.1145 per pass-km on unpaved roads. In January 2004 these rates were revised upwards by just over 10 percent to Birr 0.1095 and Birr 0.1265 respectively. They have been revised again in $XYYJ^'Y!Y'XYY!Y'/(Y _;XYY?= price of fuel in that period.

%__5++;{+Z$>%&&8,

Road Surface Birr/passenger – km Asphalt 0.11 Gravel 0.14 q\#_;_=;_XYYJ= Source: Transport Authority.

Anbassa Bus Fares 0_YXZ!^}XXZ/XM>?}_^Z passengers pay between 0.25 birr and 0.50 Birr. Some exceptions apply to recently introduced routes. For example, one new 40 km route has a fare of 3.00 Birr.

__ recent years. The subsidy is presently 0.10 birr per trip; the total amount paid is based on records of numbers of tickets sold. Fares on Anbassa buses are collected by conductors. Paper tickets are used, with different colors for inward and outward journeys. Ten-trip tickets are also issued. Because tickets are not sold to passengers be- RR} And because many passengers must stand it is common practice for conductors to collect fares from passengers through the bus window before they board the bus.

The company estimated that between 5 to 10 percent of revenue is lost through fare evasion and conductor malpractice, despite the presence of ticket inspectors. The fares charged for express services are normally 0.10 !$\Y'Z!

In 2006 the trip over 45 km from Addis Ababa to Debre Zeit cost Birr 2.25, at a cost of Birr 0.05 per km.

183 Tariff systems vary between buses and taxis. For the former, there is an approved fare for each route irrespective of the length of the individual boarding made on it. This fare is correlated to, but not directly dependent on, the length of the route. Variances will occur depending on how recently the route has been introduced or revised, or whether the services are nominally limited-stop. Previous studies have estimated that, taking a weighted average of fares applicable to the core network, fare rates approximate to Birr 0.046 per kilometre for those riding the full length of the route and proportionately more for those making shorter boardings. At current exchange rates, this fare rate equates to 0.53 US cents per kilometre representing some of the cheapest travel in the world. Fares are low both because of the subsidy provided to users (roughly 25 percent of the fare =<;'YY= ance of crush conditions in the peak.

&_\ of its operation, but do include a depreciation charge relating largely to capital expenditures not actually made by the enterprise at a rate set by tax legislation and not economic life considerations. Notwithstanding these reservations, recorded costs are some Birr 5.3 per kilometre, or Birr 0.053 per pax-km at an average load fac- 'YYYJ'@$<+ z_

The tariff in force from 2004 showed rates for individual city routes varying from Birr 0.25 up to Birr 3.00. & !YXJ'^^^!YY(XYY?

Bus Fares: Recent Changes

Intercity Bus Fares The Transport Authority under the auspices of the Ministry of Transport and Communications of Ethiopia has announced new tariffs on cross-country bus transport services a day after announcement by the Ministry of Trade and Industry fuel retail price readjustment amidst ever-rising cost of petroleum products in the global market.

__XJXYY( on asphalted roads is 0.12325 Birr per pax-km (up from 0.11 Birr per pax-km, and that on gravel roads 0.14966 !<};Y'>!#<}= comes of commuters and in line with the subsidy the government continues to make on fuel imports.

Anbassa Bus Fares *XYY^___!/(Y! YY(Z}_<}} available to all.

Historical Minibus and Taxi Fares The fares for minibus taxis ranged from 0.60 birr for up to 2.5 km to 3.00 birr for 25 km. The minimum fares for minibus journey are shown as follows: &Up to 2.5 km Birr 0.65 &Up to 5.0 km Birr 1.25 &Up to 7.0 km Birr 1.65 &Up to 9.0 km Birr 2.25

In Addis Ababa, minibus and taxi fares are proposed by the operating associations and subject to approval by AATB and MoTC. The minimum fare for a minibus journey up to 2.5 km has been Birr 0.65, while a 5-km journey has costed Birr 1.30. 184 Previous studies have estimated that, approved fares for taxis are directly related to the length of the trip being <} with regard to fare rates, with these being far higher for trips up to 4 kilometres in comparison with those of 6 }_};}= force passengers to pay two higher rated fares. Taking that higher rate as being applicable to the large majority of journeys, taxi fare rates work out at about Birr 0.26 per kilometre. At current exchange rates, this fare /Y@$} $$_\ of overloading.

For taxis, operating margins are hard to determine in such a dispersed ownership system. However attempts (( 'Z} !YX'<}X>@$}+ z<

Prices for premium services are not controlled and may be set by the operator. This applies for instance to the private taxis in Addis Ababa, where the fare must be agreed between driver and passenger.

Minibus and Taxi Fares: Recent Changes The Transport Authority under the auspices of the Ministry of Transport and Communications of Ethiopia has <XJXYY(

The taxi fare on a 2.5 km. distance rises by 5 to 70 cents. The fare on a 7-km taxi trip rises to 1.35 Birr from 'XY!'Y}'(Y!'JY!'X}XYY!'?Z! on a 15-km distance to 2.50 Birr, from 2.20 Birr per passenger.

International Comparison of Urban Bus Fares _</X_!0;@$=

City Large Bus Minibus Abidjan 0.40 0.40-0.70 Accra - - Addis Ababa 0.25 0.12 Bamako 0.25-0.30 0.20-0.25 Conakry Y'( 0.21 Dakar 0.30 Y'( Dar es Selaam n/a 0.16-0.24 Douala 0.30 n/a Kampala n/a 0.20-0.25 Kigali YX( YX( Kinshasa 0.33 - Lagos 0.40-0.56 Y/(Y/^ Nairobi 0.25-0.40 - Ouagadougou 0.30 n/a Average 0.31 0.25 Sources: City Authorities, Published documents, various. Note: =not available; n/a = not applicable.

185 Affordability Index Annex Table 3.3 Spending on Urban Transport as a Share of Household Income

Percentage of Percentage of Absolute monthly Percentage Percentage households household budget expenditure on of average reporting positive spent on transport transport for household tile household expenditure on for households households with budget needed budget needed transport with positive ex- positive expendi- to pay for 60 to pay for 60 ;= ;@$= one-way trips one-way trips ;= ;=

Abidjan 77 10.1 31.47 10.5 42.9 Accra 95 6.0 16.36 - - Addis Ababa (? 3.3 /(/ 6.3 '(J Bamako - - - - - Conakry - - - - - Dakar 92 4.3 'ZY( 3.1 11.3 Dar es Selaam 92 11.6 12.04 11.6 53.2 Douala 77 4.0 6.94 10.4 23.5 Kampala (' 7.4 '/Y( ?( 41.0 Kigali (Y 4.4 14.55 5.1 46.0 Kinshasa 49 X( 5.43 10.1 31.0 Lagos Z( '/( 14.44 27.5 105.2 Nairobi 61 10.1 25.97 7.5 33.6 Ouagadougou 3 5.5 0.30 (^ /Z( Average 90 6.5 13.29 (Y 32.7 ##8V?X8q Note: All data is for cpital city, except for Douala and Ouagadougou, where spending at the urban level nationwide is taken as a proxy for spending in the capital city. - = data unavailable

*< This is based on the cost of 60 public transport trips, which represents the minimum level of mobility needed to allow one family member to commute to and from work for a month.

The cost of these trips is expressed as a percentage of the monthly budget of the average household and the ;_<//=JY( of the monthly budget of an average household. In some cities (Abidjan, Dakar, Dar-es-Salaam, Kampala, Ki- = the 60 trips. Elsewhere the difference is quite large and can run in either direction, with households spending ;q=;__"[= the 60 trips.

*// percent of their budget to purchase the 60 trips and in many cases a lot more, indicating that this level of mobility is completely unaffordable for the poorest households. Calculations of the same index for a number of Indian cities indicate broadly comparable results, with the average household needing to spend 5-10 percent of its monthly budget on the 60 trips, with that share rising to 15-25 percent for the poorest households.

0;__q= fares charged vary somewhat arbitrarily depending on circumstances such as bad weather and congestion. *[<q>Y}q?Y;q^Y=*q R 186 mon. Uncertainty about fares is a serious concern of many passengers, as revealed in various surveys. Poor passengers making the journey home after work often do not know whether they will be able to afford the ride. Passengers also report other operating practices that increase uncertainty, such as curtailing a trip to take advantage of a better commercial opportunity in the other direction. So-called short-turning leaves passengers 8 but the results presented here suggest that the price of urban bus fares remains high in relation to the purchas- ing power of the typical family, so that usage of buses is correspondingly low. The average family is barely able to afford one round trip each day, while for the poorest households even this basic level of mobility is unattainable.

Nevertheless, even this low level of expenditure translates into peak demand for around 200 seats per thousand

187 !!'Yoad Freight Industry Structure Introduction +R}_ j} with analysis and forecasting.

Historical Perspective @;'^?>'^^'= O"P+&;+0&=#& corporations operated there own large trucks and managed the other operators.

+0&\'XYY}}+0& the business, allocated loads, organised payments, received a 5 percent commission, etc. Freight rates were set by Government. The rate/km varied little with trip distance, commodity or road type and conditions. To ensure equity among operators, routes were rotated.

Proclamation No. 14/1992 in May 1992 deregulated the transport sector EFTC to become Comet, Shebele, Woyira and Gefersa. A transport company called Abyssinia was also created. The four companies were allowed to operate independently with their own budgets and management.

Several large trucking companies also emerged in this period with quasi-governmental backing. The large companies were later encouraged to form associations. This led to the dilution of the domination of the public enterprises and the ex- “Ketena's” in the market.

plaints for the private sector with regards to the public enterprises and endowment companies. The public enterprises are expected to be converted to share limited companies and then

Breakdown of Industry by Truck Type *XYYJ'YZJ??Z^/;?X= 'J^';'X=

The largest freight transport associations may have perhaps 200 to 300 members, operating 300 to 400 trucks, but many are much smaller; on average, however, there are over 100 trucks per association. Eighteen associations operate more than 100 trucks.

'%#>$++Z,

q}& Operator Group Trucks Trucks/ Trailers Semi Trailers Others Total _;JJ= 4,729 1,231 310 1,323 7,593 *;'X>= 123 (Y 30 20 253 #;JJ= 56 ((Z 239 (?1,267 +;/= 3 32 131 --- 166 +;/= 740 25 ( 73 (>J j 197 '^( 46 1 442 ;//>= Z(>( 2,451 764 1504 10,567 188 Source: Transport Authority. On the other hand private companies operate on average nearly 20 trucks, and the largest, such as Tana Transport and Trans Ethiopia, have up to 200. Endowment companies are owned and operated by different +#%0+<+;+$&8=!q& +$&8'^^/+* involved in dry and liquid bulk transport, engineering workshops and garaging services, import and selling of vehicles, spare parts, tyres etc.

;&!}$='JJ} !}$/YY?X <}\& +0&\XXZ}

Current Industry Structure _XYYY'?(/ (Y^(^//(/' vehicles or c. 39 percent.

The one-time lifting capacity of associations in 2000 was 46,373 tons, while companies and parastatals >(ZXZ>Z

Annex '_W">$++'{;,

Capacity (tons) Individual Operators Associations Parastatals Private Co. Total 0.9-4.0 /J( 1713 9 2090 4.1-5.4 13 139 4 156 5.5-9.4 271 1429 42 1742 9.5-12.0 194 '(/( 60 2092 12.1-15.5 90 464 16 74 644 15.6-22.0 20 540 42 62 664 22.1-25.0 13 J(( - 65 766 25.1-29.9 10 261 1 96 /J( 30.0-37.0 10 356 405 314 'Y(Z 37.1-41.0 2 296 10 965 1273 Total 991 88' '8' 1691 10880 Source: Transport Authority. *XYYZ'Y((Y??X>;?'= 'J^';'ZZ=*\ consisting of 991 and 474 trucks respectively. Hence, the trend between 2000 and 2005 showed a rapidly in- \

&}R< ;*&=}__0 monopoly in performing this function, as all import goods trucked from Djibouti to Addis Ababa must be j)&*&R <XYYJ*& increasing the throughput capacity of the yard, especially in respect of container storage capacity.

&;=}__ \ Open and closed warehouse service; and &;=

189 It closely works with Customs Authority which has a facility in the centre. In the future it is planned to support the dry ports being developed in the country. The development of dry ports is handled by an Agency )&&);?Z}_= $_%;Z(Y}__= in the near future.

&XXZ};''Z>Y''Y/Y=( closed warehouses with a total of 3,735 tons storage capacity, an open warehouse to handle 2,000 vehicles and '(YYYZ>Y8& _<>/ Annex '_5z

Year Throughput (tons) ++' %5+'5Z+ ++; 982,180 2006 1,169,187 2007 1,129,968 2008 %5'+5%Z&

jj$8+R&!} Enterprise, Shebele Transport Enterprise, Comet associations, etc. These public enterprises are very active in j+ <\}

)j+\ of a large quantity of road motor vehicles has had an impact on the capacity and operational performance of for-hire carriers. The shift from hired trucks to own private commercial vehicles might not have necessarily been intended to reduce cost of transport, but primarily was to avoid the risk of high quay rent at the port of }$ \} R}

_#[&R^Y}\_ provide a legal umbrella for small yet independent trucking operators. Most associations have been formed from former “Ketena” members. The associations are allowed to operate countrywide, however many tend to 8}} structure that binds membership and the in general weak human capital among members. Each member is of- } services for their owners, and customers are restrictive and have monopolistic tendencies. They hinder the The implication is that there are no economies of scale, or operational advantages, in belonging to an association.

Although domestic costs are somewhat competitive, weak contestability of the market is a limit for higher }< \ and as a result dominate the market, and could create important barriers to entry1.

As far as ownership structure of tankers supply is concerned, that data shows that from the total number of 1591 registered vehicles in 2004/05, the share of private limited companies was 560 vehicles or 35 percent >^X/'\~

1 PPIAF 2004 190 category of registered individuals and unregistered operators were 314 and 225 respectively. One time lifting //?YYY'^^Z(^YYYYXYY> '(X

O"RP} }} and truck assignment in a somewhat disordered state.

Breakdown of Industry: Survey Data 0 other's freight. They are separate from private carriers, users of the system who provide their own carriage, in the sense of movement in their own vehicles. There is mixed ownership of for hire-carriers in both public passenger and commercial road transportation. A number of for hire-carriers are public-owned.

< private carriers who provide their own carriage. These include private limited companies, share companies, ;= port business entities of regional development associations.

In intercity freight transport, share companies, private limited companies, public-owned enterprises and for-hire \ \} for vehicle storage and maintenance workshops.

Because of the diversity among share companies, private limited companies and associations, it is not possible to establish a single structure to represent the commercial road transport industry in Ethiopia. In general, <$ lems in public passenger and freight transport.

Market Concentration: Survey Data There are no apparent signs of market concentration in commercial road transport, since competitive pressures have led to lower freight rates, though the circumstances in public passenger transport are different than in freight. Although complete time series data does not exist to be able to illustrate the development of the aver- ;=< share and private limited companies.

However, there are signs of increasing market share by companies (share, private limited and ownership of =< \;= tions make up for great share of intercity freight transport and they are particularly dominant outside the major import-export corridor.

Parastatals: Survey Data N<} \<\ # and functional units; Management job descriptions that describes the role, responsibility and accountability of a

191 management member; < accountability, to investigate disciplinary offences and arrive at judicious conclusions, etc; _ ! N management system; and N} parts and supplies stores, fuel depots and other required property at their premises for the smooth operation of the business.

Private Limited Companies: Survey Data The private N} than the associations. They have better data management systems, although most companies were not willing to provide access to records for commercial reasons.

\ order to be sustainable within a competitive environment. In order to adopt a competitive environment and \ 8 }_ the technology of commercial road transport continues to change, the dependence of passengers and shippers ;=$ }\_ carriers, particularly the associations have to be much more responsive to the needs of shippers.

New private companies have entered the bulk oil transport market, increasing supply in response to increasing demand for petroleum products.

Private sector participation and owner-operator businesses have grown, which have resulted in increased competition, thus ensuring that some of the savings in vehicle operating costs from better roads will be passed on to customers.

Public-owned Enterprises: Survey Data For most of the enterprises, the existing facilities have become supplementary income generating sources by rendering interrelated services to customers engaged in the commercial road transport industry.

Transport Associations: Survey Data Associations are merely gatherings of owner-operators acting together for securing cargo in the form of "coop- } 0

z;= \ Associations are groupings of in general a small number of vehicle owners; Associations act as brokers facilitating prompt loading to their members and collecting commissions for the services they render; As associations are not registered companies, but are groups of independent operators, the

192 \ $8 & } * &\ Associations are preoccupied with day-to-day management of operations.

In general, a shortage of skilled staff, a lack of proper facilities and ineffective management, an absence of ra- } a large share of the associations that were sampled.

Some associations have simple structure and some functional structures, which are replicated from both the 8

_N;}= spare parts and other supplies stores which are required to serve the association members.

from just "grouping" of individual operators to companies managed on the basis of business lines. There may j _ most desirable approach, during an interim period many steps could be taken to improve the management and performance of Associations.

Regulatory and Institutional Environment

; }=} mance and the poor safety standard. This is attributed to a weak skill development capacity, which is exacerbated by ineffectiveness in the enforcement of regulations.

Business Environment }} ;=

There is no forum established, as yet, to discuss and resolve problems among stakeholders, parastatals, private limited companies and associations, in order to bring issues to the attention of the Government or for dialogue.

+R8__ ;= is an absence of, or inadequate, freight forwarding and cargo consolidation services at strategically located centres.

;}= policies to the industry. 193 !!;Yublic Transport Industry Structure Introduction A review of the historical development of the passenger industry is helpful in understanding the current situation.

Historical Perspective During the Imperial Era, the private sector provided public passenger transportation services. Long distance \ themselves in associations. Anbassa, which was established as a share company in 1952, was the only organi-

The key dimension of the period prior to 1974 was that the market, through the forces of supply and demand, determined decisions on the allocation of resources in the commercial road transportation industry. The roles of government included making investment in roads, setting of safety standards, and promotion of road transportation services and regulation of private industry, without public sector involvement in the delivery of commercial services.

Before the establishment of the Road Transport Administration by Proclamation No. 256/1967 to control and regulate travel and transport on the road, driver and vehicle licensing, annual inspection and registration and issuance of route permit for long distance public passenger transport vehicles were carried out by Land Trans- port Division of the Imperial Ministry of Transport and Communications. There were about 14 private cross- \>Z Anbassa was one of these private companies providing long distance interurban service. Individuals with a limited number of buses could be registered with any one of the enterprises as associates, mainly to get scheduling and dispatching services. During this period, public road transport fare for all types of services (urban, re- =}_

In an environment where there were a large number of operators compared to demand, there were reductions in fares as there were no controls on pricing. As a result, passenger fare, which was initially more than two cents per passenger kilometer, had declined to 1.5 cents per passenger kilometer. However, the intense competitive pressure had adversely affected passenger convenience and safety. In an attempt to overcome the problems associated with weaknesses in control over prices charged, quantity and quality of services, the Road Transport Administration was established in 1967 as an autonomous agency. Its main functions were to control public road transport fares and reduce barriers affecting expansion of services.

The establishment of the Road Transport Authority during the Derg regime was accompanied by extensive regulation of commercial road transportation involving entry to and exit control from the business, control ;O"RP=< sively regulated commercial road transport industry is that it had resulted in the distortion of the normal market mechanism, and forcing carrier rates below what would otherwise be charged. This led to serious consequenc- _\ ;'Z= \;(=

194 Immediately after the rise of the Derg regime to power in 1974, Anbassa was one of the commercial establish- < R*q %&;q_%_&8%= #%&8q_%_&8% }O"RP[ <_ ment.

_\}q_%_ &8%'^(?q_%_&8%\#0% &}\ individual private operators. Following change in the regulatory environment during the transition period, the O"RP

_&!+__''>_0 buses were transferred to the then newly created Walia Intercity Bus Services. In addition to these parastatals for urban and interurban services, Abay, was formed, with the function of providing heavy maintenance to both Anbassa and Walia, and supply parts to all operators.

8 _O"RP replaced by private associations and the role of the corporation was assumed by the Supervising Agency.

One of the issues raised by private operators following commercial public passenger transport industry lib- % Bureaus, while others are obliged to comply with the rates set by the Transport Authority. In contrast to commercial freight transportation, most fares for public passenger services have not been deregulated. There are \<* passenger transport, the private sector has won back a rapidly increasing share of the market, compared to the period prior to the deregulation of the industry.

The Addis Ababa Taxi Service, formerly under the control of the Public Road Transport Corporation was trans- < fares are controlled.

Current Passenger Transport Industry Structure < who provide their own carriage. These include private limited companies, share companies, public-owned ;= entities of regional development associations. Because of the diversity among share companies, private limited companies and associations, it is not possible to establish a single structure to represent the commercial road transport industry in Ethiopia.

Intercity Passenger Transport Industry _X( ;=;$![j$= in Annex Table 5.1.

195 Annex ;%$_`,>>$++Z,

q!&q$ Operator Group Up to 43 44-47 >(JY 61 and over Total _;X(= 2,939 1,193 530 250 4,912 Walia I/City Bus N N 114 N 114 +;'= Walia I/City Bus 1,259 93 105 47 1,504 +_;'= #;X= N 10 44 3 57 ;/X= >'^( 1,296 793 300 JZ(?

Source: Transport Authority.

Some 15 of these operators are engaged primarily in long-distance bus transport, including 11 associations, ;= >>

Annex ;

''@'8 393 '\@Z+ 779 61 seats and over 300 Total %5'8

Other buses listed in the above table, including around 4,200 buses with up to 43 seats and 900 buses with 44 to 47 seats, are primarily engaged in short-and-medium distance interurban transport.

Walia Bus Walia Bus was born in 1995 detaching itself from Anbassa Buses Enterprise. Going operational with a capital 'J^!}/' erating at a loss. Though PPESA has repeatedly placed the company on the auction block, no buyer has been interested to acquire it. Therefore, of the 900 staff, GoE has laid off 500.

Associations Some characteristics of the public transport associations/operators are as follows: 1. Associations are grouping of small number of vehicle owners; 2. Associations are not registered companies, but groups of independent operators; and 3. _

Some strong associations distribute to their members tyres and lubricants at less than retail market prices. They _ insurance companies and secure better premium for their members. For instance, an association operating over 130 medium and small buses has an agreement with one of the private insurance companies to pay an annual premium of Birr 750 for an 11-seat capacity minibus for third party motor insurance coverage. The premium for a 44-seat capacity bus is Birr 1,350. If the policy is to cover passengers, the driver and his assistant, the annual payments go up to 900 Birr and 1750 Birr for 11 and 44-seater buses, respectively. One major problem }

196 Urban Large Bus \_&!+__ Although the federal government owns the company, its operations are supported by the city administration, which pays a subsidy for each passenger carried. The level of these subsidies is being reduced gradually .

Originally a private enterprise that held an exclusive franchise for passenger transport services in the city, An- '^?>#&;#&=#& ;=*'^^J PTC was broken into its three component parts, restoring Anbassa to its previous status as a freestanding commercial enterprise. Since then the workshop component of Abay Technical Services (the bus materials supply #&=_}$

In Addis Ababa, the Transport Authority already has the power to issue route licenses, but it intends to develop R

Urban Minibus The Addis Ababa Taxi Service, formerly under the control of the Public Road Transport Corporation was trans- < *_R\__'YYYY taxis that provide service of far higher quality. Minibus taxis are not restricted in terms of the routes or areas in which they may operate

);= 0 services and Addis Ababa city taxi services are dominated by this category of vehicle.

The market for shorter distance transport has been transformed with the expansion of the services of mini- }} markets in the short-distance operations are increasingly competitive, while the fare of long-distance conventional bus operations continues to be regulated.

Metered Taxis $&)<$& pany, which launched new and modern business meter taxi cabs to operate on a system using distance metres

\'YYY Birr each with a nine percent premium, to expand its capital base to 50 million Birr. The sale of shares started 8'JXYY(0'XXYY^<

5,450 Birr, including the premium. The maximum number of shares a single shareholder can buy 100 which amounts 109,000 Birr.

Market Share Intercity Bus Operations In long distance intercity public passenger transport, the private sector has won back a rapidly increasing share of the market. In the long-haul public passenger transport, conventional bus operators are not yet able to }\< problems of safety of services and capacity for the enforcement of economic and qualitative standards.

197 The market for shorter distance transport has been transformed with the expansion of the services of mini- }}

\< < to allow the market to determine the number of mini-buses with the introduction of other types of services, it would not be possible to achieve a well-functioning Demand-Responsive System. Operators and regulators should focus on managing changes to adapt to markets, customer expectations, technology and competition.

The markets in the short-distance operations are increasingly competitive, while the fare of long-distance conventional bus operations continues to be regulated. Regional mini and medium capacity public passenger 0};>Y =*< network of their services beyond the suburbs of Addis Ababa. Now minibuses are providing charter services on long-distances such as from Addis Ababa to Dire Dawa. This is a very good development as it enhances competitiveness and put pressure on regulatory authorities to consider options to the current controls on schedules and fares.

198 ANNEX 6: Access to Credit/Loans

Introduction An investigation of access to medium term credits and loans is important for the road transport industry. All sources in this Annex are from the W.T Co. Draft report and are repeated verbatim.

W.T Cosult Market Survey

Loans Granted All the banks surveyed by W.T Co., except the Development Bank of Ethiopia, provide credit facility for par- ;=$/> <&!}+;&!+= years of experience in providing loans to the industry had suspended the credit facility for the past six years &!+ XYYJ!'^Y year.

Most of the data obtained from the banks is not detailed enough to provide a basis for meaningful analysis. On the basis of the data collected, an aggregate amount of Birr 976 million loan was granted to the commercial transport industry by the CBE, Awash Bank, Bank of Abyssinia, United Bank, Nib Bank, Dashen Bank and &!!};XYYXXYYJ=_<0J'_< Table 6.1 below.

Annex Figure 6.1 Loans Granted to the Road Transport Sector

199 Annex Table: 6.1 Loans Granted to Commercial Road Transport by Ethiopian Banks

Year Amount of Loan Granted in million Birr 2002 23,197,200 2003 14,722,000 2004 'X^^(YYY 2005 'Z>(?YYYY 2006 712,730,000 =; &8;58'85++

Since CBE reinstated the credit facility in 2006, the magnitude of the loan balance in 2006 was much higher than for the preceding years.

As shown in Annex Table 6.1, the loans provided each year for the industry has shown a continuing upward trend, and consequently the cumulative total reached about Birr 976 million in 2006. According to the data collected from the transport operators, the interest rate charged by the bank on loans advanced ranges between 7.5 and 11 percent.

Nonperforming Loans _}}};q#[= }q#[q#[} 'Zq#[}q!}+;q!+='Y that is an internationally accepted NPL rate. Even those loans reported as “Nonperforming Loans” by some !} meeting their commitments accordingly or are creditworthy.

\ enhance competitiveness through the reduction of unit vehicle operating costs.

Annex Table 6.2 below provides details of Nonperforming Loans.

Annex Table 6.2 Nonperforming Loans as % of Total RT Industry Loans

Year In Percent (%) 2002 X(> 2003 6.10 2004 7.32 2005 /J( 2006 2.02

200 Loan Terms and Conditions Most banks have the same terms and conditions for both urban and rural transport commercial vehicles. Over- all, the terms and conditions that apply to the creditors of the Commercial Road Transport Industry can be \ Banks seem to have different modus operandi for different borrowers described in the following terms:- - If clients are capable of paying 50 percent of the price of the truck, some banks can ZY - Some banks cover 60 percent of the purchase value of the vehicles holding the ">5>"'+ - Some banks require contribution ranging between 30 percent and 60 percent of the purchase value of the vehicle plus additional collateral, depending on the credit risk posed by the applicant, to lend the balance required for the purchase; - Some banks require the client to contribute 30 percent of the purchase value of the vehicle and effect a maximum balance of 70 percent directly to the supplier }< collateral; - $} either freight or public transport; and - Some banks do not provide credit for public passenger transport companies. )} default status; no record of any mal-operational practice of checking account in the banking industry; Applicants are expected to have: - $< - < _ N} nomic information; }'YY tors. }} - $}}'Y>Z seats. - 8}/YY} 40000 litres loading capacity and a bus with at least 30 seats. - Some banks require that the motor vehicle to be purchased meets the standard speci- _ The maximum tenure of the loan is 4-5 years; and If the loan is sought for the procurement of tanker, some banks require a tripartite agreement, involving the borrower, the oil company and the bank.

Although the percentage contribution of the loan to be covered by the client varies, entrepreneurs borrow from }OP;= _}

competitive market structures within the sub-sector need to be investigated.

201 ANNEX 7: Free Trade Zone

Introduction )# vided below. It is recommended that a customer survey be conducted to obtain more concrete data on precise requirements.

Potential Legal Options that could operate within a Dry Port In order of Likely Preference

Free-Trade / Export Processing Zone The traditional free-trade zone;0=export processing zone;+#= which contains production, display or storage units, importation to which is free of domestic taxes and du- <} exempted for exports.

Special Economic Zone The special economic zone;$+=+#&} <$"_+#Admin- istrative EPZ_<)+#R *R

Free Port / Free Zone The free port, or free zone few hundred hectares. Here goods of any description can be imported and stored under customs control, free of customs duties and tax.

Production or processing of the goods is generally not permitted, although the goods can be repackaged prior <$OP preferable alternative.

Local Free Trade Zone A further option is the local free trade zones, or border markets. These tend to be informal affairs, which have } examples, albeit now historical examples, might be those border towns and villages, such as Andorra and Cer- vigno, on the borders and France and Spain, and France and Italy respectively, which offer, or offered in the

Bonded / Customs Warehouse The more traditional bonded, or customs warehouse is a < ditions. This type of facility can also allow some limited re-labelling, or processing, of consignments for re-export. This type of initiative is frequently an acceptable compromise, as it can, depending on the precise } potential problems.

202 Distribution Centre Finally, there is the pure distribution centre< logistical advantages of a particular location. These centres represent the optimal point, within a given geographical, institutional and supply chain framework, for the distribution, or importation and distribution, of a particular commodity, or commodities. Whilst, they can have a bonded warehouse on-site they are dependent on whether the intended market is national or international, although the standard distribution centre serves a domestic market.

Current demand A customer survey would need to be conducted to establish what the current need is for such a range of ser- *} most wanted.

203 ANNEX 8A: WTO Accession Introduction It is useful to consider the WTO when investigating the future direction of the freight forwarding industry and the road freight transport industry in Ethiopia.2

The WTO Established in 1995. Replaced the GATT 1947 system with a single undertaking. )'Z/ 29 observer countries, including Ethiopia

The WTO’s Main Agreements Multilateral agreements on trade in goods --- includes 13 agreements covering different areas of trade in goods. j_$;j_$= divided into 12 main sectors. _%*#%;%*#$=M 7 intellectual property rights.

The Accession Process A country wishing to accede to the WTO undergoes the following major processes: Application for accession. 0 Bilateral and multilateral negotiations. Adoption of Working Party Report and accession.

Status of Ethiopia’s Accession Negotiation In 1997 Ethiopia became an observer. *XYY/ In February 2003, a Working Party on the accession of Ethiopia was set up. In December 2006, the Memorandum of Foreign Trade Regime was submitted. *XYY?+8 *XYY(+ 8)'JXYY(0}#+R WTO. *XYY(+8

>R[ It serves as a tool to lock in reforms. It ensures market access for Ethiopian exports. It provides for a transparent and predictable regulatory framework. It prohibits arbitrary and discriminatory restrictions on foreign trade. *+R +8R other WTO members. It provides a platform to integrate Ethiopia in the multilateral trading system.

2 |^&Xk%Y?X7"#"8&V%<~_"%XV% Addis Ababa, Ethiopia. 204 ANNEX 8B: Developments in the Freight Industry-World Experiences & }'^/YR'^ZYR and net loads, this explains why the sector has developed so quickly and so competitively. It also explains the \<'^(Z+JY vehicle.

Since the 1930Rs, road transport has been subjected to tight quantitative regulation. The aim was to introduce 0} < two waves of deregulation in the 1960R'^(YRs the profession had to operate within the context of various <

These domestic regulations were supplemented by international regulations based on bilateral agreements \<

The economic regulation of the sector was also accompanied by social regulations (driving hours, no driving $=;<=

The quota system did not achieve all the objectives set for it by its promoters: it did not succeed in regulating capacity or in preventing the erosion of rail transport, and it encouraged fraud and the development of transport on own account. These systems of quantitative regulation have gradually disappeared domestically. In the United States this took place within the framework of the deregulation movement.

In Europe, in the European Community, the process of establishing a single road transport market started (price '^^Y++&' '^^( < =

*+ \ panied by a collapse in the market share of rail transport and a considerable increase in that of road transport.

In recent years, wherever there were domestic quantitative regulatory and mandatory pricing systems or indeed $ especially at the instigation of the World Bank.3

}} } in wages. The impact on safety and working conditions has been the subject of doctrinal controversy in the 8 }; =\ pollution control, and energy conservation, etc.

*% ;<+&JJN NZY}=

399%7|+

*%@**%@ and uncoordinated border-crossing procedures, has asked all states concerned to accede to the international @q each side of the border and the introduction of "one-stop" technology, improved training of border personnel

These border-crossing problems seem to be universal, as evidenced, for example, by a recent Southern African Development Community document6>( every year.

The industry also considers that, a variety of measures such as total or partial bans on transit, quantitative restrictions on road transport which distort intermodal competition, bureaucracy which prevents forwarders tion quotas or limitations on vehicle weights and dimensions below the levels usually accepted and excessive _~j_ _~> transit to or from the territories of other contracting parties shall be reasonable, having regard to the conditions

0;< =;} = barrier, as does the very uneven application of social legislation concerning driving and rest times (number of =*<+ by the industry mostly relate to the European Community but it seems that they could also be extended to other geographical areas.

* _ }} namely mail transport, especially in relation with postal and courier services.

4%\@\[Z_]q@ 5%\@\[Zq]<\[Zq]<@< HX%%\Z'~}

Critical Issues Some critical issues for road transport aspects of the Master Plan to address the key priorities include the following: The need to improve road safety through training, better road designs, clear and up-to-date The need for improved skills and management in the transport sector, and the adaptation and strengthening of institutions, to enable objectives to be reached; The need for an enabling strategy, to release the potential of the private sector. Steps to increase the contribution that private sector investment can make will release public funds for complementary infrastructure or other investments; M transport will become essential; 0 ternational trade, including high-value goods such as perishable products. The development of for road, rail, air and maritime transport is vital. International transport links can also grow regional markets, and are an important component in the development strategy for Africa as a whole.

Constraints to be overcome The main constraints that need to be overcome for the road transport aspects of the Master Plan to be able to meet the challenges ahead include the following: More professional commercial companies are needed. Training and skills development are essential. An important constraint on the private sector is #_ for investment or re-investment kets are not yet ready to manage this problem. Government limitations on imports also play a part, and vehicle ownership remains in the hands of a multitude of small investors and endowment funds linked with the regional states; The expansion of the Ethiopian transport sector to deal with increased volumes of international transport requires both capital and knowledge.

207 sponsibility MoTC MoTC MoTC, Ministry of Education 7 Start in June 2007 MoTC Start in January 2009 years Start in January 2009 years Start training trainers by November 2007 Complete by November XYY( ing in January 2009 V &\"8% } @<\ + and other road agencies. Police, ERA Strengthen the testing procedure by changes to law and re-establish private testing stations equipped with internationally compliant equipment to check all aspects of vehicle roadworthiness. +XY 'Z<< Establish a system of control, and review the policy law on access to profes- 8R Introduce a requirement for approved parking sites when not in use to ensure safety of vehicles and pedestrians to limit parked in residential or unsafe areas. With assistance from EU fund a programme to introduce national and international With CPC to raise the awareness of changes needed in legislation reduce accidents } !` Objective Action Description Timescale Initiator/ Re- Establish the Road Safety Council with authority to act. New legislation planned Strengthen the vehicle testing regime for all vehicles to ensure that they comply with a new law on Construc- tion and Use to be introduced Establish new legislation for truck and bus operator ;8= age quality and safety of truck bus operation in Ethiopia Introduce CPC, ADR, DGSA and Customs training for ADR, DGSA Introduce CPC, R transport managers, commercial driv- for MoTC staff, ers, etc. #%%#V"#V%%8#8#"##%# ' 3. 2. 1. #8%#*#q@_"##%%%## 208 %+Y q sponsibility MoTC MoTC ERA, AA- &%_%%_R MoFED MoTC MoTC Start in August 2007 and Start in continue until completed Start in August 2007 and Start in continue until completed $)XYY( MoTC Start in January 2009 MoTC Start in August 2007Start in TA Start in August 2007.Start in MoTC/ Start in August 2007 and Start in continue until completed Start in July 2007 MoTC Start in August 2007 and Start in continue until completed ; For new cars this could be introduced immediately and for older vehicles phased in. Non-compliance will result in a failed vehicle test The new test would be based on best practice requiring written and driving experi- This to include ence that is compulsory and unable to be obtained by payment alone. = Establish ADR in law for drivers and compliance of vehicles. Require license to be Establish testing to Vehicle issued to each driver after training, renewable every three years. _% starting with the oldest vehicles. Road markings on paved roads should be applied consistently. The application of Road markings on paved roads should be applied consistently. double white centre lines needs special care and training, as if not related to sight distance the system falls into disrepute. More signs are needed on gravel roads where road markings are impracticable. Ababa should be considered as these are a low Addis The use of “box junctions” in cost way to reduce blockage at junctions and could have immediate effect. ) visitors, to avoid loss of time and fuel. Training to be established at Kaliti and other key locations for national interna- Training tional CPC's. Regional training courses to be established. considerable confusion that exists today (there should be no need for tourists on visits ^Y+= By government tax incentives encourage private investment or public-private partnerships in approved facilities when needed. Ensure by market research that investment is matched to demand and customer requirements. R and enable the authorities to limit driving hours of freight passenger ate effect ;= sources to determine the constraints on transport industry. Bring legislation in line with best practice. If insurance is not possible due to vehicle condition it has either to be repaired or scrapped. rd Objective Action Description Timescale Initiator/ Re- / Introduce compulsory 3 * belts *R road vehicles Establish compulsory ADR training prior to license is- Establish compulsory } Better road markings and signs in Addis Ababa and on Addis Better road markings and signs in the rural road network Establish compulsory CPC testing before license issue for truck and bus operators International Driving Permits Establish in law the status of such permits for tourists and other visitors to prevent Identify preferred locations for future dry ports, bus ;*[&R= Introduce a driver logbook system for all heavy commercial vehicles over 3.5 gross tons followed by years old Insurance, banking, lending and leasing reforms % for cars 11. 11. 10. 9. 8. %' 7. 13. 6. 12. ; 209 0j Minutes of meetings allowed chat V &\"8% 8 Regulations on tyre condition, seat belts and mobile phones in place %R Regulations on fuel quality and vehicle emissions updated and coordinated Regulations on amounts of alcohol and in bloodstream adopted Minister #q>J(zXYYZ 0j Frame established Capacity building program established q q [< #q>J(zXYYZ 0j $ Unit created and fully staffed q Law enacted Council created, meeting twice yearly under Prime 0j £\! Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Indicator 11: Road Transport: Action Plans for Principal Actors with Timelines Actors with Principal Action Plans for Transport: Road 11: Introduce operator licensing Make CPC a requirement for new operator licenses q Create Implementation Unit an effective capacity building an effective program New General Transport Law Transport New General Council Transport Create National Institute a framework in support of + Authority and Transport the [With %8 #%%#V"#V%%8#8#"##%# 1. 2. 3. ' ; 6. 7. 8. Preparatory studies Detailed preparation Implementation assistance needed Technical #8%#*#q@_"##%%%## 210 Annex and Communications (MoTC) Transport Action Plan: Ministry of 1. ( Means to Ob- tain Indicator Means to Ob- tain Indicator MoFED advice City and AAC- City and reports TO Advice from TA Advice from 0j Advice from CDE 0j Targets Indicators/Goals/ ed and institution- 27 implemented ing to Prime Minister amended accordingly Activities complet- Levy approved Federal Ga- Study completed, trial started Advice by MoTC Plans and budgets Studies completed. q Authority created and staffed q #>J(zXYYZ Agreements to be signed and Lines in place and open to created and fully operational AACTO report AACTO Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012– Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Indicator }}; Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets __&8 Strengthen oversight of transport sector; approve investment criteria, programme = Ababa and Addis Permit a public transport levy on fuel to support in ;<%0= Create new Addis Ababa City Transport Or- Transport Ababa City Addis Create new ;__&8=__&%_ AACTO and others into + programme =8 connections, international road links Yard vices, and introduction of trial 15. Establish National Road Safety Council Council established and report- 14. Develop international road transport (bilateral/interna- 13. Study of Sudan rail links and possible Berbera and Assab 13. Study of Sudan rail links and possible Berbera 12. Create Railway Infrastructure Authority 12. Create Railway Infrastructure 11. Implement rail line to Doraleh and branch into Comet 11. 10. Study for new system of providing interurban bus ser- 9. Prohibit restrictive practices by transport associations; 1. 2. 1. 2. 2. Action Plan: Ministry of Finance and Economic Development (MoFED) 2. Organization (AACTO) Transport Ababa City Addis Action Plan: 3. 211 MoTC AACTO AACTO reports &j reports AACTO reports AACTO report AACTO Inspection PPESA and PPESA City reports CDE advice ZYY __#= regulation buses in 2009] ule leybuses Ownership transferred ¢q\ near future -at least not in the next 5 years] CDE advice CDE advice CDE/Comet reports progress on concession agreement as at March 2009] Study completed, trial started Advice by Solutions proposed and implemented Inspection Arrangements in place and proclaimed by Progress as per Master Plan (as adapted by ! Anbassa Progress as per Master Plan [Note completed Tasks report AACTO Progress as per Master Plan report AACTO created and fully operational AACTO report AACTO $ [ Agreements completed CDE advice Contractor assumes management role. [Note: no Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Indicator #+#__ Assume ownership of Anbassa from PPESA Assume ownership of Install line into Doraleh port [ Install line into Comet Yard Install line into Comet Agreements with oil companies Tank depot sidings Tank Continue rehabilitation Staged programme for full rehabilitation CDE advice Install three-year management contract if no concession agreement for urban bus and minibus operations < and public transport ing arrangement provision of bus depots, including arranging technical assistance for new bus operators = bus terminal at Lagar station 14. Study on the regulatory arrangements needed 13. Continue road network expansion, while 12. Create new bus service subsidy and franchis- 10. Purchase of new buses or trolleybuses; Create new bus companies (possibly one per 11. 9. Air quality monitoring system9. Monitoring and reporting system in place AACTO/EPA (__# Plan approved and implemented to sched- 6. Southern busway on existing rail alignment; ?+M 3. Z$ 4. Establishment of AACTO 4. Establishment of 1. 2. 3. ' ; 6. 212 'Y>@>$, Indicator Means to Ob- tain Indicator Indicator MoLA/TA MoLA/TA advice MoLA/TA advice MoTI to advise Comet/PPESA advice Comet/PPESA CDE and Addis Ababa City agreement Targets TA TA £ £ [ is not foreseen in the near future (at least < < for city use Plan accepted by Plan accepted by Permanent solution in place CDE advice Companies formed Joint venture entered into Comet advice Comet/MTI advice Units created and functional Comet advice +¢q\ $ Orders placed. Deliveries completed CDE advice Orders placed. Facilities installed and in operation CDE advice Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/ R Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain #)$+ Re-let concession (or other permanent management solu- = Create separate accounting/business units for trucking and dry port operations Create separate companies for each unit #}Enter into joint venture for dry port operations }¢q\ New station at Akaki; lease New station at _}}M__ Government for 20 years ;_= Make plan with TA on how to enforce existing legal maximum working TA Make plan with hours for road transport sector workforce ;_= %_ Provision of new rolling stock Communications, train control and ticketing 1. 7. 1. 2. 3. ' 8. 1. 2. 9. 10. ;Y> Affairs Action Plan: Ministry of Labour 6. and Industry Trade Action Plan: Ministry of 7. 213 cator PPESA to inform PPESA MoTI; MoTI to advise MoTC/NTC q CSA/MoFED )& Public Transport Enterprise will be priva- Transport Public XYY^£ alue-added in transport and logistics sec- shops tors deliberations Proposals agreed by NTC. MoTI report to NTC Walia The Measures completed. [Note: Forum Established Capacity Building Established 8} q q Database established Study completed PSD Hub to advise PSD Hub to advise Study completed Study completed PSD Hub to advise PSD Hub to advise Proposals agreed by NTC. MoTI report to NTC Associations established and invited to NTC V Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Indi- Chair a Forum for discussion of issues and for making proposals possible solutions to improve the ef- Implement capacity building, with emphasis on business planning, 8 workshops on the Management of Logistics Develop transport and logistics services in all modes Establish passenger and freight transport user associations Undertake a seminal study of Urban Ababa Addis Freight Operations in Undertake a study on the impact of 0_0 costs on Transport $)+ for road transport industry Investigate commercial opportunities for drop trailer operations Remove all preferences for Ethiopian Ship- [ Study of optimal future ownership ESL; implement same +##+$_ bus Walia owned trucking operations and Addis Anbassa to and transfers company, Ababa and Jimma cities 1. 2. 3. ' ; 6. 7. 8. 9. 3. ' 2. 214 Development [PSD] Hub Private Sector AACCSA’s including Action Plan: Private Sector, 8. Indicator Indicator RTB reports RTB reports RTB Inspection of and logbooks, RTB police records police reports PPESA advice PPESA advice PSD Hub to advise PSD Hub to advise £ %! tion is not foreseen in the near future (at < 2012 to depend on CPC licensed by 2010 Number of inspections, violations and prosecutions these activities availability of credit to industry All new licenses, and all license renewals, after Increase in Private Sector investment Improvements in loan tenure period and Comet restructured PPESA/Comet Anbassa transferred 8¢q\ PPESA/city advice All commercial road transport operators to be trained and schools licensed by 2009/10. Trainers reports RTB Log books introduced and regularly checked % Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Restructure Comet as dry port operator in joint venture with private sector Transfer Anbassa bus company to Ad- Anbassa bus company to Transfer Ababa and Jimma cities dis #} tions (including the trucking activities &= Introduce operator licensing Create CPC system and approve training institutions in all regions/ Make CPC a requirement for new operator licenses Enforcement of labour laws for all commercial vehicle drivers Preparation, distribution and enforce- Private sector encouraged to develop terminal facilities, modern vehicle maintenance workshops, warehouses and other related facilities, etc Develop a proposal for improvements of the tenure period and interest rates for industry loans 3. 1. 2. 1. 2. 3. ' ; 10. 11. 11. 9. Action Plan: Privatization and Public Enterprises Supervisory Authority (PPESA) Action Plan: Privatization and Public Enterprises Supervisory 9. Bureaus Transport Action Plan: Regional 10. 215 Indicator Reports of ERA, and bus termi- RTB nal managers changes in services and fares and bus termi- RTB nal manager reports Reports of ERA, TA and TA Reports of ERA, bus terminal managers and bus terminal man- TA ager reports services and fares _ TA report TA report TA report TA TA Inspection of logbooks, and police records _ night operations permitted busway opens. Other cities as required tions permitted to be licensed by 2010 trained and schools licensed by 2009/10 als, after 2012 to depend on CPC checked Number of inspections, violations and prosecutions trained and good passenger facilities Routes agreed with ERA/RRA's and night opera- All new licenses, and all license renew- Ababa terminal completed when Addis constructed as needed; paved surfaces Terminals %+%_z%%_R Implementation of revised proclamation to monitor changes in TA System introduced and enforced by traf- All commercial road transport operators Log books introduced and regularly % Implementation of revised proclamation to monitor RTB &XYY( Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27Activity Indicators/Goals/Targets 2007/08 2008/09 Means to Obtain 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Indicator

Prepare routes for bus night operation Addis Promote new bus terminals in Ababa and elsewhere Introduce mandatory third-party motor insurance, with agreement of Ministry of Health Introduce operator licensing Prepare routes for night operation Prohibit restrictive practices by transport associations; allow licensing for Create CPC system and approve training institutions in all regions/ OP Make CPC a requirement for new operator licenses Enforcement of labour laws for all commercial vehicle drivers Preparation, distribution and enforce- Construct New bus terminals fare restrictions port associations; allow licensing for 7. 8. 9. Prohibit restrictive practices by trans- 6. 1. 6. 7. 2. 3. ' ; 8. 11. Action Authority 11. Plan: Transport 216 Indicator

MoE reports to NRSC MoTC to commission consultant reports

zq%$&

services and fares _

NRSC to identify in accordance with plan contents

report on progress

Police report; Federal j

into; number remaining; number of implemented and in force

Schools visited and number of hours per visit and children addressed

completed; courses designed and introduced; numbers of teachers and students compared with plan; pass rates and international benchmarking of standards

Plans approved and implemented to schedule

ity and a development plan prepared. The implementation of this plan must be monitored. NRSC to be involved in plan development.

and regulations in place

Implementation of route franchises to monitor changes in TA

sector training needs assessment Transport

Report produced on safe/unsafe levels

Number of relevant agreements entered

in bloodstream (to be

Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain

Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Indicator

chat

Work with NRSC to promote univer- Work sal road safety education Work with MoTC, TA and RADA to and RADA TA with MoTC, Work develop appropriate academic and professional education in the transport sector

Formation of Council Council formed 0j Council to develop its database of accidents and causes and its short and long term plans based on analysis

+ status, budgets, equipment and training

Develop means to identify unsafe levels of =

distance routes to operators

10. Sub-contract or franchise some long-

11. Develop international/bilateral road 11. transport agreements

1. 2.

12. Action Plan: Ministry of Education 12.

13. Action Plan: National Road Safety Council (NRSC) 13.

%'Y 217 cator z+#_ Reports from Road Fund. Road authorities and NRSC to submit annual statement of true maintenance / safety needs, to be published by Road Fund 0j& lic transport plans. Road Fund to report on amounts collected and disbursed in accordance with plans. City transport orga- spending as compared with plan. __&8 reports funding source Amount of revenue compared with demands from road authorities and NRSC lected and disbursed in relation to public transport plans ment. Penalties and trends (targets to be ment. Penalties and trends (targets q%$&= randum of understanding agreed with on roles of each body AACTO Report produced and measures in place Desk established and equipped; memo- Amount of revenue col- Levy agreed. Percent of revenue received from each Number of violations each key ele- Activity 2007/08 2008/09 2009/10 2010/11 2011/12 2012–27 Indicators/Goals/Targets Means to Obtain Indi- } ; Ensure that key elements of road q%$&= Develop means to measure harmful emissions from road vehicles AACTO cated in Gradual increase of fuel levy to reduce dependence on value-added tax, and to ensure income increases in parallel with road maintenance and safety funding needs Public transport levy on fuel to support Ababa Addis public mass transport in and other cities (could replace municipal tax, which is already allocated to %0= 3. ' ; 1. 2. 218 %;YW 219 220 221 222 223 224 225 226 227 228 229 230