Inv I l i RNE S Tl RI ECTr r LULIPYi~iIriReport No. AF-60a

I.1

Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated orgonizations. TThey do not accept responsibility for itg accuracy or completeness. The report may not be published nor marj it be quoted as representingr their views.'

TNTPRNATTCkNL BANK FOR RECONSTRUCTION-AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT. ASSOCIATION Public Disclosure Authorized

THE ECONOMY OF

(in five volumes)

Itrf"%T TT'KXL' TTT -V %J..JAULJLV.L;& ".L.L

TRANSPORTATION Public Disclosure Authorized

August 31, 1967 Public Disclosure Authorized

Africa Department CURRENCY EQUIVALENTS

Unit - Ethiopian dollar (Eth$) US$1. 00 Eth$Z.50

T. 1,-.1 nn - TTChn AA

METRIC SYSTEM

1 meter (m) = 39. 37 inches 1 kilometer (km) = 0. 62 miles 1 hectare (ha) = 2.471 acres 1 square k4lot-neter = 0.38 square m0iles

TIME

The Ethiopian calender year (EC) runs from September 11 to September 10. Moreover, there is a difference of about 7-3/4 years between the Gregorian and the Ethiopian era. For intance, 1959 EC runs froM. September 11, 1966 to September 10, 1967. Most of the official Ethiopian statistics on national accounts, production, and foreign trade are converted to the Gregorian calender. Throughout the report the Gregorian calender is used. The Ethiopian budget year begins on July 8. For example, Ethiopian budget year 1959 runs from July 8, 1966 to July 7, 1967. In the report this year is referred to as budget year 1966/67.

VOLUME III

TRANSPOITATION

This- repointW+. i hbased orn +he findings of1 2 mTisionn in rnvemher- December 1966 to Ethiopia composed of Messrs. David Kochav (Ghief of Missior. - T~R,RTPn) TD,fin TiJmnl (TlRPn)l .Jorgcn R Lotz (Ilg), Willem Tiaane (IBRD), Sei-Young Park (IBRD), Stuard M. Taylor (FAO), Ann4 bal V; 1 1ela (IBRD3) , and T . El.wyng. I,i 1 am.S (FAO Consultant).

Volume III has been prepared by Mr. Sei-Young Park. TABIE OF CONTENTS

Page No.

I. INTRODUCTION 1

II. PROBLEMS OF TRANSPORT POLICY 2

A. Transport Investment and Economic Development 2 B. Transport Coordination 3 a. Investment Coordination 3 b. Regulatlon of Transport Operations 4 c. Road User Charges 5

III. ROADS 7

A. Recent Developments of Road System 7 B. Adninistration of Roads 8 C. Road Transport Industry 10 D. Review of Road Investment Plan 12

IV. RAILWAYS 17

A. Railways' Place in Ethiopian Economy 17 B. Investment Requirements for Railways 18

V. PORTS 19

A. The Port Development Policy 19 B. Administration of Ports 21 C. Port Investment Requirements 23

VI. CIVIL AVIATION 23

A.. freneral 23 B Domestic Airports 25 C. Administration of Civil Aviation 26 D. Operations of 27

ANNE

MAP

TABLES Tabl e 1 - National Road Svstem. 19q7/58-1966/67 Table 2 - IHA Expenditures on Roads, 1957/58-1965/66 Tabhl 3 - anovenrnment Capita.nl rudget- 1903/6L,-1966/67 Table 4 - Motor Fuel Consumption, 1958/59-1965166 Table 5 - VMt.rn.Uehincles in Circulatinn, l962-1Q6 Table of Contents -2-

Table 6 - Average Daily Vehicle-Kilometers, 1953/5h-1965/66 Table 7 - Tentative Road Investment Proeram. 1967/68-1971/72 Table 8 - Revenues and Expenditures of Ports, 1960/61-1965/66 Table 9 - Traffic Through Port of . 1960/61-1965/66 Table 10 - Traffic through Port of , l960/61-1965/66 Table 11 - Pronosed Purcnhase of EqPiipment for Massawa and Assab Ports Table 12 - Ethiopian Airlines, Operating Statistics, 1956-1965 Tahle 13 - a-iAEthiopia_n inn Finbnpin1 n StatiStiGS; 1956-1965 Table 14 - Port of , Traffic Statistics 1958-1965 I. INTRODUCTION

1. Ethiopia lies between 3½< and 18° N latitude and 33 and 480 E longi- tude in East Afrina. Before Eritre a wa federated in 1952; Ethionia was an inland country. The main outlet to the Red Sea was through the French Somali- anad nort. Dbibonti The dtio br'h1. to Ethiopia the 1000 km coazt- line of with the ports of Massawa and Assab.

2. The large size of the country -- 1,220,000 kM2 , twice the size of France -- and the difficult opographical coni4tions make provisionr of adequate transport facilities difficult and costly. Between the lowland in the eastern half of the country which slopes toward the Red Sea .ad the So 1- Republ c and the high plateaus in the west, a high wall rises abruptly and precipitously Sep-arating the two regions. Thue road fro MUAddi Ababa to ALsm-ara ascer.ds -ad descends the escarpment at several difficult places. At only two points along the wall separatin the -westerrn plateaus from tWhe eastern lowlan.ds (between Massawa and Asmara and between Nazreth and , where there is a break' in the line of escarpm,ent) has it been possible to cor.swruct railways wtich give access to the plateaus.

3. The backbone of the transport system of the country is roads, supple- mented by railways and air transport. Inland water transport is not impoi-tant as the rivers are for the most part unnavigable. The road system consist3 of about 6100 km of all-weather roads, of which 1900 Xm are asphalt paved, maintained by the Imperial Highway Authority, and over 16,000 km of unimproved roads. A considerable part of the present road system wvas built by the Italians during their occupation from 1936 to 1941. But due to neglect until the early 1950's, a large part had to be rebuilt; in this operation the etnkis three loans played an important role. The roads built during the Italian occupation were mainly for military requirements, and the alignment and standards are not always suitable for present economic development. The difficult mountain terrain, together with the special climatic problems arising from the alternating extremely wet and dry seasons, present a formidable maintenance problem.

h. There are two railways in Ethiopia. The 781 km single track meter- gauge line from Addis Ababa to Djibouti in French , completed in 1917. is operated by the Franco-Ethiopian Railways Company. The 306 km railway from the Massawa port to Asmara and Agordat, in Eritrea, is operated oy the Govern- ment. The latter railway has a much steeper gradient, as it climbs 2300 m in about 80 km.

5. Since the construction of the port of Assab, completed in 1961, there has been a three-way split in external trade of Ethiopia between lassawa, Assab and Djibouti. The present trend, however, is to develop the Eritreal ports, particularly Assab, in preference to the French-controlled . 6. The mountainous nature of the country and the relatively under- developed overland transport facilities give special importance to internal air transport. There are about 50 airports and landing strips. Ethiopian Airlines, government-owned and established in 1945, operates regular services to about 30 domestic airports, many of which, however, are closed during part of the rainy season.

7. During the past 10 to 15 years the Goveniment has made great efforts to expand and improve the country's transport facilities. The investment program was mainly concentrated in highwav construction and in building a new deep-water port at Assab. The length of all-weather roads has more than doubled during the past 10 years. The road progrnm w2S mainly devoted to primary road construction; relatively little was done with regard to mainte- nance of t-he road system and provi-sion of secondaj and feeder roads.

II. PROBLEMS OF TRANSPORT POLICY

A. Transport Investment and Economic Development

8. Ethiopia is potentially a very rich country. The fertile soil and the livestock potentials could be the envy o maniy less favorably endowe4 countries. On the other hand, the country, as discussed in the main volume oL this report, nas many unusually difficult problems which must be overcomLe if the rich economic resources are to be exploited. Inadequate transport therefore is but one of the problems which are holding back the progress of the social economy; tackling the transportation problem in isolation is not likely to lead to a satisfactory improvement of the economic conditions of the country.

9. There are countries where the transport problem poses virtually the only major constraint to development, where other econorriic needs are fli:Led by public investments or are met by the private sector. Examples are the nineteenth century United States, present-day Mexico and possibly Thailalnd, where provision of transport facilities may be expected to induce private initiative for economic improvement. Ethiopia today, unfortunately, is nlot one of these cases.

10. The task before the Government is not simply to eliminate one major bottleneck but to attempt a simultaneous assault on the multitude of problems that are hindering the development of its economy. The Government, dealiUng with many problems at once, needs well-coordinated action to distribute wisely its human and material resources rather than concentrate all available re- sources in one sector.

11. Until recently, the policy of the Government appears to have been to devote the greater part of its available resources to the provision of trans- portation facilities, particularly in road construction. The major portion of the Gfovernment's develonment finds has been directed to road construction while requirements of other sectors of the economy are rather inadequately met. Gonnneqiuently, the existing rapacities of the road facilities are urLder- - 3 -

utilized. With few exceptions, the daily traffic volumes on all-weather' roads which have been imoroved during the past decade are far below 100 vehicles with no clear indication of increase.

12. The Mission is convinced that to make investments in transportation effective in stimulating economic developnmnt. there should be complemertary programs for other sectors of the economy, particularly agriculture, and. that transport investment shou%ld be closely coordinated with the investments in other sectors in order to ensure attainment of the objectives of those sectors It is sometimes suggested that road investments in Ethiopia have been successful because they result in shorter travel time or reduce vehicle operating ^osts. These lndicators of unit savings for travelers or truck operators, however, cannot be taken as adequate proof of economic justificatio. if t,he traffic volum,.e is low. The test for justification is the number of vehicles affected by the improved facilities, the volume of traffic generated by building the road, and the value of additional crops and other products produced as a result of the improved transport facilities.

13. An agro-industrial survey is now being carried out with financing by USAID. The Rission believes that the survey is a timely undertaking and that it should be supplemented by a road investment survey; an invest- ment program closely coordinated with the agro-industrial development program resulting from the USAID survey should be prepared. The road invest- ment survey team should include a railway expert and an airport specialist tc consider the possibility of alternative modes of transport. The Government had requested earlier UNDP financing for a long-term highway master plan study which would take three years to prepare. In the Mission's view, this is both overly ambitious and costly in relation to what really is urgently needed for road investment planning. The Mission suggests that the Govern- ment consult the UNDP with a view to modifying the scope of the study to a less ambitious but more useful investment survey covering the next 5 to :10 years.

B. Transport Coordination

a. Investment Coordination

14. Coordination of investment activities in the transport sector with those of other sectors is important to ensure a balanced development. Coordination is equally important within the transport sector both in investment planning and in the operation of facilities.

15. The Ministry of Communications is responsible for coordinating investment programming for all forms of transport, except roads. The latter is the responsibilitv of the Ministry of Public Works and the Imperial Highway Authority (IHA). There is no established procedure for coordination of investment within the transpo-rtation sector as a whole -4-

16. Because of this split of investment planning, road investments are carried out without being sufficiently related to the investment plans in other modes of transport. This is not meant to suggest that the Ministrr of Public works and the IHA do not know about the investments under consideration by the Ministry of Communications, or vice-versa. Investment coordination, howTever, does not merely rmean that the different agencies know the plans of others, but also that the size, component and timing of investments of zini- stries and agencies are adjusted in close consultation so that the total investment program of the transport sector becomes an integrated whole anld the program components represent the optimum use of investment resources.. Such a coordination of investment activities -- which is essential to assure a sound development of transport -- seems to be inadequately attempted in Ethiopia.

17. It is desirable that a Transport InvestmBnt Committee be organized, on which the Ministry of Communications, the Ministry of Public Works, the IHA and other agencies concerned should be represented. This comrittee shoul.d be put in charge of the coordination of investment programming and the elaboration of the total transport sector investment program.

b. Regulation of TransDort Coerations

18. Regulation of transport activities is primarilv the responsibility of the Ministry of Communications. There are, however, some exceptions which create confusion and render regulation less effective. The Ministry issues licenses for shipping, airline services and other commercial transport, excent road transnort. Administration of road transnort licensing is shared between the Ministry of Communications and the M4inistry of Interior. The latter issiies lirenses hbasd onn tGr"hnir'.,1 Pnminntinn h-, the former. The Ministry of Communications is responsible for regulation of tariff rates of the various modes of transport and for enforcemernt Or trffic lawqs The administration of vehicle size and weight regulation is also the responsibility of the Ministry of Cormiminications, but this function is at present ca-rried mit. through an ad hoc arrangement, by IHA.

19. The Ministry of Communications also undertakes control of the truiCkin- Jinrd-o.Yust 1-vh ra-cv. iorng-r- fr-eihts +to t."w-ckers.iqat mrnev+.pan.t cargo origi- nating points, such as the port of Assab. These truckers register with the M;vnstry repre sentative _nndA +itD,+ waait .Thel;_. +, 1Aload cn-- -es Tr h D ln, - of such a regulation is to prevent cut-throat competition among truckers. But this +-pe, f a p.sppears -4-obe So., o-i-4,.eb ^I ec'n+4re rsfT transport regulation. Competition within the framework of rational transport the transporters' efficiency and the services offered to shippers; it would not necessari -+ : -esul4in-4 cogeiton__ut--4oat Prvie tsh-e G-1-ov n takes appropriate regulatory measures, such as strict enforcement of traffic andi vC%ehlic.le size, Lwei± and4 safety rVgULLU.LULb d.L±UanJd =LUoUdLJOZ adqut U Lr-ad.L charges, free competition among truckers should soon bring about an orderly -5-

atmosnhere in the tmrLcking industr77- The Government. therefore should re- consider this regulatory measure, so much the more because the Government can hardily afford to waste its Scarce adnmin:istrat-ve resour-es on such less essential activities.

20. The more essential regulatory functions, such as vehicle inspection and er' orceMent of vel-cl si a ,1-,e-l+ "noll4 - . are + ,o,nnss+ene. ln carried out. Operation of vehicles which are unsafe to both passengers anr traffic is acquiened , and overloading of trnucks is the rule rather thn ta.e exception.

21. Failure to enforce strictly vehicle size and weight regulations appears to be partly due to imerfection of stauto-ry provisions topros't violators. Although the Vehicle Size and Weight Regulations of 1962 provided t4a- IjI± V±Lol'ator I1dL Ib ldale oaloi con-victLon to the penaltLes prescrlbed in the Penal Code of 194711, the Mission was told by agencies concerned with enforcement of these regulations that the Penal Code of 1947 does not presc-rJ. penalties for owners and drivers of overloaded trucks, and therefore the coul'ts cannot convict the violators. This legal loophole should be eliminated as quickly as possible.

22. The complicated system of sharing responsibilities for coordination and regulation of transport operations not only adversely affects the administration of these functions but also results in no individual agen-y feeling responsible for rectifying the situation. This problem was reviewed by the road transport expert commissioned by the UN Programme of Technical Assistance in 1965 to study the problem of reorganization of commercial :road . He recommended that responsibilities in all matters pertaining to road transport regulation should be concentrated in the Millistry of Communications where a Directorate General of Road Transport should be created to be immediately responsible for administering these regulation.i. Such a reorganization would help improve materially the effectiveness of road transport regulations. This proposal is under consideration by the Government. The M1ission recommends that the unification of responsibilities for road trans- port regulation should be given serious consideration.

c. Road User Charges

23. It was mentioned earlier that the road facilities built and im)roved were not adequately utilized as suggested by the generally low traffic volumes on the country's highway system. These considerations make it difficult to expect the small number of users of the road system to pay for the full cost of the road system.

24. A close investigation of the various data on road user charges, however, would reveal possibilities of increasinz the government's revenue to a level higher than it is now, if not quite to compensate its road costs. Although competition between different transport modes is of limited signifi- cance in Ethiopia, a review of road user contributions would provide the basis for improved policv for coordination among road transport; railways and air transport. 25. The Mission could attempt only a rough estimate of the road cost and road user contributions. This should be refined on t'e basiso mor-e -LLcULe statistics. In the Mission's estimate the road users at present are pay-ng only a smalL portion of the Government cost.

26. Tne 6,100 Km all-weather road network in Ethiopia, which would have a replacement value of about Eth $470 million, is estimated to cost the Ethiopian econormy about Eth $71 million annually, as follows:

Eth $ nillion

Depreciation of the system 27.5

Maintenance cost 17.0

Administration cost 3.0

Average economic interest on invested capital (based on assumed rate of 10% p.a. on declining balance) 23.5

71.0

27. The level of charges collected from road vehicles in recent years has been some Eth $32-38 million a year. According to Government statistiLcs, the total collection of road user charges in 1965 was Eth $37.5 milion, cls follows:

Eth $ million

Custom duty and transaction tax:

a) on vehicles and parts 13.0 b) on tires and tubes 1.3

M4otor fuel tax 22.2

Motor vehicle and other carriage license fees 1.0 37.5 28. The tstal co1Ihrtion of road user chnrges shoTn. above represents the amount of taxes paid by users of both city streets and the inter-urban road s-st,-__ whil…e the rnoad cost AA+A.Atei earlie relate onltothe ie- system. Based on interviews with representatives of road transport industry nnd petrnI-iim corpanies in E.thiopi, the M-oission oJimn+ tha.. -n mr%..ore+)an one half of the total collection or less than Eth $19 million a year can be attributed to the users of the inter=urban system., 29. If the above estimates are fairly representative, the Government is shoim to subsidize the road users to the extent of over 70 percent of thfa road cost. In view, however, of the small vehicle fleet which uses the inter-urban highways (for instance, there are less than 4000 trucks and tractor-trailers in the whole country), it would be unrealistic to expect that taxes could be increased to an adequate level to compensate the Government's road costs. To what extent the road user contribution should be raised, can only be decide; by further detailed studies of the problem which the Mission was not able to carry out. This question should be studied in more detail under the proposed Road Investment Survey.

30. There appears to be some possibilities for increased collection frorn road users. Although the motor fuel tax is not low (about 100 percent), it cai be further increased. The import tariffs on vehicles and spare parts are generally low, ranging from 10 percent ad valorem on trucks to 55 percent on large passenger cars, and could be raised. Because the inter-urban road system is built and improved primarily for the benefit of heavy vehicles such as trucks and buses, special annua' levies on heavy vehicles may be considered. The idea of charging special levies on heavv vehicles is a logical one because motor fuel taxes and the ad valorem custom duties do not distribute tax burdens on different tvnes of vehicle nronortinnally to the level of expenditure they impose on the Government.

III. R0.!nS

a Recent Develonpments of the Road System

31. Ethiopia's nrational road system at present consists of about 6100 len of all-weather roads of which nearly 1900 km are asphalt paved, and a small portion of earth roads. In addition, there are about 16,000 Len of proirncial dry weather roads which are under the jurisdiction of provincial governments. .o.e presentl nationa' road system, represents substantia''1y r.ore than a doublJrg of the kilometerage during the past decade. Shown here is a comparison between 1957/58 and 1966/67 (Por deta;'ls see Table 1): "'W 'A _L/ ~ ~ J'~AJL1J.Lc2.LW .' L L~.JO L.> -6rii Nati.Lona1l Rloadu S-ster

AsEhalted Gravelled Earth Total

1957/1958 780 1875 - 2655

1966/1967 1868 4257 657 6782

Percentage increase in i966/67 over 1957/5 1i39 127 - 155 - 8 -

32. During this period, a number of trunk highways radiating from Addis Ababa were built. The 1076 km highway to Asmara became an all-weather road after the section between Addis Ababa and Desse was completed. The construc- tion of the Addis Ababa-- highway (508 km) to the east through Nazreth and Awash Station was also completed. To the south, the Addis Ababa-- Shashemenne-Dilla highway (366 km) was improved to all-weather standards. Addis Ababa-Jima (335 kmm) to the southwest and Addis Ababa-Lekempti (331 km) to the west were imoroved and built, and nart of the link between Jima and Lekempti via Bedelle through the coffee production center is now being com- pleted. As an alternate access to Asmara from Addis Ababa a road througlh Debre Markos, Bahar Dar and across the Blue Nile gorge was constructed,, With the opening of t-he new deep-water port at Assab on the Red Sea shore, a 487 km highway from Kombolcia, south of Desse, to the port was improved to serve the foreign trade cargo traffic. In addition, a nurber of shorter sections of primary roads were built or improved. The improvement in the quanlity of road system cannot be fully reesented b" +the indication of increases in the length of different types of road; upgrading and con- sideranble__ ir.prve..en.ts111y V wereW. .maCAdeId. -wJ~A~dAJ.'h ULi1± n. eachl c-lasoradbuthecno-lass1 ol- ro-£ lJuU +" - -nn-t' be appreciated from the above table.

33. Investment in roads during the past decade absorbed an important part of the countrys capital resources. Table 2 shows that DA's expen4'i- ture on construction and improvement of roads has grown from Eth$9 million in L957/8 bo nearly Eth$22 million in 1965/66. But the above figures do not represent the total amount devoted to construction and improvement of roads. It is known that an important, but undetermined, part of the expenditure recorded under maintenance (see Table 2) was actually spent annually for such purposes. No consistent record for investment expenditure of the Government over the past decade was available, but in the past few years road construction and improvement projects on an average have accounted for about 30 percent of the total capital investment expenditure of the Government (see Table 3).

B. Administration of Roads

34. Administration of the national road system is the responsibility of the Imperial Highway Authority (IHA), an autonomous agency of the Govern- ment, established in 1951. The 16,000 km of low grade roads outside the national road system are under the jurisdiction of local provincial govern- ments. IRA, however, provides technical services to provincial governments for execution of investment projects for improving local roads.

35. The creation of IHA was at the recommendation of the Bank in conjunction with its first road loan of US$5 million in 195o. Indeed, the Proclamation of 1951 creating IHA specifically mentioned the fact that it was established for the purpose of improving the road system of Ethiopia in cooperation with the Bank. The governing body of IRA is the Board of Commissioners consisting of the Minister of Public Works (ex-officio chair- man). the Vice Minister of FLnance, the Vice Mnister of Commerce and Ifl istV and two other members appointed by the Emperor. The administration of D A is headed by a fleneral Manager under whom there are five diviSiors headed b- t- Chief Auditor, the Planning and Programming Engineer, the Director of Adrnin'-- stration, the Ch-ief Engineer, and the Training Engineer, respectively. 36. IHA is headquartered in Addis Aoaba, with 9 district maintenance headquarUters, soine 60Ifield *maintenaLce camps and a %dozen or r,.ore constr-& n camps. IHA maintenance shops are not yet adequate to provide satisfactory rLaJ rUenuarice of i'thl flaLational roadu sys'bemi. A'lLdWoUg1 rnu o-w-iis aLadrge rumber ofLC pieces of major equipment, about 55 percent is inoperative at present duE to obsolescence and lack of repair. Inadequate maintenance of equipmrent is one of the major factors adversely affecting the maintenance of the roads as well as construction of new roads by departmental force.

37. The investment programming is done by the Planning and PrograrrmLing Division. The head of tlhe division is assisted by two foreign experts IUt would need more qualified personnel, both local and foreign, in order to im- prove its performance. However, the problem more difficult in planning than the shortage of expertise is the difficulty of obtaining data and information (particularly concerning plans outside the road sector) which are necessary to ensure a proper coordination of investment progranmming. The problem of the latter type cannot be solved by improving the organization and performance of IHA; it requires better planning and cooperation of other Government branches. The establishment of the Nlinistry of Planning in 1966 augurs well for impiroved planning and coordination.

38. The Planning and Programming Division is also in charge of the en- forcement of the vehicle size and weight regulations. Its operation, however, is severely handicapped because of limited funds. Only three weighing stations are in operation in the whole country. The enforcement of the regulation is ineffective and, as noted before, prosecution of violators is not ensured due to the absence of a clear legal provision fcr penalties.

39. The performance of lIHA since its inception has been improving despite various impediments and unfavorable circumstances. IHA is at present one of the better organized and administered agencies of the Government and seems to provide a model for the establishment of autonomous agencies for other mcdes of transport, such as ports and airports, which the Government is now consi- dering.

40. In order to review past performance of IHA and suggest further im- provement of its performance, a consulting firm (the Public Administration Service of Chicago) was engaged in 1966 to study its organization and manage- ment. The consultants' services were financed bv a grant from the Bank, and the report was submitted in November 1966. The consultants found that the present organization of IHA is eenerally adequate, but that there are certain problem areas where better coordination is called for, and some internal relationships which need improvement. The renort made detailed recommendations on reorganization of the system: increased authority for the General Manager vis-a-vis ITHAs Board of Commissioners, more delegation of responsibi- lity by the General Manager to his subordinates, reduction of redundant staff, provision of incentives to attrac-t trained persnormne and imnprouveme-nt, of shonps facilities for equipment. The Bank concurs with these recommendations, and they were discussed with LW.A wahich also expressed its general agreement. -10-

C. Road Tranport Industry

41. As the road system is the backbone of the country's inland transport, system, the road transport industry carries the bulk of the traffic generated by foreign and domestic trade. For this reason, a sound development of the road transport industry is of utmost importance to meet economicaLly the requirements of the commodity producing sectors of the economy. There appears to be sufficient entrepreneurship and capital both inside and outside the road transport industry, the latter being ready to move into the industry whenever there is a sufficient profit incentive.

42. The road transnort industry annears to provide fairly adequate services but its growth during the past decade has been limited by inadequate demand, The rapid inerea9e in motor fuel consin tion, which averaged over 10 percent per annum in recent years, is frequently considered the indication of a growt.h in road transport activities (see Table 4). But it does not appear that inter-urban motor transport has grown at the same rate; an increasing part of the motor fuel consunvtion appears to have been accounted for by urban traffic. This trend can be seen from the changes in the number of different types of vehicles durn g the past fewv y-ears. These c1anes show grolwth chiefly in those vehicles which use city streets, rather than izter-urban highways. Tabl 5 shows that between 1962 and 1965 the num'ber of passenger cars almost doubled, while the number of trucks and tractor-trailers increasedi JLLJ.bJ abutu L 18 ec,. 1 passenger- car f-Pleet acco,'nted for nearly 80 percent of the total number of vehicles in the country. The average daily veh.icle-kilometers, estimated by IHA based on its traffic cosrn4s at 38 different stations on the inter-urban highway system, indicate that passenger car traffic acco-unts for only a l'ttle over 30 percent (see Table 6). The total traffic by trucks and tractor-trailer is about 35 percent larger than that of passenger cars although the total number of trucks and trailers i- le.s than 4000 which is less than one sixth of the number of passenger cars in the country.

43. Table 6 also seems to indicate that there has been little gro-wthl i the inter-urban road transport industry during the past decade. The table shows that the total traffic movement on the inter-urba hghways, i terns of vehicle-kilometers, grew by 148 percent between 1953/54 and 1965/66. Miost of the growth took place during the first three years and since 1956/57 the average annual rate of growth was only a little over 4 percent. Bus traffic increased by about 3.5 percent annually, and there was almost no increase in the combined total traffic of trucks and tractor-trailers during the same nine year period. Although the relative increase of the tractor-trailer traffic compared with that of trucks indicates that increases in the total cargo volume transported would be more than the growth of vehicle-km, all in all road transport does not seem to have grown as might be expected on the basis of capital investment in roads by the Government during this period. h4. Because of the limited availability of freight, competition is keen among the truckers, who are generally owner-drivers. Few own more than two trucks, and there is no important trucking company, aside from one cooperative organization. A generally similar situation prevails in the passenger transport field where operation of micro-buses predominate. Competition among transporters is in itself desirable because it results in, among other things, reduced charges to shippers; this means that savings due to increasing efficiency of operation and improved road conditions are being passed on to the users of service. Such a reduction in charges took place in the past. For instance, IHA's sample checks show that the ton-lkm rate on the route between Addis Ababa and Assab dropped from about 10 cents (Ethiopian) in 1953/54 to about 3 cents (Ethiopian) in 1965/66.

45. Competition, however, should be promoted within the framework of a rational reguilatory policy in order to assure an orderly development of the transport industry. This requires a strict enforcement of traffic and other regulations. The Government's failure to enforce the regulations, however, has given rise to the prevalent practice of overloading, neglect of vehicle maintenance in violation of safety regulations, etc., which increases the economic cost of transport while the actual charges by transportation may be lowered. For instance, the overloading of trucks nearlv always increases the Government's road maintenance costs more than proportionally to the savings obtained by individual truckers.

46. The need for regulation is recognized bv the Government. but it has not decided the types of regulation required. The Mission understood, however, that the Government's current consideration of the nuestion is mainly based on a proposal for reorganization of the road transport industry submitted by a road transport expert of the United Nations Programmme for Technical Assistance. This report makes a number of recommendations regarding the need for more secondary and feeder roads, conntrol of hpanu trucks deriing rnny seasonsj provision of agricultural storage facilities to handle seasonal fluctuations of agricultural trafficj etc. His main emphasis, however, was put on: l) t need for Government organization of truckers and bus operations into profession- al associations for each region of the enrintrv- which shouOld, in tuilrn, h organized into a National Federation of associations; 2) a Government prepared National Plan for Transport. determining the nation's requirements f^r road transport with yearly revision; and 3) the establishment of compulsory tariffs, by' thep C'ov ien.t, based or. the cos of +rarsport on different road and for different types of traffic.

47. The Mission has some doubts on whether the throe measures reco:nmend- ed b' the TTN expert are appropriate.* The devrelopment of trade organiations of the trucking industry may best be left to private initiative. Indeed, there is al-read n cooperat-i e organized in 1963 to wi4ch m.ore than co truck owners now belong. This cooperative, called iNational Transport Share Company frmshperxovebe virstU rukr Aoa f om firstUU-UVserve U- Ubas from shippers to member truckers on a first-come, first-served basis. -12-

If no load is available through the Natraco, the member trucker is free to look elsewhere for cargo. The operations of this cooperative appear to have been quite successful judged by the fact that the number of member truckers in- creased fracn 177 to over 500 between 1963 and 1966. In the opinion of the Mission, the Government should consider measures to encourage further develop- ment of this cooperative movement so that it can perform the functions of the suggested obliaatorv associations.

L8. Regarding the recommendations that the Government prepare a National Plan for Transport and prepare and enforce compulsory tariffs, one should. not overestimate the admi-nistrative canabilities of the Government to perform. these suggested functions. Actually, the Government's administrative resource- are not adequate even to exeeute satisfArtnrily the Tmore immediate measures for regulation. Moreover, the measures suggested are difficult to implement. Enforcem.ent of road transport tariffs has failed in a n,m..hp ofr other nomnntrip!s which have substantially more developed government machinery than that of Ethiopia+.ntoattmpt suh nn

*9. TIhe Mission believes that a rre realistic objective in road tr'ns- port regulation would be to achieve:

1) enforcement of the regulations for size and weight of vehicles VicWW asG 0 4-- 4---IPbP s4--s - -_6 --O --0 4- V 1 +1,V-O practice of overloading,

2) a stricter inspection of commercial vehicles,

3) increased collection of road user charges from road users, par-icularly operators OI commercial vehicles.

D. Review of Road Investment Plan

50. Il1A:s tentative investment program for 1967/68-1971/72, which is under review by the Government and therefore not yet approved, envisages an investment of about Eth$290 million, of which an approximate estimate of the foreign exchange component is about Eth$206 million. The suggested program includes construction or improvement oI about 6500 mm oI primary, secondary and feeder roads. As shown in the following table a great majority of in- vestment is intended for construction, improvement and paving of the prim.ary road system, and this accounts for over Eth$251 million or 85-90 percent of the total expenditure; for more details, see Table 7. -13-

IHA Tentative Investment Progra.n 1967/6WS z71/72 (Nillion of Eth$)

Total Foreign 1967/68 Cost 1971/72 Component 1967/68 1968/69 1969/70 1970/71 1971/72

Construction and Improvement of Primary Roads 177.3 129.L 26.8 41.1 45.4 33.7 30.3

Secondarv and Feeder Road Construction 36.9 17.1 21.4 4ld 4.1 4.1 2.9

Asphalt Surfacing of Prinary Rnads 7)4=1 59,7 1),.9 iIt8 1J8 1,8 1l,.8

T14A-Arrny (ooperative Projects for Pro- vincial2 Ro2d Construction 1.7 0.8 0.6 0.3 - -

290.0 206.2 63.9 60.9 64.6 52.6 48.0

51.P~D-wrnv 'vn, roa cns'r+ctior,,d ...... rl .n. pove.n.e,nr, is r."1 nn,ed for f4,Tn roads: -I ~~-1,_1s - -1 -P,:'': -o-

%AeJ= G-re " G XLgLW .Y U 1.JJ *UC7 Awash-Tendaho Highway 303 46 .4 warluaLyaL raLghI±Wdy V0 U6.3.) Dilla-Agere Iaryam Highway 105 12.8 Addis Ababa-Nazreth Highway 9)4 28.2

52. The dM.'orI I n _ h ig__ wa w ll se _ _ n theLt-rl rh_ w._ e_ er VC~~~11 *u t ] U-LUIUI-XU 1.Lr:IWV W. U -jt;.-VU UIJ Z a -. UUbLEL- - -d s SI Wt::U 1B-1 region where the unavailability of road facilities severely limits the growth Of the region1 s economy. The construction of this road is buelie-ved to brUg large returns on the investment. The plan is to build this road to paved standards. In the mission's view paving does not appear necessary as the anticipated traffic is not high and can be carried adequately with a gravelled road.

53. The Awash-Tendaho highway has a dual justification. First, this road will make the initiation of the Awash Valley irrigation development scheme which has been studied by a team of experts from the FAO, financed by the U1NDP. The study showed major developmental possibilities for this region in the form of both plantation-type development and settlement of individual farm facLJLi- ties. The Government is in principle committed to carry out the first stage of the development scheme which would be limited to an area from Awash Station for about 100 km northward following the Awash River. Second, the const:tmction of this road will provide an economical transport route between the Addi, Ababa area and the port of Assab, the major foreign trade port of Ethiopia. The existing route via Kombolcia has a number of sections which negotiate difficult mountainous terrain where the cost of vehicle operation is extremely high. Moreover, improvement of the existing road to adequate standards would be prohibitively costly, if not impossible. The lMission believes that con- struction of the Awash-Tendaho highway -shouldbe given serious consideration.

t4. The Mission's review of the iustification of the Waldi a-Geregera highway did not show sufficient support for the projected investment. Only a lower tyne of road sections at both ends of the proposed itinerary should be considered, leaving the possibility of building a through connection at afuture dAnte when a cle_a~r deM=.nstratison of de-ei^pmen"'I potentlialls of +the area can be made.

55. The Dilla-Agere Maryam road is a first leg of the Dilla-Moyale high- way which will be connected at N"oyale -wilth th hig ay system of Ke.ya. The service area of the road has limited agricultural potentials because of :Low rLaJinfall, but "ere ap-pears to be somue ±ores'v resources an' possibJi32LJ.LUe; for livestock industry. The idea of providing an international connection to Kenya does not appear at present to have strong economic justification in view of the small prospects of increasing trade with Kenya in the near future. The propo- sal for the 94 km Addis Ababa -Nazreth highway is to widen this existing road to a four-lane highway. This highway carries one of the highest daily traffic volumes in Ethiopia, which ranges between more than 1500 vehicles near Addis Ababa and about 450 near the Nazreth end. The 20-km section between Addis Ababa and Akaki appears to require widening, but it is difficult to determine whether widening of the whole length to Nazreth has high priority. Some detailed traffic and economic studies should be carried out in order to assess the priority.

56. The program to construct 2600 km of secondary and feeder roads should be studied more carefully to determine priority investment projects. Al-though the Mission believes that the secondary and feeder road construction should command higher priority than in the past, it does not consider all 15 secondary and feeder roads proposed to have high priority. During the limited period of stay in Ethiopia, the Mission visited a large number of roads proposed; it considered that, at least, five roads totalling about 570 km appear to have high priority, but this is not an exclusive list. A more detailed inves-tiga- tion may suggest some other roads to be economically justifiable projects.

57. The proposal to pave 1500 km of primary roads as a whole does not seem to have strong justification in view of the low traffic volume on most of these roads which ranges from 60 to 80 vehicles a dav and which does not indicate a clear upward trend. Only the Jima-Agaro road (44 km) and Nazreth- Awash road (125 km) should be seriously considered, The rest of the projects seem to have low priority compared to other more urgent projects such as secondary and feeder road construetion. -8. Assuming that a Road Investment Survey wllU be initiated in the near future, the firming-up of the Government's investmeiin program should be deferred until the results of the survey are known) which is expected before the end of 1967. It is desirable that the Government and the Bank carry out, wnen the survey is completed, a consultation on the possible road investment program for the next five years.

59. The Mission believes that the Government and the consultants, in preparing an investment program, should pay particular attention to: a) balaic- ing investments in primary, secondary and feeder roads, b) avoiding pre- mature investments, c) choosing appropriate design standards, and d) devisin,-: and adopting a more suitable method of construction in Ethiopian conditions. Below th6seitems are discussed in more detail.

60. Balance within the road sector. It appears that in the tentative program, the investment in primary roads has been over-emphasized. Although the basic network to connect the main population centers is an important task, it should not be done at the expense of other types of roads. Primary roads are imiost effective only when there are other low types of roads feeding into them and thus increasing the traffic volume. This means that the development of trunk roads must be accompanied by secondary and feeder roads. The low volume of traffic on the primary road svstem alreadv referred to atmears to be to a large extent due to the lack of feeder roads. The Mission noted that during rainy seasons many trucks converge on the nort of Assab seeking import, cargo to be transported to Addis Ababa and the surrounding region, which creates the problem of an excess supply Of trucks nt the port. The reon for the concentration of trucks at the port during the rainy season is under- stood to be impassable secondary roads. This means that secondary and feeAer roads improved along with the primary road projects would not only assure uninterrupted economnic activities in those areas served bly such roads, but also a better utilization of the country's vehicle fleet.

61. Avoiding Premature Investments. The IHA appears to be planning large investments in primry roads which are pre-,--u-re Fo -instace, some of' the paving and widening projects for roads which were built not long ago and with relatively low vonl_m.e of +traffic need not be done in the .ea^ futurwe. The IHA appears to believe that these investments are justified because sooner later or an adequ_ate volrme of traffic would, e-lop. It sho d,-however, ^ stressed that the capital invested in a road which is not utilized efficiently, is a Ilos9 to tU -UL--v'n+hIk^nJ.U prq.o or'g decisions on what projects to execute, but also choice of right timing for their execuitinn . 4 eph.t t;mi4g frequenty pro4ves to be as iporta as the former, and experience shows that more mistakes in investment planning are made in the la++er c-+egory h,, - t -16-

62 rIPpr riate Desin andards. The roaos are f-equently consltbr1icueu to standards higher than may be necessary for the anticipated traffic voLume, and it seems that this would be the case for a considerable part of the 1500 km roads proposed to be paved. MIoreover, some of the gravelled roads need not be built to the geometric standards proposed, which appear excessive. High design standards adopted for a road unrelated to present and projected traffic volumes represent unproductive investment. Roads with high design features do not necessarily create their own demand. It is the other way around. The experience in Ethiopia has been that traffic grew with road construction or improvement only in those areas where there already was a latent demand for transport facilities. One of the few examples is the JTima- Agaro area where, due to growing agriculture, particularly coffee production, road construction was followed by rapid traffic growth. As already mentioned, in other areas no substantial increase in traffic followed road improvement. The traffic statistics compiled by the IHAS for the past few years from its 38 count stations disprove the view that roads create traffic.

63. Method of Construction. The construction methods being applied in Ethiopian road construction are generally the practice imported from USA and European countries with relatively little adaptation to suit the local conditions. Examples are the extensive use of machinery in preference to labor and the use of crushed stone for surfacing, As labor cost is low and an unemployment problem exists, the adoption of labor-intensive methods of road construction should be considered. The IHA appears to favor that, because modern construction equipment makes it economically feasible to adopt design standards not generally attempted with hand labor construction, the primary road system should be built by modern methods, while feeder roads could be built by more labor intensive methods. The idea of building high standard roads using more equipment is in principle correct, but it does not necessarily signify that all primary roads should be built to high standards, and that capital intensive methods should be used. It is not useful to regard as prim.ary roads all roads which form +.he hnqi r network of the roiintrV and propose to build them to standards which require the use of modern met'hods. This is particularly so when it is reaized that in the IHAs plan the pr-Lmarv network includes practically all existing improved roads plus many km of new roads iinrider plnnning to x+.end the e+-i ting system, and an m.mber of ring- roads, also under planning, to provide direct connection between the main roads in the outlying areas formng concemn,tric rngs with Addis Ababa in i-.he center.

6h. As the past construction was concentrated in high standard primary road~ts, h.eMe haO.s beer. lit.tvle oppo4u-.ity 4f or TUA tLo seriouslo stLu y th..e possi- bility of adopting alternative low cost construction methods. To a certain degee labo car. sais"corL1 susiutV->e,. hsi h rec in airport construction in many isolated areas in Ethiopia where, due to the

4i.11-jractcblt.l11dJ± Cf . bingC ,c.144-e JCLV.._AU t.Lln LI.L-L.1 ng-"J.LL MIAaL;.L_LJV.J. y, J.dLcl"1I.Lir4- d L,..strips- .LjJ.P di.e- 1-41LJLLjJ. Ur.a F-.' ~1-- _~'- with hand labor. MIoreover, whatever standards are chosen for road construction,

Wthe possi.blity VI 0UUZJ,.LUbUs L0.1 VIhiordce[10tLf IVof tZAYJorLIe.vr AIuILo be explored. For instance, regarding surfacing by crushed stone, experience in many Africani countries with similar geographical conditions as those in. Ethiopia was that stabilizing natural soil with use of lime or cement proved -17- to be very satisfactory. At present, the crushed stone which is available from only a few quarries in Ethiopia has to be transported to crushing plants and then moved again to construction sites. Due to high transport and plant cost, crushed stone costs Eth$l5-l7 per cubic meter; it is almost certain that the soil stabilization method of surfacing would cost less than crushed gravel surfacing. Laboratory tests, however, would be necessary to determine how satisfactorily the stabilized soil could substitute for crushed stone; no test has yet been attempted.

65. It could be considered to include in the Bank's proposed fourth loan to Ethiopia, an amount for a study to exnlore possibilities of adopting cheape alternative construction methods. This type of research should continue on a permanent basis after thet completion of the studyv

IV. RJULWAYS

A. Railways' Place in Ethiopian EcEBonm

66. The importance of the two railway lines in Ethiopia has been relati- vel,, reduced;n recer,+ years wth de-vrel op-.ts of road transpJort. Thi-is is particularly so with the Addis Ababa-Djibouti railway which is owned and a,,r.aged 1b theW Franco=Ethiopiar. DPailway C o,p,ar.y . 1P.oad construc+ion m-id ;>.- provement between Addis Ababa and Dire Dawa is one factor affecting unfavorably this ra-Llwayls opercat-ions, b-tA,1 4VtLL,more JU-11ort-ant rea30r, Js tshe con+tnuo-ls1 diversion of railway traffic to the recently improved Addis Ababa-Assab road.. This is partly due to the Go-veirernmient policy regarding port developiment .As shwVin in Chapter V, the Ethiopian Government's policy is to encourage shippers to use thle Ethiopian port of Assab in preference to the DJibouti port in the French territory. Consequently, the railway traffic has been increasing at a rate much slower than the growth of Ethiopia's foreign trade In the past -few years.

67. The 306 kon M assawa-Asmara-Agordat railway managed by the Ministry c" ommmunications maintains its operation only Decause of the de facto monopoly of the port traffic between Asmara and the port of Massawa. Because this rai: way operates over a terrain more difficult than that of the Addis Ababa-DJib2: railway and because of the relatively short distance of the line, a prcifitabl> operation is more difficult to achieve.

68. The question which the Government must study seriously, is wlether the continued operation of, and investment in, railways are justified rather than switching completely to road transport. There appears to be a presumptio2 on the part of many Ethiopian transport planners that railways are an un- economic mode of transport and therefore should sooner or later cease to operate. The Mission believes, however, that the railway question requires a more serious review on which a clear policy on the future of the railways can be prepared. Such a review should take into consideration that when an economy reaches the point in its development where increasingly large volumes of bulk cargo must be moved over long distances, low-cost railway transport becomes necessary. Road transport cannot provide economical services for such types -18- of traffic as railways can. This means that, although the railways may find it difficult to compete with road transport now. they could do so in the future if the economy quickens its pace of development.

69. The M4ission did not attempt to review the various factors involved in establishing a railwav policv. It twas obvious, however, that part of the diversion of the Djibouti traffic to Assab is due to the cheap trucking rates based on low road user charges. Low road user charges which divert railway traffic are subsidies given to road transport users. A comparison of freight rates of the Addis Ababa-Djibouti railway with the- road tra-nsport charges on the Addis Ababa-Assab route indicates that in most categories of cargoes, particularly the imnort cargoes, ra-ilway rates are hiher than the quoted road transport charge.

70. A reliable source estimates that road transport from Addis Ababa to Assab isaoum7 cheaper per +on of ^argo than rnilway transpor t or m Addis Ababa to Djibouti. The Mission's spot check of the road and railway cb-ages al 'ears to give some credlence tIuo 'this est,.uat-e. CoW^-arLJng Mates or. coffee and hides which are exported through both Djibouti and Assab, the .issio. found that the ralwuay charge i;,0-$3Q..35 per ton of coffee and Eth$40 per ton of hides while the trucking charges appear to fluctuate arolind EtAL,0 per ton of both types of cargo. These figures im,ply a difference of less than 1 Ethiopian cent per ton/km. This small difference appears easily accounted for by the low road user charges.

71. To thle extent that the above analysis reflects the real situation in road and railway transport, the present difficulty in retaining freight by the Franco-Ethiopian Railway is to a large part due to the government sub- sidies to road transport. The analysis suggests therefore that any sturly nn the efficieney of railway transport on wnich to base the Government's raLl- ire.y policy should be accompanied by measures to implement better transport coordination, including increased road user charges.

B. investment Requirements for Railways

72. The Government does not have an investment program for the railway sector. Some investments are obviously necessary even to maintain the present level of raiLway services. Both railways experience shortage of rolling stock, particularly wagons, which results in slow and unsatisfactory services to shippers. Both railways need better maintenance and improvement of tracks. No overall estimates of capital requirements are available. The Franco- Ethiopian Railway (Addis Ababa-Djibouti) indicated investment requirements of Eth$6 million for procurement of rolling stock, track material, and replace- ment of bridges. The iMassawa-Agordat Railways might require a similar amount of investment, but no specific indication of requirements were available at the time of the Mission's visit. I .) * Ji1tml- cu- 0U'' 0 _U1 LJ. OwUIY~ V ~ II~ .;LV1 ± U.J1JJ lines for both railways. For the Franco-Ethiopian Railway , the suggestion AincludesL_'I.. - eiftersion,.. Le±- of' 1.ne.Jit fromrrur INa-zreth± .u1i to D.-i'J.L±d-I0 a (300un,uu IU,)kUI \ in1.LL± Ldwthe southi -i .4UL1 dAI1and la another line to connect the Assab port with the existing alignment somewhere betwUelle Awash Station and Dire Dawa. A Yugoslav team of experts has studced these extensions recently, but the Mission did not have access to their report and conclusions. It appears, however, to the Mission that the JustificatUion for the extensions is doubtful. The town of Dilla already has satisfactory road connections and there is no indication of substantial volumes of traffic suitable for railway transport to and from the region. A similar conclusion applies to the railway line to the Assab port. The port handles less than 500,000 tons of dry and liquid cargo for transfer to and from the interior. Even if'all Djibouti tratfic were diverted to Assab, the total traffic would still be far less than 1 million tons a year, composed of sundry export and ilport goods and petroleum products. Although in the absence of cost estimates it is difficult to prejudge the justification, there does not seem to be adequate justification at present for rail-line construction to the Assab port.

74. The Nassawqa-Agordat railway advocates extension of its line from Agordat to Tessenei near the Sudan border (approximately 180 kcm). It assumes that this would increase the freight from the present leve:L of less than 200,000 tons a year to 300,000-350,000 tons. This increase in traffic is expected to materialize from the agricultural valley which the line would traverse. In the absence of cost estimates for construction and detailed data on traffic potentials, and costs of providing alternative road transport, it is not possible to judge the desirability of the new line. The Mission uader- stood that the proposal is under review at high levels of the Government. If the proposal merits serious consideration, it would be desirable to carry out a feasibility study by quali fied experts. Whether a feasibility study is justified, can be decided bg reviewing the details of the proposal by the railway specialist who will be a member of the proposed Road Investment Survey.

V. PORTS A. The Port Development Policy

75. Until Eritrea was federated with the empire in 1952. Ethiopia was a landlocked country and had to rely on ports of its neighboring countries and territories to meet its foreign trade renuirements. At the end of the nineteenth century, Ethiopia negotiated with France a special privilege to use the Diibouti nort. in FTrenc(h Somnaliland; this led to the construction bv France of the railway between the seaport and Addis Ababa, which was completed in 1917. The Dliihmiti nn-rt. then ber-nm.e the main Ethinnin forein trade nort. A description of the port is given in the Annex. [U. Theu lc-rpOra0tiOfn l0E mritr-eia pPoviJ.bQ UWO adQuZL ioln 6sea-uiUUle- to Ethiopia -- the ports of Assab and 111assawa. The Government's policy since then has been to build up the facilities at Assab to decrease the reliance on Djibouti. A newT deep-water port was built in Assab at an estimated cost of Etnh26.5 million; the construction was completed in 1961. The decision to build up Assab wJas partly caused by the inconvenience of the sole reliance on railway connection, which is not alwfays adequate and flexible to meet the neec. of shippers, particularly those exporters whose requirements for shipping agricultural commodities fluctuate considerably between seasons. The Dj:Lbouti port is not connected by a road from Ethiopia. The more basic reason appears to be the desire on the part of' the Government to create adequate port facilities within its ow^m territory to handle most of the country's fore:ign trade requirements.

77. The policy to concentrate traffic to Assab must be revieSwed care- fully taking into consideration the various possible consequences of such a policy. Ethiopia's right of access to Djibouti involves not only the use of the port facilities but also the operation of the railway between Addis AIbaba and Djibouti, which would have little value for Ethiopia if the use of Dtjibouti is to be discontinued. Niot only would the existing investments have to be for- saken, but additional investment in port facilities and overland traffic route; and vehicular equipment would be required. Ethiopia today can ill afford such additional capital expenditures at a time when its economic develor,iment program requires large investments in non-transport sectors. To be sure, the investments already made in the berth facilities in the Assab port, are adequate to handle the traffic presently moving through Djibouti if it is diverted to Assab, but the reserve capacity may soon be used up with the growth of foreign trade traffic. Although berth facilities may not have to be expanded in the near future, the diverted cargo from Djibouti would re!quire additional cargo-handling equipment and possibly more sheds and warehouse space. The road construction and maintenance costs would go up and more goods-carrving vehicles must be imported which would adverselY affect the country's balance of payments. 78. The Mission feels that although the policy to build up the Assab port as the main foreign trade port for Ethiopia is a sound long-run policy, implementation of this policy should keep pace with the development of the economy. The national budget should not be burdened bv the large capital. expenditure necessary merely to avoid dependence on a foreign port.

79. The emphasis given to the development of the Assab port appears to have resulted in somewhat iinbaTnned de-velonpment between the two Eritrean ports. While Assab has been built and equipped with new facilities, the N4asSawa port, whic.h handfles a somnewhat lnrger volulme of nnrgo than Assab has received little attention and even maintenance is rather neglected. Tn view of the lnrge hinterIntid serv.ed hy the Massawa port, including Asmar the second largest city of Ethiopia, the improvement and maintenance of this port. shoul d not be left uznattended. -21-

R. Administration of Ports

80. Administration of onrt affairs is the resDonsibilitv of the Marwine Department of the Ministry of Communications. Until recently this depart- men+t wast n nrt+. nf +.h Theini+.rst nf Defense- Tts transfer to the Ministry of Communications nould help achieve a better coordination of investment ond -eratiornal a=r.+tie- in the por+. sector *ln-ner the- contro_ of the Minister.

81. The IIarine Department prepares operational procedures and regulat- ions fLor ;6nd-J0VAidu",al poUS, oe+vs por^ ae,,ol9lspro-^.l s+at2.n of ports and prepares investment programs. It is assisted by foreign technical advisers. Each port is operated d the 4mVmVaJ+c. respo.hbi ft of the port manager who is appointed by the MUnister of Communications.

ILiu± J.-U; 11Vt. LIU .L.L.1CLIdf,La.L d4LIUL±IUlik,y, UIUJ11 .L ULAU6-U Q -L'V.LLII UC~ 'J- .*' Marine Department budget. As showm in Table 8, both Assab and Massawa ports seem to produce considerable operatilng surplus in reIent yec-. Te.4 n ditures, however, do not include depreciation of facilities or debt services. It is therefore not possible to determine whethier the port rates are adecuaa.te to cover the Govermnent's expenditures on ports.

82. Port of Assab. The Assab port in Southern Eritrea lies at the entrance to Assab bay im a raimless region with very high temperature. Ihis port, built with financing by the Yugoslav Government, has two quays with a total length of 1330 m, which can accommodate 6 ocean-going vessels and 5 smaller craft. The depth alongside is 6 to 11 m. There are three warehouses on the quay totalling 17,000 me of covered area and a 1344 m cold storage. In addition, 174,000 m2 of open storage space is available. The port equip- ment includes 1 derrick crane, 2 mobile cranes, 10 fork-lifts, 12 tractors and 93 trailers. The port operation requires more equipment, particularly cranes. The port is connected by a paved highway with the interior of the country. The traffic through the port in 1965/66 was about 330,000 tons of export and import general cargo and over 130,000 tons of imported petroleum products (see Table 9). Coastal traffic is relatively unimportant. The ex- port cargo jumped to 240,000 tons during first year of operation of the new deep-water port from the 75,000 tons handled by the lighter port in the previous year. Since then, the export cargo has not been increasing; in facts, there was a slight net decrease in 1965/66 compared to 1961/62. Imports on the other hand increased almost every year. The 1965/66 import level of 117,000 tons drv cargo is about double of the 1961/62 volume. The petroleum products piped in at special oil terminals increased from 37,100 tons in 1961/62 to 133,000 tons in 1965/66. This is mainly due to the increasing switch from Djibouti to Assab as a port of entry of petroleum products. This nAtenorv of nort traffic, however. will disanpear when the petroleum refinery under construction in Assab is completed in 1968, The berthing capacityv is conideredaequnni t-.o hnndle general cargo up to 700.000 tons a year, or double the present cargo tonnage. -22-

8R. Port. of Massawa. The Massa.aa port in Northern Eritrea lies in the Bay of Nassawra on the Red Sea, 115 km northeast of Asmara, the capital of' Eritren. Tt. stands on two connected islans,q Tanulud and Massawa, and on the mainland. It has 6 berths for ocean-going vessels and 5 for small coast

84. At both ports stevedoring labor is supplied by the port office. No labor shift system is yet introduced, and stevedores are employed on a casual basis. Port working hours are from 7.00 a.m. to 6.00 p.m. after which over-time is paid.

85. TWith a view to streamlining the administration of ports, the Govern- ment submitted a bill to Parliament for creation of an autonomous National Ports Authority; it will be operated by a general manager responsible to a Ports Authority Commission, which will be chaired by the Minister of Commu- nications. According to the bill, the Commission will include a representative of port users appointed by the Addis Ababa Chamber of Commerce in addition to representatives of several government agencies concerned with maritime affairs. The Authority would be a corporate body with the right to enter into contracts with private and public persons or agencies, both domestic and foreign, and to borrow funds for the purpose of financing operations and improvements of ports. Port expenditures will be met by port revenues, and the surplus will be retained by the Authority. The Authority will have the power to set port rates to balance revenues and expenditures. There is no provision for autonomy of individual ports.

86. The proposed establishment of a port authority which will assume the cperational responsibility for ports from the present Ilarine Department of the M1inistrv of Communications, appears to be a step toward an improvement of management of the nation's port affairs. It should, among other things, -23-

help improve the operational efficiency of ports and establish financial auto- nomy ir.port operations which will ensure that users will pay the cost of services. The operation of the Authoritv, when established" and its pre.pa- ration of a port investment plan, which does not exist at present, would require outside technical assistance.

C. Port Investment Requirements

87. For the next, few yenrs, the investments in pornts shonl1d be mainiry for acquisition of port equipment and improvement of the Massawa facilities. HTowever; curing the Third Five-Year Plan period, 1968/69-1972/73 the problem of port capacity should be studied based on a reliable traffic forecast. The nort-. of -iassawa may have to be expanded in 7 or 8 years' time.

88. The present operating conditions of both Assab and Massawa ports are adversely affected by shortage of equipment and, in the case of Massawa, the deteriorated conditions of t4-he facilities. A lis4 of equipr.er. necessary for both ports has been prepared (see Table 11); this equipment is estimated to cost approxmately Eth$8 ml ion. It is not possible to appraise the appropriateness of the estimated requirements and the composition ofquir.e,ton the1bkasi;s LftelsIo.S visitSre S4o these u4ot, it was fairly obvious that the existing equipment is not adequate to handle the present and future port cargo, and therefore sore investment in equipment would be necessary. The Mission believes that a detailed review of the equipment situation should be carried out either by the Marine Departm,enL or, if necessary, by retaining a port equipment expert for a short period. Based on such a review ar equiprent procurement program can be prepared.

89. The Marine Department plans to erect 9 new warehouses in the Massawa port at an estimated cost of Eth$2.2 million. The investment in warehouses in Massawa is a priority need and is justified. The Department also plans to build 500 dwelling units in adjacent areas of both ports to provide housing for port workers. The construction is estimated to cost about Eth$6.5 million. Although providing housing for port workers would improve labor relations and increase efficiency of cargo handling, an under- taking of this nature is not in itself an essential part of port operation. Such an investment may best be left for review by the proposed National Ports Authority, within the framework of autonomous financial management.

VI. CIVI1L AVIATION

A. General

90. The mountainous territory, the underdeveloped state of overland transport and the scattered distribution of population throughout the larige territory make domestic civil aviation an important mode of transport, at first, as a precursor of land transport and then as a supplement when land transport facilities extend to areas hitherto isolated. The emphasis on civil aviation development in the past has been laid on international aviation and the overwhelmLn- propor,ion of capital funds for air transport was spent on construction and improvement of international airports and acquisition of jet a-ircraftr forJS *-nteraJ.a+or.. a flights-.J.fFl _" L IJ ~ the4-JL' overinginent±LI.J. ~.~L~U~LLj~~.nwseu L'hiop-Ci. Airlines.

91. In 1962-1966 the Government spent over US$20.2 million in equipping and constructing airports, airnly for- iprovements of the four major air- ports at Addis Ababa, Asmara, Jima and Dire DawTa. This involved construction of paved and lighted runways for Jet aircraft, tel-mina buildings and airport service buildings as well as installation of air traffic control, aeronau- tical com,nranications and air na-vigation facilities at these four airj-orts. In addition, aeronautical communication facilities were installed at 17 smal''er- rports, and air navigation aids were provided at 11 of those locations. These investments were financed by a US Development Loan Fund cLreu.±v

92. Ethiopian Airlines (EAL) invested in aircraft a similar amount to the Government's airport investment during 1962-1966. The total expenditure of Eth$50.7 million, or US$20.3 million equivalent, was distributed on purchase of the following types of aircraft together with spare parts:

Eth$Thousand 7 DC-3's 957.2 3 DC-6B's 311.9 3 Boeing 720-Bs 49,h79.8

T o t a 1 50,708.9

93. Despite the large investments in international air service facili- ties during recent years, both the Government and EAL continue to emphasize the international operation. As will be shown later, EAL plans to acquire more jet aircraft and the Government has now engaged an American consulting firm to prepare plans to imrprove runways, taxiways, aprons, navigational and landing aids for the two international airports at Addis Ababa and Asmara. The consultants' study,begun in January 1967, will be completed in 8 months. The Government considers as its order of priority in airport investment: 1) further extension and improvement of Addis Ababa and Asmara airports;

2) equipping the above two airports with necessary navigational and landing instruments;

3) study of the conditions and requirements of domestic airports. -25-

94. It is difficult for the l4ission to prejudge that domestic aviat.Lon should have a prior claim on the investment resources over the requirements for international aviation. The latter is inportant to Ethiopia because air transport is virtually the only means of movement of people between Ethiopia and foreign countries. As will be shown later, the international operation of EAL has been fairly efficient and, uni-Mke airlines of many other develop- ing countries, it does not rely on Government subsidies, but is a net foreign exchange earner; this seems to make investments in international aviation merit some serious consideration.

95. From the view point of fostering economic development and socia]- integration, domestic aviation has an unusual importance, and therefore its development should receive, at least, as much and probably more, attention from the Government as international aviation. The inadequate physical conditions of most of the domestic airports requires an urgent program for improvement.

B. Domestic Airports

96. There are about 50 domestic airports and landing strips in addition to the four major airports for international flights. Nearly 30 of these are served regularly by EAL, using mostly DC-3 airplanes. Most of these airports have runways less than 5000 ft long and are located at an altitu(le of more than 4000 ft, which, combined, make aircraft operation difficult. Experts express doubt that any of these airports could be used for scheduled air transport if evaluated under internationally accepted criteria. None of the 50 airports and landing strips are paved or lighted, and because of the poor soil and drainage conditions, most are closed during part of the rairny season.

97. Even with these inadequate facilities, domestic aviation plavs an iagortant role in maintaining communication and helping increase production in areas without over-land transportation. The DG-3's carrv both passengers and cargo, including mail, to and from those isolated areas and the demancd for such services is strong. In many places, passeneers sometimes must make plane reservations a week or two ahead of time because of shortage of space. Agricultural products flown out to markets are relatively high value and/or light weight goods, such as coffee, hides, butter, honey, poultry, etc.

98. The Government has recently requested the US Government for financial assistance for a study on domesticGirnort. investment requirements. The M4ission recommends that this study be carried out as soon as possible, and that based on thi a suitnble investment program for domestic airports be prepared for implementation. Pending this study, no reliable estimate of i nves+m.?ePn+. needs~is 25.rai abe. WrT~.^vr,Y +htheGofLr.erm.nrt. cor.si4ders +.thn+. Eth$40 million in the next five to ten years may be spent on domestic air- ports. It estma the foeign.exchange cwwomnet at about Lo percen.t. -26-

C. Administration of Civil Aviation

99. Administration and regulation of civil aviation are the responsibi- lity of the Civil Aviation Administration (CAA) which is headed by a Civil Aviation Administrator appointed by the Emperor. The Administration is under the immediate supervision of the Minister of Communications and executes the policies established by the Civil Aviation Board, which is chaired by the Iinister of Communications. CAA issues licenses for pilots; registers and inspects aircraft; regulates and controls all air routes; licenses, inspects and regulates all airports and air navigational facilities and services; and sets tariff rates for commercial operation of aircraft and rates to be charged for the use of airport facilities.

100. Although the setup of CAA appears to indicate an autonomous agency, there is little, if any, autonomy. CAA's budget forms part of the Government Budget, and revenues from airport fees and other activities are part of the Government's general revenue. The revenues from airport operations are only a fraction of the expenditures. For 1966/67, the total estimated collection of airport revenues was put at Eth$0.6 million against the total ordinary budget for airport operations of Eth$2.7 million. The current practice is to waive landing fees and other charges from Ethiopian Airlines.

101. CPA experiences shortage of trained personnel despite the consi- derable effort to train technical operators both within the country and abroad. Because of low salaries, CAA frequentlyt looses personnel trained at its expense. The growfing aviation activities, both domestic and international, renuire a net addition of technical personnel. A recent review cf the aviation requirements done by American experts from the Federal Aviation Agencv (FAA) suggests that, allowing for expected growth of aviation acti- vities over the next five years, the number of technicians required to nperate and maintain the Ethionian airways system must be quadrupled.

102. There is little coordination of investment and oneration of air- ports and air navigation facilities between civilian and military aviation due pri arily to the lack of clear-cut authoritg for coordination. It is desirable that airport facilities and services should be planned and provided w,Thinh can be u-sed jointly by militarv and civilian operators wihenever possible.

103. The FAA te2m recommended as a solution; armona other things. to the problems of retaining technical personnel and improving coordination with -r nYni aviatione-m activritiesj to establish _ Tmperial Aviation Authority; which would be a semi-autonomous agency similar to the Imperial Highwray Authority. It is doubtTflt, however, wAhether a se;miaualtonnmou-s agencv would be more successful in coping with those two problems. Unless the Aviation Authority is finan.cialy autonomous and per.m_t+Aa to collect rderunte charges from airlines, including EA1L, and other users of the airways facilities, 4-1, A,-hori-+tv - 'dA no > !t' adequate finn.cial Vr.sorc +esto r-i nan u,re Aat ,~ .u A.aIhJ 110U I- V e A. ,U..s... attractive pay scales to retain technical personnel. The Imperial Highway JAUtLoriLUy, aclth±JIough, semi-autor.or,ousJn L it.s operat±ior.s,, does r.ot h-av'e t+he -27-

financial autonomy and has not yet solved the problem of retaining trained personnel in competition with non-Government employees. Liaison with military aviation can be improved by appropriate consultation between the Ministries of Communication and of Defense. An establishment of a liaison committee composed of representatives of CAA and the military establishment would serve the nurnose, As militarv operations cannot be placed under the control of a civilian authority, the establishment of the Authority would not have anY

i-nortagnt effects .nth regard to i -m-rnrny co.rdination of activities between civilian and military authorities.

D. Operations of Ethiopian Airlines

104. Ethiopian Airlines was created in 1945 to provide scheduled and non==scheduled air services witin the contry as well as to foreign countries. Because of inexperience of Ethiopian personnel in operating an airline, a contract was negotiated wi%th Tran IWorldAr4es to rwnage and operate tih.e airlines and to train Ethiopian personnel for management and operations. From a modest begJnning with a few surplus rmilitary C-' 4!s (equivalent DC-3's) from World War II, EAL's operations expanded very rapidly and have Ueen successful. It, now provides scheduled se-vices, as aeadyvv imen-tioned, to nearly 30 cities and towns in Ethiopia and to 16 cities outside the country in Africa, ZiUrope, th-e Miuddle East and India.

105. As shown in Table 12, the operational recoros vhowrapiy increasng activities during the past decade. The number of passengers carried increased from about 70,000 in 1956 to nearly 180,000 in 1965. Passenger-"nles has more than quadrupled from about 34 million in 1956 to 145 million in 1965. This shows an increase in long distance international flights. EHLL projects that passenger miles will reach nearly 270 million by 1971 which is an in- crease at about 11 percent per annum. There is little reason why this projection cannot be achieved.

106. The airline now employs over 1800 men which is more than double the number in 1959. About 350 foreign technicians are employed, but the number is expected to decrease as more acquire technical and managerial skills through technical classes and management traIning programs.

107. EAL's financial results show small operating surplus in most of the recent years. For instance, in 1965 there was an operating surplus of Eth$ 3 million which is about 3.3 percent on the total asset (see Table 1.3). This is to some extent due to the fact that EAL is waived the payment of taxes, landing fees and other airport charges. According to EAL, the financial gain due to the non-payment of taxes and landing fees is more than offset by the expenses to operate and maintain 32 domestic airports, which is done by EAL rather than CAA. There are no financial statistics from wlich a comparison can be made of gain and loss on the part of the EAL due to this intertwined arrangement with CAA. It is, therefore, desirable that the administrative and financial responsibilities between them be clearly esta- blished to avoid unaccounted subsidies one way or another. -28-

108. EAL owns and operates the following equipment:

- 3 Boeing 720 - 3 DC-O.B - 9 DC-3 - 4 Bell Helicopters - 3 Cessna 180 - 3 Piper Cubs - 1 Beechcraft C18S

109. EAL plans to acquire more jet aircraft for international service at an estimated cost of about Eth$76 million during the period 1968-1970,, This investment wlTl be financed through foreign private banks. Some additional investments in domestic aircraft would be made. EAL also has a tentative plan to erect an office building in Addis Ababa at a cost of about Eth$10 million. These planned investments appear economically justified and are necessary to meet the increasing volume of operation of the airline. The Port of Djibouti

1. Djibouti is the capital of French Somaliland situated on the east African coast where the Red Sea meets the Gulf of Aden. The French territory (22,000 square kilometers) is bounded by Ethiopia to the north, west and south, and by the Somali Republic to the southeast. The extremely arid soil and torrid climate make this territory of no econoric significance, except for the port facilities at Djibouti which is an important bunkering center at the gateway of the Red Sea and the Indian Ocean. The cargo movement through the port is mainly (80 percent) traffic to and from Ethiopia (export of coffee, and hides, imports of manufactured goods such as vehicles and heavy equipment as well as timber).

2. To handle the Ethiopian import and exports, Ethiopian customs officers are stationed in Djibouti, and the transit freight between Ethiopia and Djibouti is moved in bonded freight cars on the Franco-Ethiopian Railways. The relations between Ethiopian and Djibouti authorities are good, and no difficulty in transit is experienced by Ethiopian traders who ship merchandise through Djibouti. The Commercial Bank of Ethiopia has a branch office in Djibouti which handles foreign trade transactions of Ethiopian exporters and importers.

3. The port has 8 berths for ocean-going vessels with denth between 9 and 10.8 meters. Ttwo of them are used for bunkering purposes and the rest, with a warehousing area of 12 -300 sanare meters. fnr oenernl cnrg?o vessels- There are a number of bonded and private warehouses and a meat refrigera-tion plant within the nort nrPm1ses - The r.rgo-hr n2ning equipment is adequante, and the port labor is fairly efficient.

4. The port handled about 360,000 tons of general cargo in 1965 (see Table 1)i); as m.e.ntioned earlier, about 80 percent is cargoes to and fromr Ethiopia. The port also handles about 2 million tons of petroleum products w.Thich are m.ainly for bunkering and to a minor exten.t for the needs of French Somaliland. Only a small volume of petroleum products are imported to Ethinpia through Djibohti nowadaysv= Since the opening of the deep-water Assab port in 1961, there has been only a limited growTth in general cargo trPffi an the ve-np-rt. vrol iirn hasrq not. increaed+. a l.1

5. T~~he Djbot---- or-t Amitation has a plar vo-l vwo- diLoa berths with a total length of 400 m and 12 m depth to serve deep draft vessels. 4 '1fl,~~c+~i,rn~+- - n +^ -,+,c TT'Z&tl, m 1 -- -A-,-4,4-b A 1 The con-trction is estimted to cost U S$3, ri"A.A equi Vo 'er.t, ,ihwou:ALd%A financed by the French Government. The current plan is to commence c struction du*r+ing .. r1.04,7 ff r \ 0 \ ~ TH ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~EI O PI1A, t i R --- ' ' \ j ~TRA,NSPIORT'ATION

t %9 - _( z s 1\,,1 5; q 6 4 a!a=oDrs ~~~~~~~~~~~~~~~~~~~~~~ANDIAt/DIN- 5 r-ES

\ _ , 4S > s < i 3 o~~~~~~~~~~50 100 1f 200

() 2 X5EndC ;dlqcl gt X 0TT Sll_~~~~~~~~~~~~~~~~~~~~~~~~~~~11O.ETERS

At / SAS C f.OXGONDR/

y tT jJ / .Z- g { Ct kAs;ob X /A t

<'>) r j/ 0.Ig g t F87,T.

a tobr

\( ADonQheloy10ttr(p %°ABAB

rw \v ( RE urf / \ \~e IIuo \ ;g ~ \

T.M : SEeooe

S.dDe IG/-LE. \ /

14ruierDI \ ererhn s AZ

{ S'^, C him T4 / u st;<.I" b, (;i99+9 > P~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~c U0G A N

National Road System, 1957/58-1966/67* (km)

Asphalt Gravel paved Surfaced Earth -* Total

1957/58 780 1875 - 2655

1958/59 800 2250 - 3050

1959/60 870 2565 - 3435

1960/61 935 3000 - 3935

1961/62 1065 3250 - 4315

1962/63 1244 3578 - 4822

1963/64 1244 3702 - 49h6

1964/65 1S55 3869 137 5461

1965/66 1526 3778 451 5755

1966/67 1363 4257 657 6782

* Roads maintained by the Imperial Highway Authority. In 1966/67 Liii L4lu~dUUL. d.~ 03 U1AJ lll Li. ~ULLLU.1UL U.L-y L4Ullu_1e± ±LUD d.iiU U1±"LQL which little or no investment is made by the Government. 11here some invest- 4 LsUr-J are maadel,An 4-V,vI I Je-,nv.n are usa--e, ,1 1,oy prvid-n AnA V-0 Lypo.nr nldnc4al am ±JsLVe,UV-r.tsffl wSt9 - technical assistance by the IRA.

IX* The earth roads included in this table are those dry-weather ruau~ V LUGI'U VIAdUVVa -iUIIl L1 W.L_Uli - l±VGZaWIL d_-LGre l -lLU- 4-1- 1TA such as providing drainage structures and surfacing with select materials onl section1s -Wne-re dri-v-.Lig ConduitU3Loins ar-e pdC tU.LLU.LdrLy Udif.LfLiLcLU.

Source: Imperial Highway Authority. Table 2

TI-A Fn8;t+iws on P 1957/58-1965/66

Construction a.ndAl Improvement 1/ Maintenance 2/ Total

1957/58 9.0 10.0 19.0 1958/59 6.6 11.5 18.1

1959/60 8.5 9.3 17.8

1960/61 17.0 10.5 27.5

1961/62 16.4 7.8 24.2

1962/63 17.4 7.8 25.2

1963/64 16.2 9.1 25.3

19(6/65 19.9 10.6 30.5

1l'65/66 21.9 12.1 34.0

1/ Including surveys and studies.

2/ An important, but undetermined, part is annually diverted to construction.

Source: Imperial Highway Authority. uoveer-r,Le nt CaptUal DUUeL, L963Q/ U64-.L;/`JU/ U OK*

(li,l,on Ethi-opian dollar-s)

1963/64 196h/65 1965/66 1966/67 actualsj) kACtUtiaJ) kACtUais)

Social Development 2.8 3.0 3. l,

Economic Development

a. Infrastructure 28.3 19.4 25.1 31.5

1. Civil Aviation 7.8 .4 o.6 u,,6 2. Highways 19.6 15.2 23.3 30,8 3. Broadcasting Network - 3.1 0.5 0,1 4. Post Office 0.2 0.4 0.7 5. Radio Transmitters 0.5 - - 6. RailwTays 0.2 - - 7. Assab Port - 0.3 -

b. Industry 16.5 6.8 25.5 45,5

c. Agriculture 14.3 3.1 309 7,8

d. Others 6.6 9.4 19.7 19.3

Public Buildings 3.0 2.6 2.4 3.0

Total 61.5 44.3 80.1 121.3

Approx. Percentage of Total Budget assigned to Highway 32 34 29 25

* The figures in this table differ from those in Table 7 in Volume I; in the latter table expenditures financed by earmarked taxes are included.

Source: Ministry of Finance. .Ldk. L Tlf ~ Tal e - ) 4 Motor- fUel Consu.tion,, 1958/597-1965,rW/66 ±IULAJ±£ .LWL! - -U1 .2 U±1±-I .L?)UN ~ 7) (ki'I I I Oon .lbe.Lti)

Percentage Diesel oil Gasoline Total increase i958/59 hS.O 33.0 78.0 - 1959/60 51.9 33.0 04.9 8.8

1960/61 58.1 36.3 94.4 11.1

19 61/62 58.9 .1 100.0J.9 U 1962163 66.5 48.0 114.5 14.5 1963/64 77.0 51.0 128.0 11.8

196 4/65 82.1 59.4 141.5 10.5

1965/66 92.0 64.8 156.8 10.8

Source: Imperial Highway Authority. Table 5

Motor Vehicles in Circulation, 1962-1965 1/

Trucks and Cars Buses Pick-ups Tractor Trailers Total

1962 12,893 1,199 1,703 3,333 19,128

1963 13,958 946 1,824 3,086 19,814

1964 21,h08 1,559 1,498 3,164 27,629

1965 24,554 1,698 1,437 3,949 31,638

Lncreanc in 1965 over 1962 9ap?O22J -16% 18 % 65%

1/ Situation as of September 10 of each ye.

SOUice ;4 r- '4I TrUgn-ay Authority.; 4 Table 6 Average Daily Vehicle-Kilometers, 1953/54-1965/66*

Percentage Increase uvtL- Tractor- Over Preceding yU du, uCars Trucks Trailers Duses Total l953, Yeiua _

l9~~35 775,632 161,5"73 22,507 lo8, >!0 2780,222 - ly)J/)4 {)nr)tlOl- ,tU/lOvV ~I - lU -(O- -1 - 195h,'55 84~,o57 l6l,7L40 19,859 21,28h 287,7h0 3 3

i5/5 i0O4 O89 204,1408 39,740 53,9612 402,339 4,5 40

1956/57 147,444 250,0o7 58,058 103,644 559,193 101 39

1957/58 214,426 301,406 74,145 130,885 720,862 159 29

1958/59 187,681 286,455 85,212 98,821 658,169 137 -9

1959/60 222,768 228,833 55,071 125,742 632,414 127 -4 1960/61 208,499 202,743 52,936 126,417 590,595 112 -7

1961/62 155,001 202,667 74,992 107,938 540,598 94 -8

1962/63 164,292 225,077 87,847 130,870 608,086 119 12

1963/64 186,063 243,375 84,633 144,832 658,903 137 8

1964/65 223,370 198,407 74,409 138,426 634,612 128 -4

1965/66 233,606 222,942 91,522 140,696 688,766 148 9

* Estimates based on counts at 38 count stations throughout the country.

Source: Imperial Highway Authority, Planning and Programming Division. Table 7

Tentative Road Investment Program of the Imperial Highway Authority, 1967/68-1971/72

Total Cost Schedule Km 1967 7V72 1967-66 1966-69 1969-70 1970-71 1971-72 R e m a r k s ------Thousands of EthS --

A. Primary Road Construction

Bedelle-Gore 138 29,517 4,705 6,203 6,203 6,203 6,203 IBRD financing requested Awash-Tendaho 303 46,465 12,467 15,315 15,315 3,368 - Waldiya-Geregera 300 60,391 9,599 12,698 12,698 12,698 12,698 Dilla-Agere Maryam 105 12,750 - - 4,250 4,250 4,250 German financing requested (Eth$12.5 million) Addis Ababa-Nazareth 94 28,200 _ 6,900 6,900 7,200 7,200 SIDA financing being considered

940 177,323 26,771 41,116 45,366 33,719 30,351

B. Secondary and Feeder Road Construction

Bonga-Mizan Teferi-Tepi 155 1,935 479 479 479 479 19> Arb Mech.,oi 615 . .. 7.2e^... 479 2 4 > - - - Asbe Teferi-Gelemso-Mechara 140 1,668 566 551 551 _ _ IBRD financing of construction Asela-Bocoggi-Dodola 120 1,740 - 261 493 493 493 equipment purcha:3e for about Miesso-Gewane 70 1,015 - - - - 537 Eth$L0.0 million requested. Desse-Were nlLu 80 1,161 363 435 363 - Asaita-Dubti-Tendaho 60 870 - - 72 435 363 Hosana-Didu-Soddu 95 1,378 464 479 435 - 'Laibe -Spr 60 70 - - - 0345- Jiggiga-Ferfer 695 1,136 319 327 164 163 163> Equipment would be financed by Debre Markos-Mota 115 2,070 540 540 540 450 - a German Govt. loan of Jina-Suntu-Walkita 200 3,600 720 720 720 720 720 Eth$5 million signed 2 years Addis Zemen-Debre Tabor 70 70 35 35 - - - ago. Delivery oi equipment Kibre Dahar-Godi 100 180 90 90 - - - . expected shortly. Ginir-Immi-Godi-Ferfer 575 1,375 250 250 250 375 250 The German Govt. is being approaclied for financing pur-chase of equipmenit, 2,600 19,793 4,305 4,413 4,o67 4,087 2,921 Eth$2.1 milLion.

C. Asphalt Surfacing of Primary Roads

Wo.Lliso-Jima-Agaro 267) Awash River-Asela 60) Agaro-Bedelle 96) Lekempti-Ghimbi 111) -Bahar Dar 345) 74,110 14,822 14,822 14,822 14,822 14,822 IBRD financing requested. Bahar Dar-Addis Zemen 80) Nacareth-Awash 125) Mieasso-Asbeteferi-Kulubi- ) Dengego 211) Agere Hiyot-Lekempti 205) _ _ 1,500 74,0lo 14,822 14,822 14,822 14,822 14,822

D. IhA-Army Cooperative Projects

Bitata-Maslo-Goro 232 400 200 100 100 - - Kadjo-Sendafa 60 60 30 30 - - - Mekele-Abbi Addi-Adwa 205 205 65 70 70 - - Adi Ugri-Barentu 150 150 30 30 30 30 30 Financing by budgetary Ghimbi-Dembidolo-Gambela 315 315 165 150 - - - ann,onriations Azezo-Metemma 215 215 115 100 - - - Lalibela-Feneroa-Adigudum 235 235 135 100 - - - Feneroa-Abbi Addi 90 90 45 45 - - -

1,502 1,670 785 625 200 30 30

E. Procurement of enuioment for secondary and feeder road construction 17,102 17,102

Total program 289998 63,785 60,976 614.455 52,658 48,124 cfI C) c. -~ c'n Lt' -t . C)O _J r-. i t Ci r- ap r.0r

.io a) a:) ') CQJ CU t-

X~~~~~Lrwl O \ crl OD _JT U r- '. r- Er- '.0 t

S../DCO C) CQ VJ r- r - HCN "012 v 0 a°Hn f\J C%a Cr D Cr\ , CC ?g O\ .4 V- ci\ A H3

H)I) \0 9LI 9 0s-CZ, 0 rLt & t 11'.0 C) -.4: r- CD O7\ o : 4-1 11 *r0r 1.00t i- C";* C)* C'J* H4**r 0)0 Ek. 9 r- _: C't- Cl- CZ) cii I). - ccri E-4 4 H~~.I '.0U '0t-- 0 r-v- P 0

cd r~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~r H~Hd IC 0'. rH rH a; iiu 94, O? '.00i1% r r) CY'% 'U'\ V\ .4 0

0~~~~ Table 9

Traffic Through Port of Assab, 196o/61-196566

Cargoes (Thousand tons) Ships Called Exports Total Net Imports All Dry and Registered Dry Petroleum Dry Dry Liquid Tonnage aro Products Cargo Cargo Cargo Numnber (000) 1960/61 50.2 36.1 75.4 125.6 161.7 4 86 915 1961/62 58.1 37.2 240.h 298.5 335.7 513 1033 1962/63 55.8 39.5 221.4 277.2 316.7 544 1233 1963/64 77.2 55.0 209.7 286.9 341.9 547 1230 1964/65 115.6 89.o 166.8 282.4 371.4 568 1408 1965/66 117.5 133.4 213.9 33144 464.8 650 1693

Source: Ministry of Communications. Table 10

Traffic Through Port of Massawa, 1960/61-1965/66

Cargoes (Thousand tons) Ships Called _ Exports Total Net Imports All Dry and Registered Dry Petroleum Dry Dry Liquid Tonnage Cargo Products Cargo Cargo Cargo Number (000) _ 1960/61 125.9 53.5 160.8 286.7 340.2 788 1644 1961/62 147.3 41.3 154.0 301.3 342.6 76h 1716 1962/63 l1.8 75.7 17h.h 286.2 361.9 793 1924 196 3/6 4 131.8 71.3 175.2 307.0 378.3 772 1888 1964/65 178.5 80.8 184.8 363.3 84441 785 1712 1965/66 211.5 .84h1 190.1 401.6 485.7 821 2003

Source: Ministry of Communications. MTaI ,11

Proposed Purchase oI Equipment for Massawa and Assab Ports

No. required No. requiredu Type of Equipment for Massawa for Assab

1. Quay cranes 8-ton 7 6 20-ton 1 1

2. Mobile cranes 5-ton 2 2 20-ton 1 1

3. Fork-lift trucks 3-ton 6 -

4. Electric stackers (1-ton) 6 6

5. Pallets 3000 3000

6. Tractors 6 3

7. Trailers 5-ton 50 10 10-ton 15 5 15-ton 2 2

8. Work-shop equipment Not itemized Not itemized

9. Construction equipment " " "

10. Communications equipment " I"

11. Crafts Buoyage, water tender 1 1 Pilot boat -1 Survey crafts 1 1

12. Pumps 1 2

13. Fire engines 1 1

Source: Ministry of Communications. Table 1]2

Ethiopian Airlines, )erating StatistLes 1956-1965

1956 1957 1958 1959 1960o 196t1 196S2 1963 1964 1965

Plane miles (000), 2,946 3,19?7 3,326 3,649 3, 783 4h,13 9 4,096 4,597 5,102 5,139

Plane Hours Block Timne 1.7,921 18,988 18,912 19,568 19,716 21,362 20,747 18,577 19,389 19,,283

Passengers carried (numbers) 70,615 87,60)5 92,712 95,597 :LO4,067 L10,1t36 116,642 132,349 159,769 177,586

Passenger, nil.es iflownL (OCPOa l33,6L5 319,1S?2 47,388 55,,680 65,:338 71,498 77,418 102,244 132,652 1L5,331

Available seaLt miles (OCO) 80,093 81,325 L21,683 :L65, 053 :-62,394 188,571 191,276 320,765 384,111 1419,123

Freight carried (tons) 5,062 5,2774 5,614 7,068 6,725 7,726 6,943 7,585 6,976 6,760

Freight ton miles(OO()) 1,699 1,679 1,819 2,199 2,307 2,803 2,744l 3,280 3,507 4,530

Payload f'actor n.a. 46% 46% 144% 47% 44% 4i5% 35% 38% 41%

Breakdown. payload factor n.a. n.a. n.a. 441% 39% 35d 37 37% 34% 38%

Nuriber of employees 655 724 772 812 895 1034 1281 1512 1746 1833

Source: Ethiopian Airlines Annual Reports Table 13 Ethiopian Airlines Financial Statistics, 1956-1965

(Millions of Eth$)

1956 1957 1958 1959 1960 1961 1962 1963 196I L965

1. ODerating Revenues 10.6 11.8 15.4 20.4 23.7 25.7 27.9 34.4 h2.0 45.4

2. Cperating Exnenses 9.8 11.6 1L.8 18.6 19.5 20.6 22.6 35.6 37.0 hll.3

3= Non-onerating expenses - 0.2 0.5 1.0 1.2 0.6 - 1.8 2.0 1.1

4. Adjusted net pro f;t (1-2-3) 0.8 - 0.1 0.8 3.0 4.5 5.3 -3.0 3.0 3.0

5. Share holders equity 129 I1. 9 C 9 6.A3 Q 992. 19 399 922Q 268

6. Total assets 9.5 17.029.0 29.0 31.2 33.9 76. 82.5 B2. q1.3

7. Current assets 3.9 11.6 10.7 11.8 15.h 18.4 24.2 30.6 32.0 34.0

8. Current liabilitIes 3.0 3.1 3.9 4.8 5.' 5.3 9.4 9.6 .A 11.8

9'. ;work-Lug capital(7-8) 0.9 8.5 6.8 7.0 10.0 13.1 14.8 21.0 22.4 22.2

Source: Ethiopian Airlines ril7lual Ripoi-'s Table 14

Port of Djibouti, Traffic StatiStiCS, i958-1965

Comuer cial Vessels Calved Dry Cargo Petroleum Products (net tonnage) lncoming Outgoing Total Unloaded Loadecd mEilion ------Tlhousand tons) - 1958 6.0 144.7 62.0 206.7 690.2 681.1 1959 7.9 150.7 79.2 229.9 980.8 925M.. 1960 8.1 143.3 114.0 257.3 935.3 899.1 1961 9.2 2148.6 a4BeX 292Z4 1179.1 1105.C0 1962 10.9 163.1 140.4 303.5 1490.0 1365.7 1963 10.8 181.3 136.3 317.6 1373-3 1334.9 1964 12.0 170.5 125.6 296.1 1605e4 1504.7

1965 14.8 224.4 139.2 363.6 1915.2 1850.3

Source: Statistiques 1958-1965 Port de Comnmerce du Djibouti