January 13, 2014

Ethiopia: Djibouti Gives Ethiopia Cargo Ultimatum

Ethiopia: Djibouti Gives Ethiopia Cargo Ultimatum

Ethiopia: Djibouti Gives Ethiopia Cargo Ultimatumby Tamrat G. Giorgis| Release of cargo will change come January, according to the ultimatum, which some believe to be in breach of a bilateral agreement. The government of Djibouti has given a deadline of January 15, 2014, for challenging the manner in which cargo is released from its ports.

The new rules will state that no cargo inbound to Ethiopia will be released until the clearing agent in Djibouti produces a note from banks stating that foreign exchange to pay for transport, transit and forwarding services has actually been transferred.

A circular instructing offices in Djibouti to this effect has been distributed by the government, according to diplomatic sources in Djibouti.

The decision will alter the status quo, whereby a clearing agent in Djibouti pays for the services from their own account and bills its Ethiopian counterparts later on. Indeed, there is a port utilisation bilateral agreement that the two countries signed in April 2002, which allows Ethiopian forwarding companies to transfer funds two weeks after the cargo of their clients has been released from the port.

However, Djiboutian transit and forwarding companies have been complaining about delayed payments from their Ethiopian counterparts, while the latter blame the Central Bank for its failure to provide them with foreign currency on time.

“I owe my counterpart in Djibouti close to five million Birr,” said a businessman who runs a forwarding firm in Addis Abeba. “Because I don’t get foreign exchange on time, there is no way I can transfer what I owe.”

There are unconfirmed reports that Djibouti businesses in the cargo transit sector are owed a total of close to 20 million dollars. Working in a country that suffers from a terminal shortage of foreign exchange, their Ethiopian counterparts are struggling to pay their fees on time.

“Neither am I willing to transfer it through the underground market,” said the businessman.

Ports in Djibouti handle 800,000 units of containers per year and eight million tonnes of general cargo, according to recent data from the Ports & Free Zones Authority of Djibouti (PFZAD). Close to 20pc of these containers and 85pc of the general cargo is inbound to Ethiopia, where the transit cost claims close to one percent of the total cost of the goods, according to industry experts.

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