Officials of the federal government in charge of the logistics sector are contemplating opening more free trade zones at Modjo, Adama, and Semera towns. It is based on the direction received from the National Logistics Council, which was established two years ago to reform the logistics sector and directly reports to the Prime Minister.
It is a proposal made just a week after the official inauguration of the Dire Dawa Free Trade Zone, which was first selected due to its proximity to ports, market potential, and high cargo gravity.
The three towns are also identified due to suitability for multimodal transport and logistics operations. Businesses can import and process goods while benefiting from custom duty privileges that will be subject to the approval of the authorities.
Even if it needs further feasibility study and a list of criteria based on their location advantages, suitability, nearness, and proximity to various markets, Mojo, Adama, and Semera will be among the areas considered for the establishment of free trade zones, according to Kiya Tessema, a strategy advisor at the Industrial Parks Development Corporation (IPDC).
Officials believe the launch of such facilities in Ethiopia would help to reduce logistics time and costs while boosting trade competitiveness, foreign direct investment (FDI) flow, urbanization, and industrialization.
The establishment of the free trade zone will prioritize areas including trade, comprehensive logistics service, export processing zone, and export facilitation.
A few weeks ago, in a discussion that deliberated on the role of setting up free trade zones in Ethiopia, Dagmawit Moges, Minister of Transport and Logistics, explained that Ethiopia planned to establish several free trade areas, establishing and implementing the first in Dire Dawa.
She said establishing a free trade area in Ethiopia is considered a beneficial and necessary solution as proposed in the National Logistics Strategy under implementation.
There are more than 5,000 special economic zones (free trade zones) in the world. Kiya says the establishment of a trade zone in Ethiopia has played a significant role in the development of the country in order to increase export trade income, create job opportunities, import substitution, and knowledge transfer activities.
The zone at Dire Dawa is expected to provide support for the manufacturing, importing, and exporting procedures. Companies would also not be subjected to bureaucratic procedures.
Ethiopia took the experience of African countries such as Djibouti, Somaliland, Kenya, and Turkey as a benchmark to setup the free trade zone.