Djibouti Gives Landlocked Ethiopia Cargo Ultimatum

The sin of empty pride. Land-locked Ethiopia is now forced to pay tiny Djibouti with 2 Billion Birr annually for port services ($722.5 million in port fees and additional $22.6 million in port tariffs) ever since it ditched the services of Eritrean ports at a meager 250 million Birr per annum, all paid in local currency.

Totally dependent. With no alternative ports in the hindsight, Ethiopia pays Djibouti with 2 million dollars a day for port services
Totally dependent. With no alternative ports insight, thanks to the No-Peace, No-War situation with Eritrea, Ethiopia has now no option except keep paying Djibouti with 2 million dollars a day for port services

By Tamrat G. Giorgis,

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 20% of these containers and 85% 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.

There are reports within the industry that Djibouti nationals involved in the transit of goods have been coming to Addis Abeba to collect their money in Birr and invest it here in businesses. Some of them change the Birr to dollars on the underground market and take it out to Djibouti.

What else were we supposed to do?” grumbled a businessman who owns a ship agency and forwarding company in Djibouti, in a telephone interview with Fortune.

One such incident occurred in mid November 2013, where customs officers at Ethiopia’s border with Djibouti arrested Abdourahiman Elmi, a former port official with diplomatic immunity. Once a resident representative of the Port of Djibouti in Ethiopia, where he had served for over a decade, Abdourahiman now runs a forwarding company, although his employment with the port continues. He was accused of attempting to smuggle 132,000 dollars out of the country and remained under customs custody for two weeks before he was released on bail in the first week of December 2013.

Ethiopian diplomats in Djibouti and many of the industry operators in Ethiopia attribute the subsequent diplomatic tussle between the two countries over the release of Abdourahiman. This was vehemently denied by Djiboutian officials this week. Authorities in Djibouti issued a directive that would stop cargo releases before fund transfers on December 7, 2013.

“It’s depressing to see a country of less than one million being able to twist the hands of a big country, such as Ethiopia, to secure the release of an individual who clearly broke the laws of the land,” said a businessman, who has had a business relationship with Djibouti for over 15 years.

Led by Moussa A. Hassan, minister of Infrastructure & Transport, a high level ministerial delegation from Djibouti were here in Addis to discuss joint railway projects with its Ethiopian counterparts, led by Worqneh Gebeyehu, minister of Transport. Both Illyas M. Dawaleh, minister of Economy, Finance & Planning, and Aboubaker O. Hadi, chairman of the PFZAD, who took part in the one day meeting held at the Sheraton Addis, denied the link between the arrest of Abdourahiman and their decision to force Ethiopian forwarding companies to transfer funds in advance before cargo gets released.

Despite Djibouti’s new requirement, Ethiopian forwarding companies can only get access to foreign currency after submissions of original receipts paid on expenses for port handling, commission to Djibouti transit agents, fees to vessel agents, container demurrage and storage fees for cargo that has remained at the port for more than eight days. They take copies of original receipts to commercial banks to order transfers.

“There is no way for us to pay unless the Central Bank changes its rules on this,” said a CEO of a private forwarding company.

The reaction from Ethiopian officials here in Addis was much more sober than their diplomats in Djibouti, Fortune learnt. Ethiopia’s Ambassador to Djibouti, Sulieman Dedefo, was pushing Ethiopian authorities to take a much stronger position. He believes that Djibouti has violated the 2002 agreement not to take a unilateral move in relation to the port’s operations that affects Ethiopia, according to sources in the administration.

“I want to assure you that nothing would come from Djibouti’s side that could affect what Ethiopia undertakes,” Illyas told Fortune. “We want to move to a deeper relationship, such as economic integration. We want to support Ethiopia’s aspiration to be an industrial nation in the region.”

While Ethiopian authorities were trying to work out a bilateral meeting with their Djiboutian counterparts, Ethiopia’s Prime Minister, Hailemariam Desalegn, raised the issue with President Ismael O. Guelleh, according to sources.

“The issue is being handled at the heads of state level,” an aide of the Prime Minister told Fortune.
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40 thoughts on “Djibouti Gives Landlocked Ethiopia Cargo Ultimatum

  1. Rather than all this debacle, why don't Ethiopia implement the border ruling unconditionally and Eritrea and its people will be more than happy to allow them to use our ports in good faith and favourable terms? Aside from the obvious, they could have greatly benefited from our industries people work ethic and honesty.

    Could it be dented ego and stupidity getting in the way of Ethiopian leadership thinking. Ethiopians are losing out because of the idiocy of weyane.

  2. This is Only wishful thinking! Ethiopia and Dgibouti are integrated beyond border. TechnicLy they are almost one country. In fact that is the long term policy….to unify the two country.

  3. They will get the money back by selling them electric city and water .They could have used our ports long time ago if our leaders avoided head on collision .Even now it is not to late to sit down and solve their problems.These two countries they know each other very well,they don't need any third party.

    1. The problem is already solved long time ago now it is time leave for Ethiopia to make a plan a peaceful exit . Daniel why are you blaming Eritrea or Eritrean leadership do not buy Abraham assertion he is mislead Eritreans.

  4. I FIND THESE PARTS OF THE ARTICLE IMPRESSEIVE.

    "Ethiopia has now no option except keep paying Djibouti with 2 million dollars a day for port services" That means 60,000,000 dollar per month.

    "The new rules will state that "NO CARGO INBOUND TO ETHIOPIA WILL BE RELEESED" until the clearing agent in Djibouti".

    WHAT WILL HAPPEN TO ETHIOPIA IF THEY CAN NOT PAY THIS AMOUNT OF MONEY MONTHLY?

  5. My lemanay agamino abraham, eritrea is better off with out you beggars. so wait and see what will be the coming 2 or 3 yrs will be, just wait if you are healthy enogh to handle that. if you are not go hell with your midget meles and you will get the report through sebhat gereweyna

  6. Abrham , I am afraid to tell you that , the empty bottle here is Ethiopia, kicked out from Kenyan Port , Port Sudan , dlgdibuti port and Somalian Port for a lack of payment like an abondened orphan .

  7. this is not the same daniel who is know for his love and passion to Eritrea, this is the clown Daniel with capital D. may be your agamino brother.

    1. Thomas
      In Swahili there is old saying Bongo lala which means sleeping mind, wake up you need to smell the coffee, you can not manufacture history, only if you are dreaming Weyane's unattainable dream and hallucination. this is a dangers disease by the way Eritrea has developed effective medicine for that kind illness. Please do us favor why don't you spend your time and post this unwise comment on Weyane websites. then you brothers will tell you the history of Assab, or if want the Egerimetkle battle the lessons should not be forgotten that wave of human mine sweepers fate those innocent people falsely indoctrinate by your ruthless and heartless Weyanes you may not have seen the out comes that madness, but your brothers can tell the rest of the story

      long live Eritrea

      1. @WediAsmara,

        according to the western time measurement we are in 2014. But you are technologically uncivilized african, your time is 600 years back .
        Nevertheless, remaining independent and free.

        Life without car, phone,…. is also possible!

  8. My people once again do we really think that the pretend State of Djibouti can stop Ethiopia from importing it's goods? I don't think so. First of all allow me my good people to preach on you of who really runs Djibouti, the wealthy state of UAE. yes the united arab emirates. They were the ones that build the Djibouti port with millions of their oil money. Second Djibouti with a population of only 1,000,000 or so does not produce nothing, so basically they sit on their behind and wait to collect the port money that they get from Ethiopia. And out of that same money half of it goes to UAE. So Ethiopia is the only life line to Djibouti. And let's not forget the little of money they make from the USA marines that are stationed there. So basically Djibouti have no power to threaten Ethiopia. So please Eritreans let us stop dreaming and let us just focus on our two beautiful ports and the unity of our people and let the others worry about their own problems. The so called one man president for life of Djibouti Mr. Gullie bought a land that is worth 100 million dollars in Ethiopia so slowly Ethiopia is getting its money back. Why can't we Eritreans do that.

  9. It is no brainer, solving the border issue and opening our ports would be benefital to both countries and Woyane junta need to come to their senses and settle the border issue once and for all.
    At the end of the day everything is about the economics.
    Lets say peace comes and Eritrea starts making 300 M/YR from ports services, plus all the jobs that will be created for the young folks that would be huge. we need to strive for peace and sell our products to attract customers though, that means compute with the competions to brings the Ethiopian enterporneurs/ business people to start using our ports for less, but not for free after all we paid so dearly so we should get paid.
    Even if they want to give us power for the services of ports, there still needs to be a transaction where we pay for the power in KWH and they pay for the port service.
    I know I am a little bit ahead of my self here, just dreaming were one day we will be discussing based on pro and con of isssue instead of the hate filled cheap argument i read on line some times. Good days will come soon deki ere…enshallah

  10. The motion that after peace returns, Ethiopian businesses might engage themselves with either of Eritrean ports , is more than stupidity. Woyanes may fancy one of the ports for Tigrayan import/ export but not the rest of Ethiopians. at this moment of time all the infrastructures being built or planned are to connect every regions of the country to Djibouti. even Tigrai and Afar laying a railway towards Djibouti. Djibouti ports maybe expensive but much more reliable than Shabiyan controled Asab.

    1. @Yosef

      You remained me of the fox and grape tale. Setting aside emtion and your stupidity, trade and commerce is all about maximising profit while keeping operational cost as low as possible. Now in ideal world if your backward weyane junta wasn't too stupid to engage in the manner it has and bring bad blood to Ethiopia-Eritrea relationship, all this Djoubti business would not have been necessary. The choice to use Eritrean port would have been in the interest of Ethiopia purely for logitical reasons. Personally I am all for Ethiopian people benefiting from Eritrean ports. But not under wayne watch.

      Get a sensable government and we can all clean the slate and start over. Otherwise good luck being fleeced by Djoubti. As they say a fool and his money part easy!

    1. Yeah of Course …Poor but Proud of our small but sure in our steps in the right direction. On our own…which must be a very strange phrase for u Dependent people.

      Is this what makes you better ?

      1. 160,000 + tens of thousands illegals https://www.bloomberg.com/news/2013-01-24/saudis-t
      2. More than 13 million are kept alive by UN WFP https://opinionator.blogs.nytimes.com/2011/05/12/t
      UK alone has done this https://www.gov.uk/government/news/horn-of-africa
      3. Corruption 16 Billion https://www.tadias.com/05/13/2013/how-big-is-corruhttps://www.dailymaverick.co.za/opinionista/2011-1
      4. Youth Illiteracy rate https://www.unicef.org/infobycountry/ethiopia_stat
      https://country-facts.findthedata.org/q/84/2395/Wh
      5. 50 % Unemployment Rate https://www.economics.ox.ac.uk/index.php/centre-fo

    1. To the "Abrahams and the Gheza Tegarus":
      .You will see a New and even better Singapore without exaggeration soon.
      Here the Facts,not the wishes:
      -China and Qatar are in the "Loop"–.
      -Asmara and the Eritrean Red Sea will be the International Hub soon-through the Joint Sino -Qatari-Eritrean projects
      –The Trillion dollar worth Culluli and Bada projects are moving fast
      -The Massawa and Dahlak Resorts are coming soon—the European and Middle East Tourists are hungry for these–Talk about more than 500 million annual income worth Torurism Industry
      -The best Sea Salt and Fishing Indusries are on their way
      -The, as of yet unheard of,Natural Red Sea-Dankalia Natural Dam is coming soon–a multi billion energy and agricultural boom—Denkalia Desert to be turned into green ranch
      -What about the more than 15 billion dollar worth precious metal mining industry?
      -What about the hidden massive gas and petrolium offshore and onshore deposit(the largest deposit ever reported per the Western Intelligence Services-"We are wondering why the eritrean Leader is quite and silent about it")
      .

      1. Very glad to hear that,now they will sent back the 100k plus refugees roaming around in Ethiopia and 500k scattered all over the world.Also some of their returnees from Saudis .

  11. Consider the untapped Eritrean Human Resources scattered all over the world with very diverse but huge potential–talking about Scientists, Engineers,MDs,Economists,etc—and the intrinsic hard working nature of Eritreans.
    -The multi-billion infra-structure boom not to be forgotten
    -The Oldest New Eritrean Airlines will be moving fast–Red Sea Airways, Massaw Airways, NasAir, Eritrean Airlines—–
    The sky will be the limit if Eritrea and Eritreans are to be given a chance–just peace–nothing else.
    Merry Cristmas and Happy New Year to all Peace Lovers.
    Eid Mubarek/Mewlid to our Muslim Brothers.God bless all.
    Good luck to the war lovers and demonizers
    Conted

  12. Empty Bravado,we have nothing,we are the poorest country on earth.We are lead by click of Tigraians who does not want us to advance forward,watch the video on you tube,Mekelle,the city of knowledge .This was the least developed city in Ethiopia.The rest of their major cities are much ,much better than this.Once our beautiful Asmara is falling apart and/or crumbling down.

  13. Djibouti economy depends on Ethiopia's port services,they are not in a position to give them any ultimatium.It is a suicidal.They are well aware Ethiopia Air Cargo Market is the Fourth Fastest in the World.In fact they are using their Air Cargo more often than Sea Cargo,right there they have bargaining chip .

    1. Stop kidding your self will you …and think . __Ethiopia started using Djibutis ports after it stoped using Eritreas Ports . So think …__….What was Djibuties economy based on for the last 100 years or so ? As they began getting income from Ethio after 1998 . _….. Google Djibuties economy and you will see that its mostly based on the Forign armies they have in thier lands and other maritime services they provide the region. __Again Stop Kidding yourself about your Emportance ok . Nobody in the whole region needs Ethiopia for anything. Never have and never will . You just Go and Keep beliving what tyour Western Masters tell about ur Double Digdit Economic Growth , your importance etc. Other than Providiing Poor Ethiopian Bodies for Slaughter in Somalia, and maybe now in S.Sudan and of course Selling your Land to the higehst Arab / India bidder …Uslelss u r

  14. Dany

    Trying to Act like your Masters Do ? Is that how they get you to bend over ?

    1. Just because you are bought and sold by donnations and Aid doesn'e mean Eritreans are.

    2. Website was not running b/se of you and won't stop b/se of you. But Don't make a mistake about what type of site you r .

  15. why the Eritreans are bitch crying, Ethiopia owns Djibuti now, and when time is right will bring back force the Asab port. at the moment you have no choice other than starving for our Cash.

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