Ethiopia has opened a new chapter in its logistics and trade services sector with the removal of long-standing restrictions on foreign participation in freight forwarding, marking one of the country’s most significant service liberalization moves in recent years and signaling a broader need to attract foreign investment into its trade infrastructure.

The reform, approved by the Ethiopian Investment Board under the Ethiopian Investment Commission, now allows 100 percent foreign ownership in freight forwarding companies. This dismantles earlier requirements that forced international logistics players into joint ventures with local firms and capped foreign equity at 49 percent.

For investors eyeing East Africa’s land-linked trade corridors, the shift effectively unlocks a critical node in one of the region’s most strategically positioned but operationally constrained logistics markets.

Freight forwarding sits at the centre of Ethiopia’s external trade system, coordinating customs clearance, cargo handling, inland transport, and distribution through the Djibouti corridor, the country’s main gateway to global markets.

More than 90 percent of Ethiopia’s imports and exports move through this route, handling millions of tons of cargo annually, ranging from fuel and machinery to fertilizer, construction materials, and consumer goods.

Despite its strategic importance, Ethiopia’s logistics system has long been considered costly and inefficient. Industry estimates and multilateral assessments, including from institutions such as the World Bank, have repeatedly flagged logistics costs in landlocked African economies as among the highest globally, often consuming 30–40 percent of product value in some trade chains.

In Ethiopia, exporters, particularly in agriculture and light manufacturing, have faced delays at ports, fragmented freight services, and limited digitalization across customs and inland logistics. These inefficiencies have weighed on competitiveness at a time when the country is seeking to expand industrial parks and export-led manufacturing.

Until now, freight forwarding was among the most tightly regulated segments of Ethiopia’s logistics architecture. Under Investment Regulation No. 474/2020 and earlier legal frameworks, foreign logistics firms were restricted to minority stakes, reflecting government concerns over strategic control of trade facilitation services tied to customs revenue and border management.

The 2018 reforms had cautiously opened selected logistics functions to foreign participation, but only within joint venture structures designed to transfer skills and capital while preserving domestic ownership dominance. That incremental approach has now been replaced by full liberalization in freight forwarding.

The Ethiopian Investment Commission has framed the latest reforms as part of a wider effort to modernize the investment climate, attract capital into strategic sectors, and address structural bottlenecks that have slowed trade expansion.

In recent years, Ethiopia has opened wholesale trade to foreign investors, partially liberalized retail distribution, and eased participation in import-export activities. These reforms mark a significant departure from earlier decades when commercial sectors were largely reserved for domestic operators.