FOB Directive in Ethiopia

The FOB directive was issued by the National Bank of Ethiopia in May 2000. The Directive states that, sea transport for every import should be done by the country's flag carrier, Ethiopian Shipping and Logistics (ESL) - formerly Ethiopian Shipping Lines Share Company, as long as the carrier has a service from the Port of Loading mentioned on the Proforma invoice or the sales contract which will be used to open L/C. In other words, the deal should be done according to Incoterms FOB. It's the buyer - not the seller - that pays the freight. The freight will be paid in local currency at ESL's head quarter in Addis Ababa. But this directive applies to those imports for which the foreign currency is paid by Ethiopian banks through letter of credit or cash against document. For those imports where the foreign currency is not paid by Ethiopian banks, the importer is free to use any Shipping Line.

If the Port of Loading mentioned on the proforma invoice is not called by ESL, importers can get a waiver from ESL's Commercial Department so that the banks could open the LC on CFR terms. ESL will email the letter directly to the LC opening bank. But all imports should use Ethiopian Insurance Companies to cover marine insurance.

The FOB directive is believed to help save foreign currency that will be used to pay the freight. Some, however, say that it's used to protect ESL from foreign competition. Even though ESL has ionly leven ships, it charters ships sometimes on time charter basis or usually on slot charter basis to transport the cargoes to Djibouti. The majority of the containers are carried by companies such as Maersk, MSC, CMA CGM, etc but under ESL's bill of lading. ESL has agreement with these companies on slot charter basis.

Important Addresses:

Location: La Gare (Behind Insurance Building), Addis Ababa, Ethiopia
Phone: +251 11 5518280, +251 11 5510666, +251 11 5517430

Location: Near the National Theatre, Addis Ababa, Ethiopia 
Phone: +251 11 5517430