Forex Strains Jam Roads Administration | The Reporter

Middle East, China creditors slow to disburse funding

Funding delays and shortages have led the Ethiopian Roads Administration (ERA) to fail to make payments in foreign currency to foreign contractors working on its projects for the last three years.

Heads of the Administration decried a severe lack of forex to Parliament during the presentation of a half-year report on January 22, 2024. Members of the Urban Infrastructure and Transport Affairs Committee were told the ERA has been forced to halt payments in foreign currency for three years now.

Documents obtained by The Reporter reveal that extended delays in disbursement on the part of ERA creditors such as the China Export-Import Bank (EXIM) and other banks based in the Middle East have affected the progress of several road projects.

On the other hand, funds flowing in from the World Bank, African Development Bank (AfDB), and Japan have sufficed to cover the cost of their respective foreign-funded road projects efficiently.

– Advertisement –

“We have to bring a solution to the disbursement system, because this highly affects the performance of projects,” said Mohammed Abdurahman (Eng.), director-general of ERA. “This should be our main focus for the next six months.” 

He disclosed local contractors have only managed to complete two-thirds of the 423 kilometers of road projects the Administration had planned for the first half of the fiscal year.

The ERA has awarded 164 projects to 45 domestic contractors.

Meanwhile, 27 foreign contractors working on 69 projects have completed 79 percent of the road construction scheduled for the last six months.

“We’ve been working to enhance the capacity of local contractors, so they should have performed better than the foreign contractors,” Mohammed told parliamentarians. “We should strategically intervene and support them.”

The forex problems cut short the Administration’s recent efforts to buy heavy trucks and other equipment and inputs, according to its management. The constraints have also prevented the ERA from carrying out a little less than half of the 54 design works it planned to conduct over the last six months.

Violent conflicts across the country have also affected the progress of road projects.

The Administration operates with a budget of 76.5 billion birr this year, the vast majority of which comes from federal coffers. Development partners and creditors are expected to cover close to eight billion birr of the budget. 

A little over 800 million birr is earmarked for recurrent expenditures, while the Administration expects 8.2 billion birr from the Road Fund.