TROUBLE IN PARADISE?
DJIBOUTI ― There’s no major conflict threatening the Ethiopia–Djibouti railway, but tensions are clearly rising between the two countries over a recent freight forwarding tender.
In June 2025, Aboubaker Omar Hadi, head of the Djibouti Ports and Free Zones Authority, raised concerns about a tender issued by the Ethio-Djibouti Railway Share Company (EDR), a joint venture where Ethiopia owns 75% and Djibouti 25%.
The tender was for services like shipping, transit, and customs clearance related to cargo on the railway. Djibouti saw this as a potential attempt to sidestep its port authority, which plays a central role in regional trade. Some in Djibouti view Ethiopia’s move as an effort to shift control over trade logistics, possibly opening the door to alternate supply routes.
Djibouti foils Ethio-Djibouti Railway's plans
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This isn’t just a political or administrative spat—it’s about deeper financial and strategic concerns. The railway was built with a $4 billion loan, mostly funded by China’s Exim Bank, and it hasn’t turned a profit. Djibouti, in particular, has felt the financial strain from its share of the debt.
At the core of the dispute are diverging priorities.
Ethiopia wants to improve efficiency and possibly reduce reliance on Djibouti’s ports, while Djibouti wants to preserve its position as the key trade hub. Add in Ethiopia’s exploration of other port options and Djibouti’s mounting debt, and the friction becomes harder to ignore.
Still, despite the disagreements, the railway is a major symbol of their economic partnership. Both sides have good reasons to settle their differences at the negotiating table, rather than let them escalate.