Ethiopian Transport Firms Spend Hundreds of Millions on New Vehicles

• Three inter-city transport companies have spent 450 million Br on new buses to meet federal government fleet requirements.
• The amended commercial road transport directive sets minimum fleet sizes and requires firms to expand step by step, putting financial risks at the forefront for these companies.
• Each new bus costs approximately 25 million Br, with financing being the hardest part of this process.
• Transport companies are working to replace about 1,600 vehicles under the amended policy.

The policy, which was amended to set minimum fleet sizes and require firms to expand step by step, has now put the money at risk for these companies.

Three inter-city transport companies in Ethiopia have spent a total of 450 million Br on new buses to meet the federal government's fleet requirements. The policy, which was amended to set minimum fleet sizes and require firms to expand step by step, has now put the money at risk for these companies. Each new bus costs approximately 25 million Br, and financing is reportedly the hardest part of this process. The companies are working to replace about 1,600 vehicles under the amended commercial road transport directive.

Directive No. 1136/2026, issued in May 2026, which amends Directive No. 984/2024 for commercial bus licensing, has significant implications for Ethiopian transport companies. Lawyers advising these firms should be aware that the policy may expose their clients to financial risks and advise them on potential compliance measures. This directive now allows operators to qualify for entry with 3-15 vehicles, depending on the commercial bus service category, but requires them to expand their fleets over four years to reach six to 24 vehicles, and to add at least one new vehicle annually in the fifth year. These requirements can be challenging for companies with limited resources. The federal government's fleet requirements have put pressure on transport companies to invest in new vehicles, but the amended policy has created uncertainty about the future of these investments.

The financial risks associated with the amended commercial road transport directive are substantial for Ethiopian transport companies. The cost of replacing 1,600 vehicles is estimated to be over 400 million Br, and financing is a significant challenge. If these companies fail to comply with the policy, they may face penalties or even lose their licenses. This has serious implications for the entire transportation sector in Ethiopia, which relies heavily on inter-city transport services.

Lawyers advising Ethiopian transport companies should be aware that the amended commercial road transport directive may expose their clients to significant financial risks, and advise them on potential compliance measures.

Source: Original reporting via Fortune