The roots of Ethiopia’s railway system trace back to the late 19th century during the reign of Emperor Menelik II. Recognizing the strategic and economic importance of modern infrastructure, Menelik initiated the construction of the Ethio-Djibouti Railway, aiming to connect the Ethiopian capital, Addis Ababa, to the port city of Djibouti. This project was among the first in Africa and symbolized Ethiopia’s early steps toward modernization.
The idea of constructing a railway to link the Ethiopian capital with the coast was first conceived by Menelik’s Swiss adviser, Alfred Ilg, who had arrived in Ethiopia in 1877. Ilg’s vision led to the establishment of the Imperial Ethiopian Railway Company in 1894, which was tasked with building the railway. Construction commenced in 1897, and the railway reached Addis Ababa in 1917, spanning a distance of 784 km. This railway significantly reduced the travel time from the coast to the capital, facilitating trade and communication. It remained Ethiopia’s primary transport link until the mid-20th century.
Establishment and Mandate of the Ethiopian Railways Corporation (ERC)
In 2007, Ethiopia officially established the Ethiopian Railways Corporation (ERC) by Council of Ministers Regulation No. 141/2007. ERC was given a broad mandate: build and operate integrated railway infrastructure, provide freight and passenger rail services — part of a long-term goal to construct more than 5,000 km of new railway lines across Ethiopia.
Key Completed Projects
• Addis Ababa Light Rail Transit (AALRT):
The light rail project was financed at approximately US$475 million, with 85% of the funding coming from China’s EXIM Bank. Construction was undertaken by China Railway (CREC), with operation and maintenance initially contracted to Shenzhen Metro of China, which is now completely managed by Ethiopians. It has two lines (East-West and North-South), totaling approximately 34-35 km, with 39 stations. In operation since late 2015; however, performance has not met original projections: many of the 41 original LRVs are not operational (for reasons including lack of spare parts and maintenance).
• Addis Ababa-Djibouti Standard Gauge Railway (SGR):
This 756 km electrified line (from Addis to Djibouti) is Ethiopia’s major freight and passenger artery to the coast. It has improved Ethiopia’s import-export logistics, significantly reduced transit times, and allowed new services (cold-chain, containerization, etc.). However, its freight performance is well under capacity: only about 2.4 million tonnes/year being moved vs a design potential of ~6.3 million tonnes in 2024; whereas in 2025, this performance has significantly increased due to the Operator’s (Ethio-Djibouti Railway Share Company) engagement by diversification of types of cargo transportation.
Stalled and Restarting Projects: Awash-Kombolcha-Hara Gebeya / Mekelle Line
• The Awash-Kombolcha-Hara Gebeya (AKH) line (≈392 km) was launched in 2015 with USD 1.7 billion financing from Turk Exim Bank; Turkish contractor Yapi Merkezi, with consultancy by the French firm Systra MD.
• Construction was halted due to the northern war (started in 2020). Yapi Merkezi suspended work, citing safety concerns; there were reports of damage and looting in some sections.
• A legal dispute/arbitration has been ongoing: Yapi Merkezi is seeking damages, and the Ethiopian government/ ERC is counter-claiming. The case is in its conclusion phase, where it has mostly ended in favor of ERC.
• As of 2025, ERC is seeking to relaunch the construction of the Awash-Kombolcha section. Consultants have been invited for a “loss assessment & resumption” tender.
• There is also discussion/plans regarding continuing or completing the Hara Gebeya to Mekelle portion, where the Chinese contractor China Communications Construction Company (CCCC) was previously engaged on.
New Port-linked Lines & Regional Connections
• Ethiopia is exploring new railway lines to connect to Port Lamu (Kenya). For example, a memorandum of understanding (MoU) between KORAIL (South Korea) and ERC had been signed to plan a line from Mojo (near Addis Ababa) through Moyale to Lamu.
• There is also a proposed Ethiopia-Somaliland rail line, linking Aysha (Ethiopia) to Berbera Port in Somaliland. Survey and planning work are underway.
Localization & Institutional Initiatives
• The ERC has taken steps toward localization of parts, accessories, maintenance facilities, and transitioning fully into a commercial entity to avoid further financial challenges, which came previously from commercial loans and less business orientation in terms of capitalizing on the already invested infrastructures and human resources.
• There are also efforts to reduce logistical bottlenecks: e.g., the Ethio-Djibouti Railway launched a “bulk cargo containerization” service to streamline handling of goods.
Challenges Remain
• Maintenance, spare parts supply, and operating costs (fuel, electricity, staff) remain issues.
• Financing constraints: many projects are funded by foreign loans and grants; servicing debts & ensuring a sustainable O&M budget is difficult.
• Conflict/security disruptions (as in northern Ethiopia) have caused abandonment, damage & legal disputes.
• Logistical bottlenecks at ports, customs, and last-mile transport still hinder full benefit.
Whats underway
• Restarting and completing stalled projects like AKH and the extension to Mekelle is critical.
• Expanding regional connections (Lamu, Berbera) could help reduce dependency on a single export corridor (Djibouti).
• Deeper localization: more local assembly/manufacture of rolling stock components, spares, and maintenance capacity.
• Institutional reforms: clearer regulation, private sector participation, risk management, and accountability, especially in conflict zones.
• Ensuring sustainable financing: O&M funding, tariff policy that balances affordability with cost recovery, and risk mitigation for foreign contractors.