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268 Diagnosing Corruption in Ethiopia
growing spending increases the risk that a few favored contractors will
dominate the market. Experience in other countries suggests that when
this happens, it can lead to the construction of unnecessary roads and to
increases in unit costs.
In Ethiopia’s case, there is evidence that the rate of increase in the use
of the federal road network exceeds the rate of increase in network
length, suggesting that Ethiopia’s growing classified road network is
broadly consistent with demand. But the rate of increase in spending
exceeds the rate of increase in network length, reflecting a significant rise
in unit costs.
Federal Roads
The figures below show variations in the cost per kilometer of asphalt and
double bitumen surface treatment (DBST) roads for the period 2003–08.
The data are disaggregated by International Competitive Bidding (ICB)
and National Competitive Bidding (NCB).
At face value, figure 6.1 suggests that ICB costs for asphalt roads have
approximately doubled between 2004/05 and 2007/08, while NCB costs
more than quadrupled. This suggests that either national contractors
became less competitive or their relatively low unit costs in 2004/05
were not sustainable.
Figure 6.2 shows a similar but more marked trend in the cost of
DBST roads. During the same 2003–08 period, ICB costs increased by
approximately 50 percent. During the same period, NCB costs more
than quadrupled.
Figure 6.1
Trends in Unit Cost of Asphalt Roads in Ethiopia
cost per km, Br, millions
6
5
4
3
2
1
0
2004/05 2005/06 2006/07 2007/08
fiscal year
ICB NCB
Source: Author’s analysis of Ethiopian Roads Authority data.
Note: km = kilometer. ICB = International Competitive Bidding. NCB = National Competitive Bidding.