By Abdinasser Ahmed
Berbera sits in a strategic commercial and security position, where 30% of world trade passes through with a deep-water port and the longest airstrips in Africa. It historically served as a gateway for trade and civilisation for centuries, connecting the vast hinterland of East Africa with the rest of the world.
The geographical location of Berbera and its sheltered harbour towards the southern side of the Gulf of Aden is a significant factor in its geostrategic importance. The strategic interest of Berbera Port for commercial and shipping lanes attracts the Dubai Port operator to transform the port into a commercial hub with a multipurpose port with integrated maritime, logistics and industrial hub, making Berbera Port a credible alternative to the ports in Mombasa, Djibouti, and Dar Es Salaam.
The UK Government investment arm, CDC Group, funnels $100 million to expand Berbera port and logistics operations, including dry ports.Further investment from Singapore-based commodity trader Trafigura Group injects $50 million in Berbera oil terminal facilities to position it as a regional supply hub serving customers in Somaliland and integrate oil logistics throughout the Horn of Africa, making Berbera port a strategic hub in a region where demand grows every year.
Local firms also merged their share of investment in Berbera, including the newly completed $50 million fish factory that exports various types of fish and the construction of a cement plant that will produce 1.2 million tons of cement invested in $60 million.
Sound government policies for a competitive and conducive investment environment attract multinational firms to invest in the country. The inflow of foreign direct investment and domestic investment into Berbera provides a vital economic boost to Somaliland and spills over into the broader Horn of Africa region.
Ethiopia’s sea outlet problems
Currently, Djibouti is the only seaport in Ethiopia. The rapidly growing increase in imports and exports in Ethiopia created an outcry among importers and transporters due to the highly congested and insufficient infrastructure in Djibouti to meet the demand of Ethiopia.
The presence of foreign powers in Djibouti frustrates Ethiopia, which is perceived as an imminent threat to Ethiopia’s interests and national security. Djibouti is becoming very expensive, preventing the economic growth of the country. The absolute dependence on the Djibouti port threatens Ethiopia’s national security and economic development.
Ethiopia opts for a minimax policy of diversifying Ethiopia’s access to the sea to eliminate its dependence on Djibouti, which serves as the only outlet for Ethiopia. Addis Ababa is embarking on efforts to find alternative ports, which saw the development of several ports, including the use of Port Lamu in Kenya, Port Sudan, the prospective use of Assab and Massawa ports after the highly publicised Ethiopia-Eritrea rapprochement in 2018 and the Berbera port of Somaliland.
Berbera is the second-closest port to Addis Ababa, making Berbera the most viable alternative to mitigate the prohibitive cost of transit due to the adverse geography.
The Berbera port infrastructure, such as improved container terminals, expanded handling capacity, and improved logistics facilities, increases the efficiency of the port to accommodate the growth of trade volumes in smooth and seamless operations.
Additionally, Berbera offers Ethiopia a 19% stake in the 30-port concession, with DP World and Somaliland owning 51% and 30%, respectively, cementing Ethiopia’s use of Berbera port due to cheaper sea outlet access.
Countering China’s Belt Road Initiative
Through BRI, China has invested billions of dollars in connectivity projects to promote an alternative trade route and the idea of development that favours a Chinese-centric order in the East African region. In a recent BRI forum attended by African leaders, President Xi Jinping said that Belt and Road cooperation has expanded from physical to institutional connectivity and offered new funding for the initiative.
Somaliland is the only government to withstand Chinese inroads through investment. Somaliland allowed pro-Western firms to invest in Berbera to access the markets of Ethiopia, Uganda, and South Sudan. It also allowed the US military to use the Berbera seaport and airfield for military purposes, making Somaliland the only nation in the region to resist Chinese investments.
Somaliland enjoys stability and is free from terrorism and piracy. The strategic location of Berbera solves the geostrategic problem of a landlocked Ethiopia and counters the rise of China’s expansionist agenda. Somaliland offers alternative and cheaper port access to Ethiopia and cements the economic and defence interests of the United States and its allies. It is the time Somaliland reaps the reward of aligning itself with Ethiopia and the West for recognition.
Abdinasser Ahmed is a developmental economics practitioner and political commentator based in Hargeisa, Somaliland. He can be reached through Twitter @Abdinasserahm or abdinasserahm[at]gmail.com.