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Africa’s economic dynamics

Moored in the deep-water port of Berbera, a ship flying the Ethiopian flag unloaded sugar and rice from India, which officials hoped would mark the beginning of a new era in the self-proclaimed East African Somaliland trade.

Thanks to a USD 442 million investment from Dubai-based port operator DP World, Berbera is preparing to restore its centuries-old trade brilliance by launching a port battle on the sea lanes traversed by approximately one-third of the world’s ships.The transformed Port of Berbera now provides an alternative Djibouti as a gateway to a lucrative trade route Through the Suez Canal.

Berbera was once the capital of the Protectorate of British Somaliland. For centuries, before the civil war destroyed most of its facilities thirty years ago, it was a hub for maritime trade between the Horn of Africa, the Arabian Peninsula and India, thanks to its key location on the Gulf of Aden opposite Yemen. .

Now, “we have another opportunity to become an international business center,” said Abdishakur Mohamed Hassan, the mayor of Berbera. Outside his office, rows of camels and herds of goats are heading to the dock, the destination is the port of Jeddah, Saudi Arabia. “There will be healthy competition between adjacent ports,” he added.

Berbera’s pier opened in June and can handle the largest ships in the world. Its container capacity has increased from 150,000 20-foot containers (TEU) to 500,000 TEUs per year, and is already undergoing expansion to handle up to 2 million TEUs per year. Supachai Wattanaveerachai, CEO of DP World Berbera Port, said that the main purpose of the port is to provide services to Ethiopia, the second most populous country in Africa, and the country needs “multiple gateways.”

Eritrea seceded from Ethiopia in 1993, making the latter a landlocked country dependent on the port access of neighboring Djibouti. According to the World Bank, Djibouti has “almost no competition” in the region In a report It is said that almost 95% of Ethiopian goods pass through it. The rest pass through Port Sudan in Sudan and Mombasa in Kenya.

Berbera’s revival may mark its re-emergence as a hub port in the late 19th century © Mustafa Saeed/AFP/Getty Images

2021 Global Container Port Performance Index World Bank and IHS Markit Rated Djibouti as the most efficient port in Africa, measured by the number of minutes each container moves.This former French colony took full advantage of its infrastructure and Excellent location on the Bab-el-Mandeb Strait, And near 1m TEU Pass through its port every year.

But the competition has intensified, and DP World is now in Somaliland and head-to-head with Djibouti.

Carl Lorenz, managing director of container shipping group Maersk East Africa, said: “Ethiopia’s destination cargo is mainly transported through the ports of Djibouti, but there are other options for the region in the future.” These options include Berbera and the long-delayed new town of Lamu, Kenya. The port, close to Somalia, was partially opened in May.

DP World Chairman Sultan Ahmed bin Sulayem stated that Berbera will become a viable and effective option for trade in the region, especially for Ethiopian transit goods. “We believe that the development of the Berbera Corridor into one of the major trade and logistics corridors will bring huge economic benefits to Ethiopia,” he said.

Hassan, the mayor of Berbera, said that these ambitions have not been welcomed by neighboring countries. “Djibouti is 100% dissatisfied with DP World’s investment in our port,” he said.

Three years ago, Djibouti Seized the container port of Doraleh from DP WorldDjibouti argued that the company’s goal was to control the country’s coastline and that the port did not realize its full potential. DP World countered Djibouti’s illegal activities and won the international arbitration case.

Djibouti officials played down any competition. Djibouti’s Finance Minister Ilyas Moussa Dawaleh said that Berbera would “in some way” participate in the competition. Another elevated Djibouti official said that their country is in a “leading position” because it is closer to the Suez Canal, adding that Djibouti is already the key to global business.

Overview of the multi-purpose port of Dolare, Djibouti

Djibouti is rated as the most efficient port in Africa, measured by the number of minutes per container transportation © Yasuyoshi Chiba/AFP/Getty Images

Although the road corridor from Berbera to Wajal on the Somaliland-Ethiopian border will be completed in 2022, Somaliland needs infrastructure development, so it cannot directly obtain multilateral financing because it is not an internationally recognized country. Unlike Djibouti, which has invested heavily in China, Has a relationship with Taiwan.

But much depends on the political situation in Ethiopia, where giants in the region are the main customers of competing ports. In the past ten years, Ethiopia has experienced an Asian-style economic miracle, growing at an alarming rate. Stunning average of 9.4% per year. Then the epidemic hit, The endless civil war has begun.

Said Hassan Abdullahi, general manager of the Somaliland Port Authority, stated that Addis Ababa has missed the deadline for acquiring shares in the Port of Berbera and is worried that the war will continue. .July, the fight from Tigray to Afar region, A transit point between Ethiopia and Djibouti.

“If the war continues, there will be no trade,” he said. “We are building all this infrastructure for Ethiopia. For Somaliland and Djibouti, this may be a problem.”

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