Horn of Africa

The Somaliland-Ethiopia port deal marks a pivotal moment for the Horn of Africa, with both nations entering a historic Memorandum of Understanding (MoU). In this landmark agreement, Somaliland and Ethiopia have mutually agreed to grant red sea access to Ethiopia in exchange for De Jure recognition for Somaliland from Ethiopia.

While the Horn of Africa region grapples with instability, poverty, and terrorism, Somaliland stands out as a beacon of peace and stability, boasting a remarkable track record spanning over 30 years. Geo-political analysts often refer to Somaliland as “Africa’s best-kept secret” and “The little country that could,” attributing these titles to its commendable accomplishments in establishing a homegrown democratic system, self-funded military, central bank, and a thriving economy driven by a sizable and well-educated diaspora.

Despite hosting nearly half of its original population, who fled in the 1980s and 1990s, Somaliland has successfully enticed its diaspora to return and contribute to the country’s reconstruction. While enjoying Defacto recognition from numerous states, Somaliland has relentlessly pursued De Jure recognition for over three decades. The reluctance of sympathetic countries to grant full recognition, preferring an African nation to take the lead, led to the establishment of representative offices in Hargeisa by several nations.

Ethiopia, as Somaliland’s largest trading partner and a close ally, emerges as a natural choice for the first country to officially recognize Somaliland. This recognition would fortify their existing security and commercial ties. The ground-breaking deal involves leasing 20 square kilometers to Ethiopia, providing essential revenue to Somaliland. Additionally, Somaliland stands to benefit from a stake in Ethiopian airlines and other valuable assets.

Acknowledging Somaliland’s success in maintaining peace, combating piracy and terrorism, and fostering economic growth, the deal underscores a stark contrast with the billions of dollars wasted by Western donors on the failed state of Somalia. Full-fledged recognition would enable Somaliland to access capital markets and attract foreign direct investment, offering a model for economic liberalization in the Horn of Africa and fostering regional economic integration.

For Ethiopia, the benefits are substantial. As Africa’s second most populous country, with a projected population of over 210 million by 2050, Ethiopia is among the continent’s fastest-growing economies. The country, however, faces a significant challenge as a landlocked nation. Losing sea access with Eritrea’s independence in the early 90s, Ethiopia has been overly reliant on the port of Djibouti, resulting in bottlenecks and high port fees due to the lack of competitive options from coastal neighbors.

Somaliland and DP World’s 2018 port deal laid the groundwork for a transformative upgrade to Berbera’s port, positioning it as a world-class facility. The agreement also spurred the construction of a major highway connecting Berbera to Ethiopia, with the United Kingdom investing in logistics tied to the deal. The latest MoU ensures up to 30% of Ethiopia’s trade through Berbera port, providing Ethiopia with competitive pricing and access to top-notch infrastructure. Anticipated developments include additional infrastructure, such as a railway connecting Berbera to Ethiopia via the existing Djibouti-Ethiopia railway.

Notably, Ethiopia’s navy, without a home since Eritrea’s war of independence, will now have a dedicated port in Berbera. This strategic move enhances security in the vital sea passage where a significant portion of the world’s commerce transits daily, leading to the Strait of Bab Al Mandab.