The Republic of Somaliland government secured a $442 million investment agreement with Dubai Port World to operate Port of Berbera.
Somaliland strategically lies on the Southern coast of the gulf of Aden, the Berbera Port has significant trading power used primarily to export life stock but in desperate need of expansion and regeneration.
The joint venture between DP World and Somaliland government has the potential to alter its economy and political status. In the same manner Dubai Port World signed joint venture with Djiboutian government in 2006 for a 30 year concession rights to operate port of Djibouti and Doraleh Container Terminal it seems Somaliland successfully negotiated similar partnership for Berbera Port.
A Chatham House report in 2013 analysing factors contributing to Djibouti growing economic and strategic attributes eluded that integration with Ethiopia and UAE had significantly improved its prospects geopolitically.
However a UK court ruling favouring DP World in Djibouti port corruption case March 2016 facilitated alternative gateway into African markets by offering Somaliland a deal to modernize Berbera Port. In a similar move Somaliland signed a bilateral deal with Ethiopia to boost trade through its Berbera Port establishing a joint committee overseeing its operations as of March 2016.
The Berbera port is 973km East of Addis Ababa, with improved road conditions already in progress its capacity will exceed from 40,000 containers per year to 200,000. The Berbera Port is the largest employer in Somaliland generating 2000 jobs and a major revenue for the Somaliland government.
As part of the terms Dubai Port world are expected to pay $5million a year plus 10% on port revenue to Somaliland government.
The Somali civil war devastated Somaliland economy and the rest of Somalia. Today Somaliland is touted as a successful functioning democratic state that holds free elections, albeit unrecognised internationally but able to maintain order and security envy of many African countries.
This is partly to do with how the people of Somaliland (Diaspora, Business and clan families) collaborated and came together after the civil war signing peace accords such as Burco and Borama diffusing hostilities.
There is a successful private sector economy but Somaliland GDP per capita is estimated by a World Bank Study at $347 one of the lowest in the world. There are 183 economies and Somaliland is ranked 174 ahead of, Malawi, Congo, Eritrea and Burundi but behind Djibouti (170).
The economy is supported by $400 million remittance diaspora older generation Somali. The telecommunication sector (Telesom,Somtel Nationlink), money transfer companies such as Dahabshill turn over millions of dollars providing valuable internet service connection, banking and sponsoring youth employment schemes but is unregulated.
Somaliland government desperately requires substantial foreign investment to boost, build and maintain its infrastructure without relying on one particular sector (30% Livestock main export) to provide work for its growing youthful population.
The DP world agreement is a major investment coup, managed properly the port could provide much needed employment opportunities, access to international markets and further development plans for other regions and sectors.
In 2011 Somaliland National development Plan (NDP) 2012-2016 cited Guiding Principles to achieve before 2030 which are as follows:
- Citizen participation
- Good governance
The Ministry of National planning and development vision is achievable but requires robust independent financial regulatory systems in place, existence of impartial unhindered media outlets and greater transparency.
Somaliland situated on the Horn of Africa bordered by Djibouti to the north, Ethiopia to the south and west, and Puntland region of Somalia to the East has the potential to become the gate way for 17 landlocked African countries.
The Somaliland government cannot exist in limbo waiting for acknowledgement after 25 years of independence, much of its budget isn’t enough to provide essential services for its citizens and it cannot wait any longer for international recognition that may or may not resolve its current predicament .
The international community US, EU, AU and UN have long been reluctant to break territorial sovereignty of Somalia by recognising Somaliland and it is this inability to understand the mechanism governing Somali conflict which are having wider political ramifications for the Horn of Africa.
It is indisputable fact that neighbouring countries interfered militarily and witnessed Somalia’s demise and disintegration into a kernel of never ending conflicts between various militant parties ranging from terrorist organisation (al-Shahab), militias and clans. While the Ethiopian government meticulously fostered relations to maintain dialogue with all Somali political elite, especially the Somaliland government.
Ethiopia today has become undisputed leader and economic power house on the Horn of Africa receiving billions of dollars from US and EU. Once the Berbera Port is operating at full capacity the possibilities are endless for Somaliland, Ethiopia would begin to use it as alternative route to the already congested Djibouti Port accessing food Aide and fertiliser shipments etc.
Ethiopian government is receiving £540 million euro grant from the EU in the next 5 years to help in the construction of rural areas (Ethiopia road construction increased from 26,000 kms 1997 to 100,000kms in 2014) the Ethiopians are hoping 35% of trade would go via Berbera Port.
UNPO (Unrepresented Nations and peoples Organisations) reported Berbera Port as a key economic development area for Somaliland Ethiopian foreign policy officials paved the way to foster DP World deal acknowledging that a foreign policy objectives based on mutual understanding is the way to go forward politically and economically. Divisive politics ruled Somalia and Somaliland thus lessons needs to be learned as war can be costly and detrimental to peace and security.
Unfortunately though there seem to be geopolitical power struggle on the Horn of Africa between nation states that Somaliland inadvertently could benefit from if it maintains clear rational objectives.
Currently Ethiopia and Egypt are engaged in a verbal skirmish about concession rights to access the Blue Nile (Renaissance Dam Project) while Yemen’s Houthi and Gulf states conflict has the potential to destabilise $700 billion Red Sea corridor through (strait of Mandab) adding Kenya’s wall building plans leading to significant army bases and naval activities in the area.
Somaliland isn’t Somalia, its stable, secure and peaceful enclave but in need of investment which is why the success of Berbera port hinges on several critical issues for Somaliland.
First democratically elected regional representatives along with academics and journalists critics of the DP world deal have unanswered legitimate questions and specifics the Somaliland ministers failed to address in a coherent and transparent manner.
Secondly the current administration term expires 2017 and by agreeing to a confidential bilateral memorandum of understanding (MoU) without parliamentary consultation spells disastrous consequences for democratic values. Thirdly maintaining peace and security involves cooperation, dialogue with all political parties and regions within Somaliland.
There are many obstacles, challenges and hurdles Somaliland government struggles with some are internal such as corruption but most notably external problems too. What happened recently in Jama Dubad a hamlet at Gashamo district populated by Somali Nomadic clans reiterates a need for effective political response.
The massacre that took place on the first day of Ramadan (Holy Month) June 6th where by 42 unarmed women, children and elders were massacred by the Liyu Police under the supervision of the Federal Ethiopian forces left Somaliland public outraged and shocked at the impunity and gross human rights violation that took place at the behest of Ethiopian supported militia.
The Somaliland administration slow response to Ethiopian sponsored aggression implies hesitancy and poor judgment. In conclusion the Berbera Port agreement is a great investment opportunity, however there are other sectors such as agriculture, manufacturing and small businesses in many towns and cities that also require worthy attention.
By Fatheya Gelleh