- The Berbera Tripartite Concession
Agreement which Somaliland entered with the DP World of the United Arab
Emirates and the Ethiopian Government is hailed by many Horn of Africa
international analysts as a game changer: for Ethiopia as a major
breakthrough in securing a stake to the strategic Berbera Port; for
Somaliland in opening its first major inlet to the global economy and in
creating a significant potential to break the political deadlock for
its quest for international recognition, and for the Emirates, it is a
major achievement in its drive to project as a regional power in the
Horn of Africa & Middle East geopolitical overlap. Internally in
Somaliland, the deal attracted a lot of controversy in the beginning,
mainly due to the lack of transparency in its incubation period, and
perhaps because the financial figure mentioned in the deal (US$ 442
million), was below the expectation of the Somaliland people.
However,
looking at the bigger picture, the development potential that could be
realized in this Tripartite Agreement is immense. This partnership is
also in tune with the unprecedented regional and global mega wealth
creation trends underway.
The investment of US$ 442 million is
expected to bring the Berbera Port capacity to competitive international
standards. At present the port handles, 150,000 TEU containers per
year, but with such investment its capacity will expand to 1 million TEU
20 and 40 foot mixed container units.[1]
The port expansion project will take place in two phases, the first
being the construction of 430 meter berth, which can dock two vessels at
any time. The complete expansion will bring the port capacity to 800
meter berth length which can accommodate five vessels at any given time.
The port extension is expected to be completed by 2020. According to
Temesgen Yihunie, Ethiopia’s Logistics Coordination and Monitoring
Director at the Authority, Berbera is planned to handle 30% of Ethiopian
import/export business.[2]
The Deal includes a 12.2 km Economic Free zone, modelled on Jebel Ali
Free Zone (JAFZA), to attract trade and investment in the warehousing,
logistics, manufacturing and related businesses[3].
- Background
The Horn of Africa due to its location
in the globe, which can be claimed to be the belly-button of the globe,
has been a coveted region for control in the history for the world
powers and still is today. In the expansion of European powers to
colonise Africa, the Horn was a prized territory whose attraction was
further enhanced by the prospect of the geo-strategic value of the Suez
Canal, as well as its commanding position in the passage to India and to
the historic Christian Empire of Abyssinia. So, we could say there was a
localized scramble for control of the Horn of Africa in the late 19th
Century between the British, and the French and Italy as a late comer,
dividing among themselves territories along the Red Sea, Gulf of Aden
and East Africa. Before the advent of the European hegemony in the
region, the coast was also under the sway of the receding Ottoman
Empire.
In the Two-polar Super-power world of
the Cold War era (the USA and Soviet Union), the Horn Africa was also a
territory seriously contested, whose geo-strategic control was sought by
both sides. During that period, the region’s importance was further
enhanced by being adjacent to the Arabian Gulf oil producing region and
its main supply route to the Western countries. The Soviet Union due to
its alternative ideology and being free from the baggage of colonial
history, challenged the traditional western dominion in the region,
winning to its side newly independent states such as Egypt in the upper
reaches of Horn and home to Suez Canal, and Somalia which possessed the
longest coastline in the region and offering geostrategic advantage of
both the Indian Ocean and Gulf of Aden maritime routes and Ethiopia,
which also by becoming the seat of the Organization of the African
Union, added to its historic importance.
These countries all started in the
1950s and 60s as solid members in the western camp, but later started to
hedge their bets with the Soviet Union as the best bidder in military
support and also due to its affinity with new anti-colonial elites
emerging from these countries. A clear example of this super-power
competition is shown in the case of Berbera Port city. The port city’s
strategic importance was utilized by the British even before fully
occupying Somaliland “During the year 1890, an underwater cable was laid
from Perim Island in the Gulf of Aden across to Berbera as part of a
communication system linking England with Aden and beyond to India and
Australia.”[4]Later
on Berbera housed the BBC East Africa Relay Station. At the height of
the cold war era in the 1970s, Berbera became home to a major Soviet
military base, but changed hands in the 1980s to serve as a US military
facility, until the Somalia state collapsed. With the end of the cold
war, and the onset of the era of mono-polar super power world order, the
interest and international competition for the Horn of Africa waned. A
new geo-political situation has also emerged in the Horn of Africa:
Eritrea appeared on the scene after the break-up of Ethiopia, which
rendered it a landlocked country after losing both the Red Sea port of
Assab and Massawa. Somalia imploded, with Somaliland taking its own
separate independence path, not yet recognized by any country, but with
all intents and purposes, operating as a de facto sovereign state. The
rest of the state of Somalia, after being in the doldrums for two
decades with the exception of Puntland is now recovering into a Federal
State system, with a weak Central Government and Regional States which
in reality are their own masters and are able to carve their own powers
within that federal system.
- Somaliland – The Hosting Country’s Pressing Socio-economic Challenges
Depleting Main Sources of Income
A recent World Bank economic
statistical analysis of Somaliland came to the following conclusions: in
terms of Gross Domestic Product and Employment: GDP for 2012 is
estimated to be US$ 1.4 Billion (current US$ prices); GDP per capita
$347. In terms of sources of GDP: 29.5% is derived from livestock
industry, followed by 20% from Whole Sale and Retail trade and 8.2% from
Crop production. These are not encouraging figures, albeit being simply
rough estimates.
At least 45% of the population of
Somaliland is directly linked to livestock rearing for their livelihood,
an economic sector which is extremely sensitive to climate change. The
traditional production system of this sector is dependent on two
diminishing resources: Rainfall and rangelands. Rainfall is much
scantier than accustomed to and is increasingly unpredictable, so much
so, that new concepts such as “el nino” and “la nina”, both global
climatic conditions which are attributed to the severity of both
droughts and floods, are now becoming mainstream in the local climatic
vernacular.
The last several years of consecutive droughts starting from
western regions of Somaliland and wreaking havoc last year with
devastating effects in eastern regions of Sanaag, Sool and Togdheer have
established the realization that droughts are no longer one
catastrophic event per so many years, but are here to stay with a
maximum of one or two years’ reprieve. That changes the core rural
production system of livestock dependence for livelihoods of close to
half of the population and the national development strategy, which also
plans on at least 29.5% of GDP contributed from livestock. The
anecdotal evidence from the eastern regions, where living off of
livestock economy dominated as the source of income and employment to a
major part of the population, is that families owning 600 heads in
Togdheer may end up with only around two dozen heads surviving from the
last drought, and in Sanaag, with normal ownership of 1000 heads,
survival of less than 10 percent.
Overall in the country, during the
times of drought and the following years, the population experienced
meat price hikes, which hit hard on the nutritional status of the poor;
drop of livestock sales in major markets such as in Burao and Hargeisa,
signifying the loss of sources of income for a large number of families
in cities, loss of transport business for truck owners and loss of
employment for export shipment infrastructure in the Berbera Port. Above
all, the drought means, the loss of vital revenue for the Somaliland
Government, something that will definitely constrain the funding of the
ambitious programmes expected from the newly elected President Musa
Behi. The contribution to Government revenue coming from livestock
exports in previous Governments was estimated to be 8 million USD in
2015. Apart from loss of Government revenue, the declining livestock
sector as a source of sustainment directly or indirectly for over sixty
percent of the population will mean an urgent challenge for the
Government to find other livelihoods and employment sources. It will
mean mushrooming urban poverty and risks to stability.
Drought displaced people in the village
camps now dotting Sanaag, Togdheer and Sool are already drifting to the
cities to augment the population of already swelling slums in the
capital city Hargeisa, and all other major cities, as a growing
destitute urban population. As if that is not difficult enough, the
recent cyclone, which hit both the interior and the coastal Awdal
Region, left devastation unheard of in Somaliland along its path. It
decimated the livestock herds forming mainstay of livelihood in the
region; destroyed coastal settlements, swept the farming land turning it
into a wasteland of gullies and dry wadies and felled the tree-level
vegetation. The rest of the people who survived from the cyclone are
destitute also expected to drift to cities.
It is worth also mentioning that the
remittances, which is long recognized as a prominent feature of Somali
resilience driven from its kinship and extended family interdependences,
is declining for various reason: first, the younger generation of the
diaspora has no attachment to the support networks of the traditional
Somali system, and secondly, the ease of its transfer is increasingly
becoming a thing of the past as a result of the imposed Anti-Money
Laundering (“AML”) and Anti- Terrorist Financing (“ATF”)) Regulations,
whose compliance requirement are beyond financial and the technical
capacities of the informal nature of the greater part of the Hawala
system.
The Youth Unemployment Dilemma and the Agony of “Tahriib”[5] phenomena
The Employment situation, especially in the youth sector is grave. From ILO 2012 estimations[6],
at the ages of 25-34 only 35% males and 15% female are employed. Adults
are of no better situation, some estimations come to: for the 35-54
ages employment: male 42%, female 23%. This situation is not one which
gives confidence to young people for a meaningful life in Somaliland and
that is why scores of them are taking the risk to cross deadly deserts,
falling into the hands of the extortionist waylaying gangs dubbed by
Somalis as “Magafe”[7]
in Libya. This creates unending misery and trauma for the parents,
while the society at large suffers from loss of its future generation,
payment of backbreaking ransoms and enduring ceaseless grieving of
suffering relatives in its neighbourhoods who lost their loved ones.
The Khat-trap as major Driver of poverty
It is established beyond doubt that
Khat consumption is the number one problem that Somaliland is faced with
at present. It is detrimental to the society’s health, social life and
economic wellbeing. However, there is a general feeling of helplessness
on how to tackle it in a rational manner. None of the Somaliland
Governments saw it as politically and practically feasible to challenge
the status quo. Apart from the daunting task of facing the people to ask
them to change such deep-rooted habit, governments themselves are
hooked to it in several ways: fist due to its reliance on the
substantial tax revenue accruing from it, which may amount to around 20%
of the national budget (Jeffrey 2015)[8];
secondly governments do not see any easily available alternative source
of sustenance for the thousands of the people that eke out a living
from Khat business[9].
Yet, the Government, the wider development oriented national elite and
the international donor community have no justification for tolerating a
drug that is recognised as the most potent driver of poverty in the
Somaliland society. This can easily be demonstrated by simply factoring
into the development process, the amount of hard currency spent yearly
on chewing, as estimated by Hansen (2010) to be US$ 50 million annually,
while in the same year the Somaliland Government’s budget was under
US$50 million[10];
similarly, Jeffery’s estimate in 2015 is slightly higher at US$ 52
million annually, which he sourced from the Somaliland Ministry of
Finance[11].
Furthermore, adverse health effects
from Khat consumption represent drastic drain in the national resources;
its health problems are manifested as ailments in the gastrointestinal,
cardiovascular, oral and dental, neurological, psychiatric and
reproductive systems.The economic impact from loss of labour
productivity and work hours, as well the burden of caring for
psychosocial patients’ often within family units, exacerbate its
impoverishing effect on the Somaliland society.
- Pathways to the Tripartite Berbera Port Concession Agreement.
Berbera is on the route to and from the
Suez Canal and a gate-way to the Indian Ocean, the Indian Sub-continent
and the Arabian Sea, and therefore, has immense geo-strategic and
maritime trade importance. Yet, the development it deserved has been
bypassing it for centuries. Similar strategic ports such Singapore,
Dubai and Djibouti have grown in infrastructure and capacities to world
standards and have played a pivotal role in the economic development of
their countries.
The short-term super-power tenancy
periods resulted in small expansions of the port facilities and the
construction of a military airport with one of the longest run-ways in
Africa, which augmented Berbera’s strategic importance. However, apart
from rental income and military aid arrangements with the ruling Siad
Barre Government, neither of these occupancies resulted in any
significant economic benefits accruing to the people of Somaliland, then
northern Somalia.
The recent renewed interest shown by
multiple actors is mainly economic in nature. Some of the interests that
surfaced in early 2011 included a combined Ethiopian and Chinese
initiative with an ambitious plan which included developing the Port of
Berbera, building a railway line to connect Berbera to Ethiopia with the
aim to alleviate landlocked status of Ethiopia and to access its huge
market potential and also through to the heartland of Africa. The
interest of the French Ballore Africa Logistics company may have even
preceded it, with long-drawn negotiations, which culminated into the
President Silanyo visit[12] to France in January 2014 leading to an early Memorandum of Understanding allegedly signed on 5th
February 2014 by the then Somaliland Foreign Minister with the company.
Both these initiatives and other less publicized attempts to manage the
Berbera Port never got off the ground.
Following the above interested groups,
the UAE DP World company became a major contender in the competition for
the development and management of Berbera, and a more successful one.
The government of Somaliland inked an agreement with DP World in May
2016 and attained the approval following a highly polarized joint
sitting of the two Houses of the Somaliland Parliament. While the full
extent of the Agreement has not been released into the public domain,
the core offer which is believed to sway the matter to the UAE favour is
the investment of US $442 Million on port development, sweetened with
further investments in the improvement of Berbera -Wajaale road, and
various other social services project support items including water
Supply improvement.[13]
Another important factor, that gave UAE
the edge in the negotiations are the long-term trade and cultural
relations as well as the geographical proximity factor between
Somaliland and the UAE and other Gulf countries.[14]
Furthermore, the push factor from the Somaliland diaspora in the UAE in
this venture cannot be underestimated, as clearly stated in the Joss
Meester et al study (May, 2018): “This trend of looking towards Africa
to recycle some of the Peninsula’s petrodollars in the form of
investment has been further strengthened by the hundreds of thousands of
Ethiopian, Sudanese, Somali, and Eritrean professionals working in the
Gulf. Many of these — especially the Sudanese in Abu Dhabi, Eastern
Saudi Arabia and Qatar and the Somalis in Dubai — have been key conduits
for advice and channeling capital inflows from Gulf economies into
their countries of origin. “[15]
Ethiopia and Berbera’s Strategic Proximity:
From all the contenders to develop the
Berbera port, access to Ethiopia’s huge internal market and the business
potential of its land locked status, added significant value to any
deal to acquire Berbera. Ethiopia was not a passive bystander but was
always considered as interested party number one by Somalilanders.
However, as outlined in the literature, it lacked the financial and
human resources muscle to go it alone in the mega-investments required
to bring Berbera up to an international standard container handling
port.[16]In
addition to resource paucity, it is argued that Ethiopia opted for an
indirect strategy letting a third party take the lead role, to attain
its aim to secure a stake in Berbera port of Somaliland; that is to save
itself from answering the political implications of dealing directly
with Somaliland, to be construed as recognition, something which it
obviously is not prepared to do at this stage[17].
Ethiopia is a landlocked country and
therefore needs a sea outlet to its transit trade. According to the
World Bank, Ethiopia is the tenth highest growth country in the world
realizing a 10.3 growth rate between 2006 – 2016. The neighboring
Djibouti handles at least 90 percent of its transit trade with the
outside world. With such a volume of fast growth, it is therefore,
obvious that Ethiopia will seek alternative outlets to its growing
trade. Berbera is considered to be a highly preferred option among many
ports in the Red Sea and East Africa Indian Ocean, due to its proximity
to Ethiopia. Moreover, Ethiopia has a close relationship with Somaliland
and is the first country to have established a Diplomatic Mission in
Hargeisa. Berbera has been handling imports at a small scale for
Ethiopia, the bulk of it being UN food aid shipments starting as early
as the late 1990s.
Apart from relieving possible
congestion of its transit trade in Djibouti, it is also important for
Ethiopia to get alternative competitive ports service for its transit
trade. As shown by John Burgoyne studies, the Ethiopian manufacturing
costs of products such as garments, footwear and leather goods are lower
than China and India, but its export logistical costs are higher.[18]Therefore,
access to the Berbera Port should give Ethiopia a more competitive
logistical cost of its transit trade, to enhance its competitive edge in
the global export markets. This will further support Ethiopia goals to
reach a middle income status in 2025 through export-led development of
infrastructure and energy.[19]
Furthermore, Berbera’s geostrategic location also fits into Ethiopia’s
equally important geopolitical goal of projecting its economic and
political power in the Horn of Africa and the rest of the continents.
Having a stake of 19% in Berbera port will take Ethiopia closer to that
goal; it is interesting to note that since Ethiopia acquired a stake in
the Somaliland Berbera Port in March 2018, it is becoming a trend which
is favouring Ethiopia in its negotiations with other ports in the
region.
Expectations of the Somaliland people from the Berbera Deal
Now the question in every Somalilanders
mind is, we gave the best we had, so what do we get in return. That
question should also be raised in both partners’ corridors of power.
Berbera is not only a port, it represents the hope of the Somaliland
people to leverage their way into international community’s recognition,
as well as a vehicle to lift them from the grinding poverty, as did
other similar equally strategic ports, which became conduit of
development and prosperity to their people such as Dubai and Singapore,
and perhaps Djibouti is on its way to such success.
The challenge facing Somaliland is to
go beyond the tantalizing Ethiopian marketing strategy of leveraging its
over100 million population market and to concretely establish how the
Somaliland people can benefit from this market. In the eyes of the
Somaliland people, during the three decades of cordial political and
security relations, the business cooperation between the two peoples has
not been very cordial. How the small population of Somaliland is to
get open access to the business of the 102 million Ethiopians is not yet
obvious to them. The general impression in Somaliland is that up until
now, whatever little trade the two countries have is one-way traffic and
that is not a healthybusiness relationship. The other general feeling
is that the Ethiopian government is not taking any steps to ease that
strain, without of course ignoring the failure of consecutive Somaliland
governments’ role as counterparts to the Ethiopian government to
champion the de-shackling of the Ethiopia-Somaliland trade.
For starters, we have to achieve freer
movement of goods and services across the border between the two
countries. It is time the two countries signed a Preferential Trade
Agreement (PTA), which also safeguards the interests of each country. If
the Berbera Deal is to lead to a mutually beneficial situation for the
two countries, priority should be given first to negotiating a PTA which
address the specificities and concerns of each society in its
provisions. Such negotiations shall define the key ingredients of such
an agreement, including‘rules of origin’, ‘safeguards against serious
injury’, consideration of ‘balance of payment measures’ and especially
robust ‘dispute resolution mechanisms’.
Since misconceptions usually abound
regarding the fairness of cross-border trade between neighbouring states
and societies, the two governments have to lead public dialogue in each
of their own countries to discuss the merits and perceived demerits of
such a trade. On the Somaliland side, the Khat issue often mars
discussions of trade with Ethiopia, in addition to the perception that
cheaper agricultural products from Ethiopia undermine the investment and
growth of food production in Somaliland. On the Ethiopian side, the
worry may be that Somaliland’s free range market economy will open
floodgates of contraband goods into Ethiopia. The livestock export trade
has also been a sensitive issue when dealing with Somaliland. The PTA’s
framework can be used to regulate trade and to overcome the
aforementioned concerns in order to move to astate of higher value
addition of open trade between neighbours, with benefits in wealth
creation far outweighing its perceived short term ills.
The UAE is a country with a deep
trading culture; in modern times it is recognized as having leadership
with profound business acumen and as being one of the most coveted
destinations of investment flows in the world. Their intense and
successful bid to acquire the Berbera Port of Somaliland is a testament
to their vision to remain a significant player in global maritime trade
and the leverage that Berbera’s great geostrategic importance affords
it. True to the visionary business strategy, its ports business
management arm, the DP World, has already outlined the thrust of its
Berbera Development strategy: Turning Berbera into a competitive world
class container handling port with an economic free zone to create a
business hub and gateway to Africa. In the words of the DP World Group
Chairman and CEO, Mr. Sultan bin Sulayem, “Somaliland’s development
opportunities…has parallels with the start of our own growth in Dubai
and the UAE,” adding “Our vision is to make Berbera a trading and
transportation hub for the Horn of Africa.”[20]
Mr. Sulayem has further outlined their vision in the Berbera Deal, that
it represents their interest to extend their footprint in Africa, that
Berbera Port’s modernization will catalyse the growth of the region’s
economy. He characterized the Deal as a breakthrough to unlock the
region’s largest economy, Ethiopia.[21]
The above words are in line with the
Somaliland people’s and Government’s development aspirations envisaged
not only for Berbera, but for the virgin coastal region of Somaliland in
its totality. This is an opportunity to link up with the Dubai
world-class business hub and its investment potential – a realization of
getting the global access that Somaliland needs. Berbera Port and Free
Zone development could represent the mothership for the global trending
model of the Free Economic Zones’ development, in the image of Jebel Ali
Free Zone, for the rest of Somaliland, and can spawn other extension
Free Zone services both inland and on the coast, and it is also a
commitment that Somaliland is open for global business.
- Towards a Strategic Partnership for Horn of Africa Economic Integration:
The Berbera Tripartite Agreement can
lead to an unleashing of the potential of all Somaliland coastal
economic transformation. In the same way, it can also provide a bridge
to the UAE economy, not only to Ethiopia, but to the depth of Africa
through the Berbera Port and its Free Zone Gateway. But for the Gateway
to open widely, the Somaliland coastal region has to develop to
accommodate such potential. The region is well situated to grow with the
predicted African economic transformation boom as well as the Saudi
Arabia 2030 trillions of dollars development initiative of Crown
Principle Salman. The onus is with Somaliland’s leaders not to allow for
the new wave of wealth creation in the region to bypass Somaliland’s
people again, left behind only to guard over “xeedhyaha gingiman”
(untouched amble resources), in the midst of overwhelming poverty.
The Somaliland comparative advantage
regarding trade with Ethiopia lies in marine based products such as an
abundance of marketable fish types, both culinary and exotic ornamental
aquarium fish; salt and other sea products,including the now trendy sea
vegetables. Transforming the Berbera deal into a more comprehensive
development and investment vehicle on a much larger scale will attract
international investment, not only to develop the established Berbera
corridor, but towards an integrated economic and business transformation
to the benefit of the wider Horn partners societies. This will mean
integrating other Somaliland ports and coastal settlements such as
Zeila, Bulahar, Lugahye, Karin, Shalao, Hiis, Mait, Onkor, Las Korey and
Elanyo into the economic transformative potential of the Berbera
Tripartite Agreement.
Such economic transformation goals can
aim at three overarching economic strategies: first, focus on transit
trade to create wider sea access to serve the Ethiopian population from
east to west with the vision to reach deeper into the African
hinterland’s landlocked countries; second, astrategy for coastal
industry development including exploiting the fishing resources of the
area in collaboration with all neighbouring states; third, focusing on
the tourist industry which is another sector with huge potential that
the three partner countries can cooperate to develop and is suited to
Horn of Africa economic integration aspirations. The UAE offers a highly
developed tourist industry and a tourism savvy population who can
appreciate the virgin and high value tourist landscape in Somaliland,
including pristine uncrowded and unpolluted beaches hugging the Gollis
mountain range (home to biblical Frankincense gum production) which can
easily connect beach activities with mountain hiking, the cave art
cultureof which Somaliland has only scratched the surface but is
believed to be found along the length of the Gollis range mountains
waiting to be discovered, as well as traditional nomadic culture not far
from the coast, with nights out in the karaal, experiencing a life not
imagined in the globally connected world of today. For its part Ethiopia
offers a relatively developed tourist industry through its world known
historic sites, natural tourism resources including mountains, lakes,
and the Blue Nile with its Grand Ethiopian Renaissance Dam (GERD), as
well as having amongst the most the diverse cultures in the world. This
partnership offers an investor’s goldmine.
To tap into the immense Somaliland
coastal and inland economic transformation potential, supply of secure
energy is critical and it can only be accommodated by the hydro-electric
supply of Ethiopian GERD. A secure and cost effective energy supply is
the greatest impediment to unlocking Somaliland’s economic potential.
Security and Economic Interaction
Somaliland branded itself as the
peaceful enclave and stable polity of the Somali region, most of which
is plagued by conflict and instability. It warded off successfully the
phenomena characterizing the Somali region, such as warlordism, Islamic
fundamentalism, piracy and clan fiefdoms[22].
These phenomena thwarted any efforts from most Somali regions to
recover from the disastrous civil war and to form a stable central
government or regional polities, with the exception of Puntland.
Therefore, Somaliland developed growing security cooperation with
Ethiopia which is mutually beneficial for both party’s development.
While Somaliland benefitted from Ethiopian technical security support
for training security personnel, intelligence sharing and overall
support of its good offices, Somaliland represented a reliable safe
border and friendly society for Ethiopia, acting in many ways as its
buffer zone against destabilizing forces[23].
Furthermore, the small but growing transit trade has continued so far
without any security breaches or hindrances, establishing a healthy
track record for a more robust unfettered inter-country trade.
Similarly the security of the Horn of
Africa coastal maritime lanes is critical, not only for world trade but
as a lifeline for Ethiopia.[24]
In this regard Somaliland has also established itself as an important
player to keep its coastline free from piracy. Although Somaliland is
inpolitical and development limbowhich perpetuates grinding poverty and
rampant youth unemployment;its people have shunned the temptation to
copy its compatriots by turning to piracy.
Therefore, for the Berbera Agreement
relationship to translate into an in-depth economic interaction of the
two peoples, Somaliland still needs to raise its security institutional
capacities and to align its other relevant bodies to build a coherent
systems of security cooperation with Ethiopia. This is to facilitate
trust for both sides to overcome the tradition of hard borders and to
move towards softer more trade friendly cross-border engagement between
the two countries. This relationship should also foster the goal of
regional economic integration, to harness the abundant natural resources
of the Horn of Africa region and to turn its diverse national cultures
and geographic endowment into leveraging their way into the global
competition to benefit from the prevailing phenomenal potential for
wealth creation.
Cross-border Trade
According to recent studies on the Horn
of Africa borders’ informal trade, evidence shows that economic
integration should not be a by-product of adequate formal security;
rather “that success and versatility of informal trade networks reveal
an alternative path to future regional economic integration and
demonstrate that cross-border linkages do not have to be mediated by
formal institutions.”[25]
So far in both the Horn of Africa region and specifically at the
Ethiopia-Somaliland border, security concerns remain to undermine the
growth of mutually beneficial economic interaction. The study advocates
for less of the state security driven approaches and urges harnessing
ofthe existing community centred cross-border trade interactions as
vehicles for sustainable business friendly security.[26]
An important factor to be kept in mind
here is that the communities straddling the Somaliland-Ethiopian border
are an extension of the same communities who also populate Somaliland.
Thiswill lead us to the conclusion that the peace and stability
prevailing along the border since 1990 is also an extension of the same
security conditions prevailing in Somaliland. The same social norms and
security systems that sustain peace and stability in Somaliland are
shared by these communities straddling the border, whether they are
citizens of Ethiopia or Somaliland. Therefore, the securitized border
culture which is still lingering along the shared border needs to
transform towards the promotion of stronger trade and economic
interaction beneficial to both states as well as to the communities
along the border. This shall be anchored on the understanding that
better security can come with people’s wellbeing and their satisfaction
to have a living worth protecting.
Further in the report (page 44) the
author addresses how current Somaliland and Ethiopian bilateral trade
cooperation can be suitably transformed into a more formal economic
integration, albeit Somaliland’s lack of international recognition and
how the Berbera Port represents great opportunity for Somaliland to
benefit from such economic integration. The identified common goods
ideal for integration in the Horn of Africa region are also relevant for
Somaliland and Ethiopian trade: transport systems, responses to the
complex emergencies like droughts, locust infestation and periodic
cyclone effects; sharing regional wealth of knowledge and governance
best practices.
However, the report warns against
integration being perceived as a solution in itself to mitigate regional
conflicts, and that on the contrary it can in fact be source of
conflict if “there is lack of transparency and accountability in the
negotiations of the agreement and its subsequent implementation”[27].
And that brings us to the urgent need from the Somaliland side for
serious due diligence in the Berbera Tripartite Agreement and other
venues of trade cooperation that it opens for all parties.
- Conclusion
While the intention of this paper is to
highlight the economic value that the Berbera International Investment
Deal can have for Somaliland and its partners, it is public knowledge
that the transparency deficiency in the deal-making process created
suspicion and opposition to it, which in the public perception
overshadowed its economic value. A first step towards addressing its
transparency gaps is to do a due diligence exercise on the Agreement,
especially from the Somaliland side. Furthermore, some of the issues
that beg for clarification are the ways in which each of the three
partners are going to exercise their share-rights in practice. And how
would the breathtaking developments in the region can dovetail with the
terms of the Agreement. For example, though the new developments in
Ethiopia and its intense drive to acquire access to all possible ports
in the region are good overdue progress for the state and the Horn of
Region, the question remains of how that affects the Berbera Deal
commitments, specifically regarding the at least thirty percent volume
guarantee of Ethiopia’s transit trade business to be handled in Berbera.
The value of the Berbera Deal for
Somaliland is more weighted in its potential benefits than what can be
taken from it in the immediate situation. Both Ethiopia and Somaliland
have the opportunity to change the present status quo characterized by
separation through securitised hard borders which undermined existing
possibilities for wealth creation, not only for the frontier
communities, but alsofor the larger population of the two societies;
this will require overcoming a centurieslong culture of mutual
impoverishment. Similarly, it is a great opportunity for the third
partner and the major stakeholder of the Berbera Deal, the UAE/DP World,
to have eager partnersocieties, andgeostrategic resources and markets
ready for investment. Of no less importanceare the added values from
theirgeographic proximity and their deep-rooted cultural affinity with
the Arabian Gulf societies.
To make the Tripartite Berbera
Agreement work, all parties need to unfetter flow of investment
resources between the partner countries: first to develop joint
institutions[28]
which are mandated to advance the full cooperation of the three
partners on the Berbera Agreement’s aims and objectives; secondly
toreform existing practices toward each other, starting with
Preferential Trade Agreements (PTAs) and facilitate business friendly
systems of visa rules, registration and licensing of businesses firms
and joint-venture initiatives; thirdly to build robust security
cooperation which swiftly addresses anythingwhich is “bad for business”
and stability.
Such institutions can facilitate
further the initiatives towards the economic integration of the Horn of
Africa region. Similarly, it is critical to connect to other economic
initiatives that can have influence on the Agreement such as the Saudi
Vision 2030, the Djibouti Free Zone project and above all the China Silk
Road global project, to which the Somaliland coast falls directly in
the path ofits maritime wing. The Berbera Agreementcontributes for the
Horn of Africa region’s ability to ride the current climate of optimism
for Africa’s economic development prospects.
Hargeisa, The republic of Somaliland
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[1]Berhanu Fikade May 22, 29018, The Horn Diplomat. http://www.horndiplomat.com/2018/05/22/somalilandberbera-port-expansion-project-to-commence-in-september/ Accessed July 10, 2018
[2]Temesgen Yihunie, March 17, 2018, “Berbera Port: Widening Access to Ethiopia’s Growing Import-Export”, Ethiopian Herald. http://www.ethpress.gov.et/herald/index.php/news/national-news/item/11238-berbera-port-widening-access-to-ethiopia-s-growing-import-export. Accessed July 21, 2018.
[3]. Sarah Townsend Nov 6, 2017, “DP World Says to Build Economic Free Zone in Somaliland”, The National. https://www.thenational.ae/business/dp-world-says-to-build-economic-free-zone-in-somaliland-1.673522. Accessed 18 May, 2018.
[4]Wavescan, May
1, 2011, “Five in a Row: The Forgotten BBC East Africa Relay Station,
Berbera in Somalia.” “When the era of wireless communication began, a
wireless station was co-sited with the cable station at Berbera and it
was on the air with spark wireless transmissions in Morse Code under the
rather logical callsign BER. This station was inaugurated before the
Great War on January 1, 1912.” http://www.ontheshortwaves.com/Wavescan/wavescan110501.html. Accessed on July 9, 2018.
[5]Adventurous illicit immigration system
[6]ILO
2012 “Labour Force Survey Somaliland Report on Borama, Hargeisa and
Burao”, In Somaliland Economic Conference: Growth and Employment, The
World Bank, January 2014.
[7]Who never misses his prey.
[8]James Jeffrey 16 June 2015, “Khat in Somaliland: economic cure or curse?” Africa Business. http://africanbusinessmagazine.com/sectors/agriculture/khat-in-somaliland-economic-cure-or-curse/. Accessed May 9, 2018.
[9]
P. Hansen 2010; based on his observations and interviews he estimates
around 7500 people are engaged in the transport of Khat from Ethiopia to
Somaliland.” In“The ambiguity of Khat in Somaliland”; Journal of
Ethnopharmacology 132. Danish Institute for International Studies …, pp.
590-599.
https://www.sciencedirect.com/journal/journal-of-ethnopharmacology/vol/132/issue/3. Accessed May 9, 2018
[10] Ibid. Hansen (2010).
[11]“Khat
is the number-one employer in Hargeisa, generating between 8,000 and
10,000 jobs,” says Weli Daud at the Somaliland Ministry of Finance. J.
Jeffrey June ,2015, African Business.
[12]
Unrepresented Nations & People’s Organisation ( UNPO), Somaliland:
President Silanyo On Official Visit to France, Jan 20, 2014, http://unpo.org/article/16766. Accessed May 23, 2018
[13]That
the project was twinned with a UAE military base in Berbera is beyond
the scope of this article, which focuses on investment and economics
aspect of the UAE – Somaliland venture.
[14]Meester,
Jos et al, April, 2108, “Riyal Politik: The political Economy of Gulf
Investments in the Horn of Africa”, CRU Report, Clingendael,
Netherlands Institute of International Relations. https://www.clingendael.org/publication/political-economy-gulf-investments-horn-africa. Accessed May 25, 2018. P.25
[15] Ibid. Page 26.
[16]
“Ethiopia has eyed the development of and access to the port of Berbera
…but also because of a paucity of critical resources and human
capital”. Cannon, J. ; Rossiter A., Dec. 2017, “Ethiopia,
Berbera Port and the Shifting Balance of Power in the Horn of Africa”,
Rising Powers Quarterly, pp. 7-29.
http://risingpowersproject.com/quarterly/ethiopia-berbera-port-shifting-balance-power-horn-africa/.
Accessed May 25, 20
[17]Ibid. Page 11.
[18]Calculating
20-foot container of Ethiopian garment exports to Germany, the
logistics costs came to 247% higher than those of Vietnam and 72% higher
than Bangladesh.John Burgoyne30 Jan 2018, seeing THE BIGGER PICTURE IN
CONCESSION BIDS; Ports Strategy: insight for executives.
[19]Tedros
Adhenom 23 Oct. 2015, “Ethiopia’s Foreign Policy: Regional Integration
and International Priorities”, African Programme Meeting, Chatham House.
[20]Sultan Ahmed Bin Sulayem Group Chairman and CEO, DP World. http://www.berberaseaport.net. Accessed May18, 2018.
[21] Ibid.
[22]
Unlike the southern part of Somalia, Somaliland emerged as a stable
political system with a functioning government, some disciplined and
regularly paid military and police, and democratic elections. Arieff A.
(2008) “De Facto Statehood? The Strange Case of Somaliland”, Yale
Journal of International Affairs, Page 68. http://yalejournal.org/wp-content/uploads/2011/01/083206arieff.pdf. Accessed May 20, 2018.
[23]
Kidist mulugeta July 2014, “The Role of Regional Powers in the Field of
Peace and Security: The Case of Ethiopia, Freidrick Ebert Stiftung. http://library.fes.de/pdf-files/bueros/aethiopien/10879.pdf. Accessed July 5, 2018.
[24]“Strategically,
the coastal belt comprising Eritrea, Djibouti, Somaliland, and Somalia
must become a secure coastline—one that guarantees the safety of trade
from the Indian Ocean through to the Mediterranean”, Rondos
Alexander, “The Horn of Africa – Its Strategic Importance for Europe,
the Gulf States, and Beyond”, Centre For International Relations and
Sustainable Development (CIRSD).https://www.cirsd.org/en/horizons/horizons-winter-2016–issue-no-6/the-horn-of-africa—its-strategic-importance-for-europe-the-gulf-states-and-beyond. Accessed June 26, 2018.
[25];
Sally Healy Nov. 2011, “Hostage to Conflict, Prospects for Building
Regional Economic Cooperation in the Horn of Africa”, A Chatham House
Report, Page ix. https://www.chathamhouse.org/publications/papers/view/180423. Accessed June 30, 2018.
[26]“This
report also argues for a less state-centric approach to regional
integration that could capitalize on the strengths of cross-border
relationships. Currently border communities are often in an impoverished
limbo, prone to conflict; but they could make a significant
contribution to regional peace and security if their commercial
potential were opened up. This could be the basis for longer-term
economic growth and prosperity, turning the burgeoning illicit
cross-border economic activity to advantage – no longer a security
liability but a regional economic asset.” Ibid Page IX.
[27]Ibid Page 44.
[28]Agency for Trade and Investment Facilitation between the Berbera Agreement Partners.
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